Authors Guild (finally) talking about deep discount clauses

[fjtorres]

From The Authors Guild:
https://www.authorsguild.org/industr...-double-cross/

Via The Passive Voice Blog:

http://www.thepassivevoice.com/2015/...-double-cross/

Note that the AG is merely talking, not doing. But still, baby steps:

In our last installment of the Fair Contract Initiative, we detailed how publishers’ outdated accounting practices consistently delay and minimize authors’ royalty payments. But that’s not the end of the story. In another common practice, publishers routinely use contract provisions to slash authors’ royalties to mere pennies per copy sold.

Standard trade royalties are based on a percentage of the publisher’s list price. But publishers have come up with a variety of clever methods to base royalties on the much lower net amounts they actually receive from booksellers and wholesalers. Then they add insult to injury by cutting the royalty rate itself by as much as two-thirds. When an author gets paid on less than half the list price, that’s bad enough. When an author gets paid only one-third the normal rate on that reduced price, the word “pittance” seems appropriate.

So-called “deep discount” clauses let publishers offer titles to booksellers and wholesalers at big markdowns. They stipulate that a publisher’s sale at a discount of over 55%, for example (a number that appears to be the new standard), the author’s royalty suddenly drops from, say, 15% of list price to 15% of the far smaller amount the publisher actually receives. A standard deep discount clause looks something like this: “On copies of the Work sold by the Publisher at a discount of greater than 55% from the publisher’s retail price through channels outside of ordinary retail trade channels, the author will be paid a royalty of 15% of the Publisher’s net proceeds.” (Many smaller publishers, which pay royalties on net proceeds to begin with, often slash the royalty rate in half on discounts from 50–70%, and by 2/3 for greater discounts.) Thanks to that drop in royalty payments the publisher makes out like a—well, the word “bandit” springs to mind.

It seems fair that when a publisher sells a book at a deep discount, the author’s take might be reduced proportionally. But there’s no proportionality in many standard “deep discount” clauses.

Let’s do the math on a hypothetical book with a list price of $10: At a 55% discount to retailers, the publisher would receive $4.50 per copy, minus the author’s 15% royalty of $1.50. That leaves the publisher $3.00 before printing and other expenses. Increase that discount to 56%, and the publisher receives only $4.40 from the sale. But under some “deep discount” clauses, the author’s royalty would suddenly plummet to 15% of that $4.40—just 66 cents—thereby magically increasing the publisher’s take to $3.74.

More at the AG.

At the Passive Voice, two comments of note among many...
...first, the host:

PG says some authors get excited when they see their books in Costco. Unfortunately, it’s almost certain that their Costco sales will fall under the deep discount royalty structure, generating only tiny royalties.

Then, there are publishers who sell virtually everything at “deep discount” so the author never receives the royalty rates that are listed first and most prominently in their publishing contract.

PG has mentioned this before, but perhaps it bears repeating. During PG’s legal career, he has helped clients with a wide range of business contracts, including agreements prepared by many of the largest and most successful companies in the world.

Standard publishing contracts from large traditional publishers stand out in the constellation of business contracts for their one-sidedness and, in some cases, outright duplicity for anyone who fails to read them very carefully. The way that Randy Penguin and its cohorts write their standard contracts is not the way that Apple, Microsoft, Morgan Stanley, Bank of America, Disney, Intel, Hewlett-Packard, American Express, Merrill Lynch and similar entities write their contracts.

PG doesn’t agree with many initiatives undertaken by the Authors Guild, but he’s pleased to see their latest efforts to shine a light on some of the most abusive contract provisions routinely employed by Big Publishing.

However, the cynic in PG holds little hope that AG’s efforts will bring about any meaningful reform. Treating authors badly is too much a part of the corporate and cultural DNA of traditional publishing to change.

And second, from KKR:

http://www.thepassivevoice.com/2015/...comment-333921

Finally.

I’ve been seeing this for years from writer friends. Unfortunately, the information they shared with me was confidential. They said I could use it as a general bit for my blog, but not in specific, even when I asked to send to others with the name and personal information removed.

Not only are deep discounting clauses being used for paper books in a myriad of ways, but they’re also being applied to ebook sales. So, if a trad pub is offering the first book in a series for $1.99 on Kindle, you can bet that sale will be accounted as a deep discount…and the author will get even less than 15% of net, minus agency fees.

