Ask The Editor

March 15, 2010

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

October 26, 2009

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

October 25, 2009

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

September 17, 2009

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

September 14, 2009

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

September 10, 2009

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.

September 3, 2009

Before tomorrow’s opt-out deadline: What you need to know about the Google settlement

Tomorrow is the deadline for opting out of the Google settlement.

Here are some bits of information that may help people better understand the broad strokes — and why you’re better off opting out:

1- You are not shut out of the Google Book Search program if you opt out of the settlement. You are only shut out of the bad terms of the settlement. You can still participate in the Google Book Search program as an individual author, retain all your rights, and remove your books at any time.

2- You will not get 63 percent of the proceeds under the settlement for any use of your book by Google. That 63 percent goes to the Book Rights Registry which skims an unspecified and unknown amount off the top for expenses.

3- The remainder of that 63 percent, once the Book Rights Registry takes its unspecified and unknown share, goes to your publisher which sends a portion to you based on its interpretation of your contract. If it interprets your contract wrongly, your only recourse is binding arbitration, a process which favors major players, not little guys.

4- The settlement terms will obviously conflict with some book contract terms. It is unclear how this will be resolved. As the settlement is written, binding arbitration is your only option if you disagree with a publisher’s interpretation. This issue has some lawyers scratching their heads because of the uncertainty that’s bound to result.

5 – It’s a pretty good deal for large publishers, for the above and other reasons.

6- Based on published quotes from its leadership, the AG appears to have initiated this class action with the goal of negotiating a settlement that would result in Google getting rights to books that it otherwise could not get. (See author/attorney Scott Gant’s objection which is a pdf file).

7- The AG will control half the Book Rights Registry and will choose half the board members. The AAP will select the other half. This deal with Google gives these groups future security at a time when the future of publishing is anything but secure.

– Anita Bartholomew

August 11, 2009

Authors Guild sends authors another misleading letter about Google settlement

You have to wonder why, if the Google settlement is as good a deal as the Authors Guild keeps insisting it is, the honchos over there keep misleading their members when attempting to gain support.

Any settlement worth signing onto doesn’t need to be spun, finessed, or made to appear something it isn’t. If it’s worth signing onto, you simply list the actual benefits. You don’t pretend authors will get benefits that the settlement doesn’t, can’t, and won’t give them.

Although I was once a member of the Authors Guild, I am no longer. But friends do forward the emails they get. And I found the text of that email, inviting all authors and agents to a free teleconference this coming Thursday, on the AG website.  I don’t have the time to fact-check everything, as it would require me to dig through the settlement agreement again, but here are some obvious whoppers I spotted that required no new research:
AG CLAIM: the only way to ensure that your book will not be completely removed from the database, and thus benefit from Google search, is not to opt-out.

AB RESPONSE: False. As I’ve written ad nauseum, just sign up for the Google Books Partner Program and you will be in Google search — but you won’t be locked into the settlement terms.

AG CLAIM: The settlement offers a 63/37 split** in your favor … It’s a good deal. For comparison: Amazon buys e-books at a 50% discount from publishers. If you’re a self-published author, the split is 35/65 — in Amazon’s favor. Newspapers face a 30/70 split — again in Amazon’s favor — for electronic distribution of their content.

AB RESPONSE: Misleading. Here’s what the AG isn’t telling you about the above “good deal.” You’re not getting 63%. The Book Rights Registry takes delivery of that 63 percent, and takes its cut off the top. The BRR’s cut is unknown, and unspecified in the settlement. Estimates are that it can be anywhere from 20 percent to 50 percent of that 63 percent. Whatever is left after the BRR takes its cut goes to the publisher which then parcels out your share to you. What will that share be? Whatever your contract says it is.

Not exactly sounding like a 63 percent share any longer, is it?

AG CLAIM: Want to negotiate a different deal with Google?  Turn off all display uses of your works and go for it.  At any time.

AB RESPONSE: Huh? You can’t re-negotiate the terms through the settlement, of course. Those terms are set in stone if/when the settlement is approved. Unchangeable. Approved settlement = done deal.

So, I wondered what on earth the AG was up to with the above claim.  As I keep saying, you certainly can get better terms through the Google Book Partners Program if for no other reason than you won’t have the BRR as a silent partner, skimming off the top. (Fun fact: 50 percent of the BRR will be appointed by the AG).

