Pub Rants

Category: electronic books

The AAR Makes ‘Observations’ On Agent Roles & ePublishing

by Kristin Nelson

STATUS: I need to go home and eat dinner.

What’s playing on the XM or iPod right now? HOT HOT HOT by Buster Poindexter

Just last week, The Association of Authors’ Representatives sent out an email alert to all its members highlighting that the Board has been discussing the current AAR Canon of Ethics as it relates to agent members helping clients with ePublishing.

To sum up, the AAR realizes that the role of literary agent is changing and that many author clients will be asking their agents for assistance in making backlist titles available in electronic form.

For full disclosure, I am a member of the AAR and will continue to be in 2012.

As of this January, the AAR is not making any changes to the current Canon of Ethics but the organization is, however, sharing these observations which I’ll paraphrase here:

1) An AAR member may receive compensation only from the client for the agent’s services. Agents may not separately engage in business, ie. electronic publication, where they receive compensation from exploiting the client’s work. In short, Agents can’t be publishers and still be AAR members.

So for example, Agent Richard Curtis has a separate ePublishing company called eReads. He is not a member of AAR. And please, do not take this as any personal commentary on Richard. This is just an example.

2) Agent is obligated to inform client of all the financial implications of any ePublisher and the agent can’t take action to put his own biz interest above the interest of the client.

In other words, it pretty much is a conflict of interest for agents to be both an agent and an ePublisher as they may want their clients to publish with them instead of with some other ePublisher.

And yet, the role of agent is evolving rapidly. So what do agents do with clients who are interested in making their reverted backlist titles available on electronic platforms?

Well, I can’t speak for all agents but I can finally tell you what NLA will be doing as we launched our Digital Liaison Platform in November of 2011. And last week I did ring up the AAR lawyer to discuss our current model and whether that would be in conflict with the AAR Canon or its current observations.

It is not. In fact, he asked me to share the details of our model so as to share with the AAR board. They are reviewing any number of approaches that agents are pursuing.

And starting tomorrow, I’ll be sharing our model with y’all.

Importance Of Specifying Format Of Initial Edition

by Kristin Nelson

STATUS: Auction tomorrow. Always fun.

What’s playing on the XM or iPod right now? FADE INTO YOU by Mazzy Star

Here’s a contract tip that is both simple and yet can have a large consequence if not done.

As an agency, it’s been a long-time policy for our deals that publisher must specify initial publication format in the contract. For example, if a publisher wins a book at auction and part of them winning was a commitment to doing the book as a hardcover (for example), then when it comes time for publication, we don’t suddenly want the publisher to do the book as a trade paperback original instead.

One reason for this has to do with the author’s ability to earn out an advance. If a publisher paid a solid six-figures for something, the author is going to need the hardcover sales (with the higher price point) to earn out. Not to mention, with a hardcover initial edition, the author gets two publishing shots toward earn-out as the publisher, as a general rule, will publish the trade pb edition about a year later.

Makes sense.

Here’s another reason for specifying format of initial edition. As agents, we want to ensure that a publisher will do both a print AND electronic edition and not just publish a digital-only edition if that was not the original intent for accepting deal/contract. (Sidenote: Obviously, if an agent is selling a title to a digital-only publisher, then ebook only as initial format is understood.)

In this rapidly changing publishing landscape, and the rise of ebook sales, it is conceivable that a publisher buys a book with the intention of doing both formats and then decides later to not do the print edition and publish it only as an ebook.

I have not heard of this happening–yet. But why chance it?

Part of our job is to anticipate possible issues.

Verdict Out On Whether A Good Idea Or Not

by Kristin Nelson

STATUS: For the last three days running, I’ve made it a goal to power through all the emails while I was at Frankfurt. I started out with 170. Made good headway but now for three days running, I’ve started with 130 emails and I still have 130 emails. Can’t shake the feeling of running in place….

What’s playing on the XM or iPod right now? THIS GUY’S IN LOVE WITH YOU by Herb Alpert

As I was walking the Frankfurt Fair floor, perusing the booths on display, I stumbled upon a booth for a company called Booktrack. In short, they do sound tracks for electronic books.

Not sure what I think about that, so I figured I’d give it a listen.

The sample work on the floor was the short work IN THE SOUTH by Salman Rushdie. I popped on the earphones and gave it a listen as I read. There was ambient noise and sounds that connected with the text on the page.

Kind of reminded me of Spa on XM radio.

Did I think it enhanced the reading experience? The jury is still out on that for me.

Random House Gets A Clean Bill Of Health

by Kristin Nelson

STATUS: Leaving the office at 5 p.m. That never happens!

What’s playing on the XM or iPod right now? YOU AND I by Wilco

In good news, we’ve now gone through all our Random House statements from the spring with a fine tooth comb and I’m delighted to report that RH is not doing a wholesale change to their electronic book royalty rate on existing contracts; there was simply an error that was resolved promptly.

