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Is the Wylie Deal Creating Unhealthy Expectations?

I’ve spent a lot of time ruminating about the business of publishing, on the blog, with other people, and in my own head.   I love books, obviously, and I’ve been a reader my entire life.

I don’t want publishing to die. I have very good friends who are in the industry, who write books, and who, like me, are readers.   We would all suffer greatly at the death of publishing.   But we are in a transformational time for publishing and this process of change will bring about pain and loss.

I don’t mean to be melodramatic but it’s true.   Traditional publishing has been based on an advance paying system whereby publishers pay authors some amount of money in advance of publication. Because the publisher is taking nearly all of the risk, the publisher takes nearly all of the profit.   The only true way for an author to receive a raise for her work was to get a higher advance because the royalty rate was generally unchanged.   The ideal is that each new book brings a higher advance.

The issue of royalties and digital books came to a head with the Wylie book deal announced a couple of weeks ago.   No less than four CEOs of the major publishing houses have given comments on the deal. Random House made legal threats. John Sargent of Macmillan was roused today to state it will vigorously protect its rights and that of its authors against – Amazon? Wylie? Only Penguin CEO was sanguinebecause apparently backlist titles represent only a small fraction of income at Penguin.

Since the 80s, there has been some clause in publishing contracts covering digital texts. In 1994 and onward, this type of language was standard.   It’s the contracts that predate the 80s that are up for grabs and worth money. They are worth money because the content has already been edited. These authors have had some audience at one point. Every penny, for each side, is nearly pure profit. For the publisher, they’ve already paid an advance and either earned that advance back or written it off. For the author, they’ve been paid once (an advance) with possible royalties, and for ebook rights reverted, no amount of that needs to be sent back to the publisher to cover an unpaid advance. Each sale represents money in the author’s pocket.

Authors whose print rights have not yet reverted want to claim those digital rights and be paid at least a 50% royalty. The argument is that these ebook rights are subsidiary rights. Under a contract, there are primary and subsidiary rights. Primary rights include those that the publisher intends to use (such as publishing and distributing the work in book form). Subsidiary rights that the publisher might license to someone else like audio or motion picture.   Right now, authors are arguing that ebooks are a subsidiary right and thus should be allowed a much higher royalty rate.   Publishers are arguing that ebooks are a primary right, a right that is subsumed with the risk borne by publishers through the advance system.

The problem is that the publishing industry cannot sustain both high advances and high royalties for books going forward. The backlist title rights are one thing, but I feel like the Wylie deal creates expectations in an ongoing fashion? Look at J.A. Konrath. Konrath has had great success with his ebooks. At last count, Konrath wasselling over 5,000 copies of digital books a month. But when he shopped his books, publishers weren’t willing to give him a desirable advance and presumably royalty share based on those ebook sales.

This is how it works at the publishing house. An author subs a manuscript, either herself or through an agent, to an editor. If the editor wants the book, she works up a profit and loss statement (this is just an example and here is another) to justify an advance. She has to go to the editorial board and sell everyone on a) the acquisition of this book and b) the advance for the acquisition. (Note, the editorial board thing doesn’t happen everytime, but a P&L sheet is done for each book).

Currently P&Ls are based on how many books that are printed, with the costs of creating the book, distributing the book, as well as any returns. P&Ls are based on sales of print books. So Konrath’s success in the ebook market could not have been translated on the P&L statement. His success in the print market was much more modest and accordingly the editors’ offered advances were probably based on the print market success.

Why is this important?   Mass market sales have been in a downward trend.   The Dorchester news only highlighted this.   Sales of mass markets have declined by 25% for Dorchester and for the entirety of the market, sales for mass markets have been trending downward since 2006.   My sources tell me that advances are contracting dramatically and that print orders from retailers are down as well.

In 2007, sales for mass markets declined 2.0% with sales of $1.1 billion”. In 2008, total sales for mass markets was down 3.0% with $1.1 billion in sales. In 2009, total sales for mass market were $1.0 billion, a decrease of 4% for the year. In 2010, the sales are down even more. As of May (our most recent statistic), sales are down 7.3% for the year.

