Hugh Howey
Hugh Howey

Bestselling author of Wool and other books. Currently sailing around the world.

Authors are Being Hoodwinked

Publishers are currently making record profits on the rise of e-books, and authors and readers are the ones paying the price. In fact, many authors—and the guild that’s supposed to fight for them—are actively defending these publishing houses that are doing well while causing harm.

News Corp, which owns HarperCollins, released their quarterly earnings report yesterday. The portion dealing with book publishing demonstrates just how profitable e-books have become for major publishers, and that despite the spin from pundits, e-books are still very much on the rise. The full earnings report can be found here. It includes this gem:

E-book revenues improved by 35% versus the prior year and represented 22% of consumer revenues, up from 17% in the prior year. Segment EBITDA increased $55 million, or 39%, from the prior year, benefiting from the higher contribution to profits from e-books and ongoing operational efficiencies coupled with higher revenues, partially offset by dual rent and other facility costs.

It’s interesting to note that HarperCollins has not added this press release to the Media Room on their site. And they are unlikely to tout these results. Of course, it could have something to do with publishing speed and not anything due to embarrassment, but this is the same HarperCollins that leaked the higher margin on ebooks compared to hardbacks, and the smaller cut authors earn at the same time. An agent comments in the prior link that publishers lied for years about whether e-books were more profitable. It’s hard for parent corporations to brag to investors without the dupes overhearing (ask Hachette).

The dupes in this case are the readers who defend the colluders who illegally raised prices on them. The dupes are the authors defending their publishers while they get shafted on pay and their dear readers get gouged. The dupes are the Authors Guild, which continues to fight for publishers so they can charge higher prices on ebooks and pay dismal royalties, because the guild is run by authors who get such high advances that these royalties aren’t a concern, and high e-book prices protect the print oligopoly that they dominate.

The greatest competitive force working in the favor of authors today is the ability to self-publish. Authors can make 70% of the rapidly growing e-book market instead of a paltry 15%. They can also make four times what they earn on paperbacks by going with a print-on-demand solution, and fully half of the print market has moved online. This is leverage authors have never had. It will result in more diversity in what is published, a greater selection for readers (at a better price), and publishers are going to be forced to compete by paying authors more and charging readers less. They are also going to have to publish more of the types of books that readers want, and fewer of the books that editors wished readers wanted.

These will all be positive changes. They are already happening. Unfortunately, we are now in a phase where enough people are having bags pulled over their heads that publishers are able to profit from the high prices and low pay. But I think word is getting out. And these corporations won’t be able to prey on us much longer.

An upcoming blog post will look at the number of authors moving from one publishing type to the other, and what we are seeing is a drain from traditional publishing to self-publishing. This will bring prices down for readers and earnings up for writers, and that should be celebrated. My hope is that it will also force publishers to work on behalf of the artists and consumers who drive this industry, instead of taking advantage of us.

48 replies to “Authors are Being Hoodwinked”

The article in the NY Times today with Doug Preston was very misleading as he stood in front of his tiny shack (not his house). Why didn’t he tell the NY Times what his advance was for the six book deal he is defending? Many bestselling authors never earn out– they live off bloated advances. Preston is very misleading with his presentation of “facts”.

What he’s worried about is when this contract runs out and his publisher crunches the numbers and they aren’t as good as they were. But all of this is his choice– he chose to sign with his publisher, not Amazon. His publisher is the one in the negotiation fight. Why is he focusing his attention in the wrong direction? He can always go indie after he finishes this contract.

David Streitfeld, the author of that NYT piece, is starting to look like a shill.

He’s the one who added this gem of little relevance to an NYT on the dispute back in May:

“Brad Stone’s book on Amazon, “The Everything Store,” said the company’s negotiations with publishers were so hostile that a veteran of its book group had post-traumatic stress disorder after leaving the company. (The price and availability of Mr. Stone’s book, published by Hachette last fall, appeared unaffected by the current conflict.)”

http://www.nytimes.com/2014/05/10/technology/writers-feel-an-amazon-hachette-spat.html

(Sorry for posting that on PassiveVoice today as well, but I didn’t know how timely it was before seeing your comment, Bob!)

