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.   

 

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Mary Mackey Talks About E-book Publishing

Mary Mackey is the author of six collections of poetry and thirteen novels, including New York Times and San Francisco Chronicle bestsellers. Her books have been translated into twelve foreign languages and over a million and a half have been sold in hard copy. This spring, nine of her novels and her latest collection of poetry Sugar Zone were simultaneously re-released as Kindle e-books.  By the end of the summer they will be available on Nook, Kobo, iPad, and Android. We are going to talk to Mary today about how she got these books back into print and what her experience has been.

Andy: Nine of your novels and Sugar Zone, your most recent collection of poetry, were recently published as e-books.  How did this happen?

Mary: The short version is that my agent Barbara Lowenstein first negotiated two deals: one with Amazon.com, which publishes Kindle books, and another with Vook, which publishes e-books in the Epub format on all other platforms. She could only do this because she had retained my electronic rights when the books were originally sold to traditional publishing houses. The moral of this story is that every writer needs a great agent to draw up contracts and make deals with publishers.

Andy: How did you get your books into Kindle and other e-book formats? Did you do it yourself?

Mary: No, thank heavens, I didn’t have to. Barbara’s assistants worked with me for several months to get the files ready, and then Amazon did the actual conversion. I had to proofread everything to catch errors and make sure nothing was left out.

Andy: Were most of these books out of print before they were published as e-books?

Mary: Yes, it was a kind of resurrection. Even A Grand Passion, my novel about ballet which made The New York Times bestseller list had been hard to get. But the strangest experience was having my first novel Immersion available again after being out of print for 38 years. Shameless Hussy Press had published about 1000 copies, but very few were still available and those were so expensive I could rarely afford to buy one for myself. Then, bang. Immersion came out as an e-book, and suddenly people who would never have stumbled on it in a bookstore were buying it.

Andy: How are the books selling?

Mary: Very well. They’ve only been available for a short time, but every month at least a third more units have been sold than in the previous month. The first month Amazon sold over 700 copies. This approaches bestseller status for newly released e-books if you don’t count blockbusters like Fifty Shades of Grey.

Andy: I understand that when most authors publish e-books, they only sell a few copies. To what do you attribute your success?  How are people finding your books among the more than a million books available on Kindle and the ten million in other e-book formats?

Mary: We think there are several factors. First, I’m a writer with a well-established readership. I already have a reputation—fans, readers who have enjoyed my work in the past and are interested in anything new I might write. Some of my novels, like A Grand Passion or The Year The Horses Came have a cult following Second, I’m a current writer. I’ve had two novels and a collection of poetry published in the last five years. If people have read The Widow’s War (Berkley Books, 2009), they might search for me by name and find my other books all priced at $2.99, and think: “Why not take a chance? I liked her other books, and if for some reason I don’t like this one, it costs me less than a small Frappuccino at Starbucks.” I mention the price because it’s the third factor and vitally important. To sell a lot of e-books you need to set a price low enough that everyone can afford them.

Andy: How can authors who don’t already have an established literary reputation help readers find their e-books?

Mary: The algorithm that Amazon uses to decide which books to recommend to readers is a secret, but certain things seem to help. For example, my books are highly rated. They’ve been given a lot of stars by people who liked them and been reviewed numerous times, mostly quite favorably. In addition, readers have tagged each novel with words they associate with it. For example, A Grand Passion is tagged with the words “ballet,” “bestseller,” “dance,” “historical fiction,” “Russia,” “romance,” “passion,” etc. Getting good reader tags is important because they guide other readers to your books. Anyone publishing on Kindle should also establish and maintain an Amazon Central Author Page. I say this with guilt because I need to find time to update mine. Other things that help are getting both your name and information about your work out there on the web, getting reviewed, establishing an author presence on Facebook, using Twitter, blogging, and so forth.

Andy: Is there anything else an emerging author can do?

Mary: Yes, be patient. Don’t publish your work as an e-book until it’s polished. Readers enjoy good writing. They like to read books by authors who care about craft and structure and who can create crisp, fast-moving plots and interesting characters.  If you’re self-publishing and can afford it, hire an editor. Great editors are like great agents. They’re invaluable. If your book is really good, sooner or later the word will get out.

EBook Sales Are (no surprise) Up. Internet Book Sales Are (no surprise) Up.

