Category Archives: Simon & Schuster

Simon & Schuster settles price-fixing class-action lawsuit

CNet reports that Simon & Schuster, who has already settled its antitrust dispute with the Department of Justice, has joined HarperCollins and Hachette in settling the price-fixing class-action lawsuit by 29 states overseen by judge Denise Cote (who issued a ruling a couple of days ago denying the publishers’ and Apple’s motion to dismiss). The terms of the settlement have not yet been announced.

This leaves the remaining defendants the same in both legal actions: hold-outs Macmillan, Penguin, and Apple. It seems doubtful any of them will be inclined to settle.

Kristine Kathryn Rusch: Publishers mishandle indie authors, fail to learn from mistakes

In her latest “The Business Rusch” column, Kristine Kathryn Rusch calls attention to the fact that this year a reporting Pulitzer went to an online-only publication, the Huffington Post, for the first time ever. Most traditional news outlets have been concentrating on the fact that no fiction Pulitzer was awarded this year, because (Mrs. Rusch posits) the Huffington Post news scared them.

Rusch points out that even if the Post is a non-traditional publication, the reporter who penned the story is a 66-year-old seasoned journalist who has worked for many traditional publications in his time—and uses the “traditional writer for a non-traditional publication” point (as well as the fact that the Huffington Post also broke some indie publishing-related news recently) to segue into a discussion about self-/independent publishing versus “traditional” publishing for writers—an old favorite topic she has discussed many times already.

The indie publishing news that HuffPo broke is that Boyd Morrison, the self-published author who signed a two-book deal with Simon & Schuster in 2009 and went on to publish two more books with them, has been dropped from his 3-book contract with S&S because his books haven’t been selling well enough. Morrison’s UK publisher, Little, Brown, will still be publishing the book there, and he will be self-publishing the American edition instead.

Rusch suggests that this was probably in some sense inevitable, because Morrison’s contract represented publishing’s latest “fad”—jumping on indie publishing sensations with unrealistic advances in the expectation that if they sold that well independently they could sell immensely better with the traditional publishing machine behind them. However, this expectation turns out to have been unrealistic, at least in terms of return on investment—Rusch thinks Morrison’s sales were better than his indie books had sold, but not enough better to make back the huge advances she guesses the publisher paid him.

From the looks of what happened to Morrison, his books didn’t do a hell of a lot better through a traditional publisher than they had from an indie publisher. The fact that S&S canceled his contract meant that the claim that the book needed a hefty revision was just an excuse. They were losing a lot of money on this contract, and they wanted it off their financial books.

Expect to see more of these kinds of stories in the future. As Morrison says, he was the first indie author to get a traditional publishing deal. Now he’s the  first indie author to get dumped by a traditional publisher for not performing to expectations. Of course, the expectations weren’t his, but that publisher’s, but when has traditional publishing ever owned up for its own errors?

And part of that error may have been a failure on the part of the publisher to push Morrison’s books sufficiently to boost their sales S&S paid too much for the book’s independent sales, but not enough to make it worth going to much trouble to publicize it And she adds that St Martin’s Press doesn’t seem to be doing much better publicizing the Amanda Hocking books for which it paid $2 million a few months ago.

Rusch writes that traditional publishing contracts are becoming less and less appealing because of the litany of restrictions they foist upon authors without offering them equally substantial benefits in return: loss of years of copyright, a restriction against publishing “competing” works elsewhere, and other gotchas. Lately, she has been pushing back, insisting on a limited license in the works she publishes through traditional publishers, so that she can choose to terminate it at the end of the ten-year license period. A number of publishers aren’t going for it, but that’s all right with Rusch because she finds she can usually do better publishing those works on her own.

Next, she calls foul on Penguin global digital directory Molly Barton’s assertion (made in a Digital Book World article I plan to cover separately next) that “the largest expense [in e-book production] is author payment and always has been.”

Most writers get paid $,5000 to $20,000 as an advance on their book. They get 25% of gross (theoretically) for their royalties after that $5,000 to $20,000 gets met, if creative accounting allows it to ever get met. If that’s the largest expense on an e-book for a traditional publisher—larger than their overhead—then e-books truly are cheap to produce.