David’s piece today is a complete hack job, and it makes me embarrassed to be a 7-day-a-week home subscriber to the print edition.

But hey, he’s covering a group of writers who just signed a check to the NYT for $104,000. That’s the kind of coverage those dollars buys you.

My favorite part of that NYT article is where he mentions a petition on Change.org that got 200,000 signatures as a way of minimizing the importance of the petition with 7600 signatures. And yet somehow it completely escapes David Streitfield’s limited capacity for logic that this also makes Preston’s letter with 900 signatures even less meaningful.

I posted about this in the comments on the NYT. I rhetorically asked, “If I had a letter signed by 32 people would it somehow merit even more coverage in the NYT than Preston’s letter? Is the author of the article blind to such obvious bias in the way the information is presented?”

That piece made me feel like I needed a shower. It was so disgusting in attitude and it appears to have mislaid all the facts it needed. It’s a shame so many easily influenced people will see it.

I’m glad to hear that report is less easy to misrepresent. I’ll read it more completely, but the bottom line up front is that they are making a huge bank in ebooks royalties while authors are getting the same as they would if they went direct and priced it at 3.99-4.99. That should make readers angry. It should make the authors of those books cringe and then get angry. We’ll see what happens.

I heard that Doug Preston has committed $32.7 million to clear cut timber and dredge an exact replica of Walden Pond on 250 acres of his 300-acre property (to go with his H. D. Thoreau hut and his copy of Civil Disobedience). This may be a rumor as well, but also heard tell that DP will be selling Thoreau-replica-hut building kits soon on Amazon (“Now with high-speed internet and mosquito screens!”).

;)

For many traditionally pubbed authors, they put their self-esteem and validation in a publishing deal, that’s why they defend their publishers despite all the evidence against them. Because that’s where they think that’s where their self-worth in being a writer lies, they defend and blindly ignore hard evidence. Writing, by nature, like acting, can breed insecurity. Publishers know this and play on it.

A publisher’s biggest value is getting books into bookstores. When bookstores go as more people by eBooks, where’s the value with a publisher? This scares many authors whose shelf space on bookstores is already dwindling. If authors are going to allow publishers to only pay them 25% of eBook royalties when they can e-publish themselves and get 70% then they are not thinking strategically. Look at JK Rowling – when it came to publishing her Harry Potter eBooks she self published them. ‘Pottermore Limited’ is her own company which sells her HP eBooks. It’s clearly labelled there on Amazon under ‘Publisher.’ Clearly she doesn’t put her elf-worth in a publisher’s name. Why didn’t she let Bloomsbury, who had published the HP print books, publish HP? Because she’s smarter than that, and knows that it takes 15 minutes to do it herself and reap much, much higher rewards.

“A publisher’s biggest value is getting books into bookstores.”

And that’s why traditional publishers still have value to authors…because they have the ability to get your work out into the marketplace where customers will see and hear about it.

Whereas self-published authors using KDP are pretty much at the mercy of Amazon’s “people who liked this book also bought this” algorithms.

As a reader, I may buy a lot of e-books on Amazon, but I still DISCOVER most of the books I read the old-fashioned way…browsing at bookstores (I live 5 minutes from Third Place Books just outside of Seattle), reading the Indie Next List, and browsing book review websites like Goodreads.

That’s the one aspect of publishing that self-published authors have no alternative for….the marketing machine.

Thing may change. I used to be the “every weekened in the bookstores” with hubby, spending 70 to 150 bucks (even when the budget was strained by it) at B&N and Borders and Waldenbooks and independent little shops and used shops. I discovered books in stores.

I haven’t stepped inside a bookstore since December of 2012. I browse, still, and look at covers and blurbs and read samples. I just do it ONLINE. I read reviews online. I look at bestselling lists online.

I have a separate apartment to house my library of nearly 3K books. I am getting rid of most of them to move to smaller digs as I get older. I can carry 1000 books on my Kindles. I don’t need to take up square footage. I’ll keep the rare ones, the ones I bought for the cover art, my art books (oversized and full of beauty), and my Bibles and special references. But the rest can go.

