Digital Royalties and Strategy at PW Panel

At PW’s panel on e-book rights Tuesday morning held at Random House's New York headquarters, questions swirled about digital royalty rates and the place of traditional publishers in a fast-digitizing book market. While panelist Neil DeYoung, director of digital media for Hachette, and the only panelist representing a big six publisher, asserted repeatedly that the creation of digital books is a costly one for houses, other panelists, including attorney Lloyd Jassin and Paul Aiken, executive director for the Authors Guild, contested that notion with questions and, at one point, a little math.

In his opening remarks about the state of digital publishing, DeYoung said the popular perception about e-books is that they’re solely a profit-driving force for publishers. Given their perceived low cost of production, many in the business—from agents to authors—have railed against publishers' claims that e-books, like print books, cost money to make, manufacture, and distribute. As DeYoung argued, the costs may be less visible, but they’re there, from the price of conversion (which he said ranges from “affordable to expensive”) through the cost of sustaining servers to the cost of tracking sales. In DeYoung’s phrasing, the addition of digital publishing “only makes the business more expensive.”

The notion that digital publishing is a complex cost center for publishers is, as Aiken put it, the “company line” that the big six have been touting for years. And in the name of those costs, Aiken said, publishers have essentially been cheating authors out of fair royalty rates on e-books. As Aiken explained, “With 25% of net, under the agency or publisher model, the publisher will always do better on e-book sales [than the authors].” And this, Aiken noted, gives publishers “an incentive to favor e-book sales.”

So how much better do publishers do on e-book sales? One attendee, who identified himself as working in contracts at Scholastic, asked Aiken to do the math. Aiken then did the math out loud, tallying what a publisher makes vs. what an author makes on three different formats of a frontlist title—the hardcover, the e-book edition sold through the wholesale model (which Amazon uses), and the e-book edition sold through the agency model (which Apple uses). With his math, which he walked the audience through, a publisher, on a title with a $26 list price, makes roughly $5.10 on the hardcover while the author makes $3.90. On the e-book sold through the wholesale model, the publisher brings in $9.25 while the author gets $3.25. On the e-book sold through the agency model, the publisher gets $6.38 and the author gets $2.28. (A graphic that ran in the Huffington Post displays this visually. Interestingly, though, more costs are subtracted from the publishers’ bottom line.) So with that math Aiken’s question remains the same: why should authors make less on one version of a book than another? In a fair world, authors would earn at least as much (in dollar terms) on e-book sales as on hardcover sales, Aiken said.

For Jassin, who said he thinks “the future of publishing is bright, but the future of the big six is cloudy,” the big thing he asserted that publishers should be concerned about is the copyright termination clause that many authors will be able to exercise as early as 2013. Jassin, touching on the issue of backlist books and digital rights, said that even though the dust may seem to be settling on this subject, “publishers may get these e-rights, but only for a few years.”

Agent Scott Waxman, who owns the Scott Waxman Agency, spoke briefly about his startup publishing venture, Diversion Books, which he described as an experiment, to see if there’s a way to publish titles his agency either cannot, or chooses not to, sell to publishers. Waxman said with Diversion, which is still in its infancy, he’s trying to figure out what the cost benefits of publishing certain authors is, and whether there’s a revenue stream there.

Other topics the panelists touched on ranged from the importance of publishers maintaining the print business—Aiken stressed that, despite the focus on digital, publishers need to find a way to keep brick-and-mortar bookstores and physical bookselling part of the equation—to the difficulties of breaking out new authors in a digital sales chain. Speaking to that point, Aiken said, “There’s clearly a growing demand for e-books, but it’s not clear that [with] e-books [we] can grow a diverse industry.”

Inevitably, though, the conversation looped back to that digital royalty issue. Moderator Jim Milliot’s question about what the costs for publishers actually are in creating digital books not only led to Aiken’s aforementioned math but, again, to a back-and-forth between the panelists. While DeYoung said profitability needs to be measured across all publishing formats and that a publisher’s costs can’t be measured “in a vacuum,” Aiken pressed the notion that the current digital royalty rates cannot stand. Reiterating that format should not affect royalty, Aiken said that the big houses are in effect paying off the most powerful authors—who have the ability to push the issue of the digital royalty rate—with big advances, but that a move to keep the status quo can work for only so long, with a 50% royalty rate on frontlist titles inevitable.

