While John is mostly right (especially about Random House's new Hydra/Alibi/Loveswept/Flirt "profit share" endeavor being exploitative) I thought he was perhaps a bit unfair to the royalty-only model, and I thought I might supply a counterpoint to his criticism, and also a bit of context about how the royalty-only model rose to prominence in the digital book sphere.
The royalty-only model is, as mentioned by John, not a new model, but its rise in the digital book world is not surprising, nor should its adoption by the larger publishers for the purposes of creating their own low-overhead imprints be necessarily surprising either. The model was born out of desperation by upstart e-publishers who didn't have the initial capital to pay out advances. Even before the rise in popularity of self-publishing, they needed an arrow in their quiver to convince authors to write for them, rather than focus their efforts elsewhere. That arrow was a higher than average royalty, and in some circumstances flexibility on the rights retained by the author.
The benefits to the publisher of such a model are fairly obvious: by not having to pay advances, they had more money to invest in expanding their business, and greater discretion to acquire works. By not having to worry about recouping an advance and by having limited production costs, not only could these small upstarts publish with greater frequency, but they could also experiment with more niche works and sub-genres, and find readerships that were previously not serviced by the larger publishers.
If you need an example of one such publisher, consider our agency's other client Ellora's Cave Publishing. They began in early 2000 as an upstart by a romance and erotica author named Tina Engler (you may know her by her pseudonym Jaid Black) who found that her steamier material was too hot for mainstream publication and decided to begin offering her and her friends' erotic tales online. The transactions used to be handled over PayPal, and the books delivered via email as PDF files. Now they are a multi-million dollar operation with over 800 authors, a backlist of over 4,000 titles, and they have launched the careers of several best-selling authors including Lora Leigh, Shiloh Walker, and Sylvia Day.
Now that's all well and good for Ellora's Cave, and other such royalty-only e-book publishers, but what about the authors? Well the redounding benefits to the authors are that now there is a market for erotic romance, where none used to exist. In 2000, good erotica was hard to find, now its ubiquity has spawned several competitors to Ellora's Cave, as well as paved the way for mainstream successes such as 50 Shades of Grey.
In 2000 there was no one willing to publish an author's male-male paranormal romance novel, now an author can choose between several different publishers, including an imprint of the largest romance publisher in the world. Next year Ellora's Cave authors will pioneer several new sub-genres (ever wonder what a vampire steampunk menage-a-trois might be like?) and a handful of their authors will grace the New York Times e-book best-seller list while doing so.
In 2000 there was no one willing to publish an author's male-male paranormal romance novel, now an author can choose between several different publishers, including an imprint of the largest romance publisher in the world. Next year Ellora's Cave authors will pioneer several new sub-genres (ever wonder what a vampire steampunk menage-a-trois might be like?) and a handful of their authors will grace the New York Times e-book best-seller list while doing so.
It's hard to say that Ellora's Cave's authors are exploited by their royalty only agreements because they receive no advances. Authors receive a substantial share of their book's take, and the back-end compensation is not as big a burden because the lead time between delivery of the manuscript and publication is short, and royalties are paid monthly or quarterly. Certainly there have been a few authors whose experience with Ellora's Cave didn't live up to their expectations of what publication should be, but when considering the alternative (no publication at all) it hardly seems fair to begrudge Ellora's Cave their business model.
Arguably, it was the rise of Ellora's Cave (and other notables like Samhain Publishing) that caused publishers like Harlequin to experiment with their Carina Press imprint (headed by former Samhain and Quartet editor Angela James), and Carina Press that started the domino effect at the other publishers to capture the same lighting in a bottle. Overall I don't believe this trend is harmful. In fact the opposite is probably true. Publishers throwing their weight behind royalty-only digital-only imprints means gaining additional opportunities for authors to reach readers with partners that offer a bit more stability than a fly-by-night digital startup can offer.
While I'm not running to go get all my clients digital-only royalty-only deals (I would prefer an advance against royalties and a print component as, I'm sure, would most of my clients) a royalty-only ebook deal is better than no deal at all, and it presents a viable alternative to self-publishing for authors who don't have the knack for it.
Not every book is mainstream enough to warrant a substantial investment by a publisher (just like erotica was thought to be unpublishable in 2000) but that doesn't mean there's no readership for that book. A publisher's knowledge of the market (or potential markets) is not absolute, and because they can't afford to take as many risks when it comes to offering an advance they often don't. That's not to say publishers don't take risks, they do, but the business of publishing is more art than science. Whole sub-genres can get written-off because a publisher's first trial with that particular sub-genre was a flop. Taking a flyer on some weird book by a new author is hard to justify when you've got to put up tens of thousands of dollars for the privilege.