And if publishers see that as the largest expense, Rusch suspects, they will find more excuses to pay authors less and lock them into tighter contractual restrictions, while failing to own up to their own errors when indie-published authors’ works fail to sell well in the legacy publishing mainstream. “Better that traditional publishers believe that indie books don’t translate,” she writes. “That’ll protect more writers from the insanity to come.”

I was actually linked to this post from a blog post by novelist Mark Terry (found via The Passive Voice) comparing the $250 royalty check he got for six months of sales through a traditional publisher to the $1,013 check he got from Amazon for one month of e-book sales. While he’s not getting rich, Terry writes, he is paying the bills a lot more easily from what he makes out of Amazon. So as far as he’s concerned, traditional publishing is dead to him.

It kind of reminds me of that line from Star Wars about more star systems slipping through the Empire’s fingers the more it tightens its grasp. If publishers’ reaction to the changing times is to pay less and restrict more, it’s not surprising that independent publishing is getting a boost. Just as their insistence on DRM is helping Amazon, their insistence on more restrictions and less payout may be driving more authors into the self-publishing camp.

Big Six publishers decline to renew contract with Amazon over unfavorable terms

Salon Magazine has an extremely lengthy story looking at Amazon, and bringing up a couple of points I hadn’t heard about before. In main, the article looks at Amazon’s habit of making quiet but substantial grants to various small independent publishing organizations, totaling about $1 million per year. Is it done to support indie publishing, or silence Amazon’s most strident critics? The Salon piece is more even-handed than the last article I covered on this theme.

But the really interesting part is actually buried in the second section of the article, which mentions something I hadn’t heard elsewhere: Salon claims that the Big Six publishers are taking a page from the Independent Publishers Group’s book and declining to renew their contract with Amazon over what they see as an Amazon price gouge.

Amazon is picking up its literary largess during an especially charged season in the company’s relationships with the rest of the book world. For the first time, the “Big Six” publishers — HarperCollins, Random House, Hachette, Simon & Schuster, Penguin and Macmillan — have refused to sign Amazon’s latest annual contract. The main sticking point is exorbitant increases in “co-op promotional fees” for e-books that the publishers see as an illegal gouge by another name. One person familiar with the details of the proposed 2012 contracts that Amazon has submitted to major New York publishers described them as “stupifyingly draconian.” In some cases, he said, Amazon has raised promotional fees by 30 times their 2011 cost. In saying no, the big publishers are following in the footsteps of the Independent Publishing Group (sic), a major indie distributor representing dozens of small presses that refused Amazon’s increases earlier this winter and soon saw the “Buy” buttons on more than 4,000 of their titles promptly delinked.

If the contracts are permitted to expire the way IPG’s was, will Amazon delist the Big Six publishers’ e-books the way it did IPG’s? That would be something to see. And of course this comes right when the publishers and Apple are under antitrust investigation for the agency pricing scheme they forced onto Amazon.

The rest of the article is long and very interesting, tackling the ambivalence organizations feel toward Amazon’s grants and the way that very few people are willing to go on the record either for or against Amazon’s grants (though plenty of people are willing to say bad things anonymously!) because they don’t want to upset either Amazon who offers them money or their own anti-Amazon compatriots. Even one publisher who does speak out largely does so alone.

[Melville House Books publisher Dennis] Johnson’s long crusade against Amazon has for the most part been a lonely one. “I admire Dennis’ rebel spirit,” said one small publisher who declined to go on the record. “It’s very brave. You can’t really speak out publicly against them. They’ll hear. It’s amazing. You say something in a short blog interview, and they know.”

So is Amazon making the grants with nefarious goals in mind? In the end, it may not really matter. Amazon is doing a lot of good with its grants…but it’s also helping to create the system where those organizations need the grants to keep going. And compared to the overall scale of its profits, $1 million a year is basically what Amazon finds going through the sofa cushions.

Some publishers more willing to settle with DOJ than others over e-book pricing

The Wall Street Journal has some further news on the putative e-book pricing settlement in the US Justice Department and European Commission joint anti-trust investigation of the “Agency Five” publishers plus Apple. Anonymous sources have told the Journal that three publishers are inclined to settle and two others (plus Apple) are holding out. HarperCollins, Hachette, and Simon & Schuster reportedly favor settling, while Penguin and Macmillan (plus Apple) do not. (Random House, who waited a year to implement agency pricing, was not part of the investigation.)

