Pub Rants

Game Changer

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STATUS: I’m not at the office late. That’s news!

What’s playing on the iPod right now? IT’S THE END OF THE WORLD AS WE KNOW IT by R.E.M

Unless you’ve been living under a rock, you should have heard the news by now. Apple had released its new tablet PC called the iPad. Think bigger, badder iTouch.

Just in case you just crawled out from under that rock, here’s a link to get you up to speed.

Most folks in the industry see the Apple announcement as a game changer—a company big enough and nimble enough to give Amazon a run for its money in terms of being the dominant player of eBooks.

As agents, the electronic rights playing field is literally shifting daily. (Ah, where did those sleepy days of just doing book deals go?)

One can imagine that The Goog will not be too far behind…

What this all means for the future is not entirely clear and I’m actually not going to speculate in this entry.

What I do want to say is this. This is the first time I’ve had to do a major shift in a negotiation literally mid-stream because of a news announcement.

In short, previously publishers have sold books to an entity like Amazon wholesale. In other words, the entity has bought a certain number of “books” in bulk at X discount. Then an entity like Amazon takes the ebooks and makes them available at a price they deem (which has been $9.99).

Apple’s announcement is changing the way publishers will be doing business moving forward. Instead of buying wholesale, Apple is saying “hey, we’ll simply be a portal for you to sell your books and we are going to ask for a 30% commission for the privilege. You get to keep the other 70% (with the main caveat that the eBook not be priced over $14.99)

On the heels of this news, Amazon announced a similar structure.

I see all of you are starting to do the math in your heads. Why should an author be stuck with a crappy 25% of net amounts received in this kind of deal?

Why do we need one lump catch-all royalty at all?

Some other random thoughts as I contemplate the massive changes publishing is going to undergo in the next five years.

1. eBooks are unreturnable. There would be no need for a publisher to hold a reserve against returns on that format. Language should be inserted in the contract addressing just that.

2. Will advances go the way of the dinosaurs? If so, what will become the main factor for choosing one “publisher” over another?

3. Will publishers finally update the royalty statement accounting periods? If eBook becomes primary format, there is no need to be 6 months behind (so as to account for returns according to publishers) in the generating of statements and the paying of royalties earned. There is no reason not to do this monthly.

And these are just a few things that immediately pop to mind…..

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27 Responses

  1. Stephanie L. McGee said:

    Interesting things to take note of for certain. Glad you didn’t have to stay late today. But I wish it was a Friday for you for that reason. Because then you’d get to enjoy your weekend that much sooner. Hope tomorrow goes as smoothly for you.

  2. Sharon Mayhew said:

    Really interesting thoughts, Kristin. I’ve been (totally) against all of the kindle like gadgets, but you’ve brought up some good points. Thanks for sharing.

  3. Eva said:

    What happened to words on pages? All this gives me a headache. Too bad I can’t stay in the dark ages forever.

  4. Gary Arndt said:

    The biggest question is “why do you need a publisher at all?”

    Printing and distribution issues will become a non-issue.

    The only real function which can be provided is that of publicity. The more famous an author is, the less they need a publicists.

    If JK Rowling decided to write another Harry Potter book and sell it only via iTunes and Amazon, why would she need anyone else to take a cut? She could probably do an exclusive with Apple or Amazon and get better than 70%.

    The book publishing business is going to face the same issues music publishing companies and newspapers have faced.

  5. Matt said:

    Changes in author contracts are coming, absolutely.

    But at what point are authors and their agents going to start fighting for them? Is it going to take a large group or a big name to make these changes happen?

    Publishers certainly aren’t going to volunteer to raise that 25% net number or to pay clients more regularly (getting to hold on to someone else’s money and earn off of it is probably one of the reasons publishing is even profitable).

  6. Dreamstate said:

    Wow. I mean… wow. Is this keeping you up at nights? Your head must be whirling as you try to work through all the permutations and implications of these changes. THIS is why we go through the pain of querying and getting an agent. What would authors do without wonderful agents to guide them through this tricky stuff!

  7. Phyllis said:

    After having seen the introduction of iBooks and the prices, which are higher than Amazon’s, I wondered if this will determine the timing of e-publication. Maybe, in analogy to hardcovers and mass market paperbacks, books could first be published via iBooks, more shiny, maybe with additional content, and at a later point via Amazon.

    Do you think somebody is thinking along these lines?

  8. Kelly Bryson said:

    Why should an author be stuck with a crappy 25% of net amounts received in this kind of deal?

    Kristin- could you explain how you got the 25%? If iPad takes thirty, agent gets 15%, that means the publisher gets what, 60%?

    Why wouldn’t you keep your digital rights and epublish yourself, maybe after a three month lag? Is that prevented in traditional publisher contracts?

    Thanks for this information. You never know what you don’t know;)

  9. Robin said:

    Brave new world. No returns! What a concept.An ebook publisher that had monthly statements and fair compensation to authors. It’s bizarre to think of a paperless publisher!!!
    Phew. Should we be feeling cautiously optimistic?

  10. skottk said:

    Kristin, I was wondering what you meant in your closing point 1 about reserves. You’re not talking about Kindle, there, are you?
    Surely Amazon doesn’t buy Kindle download licenses in blocks of a thousand and then demand refunds for the ones it doesn’t sell.
    Or are you looking ahead to the days when most books are sold via agency-model download instead of presold reserved retail?

    Seems to me that would hasten the transition toward POD fulfillment of smaller print runs, which should also argue against reserves.