New Statistics have been released by Bowker Pubtrak showing shifts in book sales by Channel and by format. The report compares  the second quarter of 2011  to the same period 2010. Not surprisingly Internet book sales are forging ahead. A lot of it was due to the closing of Borders. But  book sales have been shifting online for some time. And similarly unit sales of ebooks are continuing to increase exponentially.

First let’s take a look at the channels. That’s a fancy word for where books are being sold. As you can see by the chart, e-commerce has increased from 27.6% to 37%. Borders’ closing certainly has a lot to do with this. Even with Borders open,  last year Amazon barely beat out Barnes and Noble for the first time as the largest bookseller. We don’t know whether BN will come roaring back this year. After all, they stand to pick up the most from Borders’ closing. But Amazon, being the largest purveyor of e-books, may very well increase its market share as the largest bookstore.

Looking at some of the other channels, book clubs are becoming more marginal.  When I first entered the book business in the 1970s, book clubs were a huge presence. Now they are insignificant. At that time one of the largest venues for selling books was department stores. As you can see in the graph, department stores have pretty much discontinued selling books, replaced by ladys’ handbags and designer beauty products.

Chain store sales have declined from 30.6% to 27.3%. That is a lot less than I would have predicted, given the fact that Border’s disappeared. The only significant chains that are left are Barnes and Noble and Books-a-Million. I would have to assume that a lot of the Borders’ business has been picked up by these two companies.

Moving down to the independent stores, some nice news here. Market share has increased from 4.5% to 5%. It is still distressingly low. But indies are also benefiting from Borders’ closing.

Mass merchants and warehouse clubs have declined slightly. That would be stores like Costco, Wal-Mart, and Target. There was a time back in the 90s when Wal-Mart bragged that it would soon be the largest purveyor of books. They expected to sell 25% of all books. It doesn’t look like it will happen.

Ok, now let’s look at how  sales of book formats have been changing. Again these figures are for the 2nd quarter 2011 compared to the same period in 2010. The largest format is still paperbacks, both trade and mass market. But it has declined from 58.3% to 51%. Hardbacks too have declined significantly from 33.3% to 28.6%.  And as expected ebooks are continuing to increase exponentially  growing from 3.2% to 13.7%.

Amazon.com is Going into Book Publishing. Is the Sky Falling?

There was a somewhat alarmist article in The New York Times today by David Streitfeld about how Amazon.com is going into commercial publishing, signing up authors, and cutting traditional publishers and agents out of the deal. I’ve been getting a lot of emails about this from authors and book lovers asking either: 1)whether this is the end of literary culture as we know it?  or 2) how do I get an Amazon contract?

Let’s back up. A lot of people in the book business hate Amazon. Publishers won’t say this out loud since Amazon is their biggest customer. But they will tell you this privately.  They feel that the company has become too big and wields too much power in irresponsible ways. Usually what this means is that publishers resent the fact that Amazon charges a lot of extra money to “promote” their books. You probably have seen all those books flashing at the bottom of the page.  It usually says something like “people who bought this book also bought…”. All of this costs money. If a publisher chooses not to join Amazon’s promotional programs, their books will continue to be available on the Amazon site but will be invisible. To be perfectly fair publishers for years have been paying money to get books prominently placed in stores. Being on the front tables doesn’t come free. But apparently Amazon’s baksheesh is particularly costly.

Streitfeld’s article addresses only one of several publishing programs that have been created by Amazon.  For sometime now Amazon has been offering print on demand and e-book publishing. These are essentially self-publishing platforms. A lot of writers who could not get published by the New York houses have availed themselves of these services. Amazon also started a small commercial publishing venture called Encore Editions. The Encore books  are not big titles and Amazon doesn’t pay advances but it is a step up from self-publishing. These programs are not what Streitfeld is addressing.

Rather, Amazon has made a big splash by opening up a New York office and aggressively going after big name commercial authors and paying them lots of money. Publishers are not happy about this for a lot of reasons, but mostly not  because they believe  that this is the next step in making publishers obsolete.

And I don’t think this is going to happen anyway, regardless of what The New York Times says.  Of course, if Amazon offered me an $800,000 advance for my book, I’d think long and hard and then probably sign on the dotted line. But there are some compelling reasons why this may not be such a good deal. In spite of the endless buzz we hear about books on Amazon and Kindle editions, Amazon’s market share of trade books is about 30%. That’s pretty impressive and it’s growing. But it isn’t that much more than Barnes and Noble. If Amazon is not popular with publishers, they are positively loathed by bookstores. This is going to have some dramatic consequences when Amazon wants to distribute their published titles at venues other than Amazon. Independent bookstores will not carry the titles, period!  Barnes and Noble probably will under their own conditions that Amazon may or may not agree to. And the books B&N does carry will likely not get very prominent promotion.