"The companies involved know very well under which conditions we are ready to settle," [Europe’s competition commissioner Joaquin] Almunia said in an interview. "If our conditions cannot be met in a satisfactory way, we will continue our investigation."

Per these anonymous sources, the settlement conditions would include a “cooling-off period” during which agency pricing would be suspended. The Justice Department feels that agency pricing was only possible due to all the publishers and Apple getting together, and such a cooling-off period would allow publishers and booksellers to resume their independent one-to-one relationships. The length of such a period is the subject of one of the settlement talks.

It’s not clear what such a settlement would mean for odd man out Random House, who imposed agency pricing but did so after a long enough wait that it wasn’t seen as part of the original conspiracy. Presumably the company could make its own decision to drop prices to match those of its competitors’ books during the cooling-off period.

Simon & Schuster John Locke publishing deal lets Locke keep self-publishing e-books

JL-HowISoldAMillionSimon & Schuster has entered a deal to start publishing books by self-publishing star author John Locke. There’s not so much that’s new about that in and of itself—after all, just a few months ago several publishers bid on works by self-publishing star Amanda Hocking. But something that is new, the Bookseller points out, is the terms of the publishing agreement: Simon & Schuster is just taking the print books and creating a new imprint to do it, and Locke will continue self-publishing his own e-books.

Not only does this mean S&S is splitting print and digital rights—something publishers have been so reluctant to do in the past that they sued when RosettaBooks wanted to do it for backlist titles—but given the pricing Locke puts on its e-books it would seem like a rather risky move for the publisher.

For S&S, it is surely a gamble. One of the major reasons Locke’s books sell is because he prices them cheap at $0.99 (49p); S&S must be thinking hard about the size of the print runs and the right price point. US mass-market paperbacks are generally priced around $8.99, which may be a bit too steep for Locke’s fan base.

For 99-cent books, the royalty Amazon offers is only 35%, not the 70% much-beloved of self-publishing authors—but even so, 35% is still a greater percentage than the 25% publishers have balked at offering.

Will more publishers follow suit and allow authors to self-publish their own e-books while they concentrate on print? It seems unlikely, but in today’s turbulent world of e-publishing, who can say?

Penguin, Simon & Schuster now claim 14-15% of sales are ebooks

Yesterday, Simon & Schuster’s parent company CBS announced that while the publisher made less money last quarter than the one before, ebook sales accounted for a greater percentage:

Publishing revenues for the second quarter of 2011 decreased 3% to $183 million from $189 million for the same prior-year period, as strong growth in the sale of more profitable digital content was offset by lower print book sales. Digital content revenues for the second quarter of 2011 more than doubled last year’s second quarter digital sales and represented 15% of Publishing’s total revenues.

This is in line with what Pearson reported about Penguin’s revenue for the first half of 2011 last week: “eBook sales grew 128% and now represent 14% of Penguin revenues worldwide.”

Via The Digital Reader

(Photo: Xelcise)

Simon & Schuster reports increased profits thanks to digital sales

We’re all used to the idea that publishers are struggling to stay afloat in this brave new e-book-and-pirate-infested recessionary world. This is why they can’t pay greater royalties on lower-marginal-cost e-books, and why they want to keep their e-book prices high so consumers don’t come to devalue e-books (or to protect sales of hardcovers, whichever explanation you prefer).

But every so often publicly-held corporations are required to let the public know how they’re doing, and Simon & Schuster just announced that, thanks to e-books, its recent revenues are up considerably.

For the three months to 31st March, Simon & Schuster’s operating income before debt and amortisation (OIBDA) more than doubled to $7m. The publisher said it was driven by lower shipping, production and returns costs because of the increase in digital sales.

On FutureBook, blogger Agent Orange notes that this makes publishers’ refusal to increase royalty rates on e-books look even more transparent.

The conglomerates dog in the manger approach to the issue of e-books is doing them no favours. The day is fast approaching when a truly major international author will realize they are going to be greatly better rewarded by being published by Amazon because they will offer them a sensible share of the revenues they generate.