  11. Vivi Anna said:

    I find it mind boggling the changes that are going to have to happen for authors in reference to ebooks.

    Publishers have to change their archaic system when it comes to them.

  12. Susana Mai said:

    Woah, I’m surprised more people didn’t jump on this post.

    I know you asked a few questions yourself, but what exactly does this entail for agents and publishers and even authors? Is a 30% commission fee worth it?

    As for choosing one publisher over another…I still think at the end of the day, even if publishers aren’t physically publishing books anymore, you still need the middle man, perhaps to make sure you’re not gettting screwed over by Amazon+Apple. Then again…I suppose agents+editors could easily serve as the middle man, which means that their jobs would likely get harder for what seems like little monetary gain. Sigh. How frustrating.

    Times they are a changin.

  13. Dara said:

    I still think the iPad device itself is overrated. Especially since it’s essentially a fancy netbook.

    Also, not fond of the fact it doesn’t use eInk technology. I wouldn’t be reading a book on it because of the eyestrain factor.

    Now of course all the other changes it might precipitate, well that could get interesting indeed. Although I’m not entirely sure it’s going to become the next iPod or iPhone.

  14. Candace C. Davenport said:

    As a fairly new small indie publisher specializing in the little book niche, we were lucky to come into the publishing world without any pre-conceived notions based upon history. But even in the time we have been publishing (around 2 years), the industry has changed so much that we have had to adjust our business model.

    For any publisher to remain in the frey, they will have to rapidly adjust their business model or they will not make it. Amazon was smart to do so with Kindle and it still may not be enough to compete really successfully, but at least they are on similar ground as the iPad.

    What this does is further open the avenues for writers to get their work out into “print”, which ever way they choose. There is more than enough to go around!

  15. Sarah Tormey said:

    If advances do disappear, I think choosing a publisher would come down to which marketing/sales/editorial team an author feels would be best for their book.

    I haven’t heard anything specific, but I am wondering if Apple will charge additional fees for prime “new release” placement on the homepage. If that is the case, an author will still want to select a publisher willing to support their books with coop dollars.

    Perhaps the conversation should not focus on advances, but on the dollars the publisher is willing to spend on promotion and placement. Just a thought.

  16. Sarah Tormey said:

    Also, in response to Gary’s comment regarding blockbuster authors and why they need a publisher in the first place for electronic publications, I think it is important to keep in mind that e-books also require production. The publisher does have costs associated with cover design, formatting and whatnot. An e-book is much more than a electronic file of a manuscript. The people working in these positions at the various houses do not necessarily have the most glamorous jobs like say an editor, but their work is very important, at least in my opinion.

  17. Steven Till said:

    I do think the iPad will affect the publishing industry a good bit. It’s hard to predict exactly the amount of impact it will have, but it will be interesting to watch. On a side note, I’m not too fond of the name iPad. I think they should have gone with something like iSlate.

  18. Anonymous said:

    You’re very much on target with the implications that are taking shape now.

    Dave Kuzminski, P&E

  19. Christine said:

    Suddenly that direct marketing skin care scheme looks very inviting. Oh, just remembered, I love to write. Can’t stop–iPad or not–just super glad we have savvy agents out there to fight for us.

    And I agree: iPad doesn’t sound very catchy from a totally female perspective ;P. I prefer iSlate.

  20. Jenn McKay said:

    Kristen, it`s funny that I found your blog tonight…

    Just last week I sent an e-mail to Amazon asking if their 35% royalty offer (as currently stated on their web site)was negotiable. It sounded absurdly low to me, considering the current royalty model is based on the cost of producing a hardcover.

    Amazon responded by saying the royalty was NOT negotiable. I`m glad I read your blog!

  21. Stephen said:

    Gary, there are hundreds of new ebooks available each month that haven’t come through publishers. And I ignore them, because I’ve discovered that they’re generally crap. I don’t have the time to winnow through the slush looking for gems.

    For me, the function a publisher has (and the agents, editors etc) is to act a gatekeeper and only let the good stuff through. Printing the book is secondary. Somebody will have to come up with a better way to do this before publishers fade away.

    Kristin, something else to think about. Geo-restrictions are hurting overseas sales of ebooks. If you sell a book to the NA market only (no overseas publisher picks it up), I can still legally buy a copy of the paper book overseas, it will just be mailed to me. However, they won’t sell the ebook overseas, evidently the ebook store is treated as a distributor, not a store. Agents and publishers need to get this sorted out before ebooks become a really big thing, or you’re going to lose out.

    Even if you do sell a book to an overseas english market, they often don’t release an ebook version, (or if they do, nobody can find it – all the stores are in the US) so we’re still out of luck. You’re just training all your potential overseas customers to become pirates, and nobody wants that.

  22. Robin said:

    I just saw that Macmillan has been given the old heave ho by Amazon. With the news of the ipad and Apple selling ebooks, Macmillan felt brave enough to protest the 9.99 ebook price and Amazon gave them the boot. How can Amazon lose a top six publisher and still survive? Lord knows there are other places to order books. Who should authors be rooting for? I’d like to think the extra cash would see its way into authors hands, but I’m skeptical.

  23. Gilbert J. Avila said:

    Helen Stringer said that her debut novel “Spellbinder” (The Last Ghost–U.K. title)
    is still available at Amazon U.K. Have many of your clients been caught in the imbroglio?

  24. Aleksandr said:

    Very interesting I was thkinnig the same thing that James was thkinnig bearing in mind that the picture was taken the morning of Jan 1st. MMMM Must have been a great party!