Pub Rants

You Need A Reserve For Returns For eBooks Like You Need A Hole In Your Head

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STATUS: I had a To Do list a mile long but I buckled down and just concentrated on it. The fact that I only got 70 emails rather than my usual 120+ today made a big difference in accomplishing what I did.

What’s playing on the iPod right now? HEY, SOUL SISTER by Train

It’s been awhile since we’ve talked about contracts. I know. Your favorite thing but to be honest, contract language is ALL I’ve been thinking about for the last 3 weeks since Apple made their big iPad announcement, Amazon pulled the links for Macmillan titles to flex some muscle, and publishers such as Macmillan and Hachette moved solely to an agency commission model for the sale of eBooks. (See sidebar tags for “publishing contracts” and “electronic books” to get up to speed on these past events.)

The hardest part about being an agent right now is figuring out what dang language to put in the contract when terms are changing, literally, every week.

But today’s topic is a no brainer when it comes to contract terms that need to be revisited in light of the ever-changing eBook landscape.

Publishers, in the old school world of actually selling physical copies of the book, like to hold a reserve for returns on any given title. This reserve is usually specified on the royalty statement (although some publishers do not include that info and then we as the agency have to specifically request it). Because publishers sell books to booksellers who can then later return them for full credit or refund, they have to hold a certain percentage in reserves to account for the possibility of all these returns. Publishers like to hold reserves on each specific edition of the title.

Got that?

But here’s the interesting thing. Some publishers are holding a reserve on the eBook edition.

Right. Explain to me how somebody would return an electronic book. They can’t. eBooks are non-returnable so why would a publisher be holding a reserve for returns on an electronic edition?

What a good question. They shouldn’t be. So now we’ve implemented policy here at the agency to make sure that no reserves are being held for eBooks on any past contract where that was not specified (which means we are having to ask when each roy. statement arrives and make sure reserves are not held). Oh what fun!

And on future contracts, we are including specific language that no reserves will be held on the electronic edition. And yes, if you don’t specifically raise a ruckus about this, some publishers are holding a reserve on the eBook (not all, mind you, but some are).

Oh, I’m going to be ranting about this kind of stuff all week so stay tuned. Those of you who are agented authors, aren’t you glad somebody is worrying about this stuff on your behalf?

38 Responses

  1. NipponBeck said:

    … wow, am I glad that all I have to worry about is getting an agent at this point! (And that’s bad enough – waiting for responses on my first queries ever is nervewracking, to say the least.) These publishing contracts sound so daunting.

  2. Anonymous said:

    I returned an eBook the other day… it was an accidental purchase. It probably isn’t quite what you’re discussing though. 🙂

  3. Aimee said:

    Wow, that’s insane! Also, I had to laugh when I saw that “Hey, Soul Sister” was playing on your iPod because my four year old and his friend have randomly been belting that out lately.

  4. Stephanie McGee said:

    You’re talking an amount of money, right? Not a number of actual books? (In the original model, not the changing e-model.)

    Numbers don’t mix well with my brain so I’m trying to work this out. Thanks for all the great information you share on the blog.

  5. Jimmy Ng said:


    It’s kinda like collecting a garbage fee for deleting your electronic files.

    Thanks for this! I’ll have to keep this in mind for sure.

    Jimmy Ng

  6. Stephen said:

    I can return an e-book in some stores, but only before I’ve downloaded it. Once I’ve downloaded it, it’s not returnable. However, in these cases I’ve only got store credit in return, so I suspect the store is not getting the money back from the publisher anyway, so your point still stands.

    The only time I’ve had to do this is when I pre-purchased a book, and then when it finally came out it was not available in the format I had been promised, or was now geo-restricted.

    I would hope that having returns for ebooks is because they just haven’t thought about it and are doing the same as they always have, but I suspect some of them are trying it on.

  7. Alli said:

    And this is yet another reason as to why agents are invaluable. Oh boy, I don’t envy the job of an agent… thanks for bringing this to our attention, Kristin.

  8. Anonymous said:

    Some years ago I wrote and sold a shareware computer game. People bought and payed for it with a credit card.

    Most software has a sort of non-fit-for-purpose catch-all disclaimer (which is bizarre, but there it is), and so you’d think people couldn’t return it. After all, with most software there’s no way for the supplier to ensure that all the user’s copies of the product have been destroyed.

    Nevertheless, someone (apparently) used a stolen credit card to buy a copy of the game, defeat the DRM, distribute it on the internet, and then the proper owner of the credit card (apparently) got a refund.

    Amusingly, this was the last transaction I had with the banking company – sales petered out (I wonder why!) and because I’d already collected a cheque from the original (very few) sales, my resulting bank balance was a debt to the tune of one copy.

    Irrelevant? I don’t know: certainly the medium is much the same (internet distribution), the chance for banking stuff-ups exists (credit card fraud etc, or customers making wrong purchases).

    But that one little brush with piracy makes me wonder if it’s more of the big issue in the long-term ebook business than funding returns.

  9. Joseph L. Selby said:

    Actually, your posts on contract specifics are usually my favorite. While I find your comments on queries and first pages helpful, it’s the contract discussion posts that I do not find on any other blogs. Please keep them up.

  10. Lisa Blandford said:

    Why I am grateful YOU are the agent and I am the author! Thanks for all you do, Kristin, and all the FREE information and advise you provide on your blog. It is truly priceless!

