Wednesday, February 23, 2011

Are You Ready?

My dear  bloggie friends:

I am SO glad to have this chance to have your ear. I have this *very important message from David Farland:

David Farland’s Daily Kick in the Pants—Changing Times

As I’ve been forecasting since last April, we’ve seen some huge changes in the publishing industry this year.

In the latest news, Borders has filed for bankruptcy here in the United States. Borders of course is the second largest bookstore chain in the United States, but they failed miserably at keeping touch with the changing times. The mistake? They didn’t respond to the online threat from, and they didn’t put together a program to sell electronic books.

As a result, in the fourth quarter of last year, the busiest season for bookstores, Borders group saw sales drop by a whopping 18 percent. So they’re filing for bankruptcy and will be selling about 200-250 stores. Since Borders stores are built, usually, near a Barnes and Noble, one must assume that customers will migrate to the competition.

Meanwhile, Borders doesn’t seem to have a viable plan to stay in business. Instead, some goofball decided to help wannabe authors self-publish their books electronically through a program called BookBrewer. Stay away from Borders’ stock, and stay away from their self-publishing model. Both are poison, in my opinion, and I’m not the only one to think that dealing with them is gonzo.

Borders has a plan to restructure which will pay only about 20 cents on the dollar to its debtors. This is going to hurt a lot of publishers and distributors—to the point that Ingrams, the nation’s largest book distribution company, has ceased providing them with books.

Meanwhile, we’re seeing similar news around the world. A day after Borders announced that it would go into bankruptcy, a major bookstore chain in Australia announced that they were going bankrupt, too. Last week in Canada, a bookstore chain tied to a major distribution company announced that both were filing for bankruptcy, while we see the same happening in England with one of their major chains on its way out.

In short, we’re seeing the dinosaurs all die off. Those businessmen who haven’t adjusted to the way that books are being sold will soon be gone. Whether they’re small private bookstores, major chains, book distribution companies, or publishers, those who don’t adjust will die.

Meanwhile, many publishers are actually showing higher profits right now. With electronic book sales up by 118% for the last year, publishers that take a chunk of electronic rights are actually seeing higher revenues with less in costs, thus increasing their profit margins. So the publishers are healthy. Barnes and Noble is feeling giddy over its sales of e-readers and the accompanying surge in electronic sales. Simon and Schuster, along with a number of other publishers, are seeing a big rise in profitability.

But this leads to a new problem for authors. Those same publishers are finding that the hardcover book market for bestsellers is shrinking. Many of the most active readers, the people who read ten or twenty novels per year, are now reading them on Kindles or iPads. As a result, some authors who were selling three hundred thousand copies in hardcover are finding that more than half of their sales are now made electronically—and that under current contracts, the publishers actually get to keep a larger percent of the author’s income. Thus, an author who might have made a million dollars on a novel last year is finding that he’s losing a couple hundred thousand dollars of that money to the publishers this year.

So now we’re coming to the next big battle. How much of the money on a new release should go to the author? I think that we’ll see some heavy contention—with agents and writers groups lining up to battle the publishers this coming year.

The real battle, perhaps, might re-shape the industry. The argument should be whether “electronic publishing” is really “publishing” at all. Under old-fashioned copyright law, when a publisher buys the right to publish a novel, he’s buying the right to make a physical copy and distribute it.

But with electronic publishing, there is no physical book being created and shipped. The book exists only as an electronic file, in the same way that music files are being downloaded and sold. So the question arises: is the selling of electronic copies in violation with the intent of the copyright law?

At least one judge has ruled that “electronic publishing” should be handled as “electronic licensing.” There is a huge distinction here as far as the author is concerned.

For example, a publisher in today’s world can publish your book, and then hold onto it indefinitely by claiming that he’s still publishing it electronically a hundred years from now, even though he has no other interest in it. The rights to the property would never revert, and the old contracts that are in the books in some cases give very little of the money from those sales to the authors. It creates a perpetual windfall for the publishers, and makes the writer wish that he’d never published the books in the first place.

So authors under the current system basically handle control of their work over to publishers for eternity. Savvy authors don’t want to do that, and if you understand that we see the emergence of a major new market over the next few years, where the control of electronic rights are all-important, it makes you as an author wonder if publishing a book right now is ultimately a mistake. In the long run, an author might make far more by self-publishing his works electronically.

A year ago I would have told you that you should stick with the traditional publishing route. Right now, as we move into a new age, I’m still going to tell you to stick with the traditional route. But here’s the thing: self-publishing electronically looks like a better alternative every day, even to someone like me who is a New York Times bestseller.

So when do you give up on the old system? So much depends upon you as an author. I’m an old guy in my fifties. For me, the old system still makes a lot of sense. But if I were eighteen or twenty, and I was looking at giving up thirty percent of my income on a book for life, just to have it published by some sloppy New York Publishing company that probably wouldn’t do anything to push my books anyway, I’d be giving New York the evil eye right about now.