  • May: down 14.6% $54.6
  • April: down 17.7% $49.1
  • March: down 18.1% $53.6
  • February: The Adult Mass Market category increased 1.9 percent for February with sales totaling $49.8 million; sales were also up by 0.6 percent year-to-date.
  • January: down 0.5% $56.0

The last year mass markets saw an increase was in 2006. The increase in 2006 was 4.6% and sales were at $1.1 billion.   Amazon predicts that digital sales at Amazon will overtake mass market sales soon.

According to Mike Shatzkin, printing costs are the biggest   cost for a publisher.   Dorchester has maintained that it is losing money due to print books and hopes to salvage its house by going digital first with trade paperback supplied via print on demand.

This presents a boon and a problem. First the boon is that with the rise of digital sales, there are fewer returns, lower printing costs. The problem is that with the rise of digital sales and the enormous fluctuation and uncertainty in the digital market, more errors will be made about how many print books to order and thus, everyone is scaling back.

Publishers have to start compiling better numbers on ebook sales and projecting ebook sales so that the advance system can continue in some form.   It may be that advances will be dramatically reduced and that majority of authors will not get an advance.

For authors, they have to weigh high advances versus high royalties. In this nascent digital book environment or even going forward, I don’t think you can have both. In time, publishing houses may be able to predict digital book sales like it tries to predict print sales, but one thing is for certain: orders will no longer be an asset on the plus side of the balance sheet.   Instead orders must be replaced with actual sales.   Remember in Sittenfeld article?   In it, publishing is described as more casino than business.   Without a business based on orders, publishing has to become more business and less casino.

For readers, this means some authors won’t write anymore. This is the pain and loss I referred to above.   Some authors won’t continue to write without an advance. They won’t do it because of a variety of reasons and none of those reasons are wrong.

Some authors just don’t want to take up the reins of a business and some are just bad at business (and to a large extent they haven’t had to be business people in the past. This is a new and difficult competency). They just want to write. Some authors won’t want to write without an advance; won’t want to invest and absorb the risk.

I know that there are some authors out there that I will miss if they stopped writing.   I miss Judith Ivory, a lot.   I think Lavyrle Spencer wrote some of the best contemporaries ever and she’s retired.   (and of course, there are authors still writing whose works have changed so dramatically since their original tone/voice/quality it’s like they stopped writing).

My hope is that there are those authors out there that will be ready and willing to embrace the new business of publishing, no matter what form it will take. I know I will be ready, with credit card in hand, ready to pay for those books.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She self publishes NA and contemporaries (and publishes with Berkley and Montlake) and spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com


  1. J L
    Aug 10, 2010 @ 05:03:04

    Thanks for a good summary of the implications of the Wylie announcement. I’m one of those authors who has been with small publishers from the start, so I’m comfortable with the Dorchester model (digital then POD). It is a new world for a lot of people, and there’s a lot of bewilderment about what it means.

    A key element to Konrath’s success (as he says) is pricing. He’s priced his back list and his new books at a relatively low digital price and that has drawn in a lot of readers and it puts more money in his pocket because he makes a better return on the book (without having the publisher as the middle man and given Amazon’s royalty rates).

    I hesitate to follow in his shoes for a few reasons. First, I’m happy with my publishers (mostly). They handle a lot of the business stuff you allude to in your post, stuff that I don’t care to learn. Second, I don’t have much time for the business stuff. I work a full-time day job outside the home and my 17th fiction book just released last week. So I’m busy with my ‘other’ job, too, the job of fiction writing and have little time for the business end. And third (but probably most important): I have great editing from my publishers. That helps my work a lot.

    I may take the route a lot of other authors have done and when rights revert to me, I’ll release the books myself. I’m not anxious to jump into business, but I will if that’s a way to keep my books available.

    I think publishing will be going through a lot of flux in the next decade. I do have sympathy for those authors who are accustomed to the traditional publishing model because the world that is opening up is not what they’re accustomed to. It’s going to be a bumpy ride for a lot of folks.