If someone as addicted to books as me can move totally online and digital, it can and probably will happen to the majority of folks as the digital century progresses.

Bookstores need to evolve fast…

That was me, too. For many years, “shopping” to me meant book shopping, as a reward for the pain of everyday shopping.

I stopped buying paper books in 2012, and now rarely buy “real” books — I still have a paper TBR pile, but I won’t read them until I can buy the digital versions.

I’ve started giving away paper books I won’t read again, and won’t need for reference. For many years, each time we moved, I gave away many boxes of books. Now I have 1500 ebooks, and I can carry them all in my purse.

Last week I visited our local library for the first time in three years. I took out some books (after checking Amazon reviews on my phone), but carrying the huge pile of books home was a pain.

I’m reading them, but I’d rather read them in the Kindle app on my iPad. I’ll be downloading two as ebooks from Amazon, because I know I’ll want to reread them in a few months.

Sooner or later readers will wake up to publishers’ outrageous practices, and will stop buying over-priced ebooks. And traditionally published authors will stop shilling for publishers who are doing publishing more harm than good.

The marketing machine, as you ought to know, is reserved entirely for the benefit of a very small percentage of traditionally published authors. Midlisters and first novelists (i.e., the vast majority of authors on the publishers’ lists) are expected to do their own promotion at their own expense. And if they don’t do it, the publisher will simply drop them.

As I have seen, publishers no longer claim that their advance is meant for the author to live on while he either writes the book or awaits publication; most advances are far too small for that. No, the claim nowadays is that the advance is money to fund the author’s own marketing campaign, which he is expected, and often contractually obligated, to do.

Since you mention how print sales are moving online, I will ask some questions I posted on The Passive Voice also:

Have any other self-published authors noticed that Barnes and Noble has stopped carrying your POD paperbacks? For years our CreateSpace produced paperback books have been sold by B&N on their online store. But recently I noticed that most (23 out of 26) of my wife’s and my books are no longer being offered for sale by B&N (some of them are still being sold on the site by third party “Marketplace” sellers, but some of our paperback titles no longer show up at all in search results).

I looked around and noticed that none of Joe Konrath’s CreateSpace titles are listed, while David Gaughrin’s titles are still listed. I wonder if they are just gradually weaning out the CreateSpace titles once they sell all of their existing stock of each title.

If B&N is trying to compete with Amazon by offering fewer titles on their online store, then they have their head further up another part of their anatomy than I realized. Has anyone else noticed their POD titles disappearing from B&N.com?

There is no “existing stock” of print-on-demand titles. That’s the point of the business model. Fwiw, my books are still listed. Perhaps it has something to do with the type of ISBN used or some other factor.

@Nirmala – Not sure how you’re searching, but B&N is still carrying CreateSpace titles on their site. Konrath’s books are still there. Hugh’s books are still there. I just did a general search and got this: 338854 results for createspace in Books. I did a specific search for my books, and they have all my small press titles, my self published titles and my 47North title for sale. Perhaps you tried searching during a time when the site was too busy or getting maintenance done?

Well one mystery is solved: I was searching for Joe Konrath and that does not work….you have to search for J A Konrath. What is up with that? Is their search function really that picky, and why would they not want to show me results by Konrath when I search Joe Konrath? Try it and you will see that you only get 3 results for “Joe Konrath”. In contrast on Amazon, I get all of his books (74 results) when I search “Joe Konrath”.

Anyways, I still have no clear explanation for why my POD books and my wife, Gina Lake’s, POD books seem to have mostly disappeared from their site. I do have an email into their publisher/author support department, so maybe I will find out soon.

Thanks for clarifying that it is a limited problem and not some new change in policy on BN.com.

I pretty much stopped buying at B&N, though I like my Nook Color just fine, because their search engine makes me insane. It’s useless. Useless. Even doing reviews there is a chore not worth my time (and I’m an Amazon op 500 reviewer). If I want to find something at the B&N site, I have to go to Google, enter the keywords there with “barnes and noble” or “B&N” added, and I get the link to what I want FASTER than if I tried the deranged sloth monster that is B&N’s search engine. It caused them to lose me as a Nook customer…hate it.

