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In July’s IBPA Independent, Authors Guild executive director Mary Rasenberger wrote about the potential future of a flat royalty rate for authors. Unfortunately, her article included inaccuracies that almost certainly will mislead most authors.

In her article, Rasenberger makes one key statement that is so grossly inaccurate that I feel it calls into question her knowledge of everyday industry practices of the publishing business.

The standard e-book royalty rate for many publisher is 25% of net profits; the publisher shares just a quarter of his profits with publishers.

As a literary agent, I have negotiated publishing contracts with every major house. No publisher shares a percentage of net profits. According to Merriam-Webster, a “profit” is “the excess of the selling price of goods over their cost.” It is not the difference between what publishers are paid and what they pay authors.

What publishers’ contracts actually say is that the publisher will pay the author “25% of the net amount received.” This language is nearly universal in publishers’ contracts. Contracts also nearly always define the term “net amount received.” For example:

All monies actually received by the Publisher from sales by the Publisher (directly or through agents or distributors) of Electronic Version(s), less any applicable taxes, handling or processing fees paid by the Publisher, customer refunds resulting from bona fide errors in the transmission of the Work and commissions paid or payable to third parties.

So, how does this work in practice? If a publisher has an Agency Model agreement with Amazon, it generally will receive 70% of the amount paid by the consumer, less a delivery fee. That delivery fee may be only seven cents, but they add up. On a $9.99 eBook, the publisher may receive $6.93. It will then account 25% of that net amount received to the author, or $1.73. The $6.93 is not the publisher’s profit on the eBook. It may be difficult to calculate the profit on an individual eBook sale because the publisher’s expenses are amortized across the costs of publishing the book in multiple formats. The 25% the author received is a royalty expense. The costs of paying editors, copy editors, typesetters, proofreaders, cover artists, cover designers, interior designers, publicity, eBook conversion expenses, distribution fees, co-op payments, and other expenses all come out of the cumulative amounts received before you can figure out profit. One could easily argue that authors benefit from getting a share of the amount received per book, because so many books are not profitable.

If a publisher has a wholesale-model relationship with Amazon, Amazon is likely paying that publisher 45% of the publisher’s suggested retail price on the eBook, i.e., Amazon is receiving a 55% discount. So, if the publisher has an SRP of $9.99, Amazon is likely paying it $4.50 for every eBook it sells. Amazon may also be discounting the book well below the publisher’s SRP. Of that $4.50, the author would receive 25% or $1.12, though if the contract includes a deep-discount clause that can be applied to eBooks, the author could be receiving just 10% of net, or 45 cents. Regardless, in either scenario, the author receives more money if the publisher has an Agency Model with Amazon.

Is this making a mountain out of a molehill? No, because the difference between a percentage of profits and a percentage of net is as big a deal as a percentage of retail price versus a percentage of net. There is no doubting that deep-discount clauses are prone to abuse. The fix for that is for agents to argue that they cannot apply to “normal wholesale and retail channels, including but not limited to sellers such as Amazon.com, Barnes & Noble, Costco, Walmart, Target, and other retailers customarily engaged in the sale of books.” Some publishers will agree to this and some will not. Like anything else is a publishing contract, the publisher’s willingness to negotiate depends on how badly it wants the book or author.

Anyone who has ever heard the term “Hollywood accounting” should be very afraid of the idea of publishers paying authors based on profits. As for the argument of whether or not authors would be better receiving a percentage of the SRP (as they do on hardcovers and paperbacks) versus a percentage of net on eBooks, that’s highly dependent on the discount. If publishers can maintain an Agency Model with sellers, then the net is actually better and, in fact, would be better across the board. But when discounts get higher and net gets lower, the royalty based on SRP is better.

Therefore, the argument could be made that a flat royalty might work and might make sense, but only if the discounts granted are low enough to ensure authors don’t lose money on the deal. And there are too many moving parts in that. Publishers would have to draw lines in the sand regarding their discounts and booksellers would have to stop demanding better discounts. However, the history of publishing shows the opposite trends. So an across-the-board flat royalty not only would not benefit authors and provide higher income, it would no doubt hurt them.