  2. Mike Cane
    Aug 10, 2010 @ 05:52:37

    Thanks for digging up the paperback stats. Very interesting in light of Kindle books vs. hardcovers for Amazon.

    Publishing’s wound are all self-inflicted. Here are two examples:

    THE PUBLISHING DEATH SPIRAL–part one–The Cold Equations
    THE PUBLISHING DEATH SPIRAL–part two–My Own Death Spiral

    That’s writer Norman Spinrad, who has been prominent in SF. The Order To Net system doomed him, doomed other writers, and has doomed publishing itself. This is a prime example of, Live by the sword, die by the sword.

    Publishing won’t die. Publishers will. And it will be a suicide.

  3. Tweets that mention Is the Wylie Deal Creating Unhealthy Expectations? | Dear Author --
    Aug 10, 2010 @ 06:08:50

    […] This post was mentioned on Twitter by Mike Cane, Michelle Wolfson. Michelle Wolfson said: RT @jafurtado: Is the Wylie Deal Creating Unhealthy Expectations? by Jane Litte (@jane_l) […]

  4. Jane
    Aug 10, 2010 @ 06:32:11

    @J L I kind of see authors used to traditional publishing similar to traditional publishers themselves – some are very entrenched and won’t be able to make the transition, some won’t make the transition until the very last, and others will be more nimble, experimenting here and there.

  5. jayellwilson
    Aug 10, 2010 @ 06:57:04

    @Jane: I suspect the same will be true of readers.

  6. DS
    Aug 10, 2010 @ 07:09:32

    Jane, I’m having trouble with your links. I even gave your page full permission with Noscript (which recently updated) and I’m still getting 404 errors. Is it just me? The link in the post to the Norman Spinrad article worked.

  7. Jane
    Aug 10, 2010 @ 07:47:46

    DS Sorry, my html code was super bad.

  8. Jane
    Aug 10, 2010 @ 07:49:03

    @jayellwilson We are already losing readers. The numbers of ebooks sold aren’t a direct one to one replacement for loss sales in mass markets. It could be that small press sales are underrepresented but we are talking a $100 million loss in less than four years.

  9. DianeN
    Aug 10, 2010 @ 07:49:25

    For those interested, part 3 of Spinrad’s article is now on his blog. It’s his take on where book publishing is headed in the not-so-distant future, so it’s definitely pertinent to the subject of Jane’s post.

  10. Julia Rachel Barrett
    Aug 10, 2010 @ 08:40:17

    Regardless of our personal feelings, the publishing world is changing. I think it’s the pace of change that is disconcerting. Yes, traditional publishing costs are very high. To continue to do business in the traditional mode is a recipe for failure.
    Contributing factors – a lousy economy, the ease with which the younger generation – i.e., readers under, say…the age of 55…accustom themselves to the use of electronic devices, and even prefer e-readers and inexpensive uploads to more expensive print books, the publishing industry’s history of financial and PR focus on a few select authors – advances for first time authors, especially in the romance genre, are tiny in comparison. A good romance author can make more on ebook royalties.
    E-readers and e-publishing will continue to evolve – The electronic industry does not carry the baggage – wonderful baggage though it may be, of traditional publishing houses. Technology will continue to drive the changes in the publishing industry.
    I have faith that authors will adapt.

  11. Chicklet
    Aug 10, 2010 @ 09:28:31

    Right now, authors are arguing that ebooks are a subsidiary right and thus should be allowed a much higher royalty rate.

    Hmmm. But as a reader, I consider an ebook to be just another format of book, like mass-market paperback vs. hardcover, especially when the ebook is released in conjunction with the hardcover/paperback version. If that’s the case, then it would be contradictory to expect high advances for the text that is turned into the hardcover/paperback/ebook *and* expect high royalties on just the ebook sales. The ebook is the same text, the same story, just a different format.

    Or am I completely out to lunch on this? I’m not an author or a publisher, so I don’t know all of the issues involved.