Amazon is hiring some pretty good editorial talent in New York. It seems to be making publishers nervous. But Amazon’s  program is relatively small and is focused on some very big and very commercial titles. So it is not likely to bring down the great New York publishing empires yet.

There has been a lot of talk in publishing about how the “old publishing paradigm” is dead and how “legacy publishers” are standing in the way of a vibrant literary culture. Amazon has certainly fueled these fires by articulating a concept that no one should stand between the author and the reader. It is a nice thought, even if it is coming from the  largest entity that really is standing between the author and the reader. But if you look at the millions of books that are being self published now, you will have to agree that a lot of them aren’t very good. If there is no filtering apparatus, if everyone can be a publisher, then it becomes very difficult for the reader to make intelligent and meaningful choices. We have written about this phenomenon, “the paradox of choice”,  in a previous blog.  And when the buyers are flummoxed by too much choice, they  tend to focus on a very narrow range of titles. That’s the paradox.

And so returning to the title of this blog post, in my humble opinion, the sky isn’t falling.

I

The Future is Now…No, Wait a Minute…Not Yet

For the last 12 years, there has been so much buzz about internet bookselling in general and Amazon.com in specific that you would think  community-based bookselling (bricks and mortar) was dead. At the cocktail parties in Berkeley and Silicon Valley, when the conversation turns to books, the subject seems to be: Amazon, Amazon, Amazon, and Amazon.  The demise of Border’s this year and the ongoing decline of independent bookselling that has been talked to death in the media would tend to confirm this opinion. The conventional wisdom seems to be that a revolution has occurred in retail and that the vast majority of books are now purchased on-line.

 
Similarly in the last two years book lovers inside and outside the industry have been talking, almost exclusively, about the rise of e-books. E-book gurus and digital cheerleaders would lead us to believe that the 500 year Gutenberg era has ended and that print on paper books are dead.

 
A few weeks ago I did a blog post about the first report of Bookstats, the new statistical survey commissioned by the Association of American Publishers. Before Bookstats, book industry statistics were pretty sketchy and generally limited to a few top publisher members of AAP. The new Bookstats report was based on sales from 1963 companies with a combined sales of $15.3 billion.

 
And what we learn from these statistics is really rather astonishing. Just looking at trade book sales by channel, we learn that online sales are 14.3%.  In contrast, sales in physical retail stores (which includes, indies, chains, mass merchants and others) are 40.8%. The statistics also list sales to jobbers and wholesalers (who in turn sell books to retailers, mostly physical store retailers) as 30.1%. These figures tell us that online bookselling has a long way to go before it catches up with bookselling in the physical world.

 
That said, it should be noted that sales at retail bookstores declined 7.8% between 2009 and 2010, while online sales have increased 46.1%. So we see that  changes are afoot and the future will likely be quite different. Looking at the rise of e-books, we see a similar disconnect between the statistics and the conventional wisdom.  The report shows that e-book sales in 2010 were only 6.2% of market share. But again we learn that while almost all physical book formats have declined between 2009 and 2010, e-books grew by 201%. The figures show that the future is not yet…but maybe soon.

 
The statistics don’t include sales of self-published titles, either in paper or e-book format. Again the gurus have announced the end of “legacy publishing”. They tell us that the great commercial publishers are dinosaurs from another era and are collapsing as we speak. In fact the number of self published titles has grown in the millions, and self-published e-book downloads are growing at an astounding rate. It is not clear exactly what the market share of self-published books is. We do know that most of these titles sell in the hundreds or even less. In today’s New York Times Bestseller List of the 30 bestselling books combined in all formats, none are self-published. Of the 50 bestselling books in the ebook format only 4 are self published.

 
It would seem that the death of commercial publishing, paper based books, and physical bookstores  has been greatly exaggerated.

 

 

More Book Publishing by the Numbers

The Association of American Publishers came out with its first report from Bookstats  today. It is the new method adopted by the book industry to analyze its sales. The previous methods were so flawed in methodology that no one in the industry took them very seriously. We hope that the statistics being offered by this  new methodology are more robust. There is a good analysis of the new numbers in Publishers Marketplace    today.