It’s really ugly in trad pub contract and royalty land these days. That’s why I continually tell writers who want to be trad pubbed to hire a LAWYER to negotiate their contracts, not an agent (even if it were legal for an agent to do it, which it is not. [sigh]). But do these writers listen? Nope.

And that, folks, is the status quo in Manhattan Publishing.

https://en.m.wikipedia.org/wiki/Lion%27s_share

That is is how Amazon, Costco, B&N, etc can offer 40-50% discounts on books. No, they are not selling below cost (as the DOJ confirmed) but rather getting discounts that *boost* the publisher's take take so that the discount comes out of the author's hide. Generally, those deals (with Amazon, at least) include no returns clauses so the publisher's take is free and clear.

The dirty secret of tradpub these days is there are two different business models: the "traditional" low volume full price/full royalty independent bookstore model (with returns) and the "big boy" model where the big discounts drive high sales volumes. (For assorted values of "high") In the publishing media the BPHs and their apologists pretend they prefer the old timey model but the truth is they encourage and exploit the discount model.

And, this whole set of contract gotchas is yet another reason why big name authors and tradpub supporters harp so much on the (ever declining) advances. Royalties are a minimal part of tradpub income, assuming the book ever earns out.

One way or another, the BPHs get their Lion's Share. They always have.

The only thing that has changed is that that tradpub is not the only game in town and people are (finally) talking: the classic threat "you'll never work in this town again!" no longer has much bite as formerly tradpub authors in droves are quietly (and not so quietly) going indiepub. And many, if not most, newcomers to the game are forgoing the tradpub query-go-round time sink altogether. (As a friend of fine puts these things: "Gee, 70% of the reader spend vs 10.5% or less? Basic intelligence test, no?")

Those that think all indie titles are substandard had better reconsider because many of the best reads now and in time to come will be found among them.

The digital evolution marches on. The new battlefield is transparency. No more omerta.

About frakking time!

[artifact]

A bit of a tangent:

Am I correct in assuming that the Kobo super coupons fall under these discounts and could be hurting authors in the end? Or since the BPH doesn't do coupons the little guys aren't so bad and the authors aren't (as) shafted? I've always had concerns about this.

[GeoffR]

From the AuthorsGuild article:

A standard deep discount clause looks something like this: “On copies of the Work sold by the Publisher at a discount of greater than 55% from the publisher’s retail price through channels outside of ordinary retail trade channels, the author will be paid a royalty of 15% of the Publisher’s net proceeds.”

Originally Posted by fjtorres

That is is how Amazon, Costco, B&N, etc can offer 40-50% discounts on books. No, they are not selling below cost (as the DOJ confirmed) but rather getting discounts that *boost* the publisher's take take so that the discount comes out of the author's hide. Generally, those deals (with Amazon, at least) include no returns clauses so the publisher's take is free and clear.

Originally Posted by artifact

Am I correct in assuming that the Kobo super coupons fall under these discounts and could be hurting authors in the end? Or since the BPH doesn't do coupons the little guys aren't so bad and the authors aren't (as) shafted? I've always had concerns about this.

I don't know about Costco, but how could selling a book through Amazon, B&N or Kobo be considered "outside of ordinary retail trade channels"?

[Rizla]

Originally Posted by fjtorres

Those that think all indie titles are substandard had better reconsider because many of the best reads now and in time to come will be found among them.

Good to see someone is doing something to protect the producers of the art, but I'm not sure I agree with your above comment. I am personally yet to find any decent self-published works. The exception is The Martian and that was subsequently picked up and traditionally published.

[Cinisajoy]

Originally Posted by Rizla

Good to see someone is doing something to protect the producers of the art, but I'm not sure I agree with your above comment. I am personally yet to find any decent self-published works. The exception is The Martian and that was subsequently picked up and traditionally published.

Rizla,
What genre do you read?

[Rizla]

Originally Posted by Cinisajoy

Rizla,
What genre do you read?

Science-fiction, Fantasy, adult or YA. War and spy books. I'll read anything if it grabs me.

I started a thread about it: https://www.mobileread.com/forums/sho...35#post3207535

I don't want to be a hater, but I've yet to find anything self-pub that "got" me (apart from The Martian).

[Dazrin]

Originally Posted by Rizla

Good to see someone is doing something to protect the producers of the art, but I'm not sure I agree with your above comment. I am personally yet to find any decent self-published works. The exception is The Martian and that was subsequently picked up and traditionally published.

One of my favorite series from the last few years its the Wool/Silo series by Hugh Howey which was also picked up after the fact (for print only). Then there are people like Amanda Hocking or E.L. James who have made HUGE amounts of money by getting a traditional publisher after the fact. Of course you may not think some of these are very good but obviously someone does.

