What’s a fair ebook royalty?

This is a question that’s come up quite a bit lately with author and editor friends. Are the current standard ebook royalties (25 percent of receipts) fair? And if not, what would be fair?

The argument for raising royalties to 50 percent or greater of receipts is that ebooks don’t cost publishers anything to produce: no paper, no printing, no binding, no warehousing, no shipping, no returns. Whatever investment in editing, promotion, typesetting and design that the publisher made, had to be made in order to produce the print book. Producing an e-version is a trivial additional cost. So authors should get at least half because for the publisher, ebook revenue is gravy.

That argument assumes that everything stays the same in publishing and that ebooks will continue to be a small portion of books sold. We know, however, that publishing isn’t staying the same. Sales of e-readers and ebooks have risen dramatically in just the past year. Between the Kindle and the iPad, almost everyone expects that the ebook will be embraced by more readers. The pace of adoption should increase dramatically. The open question is how to quantify that adjective “dramatically.”

And for virtually every ebook bought, a print book isn’t.

Right now, ebooks are estimated to be about 5 percent of the market. What happens to the industry when they’re 25 percent?

Anyone who has read this blog more than once knows that I’m a fierce advocate for writers, am against the Google settlement because it’s a worse deal for writers than writers can get on their own from Google, and have urged writers to stand up for their rights on pay, copyright, and other issues.

So you might be surprised to learn that I’m not convinced that writers should demand 50 percent of receipts for ebook royalties.

I agree that 25 percent of receipts is too low. Publishing guru Mike Shatzkin estimates that on hardcover books, the “standard” royalty of 15 percent works out to about 27 to 32 percent of receipts, which in turn, after expenses, splits profits about 50/50 between author and publisher.

A 50/50 split of profits is fair. But that’s not the same as a 50/50 split of receipts. One day soon, e-publishing won’t be all gravy. It will be the way we publish books. And all the costs associated with publishing books (minus the printing and other costs that printed books incur but ebooks don’t) will have to factored into ebook pricing and royalty calculations.

You can bet that publishers are already factoring the future into their calculations as they set their 25 percent of receipts royalty schedules. Nobody can accurately predict the future though, and publishers are giving themselves ample padding.

The issue we need to address is how should receipts between publisher and author be split to account for a future where ebooks are a big chunk of the books sold?  The goal should be that, after publishers’ costs are covered, authors and publishers share the profits 50/50.

The percentage of receipts authors would get with a fair (50/50 profit) royalty system is not 25 percent of receipts. But it’s not 50 percent of receipts either.

– Anita Bartholomew

Yet another disappointing column by The New York Times’ public editor

Clark Hoyt, The New York Times’ public editor, has belatedly discovered that sources quoted by reporters may not always be disinterested observers of the issues on which they comment.

Hoyt points to several people who were quoted by reporters who had business interests intertwined with the issues they were discussing. Included among these sources is Jonathan Gruber, an MIT economist who has been a paid analyst on health care reform to the Obama administration.

There is no question that Gruber should have disclosed his relationship. But there is also no question that Hoyt, in identifying a squeaking mouse in the corner of the pantry,  ignored the herd of elephants regularly stampeding through the building.

What about the tendency to quote political figures making false statements that reporters know are false, without pointing to the actual facts that refute the statement? You can find a New York Times’ report, blog or column that quotes a political leader making a false statement virtually every day. I challenge anyone — but especially Mr. Hoyt — to show me where the reporter informed readers where the truth actually lay after acting as a stenographer of such quotes.

Here’s a typical example. And no, I didn’t have to look hard to find it. My first click after reading Hoyt’s column brought me to this doozy.

In writing about the problem Democrats will have passing healthcare reform should Ted Kennedy’s seat go to a Republican, David Herzenhorn quotes Republican Senate Minority Leader Mitch McConnell saying the following:

“This arrogant attempt to have the government take over one-sixth of the economy on the heels of running banks, insurance companies, car companies, taken over the student loan business, doubling the national debt.”

Nowhere in the Herzenhorn column will you see any mention of the facts, easily accessible to any Times’ reporter or blogger,  that show that McConnell’s claim about a government takeover of healthcare (his one-sixth of the economy claim) to be utterly false.

