Hugo Award-winning author Kristine Kathryn Rusch, who has written a fairly large number of novels and edited The Magazine of Fantasy and Science Fiction and Pulphouse Magazine, has written a remarkably thorough and insightful blog post comparing the traditional publishing industry to the new world of electronic self-publishing.
Rusch posits that adapting to the new world of electronic self-publishing “requires a radical change in thinking,” which many established authors aren’t ready to assay yet. She explains that the traditional publishing operates on a fundamental assumption that can be summed up in two words: “trust me”.
Writers, she explains, are always the last to know how well their books are doing. This isn’t so much because publishers are evil, but because the nature of publishing has gotten increasingly arcane over the years as complications accreted without ever being removed—so it’s not necessarily that publishers want to keep information from the authors so much as that they don’t actually have that information themselves. Part of this has to do with the way that bookstores are still allowed to return copies that don’t sell—but there’s more.
For example, when a book is actually printed, the printer is allowed to deliver the ordered amount plus or minus 10%. So if you order 50,000 books from printer A, printer A by his contract could give you 45,000 books or 55,000 books. This isn’t because printers are inherently lazy or shady. It’s because shutting off the older presses at a precise number was impossible. You had to guess and let the machine either short the run or add to the run.
Doing short print runs (of, say 100 copies) was next to impossible.
This, by the way, is one of the technological changes that has enabled cheap and easy print-on-demand books. Now a printer can print as few as 100 or as many as 10,000 and do so accurately.
But remember my post on how Big Publishing actually works? Many Big Publishers have printing contracts that predate the change in technology, so they still get the print run plus or minus 10% from their printer, and accurate information is still impossible.
Remember that this print run problem is compounded by the returns system. And human error. Exact numbers up until a few years ago were impossible to get.
There’s a lot of interesting stuff in this post—more than I can summarize. I was especially interested by how much opportunity agents have to embezzle from their authors. I never realized before reading this just how much the old publishing industry system really is built on trust, which can readily be misplaced.
But the new self-publishing schemes, such as those offered by Amazon or Barnes & Noble, are essentially starting out from scratch, in the information age. They are able to offer sales statistics on a daily basis, providing a lot better way for writers to understand just how well their works are selling and more facts on which to base pricing decisions (such as whether to drop prices to 99 cents or raise them to $2.99). You could say that where traditional publishing was based on “trust me”, e-publishing is based on “show me”. (After all, I am from Missouri…)
But Rusch is frustrated that many writers she’s spoken with have been unable or unwilling to make the change to the new way of doing things.
I understand why a writer would still go to Big Publishing for new books. I still do, for a variety of reasons (none of them relevant here). There are things that Big Publishing can do that small publishing or self-publishing can’t (although those things are getting fewer and fewer with each passing day). But for out-of-print backlist, for books that didn’t sell into Big Publishing, I do not understand why these writers insist on going into an unnecessary system that will only hurt them in the long run.
Or at least, I didn’t understand until I realized that it will take a shift of thinking—a movement out of the old paradigm—that so many of these writers are unable to do.
Rusch hopes that more writers will be moved to start offering backlist titles to which they own the rights through these firms that give them greater control and higher royalties. She is concerned that “trust-me electronic ‘publishers’” will become the norm, continuing the old system and depriving their writers of the opportunities for greater information and control that self-publishing can provide.
As I mentioned last night, I think there’s room for both traditional and self-publishing models in the e-book world of the future, but they need to work out a way to co-exist. If traditional publishing served as an easy way to push “new stuff” while old stuff moved to the self-publishing market, that could be one way of doing it. Of course, something would have to be done about the rights reversion question when e-books can remain “in print” forever.
Not that I disagree with anything you said above — BUT the new publishing models require even more trust. You see, traditional contracts also allowed for audits, and there are even accountants who specialize in doing royalty audits, some of whom will work on contingency basis if they think you have a good chance of finding a problem.
There is NO way to audit Amazon or LSI, much less one of the so-called self-publishing companies. Now, I very much doubt that Amazon or Ingram (LSI’s parent) is deliberately ripping off anyone. But I’m also a believer in Murphy, who ought to be the patron saint of engineers and programmers.
And some of the subsidy press/author services/self-publishing companies have left me feeling very suspicious.
I would rather trust, and be able to audit, than rely upon trust alone. This is one gap in the contracts that I hope will be closed soon.
an interesting piece.
i was hoping for some thoughts RE: the advisibility of NEW writers … who really are good … of going ahead with self-publishing. are they ( we ) shooting themselves in the foot? will agents and publishers pick them up later?
some discussion on that subject would be great.