  12. Jane
    Aug 10, 2010 @ 09:32:46

    @Chicklet I can see the high royalty rate for the ebook editions for books that have already been paid the advance 30 years ago or even 10 years ago, regardless of whether the advance has earned out or whether the book has been profitable. But going forward, I don’t think it’s sustainable for publishing, as a business, to offer both the high royalty and the high advance.

  13. Isobel Carr
    Aug 10, 2010 @ 11:33:20

    There was a LOT of talk about this issue at RWA's convention in Orlando. Basically it comes down to the fact that what publishers offer is an advance, editorial, and distribution. If MM/print dies, then you're already taking distribution off the list (producing print books and getting them into stores was the big thing we, as authors, couldn't do on our own). Editorial we can get from our agents, our beta readers and our crit partners. An advance is the only thing left. You take that off the table and I think a lot of authors will throw themselves into the arms of Amazon's self-publishing program.

    In short, publishers are going to have to figure out what else they can add to that list if they want to survive, not what they can subtract.

  14. joanne
    Aug 10, 2010 @ 12:35:46

    I liked this article at Huffington Post and how ‘older’ established author Pat Conroy is coping (or willing to go along for the ride) with the digitization of of his books.

    That 25 million dollar loss to the industry in each of the past four years tells me everything about the world economy. People who use to buy an armload full (or shopping cart for ebooks) just can’t spend what they don’t have.

    Change was inevitable but I hope that publishers don’t throw their authors or the readers under the bus to make a new business plan that works.

  15. Ridley
    Aug 10, 2010 @ 12:48:49

    I’ve heard that in the UK, MM sized books are treated like trade paperbacks, i.e. not stripped and pulped. Would that be a wise half measure while waiting for the ebook v. mass market transition to level?

    And no doubt readers are a shrinking pool. I have more and more friends who don’t own a single bookcase, library card or ereader. We’ve made it too much about schoolwork in this country. People graduate from reading when they graduate from school.

  16. TKF
    Aug 10, 2010 @ 14:19:25

    And no doubt readers are a shrinking pool. I have more and more friends who don't own a single bookcase, library card or ereader. We've made it too much about schoolwork in this country. People graduate from reading when they graduate from school.

    Really? I've been watching my younger sibs and their friends totally rediscovering the joy of reading now that they're out of college and have time for “fun” books. There seem to be more and more people reading all around me (esp on public transit).

    I just don't see how school can kill the joy of reading. Being busy with school might mean you have no time for it, but a reader is always going to be a reader.

  17. Julia Rachel Barrett
    Aug 10, 2010 @ 14:30:58

    “And no doubt readers are a shrinking pool. I have more and more friends who don't own a single bookcase, library card or ereader. We've made it too much about schoolwork in this country. People graduate from reading when they graduate from school.”

    Whoa Ridley – I have to disagree! I think more young people are reading now than they were just ten years ago. Look at the increasing popularity of YA literature. My kids’ friends love their e-readers – Nook, Kindle, iPhone – I’m impressed by the numbers of kids discovering the written word via electronic media – they are uploading classics for free from a number of different sites!

  18. Likari
    Aug 10, 2010 @ 16:51:12

    Unhealthy expectations seem to flourish in so many creative fields.

    How many actors make a living at it?

    I think there were/are a lot of unhealthy expectations in traditional publishing. Until recently, there’s been a lot of celebration of the big deals out there and a lot of secrecy about how little the average writer really makes.

    When I found out authors get 5 to 8 percent of the cover price on a book, I smelled a rat. Not blaming anyone (except the publishers who devised and clung to the ridiculous return system), but sheesh! Something is wrong with that picture.

    So is it unhealthy for content creators to imagine they might make a decent percentage? Yeah, if you’re the content exploiter, ha! How are you going to pay those huge CEO bonuses if you can’t get the little people to work for pennies?

    As someone said above, what do publishers bring to the equation? Unless they figure out a way to bring value to the author/reader relationship, they aren’t going to survive.

    I’ll bet right now Samhain is getting a ton of submissions from authors who used to turn up their noses at ebooks! Samhain pays a “healthy” royalty and has good experience with ebooks.