Contracts that have the royalty rate of 25% of retail will still have 25% of retail. Now, I have heard that they want to change any 15% of retail to 25% of net (which is actually to an author’s advantage per my previous blog entry) but I have not personally seen that so as far as I’m concerned, that’s simply a rumor for now.

As RH royalty statements are my fav in the biz and because they always resolve issues quickly, I’m back to happy.

News Flash: UNLOCKED hits USA Today and NYT Bestseller List!

by Kristin Nelson

Status: Giddy with excitment!

What’s Playing on the XM or iPod right now? nothing at the moment


I usually get the weekly NYT list around 6 in the evening but alas, it didn’t hit my inbox until 9:30 tonight but whoa, a huge surprise was waiting for me.


HUGE CONGRATS Courtney Milan!


You, my dear, are now officially a New York Times Bestselling author as well. Today, not only did your novella UNLOCKED hit the USA Today list coming in at #36, you also hit the NYT eBook bestseller list coming in at #6.


And sheesh, right during RWA 2011. That’s timing. I couldn’t be more thrilled for you.



Speaking of 25% Of Net Receipts

by Kristin Nelson

Status: Gotta hit the shower and the ground running. RWA, day 2.


What’s Playing on the XM or iPod right now? NEVER THERE by Cake

An update from blog entry 8-4-2011:

In good news, we’ve now gone through all our Random House statements from the spring with a fine tooth comb and I’m delighted to report that RH is not doing a wholesale change to their electronic book royalty rate on existing contracts; there was simply an error that was resolved promptly. Contracts that have the royalty rate of 25% of retail will still have 25% of retail. Now, I have heard that they want to change any 15% of retail to 25% of net (which is actually to an author’s advantage) but I have not personally seen that so as far as I’m concerned, that’s simply a rumor for now.


Since we’ve been speaking of 25% of net receipts and it would have been easy to miss, if you publish with Random House, you might want to take a look at your April statements again.


Random House decided they were arbitrarily just going to use the 25% of net receipts to calculate their authors’ eBook royalties in this last accounting round—regardless of what is stated in the contracts. There was no mention of it to agents or letter circulated to authors–that I know of anyway. I’m assuming some folks just weren’t going to notice?


Now for some authors, this may be an improvement over what they were getting, depends on what is in the contract. However, for probably the majority, Random House used to pay 25% of RETAIL price that would then drop to 15% of RETAIL price after the title earned out. (and yes I’m capitalizing the word “retail” for a reason).


We had so much fun yesterday doing math, I can’t resist doing more today.


Let’s say you have a mass market paperback priced at $7.99. (we might as well use the same type of figures as yesterday):


25% of RETAIL of 7.99 = 1.99 of royalty per sale to the author.


Oh how I loved Random House back in the day….


Now, if RH switches to 25% of net receipts and because they did, as a company, switch to the Agency Model in March 2011, the math would look like this:


7.99 – 2.39 (which is the 30% to the distributor such as Amazon) = 5.60 to the publisher

25% of net receipts of 5.60 = 1.40 of royalty per sale to the author


Yep, the author just lost 59 cents per sale. Add that up over X number of sales and that’s a lot of dough.


However, if an author’s title has already earned out and they are now at the 15% of RETAIL price, it’s actually a better royalty to switch to 25% of net receipts.


15% of 7.99 = 1.19


Since the author would get $1.40 calculating the other way, then it might be worth considering (but make sure RH is not doing any other deductions beyond what they are paying to the distributor).


This concludes your moment of math. We will now return to our regularly scheduled programming.


Doing The Math on Harlequin’s Move to 25% of Net Receipts but on Wholesale Model

by Kristin Nelson

Status: It’s official. RWA in New York has just begun. Most awkward moment today? Sitting on a panel that also had editors and being asked the question: what is a fair electronic royalty rate. Grin.

What’s Playing on the XM or iPod right now? BAILAMOS by Enrique Iglasias

Last Thursday, Harlequin sent out a press release announcing that for single title romances on their list, they would be switching to 25% of net receipts starting Jan. 1. 2012.

But before you begin celebrating that finally Harlequin is getting in line with the other major publishers, take a moment to look at the fine print or in this case, what isn’t there. What Harlequin didn’t mention in their press release is that as a Publisher, they are currently not on the agency model with their digital distributors—Apple iBookstore being the one exception.

So in short, this move to 25% of net is def. better than the paltry 6 or 8% of retail that they were offering but it’s not necessarily equal to what Publishers pay via the Agency Model.

Here’s why. Let’s do some math boy and girls.

Let’s say your single title Harlequin royalty rate is 8% of retail and the retail price for your romance novel is $7.99.

8% of 7.99 = 0.64 of royalty per sale to the author

That’s the baseline. Now let’s look at what 25% of net receipts from Harlequin looks like on the wholesale model.