Royalty-only e-book publication offers a viable alternative for success in the instance that a mainstream publisher deems a book too big a risk to publish through traditional means. I am happy to see that the big publishers are each sporting new digital-first/digital-only imprints (some of which, like Berkley's Intermix and S&S's Pocket Star, do pay nominal advances, though smaller royalties) and I think creating more opportunities for up-and-coming authors to get published should be encouraged, even if that means giving up an advance in lieu of back-end compensation.
That being said, John is right to be wary of the big publisher's foray into this realm. In the absence of advances, royalties should be higher than average, and authors should never be on the hook for expenses related to publication. Nor should authors tacitly accept less than favorable terms, just because their book is being sold digitally. There is always room to negotiate, and authors, agents, and writer's groups have a responsibility to insist on fair compensation. (update: it turns out such insistence works)
The point of these digital-only/digital-first imprints should not be to lure noobs into exploitative arrangements but to use the flexibility afforded by the low overhead to explore new vistas of genre and style and to discover and cultivate readerships that can blossom into new enterprises that will benefit authors, publishers, and readers alike.
The point of these digital-only/digital-first imprints should not be to lure noobs into exploitative arrangements but to use the flexibility afforded by the low overhead to explore new vistas of genre and style and to discover and cultivate readerships that can blossom into new enterprises that will benefit authors, publishers, and readers alike.
Great article and I agree with your position. I am a newly published author and have signed two contracts with e-publishers (with later print options) in the last six months. These contracts are basically similar to what you describe above. I am happy with them because as a newbie writer I had ZERO interest in trying and trying to break into the traditional publishing houses and waiting for months for any sort of response. I signed with two different companies in order to compare how each handles my work so I can submit my third novel to the best one for me and my work. I might even sign with a third publisher, if I like what they are doing.
ReplyDeleteEvan,
ReplyDeleteJumping onto your blog from John's.
Am I incorrect to feel that the rights issues (viewed as predatory) is what pushed this from being just about compensation models to being about one party taking advantage of another?
Would you be willing to expand and explain how you see royalty only model publishers such as Ellora's Cave (whom I assume you would be willing to do business with on your client's behalf) versus Hydra have handled the right's aspect of this?
What's your opinion about asking authors to pay for layout and marketing costs for a royalty-only digital-only publication?
ReplyDeleteJason,
ReplyDeleteWell Ellora's Cave standard agreement does take a whole host of subsidiary rights (many of which our agency sells on their behalf), but that's not necessarily opposed to the author's interests. Most Ellora's Cave authors don't have representation, so hanging on to translation rights, for example isn't going to benefit them much without a means of selling them. Print rights are also typically granted, because a publisher shouldn't have to abide by competing editions, and because Ellora's Cave does produce some print editions. They are, however, flexible when it comes to rights arrangements depending on the project and the demands of the author.
The rights issues with Hydra, however, were not as serious as the expenses. You can't deduct publishing expenses that are traditional born by the publisher from the author's royalties. That's what the publishers percentage is for. Where this becomes exploitative. A publisher can't claim complete control over a whole host of rights, and then charge back expenses associated with publishing to the author when it decides to utilize those rights. So for example, say you were selling a fair number of e-books and you were expecting a big royalty payment, but Hydra decided they wanted to do a 10,000 paperback print run which you didn't want. Hydra could deduct the expenses related to that print run from your e-book royalties, and do that print run anyway. If the print run flopped, then its cost would be shouldered by you, meanwhile the Hydra gets to hang on to your e-book profits. That's bad news.
David Wilson, I would say this sentence addresses that: "authors should never be on the hook for expenses related to publication..." I can see the royalty-only model working if the publisher is not charging the author for editing, cover design, advertising, etc. I think it was Hydra dumping all that on the author that set up the red flags as much as anything else, not to mention the way they wanted to keep all rights.
ReplyDeletePublishers should pay for the expense of publishing, otherwise they're not being publishers, they're offering publishing services.
ReplyDeleteI think this is a very fair assessment, but I'd have altered one bit:
ReplyDelete"While I'm not running to go get all my clients digital-only royalty-only deals (I would prefer an advance against royalties and a print component as, I'm sure, would most of my clients) a royalty-only ebook deal is better than no deal at all, and it presents a viable alternative to self-publishing for authors who don't have the knack for it."
I think "may well be better than no deal at all" is probably more accurate; the lesson I learned in my years in sales was that the deal you're unwilling to walk away from is the deal where you're getting the less favorable terms. And since most deals don't HAVE to happen at that moment you may well be better off waiting, or turning your approach on its ear.
