Saturday, February 19, 2011

Negotiating ebook rights

With regards to signing with a traditional publisher...I can't tell you how many times I see the following post (or one similar).

"Sure, I'll sell you the print rights for that advance. But I'm keeping the digital rights."

This drives me CRAZY! There is no publisher in existence that is going to let ANYONE sign just for print rights and let them keep the ebook rights. It's insane to even think so. Now there may be some small publishers that are willing to do so - and on the surface of things I would say - great go for it - but to be honest any small pub who is that out of touch with publishing to allow such a thing is probably not a good horse to be jumping on in the first place.

Recently after one of these poses, I responded that ebook rights are not negotiable the original poster came back with "anything is negotiable". While I guess that is "technically true" - that you can "ask" for anything in a contract, the fact remains you'll get no traction on this. Period.

The industry standard is 25% of net for ebook royalties - this is substantially higher than most other royalties (6% - 15%) but it does leave an unequal distribution between author and publisher. Let's look at kindle as an example as it is the top selling platform for ebooks.

When priced between $2.99 and $9.99 Amazon will take 30% and the remaining 70% is "net". Since the author gets 25% of that they are actually receiving 17.5% of sales price. That's not bad, but considering the publisher is getting 52.5% for a product that has only incremental costs over the print book they've already produced this seems unfair. This is further complicated by the fact that, at present, a traditional publisher's ebook has no greater advantage (from a distribution standpoint) from the same book produced as an independent. In other words, the concept of coop space does not currently exist in online purchasing - a fact I suspect will change in the not so distant future.

Personally, I think this standard will start to crumble. Mainly because more and more authors will walk away even when the advance is large, because they can make more money getting the whole 70% instead of 17.5%. Publishers will realize that they HAVE to change the %'s in order to have any authors willing to sign. So in the future I think the roles will reverse with 30% going to the publisher and 70% staying with the author.

If I were negotiating a contract, which I am, I would work to get the language to say that the % needs to be evaluated every year and adjusted to the industry standard. That seems at least "possible." This solution is not ideal by any stretch of the imagination. It will result in the author still receiving (IMHO) a smaller percentage then they should, but for now I think its the best that can be hoped for.

I'm interested in what others have seen in their contracts or what they think might be a reasonable alternative.

21 comments:

Christopher Wills said...

I value your points and your experience and I love your blog.
However I think in the near future fiction will only be available in ebook form, except for special edition sets, like the complete works of Hemingway or Dickens etc. These printed books will be luxury items priced at $50 to $100+ per book to suit small print runs.
So the fiction author should consider, what can a publisher do for them? At the moment I have not heard of one publisher say anything about helping to market an ebook on its own. So why should a fiction author give a publisher any % for doing nothing?
I believe many authors and would-be-authors are signing contracts with publishers and agents at the moment, that they are going to regret in the next year or two. Have you read J A Konrath's latest post?

http://jakonrath.blogspot.com/2011/02/numbers-game.html

He makes a strong case.

Robin Sullivan said...

The last data on ebooks is 9% of book sales I think that number is low, but even if it is 15% we are still a long way from a "paperless" world for books.

You are corerct in that the big publishers are not focusing on ebooks - but their eyes are turning this way. Once they do then techniques they used in bookstores (like coop pricing) will be applied there and the even playing field will not be so even as it once was.

As for signing contracts that they will regret - I agree. the 17.5% to 52.5% is not fair but it is what it is. Until there is a substantial number of authors walking away publishers won't adjust it.

And yes...I've read and commented on Joe's post. For THIS author - he is 100% correct (because they already have an audience). For others it might make sense (although not financial sense).

SlingWords aka Joan Reeves said...

Hi, Robin,

I come to you via Joe's blog. I've found your articulate comments about indie publishing insightful and sound.

I think a lot of people are beginning to recognize the value of ebook rights. The average author simply doesn't have the clout to get a contract changed from boilerplate so retaining ebook rights while licensing print rights is probably unrealistic as you point out.

Today I just heard of an audio book rights company that now wants the ebook rights if an author contracts for audio book rights.

I think you'll see more of these attempts to gain ebook rights in combination with licensing other rights so it's not just print publishers trying to lock them up for the future.

Robin Sullivan said...

@Slingwords - I agree - personally I thin ebook rights are the most valuabe of rights but unfortunately the ones that have the greatest disparity between author and pubisher.

Anonymous said...

I am not an author but in my opinion the book business will evolve to one where authors keep ebook rights and self publish their books. Those that are successful will then go on to sign contracts with the big publishers to print and distribute said successful books. The reason I think this is the way it will go is because in reality the trad. publishers add very little or no value to ebooks and you can't keep getting customers if both sides are not benefiting. On the other hand they do have great value as printers/distributors and as they will be able to pick KNOWN winners they should be able to make plenty of money doing that. Both sides will do well under this system, it just has to get over the hurdle of the big publishers thinking they are the 'landed gentry' and the writers are the peasants of the book business.