Do I think publishers could pay more in eBook royalties? Yes, but I am less concerned about the rate being based on net or retail than I am about the lack of escalators. As the number of copies of a book sold increases, the costs of publishing it are amortized over more and more copies. Therefore, the profit per copy increases. Yet, eBook royalties rarely have escalators. Think about that. The eBook edition is the one likely to be available the longest and, over time, probably sell the most copies. It is, by nature of the format, less expensive on a per-copy basis than printed copies. Yet, the author’s royalty rate does not increase based on the number of copies sold. This is the battle the Authors Guild and other writers’ organizations should be fighting: the fight to get escalators on eBook sales.

When you factor in all of the above, flat royalties are not worth considering. They may simplify the accounting, but they work against the very goal the Authors Guild would seem to be seeking in its argument for authors to receive a larger percentage of “net profits.”

Tagged in: Authors Guild eBooks
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As I read the reports of the upcoming trial for price-fixing in which the Department of Justice is going after Apple and Penguin (the other defendants all settled out of fear the costs of fighting and losing were too great; and the DOJ has, by far, the better track record in winning these things), I can't help but shake my head at the damage being done to the publishing community.

This seems to be a classic case of the cure killing the patient.  Perhaps not yet, but in time.

Simply put, the DOJ says Apple and publishers conspired to raise eBook prices and that consumers were negatively affected by this conspiracy.  A large number of states also sued for the same reason.  Publishers that settled have paid or will pay out millions.  Macmillan alone is said to be paying out $26m.

I remember going to breakfast with John Sargent, the CEO of Macmillan, and he proudly explained to me that the St. Martin's model was to buy a mystery for $5,000 and then make a bit of profit and hopefully pay $6,000 for the next book.  Now, that doesn't apply to every mystery, of course, but probably a lot of them.  Now, I admit to having issues with St. Martin's.  I think its contract is one of the more author-unfriendly and I have issues with the deep discounting they have done.  I think deep discounts should be offered only to non-bookstores and certainly not Barnes & Noble, since the purpose of such discounts is to provide an incentive to an account that would normally not order books to order some.  But that's an argument for another day.

Because throughout this matter, I have a bit of newfound love and appreciation for St. Martin's and John Sargent.  While certainly it acted in its own interests, St. Martin's has been the leader in standing up to Amazon, and if you are an author, then you have to appreciate that.

You see, I love books and I respect authors, and while oftentimes the publishing industry gets lost in its search for the profit part of the P&L, I believe that nearly everyone in the publishing business loves books and a lot may actually be authors or want to be authors.  After all, you don't go to work for a book publisher hoping to become wealthy.

Amazon, on the other hand, professes to love books and authors—and I'm sure the folks there do—but the perspective from where I sit is that Amazon is more interested in "content" that can be sold via Kindles.  And publishers provide content and Amazon wants to provide it to you as cheaply as possible and damn the consequences.  Authors already not making a living wage?  Who cares?  As long as they write.  Self-published novels not edited, copyedited, or proofread?  Who cares?  As long as they get published.

People use to laugh at cable-access channels.  Wayne's World wouldn't have existed without real-life goofballs who were no doubt shocked to be able to turn on their TVs and watch themselves just a few channels away from Law & Order.  But those access stations were part of the deals with communities into which the cable companies wanted entry.  But no one actually needed or, to my knowledge, sought free self-publishing without standards.  Self-publishing always existed but the entry costs were too high for most authors.  And I'm not slamming self-publishing.  Done right, it can be a boon and has been a boon to some of my clients.  But I don't think Amazon offered free self-publishing and higher royalties for those in the Kindle Select program out of a love for authors.  It did it for a desire for more content and to have that content exclusively.

And it didn't sell eBooks at a loss for consumers.  It did it for the same reason your cell-phone company gave you "free" minutes: to sell Kindles and build market share.  But it was devaluing books in the process and publishers saw this.  Now, why the DOJ never investigated this, I do not know.  I've been told that selling at a loss as Amazon did with eBooks could have anti-trust implications.  Why isn't the DOJ looking into those implications?

