UNTIL NOW, I WAS THE RIFFRAFF: WHAT IT MEANS TO WIN THE ILA

Tawni Waters accepting the International Literacy Association YA Award for Beauty of the Broken

Below is an essay my client, Tawni Waters, wrote on receiving the International Literacy Association Award for the best debut YA novel. I always thought that Tawni was the most heart wrenching novelist writing today. It turns out that she is also the funniest. Read it and laugh.

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I am sitting next to Meg Cabot eating chicken.  The conversation is going well.  I’m totally playing it cool, like I have no idea she’s a bestselling author.  I even get a little piece of parsley stuck between my teeth, you know,  to solidify my “we are just two regular chicks chatting over chicken” routine.  She says something about her books, and I say, “Oh, are you a writer?”

She smiles graciously.  “Yes, I am.”

“Cool, what do you write about?” I ask, throwing back a swig of tea.

“Oh, princesses,” she says.

“That’s awesome,” I say without missing a beat.  “Are they published?”

“Yes,” she says.

“I should totally look those up,” I say and move on to my potatoes.

I could chock my wonderful performance up to the fact that I’m a trained actress, but that would be dishonest.  My spot-on “I don’t know you are rich and famous” performance actually comes from the fact that I don’t know she is rich and famous.  I guess I should have put two-and-two together.  A man in a tuxedo led me to this reserved table at the front of the banquet hall.  I am here to receive the ILA Book Award for Young Adult Fiction, and Meg Cabot is scheduled to speak at the luncheon.  So when this beautiful, poised, funny woman sitting beside me introduced herself to me as Meg, I should have said, ‘A-ha! This is Meg Cabot, writer of the gazillion-dollar earning Princess Diaries.” But I didn’t.  I didn’t because this whole weekend has been overwhelmingly hard-to-believe, so I seem to be coping by subconsciously deciding not to believe it.  I feel like Dorothy transported to Oz, muttering, “We’re not in Kansas anymore, Toto,” ad nauseam.  I think I may be suffering from mild shock.

It all started when I arrived at the Four Seasons in St. Louis after a two day road trip from Minneapolis.  My publisher, Simon & Schuster, had offered to fly me in for the event, but I wanted to bring my friend Polyxeni, you know, for moral support, so I wouldn’t make an idiot of myself in front of Meg Cabot or anything.  Polyxeni is a book buyer for the St. Paul Library System, and from the minute I found out I won the ILA, she told me it was a big deal.  A huge deal.  A life-changing deal.  So did Simon & Schuster. So did my agent, Andy Ross.  I didn’t believe any of them.

“Last year’s winner was Rainbow Rowell,” Polyxeni said slowly over coffee, as if talking to a brain-damaged child.  “Do you get that?  Rainbow Rowell?”

I nodded.  Sure, I knew who Rainbow Rowell was.  Who didn’t?  What did that have to do with me?

“Her book is being made into a Pixar movie now!  This award changes the career trajectory of everyone who wins it!”  Polyxeni enthused.

I wondered why she was being so pushy.  And why was she using big words like “trajectory”?  Did she think I was a scientist or something?  Show off.  Suffice it to say, out of self-preservation, I decided to miss the point.  I think it was because I had been a struggling artist for so many decades, the thought of all that changing seemed impossible to me.  I didn’t want to get my hopes up only to find them dashed.  It was easier not to believe.

We arrived in St. Louis looking just about like people who have been driving and eating Pringles for two days should look, which is to say, dead shmexy.  I knew Simon & Schuster was going to be putting me up at the Four Seasons, but I didn’t know what that meant.  I guessed Four Seasons was sort of like Holiday Inn—nice, clean, probably no roaches in the showers.   When we walked through the doors, I thought four things:

1. Now I know what the phrase “smells like money” means.
2. Maybe I should have put on a fresh T-shirt, one without the Jaws emblem.
3. Is everything here made out of actual marble, or is that pen faux marble?
4. I hope that mini-van-sized chandelier doesn’t fall on my head.

After checking in, Polyxeni and I stepped onto the elevator.  “Why do you have to put your key in?” she whispered.

“To keep the riffraff out,” I said.  “Which is weird, because until now, I was the riffraff.”