Robin Sullivan said...

@Anom - I'm sorry but I can't agree. As a business person I don't want to enter into a business arangement where my competition (in this case the author witht he same book in ebook form) can offer the same product at a fraction of what I can.

What you are saying is true - they don't offer any value add to the ebook - now...but the more likely scenario is that they will work to change ebook marketing such that it uses a system similar to print coop - where they have to pay a large $ fee to get their books in recommendation programs and it is this way that they will force that environment to no longer be an even playing field. With a big $ outlay the traditional publisher will once again have a real reason for the author to need them as opposed to going it on their own.

Anonymous said...

Hi Robin,

I just wanted to make a comment about what you said here:

"...but the more likely scenario is that they will work to change ebook marketing such that it uses a system similar to print coop - where they have to pay a large $ fee to get their books in recommendation programs and it is this way that they will force that environment to no longer be an even playing field. With a big $ outlay the traditional publisher will once again have a real reason for the author to need them as opposed to going it on their own"


I don't see this happening for one reason - Big Publishing does not have the resources right now do this. Add the fact that bookstores like Borders (and others around the world) are having financial trouble, which means financial trouble for Big Publishing, then they will be forced to change their policies when it comes to signing contracts with authors. Another problem for Big Publishing is that they also do not have the resources to convert their existing inventory into e-book format, which they need to do if they want to stay afloat. I'm not sure what will happen in the publishing world in the next year but what I do know is that it is going to change drastically and the change will happen fast.

Eric Hendrixson said...

Hi, Robin. I've attended a couple of your workshops and look forward to the next one.

When Eraserhead Press published Bucket of Face, I was surprised to find I owned full electronic rights. They do this because their printing and distribution have nothing to do with whether or not ebooks sell. However, they did make an investment in editing, layout, and other publisher stuff.

Out of gratitude, I'm giving them about a year of exclusivity they didn't ask for. Bizarro is a strange, West Coast thing. We operate on a system of good will: "Be excellent to each other and party on, dudes." It's still small enough to do that. I'm sure things would be different with a larger press.

Robin Sullivan said...

Hey Anon - going to take your comments one at a time....

I don't see this happening for one reason - Big Publishing does not have the resources right now do this.

It's already happening - the Sunshine Deals that ended on June 15th was essentially a "co-op" marketing. 600 books got "more attention" during 15 days and drove a lot of them to the top of the rankings. I think we'll see more of this in the future.

Add the fact that bookstores like Borders (and others around the world) are having financial trouble, which means financial trouble for Big Publishing, then they will be forced to change their policies when it comes to signing contracts with authors.

I'm not sure what "changes" you are expecting them to do - please explain further and I'll comment.


Another problem for Big Publishing is that they also do not have the resources to convert their existing inventory into e-book format, which they need to do if they want to stay afloat.

This is a "no-brainer" for the big publishers - it is low hanging fruit. For a book that is already edited and has a cover design - to convert it to ebook takes only a few hours. To invest 2 hours to get a huge chunk of sales is a model that every bean counter can understand. They'll outsource this at $50 - $100 a pop and more than make up for the costs once they go live.


I'm not sure what will happen in the publishing world in the next year but what I do know is that it is going to change drastically and the change will happen fast.

Yep we can all agree that changes are occurring quickly - which is one of the reasons to keep abreast on what is going on.

Robin Sullivan said...

Hey Eric - if you have the rights - I say run with it. If they are not going to produce the ebooks then its not like you are taking something from them - its just unclaimed sales. My experience has been that lack of an ebook version does not lead to a pbook sale - it leads to a "loss sale" so get it out on the market - you'll actually be helping the pbook sales as more people will be talking about the the book and those not into ebooks will buy their version.

Eric Hendrixson said...

But I want my publisher to make money. Otherwise, who will publish my next book? If I'm competing with them on Amazon for sales, and undercutting their price, isn't that kind of rude? I'd actually feel better about this if they got got a cut of my ebook sales.

Robin Sullivan said...

Eric - perhaps you misunderstood me. I'm not saying retain your ebook rights and compete against your publisher on Amazon. I'm saying that you will have to give up your ebook rights (any good publisher will want them) but the revenue sharing that is currently industry standard is too weighted to the publisher. My point was make sure your contract will adjust the share as the industry changes. I do believe they will change and if your contract doesn't allow for escalation you'll lose some substantial money.

Eric Hendrixson said...

Robin,
I agree that in most cases publishers get too large of a share of ebook sales. In my case, I got full electronic rights, but to exercise those rights, I have to compete with the publisher, since the ebooks will be sold where the print books are. They're fine with it, but I feel awkward about it. I may just be over-thinking it. Thank you for your advice and for the blog. This is my first book, so I'm learning a lot.

Eric

Robin Sullivan said...

@Eric - count your blessings that you have your erights - that is VERY unusual. Leverage that advantage - is my best advice.

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