Nothing in the healthcare bills under consideration involves a government takeover of healthcare. The House and Senate bills would, among other things, regulate insurance companies; create exchanges where people could buy private insurance; make insurance available to 30 million more people; end denials of coverage for pre-existing conditions; and subsidize the purchase of insurance for most middle-income Americans. Most important, given the claim of the speaker, the bills are projected by the CBO to reduce the deficit over time.

Quoting, without context, someone’s false statement concerning something with such massive consequences as healthcare reform, is a far greater failing than quoting someone who has a business interest without disclosing that business interest.

Hoyt continues to go after fringe failings at the paper of record, while ignoring the immense ones that contribute to the public’s confusion about the most important issues of their lives. We saw this in the run-up to the Iraq invasion, and in so many other issues that have life-altering effects.

These are the issues news organizations exist to inform us about. And they’re failing — not just the Times but most news organizations. I point to the Times only because of its stuffy insistence, in Hoyt’s columns, that it is rooting out problems when it’s doing nothing that even comes close. Hoyt’s columns point to a self-satisfaction at the Times which is likely to dissuade those in charge from addressing the serious issues.

– Anita Bartholomew

The New York Times and freelancers (A.K.A. filthy non-staff writer scum)

Clark Hoyt, The New York Times public editor, has continued his predecessor’s attack on freelance writers. He doesn’t exactly call us an odious bunch as his predecessor did but seems to feel it’s perfectly fine to impose draconian rules on non-staff writers while refusing to pay their reporting expenses or a decent pay rate, and to ignore the huge transgressions of staffers and stars.

Hoyt points to three freelancers who “transgressed” and were tossed by
the Times, but the offenses are minor compared to those of Times’ stars who are still with the paper.

1. Mary Tripsas, an associate professor at the Harvard Business School wrote a column about innovation and included 3M in her column without disclosing that 3M paid her expenses to go to their site. Because her university research involves checking out such sites, if 3M hadn’t paid Harvard certainly would have. And presumably, that would have been okay with the Times. Otherwise, her career as a professor, which qualified her for this column, would have been viewed by the Times as an ethical failing and also disqualified her for this column.
2. Mike Albo, who accepted a travel-sponsored junket to Jamaica but didn’t write about it for the Times. Hoyt fails to mention that few travel publications or columns pay travel expenses to travel writers.  So writers who wish to write about travel have three choices: pay their own expenses (usually greater than the assignment fee); accept complimentary trips from travel companies; or stop writing about travel.
3. A third freelancer, Joshua Robinson, identified himself as a writer for the Times while soliciting photography work from airline magazines — and asking the airline magazines to cover his airfare. Wouldn’t any of us, if pitching an airline magazine A) promote our major credits and B) ask the magazine to cover the travel and other expenses of the project?

Virginia Postrel was asked by The New York Times to write the column that Tripsas eventually accepted and was fired from. Postrel turned it down due to the Times’ measly pay and refusal to cover research expenses. However, she says, had she taken the gig, she also would have been disqualified on “ethical” grounds.

She had a correspondence with Hoyt about the hypocritical so-called ethical stance of a media outlet that demands purity from freelancers but refuses to pay in full for the research and reporting it profits from. Worth a read.

– Anita Bartholomew

Post has been updated to remove a statement that Hoyt didn’t mention that Tripsas’ expenses could have as easily been picked up by Harvard. Hoyt did mention this.

Sales of ebooks nearly triple from 2008 to 2009

The headline says it all. E-Reads reports that, from August 2008 to August 2009, ebook sales shot up from $5 million to $14.4 million.

This may be bad news for traditional publishers but it has the potential to be excellent news for the small publisher, especially the one-person shop, publishing his or her own title.

It means that there is a market for ebooks and that market is growing like kudzu.

It does not mean you can simply publish and hope that people find your books, buy them, and recommend them to their friends. You still have to publish a book that is compelling enough to rise above the pack, with a great story, well-told, and a satisfying ending. You still have to promote the hell out of the book. Otherwise, no matter how great it is, nobody will know it exists.

But if you can turn out something that others will want to read and if you know how to reach potential readers, you have an easier entry now that at perhaps any other time in history.

– Anita Bartholomew

How Demand Studios’ exploitation of writers turned it into a billion dollar company

Wired has a fascinating article about Demand Studios, one of the word factories that regularly advertises for writers, only to exploit them. You can’t claim Demand pays writers peanuts. It’s more like peanut husks.