We laughed and rode the elevator to the 15th floor where a beautiful woman was waiting for us with our luggage (a very stained polka-dotted roll-along and an army green duffel bag, respectively).  She showed us around our room, making sure to point out the television hidden in the bathroom mirror, just in case we wanted to watch Seinfeld reruns while we were freshening up, after which she offered to bring up bath salts and bubble bath, should we decide to take advantage of the amenities.  She pointed at the marble encased tub, as if we could miss it.  The bathtub was roughly the size of the Aegean Sea.  I suddenly understood why rich people so often drowned in their bathtubs.  I asked Polyxeni if she had brought our life jackets.  She hadn’t.  We decided to take our chances with the drowning and said yes to the bath salts.

After the woman left, Polyxeni and I glanced around our room in awe, commenting on the St. Louis arch glinting in the sun just outside our window.  Then we flopped on the giant bed at its center.

“It feels like a cloud!” Polyxeni giggled.  She was right.  It did.  I was pretty sure we’d been transported to heaven.  We bumbled around for a bit, smelling shampoos and tasting pillow mints and acting like a scene from The Beverly Hillbillies.

That night, Polyxeni and I went to the hotel restaurant for a celebratory dinner.  Our waiter was a lovely girl.  She seemed to know who I was.  As she poured my champagne, she called me Ms. Waters with a sort of reverence I am not used to.  Sometimes, my community college students would say my name that way at the end of a semester, when they deserved an F and wanted a C.  But this felt sincere.  During the course of dinner, every waiter in the restaurant came to meet me.  They brought me a little dessert plate that had “congratulations” written on it in chocolate.  Polyxeni assured me that she hadn’t told them about my award.  That’s when I started to think that maybe, just maybe, Polyxeni and Simon & Schuster and my agent hadn’t been lying when they said this award was a big deal.

The next day’s events were even more surreal.  I had a signing at one.  Rewind with me for a minute: Beauty of the Broken was released almost a year ago.  I have pretty much been on book tour since then.  I am not new to signings.  I have signed books all over the USA, in coffee shops and bookstores and libraries and schools.  What I have learned about book signings is that they are very unpredictable things.  Sometimes, 50 people show up (if you are signing in your hometown).  Sometimes, two people show up, and you take them out for wine and Chinese food because you are embarrassed they bothered to show up when no one else did.  So I warned Polyxeni at lunch.  “Don’t expect much from the signing.  I’m not sure people will show up.”

“Oh, they’ll show up. Trust me,” she said.  Poor Polyxeni.  She just didn’t understand the nuances of the publishing business.

Or maybe she did.  The second I sat down to sign, a line formed.  A long line.  It stretched out of sight.  People gushed as I signed their books.

“You’re my daughter’s favorite author.  I can’t believe I get to meet you!”

“Make it out to my wife!  She’s your biggest fan!”

“Can I get a picture with you?”

I handled all of this with the grace and dignity of a seasoned author, which is to say, I didn’t throw up on anyone.  After 20 minutes, we had to end the signing, not because the line had dwindled, but because we ran out of books.  I don’t know how many books we had to start with, but I can tell you we had bunches.  Bunches and bunches.  I walked away dazed.  Again, it occurred to me that this award might actually mean something.  Could it be that my career was really going to change?

That night, Simon & Schuster hosted a “family dinner,” which meant that they brought a handful of really cool marketing people and authors together in a posh restaurant and fed them amazing food.  (Full disclosure:  I had never been invited to a Simon & Schuster family dinner before.)  It was beautiful.  I ordered steak and three glasses of champagne because I could.  (I noticed another author ordered four neat whiskeys, so I figured I was ok.)  After we were well into the main course, Candice, the extraordinary library and marketing person who had organized the event, suggested we go around the table and introduce ourselves.  We did.  Everyone said his or her name, the title of his or her latest book, and the name of his or her editor.  When my turn came, I said just those things.  Candice looked at me expectantly.  “Don’t you have something else to tell them?” she asked.  What was she talking about?  I looked at her blankly.

“Your award?” she prodded.  “I think we can tell them even though it’s a secret.  No one will say anything.”

