Pub Rants

Category: electronic books

How I Know The Tipping Point For eBooks Is Here Or Very Near

by Kristin Nelson

STATUS: Two contracts to wrap up and 270 emails to go in the inbox. Feeling significantly better after a lot of rest this weekend. Kristin–7 Flu–3

What’s playing on the iPod right now? NEED YOU TONIGHT by INXS

As you folks know, I’ve been on planes quite a bit in the past month. And here is how I know that the tipping point is potentially here (or near) where eBooks are concerned.

On one leg of my trip, I sat next to a 60+ grandmother (by her own admission) who saw me reading on my Kindle.

Grandmother: “That’s a new eReader, isn’t it? Where did you get that?”

Me: “This particularly eReader is called a Kindle and I bought it through Amazon but Sony and BN and a couple of other companies sell eReaders as well. You can buy them online at Amazon or go into Best Buy etc.” [For the record, I do try and promote equal opportunity purchases for electronic readers! I even mentioned the iPad.]

Her: “I read at least 3 novels a week! I’d love not to have to carry all these books around. I’m going on a cruise this week. [Leaning over to look at the text on my Kindle] Looks like you can up the font on that.” I gotta get me one of those.”

Me: “Yes, you can change the font size.”

Her: “That does it. I’m asking for it for my birthday and Mother’s day combined. If my children can buy a $200 game program for my grandkids, they can buy me one of those.”

In chatting with her a bit more, this grandmother was from Pueblo, Colorado—a smaller but good-sized town in South Colorado. Probably not too far off the core of “middle America.”

When I’ve got an older grandmother expressing unabashed enthusiasm in owning an eReader, I can’t help but think the tipping point is near—even if current electronic sales only equal about 2% of the market right now (statistic via a recent PW article).

I think a lot of us assumed the older generation would be the luddites where this new technology is concerned but through my anecdotal experiences, I’m not finding that to be true…

Burning Question about Agency Commission Model

by Kristin Nelson

STATUS: TGIF!

What’s playing on the iPod right now? BEEN CAUGHT STEALING by Jane’s Addiction

As you can imagine, I’ve been having a lot of conversations with various Contract Directors at all the major publishing houses as of late as we navigate contract negotiation.

I was in discussion with one person from a Big 6 house and we got to talking about returns with electronic books. Were they going to be allowed on the agency commission model that publishers have with entities like Apple?

According to this contracts person, the answer was yes.

So I asked what I thought was a rather pertinent question. I said, “if Apple allows returns and they’ve already deducted the 30% agency commission from the sale, how will the publisher know that the commission should have been refunded to them for the returned-sale of that title?”

Contracts person: “Good question.”

Glad I could be of some help…

Q&A 2010—Round One

by Kristin Nelson

STATUS: I shouldn’t pat myself on the back when I have to leave next week to go out of town. I so want to enjoy being caught up.

What’s playing on the iPod right now? LEGEND IN YOUR OWN TIME by Carly Simon

Wow. That’s a plethora of Qs. At least I know what I’ll be gabbing about next week—which is good because pre-trip is always a tad hectic.

worstwriterever asked:
1) If you had to choose a different career than literary agent, what would you choose?
I used to teach college back in the day. Unbelievable to me that it has been over 15 years ago now. I think if I weren’t going to be a lit agent, I’d probably teach again. I really enjoyed it.

Of course what I like to be is independently wealthy. Wink.

2) I tweeted your post(s) yesterday because they rocked. If you’re not on Twitter, how come?
Oi! It’s on my list of things to do. Honestly! Anita, our new fab assistant is getting us on Facebook and Twitter very soon so keep an eye out.

MeganRebekah asked:
I don’t know if this outside your power/knowledge, but I’m wondering why Perfect Chemisty isn’t available on Kindle?

In this case did the publisher decide not to go ebook? Or was that decision made on different level? Any insight onto the reasoning?

Walker, Simone, and I all want to be in eBook format. The eBook was supposed to be available by now but the reason it isn’t has a lot to do with the whole Amazon hoopla and publishers changing to the agency commission model etc. I expect it will be available very soon as Simone’s editor keeps assuring me that it’s in the pipeline etc.