The new statistics show that trade publishing grew modestly between 2008-2010, about 4.5% in units. Both adult fiction and non-fiction grew 3.5%. Juveniles fared better with a growth of 7.1%.

 The analysis in Publishers Marketplace was considerably less positive. In removing the category of religious books from the equation (a category where there was considerable growth), the remainder of trade publishing declined slightly, even considering the exponential growth of e-books.

 The statistics on e-books themselves were surprising. With all the buzz about them, and with the constant drumbeat  by publishers, media commentators and gurus, one would think that book publishing had been hijacked by this new format. Previous AAP estimates were showing e-book sales of 20%. I spoke with a number of editors at the large trade publishers who told me that their own sales in e-books were reaching 20% or even higher in some months. The new figures from Bookstats tell a different story. They show e-book sales growing from an infinitesimal  .6% in 2008 to 6.4% in 2010. Clearly e-book sales from the smaller publishers are considerably less than the majors. The statistics do not include self-published e-books which now number in the tens of millions. Still the growth in e-book sales is continuing unabated. The future seems to belong to them.

Will Apple Buy Barnes and Noble

There is a bizarre rumor floating around financial circles that Apple Computer may be interested in buying Barnes and Noble. Actually this may not be quite as farfetched as it sounds at first hearing. Check out the story on Investor Place.  The cost of acquiring BN is estimated at between $1 and $1.5 billion. This is pocket change for Apple. They are sitting on $76 billion in cash. In purchasing BN, Apple would have access to the huge selection of  BN electronic books and Nook customers   and enhance the Apple iBookstore that is struggling against mighty Amazon. Additionally Apple could use many of BN’s 800+ physical bookstores as locations for their own Apple retail stores. And, not insignificantly, Barnes and Noble is the largest owner of university book stores in America. Control of this would be very valuable to Apple for whom the college market is important.

What this means for us book lovers down here on the ground is hard to say. As a general rule I always think that any development likely to erode Amazon’s almost monopoly power over e-books is a good thing. Stay tuned for more information.

The Explosion of Self Publishing

A few weeks ago I had lunch with a number of literary agents here in the Bay Area. All the talk was about  self-publishing in general,  e-book self-publishing in particular, and what is the role of the agent in this Brave New World.  Sad to say solutions were not at hand but there was much hand-wringing and talk of the sky falling.

Self-publishing has exploded in the last 10 years as a result of the advent of new technologies and distribution channels  that allow writers to cheaply publish and distribute their own books. Print on Demand publishing (POD) began about 10 years ago. Companies like Lulu, Lightning Source,  and Book Surge offer  a complete publishing package to the aspiring writer/publisher including cover design, formatting, editing, printing, and distributing POD books, all for a very modest price. The quality of the perfect bound paperback POD book is as good or often better than a similar paperback by a trade publisher.

Distribution is mostly done through Internet booksellers like Amazon and Barnes and Noble. Most bookstores have been reluctant to stock POD titles. And, of course, the author/publisher is responsible for marketing and promoting her own book(s). The term that is often used for this new model is “disintermediation.” It’s an impressive word that you should learn and throw it around at the next cocktail party. It means getting rid of the middle man, in this case commercial trade publishers. The good thing about that is that it is a democratizing force in the world of ideas. The bad thing is that there are no filters to separate wheat from chaff. And, gentle reader,   make no mistake about it. There is plenty of chaff out there, a veritable ocean of mediocrity.  In this respect it is consistent with the new culture  of information on the Internet where everyone is an expert.

  This easy entry into book publishing is reflected in the numbers.  In 2009 the number of books published by traditional commercial publishers was 302,000, a number that had been holding steady for many years. In 2010 there was a modest 5% growth to 316,000 titles. POD titles, which didn’t even exist 10 years ago, shot up from 1,033,000 titles in 2009 to 2,776,000 in 2010. Wow! It seems like almost everyone is a published author now. (These figures are compiled by W. W. Bowker, the publisher of Books in Print.)

Of course, e-books are now the talk, even the obsession, of everyone in the book business. E-books are still an emerging technology. Things seem to be changing almost every day. I just came back from meeting with publishers in New York. E-book sales are continuing their exponential growth. In the last few months a number of genres have had e-books sales surpassing print sales for the first time. Amazon.com reported last month that Kindle Editions sold more copies than all print on paper editions combined (at Amazon, at least). Surely the second coming is at hand.