My award?  It was a big enough deal that I could say it to this room full of important people and expect them to be impressed?  “Well, Beauty of the Broken won the ILA Book Award for Young Adult Literature,”  I said, feeling almost sheepish, expecting everyone to nod politely and go back to nibbling cheeses.  I probably will never forget that moment as long as I live.  The expressions on the faces at the table changed.  They were impressed.  Amazed even.  Everyone clapped and congratulated me.

“Thank you,” I said, learning to love the attention.

And then, a bunch of naked guys rode by the window on bikes and stole my thunder.  No, I’m not making this up.  There was a nude bike rally in St. Louis that night, and it happened to pass the restaurant where we were eating.  Everyone forgot my award, ran to the window, and started shrieking, “Oh, my god!  Did you see his ______?”  (Sidenote: if you ever want to be cured of the demon of lust, watch a naked bike rally.)  Which made me go, “Ok, now I get it!  This is a dream!”  But it wasn’t a dream.  I don’t think.  Maybe it is.  Maybe I just haven’t woken up yet.

The next day, I accepted my award shortly after I realized who Meg Cabot was.  “Oh, my god!  You’re that Meg!”  I said, looking at the giant screen behind us, onto which was projected a God-sized picture of Meg, along with photos of her zillion best selling novels.

“Yes,” she laughed.

“I’m so sorry,” I said.  “I feel so dumb.”

“Don’t worry,” she said.  “I get tired of that other stuff anyway.”

I don’t know if I will ever be Meg Cabot.  I don’t know if I will ever get enough of this “other stuff” to get tired of it.  Right now, two days after coming home from the ILA Conference, I’m still blown away that any of that “other stuff” is coming my way at all.  Already, people care about Beauty of the Broken in a way they never have.  People I don’t know are Tweeting about me.  I’ve already been asked to speak at a major conference. Facebook, the litmus test of all that is good and likable in this world, tells me that people like me way more than they did two weeks ago.  And this is just the beginning.

After the banquet, I attended a panel where a brilliant professor taught people how to teach Beauty of the Broken in the classroom.  I looked down at the worksheet she handed me, taking in phrases like “feminist critique” and “Marxist analysis” in relation to my characters.  Stay with me here: Those weird little figments of my imagination are now going to be used to torture high school and college students everywhere.  Someday, a few months from now, a year from now, some poor NYU freshman will be popping No-Doz, analyzing the socio-economic implications of Iggy’s quilt.  “Why do you think the author used Iggy’s quilt so often in the text?” some well-meaning teacher will ask, and the student will write an essay about this, a terrible essay, an essay that mixes up “you’re” and “your” and postulates that Iggy’s quilt is a symbol of the various facets of bourgeois oppression in the 21st Century.

And I will be sitting at home saying, “Ha, suckers!  The author used Iggy’s quilt so much because she knew she needed to write a few physical details to help readers visualize the scene, and she was way too hopped up on caffeine to think of anything fresh, so she referenced the dumb blanket again!”

Maybe I shouldn’t write that down.  Maybe I should just pretend I meant all the profound things students will someday say I meant.  Thanks to the ILA, I am a serious writer.  But the transition is hard.

After all, up until now, I was the riffraff.

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The Authors Guild on E-book Royalties

On June 17, we posted a statement by The Authors Guild about their new Fair Contract Initiative, in which they would be clarifying the issues in the typical book contract that are unfair to authors. Today The Authors Guild issued  their first analysis having to do with e-book royalties, which are substantially lower than the royalties on hardbacks, even though the costs of production and distribution of e-books is substantially lower. It’s worth reading. Here is the text in its entirety.

We announced our Fair Contract Initiative earlier this summer. Now our first detailed analysis tackles today’s inadequate e-book royalties. At the heart of our concern with the unfair industry-standard e-book royalty rate is its failure to treat authors as full partners in the publishing enterprise. This will be a resounding theme in our initiative; it’s what’s wrong with many of the one-sided “standard” clauses we’ll be examining in future installments.

Traditionally, the author-publisher partnership was an equal one. Authors earned around 50% of their books’ profits. That equal split is reflected in the traditional hardcover royalty of 15% of list (cover price, that is, not the much lower wholesale price), and in the 50-50 split of publishers’ earnings from selling paperback, book club, or reprint rights. Authors generally received an even larger share than the publisher for non-print rights (such as stage and screen rights) and foreign rights.