Consumers comparison shop all the time; it's a national pastime.  And Amazon happily shows us the same product in different formats and priced differently.  Or the same format priced differently.  Or the new and used versions priced differently.  And when consumers see a $25 hardcover and a $9.99 eBook of the same book, they have a true WTF? moment and start to think that $25 for a hardcover is grossly overpriced, even though hardcovers have been published at that price for decades, give or take a few dollars, and aren't actually making anyone rich at that price, either.  Readers start to think that they can recoup the $199 for a Kindle Fire (with "special offers," i.e., advertising on the screen) pretty quickly, depending on how many eBooks they buy.  Which is exactly what Amazon wants you to think.  But if the eBook for that $25 hardcover is only $21, then the savings isn't that significant, so why spend the extra money and go to the hassle of getting a Fire?  That kind of model is what killed the earliest eBook readers like the Rocket.

I have no desire for Amazon to get sued, but I have concerns that it hasn't exactly been playing fair and that in not playing fair it is costing the publishing industry as a whole many, many millions of dollars.  At some point, some editor is going to tell me he can't acquire the rights to publish a book because the house took such a big hit in the DOJ settlement, I'm sure.  And that's going to hurt my client and me.  And you. Because if you are an author, your odds of selling a book to a publisher are made greater by the expenses of this litigation and settlements.  And if you are a reader, you may have fewer options from traditional publishers because they may publish fewer books because of the expenses of this litigation and settlements.

In the near future, the DOJ and states may get to chalk up a win and to claim they cured a great consumer illness by beating the publishers into submission on the alleged price-fixing, but in the process they will have done more long-term damage to the publishing industry and ultimately more damage to authors and consumers than the price-fixing (if it actually occurred).

Z

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If you haven't already heard, there are new terms on the table from Skyhorse and Start Publishing for Night Shade authors.  I'm excited to see these, not least because a lot of them reflect the conversations I've had with Tony Lyons and Jarred Weisfeld over the past few days.  I spoke with and reported on my conversation with Tony over the weekend.  And I also chatted with Jarred yesterday.  In a post on io9, the new terms are outlined as follows:

  • 7 1/2 % of retail for all printing books.
  • 25% of net receipts on all ebooks up to 15,000 copies sold and 30% thereafter
  • 50/50 on audio, with a reversion if we don’t sell the rights in six months. Audio rights money to flow through within 30 days of receipt of payment, provided that the advance has earned out.
  • The assignment clause, clause 7, would only apply if the assignment is part of a sale of “all or substantially all of the assets of the company” purchased by either Start Publishing or Skyhorse Publishing.

And I think those are certainly better terms than were previously on the table. And I should; I suggested versions of all of them and I'm pleased to see that Skyhorse and Start have actually gone a bit better than I'd hoped.  The escalator on eBooks, in particular, puts this deal ahead of terms you'll see from Random House and other major publishers.

So, I think authors should take this deal and be happy.  I'm pleased to have been a part of the conversations and I'm exceptionally pleased that Night Shade, Skyhorse, and Start have really listened to the agents and authors involved and worked to improve the terms.  This is the way publishing should work.  It should be a give-and-take between the parties, where each party walks away satisfied.  All too often, authors feel abused in their negotiations with publishers and as though they were ultimately forced to accept terms they didn't want in order to get the deal done.  Here, I think authors can be satisfied to get fair terms and I thank Night Shade, Skyhorse, and Start for working hard to make that happen.

Z

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Last night about 11:30, I posted a blog about how embarrassed I think the Skyhorse Publishing team should be about its offer for Night Shade Books.  And this morning I got a couple of emails from Tony Lyons (one via his assistant and one from him).  Mr. Lyons wants to chat tomorrow and I'm happy to have that call with him.  In the meantime, though, I just finished reading through this piece on io9:  http://bit.ly/XYJwJG. This is important reading for any Night Shade author and his or her agent. Because here the buyers state their case and it's interesting both for what it says and doesn't say.

For starters, the tone is clear:  Skyhorse sees itself as trying to save this publisher and do its authors a service in keeping their books in print.  And that's something authors should appreciate.  It also makes clear that the owners of Night Shade prioritized making their authors whole and getting them paid all they are due.  And that's something authors should really appreciate.