Cheryl asked:
Staying with the cover art theme, could you explain the process. I assume the editor gives the art department direction and the writer’s input is slim to nil (unless your name is Stephen King and your publisher contracts an independent illustrator to do your cover art).

And have you ever had to battle a publisher on your client’s behalf because the cover art was just all wrong or looked like it had been slopped together?
The answer to this question really depends on the editor and the publisher involved. I have some editors who keep us in the loop on EVERYTHING regarding the cover—including seeing early sketches from the cover artist. Then other houses just want to present the finished cover to you (which I hate). Now, in general, editors really want their authors to be happy with covers so they often ask for a lot of feedback before the cover process begins such as how a character looks or scenes that could be cool if represented.

No matter what, I always have a new author put together a file of covers they love and why (and grabbing most from their publisher but others are included too). That way the house gets a sense of the author’s taste even if they aren’t going to get a direct say in the art.

And yes, I’ve done many a battle over cover art. Sometimes I’ve won. And sometimes I have not. In the latter case, I always pray that the publisher was right and I was wrong and the cover works in a big way.

More Qs tomorrow.

If You Haven’t Got Anything Nice To Say…

by Kristin Nelson

STATUS: Springtime in the Rockies! It was 65 degrees and sunny today and I must admit, I left the office at 2:30 in order to take Chutney out for a run and enjoy the day. In exchange, I’m working all evening.

What’s playing on the iPod right now? TOMORROW PEOPLE by Ziggy Marley and The Melody Makers

Come sit next to me!

Last week, I pretty much spent every entry talking about contracts but today’s discussion tops the cake.

Just recently, a publisher made an offer for the next books from one of my clients. Excellent. But this publisher is also one of the big 6 that have announced that they are moving to the agency commission model for the sale of electronic books.

As ya’ll know based on my math lecture about net receipts last week, there are some key questions that really need to be answered about electronic books and exactly what 25% of net is going to mean.

So my contracts manager and I insisted on talking to contracts director before closing the deal.

The publisher’s response (and this is a paraphrase): they have no idea what the definition of net receipts will be and feel uncomfortable accepting the language we have put forth. Their suggestion? If the author would like to put the contract on hold until the company makes a corporate decision on this, then the author is free to do so. However, the publisher has no timeline for when this will be resolved.

Snort. That’s the solution?

Publishers. The world is changing. Quit dithering. We agents have to negotiate contracts now so maybe get on this. Telling us we can just put it on hold until you get your act together isn’t an alternative.

Rant over.

Redefining Net Receipts Where eBooks Are Concerned

by Kristin Nelson

STATUS: Lots to tackle today so getting the blog entry out early.

What’s playing on the iPod right now? THE BLACKEST LILY by Corinne Bailey Rae

And the fun of how electronic books are changing the publishing contract continues. Today, boys and girls, we are going to talk about net receipts in Ms. Kristin’s neighborhood.

In light of this new agency commission model where Amazon and Apple will no longer carry the product per se but have an agreement to sell titles via their site in exchange for a 30% commission on the sale (see earlier post to get up to speed), suddenly agents need to re-examine the whole definition of net receipts in publishing contracts.

The definition of net receipts (or amount received) for an electronic book is not the same as the definition of amount received for a physical book.

With the agency commission model, the biggest question is this. Will publishers deduct the 30% commission paid or will they absorb it when calculating net receipts and determining what is the total used to pay authors their 25% of net receipts? One major publisher has stated that their current thinking is that the royalty would be calculated BEFORE deducting commission. In current negotiations for contracts in play, I’m not seeing publishers as excited about redefining net receipts this way.

So what does redefining net receipts mean to the author? Let’s do a little math!

Let’s say a title will sell on Amazon or Apple’s iPad for $10.00 (might as well make it easy math).

Now let’s look at the difference between net receipts if the publisher absorbs the cost of the agency commission versus if they don’t in defining and calculating net receipts.