…
tom honea asheville
You give Amazon an electronic file, which they can duplicate and sell ad infinitum to a user base which is entirely within their orbit, using machines they have bought from Amazon, a user base whose numbers Amazon has chosen not to reveal, and you get Amazon’s sales report about the movement of Amazon-controlled electronic bits to Amazon-built machines, and this is not all about trust?
Is there some irony in this article I am missing?
Her blog post does mention audits and … not in a complimentary way! A sentence is quoted below;
“Writers learned that the only way to know exact sales figures of an in-print book was to audit the publisher. And then, sometimes, the audit wouldn’t work. Because the publisher doesn’t always know.”
It dosen’t seem like auditing helps much either!
There are a lot of things that publishers don’t know, because no one knows them, in the print book world — even if you’re self-publishing. This includes things like how many books will be returned by the bookstores in the future.
That said, if you have an auditor who knows how to do a royalty audit, and where the bodies are likely to be buried, you’ll get what’s coming to you, as of the date of the audit.
NB: she made a couple of errors in that post, too. For example, she doesn’t quite have the issue of reserves right. Also, she said that returns could come in for months, but I’ve seen them come in as much as a year after a book was taken out of print, or several years after they were sold to that store. Oh, and she conflated distributors and wholesalers.
Still and all, she has a better grasp of how big publishing works than most writers do.
There’s an interesting post here by David Hewson on why (particularly non-US-based) authors might prefer to stick with the old model, for now at least.
http://davidhewson.com/2011/03/the-self-publishing-frenzy-a-view-from-this-side-of-the-pond/
@Tom Honea:
No one quite knows how this will work out in the future. BUT we do know that the vast majority of self-publishers sell far fewer print copies on their own, than a traditional publisher would sell for them. The difference is, of course, access to distribution, first, followed by extra publicity muscle and expertise in “packaging” and positioning.
And we also know that every significant publisher, and most bookstores, look at the author’s past sales record in Bookscan in order to gauge how much to bet on him/her this time.
So, if things continue in that vein, and if print continues to be a big part of the picture (it’s still more than 3/4 for all but a very few segments), then self-publishing to build a fan base may not be wise.
Then again, things do seem to be changing rapidly.
Rusch’s blog is indeed very educational, though not surprising to most within the industry. I have a lot of audit experience early in my career and know how this system has always worked.
She is essentially right in characterising the ‘olde’ system as a ‘trust me’ system where the Publishers and Agents together created a totally cozy world for themselves, keeping writers living in blissful ignorance. The vast majority of writers had no clue about what was happening to their books or how to check it. They bought into the whole illusion of honest Publishers and honest agents. There is no doubt in my mind, based on personal and second hand experience that writers lost millions during the 20th century, to their publishers and agents who skimmed and trimmed and rounded and averaged their way to financial success. Does it bother me ? not in the least. ANYONE who hands over control of their finances in such a blind and incompetent manner deserves to get whatever comes their way.
I can only hope and many others have written here about it, that today’s authors of new works pause and deliberate intensively before signing contracts with publishers. They should edit and develop their own contract to negotiate with and open their eyes to ALL of the possibilities and make sure there are opt outs and reversions built in.
On the subject of audits I think the points above are well made. The path to verification is through associations and political pressure. Associations who can verify sales with eRetailers by negotiation, with individual or sample audits. Also political pressure because Company Auditors today have no responsibility to audit this aspect of their client’s business.
With the new world of online sales and online retailing of electronic products such as eBooks, I believe there is a new need to have such a requirement included in an Auditor’s Report. The Auditor’s Report should include a statement that “Significant and representative tests have been done on the accuracy of sales and download numbers. Appropriate royalties have been paid to the copyright holders and total downloads have been reconciled with total royalty payments”.
Interesting take on this. I find the world of traditional publishing too slow as well. Sending a manuscript in and waiting for at least 6 months to hear whether or not you have piqued their interest feels way too long. I know that they face a lot of slush, but it seems to me from the final polish to the day it’s in the books store could be 5 years.
Having run a publishing company, I know that there are bits of information that are impossible to have in precise numbers on demand with print publishing. But I also know that the power to audit was a powerful weapon that the author had at hand. Not a perfect weapon, by any means, but a powerful one.
In the ebook world, at least for the book contracts I have seen, the audit power doesn’t exist at all. And even if it did exist, with digital files and digital sales being so ethereal, I’m not sure how well it would work. It would be very easy for a company to hide ebook sales, much easier than with print books. With print books, ultimately, there is something physical to count.