  11. Kimber An said:

    “The fact that I only got 70 emails rather than my usual 120+ today made a big difference in accomplishing what I did.”

    You lost me after this line ’cause all I could think was, “What kinda coffee is she drinkin’ and where the heck can I get me some?”

  12. Jess of All Trades said:

    This is why agents are worth every penny. The concept is simple but just figuring out that they’re Doing this, and shattering my illusion that people aren’t greedy is more effort than my brain usually puts out…

    Thanks for your work. Fight the good fight!

  13. Stuart said:

    “It’s been awhile since we’ve talked about contracts. I know. Your favorite thing… “

    Actually, it is something I look forward to here. 🙂 Thanks!

  14. Carl said:

    I think “returns” refers to returns to the publisher, not to the store. Individual store policies about returns vary, but the publisher is not going to take a return on an e-book.

    Am I understanding this correctly?

  15. Anonymous said:

    I’ve been selling a novel on the Kindle for the past six months. In that time, I’ve sold a few thousand copies, and I’ve had over 100 returns.

    Maybe not big enough numbers to warrant a reserve, but you definitely can return ebooks.

  16. Tara said:

    I’m not yet agented, but I’m still glad you’re worrying about it. And sharing in your blog. One more question for my future agent.

    Thank you!

  17. Rebecca Knight said:

    I LOVE it when you discuss contracts :D! Even for us non-agented folk, knowledge is power. We’ll need to know this info someday soon.

    Thank you for paving the way on all of this e-rights craziness :).

  18. Kimberly Kincaid said:

    I know Amazon will let you return a Kindle download if you purchase by accident (those tricky buttons and all…I jest, but I actually did order something by accident when my Kindle was brand spanking new, heh). Does anyone know what the deal is once you’ve viewed it, though? It would make sense that after that, you’d have to keep your purchase. Akin to “cracking the binding”, as it were.

    Thanks for this knowledge. I’d like to think that these companies aren’t trying to pull one over on agents and authors on purpose, but it’s possible that I am just a rose-colored glasses kind of girl when it comes to that.

    All the more reason to have an agent…

  19. Samantha Clark said:

    I’m not yet an agented writer, but yes, I’m VERY glad someone is looking out for these things. With the industry changing so much, I’m sure it’s challenging for agents right now. But it sounds like you’re thinking of everything.

    Thank you

  20. Mags said:

    Yes, the returns are on hard copies of physical books from the retailer, not individual consumers making returns. The retailer can return the books (and I believe they have to be in saleable condition, right? Though I don’t know the criteria for that). That allows the retailer to have inventory of books for the buyer to browse, but not be stuck with stock that doesn’t sell. The retailer can afford to order more books and offer a wider selection to its buyers.

    However, under the current system most ebooks are wholesaled, so I think the retailer buys “copies” of the books (that is, the right to sell X amount of copies of the ebook). I don’t know what provisions are made for wholesale licenses that aren’t sold. Or does the retailer only pay the publisher/distributor upon sale? In which case, there would be no cause for “returns.”

    However, under the agency system, as the retailer never has “possession” of a book, but only acts as a pass-through from the publisher/distributor to the buyer, there definitely is no case for returns at all, as Kristin has said.

  21. Jeff Baird said:

    Rant request This one is great! That is why I am looking for an agent to figure this stuff out!
    I looked over Author Camaraderie and Lessons from popular Books looking for what a good agent expects from an author. I also checked out Jackson and Reid and can’t find anything on their sites. Yes we have to promote but to what level? Also, reading the Tipping Point by Malcolm Gladwell which I think is responsible for Stephanie Meyer’s huge success. I love her books and really like her easy read style. But what exactly can an author do across fifty states and five markets, TV, Internet, Radio, Paper and magazine to help a good agent promote us? Can’t go to 1000 Barnes and Noble stores! I know your busy and love your site.

  22. Paula B. said:

    Yes, Amazon does let you return Kindle books. In fact, every month a couple show up on my sales report for my Kindle books. I never could figure out what kind of a person returns a 99-cent ebook (some of my articles are priced at that level), but they do.

  23. Barry said:

    I am more of an old school, I like to hold something in my hands rather than digital format.
    I noted that looking at screens such as TV, computers for an extended period of time can cause a strain on your eyes.

    Long term strain on your eyes is no good. I find it hard copy print easier on the eyes.
    Don’t get me wrong technology is a wonderful thing.
    take ipod for example they tend to break faster while MP3 players from two certain brands last a bit longer.

  24. Barry said:

    I almost forgot,
    There are different kinds literary agents.
    A right kind of agent is worth every single cent.
    Of what i read, there are certain kind of agents and publishers that are willing to squeeze every single penny from a writer.

    I live in Canada, in a remote Indian Reserve, I doubt that I would be accepted by any agent. Not of my exterior. But of what I write. Like my online friend, I don’t like to be put in a category.
    The agents won’t take me seriously as a writer. And being unable to travel considering that my home town doesn’t have access to highways.
    A flight to a nearest town with a highway cost 1100.00 CAD one way.
    I am not afraid to tackle anything that comes to mind.
    In loose translation, you have to get your foot in the door.
    Writing is basically taking risks and having a thick skin.