Think about it: is an extra $20,000 in your pocket right now worth a loss of 30% in income on the sales of your book for the next fifty years? That’s the gamble you’re taking on publishing, and increasingly new authors are saying “No. I’m not getting enough of a push from existing publishers to make up for the long-term losses.” They may be right.


What are  your thoughts?

*this has been reposted with permission by the author


  1. Great article, Elizabeth. Thanks for sharing. :-)

  2. Hmmm, his legal analysis is rather shaky (I am a lawyer, just not practicing at the moment). Copyright does apply to electronic files. Determining when a book is out of print when you're going electronic presents an interesting dilemma, but not an insurmountable one. One can learn a lot from successful self publishers, i.e. how to market, how to get into various shops - real and virtual - but it's worth noting that self publishing is, for the most part, a graveyard for wannabes. There are people who do it successfully, but if you look at how many books are self published, you soon realize the success stories are an itty bitty fraction of one percent, and of that itty bitty fraction, most of the true success stories get picked up by publishers and their books re-released that way. (Think Eragon, the Christmas Box, etc.)

    FWIW, I think traditional publishing is still the route to go - and turn to self publishing techniques and advice if your publisher isn't marketing you well enough.

    Regarding getting paid for electronic rights, that's something agents need to get with it on. All of the things Dave Farland/Wolverton is saying can be modified in the contract; the key problem is that, for whatever reasons, they aren't being modified appropriately, at least not for him.

  3. Elizabeth, you got Dave's permission to reprint this on our blog? That is so AWESOME!

    My concern about e-books is that they may eventually become MORE EXPENSIVE to produce than your typical trade paperback. Think about it - all those bells and whistles are going to take programmers and e-book designers, people you can't afford if you're looking to self-pub.

    I like print books. I can drop a print book down a flight of stairs and still read it. I can run over it with my car and still read it. In case of total apocalyptic technological collapse, I can still read it.

    And no matter what changes or what happens, people will need stories. Making a living as a storyteller? That might get tricky. But people will still need stories.

  4. Thanks for sharing this Elizabeth. And I can speak from experience that electronic rights are definitely in the contract, at least any recently negotiated ones. If they're not, something's wrong.

    As far as self-pub vs. trad-pub, the most fascinating tid-bit I've heard in the last six months about this age-old debate, is how many PREVIOUSLY TRADITIONALLY PUBLISHED authors are going self-pub. Whether it's e-pubbing their backlist, which have been out-of-print for a long time, or self-pubbing their latest novel, because they have a fan base, yet can't get a traditional publisher to take it seems like traditional publishing is taking a hit, when the authors they normally publish go elsewhere.

    But for young-in-career, or debut authors, I think traditional publishing still holds some keys of promise - in helping them establish themselves as a real presence in a book-world where there typically are only 100 books that "everyone" reads. But increasingly, small publishers will be filling out the gaps that large traditional publishers are leaving behind.

    Great topic! And post! Thanks for sharing! :)

  5. Well, yes, I know electronic rights are in the contracts :-). That's not what I was referring to. He had concerns about how they work for him, economically, and I pointed out this is a contractual problem, not a problem inherent to the publishing medium.

    The fall of the big houses and the rise of the small is an ongoing phenomenon. Many of the big houses and lines are only about a generation old. I was shocked to go to World Fantasy and see the actual people the houses were named for still alive and kicking and going to cons.

  6. @Emily I thought he was referring to old contracts, many of which didn't have the e-rights in them. I was also confused by his contention that authors were losing out on e-book sales, which had lower royalties than hard-cover. My impression (and personal experience) was that royalties are the same or HIGHER for e-books than paper. But maybe that's a new development, and he's referring to older contracts again? Not sure.

    And yes, I agree it's a contractual problem. But I also think that the "contract" is often set by the "industry standard" to some extent (unless you're famous), so what's set by the big guys trickles down? Again, not sure.

    Great discussion, though! :)

  7. Yeah, I've never sold my electronic rights for anything but short stories, so I don't know details. Really, they shouldn't be in your contract unless your publisher has firm plans to use them, and will pay for them.

    And nah, you don't have to follow the crowd with contracts. Any publisher who treats you like you're speaking out of turn for wanting a fair shake is not a professional publisher. I mean, don't ask for things like 100% royalties on all e-pubs or anything, but if you've got a reasonable offer to make and a sensible argument for it, the contracts guy at the publisher should be willing to work with you or your agent.

    Which agents get you the best deals is not as straightforward as who has the biggest clients. Pay attention and you'll notice there are household names in debt up to their eyeballs and little people you've never heard of taking year long cruises around the world. There's some correlation between fame and competence of your agent, but it's not strict by any means!

  8. Elizabeth, thanks for the great post! It's good to hear what seasoned, well-published authors are seeing. It will be interesting to see how this all works out in the next year or two.

  9. Wow! All this stuff seems daunting, I hope I'll have a down-to-earth head when it's my turn to get published. Heaven knows that aspiring authors could use well-seasoned (debut authors included), as mentors!

    Thanks for your thoughts, ladies!!!


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