Self-publishing e-books has become the new enthusiasm. It barely existed a year ago. Now  it  has emerged. It is even easier and cheaper than POD. It can be created and distributed virtually for free.  We’ll talk about that some more later.

5 Myths About the information Age

There is a very interesting and thoughtful article in the Chronicle for Higher Education by Robert Darnton, the university librarian at Harvard University. Darnton is something of a contrarian on matters relating to digital-mania in the world of books and culture. I like what he has to say. Here is a short version of his myths. But check out the complete article.

1. “The book is dead.”  Wrong.  More books are produced in print each year than in the previous year.

2. “We have entered the information age.”  … every age is an age of information, each in its own way and according to the media available at the time…. No one would deny that the modes of communication are changing rapidly, perhaps as rapidly as in Gutenberg’s day, but it is misleading to construe that change as unprecedented.

3. “All information is now available online.” The absurdity of this claim is obvious to anyone who has ever done research in archives…. Only a tiny fraction of archival material has ever been read, much less digitized. Most judicial decisions and legislation, both state and federal, have never appeared on the Web. The vast output of regulations and reports by public bodies remains largely inaccessible to the citizens it affects. Google estimates that 129,864,880 different books exist in the world, and it claims to have digitized 15 million of them—or about 12 percent…

4. “Libraries are obsolete.” Everywhere in the country librarians report that they have never had so many patrons. The libraries supply books, videos, and other materi­al as always, but they also are fulfilling new functions: access to information for small businesses, help with homework and afterschool activities for children, and employment information for jobs… Librarians are responding to the needs of their patrons in many new ways, notably by guiding them through the wilderness of cyberspace to relevant and reliable digital material. …While continuing to provide books in the future, they will function as nerve centers for communicating digitized information at the neighborhood level as well as on college campuses.

5. The future is digital.” True enough, but misleading. In 10, 20, or 50 years, the information environment will be overwhelmingly digital, but the prevalence of electronic communication does not mean that printed material will cease to be important. Research in the relatively new discipline of book history has demonstrated that new modes of communication do not displace old ones, at least not in the short run. Manuscript publishing actually expanded after Gutenberg and continued to thrive for the next three centuries. Radio did not destroy the newspaper; television did not kill radio; and the Internet did not make TV extinct. In each case, the information environment became richer and more complex. That is what we are experiencing in this crucial phase of transition to a dominantly digital ecology.

Darnton goes on to talk about the ways that the activity of reading is changing in the electronic age. He’s an informed and realistic optimist. We could  use a little more of that right now, when so many people (myself included) have been saying that the sky is falling.

Andy Ross Interview Part 2

  This is a continuation of  John Marlow’s  interview with me for his Self Editing blog. John is a novelist and script writer and editor. His blog focuses on people writing for movies.

JRM: A number of agents and agencies are now rebranding themselves as “literary management” companies. Does this, in your opinion, represent a fundamental change in the representation business-a shift, perhaps, toward the Hollywood model where writers often retain both agent and manager?

Andy Ross: In the book trade, so far, distinguishing between “agent” and “literary management” is like distinguishing between “used car” and “preowned car.” Different words for the same thing. The real distinction is between agents who do manage client’s careers and those who just flip contracts. The former are preferable to the latter.

JRM: You’ve just described the difference between managers and agents in Hollywood, though there are of course exceptions. But in the book trade-so far-they’re all still “agents?”

Andy Ross: Yes. I guess my simple answer is that, in the book world, good literary agents manage their clients’ careers as well as get them contracts. Bad agents just flip contracts.

JRM: What’s the industry-wide average or typical advance for a book by a first-time writer, and how is that paid out? Feel free to break that down into categories, or to qualify it any way you like.

Andy Ross: I can’t make any generalization about typical advances. But I can say that advances have dramatically decreased in the last few years. It is not unusual to get an offer of a $50,000 advance from a major publisher, for a book that may very well be a lead title.

Any agent will tell you that today, $50,000 is a very good advance. Five years ago, that same book might have garnered three times that amount. You read about seven-figure advances, but really these are for the big celebrities.

Advances get split into payments. Two, three, and even four. Smaller advances are often paid in two parts, one on signing and one on delivery and acceptance of the manuscript. Larger advances will have an additional payment at the time of publication.

I have a six-figure advance that has yet an additional payment at the time of paperback publication. So the final payment is likely to come over two years after the contract is signed. One questions whether this should even be called an “advance.”