I would say that it also suggests publishers may be a little too worried about piracy—judging by those reports, at least one of them is still doing fine even in the middle of a recession—and that if they were to fiddle with their e-book prices a little to find a more optimal (which is to say, lower-priced) position on the price-demand curve they could do even better.

Which in turn suggests that perhaps publishers aren’t quite so likely to be driven out of business by the new way of doing things after all.

For libraries, e-books are a complicated issue

Publishers Weekly takes a long, interesting look at the question of library e-books and what they mean for both the publishing and library industries. To some librarians’ surprise, library e-books are proving extremely popular with patrons.

"It’s amazing," says Diane Eidelman, administrator for member services at the Suffolk Cooperative Library System, a consortium of over 50 libraries on New York’s Long Island. "We just can’t keep up with the e-book demand. We’ll purchase an enormous amount of content, and within 24 hours it’s all checked out."

Indeed, the numbers tell the story. In the past 18 months, the Suffolk consortium’s e-book expenditures have tripled. In the first few months of 2011 alone, Eidelman says, the library system has increased its e-book budget by 66%. And still, patrons can’t get e-books fast enough. Earlier this month, the e-book version of James Patterson’s 2010 thriller, Don’t Blink, had a staggering 108 holds, she says, even though the library tries to purchase enough copies so there are no more than two reserves at a time. "We’ll probably have to buy more copies," she notes. "We believe that’s good customer service. But it is incredibly expensive. E-book purchases really are almost patron-driven at this point, and every few months we put more money into e-books."

Library e-book provider Overdrive reports that library e-book usage is essentially doubling every year, and some publishers are getting concerned. Apart from the widely-reported HarperCollins decision to impose lending limits, Simon & Schuster and Macmillan don’t lend library e-books at all.

"We have not yet found a business model that makes us happy," S&S CEO Carolyn Reidy explains in a recent Publishing Point interview. Macmillan CEO John Sargent, in another Publishing Point interview, suggests that free digital copies that can be delivered conveniently right to one’s device was at issue. "It’s like Netflix, but you don’t pay for it. How is that a good model for us?" Sargent asks.

But others, such as a vice president of Random House, point out that libraries “create readers” and getting library readers hooked on their books is not a bad thing, free or not.

Still, given that it is not really possible for a library to “own” an e-book in the same sense as it owns its paper books—or for that matter, to transfer ownership to other libraries or send it out via interlibrary loan—the question of what is going to happen to libraries as e-books wax and paper books wane is a thorny one that has a number of industry professionals concerned. Is a library without any physical books at all still a library?

Someday, we may find out.

Simon & Schuster’s ebook revenues at about 8% of adult sales

images.jpgSimon & Schuster’s profits are up and so are revenues. The revenue increase was, in part, because of increased digital content sales.

Their CEO, Carolyn Reidy, reports the Bookseller: … echoed other US publishers in indicating that ebook sales “right now” were approximately 8% of adult sales, but added that the exact percentage has been changing every month. With a nod to the Odyssey Editions flap, Reidy estimated that the number of titles it had available digitally would double if they were able to agree upon royalty rates with rightsholders for titles not yet available electronically. Reidy said they were “clearing those royalty rates piece by piece”.

Simon & Schuster introduces mobile website

Screen shot 2010-07-07 at 12.19.59 PM.pngS&S has opened a new mobile website specifically tailored for smartphones and other mobile devices. According to the press release the site includes:

Author pages including popular features such as exclusive Author Revealed and Author Voices content, videos, and bios.

· Books and series pages, with excerpts, descriptions, audio and excerpts

· A dedicated Video hub similar to the similar to the simonandschuster.com site

· Full-site search capability

· Signups for newsletters and alerts

· Buy links to retailers with mobile-optimized shopping carts.

· Future mobile capabilities will include sweepstakes and customer reviews.

Simon & Schuster Canada making its books available on iBooks

simon.jpgGood news for Canadians! From the press release:

Simon & Schuster Canada is pleased to announce that it is making ebooks available on Apple’s new iBookstore in Canada starting today.  iBookstore is included in the free iBooks app for iPad, iPhone and iPod touch (www.itunes.ca/appstore). 

Among the ebooks now available on iBookstore are internationally bestselling titles from Stephen King, Kathy Reichs, Jodi Picoult, Robin Sharma and Cassandra Clare.