But there are some points that I found interesting.  Lyons is quoted as saying "they were paying royalties which really nobody else pays."  Now, I can't speak to every contract and author at Night Shade, but I can speak to industry standards.  And for fiction they are well established:

Hardcover:  10% of the retail price on the first 5,000 copies sold; 12½% on the next 5,000 copies sold; 15% thereafter

Trade paperback:  Tends to be either 7½ of the retail price on all copies sold or 6% on the first 20,000 copies sold and 7½ thereafter.  In some instances, you might see higher rates, but these are the standards.

Mass-market paperback:  Can be as low as 4% of the retail price on the first 150,000 copies sold; 6% thereafter to the more common 6% to 150,000; 8% thereafter to the also common 8% to 150,000; 10% thereafter.

As Lyons states in the interview, the trade-paperback rate from Night Shade was higher, but the breakpoints were high enough that I would expect few authors to ever actually escalate beyond the initial rate of 8%.  So Night Shade was paying about ½% more on the starting rate than many publishers.  Okay.  Got that.

Additionally, Night Shade was paying about 5% more on eBooks than many publishers, but certainly not all, as some pay 50%.  And Mike Stackpole stated in his blog post on this deal that he was getting 50%.  But should that break the bank?  I would say no, since the costs associated with doing eBook editions are quite low if you are also producing a print edition.

So what broke the house?  Lyons, in this article, claims that Night Shade was losing 25% a year, which clearly is not a level of losses any publisher can sustain, and that comment raises the question, How did they last as long as they did?

I imagine the owners might have invested quite a bit of their personal money in the company, but I can only imagine.  Because one thing that has not been discussed by either the owners of Night Shade or Skyhorse is hard numbers.  How much does Night Shade owe authors?  How much does it owe printers?  How much does it owe other creditors?  And how much does it owe its owners?  These numbers are pretty relevant if you want to convince a bunch of authors to take a lower royalty and give up new rights.

The offer from Lyons requires authors to accept 10% of net as a rate on all copies sold, other than eBooks, which would be at 25% of net.

If you go to Google and in "Random House Terms of Sale," you can get here:  http://www.randomhouse.biz/booksellers/pdfs/RHPSRetailTOS.pdf.  This tells you pretty much all you need to know about what the discount granted might be on a Random House title and your expected "net" on which a net royalty might be based.  I couldn't find anything like that for Skyhorse, but then remembered they are currently distributed by Norton, but are moving to Perseus.  Presuming most Night Shade sales will be via Perseus, here are the terms of sale:  http://www.perseusdistribution.com/salesterms.asp.  Based on this, authors' royalties will mostly be based on a net after a 50% discount.  So Skyhorse will sell a $15 trade-paperback at $7.50 and the author will get 75 cents.  Under his original contract, that author would get $1.20.  So the deal loses the author 45 cents per sale.  But is some money better than none? (Let's ignore that most authors would read that sentence and think, I only get $1.20 out of $7.50??!  That's the reality of publishing.)

Let's look at some other harsh realities here:

Most titles never earn out.  That's right.  If you talk to people in royalties departments (something I did a lot of when I was the chairperson of the AAR's Royalty Committee), you find out that the vast majority of titles never earn out.  This does not mean the titles are not profitable; it just means they never earn out.  So for many Night Shade authors, it may not matter at all if their rate is cut.

Many authors never see their royalties escalate.  Since the breakpoints are so high and sales volume on most titles is so low, getting to the breakpoints is often a moot issue.  So, again, eliminating escalators may not matter.

Now, on the subject of audio rights.  I'm not sure if I'm "the one guy" that Lyons refers to in the interview, since I don't think I made it sound like a travesty of justice, but I'll respond anyway.  When one does a deal with a publisher, agreements are made with regard to rights.  Certain rights are included and others are not.  When Night Shade did its deal with Audible, it started making getting the audio rights at a 50/50 split a deal-breaker.  Now, keep in mind that once that initial deal was done, Night Shade does no more work to sell the audio rights.  It merely puts them into the program.  It does nothing to earn its 50%.