If Publisher absorbs commission:
eBook price: $10.00
25% of net royalty (all the rage with publishers as of late)
Royalty to author: $2.50 per title sold

If Publisher does not:
eBook price: $10.00
$7.00 received by publisher (after 30% sales commission to retailer)
25% of net royalty
Royalty to author: $1.75 per title sold

Yep, definitely worth the time to find out exactly how this term is going to be defined in the contract when it comes to electronic books.

eBooks and Royalty Statements

by Kristin Nelson

STATUS: Remember when I said we were reading a lot? Yeah, that was before the Olympics began. Bad Kristin but I can’t tear myself away from the TV in the evenings!

What’s playing on the iPod right now? HOLDING BACK THE YEARS by Simply Red

As you know from a previous post, I’m not all that enthusiastic about this move by Publishers to switch an eBook royalty rate based on retail price to a royalty percentage based on net amount received.

As I ranted about this topic previously, my issue is the lack of transparency on the statement. It’s impossible to track actual amount received by the publisher unless you can get more detailed accounting info

So what have we been doing? Asking Publishers to included language in the agreement that contractually obligates them to provide more accounting information upon request. The only way to verify the accuracy of the Publisher’s stated amount received is to get info such as a list of customers purchasing and disseminating the electronic product, the business model used (wholesale or agency commission or maybe something not even invented yet), the actual retail price, the discount, any deductions made to establish the Amount Received figure from which the royalty calculation will be based.

And I could go on.

Notice that yet again, the onus is on the author/agent to go out of their way to request this information. It won’t necessarily or automatically be stated on the statement.

If we are having such a revolution in publishing over the electronic book, is it too much to ask that publishers have a revolution regarding the info provided on a statement? You got to change the system anyway to account for these new royalty structures. Why not make the whole reporting process more transparent. Heck, why can’t all this info be readily available online and the author can access it at anytime.

Now that would be a step in the right direction.

Bonus Clauses—Another Item to Re-evaluate With eBooks?

by Kristin Nelson

STATUS: Anita, our new assistant, started her first day of work today. Hooray! We have so much work we could pile on but we are trying to be reasonable. Both she and Sara have colds. Oi! Knock on wood that I don’t catch whatever is going around.

What’s playing on the iPod right now? SWEET EMOTION by Aerosmith

Here is an interesting thought.

Agents will often negotiate bonus clauses with publishers. A popular one is a bonus (increasing the advance) for X number of net copies of the title sold during a certain period of time (12 months being a popular number).

Currently, the publisher ties the bonus to the specific edition. For example, if the title is published as an original trade paperback, then the bonus will be tied to X number of copies of the trade pb edition sold within that time period.

Make sense?

Well, eBooks are changing the landscape and are often released simultaneously with the original edition (be it hardcover, trade pb, or mass market).

So my thought? Why not count and include the sales of the electronic books in the total that is triggering the bonus clause? True, it is considered a separate edition but it’s rather unique in that it mirrors the original edition and doesn’t need a separate performance creation like, let’s say, an audio book.

Brilliant! Oh I’m sure Publishers will be stampeding to this point of view (not) but it is an interesting discussion, no?

My guess is that now we need to start creating bonus language specifically for sales connected to the eBook—especially as this format becomes more prominent and the sales start catching up or outstripping the other main format editions.

Fun fun!

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

by Kristin Nelson

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?

The Latest On Macmillan-Amazon

by Kristin Nelson

STATUS: A bit frustrated with all this Amazon stuff.

What’s playing on the iPod right now? NEVER THERE by Cake

Which is to say the latest is not much. The links are still not on. February 16 is fast approaching for my author Paula Reed and the debut of HESTER.

As authors, if you are impacted, I think it’s important to have your voice heard on the Amazon Kindle forum where there is a lot of chatter going on. The average everyday customer really doesn’t know much about the ins and outs of publishing and what the hoopla is about.

This in from John Sargent earlier today….

To: Macmillan Authors and Illustrators
cc: Literary Agents
From: John Sargent

I am sorry I have been silent since Saturday. We have been in constant discussions with Amazon since then. Things have moved far enough that hopefully this is the last time I will be writing to you on this subject.