$7.99 is the retail price but because Harlequin sells wholesale, they give (on average) a 50% discount to the seller. That would look like this:

7.99 – 3.99 (discount) = 4.00 of net receipts to Harlequin

25% of 4.00 = $1.00 of royalty per sale to the author

Well, that’s definitely better than 64 cents given previously!

But the whole reason why Big 5 Publishers moved to the net receipts royalty rate is because of the agency model. In this configuration, the Publisher gives 30% to the distributor and receives 70% as net receipts. So it would look like this:

30% of 7.99 = 2.39 to the distributor

Now deduct that commission:
7.99 – 2.39 = 5.60 of net receipts to publisher

If author gets 25% of net receipts on agency model, that would be:

25% net receipts of 5.60 = 1.40 of royalty per sale to the author.

Not quite the same.

Now keep in mind that the above calculations are not taking into consideration any other deductions a Publisher on Agency Model might possibly be taking before calculating the author’s share. So that is a possible factor to consider.

But in general, Harlequin’s move to 25% of net is not, on the surface, the same as what other houses are offering.

And from what I’m hearing via chat in the blogosphere, the other Harlequin royalty rate of 15% of net to series authors (which was also announced in a separate press release) is going over about as well as a lead balloon.

Do Cheap Backlist eBooks Poach Frontlist Sales?

by Kristin Nelson

Status: Best moment in NYC today? Walking over to Central Park and seeing a dude that looked remarkably like Will Smith asking folks if they wanted to do park bike rentals. And in this town, it really could have been him and people didn’t notice. It was a remarkable double…


What’s Playing on the XM or iPod right now? REAL LOVE by The Doobie Brothers


Today a fellow agent and I were having a discussion about eBook pricing. What should backlist romance titles be priced at and does that poach sales for the current release?


Obviously there are a variety of opinions on this subject but here is mine.


I don’t personally believe that a lower eBook price for a backlist title poaches from a current title. I think the romance reader is more likely to then buy both if the backlist title is reasonably priced.

In terms of pricing, most authors are seeing good movement when a backlist title is priced between the $2.99 and $3.99 price range. Higher than that and the sales are flat.


And speaking of reduced pricing for backlist titles, this is a perfect segue albeit for women’s fiction. Need a cheap summer read? HarperCollins is letting you get a taste of NLA client Kristina Riggle for $0.99


Yep, less than a buck. And it’s across all platforms. Here are links for just a few:

Amazon

BN

Kobo

Sadly Google eBookstore (that does sales for independent bookstores) didn’t have their version up although they were included in the promotion.


Going Public

by Kristin Nelson

Status: Most of today I felt like I still had BEA brain. And the Brenda Novak Auction is ending tonight!


What’s Playing on the XM or iPod right now? ROSEALIA by Better Than Ezra


Many weeks before several authors started making headlines about their choice to self-publish, my author Courtney Milan, with my blessing and support (not that she needed it!), had already made that decision. She walked away from an offer on the table from her publisher Harlequin. There were several reasons for this decision but it will come as no surprise that it mainly hinged on the electronic royalty rate that had been offered. It’s no industry secret that Harlequin is well below what has become the “industry standard.” And it’s also not a secret what I think about Publishers’ current industry standard of 25% of net.


What was secret is that Courtney didn’t announce it—until now. Today she launched this new publishing direction with a novella entitled UNLOCKED in her Turner Brothers series that began with Unveiled & Unclaimed which will release in September.


In four short days, I can already tell you two important things about this digital revolution.


1. Pricing is everything. Pricing a title appropriately will move a great number of books in a short period of time.


2. Publishers are under-reporting electronic book sales in any given period on the royalty statements we are seeing.

That’s a fact.

21st Century Evolution Of The Agent’s Role

by Kristin Nelson

STATUS: As it’s almost 8 pm here and I’m still at the office, you can guess my status. I’m getting ready for Book Expo so there hasn’t been a lot of extra time for blogging.

What’s playing on the XM or iPod right now? I’M IN THE MOOD FOR LOVE by Barbara Streisand

I can’t say I have all the answers to this one but I can very clearly tell you what it WON’T be. I’m not on twitter but I’m still in the loop on a lot of things and there has been a lot of discussion around this blog posting.

So I’m just going to state my stance in very clear terms.

1. Agents roles will indeed transform but I’m willing to go on the record and say that we will never need to charge a reading fee or for editorial services in order to be an agent in this new publishing world.

2. I believe, and I’ll be talking about this in more detail in later blogs, that agents and agencies opening publishing divisions as part of their agency is a conflict of interest. Plain and simple. One can’t be an agent and a publisher at the same time.

3. I do believe that agents have a role in the ePublishing realm and I have definite opinions on what that role should be and I promise I will share it but not right at this moment.

Soon though.