But more important in the ebook world: Does anyone seriously think that Amazon or Apple are going to permit author audits? It woudl be so disruptive to their business model that I can see them telling the author to go take a hike before agreeing to any kind of audit that isn’t government required. If authors think they were held by throat by traditional publishers, they should consider themselves held by the throat and 8 feet off the ground by Amazon and Apple.
Richard I think you make sense in your last statements. However there are counter balancing factors that make it harder for enormous companies to do so. They have huge admin staff and would find it much much harder to keep any ‘adjustment’ secret for a start.
All of this… especially the degree of uncertainty and lack of auditability in the traditional system… makes self-publishing through your own portal look better and better. Provided, of course, that you can draw people to your site through advertisement/promotion, you can make sales that you can track, one by one. You can keep track of sales yourself, and not have to wonder what the outlets are doing (or not doing) with your book.
In fact, though my books are in the outlets, they also sell on my site, and in greater numbers than on all the outlets combined, making it much easier for me to track my sales on a constant basis.
And as the original post pointed out, new procedures are getting easier to use every day, making it harder to justify the old, untrackable systems.
@Howard — The issue is not whether an audit could uncover shenanigans but whether Amazon or Apple would ever agree to the audits. In the absence of evidence of fraud, which would be pretty darn hard to have upfront, a court is unlikely to order the companies to submit to an audit. Consequently, it would have to be in the contract, which I doubt Amazon or Apple would ever voluntarily agree to include.
@Steve — Absolutely correct that the best accountability is to control everything yourself through your own portal. That’s the Amazon and Apple method, so we know it works. The problem is driving people to your portal. That is a tough nut to crack today.
Richard, every company has to be audited every year. That is the law.
Individual audits by individual authors are impracticable and unworkable.
The idea that eBooks be sold though each author’s portal is a nice idea but a fantasy.
@Howard,
When an auditor signs off on a publishing company’s financial statements, they generally DO test the accuracy of the royalty reporting system. But they don’t find the most common problems, because they don’t have all that much experience in that part of the business.
Audits by individual authors are almost ALWAYS an option in the traditional publishing world’s contracts. It’s just that there’s usually not enough to find to make the audit worthwhile.
Richard makes a good point, however, that Amazon and others like it have no incentive to allow this new provision in to the standard contract for the myriad of tiny publishers and individuals uploading books onto the Kindle platform. I can’t see any way that such a provision could be made practicable in today’s world.
That said, I am absolutely convinced that Amazon is NOT ripping off anyone to any significant extent, and certainly not deliberately. I am equally convinced that some of the slimier denizens of our bold new world are ripping them right and left.
This is one area where authors really can’t afford to go blithely skipping down the garden path.
I help run one of the larger email groups for small and self-publishers, and I hear far too much of the consequences of that sort of attitude. It can be heartbreaking.
The real problem isn’t the old model of publishing, or the old way of thinking, or even the new model, in my opinion. The real problem is that far too many writers are so fixated on their dreams that they willfully discard any information that doesn’t fit the way they WANT the world to work.
And when that is true, you have a flood of would-be victims searching for predators ready to harvest them. You can do your best to stop the damage (and I do), but it’s like trying to slow a tsunami with a dike made of tissue paper.
Marion:
“When an auditor signs off on a publishing company’s financial statements, they generally DO test the accuracy of the royalty reporting system. But they don’t find the most common problems, because they don’t have all that much experience in that part of the business.”
You are wrong I am afraid. Auditors know more about the royalty structure system than anyone, even the company itself. I have worked in large company audits and it is amazing how little companies think the auditor knows. But in practice the absolute opposite is true.
But as far as the legal responsibilities of the auditor goes, this aspect of the business is not material to the purpose of the audit. That is why it is only lightly tested and not deemed a matter requiring to be reported on. Even if an auditor finds errors, and even he finds many of them, if it is not material to the overall assessment of the accounts providing a “true and fair view” of the financial results, then there is no requirement to report.
Only when issues are covered by specific mandates in the Auditors regulations does he report on them separate from the “True and Fair” issue. I am saying that with the new economic structures in publishing and online sales of software such as eBooks, I am suggesting that this is something that should be campaigned for by Author’s groups and associations.
“Audits by individual authors are almost ALWAYS an option in the traditional publishing world’s contracts. It’s just that there’s usually not enough to find to make the audit worthwhile.”
There is no way this is happening or will happen with huge entities like Amazon. Do you really think it will ?
I agree wholeheartedly about your point about “the old way of thinking” of authors.