    (disclaimer: I have a book on submission to them at the moment)

    I think the question of whether “indie” books can be valid is answered. They can. They can also, of course, be horrific dreck.

    It will be interesting in the next year or two to see how sites like Dear Author and SBTB approach reviews of indie books.

  19. Jane
    Aug 10, 2010 @ 16:56:12

    @Likari: Forgive me if I am wrong, but isn’t Samhain’s advance $100? It’s under $1,000 per book, correct? The digi publishing model is no advance in exchange for high royalty.

    As for Dear Author and indie authors, we accept books for review so long as they have been professionally edited.

  20. Likari
    Aug 10, 2010 @ 17:33:22

    D’oh! I wasn’t even thinking in terms of advances.

    You are right about the whole advance thing. The advance is what authors live on while writing the next book. And I see what you mean about authors not wanting to write a book “on spec” when they are established authors.

    But the advance is a moot point when you get paid once a month instead of having to wait a year and a half — or more — to get paid (and then wonder about bookkeeping quirks).

    I’m not surprised that you’ll review professionally edited independent books. That’s what will make Dear Author a go-to site for readers (in my opinion) looking for quality independent stuff.

    You’re part of the new matrix.

  21. lisa
    Aug 10, 2010 @ 19:50:07

    While I’d agree there is a publishing shift going on, I think that if you compared any luxury item (defined as nonessential in my reference) that those sales are down as well. Restaurants, clothing, and so on. Yes there has been a digital shift but I also think there is an economic/unemployment factor as well.

    The blog post says:

    In 2007, sales for mass markets declined 2.0% with sales of $1.1 billion”. In 2008, total sales for mass markets was down 3.0% with $1.1 billion in sales. In 2009, total sales for mass market were $1.0 billion, a decrease of 4% for the year. In 2010, the sales are down even more. As of May (our most recent statistic), sales are down 7.3% for the year.

    In 2007 National unemployment was 4.6% and having owned and operated a staffing agency for 11 years I can tell you that means employers are begging the people to come to work and paying well. 5% is considered fully employed. Anyone who really wants to work can. (In 2000 it was 4% and I cant tell you first hand — a nightmare for employers trying to find employees)

    2008 was 5.8%
    2009 9.3%

    2010 — over 11% in some states

    Not only are there less jobs, the demand for jobs, not people, drives wages down.

    Less income — less buying. Less book:) New companies who are not heavily loaded down with prior expenses thrive and grown. Old ones die.

    It’s hard to truly compare year by years sales without looking at how the entire picture has changed. If we still had 4 or 5% unemployment would those numbers be down? Hard to say? Yes. Probably. It’s a bit like the old — if a tree falls in a forest and no one is there to hear it, does it make a sound? – thing. It’s speculation but it’s part of the equation of a full, logical educated analysis of what is going on in the industry.

    I truly hope the book industry comes out bright and shiny and new. At least e-readers have created a new excitement for books. DH’s youngster wants an e-reader, not a game system for Christmas. Gotta love that!

  22. Christine M.
    Aug 10, 2010 @ 20:50:30


    I might be wrong but wouldn’t what you say be true if the *hardcover* sales were down, not the MMPB? Wehn we talk about luxury items, I think of HBs not of MMPBs.

  23. Lisa
    Aug 10, 2010 @ 21:03:10

    Christine — In my humble opinion, anything that can be done without — a brand name, a movie, a pleasure read — is luxury when you are trying to put food on the table in hard times. I don’t doubt people cut back on HB purchases first. I know I stopped buying trades. Mass market would be last to be impacted of the 3, by logical assumption, because of price. It stands to reason the highest price goes first. It’s choices based on circumstances. Like settling for Target rather than name brand or you have to go without. Or buying just the HB and nothing else that month when you would have bought 3 or 4 books a month and the HB.

  24. jayellwilson
    Aug 11, 2010 @ 04:22:36

    @lisa: Very good observation about economic times. Didn’t the current publishing model of bookstores stocking then returning unsold items start during the Depression when times were bad?