Now, some publishers who make rights like audio a deal-breaker will argue that they need "every opportunity to earn back our advance."  Okay.  Where is the additional advance being paid for these audio rights by Skyhorse?  What exactly is Skyhorse doing that it deserves these rights? Well, they might say, we are rescuing the company.  Okay, fair enough statement, but does Skyhorse really need to demand assets that are not owned by Night Shade to make this deal work?

The interview continues on this subject, "Why on Earth wouldn't [authors] be thrilled that we're trying to negotiate on their behalf?" asks Lyon. "Why wouldn't they want us to sell rights that are as yet unsold, and give them half the money? That seems like it ought to be a good thing, and yet it's being portrayed as, 'Oh, they're trying to grab rights that weren't included in the original contract.'"

Well, let's be honest, they are trying to grab rights that weren't included in the original contract.  It's not a "portrayal," it's a fact.  But, also, if I were an author who had unsold audio rights, I wouldn't want to sell the rights to Skyhorse because (1) I don't recall that the contract includes any kind of flow-through provision, i.e., if the audio rights are sold, the author's share is immediately paid to the author within 30 days of receipt.  No, instead that money will be applied to the author's royalty account, which means if the author has an unearned advance, then he or she will not see that money, while Skyhorse will put 50% straight into its pocket.  Another reason is that Audible has a standing deal with Night Shade, so if you hold the audio rights, your agent can go directly to Audible and cut a deal.  Under the Skyhorse deal, you give up 50% and your agent takes 15% of your 50% (presuming you are earned out) and you get 35%.  Under the direct route, your agent takes 15% and you pocket 85%.  It's not the kind of math one needs to have graduated college to do.

Last but not least, when I read this contract from Night Shade, it has the feel of something cobbled together by the publisher frantically and never run by an attorney.  Even if you agree to the basic terms—10% of net royalties for print; 25% of net for eBooks; and giving up audio at 50/50—I'd still say there's plenty of language here that should be negotiated.  The audio rights should come back to the author if no audio is produced within one year and should also have a reversion threshold.  Also, there needs to be clarity about when these new royalty rates will kick in.  Let's say an author agrees to this deal, but is owed royalties.  Will those be calculated at the old rate or the new rate?  In other words, will the new rates be retroactive?  I don't think it's clear in the agreement.  Also, note that this agreement states that all accounting will be cash-based and not accrual.  So if an account orders 100 books in January but doesn't pay until July, those sales will be accounted for as happening in July.  That's not industry standard.  There are other issues, of course, but I'm not going to go through the entire agreement here.  It seems to me that Night Shade and/or Skyhorse could engage with the Authors Guild, the AAR, or SFWA to discuss this agreement and to make sure that it isn't a contract for indentured servitude.  And while I know SFWA has had conversations about this deal, I do not know if it has reviewed this agreement.

In the end, the decision to move forward is each individual author's, but what I'm seeing online isn't promising. Never have I seen a prospective acquisition of a house so publicly discussed and debated.  On the one hand, I appreciate and applaud the transparency.  On the other, I sympathize with Night Shade and Skyhorse at having to defend itself so publicly and to so many individuals.  In the end, though, if authors don't approve some changes that are enough to get Skyhorse to do the deal, the deal will fall through and that could be that.  Night Shade could go bankrupt and authors will then have to struggle, individually, to get their rights back.  There are no other suitors yet (hello, Amazon!) and no better offer on the table.  So as authors bitch and moan and post publicly that they will not be taking this deal, I advise them to be careful what they wish for, as it may come back to haunt them.

In closing, I can't help but think that the real problem here is that this entire deal was "spun" wrong. It's a PR nightmare.  If you want to ask authors to take a cut in royalties, fine, but asking them to go from a retail royalty to a net royalty was too aggressive.  Asking for more rights than licensed in the original contract was too aggressive, also, and arrogant.  If I had had the chance to review this in advance, I would have suggested raising the breakpoints on the hardcover rates and cutting the trade-paperback rate to an industry-standard 7½% straight or even 6% to 20,000 and 7½% thereafter.  I would also have reassured authors that the cuts in rates would not be retroactive and offered any and all authors not interested in the deal the opportunity to negotiate a reversion of rights.  Let's say your book has earned out.  Your rights should be yours for the asking.  If your book has not earned out, you can revert rights by paying back the unearned portion of the advance.  If you are owed an advance, e.g., an advance due on pub that was not paid, you can have your rights back in exchange for the unpaid advance.  However, most authors are loathe to pay a publisher back money.  It just never happens, other than in rare legal wrangling.  So most would probably accept the reasonable revision of royalties but, the authors would feel as though they were treated more fairly and given more options.  And that would have served both of the publishers in this matter better, IMHO.

