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

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January 7, 2010

The next big thing in e-readers isn’t an e-reader

Watch out Kindle, Nook and other e-readers. Blio, a software based e-reading platform is rumored to offer the best e-reading experience yet. It will run on anything that has an operating system.

And it’s free (but not available until the end of the month spring, says PW).

The FREE Blio eReader software is the new touchstone for the presentation of electronic books & magazines. Stunning, full-color pages come alive in brilliant 3D. Even image-rich books are now at your digital fingertips — because Blio preserves a book’s original layout, fonts, and graphics.

Enjoy a vast selection of cookbooks, travel guides, how-to books, schoolbooks, art books, children’s stories, and magazines. Relax, learn, work, or play! The smart display lets you insert highlights, notes, videos, and even webpages. Selected books also go hands-free with Blio’s read-aloud feature.

Flexible & accessible. Shop endless titles, right from the Blio Bookstore, with access to over one million free books and a huge library of today’s bestsellers. Then, take your library on the road by syncing to your favorite on-the-go mobile device.

– 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 8, 2009

How to understand the objections just filed in the Google settlement

The time has now passed for authors to opt out of the settlement. However, we can still hope that Judge Chin will decline to approve it in its current form.

Today was the last day to file objections and briefs, and those that were filed mostly focused on an issue originally raised by attorney-author Scott Gant: that most of the authors who will be bound by the settlement terms were illegally drawn into the class.

Let me, as a non-lawyer, explain my understanding of this, as simply as I can.

On the same day the settlement was announced, the Authors Guild amended the class action complaint to immensely expand the Plaintiff (allegedly wronged party) class from where it had been: all those with a copyright interest in a book in the U Mich library, where Google had scanned all the books.

The newly amended complaint, which coincided with the announced settlement,  included in the Plaintiff class EVERYONE with a U.S. copyright interest in a book, not just those whose books had been infringed.

Why do Gant and most of the current crop of objectors claim this is illegal?  Because a lawsuit’s Plaintiffs have to have a valid complaint against a Defendant. Those whose books were not scanned by Google have no valid legal complaint. They aren’t affected.

The effect when the Authors Guild amended its complaint to expand the Plaintiff class was to sweeten the deal for Google, the Defendant. It gave Google the future right to scan books it hadn’t yet scanned and to circumvent copyright law (and, apparently, privately negotiated book contracts), and gain significant future control of all books.

In exchange, the Authors Guild got whatever it negotiated from Google, which we don’t (and probably won’t) know.

That’s a commercial transaction, not a settlement of a legal claim. And that’s the theme running through objections filed earlier by Scott Gant and today by Microsoft, Yahoo, Consumer Watchdog,  and a group of authors called the Bloom objectors.

Shorter explanation of the objections’ basis: it’s as if Search Engine X infringed my copyright but not yours. But in settling the case, I made a deal with Search Engine X that it could have your future rights along with mine, in exchange for something else I wanted.

Do you think it would be fair for you to be forced into such a deal? I don’t either. And, aside from a dozen other arguments that could be made, I hope that Judge Chin recognizes the inherent injustice of such a deal and stops it right there.

– 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

April 28, 2009

Judge grants request for extension in Google settlement

Attorney Andrew DeVore had asked that the deadline for opting out or objecting be extended to September 7, 2009.  Although class action attorney Michael Boni asked that the extension be half as long, the judge has, apparently, ruled for the full four months:

In a surprise move, New York Judge Denny Chin today granted a four-month extension to a group of authors, led by Gail Knight Steinbeck, delaying the May 5 deadline to opt out or object to the Google Book Search settlement to early September. Although the order had not yet been made public at press time, sources confirmed for PW that Chin had granted the extension.

Google opt-out deadline still May 5th but court hears request for delay

From Publishers Weekly:

Last week, a group of authors and their representatives filed a request to delay the May 5 deadline. The motion filed April 24, by attorneys representing The Palladin Group for John Steinbeck and Thomas Myles Steinbeck, Catherine Ryan Hyde, The Philip K. Dick Testamentary Trust, Arlo Guthrie, Michael W. Perry, Eugene Linden, and James Rasenberger, asked the court for a four-month extension, with October 7 marking the new opt-out deadline, and with the hearing, now set for June 11, to follow at the court’s discretion.

Meanwhile, in response, attorney for the publishers’sub-class, Michael Boni, said the authors’ complaint was without merit and asked the court to reject it. However, Boni, said that “independent of” the authors motion, “plaintiffs and Google are amenable to a 60-day extension.”

The article goes on to quote New York Law School professor James Grimmelman saying that an extension is unlikely to be granted while the attorney presenting the request for the delay, Andrew DeVore, said that such a delay was necessary. DeVore pointed out that the Google settlement is “not a typical class action settlement,” because it’s not primarily about compensation for past injury but about future rights.

I’d point out that while the Google settlement is, indeed, not typical for class actions, it took its lead from an earlier class action that grabbed future rights from all affected writers for periodicals, essentially overriding copyright law by granting the Defendants future rights in all the works affected. In that class action, too, writers were “represented” by class action attorney Michael Boni, supported by the Authors Guild.

To haul out an old cliche, with friends like Boni and the AG, writers really, really don’t need any enemies.

– Anita Bartholomew

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