Also, when I searched “createspace Gina Lake”, several of my wife’s paperback titles showed up that are not actually being sold by Barnes and Noble. Instead they are listed on the site, but the only sellers are third party sellers selling through the “Marketplace.” They show up on the search results because they list CreateSpace as the publisher in the book description. So it seems there may be many more Createspace books that B&N has stopped selling than just what the 250,000 difference in search results between Amazon and BN.com would suggest.

It gets weirder…the number on BN.com has now dropped over 50 to 338,803, and yet over on Amazon the number of titles has risen over 150 to 586,451.

Now I am very curious. How would the number of titles go down on BN.com when I am sure every day there are lots of new titles loaded onto CreateSpace’s expanded distribution (as also is probably reflected in Amazon’s increasing number).

I will have to keep an eye on these numbers now, but again it suggests that they are selling out current stock and then delisting the titles. (And yes I know that they are POD, but I am pretty sure both Amazon and B&N have kept a few titles on hand to be able to fill orders quickly. There is no other way they could offer such quick shipping times.)

Someone pointed out that not all who publish on CreateSpace select the expanded distribution which might explain most if not all of the discrepancy between the B&N and Amazon search results, although it still seems like a huge difference, especially if there are books in B&N’s search result that are still listed but are not being sold by B&N on there.

I have contacted both B&N and CreateSpace and will report back on anything I learn.

Well, this morning most of my wife’s paperbacks reappeared on B&N, and one of mine. There are still three or four of my paperback books that are not showing up on there, but it looks like this was some kind of technical glitch. I will post again if anything changes or if I hear something back from B&N.

I saw your other post on this so I checked and the two books I have available in paper are there. The last volume of my Silo 49 series (it’s a test because it’s the shortest) and my new book Strikers are there just fine. Also, my perma-free is still listed exactly the same as before, too.

I think there’s probably a lot of flex in what is listed where because of author choices in terms of distribution. How many books get de-listed by the author? How many change channels? Probably a lot.

But I agree with Mir, their search engine is a dinosaur that makes me insane. It could be that alone that is messing with the results.

Looking over some of the early data starting to come out on KU borrows versus Amazon sales suggests to me even more than before that the horse has already bolted. All those trying to hold the legacy system together and undermine the ebook/self pub transition are just looking more antiquated and desperate every time they post/blog/or cry out. Even the Google and B&N tie up announced today http://www.nytimes.com/2014/08/07/business/media/google-and-barnes-noble-unite-to-take-on-amazon.html?ref=todayspaper&_r=1 sounds like an awkward half measure where books will be sourced from local B&N stores, which limits the range straight away to at most 100,000 titles. How is that supposed to compete with Amazon’s millions of available titles and same day delivery?

Half baked.

“this is the same HarperCollins that leaked the higher margin on ebooks compared to hardbacks, and the smaller cut authors earn at the same time. ”

This is also the same HarperCollins that spent more than 2 years in litigation against Open Road Media rather than negotiate with Jean Craighead George on their “industry standard” ebook royalty rate of 25%-of-net.

HarperCollins acquired Craig’s book, JULIE OF THE WOLVES, for an advance of $2K in 1971. Since then, it has sold over 3.2 million copies in print–so HarperCollins has made an extraordinary amount of money on this book. Due to Harper’s long print history with the book, Craig wanted to license the digital rights to them, but they presented 25%-of-net as their non-negotiable rate, which Craig felt was unfair to authors. So she instead licensed the ebook rights to Open Road for a royalty of 50%-of-net. (According to reports I read of the case, upon receiving the Open Road offer, Craig have HarperCollins an opportunity to match it and they refused.)

Then HarperCollins sued Open Road for copyright violation, claiming the phrase “in book form” in the 1971 contract included digital format. They spent 2 years pursuing this case.

They finally won, primarily based on a badly-written clause inserted by the author’s agent into the contract. (For details on why this made a different, read the judges opinion in HarperCollins v Open Road. Long explanation.) The thing that’s interesting about it is… it was NOT a boilerplate clause, it was inserted by the agent in this instance, so this court victory is unlikely to have sweeping ramifications for other old contracts.