As I head off to bed, I'm looking forward to my call tomorrow.  It will, I'm sure, be interesting and educational, and I do appreciate the willingness of Mr. Lyons to chat with me about all this.

Z

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FOR IMMEDIATE RELEASE:

Contact:
Contact Person:         Andrew Zack
Company Name:        Endpapers Press, a division of Author Coach, LLC
Telephone Number: +1 (858) 384-0265
Email Address:         
publicity {at} authorcoach.com
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www.authorcoach.com / www.endpaperspress.com

 

Veteran Literary Agent Launches Endpapers Press
Managed Self-Publishing Solution for Authors

 

San Diego, CA, June 12, 2012—Veteran literary agent and author coach Andrew Zack, founder and president of The Zack Company, Inc. (TZC), and Author Coach, LLC, announced today the launch of Endpapers Press, a managed eBook and print-on-demand (POD) self-publishing solution for authors.

The on-line marketplace is not only growing for new books, but it has presented an incredible boon to authors with deep and even not so deep backlists of out-of-print books. For authors who have invested in creating their own eBooks and print-on-demand editions, the rewards have been impressive, but the process of creating a quality book and placing it on-line with multiple booksellers is not a simple one, and on-line reader reviews can swiftly take a toll on the rankings—and sales—of an author whose work has not been professionally converted and published.  Authors who hope to build an audience and grow the sales of their backlist titles or original eBooks must produce professional-looking editions or face the disappointment of their readers.  Endpapers Press’s production team ensures that readers will be focused on the writing and story and not on the quality of the book production.

“Reading to my oldest son at night, I often talk about the parts of the physical book. The dust jacket, the headband, and, yes, the endpapers. To me, publishers that care about books go to the extra effort to not just publish a book, but to physically build an attractive and quality book. Endpapers, in part, signify quality,” said Zack, emphasizing that Endpapers Press will not be a vanity press, but a service provider for authors of quality fiction and nonfiction, often bringing back into print books that were originally published by major houses. For authors of original works, Endpapers Press editors will take authors through a professional publishing process, including developmental editing, line editing, copyediting, and proofreading, to ensure a high-quality result.

Endpapers Press has already published several titles that are currently represented by The Zack Company but were out-of-print or to which eBook rights were not licensed to the publisher. And it currently has in the works several original eBook editions by TZC or Author Coach clients. Endpapers Press is open to working directly with authors or literary agents on publishing out-of-print or unsold titles as eBook and/or Print-on-Demand editions and offers an industry-leading royalty of 75% of net royalty on many titles.

 About Endpapers Press

Endpapers Press is a division of Author Coach, LLC, an author-services company working directly with authors of commercial fiction and nonfiction. For more information, see www.authorcoach.com and www.endpaperspress.com. The Zack Company, Inc., is a full-service, commission-based literary agency representing authors of commercial fiction and nonfiction. For more information, see www.zackcompany.com.

 

###

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The Association of Authors' Representatives is urging literary agents to write to the Department of Justice on the subject of the DOJ lawsuit against Apple and several publishers, some of which have already settled with the DOJ.  One such letter was recently brought to my attention and I thought I'd link to it here:

http://www.idealog.com/blog/letter-to-the-doj-about-the-collusion-lawsuit-and-settlement/

What's interesting about this letter is just how technical it is in its evaluation of the business and the settlement.  But one of the issues that I see and wish were being highlighted just a bit more is that Amazon as a publisher isn't at all distinct from Amazon as a bookseller.

It seems to me that rather than punishing publishers and Apple, the DOJ should be considering the issue of Amazon as a publisher and its relationship to consumers as a bookseller.  Further, it seems to me that to be fair what likely should happen is that Amazon as a publisher should be broken out from its parent company and made to run as a regular publishing company . . . on an arm's-length basis with Amazon the bookseller.  Because without this requirement, Amazon Publishing enjoys an unfair advantage over every other major publisher.

