Publishers aren't as dumb as people think

(Reprinted from guest post at Megalith Books)

Most observers and even some authors believe the major publishing industry has been slow to respond to the electronic-book era. True, the industry is struggling with pricing while trying to protect hardcover sales and has not been especially welcoming of digital books, especially those that compete with their higher-priced versions. But they have not been putting their heads in the sand, either.

Publishing contracts of this century almost universally grant publishers the electronic rights to the content, and those clauses may have seemed innocuous even two years ago, when e-book sales were negligible. The clauses that were afterthoughts returned the electronic rights to the writers when the book went out of print, back when that term was more cut-and-dried.

But, increasingly, the publishers are setting clauses that lock in the license as long as some minimum sales levels are reached. I don't get a lot of contracts these days, but the ones I know about generally have numbers like "If ebook royalties reach $100 in a six-month period, the clause automatically renews." In other words, if some laughable minimum of sales is met, the publisher retains the rights. Possibly forever, if the clause keeps renewing.

That is literally indentured servitude that traps writers over an entire career, at least those unlucky enough to have the moderate success needed to stay trapped by the clause. Ironically, those writers who are most deeply invested in The System are the ones who are going to be in the worst shape in five years, and even worse in 10 or 20, their retirement years, when they will be getting nickels instead of dollars.

You'd think agents and authors would be screaming about this development, but the ones who are most invested in The System are the ones most actively in denial. Look at the agent blogs--most are talking about how challenging the current system is and how lousy the quality of submissions are (when they are not actively making fun of some poor author's query letter), not how their roles may be diminishing, and very few (I've only found one) will admit that the current ebook clauses are suicide. I know agents have fought these battles with publishers, insisting on better e-book terms, but at the end of the day, you just get the most you can right now and take your 15 percent. Any agent who did otherwise would be either looking for job or heralded as a true advocate of the author. In other words, blackballed by New York.

In today's publishing environment, you still need an agent and the agent still needs to get a significant deal. It makes sense for them to do the best they can right now and not worry so much about the long term. Unless the client is a blockbuster, the client likely will not be earning royalties or a lifetime revenue stream anyway.

Even if you are an e-book phenomenon, you will do better if you have shelf presence. Take Boyd Morrison's deal for The Ark, after making a name selling $1.99 e-books. He was signed by a major publisher and now his e-book is $11.99 and he's not making much more per sale than he did back then--and the poor consumer is expected to pay six times the price. By Boyd's own admission, the biggest edits were some minor stuff and the changing of one character's name. Where's all that extra money going and what value was added?

Publishers are great at distributing books and can afford to ship free copies to the numerous book bloggers, who often seem to be reviewing the same book at the same time. That's been the carrot publishers are still holding out while they grip the stick to beat authors over the head. "You're not a real writer and no one will review your books" is still a powerful tool.

If publishers use the carrot to lock down long-time e-book rights, and ebooks become even 20 percent of the market (as is predicted by 2015), then those publishers have just made major bank, and will continue to do so as e-books increase in popularity. I don't see anyone predicting the genie will be shoved back in the bottle and all this new-fangled technology will get boring. After an e-book is published, it is nothing but content, and the publishers will be skimming both the cream and the milk, with little additional work besides dipping the ladle. As the e-book market grows, those publishers who have hoarded the most content will be on Easy Street. Those writers who gave the most away will be in the soup-kitchen lines, or, if they're lucky, they will be the beneficiaries of charity auctions at fan conventions.

Agents are debating whether it's better for the writers to get 15 percent of list or 25 percent of net--well, what about 70 percent of gross? How about that, Mr. Agent and Ms. Publisher? (And, by the way, you can trim 15 percent off that 15 percent, so the writer is getting around 13 percent.) And when e-books reach their natural price range of $1-$5, those writers will be getting a quarter a copy and have no control over anything, while publishers will have an easy, ongoing revenue stream because they essentially own the content (you can call it a "license," but if it's for a rock-bottom e-book floor to keep the clause active, then it will last forever).

Sure, publishers will be happy to return your rights once the content is worthless, meaning your career is dead and every drop has been squeezed from the teat. Of course, agents will get their spillover as long as their names were on the original contracts.

The odd thing is how little the word "author" appears in all this discussion of "The Future of E-books." But, then, most authors went into writing because they were lousy at math. And, I suspect, they like getting beaten with sticks.

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Scott Nicholson is author of 10 novels, including Drummer Boy, The Red Church, The Skull Ring, and They Hunger. He's also written three story collections and six screenplays. He works as a journalist and freelance editor in the Blue Ridge Mountains of North Carolina. His web site is www.hauntedcomputer.com.