Which is why I think "presents a viable alternative to self-publishing" is contingent on it actually being DIFFERENT than self-publishing. The thing that made those Hydra contracts so awful was that they had all the drawbacks of self-publishing combined with all the drawbacks of a contract and adding nothing other than some more drawbacks. Asking someone to keep all the same drawbacks and hand over control and ownership and a big share of the profits isn't an alternative, it's a mugging.
Thank you. As someone working in small press, where we just don't have the money (right now) to offer advances, but are trying to offer quality editions (print & e) including editing, covers, book design, etc., and are offering higher royalties--I wasn't sure how to speak up and say this. Not everyone has the resources of Random House . . .
ReplyDeleteGreat points all around. I know you're a champion of Weird Books, and having been a writer of some Weird Books in my life, I'll happily do what it takes to see an environment where such things can flourish. I concur -- the slimiest part of the Hydra et. al. situation was the "expenses" being charged on top of the publisher's cut. That's the publisher getting paid twice and shifting risk away.
ReplyDeleteGreat post. You do a really good job of explaining the topic and it is much appreciated by those of us choosing to go this route.
ReplyDelete"...not only could these small upstarts publish with greater frequency, but they could also experiment with more niche works and sub-genres"
ReplyDeleteThis is why I am so happy with the small press I've been publishing with. I get a 40% royalty rate and my niche fiction has a readership. With what I write about, I'm never going to be a NYTB author, but I get a fair chunk of a modest pie.
I think Scalzi's argument makes sense for authors of mainstream fiction who have mega potential and drive. It would be a shame to see someone like that flounder in a bad deal where thousands of copies of their books are selling and they're getting peanuts for it.
Since that's not me, at least right now. I'm SO glad I don't have to do ALL the work to get my books out there as a self-published author, which would be my only alternative without the opportunity of small presses. I'm truly happy to pay my publisher 60% to take all the risk and turn my manuscripts into beautiful, sellable products at no risk to me and with my rights back after an agreed upon time. There are authors out there for whom small press is a win-win.
So no advance...no problem, as long as you know who you are and do due diligence in reading your contract before signing.
I honestly don't think you and Scalzi are that far apart, Mr. Gregory - you both feel the Hydra/Alibi/Loveswept/Flirt "partnership" is highly exploitative, and assigns almost all the risk to the author and none (or at best very little) to these Random House eBook-original imprints. You two's major sticking point, advances, is I think more in the category of "As a general rule", because Scalzi has admitted he'll take a writing gig he doesn't get an advance on if the other terms are good enough to justify it.
ReplyDeleteI'm not automatically against the no advance model - on paper at least. I would much rather a more equitable royalty rate than money up front. However, there's one major problem with this approach.
ReplyDeleteThe advance is a sign of how much the publisher is going to back the book. It's their skin in the game. Without it, their investment is (or could be) minimal, and much easier to write off if there are any bumps on the road to publication, or if the launch is underwhelming (for whatever reason).
Yes a publisher with a lot of money on the line certainly will scramble to ensure that they don't waste it, but an advance can be a blessing and a curse. Sometimes it's the thing that puts you over, other times it can be an albatross around your neck. If a book has a big advance and big expectations, and it doesn't end up living up to those expectations, it can be harmful for an author's (and an editor's) career.
DeleteThat being said, I believe there's a way to minimize overhead while still offering advances, and that is through low introductory royalties with reasonable escalators. Right now it's an either/or proposition when it could be an also/and proposition. Right now it's either you take a nominal advance and a low royalty, or you eschew the advance for a high royalty. I'd like to see nominal advances for digital only deals (in the ballpark of $1,000 to $10,000) with an introductory royalty of 25% with escalators every few thousand copies up to 50%. That way the publisher has some skin in the game, and they don't profit disproportionately on the back-end. In e-book sales after a certain point the ratio of publishers expenses as compared to income shrinks to next to zero, and they shouldn't be taking 75% of the pie for doing nothing. Likewise, it would be nice if the publisher shared some of the risk with the author through an advance of some sort.
Thank you for the alternate view, and the update about the Hydra Hassle (sounds like a bad dance move, doesn't it?). As a multi-published eBook author, I can say that the royalty-only model has been profitable for me in many ways. One benefit of not going with the traditional route is having books release more quickly. A friend of mine finished her first book the same time I finished mine. By the time hers came out three years later, I'd released four eBooks and had a fifth in the pipeline. Meanwhile, I have several more in the works, and she's still waiting to hear about book two. The wait doesn't bother her, but she's 20 years younger. I have stories to tell and the feeling of running out of time to tell them. This system works for me. Thanks for explaining it so well to others.
ReplyDeleteWell said. Its nice to hear someone from the industry (other than us authors who publish with companies that don't offer advances) point out that the practice isn't automatically terrible. I wrote much the same thing as is written here on my blog following John Scalzi's very brusque rant against any publisher that doesn't offer an advance. My experience has been satisfactory with one.