Over the last few years we have been deeply concerned about the pricing of electronic books. That pricing, combined with the traditional business model we were using, was creating a market that we believe was fundamentally unbalanced. In the last three weeks, from a standing start we have moved to a new business model. We will make less money on the sale of e books, but we will have a stable and rational market. To repeat myself from last Sunday’s letter, we will now have a business model that will ensure our intellectual property will be available digitally through many channels, at a price that is both fair to the consumer and that allows those who create and publish it to be fairly compensated.

We have also started discussions with all our other partners in the digital book world. While there is still lots of work to be done, they have all agreed to move to the agency model.

And now on to royalties. Three or four weeks ago, we began discussions with the Author’s Guild on their concerns about our new royalty terms. We indicated then that we would be flexible and that we were prepared to move to a higher rate for digital books. In ongoing discussions with our major agents at the beginning of this week, we began informing them of our new terms. The change to an agency model will bring about yet another round of discussion on royalties, and we look forward to solving this next step in the puzzle with you.

A word about Amazon. This has been a very difficult time. Many of you are wondering what has taken so long for Amazon and Macmillan to reach a conclusion. I want to assure you that Amazon has been working very, very hard and always in good faith to find a way forward with us. Though we do not always agree, I remain full of admiration and respect for them. Both of us look forward to being back in business as usual.

And a salute to the bricks and mortar retailers who sell your books in their stores and on their related websites. Their support for you, and us, has been remarkable over the last week. From large chains to small independents, they committed to working harder than ever to help your books find your readers.

Lastly, my deepest thanks to you, our authors and illustrators. Macmillan and Amazon as corporations had our differences that needed to be resolved. You are the ones whose books lost their buy buttons. And yet you have continued to be terrifically supportive of us and of what we are trying to accomplish. It is a great joy to be your publisher.

I cannot tell you when we will resume business as usual with Amazon, and needless to say I can promise nothing on the buy buttons. You can tell by the tone of this letter though that I feel the time is getting near to hand.

All best,
John

Amazon Macmillan Kerfuffle

by Kristin Nelson

STATUS: Well, the above is all I’ve been dealing with this morning.

What’s playing on the iPod right now? SMOOTH by Rob Thomas

Normally Saturdays and Sundays in Publishing are a little quiet. Not so for this weekend. My goodness. I had emails coming at me from left and right on Saturday. I was actually in the office working so I heard the news almost immediately as it was hitting the wires.

To make a long story short, John Sargent, CEO of Macmillan, met with Amazon last Thursday to discuss moving to the agency model/commission split structure for Macmillan eBooks starting in March 2010. Amazon was in disagreement in terms of that being the only structure.

In response, Amazon pulled the buttons for all Macmillan titles on Amazon.com. Buyers could still purchase the books from third parties but not directly from Amazon. The buttons were pulled for ALL books—not just the eBooks. To make matters worse, all Macmillan Kindle books disappeared from customer wish lists. Oh shades of last summer when Amazon pulled the illegal eBook from customers’ kindles. As one Macmillan editor said to me, “what a sh*tstorm.”

Yes, Amazon is flexing a muscle but whether it’s going to impress the general populace remains to be seen. For my part, I’m trying to fathom their thinking in terms of the PR for this. Perhaps they think their customers are completely wed to the $9.99 price point and will salute their action. Rumor has it that Amazon has been inundated with chatter and emails complaining about the action and thus their step back late on Sunday.

Bottom line, it’s authors who get hurt the most here. I’m really feeling for authors who have on-sale dates for today and maybe tomorrow. I have an author releasing in two weeks in hardcover from St. Martin’s Press (HESTER by Paula Reed) so I’m particularly anxious to see a resolution.

Talking with Macmillan editors, I hear that John Sargent has a meeting this afternoon with Amazon and that the company is “optimistic” that links will be back up by tonight or tomorrow morning. I’ve been assured that the conversation is continuing.

Below is the string of communications from the weekend. Also, Nathan Bransford, Ashley Grayson, and Richard Curtis have excellent detailed entries about this showdown if you want more understanding.

I’ll update if I hear more news.

It begins with New York Times breaking the story late on Friday, Jan. 29 at 11:19 p.m.