Here is one list that purports to compile some of the authors who have started out self-publishing and then gone more traditional:
http://www.huffingtonpost.com/ronald...b_4064574.html

There are also a number of authors who started out traditionally published but have gone the other way for various reasons (more money, trad. publisher not marketing them, disputes, etc.). The most outspoken that I have run across is J.A. Konrath.

[DiapDealer]

Originally Posted by Rizla

I don't want to be a hater, but I've yet to find anything self-pub that "got" me (apart from The Martian).

You know that putting (The Martian) in parentheses doesn't change that fact that you've now read a self-pubbed book that you thought was really good, right?

Unless, of course, you truly believe that another self-pubbed book that "gets" you will never come along, then it's probably time to stop with the "They all suck (except for the ones that don't suck)" mantra.

[Little.Egret]

Originally Posted by Rizla

Good to see someone is doing something to protect the producers of the art, but I'm not sure I agree with your above comment. I am personally yet to find any decent self-published works. The exception is The Martian and that was subsequently picked up and traditionally published.

The obvious examples would be non-backlist titles from Kristine Kathryn Rusch (and non-fiction too).

[fjtorres]

One genre that has flourished under indie pub is superhero fantasies.
I can list maybe three original projects from the tradpub gang versus hundreds of good and interesting series from the indie side. And when you factor in current comic books prices, the prose novels are great buys for those looking for old-fashioned fun.
Ditto for young adult paranormal adventure/ghost stories and more traditional variants of fantasy.
And historical fiction.
(Check out Libbie Hawker.)

In general, the entertainment-focused genres are booming in indies.

Conversely, the single genre that has least benefited from the ebook evolution is litfic.

[fjtorres]

Originally Posted by Little.Egret

The obvious examples would be non-backlist titles from Kristine Kathryn Rusch (and non-fiction too).

And Dean Wesley Smith. For equally obvious reasons.

And Lois Bujold (among many familiar names) is now an indie.

[fjtorres]

Originally Posted by DiapDealer

...it's probably time to stop with the "They all suck (except for the ones that don't suck)" mantra.

Exactly.
When traditional publishers are publicly and openly complaining that they aren't getting as many good manuscripts and that the prices for the ones they like are going sky high you know the good writers are going elsewhere. Also, Indie publishing =/= exactly the same thing as self publishing.

"Self publishing" includes vanity press victims like Author Solutions (owned and operated by the BPHs) whereas Indie publishing includes many "micro press" operations and a few author-owned businesses that are actually bigger than many small tradpubs. (Like WMG PUBLISHING and Kevin Anderson's side business.) And some authirs are both indie and tradpub. It's not an either of proposition.

It's an entire spectrum of different business models that share one signature trait: independence from the entire agent/tradpub/critic establishment. That is where indie comes from.

[Cinisajoy]

Originally Posted by fjtorres

Exactly.
When traditional publishers are publicly and openly complaining that they aren't getting as many good manuscripts and that the prices for the ones they like are going sky high you know the good writers are going elsewhere. Also, Indie publishing =/= exactly the same thing as self publishing.

"Self publishing" includes vanity press victims like Author Solutions (owned and operated by the BPHs) whereas Indie publishing includes many "micro press" operations and a few author-owned businesses that are actually bigger than many small tradpubs. (Like WMG PUBLISHING and Kevin Anderson's side business.) And some authirs are both indie and tradpub. It's not an either of proposition.

It's an entire spectrum of different business models that share one signature trait: independence from the entire agent/tradpub/critic establishment. That is where indie comes from.

I could probably name a dozen NYT best selling indies.

[murg]

Originally Posted by fjtorres

And Lois Bujold (among many familiar names) is now an indie.

Actually, she's both.

Her new book/ebook is being published by Baen.

[Little.Egret]

Originally Posted by fjtorres

And Dean Wesley Smith. For equally obvious reasons.

And Lois Bujold (among many familiar names) is now an indie.

True but only just (I assume reprinting backlist isn't what we are discussing).

Penric's Demon 6 Jul 2015 by Lois McMaster Bujold

recommended


http://www.amazon.com/Penrics-Demon-...dp/B0114LJ3BU/

http://www.amazon.co.uk/Penrics-Demo...dp/B0114LJ3BU/
http://www.amazon.ca/Penrics-Demon-L...dp/B0114LJ3BU/