Take marketing:  Amazon has the data and the ability to use that data to reach millions of consumers.  Amazon Publishing has that same ability because there is no distinction between the two.  Amazon the bookseller sells access to publishers by allowing publishers to pay Amazon to send emails to its customers.  But Amazon the publisher doesn't have to pay (as far as I know) and its books simply get promoted to Amazon customers as a part of the whole operation.  So should all publishers be given access to that data, just as cable and telephone companies were forced to give their competitors access to the wiring they had so painstakingly and expensively put into place?  Perhaps that's a fair development.

Plus, if forced to sell to its sister company on the same basis as other publishers, Amazon Publishing would lose a major advantage.  Right now, Amazon Publishing offers terms that are arguably quite a bit better than those offered by other publishers.  It actually does take advantage of cutting out the middleman, a/k/a the traditional publisher, and passes along some of what the traditional publisher takes out of the mix to the author.  And that's certainly attractive to authors.  But is it fair to other publishers?  I'm no lawyer, but to me it does smack a bit of unfair competition and I'm honestly surprised there hasn't been a lawsuit that addresses this lack of fairness yet.

Or the DOJ could just take the position that it all washes out eventually.  Yes, publishers may have some advantages over Amazon.  Yes, Amazon may have some advantages over publishers.  And a level playing field is nice.  But if that's the goal, then will the DOJ force brick-and-mortar booksellers to stock Amazon Publishing's books?  Where will this sudden and apparently massive regulation of the book publishing industry end?

Z

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Posted by on in eBooks

The Association of Authors' Representatives is urging literary agents to write to the Department of Justice on the subject of the DOJ lawsuit against Apple and several publishers, some of which have already settled with the DOJ.  One such letter was recently brought to my attention and I thought I'd link to it here:

http://www.idealog.com/blog/letter-to-the-doj-about-the-collusion-lawsuit-and-settlement/

What's interesting about this letter is just how technical it is in its evaluation of the business and the settlement.  But one of the issues that I see and wish were being highlighted just a bit more is that Amazon as a publisher isn't at all distinct from Amazon as a bookseller.

It seems to me that rather than punishing publishers and Apple, the DOJ should be considering the issue of Amazon as a publisher and its relationship to consumers as a bookseller.  Further, it seems to me that to be fair what likely should happen is that Amazon as a publisher should be broken out from its parent company and made to run as a regular publishing company . . . on an arm's-length basis with Amazon the bookseller.  Because without this requirement, Amazon Publishing enjoys an unfair advantage over every other major publisher.

Take marketing:  Amazon has the data and the ability to use that data to reach millions of consumers.  Amazon Publishing has that same ability because there is no distinction between the two.  Amazon the bookseller sells access to publishers by allowing publishers to pay Amazon to send emails to its customers.  But Amazon the publisher doesn't have to pay (as far as I know) and its books simply get promoted to Amazon customers as a part of the whole operation.  So should all publishers be given access to that data, just as cable and telephone companies were forced to give their competitors access to the wiring they had so painstakingly and expensively put into place?  Perhaps that's a fair development.

Plus, if forced to sell to its sister company on the same basis as other publishers, Amazon Publishing would lose a major advantage.  Right now, Amazon Publishing offers terms that are arguably quite a bit better than those offered by other publishers.  It actually does take advantage of cutting out the middleman, a/k/a the traditional publisher, and passes along some of what the traditional publisher takes out of the mix to the author.  And that's certainly attractive to authors.  But is it fair to other publishers?  I'm no lawyer, but to me it does smack a bit of unfair competition and I'm honestly surprised there hasn't been a lawsuit that addresses this lack of fairness yet.

Or the DOJ could just take the position that it all washes out eventually.  Yes, publishers may have some advantages over Amazon.  Yes, Amazon may have some advantages over publishers.  And a level playing field is nice.  But if that's the goal, then will the DOJ force brick-and-mortar booksellers to stock Amazon Publishing's books?  Where will this sudden and apparently massive regulation of the book publishing industry end?

Z

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