ReplyDeleteExcellent judgement distinctions between different issues. My biggest sticking point with what was described in the Random House deal is rights in perpetuity, which still hasn't been appropriately changed. I also found it fascinating that it was described as a "profit-share" when the author was being assigned the majority of costs. That's not profit-share at all.
ReplyDeleteA term-of-copyright deal is standard. It doesn't mean they own the copyright, or even that they can keep rights in perpetuity. All it means is that if the book continues to sell, they continue to be its exclusive publisher for as long as the copyright exists. Most books don't ever stay with a publisher for the entire term-of-copyright. Sales tend to go on a bell curve, and after a while the book drops out of memory, and out-of-print (in the case of digital books it drops below a certain threshold, in Random House's contracts I believe that threshold was 300 units per year) and after that you can revert rights.
DeleteI think your examples show a specific circumstance -- someone writing a genre that is not mainstream. If a writer wants to do something different, sure they should be willing to not have a publisher bet the ranch on it. But someone writing for a mainstream genre should have a publisher backing them and willing to (as John put it) have some skin in the game by paying an advance.
ReplyDeleteWell if you have a really commercial novel you should try your hand at getting a traditional publishing deal, but if that doesn't work out, an e-only press can be a viable alternative where no alternatives used to exist.
DeleteThanks for presenting another side to this issue that is, despite Mr. Scalzi's insistence to the contrary, not all black-and-white.
ReplyDeleteJason Aydelotte
Executive Director
Grey Gecko Press
I got my start at Ellora's Cave, so I'm definitely a believer in how good the royalty only model can be. Here's the huge downside to advances from print publishers, they want to tie their ebook prices to their print prices and authors have zero control over what this number is set at. If you release as mass market, the ebook price isn't so bad and not so high as to deter a reader from giving an unknown-to-them-author a chance, even though there are more and more really terrific books selling at $2.99 and $3.99. But release in trade, and the ebook price can be anywhere from $9.99 to $12.99. Unless you're a big name author, those prices are sale stoppers. Some of the big publishers are "getting it", that selling cheaper equals selling more, and that participating in a Kindle daily deal can do wonders for getting an author "discovered" but before I'd hand over e-rights again to a big publisher, I'd want to make sure they weren't going to kill the chance of gaining a broader audience with their pricing model.
ReplyDeleteJory Strong
Jory,
DeleteE-book pricing can be tricky when there's a print component involved. It's all about striking the right balance between two different, but related markets. Drop the price too low on the e-book edition, and you can hurt the print edition. Not even necessarily because e-book sales are cannibalizing print sales, but because price competition between the bookstores and the e-book stores can cause the prices of the print books to plummet, and selling at high discounts can eat into your royalty share. Certain books can benefit greatly from a traditional deal. The majority of readers still read exclusively print books, and if you can capture a significant share of that market, and the e-book market then you can stand to make a lot of money. Print deals are also not necessarily bad for new or debut authors, considering most book consumers report that they discover more new books by browsing in bookstores than by any other means. The publishers, in addition, are crafting strategies to bring some pricing parity by publishing books they know may capture a significant share of the e-book market as cheap paperbacks first (rather than as trade paperbacks or hardcovers). Del Rey's recent success with Kevin Hearne is one such example of a publisher going big with a low-priced paperback first, and reaping a windfall both in the bookstores and online.
I just found this post, and wanted to add that I have worked with digital only publishers without royalties and digital only publishers that paid me royalties and frankly I prefer the royalty bases system.
ReplyDelete"based" :)
ReplyDeleteAs a former Ellora's Cave author, I can point out a problem for the royalty only system. In their contract, they specify that the author is responsibly for promotion, and besides flooding certain over-booked bloggers with all their titles for possible review, they did nothing more than put my work up on the ebook retailers without any marketing backing. I can do that much as an indie author, which I have done. They are getting a share of the profits from my work for nothing more than the questionable editing and the stock photo they plopped on the cover. All things I have been able to find better quality on my own with little effort.
ReplyDeleteEllora's Cave has also managed to get a bad reputation for their contracts and rights abuses. It takes six months of low sales before they will consider returning your rights, and even when they did, they have still continued to sell some of my titles for an additional 18 months, despite my frequent emails pointing out their violation of my rights and their contract.
While the royalty based system might allow the publishers to add a pile of new books from new writers they might not have taken a chance on otherwise, are they really giving enough return to the author in marketing to justify what indies are giving up? Or are they just dumping tons of titles on the market and letting them sink in the ocean of ebooks, on the off chance something might actually do well on its own?