It’s worth reading the article to learn how this sweatshop-type operation makes such big bucks. But here, we’re only concerned with the pennies it pays to the people who made it possible for Demand to become the billion-dollar enterprise it now is. The snippet below provides a hint:

It’s the online equivalent of day laborers waiting in front of Home Depot. Writers can typically select 10 articles at a time; videographers can hoard 40.

Nearly every freelancer scrambles to load their assignment queue with titles they can produce quickly and with the least amount of effort — because pay for individual stories is so lousy, only a high-speed, high-volume approach will work. The average writer earns $15 per article for pieces that top out at a few hundred words, and the average filmmaker about $20 per clip, paid weekly via PayPal. Demand also offers revenue sharing on some articles, though it can take months to reach even $15 in such payments. Other freelancers sign up for the chance to copyedit ($2.50 an article), fact-check ($1 an article), approve the quality of a film (25 to 50 cents a video), transcribe ($1 to $2 per video), or offer up their expertise to be quoted or filmed (free). Title proofers get 8 cents a headline.

Don’t write for these — or any — exploiters. Leave these crumbs for the amateurs. I know it’s tempting, as newspapers die, and magazines fight for survival, to take whatever work is available. But writers who do so help perpetuate their own exploitation.

Write a book, instead. Either shop it to agents and publishers or invest in publishing and marketing it yourself. There are plenty of new publishing opportunities to explore, from the Espresso Book Machine which is rolling out a few new locations and may soon make the printing of a single book as cost-effective as printing in bulk, to ebooks, which already eliminate the costs of distribution, warehousing and shipping.

– Anita Bartholomew

Noooooo, not Heathcliff, too

I loved Interview With The Vampire, but that was probably the last vampire novel I could say anything remotely as positive about. Yet, I know I’m in the minority. Friends and colleagues swoon over Charlaine Harris’s vampire series and the Twilight books have probably outsold Harry Potter by now.

But can’t we draw the line somewhere, people? Must it really come to this? Publishers Lunch reports the latest vampire novel sale:

Sarah Gray’s WUTHERING BITES, a retelling of Wuthering Heights in which Heathcliff is a vampire, to John Scognamiglio at Kensington, in a very nice deal, for publication in September 2010, by Evan Marshall at Evan Marshall Agency (World).

– Anita Bartholomew

Publishing at the crossroads: who will own the future, you or Google?

I’ve written before that I believe the Espresso Book Machine (EBM) from On Demand Books,  could be a publishing industry game-changer, as much and even more so than the advent of ebooks. Although the EBM is only in 10 locations now, the wide distribution of EBMs or other machines like them, would allow authors, with new or out-of-print books, to publish their own work, at lower costs than are now generally available from POD printers. Because the books get published at the bookseller’s site, the author-publisher isn’t saddled with the significant costs of warehousing, shipping and distribution.

And returns? That would be a store-by-store policy issue but here, too, the savings to the author-publisher would be significant. If a store with an EBM permitted returns, the author-publisher might have to bear those costs. But the author-publisher would be spared the expense of refunds and two-way shipping on unsold  books that were published sans demand, and then removed from the shelf and returned when demand failed to catch up to supply.

The lower overhead opens up all sorts of possibilities and Google is now showing us that the game could go either way for those who want to breathe new life into their old books.

A story today in Wired says that Google is going to offer public domain (out-of-copyright) books via the Espresso Book Machine:

Over the last seven years, Google has scanned millions of dusty tomes from deep in the stacks of the nation’s leading university libraries and turned them into searchable documents available anywhere in the world through its search box.

And now Google Book Search, in partnership with On Demand Books, is letting readers turn those digital copies back into paper copies, individually printed by bookstores around the world.

Or at least by those booksellers that have ordered its $100,000 Espresso Book Machine, which cranks out a 300 page gray-scale book with a color cover in about 4 minutes, at a cost to the bookstore of about $3 for materials. The machine prints the pages, binds them together perfectly, and then cuts the book to size and then dumps a book out, literally hot off the press, with a satisfying clunk. (The company says a machine can print about 60,000 books a year.)

