Publishing consultant Mike Shatzkin weighs in with his (lengthy) thoughts on the Wylie/Amazon book deal, which has quickly become the nine day wonder of the e-publishing world. He summarizes the issue of movement toward e-books as having three key components for publishers: e-book pricing, dominance of sales by a monopoly or oligarchy of big stores, and royalties.
Shatzkin notes that the questions of pricing and monopoly have been at the center of attention for the last year, most notably at the beginning of 2010 when Amazon and Macmillan faced off over the Agency Pricing model. But now it’s royalties’ turn in the spotlight, and Shatzkin aptly zeroes in on why:
Agency pricing compounded the 25% problem from the authors’ and agents’ point of view because the base price for Agency books is 25% to 40% lower than it is for the old model, wholesale, so the authors’ share is commensurately reduced. Most agents liked the principle of getting uniform pricing, likely to create a healthier ebook marketplace, but were understandably miffed that their per-copy take could be reduced without any agreement required on their part. The publishers would no doubt point out that their take per ebook unit was going down as well. And Random House, still selling at wholesale, is no doubt making the point that their25% amounts to substantially more per unit than the other guys’ 25%.
He reminds us that Wylie was not the first to yank digital backlist titles away from the bigger publishers for higher-royalty republication elsewhere. Franklin Covey took some of his books exclusively to Amazon Kindle in December. More recently, William Styron’s books went to small e-publisher Open Road—if not with Random House’s blessing, at least with its tacit approval.
At the heart of the dispute is, of course, the ambiguity in book contracts that pre-date the rise of the e-book. Authors say that since e-books aren’t mentioned explicitly, they aren’t covered; publishers, especially Random House, say that they’re just another kind of book and so they’re covered implicitly. The courts have tended to side with the authors, however.
Back in 2001, Random House sued small e-press Rosetta Books over the issue, but apparently dropped the matter after it was denied a preliminary injunction against Rosetta “because Random House is not likely to succeed on the merits of its copyright infringement claim and cannot demonstrate irreparable harm”. Random House is making noises about suing Wylie now, but it is hard to imagine it can have forgotten what happened last time this happened.
Back to Shatzkin’s post, he sums up the events leading up to Amazon’s announcement of its two year exclusive with Wylie, then the reactions on all sides. Shatzkin notes he can see the point of view of all sides: it seems a bit questionable for an agent to turn into a publisher in such a controversial manner, and by locking the books into Amazon he is throwing away any potential non-Amazon revenue for his authors—but on the other hand, e-book editions of books that pre-date the notion of e-book rights are the classic “low-hanging fruit”, with extremely low costs to monetize and it’s hard to blame the rights-holders for seeing that. As Shatzkin points out,
Why would the publishers expect an author whose book has earned out long ago, who has no requirement to allow the publisher to publish the ebook and (at the very least) a case to make that they’re free to sell ebook rights elsewhere, to accept the same terms that are offered to authors not in that position?
Shatzkin suggests that publishers should consider offering higher e-book royalty rates on these already-paid-for titles in the hopes of keeping more writers from taking their backlist works to places that will offer them more. (And in an update made between writing and posting the piece, Shatzkin notes hearing from agents that publishers are beginning to make significant backlist e-book royalty concessions. Perhaps they see which way the wind is blowing?)
It will be interesting to see how the effects of this move shake out. Will Random House return to court to sue for the rights it thinks belong to it? (It is hard to imagine any of its authors appreciating it doing this.) Or will the publishers fight by raising the royalty rate? And can they afford to raise the royalty rate given how quickly their ship is already listing? We can only wait and see.
“Authors say that since e-books aren’t mentioned explicitly, they aren’t covered; publishers, especially Random House, say that they’re just another kind of book and so they’re covered implicitly.”
Oh look, it’s the Screenwriters’ Guild strike all over again.