IOW, rather than negotiate its “industry standard” digital royalty rate with an author whose book had made millions in profits for them, HarperCollins chose to spend two years in litigation… over a contract that may have no broader application than this particular case>

Even better… the contract does not AUTOMATICALLY assign digital rights to HarperCollins (which was why Craig and Open Road both believed she controlled her digital rights). HarperCollins can -only- epublish the book IF the author agrees to the terms…

So the question is, having spent two years suing over this, during which time the author died and now her heirs have had to deal with Harper’s mess… is Harper going to stick to a 25%-of-net as a “non-negotiable” royalty rate? If so, will the heirs accept it, or will they decline?

THIS is how deep publishers are drawing the line in the sand against paying a fair royalty rate on ebooks.

That’s the kind of thing that makes my soul burn and fuels and desire to boycott publishers. How cruel. How petty. I hope the heirs do not let HC make more money. At this point, I would count it blood money.

This is the same HarperCollins who started their own website a couple of months ago. They’re selling bestsellers in ebook format for $14.99 and $16.99.

I wish I was kidding.

Dav

Oh, but they had a =sale= section where ebooks were $1.99!

So I clicked on the link.

There were six books there. 6. Six.

In the the entire HarperCollins catalogue, in their OWN ebookstore which makes ebooks even that much more profitable by eliminating the dsitributors… they had…. SIX books on sale. As their grand-opening launch! for their e-store.

(sigh)

It’s a level of ignorance and ineptitude that would make me feel sorry for them if they weren’t so invested in screwing over writers.

Hugh says:
“My hope is that it will also force publishers to work on behalf of the artists and consumers who drive this industry, instead of taking advantage of us.”

Wow, you are an optimist. Being a cynical old man and confirmed pessimist, I regret to inform you that the most likely immediate outcome is that publishers will increasingly move to take more advantage of writers and readers. That will happen because that is what will reward the people who can make the decisions about how to treat authors and readers.

The fact that you can write that sentence sincerely means you are a decent human being. If you plan on it coming to pass, you are simply a fool. The current management teams at the biggest publishers were rewarded for breaking the law to achieve exactly the opposite effect. Expect that to continue. Nothing wrong with hoping for the best. Just don’t plan on it.

Yep, I think you’ve nailed it and that is the saddest part.

Like Hugh, I hope it will change things but I’m not naive enough to actually believe it will happen. The people who are making bank on bad behavior are rewarding by that bank. Morals don’t come into it.

It’s not just authors who get shafted, but the whole of the creative department that does. They are coming to the indie side, but it is a leap of faith for so many of them. What we really need is a comprehensive, one-stop-for-it-all, place online for trad authors to come to (even secretly), and get a complete tutorial on how to self-publish so they can see how easy it is. Include the clicks required even. Make it less intimidating sounding and I think the light bulbs will go on for a lot of them.

Publishers have no incentive to change this stuff. Authors do have incentive to avoid it all by ignoring the publishers and clicking the KDP upload button.

When you don’t like one guy’s terms, take your business to the other guy. Nobody will be singing Kumbayah.

The current management teams at the biggest publishers were rewarded for breaking the law to achieve exactly the opposite effect. Expect that to continue. Nothing wrong with hoping for the best. Just don’t plan on it.

Hugh, I have to agree with Mr. Ockham. Hope for the best, but expect the worst. And you ARE a decent human being.

Michael

I completely agree with your findings, Hugh. I received an email from Amazon’s Kindle Direct Publishing wanting me to write to Hachette directly to complain about the high prices they’re charging for eBooks. As an Indie publisher and author, I have no dog in their fight. Frankly, I don’t care what big publishing charges for their eBooks, and I don’t believe Amazon has the right to restrict free market capitalism at work. If readers want to pay $6,000 for an eBook, let them do it. Amazon would still get their slice. No, the issue is the fact that independent, self-publishers are going to take-over the market by banding together and selling to the reading public. We have always worked inside our niche, and this will continue in more specialized ways. I am establishing my own business, which is a form of Bookshout, but my readers and creators will be independents, and not conglomerates. Hugh has always been my “hero” in the indie movement, and he will continue to be so.