Publishers Lunch did an email blast Saturday afternoon:

The Battle Over the Agency Model Begins, As Amazon Pulls Macmillan Buy Buttons
As originally reported last night and many readers know by now, sometime yesterday evening the buy buttons for apparently all of Macmillan’s books–including bestsellers and top releases, and Kindle editions–were removed from Amazon’s site. Macmillan books remain listed but can be bought only through third-party Marketplace sellers, while Macmillan Kindle titles all lead to pages that read, “We’re sorry. The Web address you entered is not a functioning page on our site.” It is the first shot across the purchasing bow in big publishers’ efforts to reset ebook pricing above the loss-leader $9.99 price point and retake control over that pricing by moving from the wholesale selling model to an agency selling model (first reported exclusively in Lunch Deluxe on January 19), at least for ebooks published simultaneously with new hardcover releases. Kindle customers further reported on Amazon forums that any Macmillan books that were on their “wish lists” disappeared from those lists with no explanation, as apparently did Macmillan sample chapters that had been downloaded previously.

More story here.

John Sargent issued this statement Saturday afternoon:

To: All Macmillan authors/illustrators and the literary agent community
From: John Sargent

This past Thursday I met with Amazon in Seattle. I gave them our proposal for new terms of sale for e books under the agency model which will become effective in early March. In addition, I told them they could stay with their old terms of sale, but that this would involve extensive and deep windowing of titles. By the time I arrived back in New York late yesterday afternoon they informed me that they were taking all our books off the Kindle site, and off Amazon. The books will continue to be available on Amazon.com through third parties.

I regret that we have reached this impasse. Amazon has been a valuable customer for a long time, and it is my great hope that they will continue to be in the very near future. They have been a great innovator in our industry, and I suspect they will continue to be for decades to come.

It is those decades that concern me now, as I am sure they concern you. In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated.

Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.

The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market.

Amazon and Macmillan both want a healthy and vibrant future for books. We clearly do not agree on how to get there. Meanwhile, the action they chose to take last night clearly defines the importance they attribute to their view. We hold our view equally strongly. I hope you agree with us.

You are a vast and wonderful crew. It is impossible to reach you all in the very limited timeframe we are working under, so I have sent this message in unorthodox form. I hope it reaches you all, and quickly. Monday morning I will fully brief all of our editors, and they will be able to answer your questions. I hope to speak to many of you over the coming days.

Thanks for all the support you have shown in the last few hours; it is much appreciated.

All best,
John

Amazon retorted with this:

Dear Customers:

Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.

Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

Thank you for being a customer.

Late Sunday night, it looks like Amazon is going to step back from their stance via The Consumerist.

And the Association of Authors’ Representatives just issued this statement about 10 minutes ago.

A message from the AAR Board of Directors concerning the sale of e-books:

The AAR strongly believes that the future of the digital book market requires a business model that is sustainable over the long term, and is fair to retailers, publishers and our authors. To be in the best interests of our clients, such a model must respect the high value of book-length work, and adhere to the long-held practice in all media (and most retailing) that new and exciting work bears the highest prices. We have never believed that a model that incurs a per unit loss on every sale, and sets an unrealistically low price on the most popular bestselling books, can possibly be in the best long term interests of our clients or the publishing industry. Therefore we applaud Macmillan’s stance on e-book terms; and Amazon’s stated intention to work within Macmillan’s model. We hope and assume other publishers will soon follow suit.

It is unclear at the moment the extent to which the ‘agency model’ sales terms will work to the advantage of our clients. But it is clear that having access to our authors’ work used as a weapon in negotiation is an unacceptable turn of events that we roundly condemn. Regardless of the content of the negotiations between Amazon and Macmillan, about which we have no information beyond what has been reported publicly, we believe that Amazon’s punitive choice to stop selling print editions of work by all Macmillan authors was a blow to the industry and to authors. We certainly hope to see Amazon rectifying this situation with regard to our Macmillan authors immediately. We and our clients have been hugely supportive of Amazon’s innovative, indeed groundbreaking efforts since its inception, and we hope that going forward the spirit of partnership between Amazon and our authors can be once again something we can depend upon.

Gail Hochman, President
For the AAR Board of Directors