Tag Archives: author royalties

The Writing On The Wall: What Publishers Can Learn From The State Of The Music Industry

music industry can show the potential future of the book industry img source http://www.oneworld-publications.com/blog/music-to-publish-books-by

Book publishing professionals have been interested, to say the least, in the evolution of the music business over the last decade or so: its sudden conversion to a digital delivery system, the easy availability of music over the web, the free downloads that crushed traditional sales, the small labels put out of business and the big ones merging and contracting. The final result is a burnt-out industry, now only a shadow of its former power and prestige. Too much of this story seems to presage current trends in the book business.

Now there is another ominous chapter in their distressing story. In the January 28 edition of The New York Times, there is an article by Ben Sisario entitled “As Music Streaming Grows, Royalties Slow to a Trickle.” The article describes how the new methods that are used to distribute music by companies such as SpotifyPandora, and YouTube are a lousy deal for musicians. Even iTunes is being left behind by these new services, and musicians can now expect nickels when their recorded songs are bought instead of the dollars they used to earn.

Here is the story of one such musician, a Ms. Zoe Keating, as reported by the Times: “After her songs had been played more than 1.5 million times on Pandora over six months, she earned $1,652.74. On Spotify, 131,000 plays last year netted just $547.71, or an average of 0.42 cents a play.” By now the sale of recordings to consumers, aside from the work of the superstars, only has meaning as PR to promote live concerts.

Is there a strong parallel between the plight of the musician and the likely fate of the book author?  I surely hope not, because it is hard to imagine author readings going very far to make up for negligible book sales. But the siren song that has so badly damaged the financial prospects of record labels and musicians might soon be sung to publishers and authors. It could go something like this: forget about selling books for $14.95 each to readers; instead put your books into a big pot to which subscribers, paying a low fixed fee every month, can have access. It is true that you will be paid nickels rather than dollars, but there will be so many nickels!

If the book industry, like the music business, adopts this subscription model, there may be—for a little while—a lot of nickels. But the demand for books is limited—or “inelastic” as economists put it. So many books, so little time!  Over time, more and more titles will have to compete for the fixed amount of money collected by the subscription services. And authors really will need to polish up their dramatic reading skills.

And now this just in from Publishers Weekly:  Amazon intends to create a market for used eBooks. A print book can be sold by its buyers to someone else with no royalty going to the author. But one copy of an eBook could potentially be resold any number of times. Thousands of times.  What would the author receive each time his/her work was resold? Zip.

What can be done? If this worst case scenario happens, publishers may have to consider delaying the release of eBook editions until the print editions have had a chance to earn the publisher and the author a reasonable return, similar to how the film industry times the release of movies to theaters, then DVD, and then later, streaming subscription services. This is a version of the old rule of thumb that suggests delaying the release of the trade paperback edition until the cloth edition has sold through. In any event, publishers must not let any seller of their titles use its market power to drive prices down to the point where authors and publishers cannot do their jobs. And it is always important to remember that when the subject is books, it is not just money we are talking about. We are also talking about sustaining the vitality of our culture.

Curt Matthews
CEO, IPG/Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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When It Comes to Authors: Part I

Many people believe that in simpler times authors wrote the books, publishers touched up the spelling and punctuation, designed a suitable package, and published them. The truth however is that you can add books to the famous collection of things that you don’t actually want to see being created, along with laws or sausages.

An author’s manuscript is usually just a promising first draft. All sorts of marketing questions need to be asked and answered even before the editing—which is likely to be extensive—begins. Who is the book for? What is this audience really interested in? Are illustrations needed? What is the right tone, the right length, the right price?

Occasionally, the author’s views on these matters are exactly correct; far more frequently the author’s very closeness to the subject prevents him or her from having an objective, balanced assessment of the material and the market for which it is intended. Most manuscripts need to be cut back here, augmented there, lightened up or made more serious, reorganized or restructured—in short, extensively rewritten by the author according to ideas insisted upon by the editor or publisher.

Some authors object to this process, but anyone who has been at publishing awhile knows that it is usually the new and inexperienced authors who believe that every word they have written is sacred. Experienced authors in fact insist on strong editorial guidance; they often follow suit when their strong editors switch publishing companies.

Independent presses, of course, often publish new authors and have to contend with their inexperience. The time to explain that every word is not sacred, and that extensive revisions will probably be needed, comes before the author/publisher agreement is signed. If the author is uncooperative during this initial phase, find another author.

Perhaps this advice sounds harsh, but consider the likely consequences of going forward with an uncooperative author. A book that is wrong for its market will not sell well. And if you as the publisher or your editor is forced to rewrite the book, you will have so much time tied up in the book that it will almost certainly be a financial failure even if it does sell quite well.

But what if you have signed up an author and despite your best precautions find you have a prima donna on your hands, or else an author who is simply incapable of responding to editorial direction?

The only reasonable course in such cases is to insist to an author that, if the book is to be published, either the royalty rate must be reduced to reflect the work that the author cannot or will not perform, or else that the royalty must be shared with a ghost writer of the publisher’s choosing. To earn a full royalty, an author must do a full author’s job.

In the low-margin business of publishing, there isn’t a percent to spare.
To be continued…

Curt Matthews
CEO, IPG/Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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Author Royalties and Discount Creep

This post is a continuation of the previous, where co-op, advertising allowances, free freight, and other examples of discount creep were discussed.

Publishers are now increasingly paying authors a royalty based on net sales rather than a percentage of the list price of copies sold. Can a publisher add co-op fees, advertising allowances, and free freight charges to the discount calculation, thereby reducing the net sales on which the author royalty is based? There are thousands of Author/Publisher agreements still in force that simply do not address this issue, just as there are thousands of agreements that are silent on the question of who controls the eBook rights.

That is the easy problem. Here is the hard one: If the royalty is based on list price, it would seem to be the case that the author’s take would not be affected by any of the semantic gymnastics I have described. However, almost all list-price Author/Publisher agreements stipulate that if a book is sold at a discount greater than 50%, the royalty will be based on the amount billed rather than the list price. In other words, a list-price agreement mutates into a net royalty agreement when the discount exceeds 50%. Shipments to chain store distribution centers and wholesalers usually earn a 50% discount to start with. Does co-op, or an advertising charge, or free freight, boost the discount above 50%? If so, the author’s royalty is cut at least in half.

Likewise, for distributors the new practices I have described disrupt fundamental business relationships. Distributors for the most part receive a percentage of their client publishers’ net sales, i.e. a percentage of gross sales minus returns; and usually all, or most, of any co-op fees, advertising charges, or free freight allowances are passed through to the publishers. In the days when co-op and advertising charges actually bought a marketing benefit, passing the cost through to the publishers made sense. Similarly, free freight when it applied only to small customers (who just were not going to bring in books if they had to pay the freight) could arguably be passed through to publishers. But free freight for huge customers?

If what we are talking about here is just a power grab for more margin, publishers and distributors and even authors are going to have to resist. There is just no point in running a business for the sake of making your trading partners rich; and there is even less point in squeezing your small customers so that a big one can become so powerful it can completely disregard your business interests.

Curt Matthews
CEO, IPG and Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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