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.