    Perhaps we’re at a new turning point for publishing with these new hard economic times.

  25. Christine M.
    Aug 11, 2010 @ 05:05:10

    @Lisa: I agree 100% with you but as far as I remember, the HB sales have been stable/up in the last couple of years, which is why I was actually asking the question. Mind you I might just not be remembering things properly, but it was my impression that HBs haven’t seen a drop in sales in a while.

  26. Jane
    Aug 11, 2010 @ 05:37:11

    @Christine M. You are correct Christine. Hardback sales are more robust than ever and as jayellwilson pointed out, mass markets came into popularity during the Great Depression. Last year was a financially rough year for publishers, but this year nearly every publisher is seeing some profit but mass market sales continue to slide fairly dramatically.

    I’m not sure that the tough economic times are contributing that much to the decline in mmpb sales.

  27. joanne
    Aug 11, 2010 @ 07:22:08

    @Lisa: I agree and I don’t want to keep beating a dead horse but I think people that buy hardcover books are okay or even better off economically then they ever were and consequently spending the same.

    Nothing about my book buying has changed. Not so for the woman down the street with three teenagers she needs to feed and clothe and supply with health care. She’s a voracious reader but gets all her books from the library now.

    It’s the people who have always had less expendable income who really have less now.

    It doesn’t define what should be done in the publishing world but if the plan is to get blood from a stone they’re in for even more surprises. For many the choice between rent or books is a no-brainer.

  28. Bianca
    Aug 11, 2010 @ 07:58:50

    @joanne: Agreed. Was just about to type up something similar, but you beat me to it! :)

  29. Likari
    Aug 11, 2010 @ 11:23:03

    Which brings us to one “healthy” expectation readers can enjoy with the new model.

    The cost of ereaders are coming down. With every new model, more and cheaper used models in good shape will be available.

    And authors free of publishers can bring their prices way down, yet make more money themselves.

    As I inartfully alluded to above, review sites like Dear Author are going to be huge helps in looking for the good stuff.

  30. Likari
    Aug 11, 2010 @ 11:24:12

    the cost “is” coming down . . . argh.

  31. Lisa
    Aug 11, 2010 @ 11:29:15

    The ratio of good credit people losing their houses alone is enough to dispute he same people who didn’t have money still not having it. I find it hard to believe nearly every aspect of retail is down because of the economy but its had no impact on books. Because you don’t know the people impacted doesn’t make them less impacted.

  32. Jane
    Aug 11, 2010 @ 11:37:47

    @Lisa: I’m not saying that mmpb isn’t affected but I find it inexplicable that hardcovers, a greater luxury good, is having such a robust rebound but mmpb are dropping precipitously.

  33. Likari
    Aug 11, 2010 @ 12:09:52

    Well, wait a minute…

    MMPBs are probably dropping because people are switching to the e.

    I know I haven’t bought a paperback since I started reading on my computer — and when my shiny new K3 arrives (!) I will most certainly not be buying paper.

  34. Patricia Rice
    Aug 11, 2010 @ 13:05:27

    There are a thousand and one reasons for mmpb sales to slip, from the economy to publishing practices to the rise of e-books. As things currently stand, this will not change in the near future. So you’re right, there will have to be a mass paradigm shift for midlist authors, at least. Those on the bestseller lists are still selling enough to continue in print, although even those are seeing a decline in sales and advances.

    Creatives have difficulty with business. I’m watching this from so many angles right now that I can only shake my head and weep at the loss of experienced originality we’ll experience in the near future.

    But this is just a transition. I’m already seeing savvy entrepreneurs stepping into the gap between print publishers and self publishing, helping experienced authors get their backlists and original material in e-format. It’s going to be hard living without an advance, but the ease and quickness of putting our books on the internet will ease some of the pain. Whereas NYC might reject ten proposals a year and only publish one of our books, we can foresee publishing as many as we can write if we do it ourselves.

    I’m not sure what that means for the quality of fiction, and I know it means so many books that it will dilute our income, but There Will Be Books. And good ones. How to choose among them may be the problem.

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