The Google Books Partner Program is the only current way to get a better deal from Google in its book search and scanning venture, to my knowledge. And you can be in both the program and the settlement. Here’s what the settlement FAQ says:

Can I participate in both the Partner Program and the settlement?
Yes. You can choose to participate in the settlement and its revenue models for one or more books even if you are already a participant in the Partner Program. The Partner Program agreement, if applicable to a particular book that is also included in the settlement, will govern Google’s treatment of that book to the extent the Partner Program offers the same uses or revenue models as the settlement and any prohibitions imposed by the Partner Program agreement on Google’s uses will apply.

So, the only thing I can figure, re its re-negotiation claim,  is that the AG will suggest, during its free conference call on Thursday, that you opt in, tell Google not to display your book, then sign up for the Google Books Partner Program.  But, if I’m reading the FAQ right, the catch is that, once you’re in the settlement, you’re stuck with the same terms, or as the FAQ says, the same uses or revenue models as the settlement.”

If that’s the strategy AG plans to offer in its “go for it” re-negotiation recommendation, my brain hurts just thinking of the convoluted reasoning.

Why on earth would you give up your right to sue if Google oversteps, bring in a partner who’ll take an unknown percentage of the proceeds, sign a hundreds-pages long agreement you probably don’t understand  … just to seek the better deal that you can only get outside the settlement?

Can’t wait to hear what they say next.

– Anita Bartholomew

August 5, 2009

Why writers shouldn’t bet their careers on magazine writing, part II

Article fees are stagnating at best. Numerous magazines have lowered their per-word rates. I hear reports all the time from  writers that magazines assign an article at, say, 1,000 words but demand extra reporting that can require the writer to up the submitted word count by 50 percent or more, with no extra pay.

Writers, brace yourselves. This is your future if you continue to bank on magazines. Magazines were hurting before the economic downturn and you can’t assume that the situation will reverse once the economy stabilizes. See this article from Min on the prospects for consumer magazines — or simply read the following sobering excerpt:

Magazines did not come into the recession from a position of strength, with a [Compound Annual Growth Rate] at a meager 1.1% from 2003 to 2008.

Virtually all of the main revenue drivers for this industry are being depressed by a shifting media economy and digitization, such that magazine advertising will decline 15.6% in 2009 to $10.53 billion and a [Compound Annual Growth Rate] of -6.6% for the 2008-2013 period. This will leave the ad spend on magazines at $8.87 billion in 2013, the lowest level since 1995.

Ever-shrinking ad revenues mean that articles fees must also continue to shrink.

And for those who say, “no problem, I’ll write for the web,” I have to ask: haven’t you noticed that most websites pay less than even the struggling magazines? While some web publications pay at least something, too many are paying so little, the fee offered is an insult. And you can’t pay your bills with the proceeds  of insultingly low fees no matter how quickly you write.

So, what’s left?

My guess is that the writers who continue to make a living from writing will be writing books. Some will get traditional publishers. Some will publish their own books as book publishers also tighten their budgets.

The Espresso Book Machine, or something like it, if it catches on, will make any bookstore that has one a print-on-demand center. That will make it possible for good writers to become publishers without the overhead of warehousing and shipping, and with a lower per-book printing cost than current POD options. But only those who master marketing and publicity will earn enough to make a living.

I know this isn’t a cheery post but I read too many cheery proclamations from writers who keep doing what they’ve been doing while their incomes shrink. We all need to think ahead, not just to the end of the year but to five years from now. Where will publishing be? And where will you be in publishing?

– Anita Bartholomew

May 4, 2009

With all the buzz about e-readers, is anyone e-reading?

The headlines shout that there’s a new Kindle in the works, said to be larger screen to accommodate textbooks, newspapers and magazines.

But wait, say other commentators, that’s so ho-hum. The real news is that Apple is developing a tablet reader that will knock off the competition.

Maybe, say yet others, but just wait until Plastic Logic comes out with its own e-reader. Or Hearst. Or News Corp. These technological advances may just save the newspaper (without actual paper, of course).

This is all very exciting, but … what percentage of the reading public either has already adopted the new technology or expects to in the next year or so?

We know this is the future. What we don’t know is when, exactly, we expect this future to be embraced by significant numbers of readers. And, if it isn’t embraced by significant numbers of readers, and soon, technology is unlikely to do much for newspapers.

– Anita Bartholomew

Next Page »

Create a free website or blog at WordPress.com.