But today’s standard contracts give authors just 25% of the publisher’s “net receipts” (more or less what the publisher collects from a book sale) for e-book royalties. That doesn’t look like a partnership to us.

We maintain that a 50-50 split in e-book profits is fair because the traditional author-publisher relationship is essentially a joint venture. The author writes the book, and by any fair measure the author’s efforts represent most of the labor invested and most of the resulting value. The publisher, like a venture capitalist, invests in the author’s work by paying an advance so the author can make ends meet while the book gets finished. Generally, the publisher also provides editing, marketing, packaging, and distribution services. In return for fronting the financial risk and providing these services, the publisher gets to share in the book’s profits. Not a bad deal. This worked well enough throughout much of the twentieth century: publishers prospered and authors had a decent shot at earning a living.

How the e-book rate evolved

From the mid-1990s, when e-book provisions regularly began appearing in contracts, until around 2004, e-royalties varied wildly. Many of the e-rates at major publishing houses were shockingly low—less than 10% of net receipts—and some were at 50%. Some standard contracts left them open to negotiation. As the years passed, and especially between 2000 and 2004, many publishers paid authors 50% of their net receipts from e-book sales, in keeping with the idea that authors and publishers were equal partners in the book business.

In 2004, we saw a hint of things to come. Random House, which had previously paid 50% of its revenues for e-book sales, anticipated the coming boom in e-book sales and cut its e-rates significantly. Other publishers followed, and gradually e-royalties began to coalesce around 25%. By 2010 it was clear that publishers had successfully tipped the scales on the longstanding partnership between author and publisher to achieve a 75-25 balance in their favor.
   

The lowball e-royalty was inequitable, but initially it didn’t have much effect on authors’ bottom lines. As late as 2009, e-books accounted for a paltry 3–5% of book sales. Authors and agents ought to have pushed back, but with e-book sales so low it didn’t make much sense to risk the chance of any individual book deal falling apart over e-royalties. We called the 25% rate a “low-water mark.” We said, “Once the digital market gets large enough, authors with strong sales records won’t put up with this: they’ll go where they’ll once again be paid as full partners in the exploitation of their creative work.”

E-books now represent 25–30% of all adult trade book sales, but for the vast majority of authors the rate remains unchanged. If anything, publishers have dug in their heels. Why? There’s a contractual roadblock, for one: major book publishers have agreed to include “most favored nation” clauses in thousands of existing contracts. These clauses require automatic adjustment or renegotiation of e-book royalties if the publisher changes its standard royalty rate, giving publishers a strong incentive to maintain the status quo. And the increasing consolidation of the book industry has drastically reduced competition among publishers, allowing them more than ever to hand authors “take it or leave it” deals in the expectation that the author won’t find a better offer.

The elephant in the room

And then there’s the elephant in the room: Amazon, which has used its e-book dominance to demand steep discounts from publishers and drive down the price of frontlist e-books, even selling them at a loss. As a result, there’s simply not as much e-book revenue to split as there was in 2011when we reported on the e-book royalty math. At that time, publishers made a killing on frontlist e-book sales as compared to frontlist hardcover sales—at the author’s expense—because, as compared to today, the price of e-books was relatively high.

When we analyzed e-royalties for three books in the 2011 post, “E-Book Royalty Math: The House Always Wins,” we found that every time an e-book was sold in place of a hardcover, the author’s take decreased substantially, while the publisher’s take increased.

Since 2011, we have found that publishers’ e-gains have diminished. But the author’s share has fallen even farther. Amazon has squeezed the publishers, to be sure. The publishers have helped recoup their losses by passing them on to their authors.

These were our calculations for several books in 2011. The trend was obvious. Compared with hardcovers, each e-book sold brought big gains to the publisher and sizable losses to the author when the author’s royalties are compared to the publisher’s gross profit (income per copy minus expenses per copy), calculated using industry-standard contract terms:

Author’s Royalty vs. Publisher’s Profit, 2011

The Help, by Kathryn Stockett

Author’s Standard Royalty: $3.75 hardcover; $2.28 e-book.