 JRM: Moving more toward the classic Hollywood step deal.

While we’re talking left coast—any thoughts on books with film or other crossover potential, and how that potential affects the likelihood or ultimate price of a sale?

Andy Ross: Most good agents will try to reserve the rights for movie/tv/performance for the author. So a publisher won’t get a piece of that action. But in general, a movie helps the sale of a book. There are a lot of deals for “options” for movies, which give the production company the right to exercise an exclusive option for a given period of time. A lot of these deals aren’t worth much money. There are very few options that end up getting made into movies.

JRM: For readers who may not know the score, I feel compelled to say here that, while this is absolutely true of most options–typically those by lesser-known companies and individuals—it’s also true that many options pay more than a typical book advance, even if the film is never made. In which case, the author gets to keep the money-and option the work again, or sell it.

Also, some options involve the optioning party doing a significant amount of work to develop, improve, or adapt the work being optioned.

Andy Ross: That is certainly true. Options, like advances, come in all shapes and sizes.

JRM: What industry trends do you think writers should be aware of right now—what’s changing, and where is it taking us?

Andy Ross: The big topic of conversation right now is electronic publishing. It is growing exponentially, and will continue to do so as more consumers buy reading devices.

The reading experience with e-books has become pretty good now. I believe that this is the future of book publishing, as far as anyone can really predict the future in this fast-changing world. I think this will have tragic consequences for community-based bookstores and for the communities they serve.

I don’t think online bookselling is ever going to be able to recreate the ineffable joy and excitement of shopping at a real bookstore. I don’t think that e-books will necessarily change the way people write or the content of what they write. It is a neutral medium, just as a blank piece of paper is a neutral medium.

Of course the more substantial and, to my mind, more troubling trend is the reduction of reader attention span due to the Internet. Reading requires patience and time, and a kind of commitment from the reader that is missing when one is simply surfing the net.

And, of course, the culture of celebrity is driving bigger and bigger sales to fewer and fewer titles. These are very troubling trends, indeed.

JRM: Going back to your comment about the pleasures of shopping at brick-and-mortar stores, I have to agree. But there’s another issue in play here.

Once upon a time, the big chains drove the little independents out of business. Now the online behemoths are putting the hurt on the chains. Amazon has driven Barnes & Noble to the auction block, Borders has already gone under in Britain and was teetering on the brink last year in the U.S. The same thing is happening with dvd rentals: Netflix has driven Blockbuster into bankruptcy.

This would seem to bode well for indies, particularly small or niche stores with lower overhead—where the people working there actually know and care about the books they’re selling. But will customers be willing to pay more for that superior service and personal connection, when they can in most cases order the same thing online, for less?

Andy Ross: That is a very good point. My wife works at an independent store, Book Passage in Marin County, north of San Francisco. I used to be an independent bookseller, and I have a lot of friends who own independent stores. People in publishing and book lovers everywhere think of indies as the heart and soul of the book business.

Barnes & Noble is still a very robust company. It sells about the same number of books as Amazon. But they are closing a lot of stores and using more space for non-book items. In other words, they are having to make very significant adjustments to accommodate the brave new world of publishing.

Borders is a corporate basket case. They seem to be trying to shrink their way into profitability. Not a good sign.

And yes, you are right that smaller independents have some important advantages. They have low overhead and provide the kind of bookstore experience that is matchless. But unless they can find a way to adapt to the e-book revolution, their future will be in doubt.

JRM: What does your experience at Cody’s tell you?

Andy Ross: Cody’s was a large independent store and was probably a victim of history. The heyday of independent stores was in the 1980’s, before the chains started opening up superstores everywhere. Business began declining in the ’90s. And at the end of that decade we began facing extremely robust competition from Amazon.com. Cody’s had a very high overhead and faced eroding sales.

JRM: What do you like most about working with writers?

Andy Ross: I have enormous admiration for the vocation as well as the profession of writing. I think a lot about what Anne Lamott said in Bird by Bird. She advised the writer to stop worrying about getting published. Writing opens you to the world and makes you a better and wiser person. Getting published does none of this. And seldom brings wealth or fame.

I have said elsewhere in my blog [link]  that the work of the writer reminds me of the final magnificent sentences of Albert Camus’ Myth of Sisyphus. Something to the effect that: “the journey itself is enough to fill a man’s heart.” Nothing to my mind is a more eloquent expression about the courage it takes to be a writer.