Two issues the story doesn’t address give us the clues to what makes this so technology so important to those of us who make our living by the written word:
The possibility for POD editions had been treated as a “maybe someday” clause in the Google settlement. Someday is here, it seems, the moment the settlement gets the judge’s thumbs-up (if it does). Assuming the same pricing structure as the out-of-copyright books, Google gets a dollar, and passes along 63 cents to the Book Rights Registry (BRR). The BRR passes along to publishers what’s left after taking its unknown cut. Publishers pass along to authors — what? Maybe 10 to 25 cents per book sold?

Contrast that to what an enterprising author might get by republishing her or his own out-of-print book and offering it via the EBM. Costs to print via the Espresso Book Machine are just $3 in materials plus whatever the bookseller adds for profit and the cost of amortizing the EBM owner’s investment in the machine. But on the author-publisher’s side, when you consider eliminating the costs of warehousing, shipping, distributors and returns, you’re likely to be about where you’d be with a traditionally published book with one enormous difference. You’ve removed the uncertainty factor that drives costs to unknown, profit-killing levels and keeps so many would-be author-publishers from going it alone.

When you’re no longer working on the crazy model of providing books on consignment and assuming all financial risks, you might actually be able to run a profitable business as an author-publisher.

Can you say the same is anywhere near possible if your books are coming out of the same Espresso Book Machine but the money goes to Google instead?

– Anita Bartholomew

Biggest challenge for publishers=biggest opportunity for authors?

The Frankfurt Book Fair is conducting a survey of publishers to learn what they believe will be the business models of the future.

The second question on the survey is interesting because it points to a potential shift in the balance of power in publishing from publishers to authors.

In your opinion, what are the three biggest challenges for the media industry? (Please check three answers)

Along with digitization, piracy, the economic crisis, oversupply and other issues, one of the 10 possible answers that you get to choose as among the three biggest challenges to publishers:

– Strengthened position of authors (increasing possibility for direct marketing without a publisher/bookseller)

The fact that this is one of the possible answers tells you that the market is shifting dramatically.

The fact that the following is also among the possible answers tells you we are at a crossroads.

– Concentration of distribution channels

Either authors will gain significant power in the new marketplace or big players like Google and Amazon will so overwhelm us all that we would do well to learn a new trade that will always be in demand, like plumbing.

We live in interesting times.

– Anita Bartholomew

Google settlement an “end run around copyright law” says Register of Copyrights

Finally, Congress is reviewing the settlement. Where have they all been until now?

From a report in The Wall Street Journal:

The head of the U.S. Copyright Office told Congress on Thursday that she had serious concerns about Google Inc.’s (GOOG) legal settlement with authors and publishers who sought to block the company from scanning books and making them searchable online.

Marybeth Peters, the register of copyrights, said in written testimony before the House Judiciary Committee that the Copyright Office was particularly concerned that the settlement would allow Google to display and distribute out-of-print books without prior consent from the copyright owners of those books.

“To allow a commercial entity to sell such works without consent is an end-run around copyright law as we know it,” Peters said.

“In the view of the Copyright Office, the settlement proposed by the parties would encroach on responsibility for copyright policy that traditionally has been the domain of Congress,” she said.

Off topic: President Obama’s speech on health care reform

Watching the president give a speech about what he plans regarding health care reform, and knowing what I know about the insane commentary by those who hope to derail reform, I was proud, last night, to call this man my president. I can’t imagine any politician acting with more grace, wisdom or intelligence.

This is a man who inherited an economy in freefall; two wars; a treasury emptied by those wars and tax cuts for the wealthiest; a diminished standing in the international community due to decisions by his predecessor to invade at will and torture prisoners; and fires to put out all around because regulation was considered a dirty word for 8 years.

He’s also a man who the “stars” of one of the four major cable “news” networks, every day, imply is a fascist, a Nazi, a commie, a secret Muslim terrorist, or a dictator-in-waiting attempting to indoctrinate children into a modern-day Hitler youth movement. Their aim is apparently not just to thwart his agenda but to bring him down, utterly, so that he is a one-term president (assuming that the wackjobs these liars inspire don’t end his term with violence, first).

Given the above, and despite the insurance lobby’s spending more than $1 million per day, influencing those in congress writing the bills, and misleading the public, hoping to keep him ever on the defensive until he’s gone, Obama is still on track to reform health care.

Words can’t express my admiration for the man. At last, we have a real statesman in office, someone worthy of the title, President of the United States.

– Anita Bartholomew