Author’s E-Loss = -39%

Publisher’s Margin: $4.75 hardcover; $6.32 e-book.

Publisher’s E-Gain = +33%

Hell’s Corner, by David Baldacci

Author’s Standard Royalty: $4.20 hardcover; $2.63 e-book.

Author’s E-Loss = -37%

Publisher’s Margin: $5.80 hardcover; $7.37 e-book.

Publisher’s E-Gain = +27%

Unbroken, by Laura Hillenbrand

Author’s Standard Royalty: $4.05 hardcover; $3.38 e-book.

Author’s E-Loss = -17%

Publisher’s Margin: $5.45 hardcover; $9.62 e-book.

Publisher’s E-Gain = +77%

What’s happening now? We ran the numbers again using the following recent bestsellers. Because of lower e-book prices, the publishers don’t do as well as they used to, though they still come out ahead when consumers choose e-books over hardcovers. But authors fare worse than ever:

Author’s Royalty vs. Publisher’s Profit, 2015

All the Light We Cannot See, by Anthony Doer

Author’s Standard Royalty: $4.04 hardcover; $2.09 e-book.

Author’s E-Loss= -48%

Publisher’s Margin: $5.44 hardcover; $5.80 e-book.

Publisher’s E-Gain: +7%

Being Mortal, by Atul Gawande

Author’s Standard Royalty: $3.90 hardcover; $1.92 e-book.

Author’s E-Loss= -51%

Publisher’s Margin: $5.10 hardcover; $5.27 e-book.

Publisher’s E-Gain: +3.5%

A Spool of Blue Thread, by Anne Tyler

Author’s Standard Royalty: $3.89; $1.92 e-book.

Author’s E-Loss: -51%

Publisher’s Margin: $5.09 hardcover; $5.27 e-book.

Publisher’s E-Gain: +3.5%[1]

Exceptions to the rule

It’s time for a change. If the publishers won’t correct this imbalance on their own, it will take a critical mass of authors and agents willing to fight for a fair 50% e-book royalty. We hope that established authors and, particularly, bestselling authors will start to push back and stand up to publishers on the royalty rate—on behalf of all authors, as well as themselves.

There have been cracks in some publishers’ façades. Some bestselling authors have managed to obtain a 50% e-book split, though they’re asked to sign non-disclosure agreements to keep these terms secret. We’ve also heard of authors with strong sales histories negotiating 50-50 royalty splits in exchange for foregoing an advance or getting a lower advance; or where the 50% rate kicks in only after a certain threshold level of sales. For instance, a major romance publishing house has offered 50% royalties, but only after the first 10,000 electronic copies—a high bar to clear in the current digital climate. But overall, publishers’ apparent inflexibility on their standard e-book royalty demonstrates their unwillingness to change it.

We know and respect the fact that publishers—especially in this era of media consolidation—need to meet their bottom lines. But if professional authors are going to continue to produce the sort of work publishing houses are willing to stake their reputations on, those authors need a fair share of the profits from their art and labor. In a time when electronic books provide an increasing share of revenues at significantly lower production and distribution costs, publishers’ e-book royalty practices need to change.

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[1] In calculating these numbers and percentages for hardcover editions, we made the following assumptions: (1) the publisher sells at an average 50% discount to the wholesaler or retailer, (2) the royalty rate is 15% of list price (as it is for most hardcover books, after 10,000 units are sold), (3) the average marginal cost to manufacture the book and get it to the store is $3, and (4) the return rate is 25% (a handy number—if one of four books produced is returned, then the $3 marginal cost of producing the book is spread over three other books, giving us a return cost of $1 per book). We also rounded up retail list price a few pennies to give us easy figures to work with.

Likewise, in calculating these numbers and percentages for the 2015 set of e-books, we are assuming that under the agency model—which is reportedly the new standard in the Big Five’s agreements with Amazon—the online bookseller pays 70% of the retail list price of the e-book to the publisher. The bookseller, acting as the publisher’s agent, sells the e-book at the price established by the publisher. The unit costs to the publisher are simply the author’s royalty and the encryption and transmission fees, for which we deduct a generous 50 cents per unit.