By Rachel Deahl, PW

Oprah's New Book Selection, Book Club Will Continue On New Network

Today on her show, Oprah confirmed what had been rumored for days--her newest selection is Jonathan Franzen’s Freedom. Said Oprah, “I read it over the summer because the author sent me a galley with a note.” Finding the book “exquisite,” Oprah called Franzen to ask him whether he would like to be the next book club pick, because, she said with a smile, “as you all know we have a little history. After careful consideration, he said yes.” Freedom, said Oprah, is “a masterpiece that spans three decades…an epic family saga…it is everything you want in a book, and I’m betting it will end up being one of the best novels you’ve ever read.” Franzen will appear on a future show to discuss the book, Oprah said.

Freedom publisher Farrar, Straus & Giroux, said it has printed 600,000 Oprah Book Club-stickered copies to augment its printing of 355,000 regular-jacketed copies.

When Oprah selected Franzen’s The Corrections in 2001, the author was quoted as saying he had almost turned down the offer. He was subsequently uninvited from appearing to discuss the book, but has made both public and private apologies for his remarks.

Oprah also denied what she called "rumors that this will be my last book club pick." She said: "I’ll continue to pick books all season long, and the book club will go with me to the Oprah Network."

Priceless, new book by Nicole Richie

Nicole has already led a quite the life. And she’s only 29. A reality TV star, she’s long been a staple on the celebrity scene. The daughter of music legend Lionel Richie, she’s now a mother of two, a novelist, philanthropist and has recently launched both a line of signature jewelry and accessories (House of Harlow 1960) and (Winter Kate).

Craig Wilson of USA Today catches up with her as she looks forward to next Tuesday’s release of her second book, Priceless (Atria, $24.99), a riches-to-rags tale of a spoiled child whose life changes in ways she never imagined.

Q. Your new novel Priceless follows your bestseller The Truth About Diamonds, but it’s not a sequel right?
A. No, it’s not. I like to close one chapter and start fresh.

Q. What’s your writing routine? Early in the morning? Late at night?
A. I wake up at 5:45 and the rest of the family gets up at 7:00, so I have an hour in the morning. And then I have time after 7 at night to write and calm down.

Q. Do you work with anyone?
A. No I write all my own stories.

Q. What are you reading right now?
A. I wish I were reading something. Everyone tells me about a few books I should read, but I’m rereading Tuesdays with Morrie right now. It’s one of my favorites, and its comforting to read something I’ve already read.

Q. Who are your literary role models? Jackie Collins? Danielle Steel?
A. Danielle Steel has been a huge mentor of mine. I look up to her. I’m lucky just to have five minutes with her. She told me not to write a sequel. She told me writing takes time and I might not be in the same place in a few years.

Q. What’s next? Another novel?
A. I’m waiting to be done with my book tour first and then I can get into another creative chapter.

Q. You’re a Virgo. Is that how you can have so many balls in the air at once?
A. I’m very organized. I love a good list. It’s the nerd side of me. I like to be busy.

Q. Still a big Twitterer?
A. I am! It’s a great way to connect with those who support my dreams and to tell them what’s going on?

Q. Speaking of that, is there a sitcom in production? Will Diamonds be a TV series?
A. Not right now.

Q. Tell us about your Chuck episode which airs October 4th, Your back from last year! Still fighting?
A. We just wrapped that up. They had to up the ante this time around after last year’s fight scene. It’s longer and more intense this time. I even hurt my shoulder. It was amazing an experience.

Q. You have two fashion lines. Anything else coming down the pike?
A. We’re expanding into eyewear and handbags in the spring 2011.

Q. So , the world wants to know when you and your fiancée, singer, Joel Madden, are going to get married.
A. They’ll just have to wait and find out.

Q. How are the kids, daughter Harlow and son Sparrow?
A. They’re great. Wonderful.

Q. You’ve admitted you were given too much as a young child. Are you trying to not repeat that with your own children?
A. My parents were great and they gave me their heart and soul. I have to look up to them and hope to do the same, to be the best of me.