And Amazon has every right to set its own retail prices. Hachette wants Amazon to sign a new contract in which Amazon will forfeit that right; and Amazon has the right not to sign.

The right, yes, but they don’t want to. How would you feel walking into a bookstore and finding out there are entire areas in which they don’t sell books, where the books you want are not there? You would find another bookstore. Amazon wants to sell all books, so they are not going to deny any authors, all they want is for those sellers to charge fair prices so readers don’t ger screwed.
Do you know why Hugh doesn’t have books for $89.99 on the kindle, becuase no one would buy htem and it is a waste of everyones time listing books at that price. This is what amazon is saying, $19.99 is a waste of time for an ebook, when you can get it free in the library or used for 2 bucks.

I sent out 4 letters to Hatchette’s CEO supporting Amazon.

ARE YOU AWARE OF THIS BELOW, Howey. It’s being placed by James Patterson, who we all know is against the indie authors, and his cronies:

Over 900 Authors Sign Open Letter to Amazon-To Appear in NYTimes This Sunday

Authors United, the loosely knit group of authors who joined forces to formally ask Amazon to end its sales terms dispute with Hachette Books, is preparing to run a full-page ad in Sunday’s New York Times. The ad, which includes the signatures of over 900 marquee, midlist and debut authors, requests the e-tailer to, among other things, stop its program of “selective retaliation” against the authors.

The letter, which was previously announced by Douglas Preston, the bestselling writer (long published by Hachette) who founded the group, is being paid for by a select group of the signers. Among the many signers are John Grisham, Anna Quindlen, George Pelecanos, Stephen King, and Jay McInerney.

The letter, available in full at authorsunited.net, is the result of what has become a very public showdown, brought to light in May, between a publisher and the most powerful book retailer in the business. While the signers of the letter claim not to be “taking sides” in the issue, they feel that they have “made Amazon many millions of dollars” and want to be treated fairly by their “business partner.”

While the signers of the letter claim not to be “taking sides” in the issue, they feel that they have “made Amazon many millions of dollars” and want to be treated fairly by their “business partner.

I really want to know which of those authors signed individual contracts with Amazon.

I thought that their contracts were with Hachette! That would make them Hachette’s business partner…not Amazon’s.

The idiocy continues.

Michael

Your pulpit is obviously larger than mine, but I have also written a blog about this issue. I would love it if you would check it out: https://www.goodreads.com/author_blog_posts/6793842-on-the-importance-of-debate

The reason I write my blog is, I believe, the same reason you have written yours: to cut through the lies and speculation and give some actual facts about this dispute.

When I read your blogs I sense the same kind of frustration that I feel when I read articles or hear people talking who have the facts all wrong.

All of this is a long-winded way of saying that I really appreciate the insights that you provide in your blogs and I thank you for taking the time out of your schedule to write them.

I really appreciated, being able to read, what you had to say in this article and, I’m keen to see what other people wish to contribute. Really interesting items here, enjoyed it! Well you’ve given me some good insights here.

I spent the past six years working on my fantasy novel, and after researching this past year, realize that it makes more sense to publish independently. Thanks, Hugh, for all the information and encouragement. My wife says that she hasn’t seen me this excited about my writing in years, and knowing I don’t have to worry about the gatekeeper has made me more prolific. I’m so pumped, and so excited to join the rest of you who have already taken the leap.

6 years is too long, break it up into smaller books in a series, throw the first one on the kindle as soon as you can, use Hugh as your guide to success. I know I am…
Best of luck

Hugh says:
“My hope is that it will also force publishers to work on behalf of the artists and consumers who drive this industry, instead of taking advantage of us.”
Optimism without reason is a little insane. Publishers have NEVER cared about the reader ot the writer, they care about profit. How many people make money on a book? If you self publish, you and the publisher make some money, you get the lions’ share. But if you use a traditional publisher, you are lucky to get 15 cents on the dollar because YOU are supporting THEM. Harper and Hachette have thousands of employees who earn thier paychecks on the backs of writers, which is why they don’t want writers getting all upity and thinking they can do it on their own.
The only answer is to ignore them, self publish, and if you find success, make them beg for the right to your hardcopy… just like Hugh did.

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