Q. Have you been in contact with your old pal and colleague, Paris Hilton?
A. I don’t speak about her.

Evanovich Leaves Longtime Publisher St. Martin's Press After Asking for $50 Million Book Deal

Is Janet Evanovich worth $50 million? That was the question we asked ourselves in this week's magazine. Although no numbers have been disclosed, Evanovich now has a new publisher, having signed a four book deal with Random House's Ballantine Bantam Dell division.

After Evanvoich's longtime house, St. Martin's Press, played down rumors that she might defect after asking for a pay day in the neighbohrood of $50 million for her next four books, the author indeed left. A Random House rep refused to comment on how much the deal was worth. Now BBD, which took world rights in the deal, is planning its first Evanovich title for mid-2011.

In Random House's release about the deal, the company touted some impressive statistics, citing the fact that 75 million copies of Evanovich's 33 novels have sold worldwide. The house went on: "Her new titles are huge simultaneous e-book bestsellers, as is her backlist, and each of Ms.Evanovich's novels also are million-copy paperback bestsellers. Her foreign sales also are large and growing."

World rights for the new Evanovich novels were acquired by BBD editor-in-chief Jennifer Hershe. Two of the books will be Stephanie Plum novels, and the other two will be in the author's newer "Unmentionable" series.

From Publishers Weekly July 26, 2010

Quote of the Day for the Writer

“Just in time for my 50th birthday, I discovered that I could write fiction. My husband had urged me to try fiction for 15 years before I did…I believed that if I couldn’t write ‘literature’, I shouldn’t write at all…Now, I would say to young women, do something you have a true feeling for, no matter how little talent you may believe you have. Let no masterwork be your goal---a modest goal may lead you further than you dream.”

---- Judith Krantz speaking at her 40th Reunion. Judith graduated from the upscale Birch Wathen School in 1948. Barbara Walters is a childhood friend who also graduated from that school.

Judith Krantz wrote Scruples , I’ll Take Manhattan, & ‘Til We Meet Again

Waking the Subconscious

The subconscious: Can the unknown corridors of your mind be hidden pathways to creativity? Author and mental health counselor Kelly L. Stone (Grave Secret, Time to Write) thinks so, and with Thinking Write: The Secret to Freeing Your Creative Mind, he documents how she believes writers can channel their hidden halves to pump up their pages.

What’s a Key To Unlocking It?

One key is related to brain waves. Certain brain wave states are associated with the subconscious mind and creativity, specifically the alpha wave state. Alpha waves are responsible for causing people to get “into the zone” and are documented to be linked to creativity. Professional athletes have been capitalizing on the alpha wave state for decades to improve their performance.

Music is a good way for writers to get the brain into an alpha wave state. Many of the bestselling authors I interviewed for Thinking Write use music as a way to unlock their creativity. What you do is choose music that matches the theme, tone or message of what you are writing and then listen to the music only when you write. Over time, you set up what is called a conditioned response to that particular song or playlist, and when you hear it, you trigger the alpha wave state and are automatically in touch with your subconscious mind and deeper levels of creativity.
Do you have any advice to keep your creativity going strong once you’ve tapped into it?

Ride the wave for as long as you can. Also, be alert to messages from your subconscious throughout the day. It takes time to learn how your subconscious mind communicates with you; some people get hunches, others get dreams that offer an idea or solution, or ideas “pop” into their heads at odd times.

What’s the best craft advice you can offer?

Write on a schedule. Don’t wait “until you feel it.” Set aside time every week for writing (with a built-in time off if you need it) and then when that time arrives, sit down at your desk and write no matter what else is going on. That’s the only way to get words on the page—and, as many of the authors I have interviewed say, you might write crap, but you can edit crap. You can’t edit a blank page.

Writer's Digest

Lemony Snicket Moves On

Daniel Handler, aka Lemony Snicket, has signed a new five-book deal with Little, Brown, leaving HarperCollins to follow editor Susan Rich.

The deal includes a new four-book series from Snicket (the first book is due out 2012), and a separate YA novel---written under the name Handler—due out in 2011.

From BookPage January 2010