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Authors Guild to Publishers: Get Ready for Pushback on E-Book Royalties and “Cobwebbed” Contract Terms

As part of our renewed effort to convince publishers to better support authors and adopt a more equitable split of book revenue, on Thursday, February 5, the Authors Guild addressed the Publishers Lunch Club, a longstanding gathering of New York publishing leaders. In the talk, presented here in slightly edited form, Executive Director Mary Rasenberger addresses the mutual interests of authors and publishers and challenges publishers to think more creatively about the author-publisher relationship in order to ensure that authorship is a viable profession in the years to come.

Mary+RasenbergerGood afternoon, and thanks to Bill Strachan from HarperCollins and the rest of the Publishers Lunch Club for inviting me here today. I’m Mary Rasenberger, the new Executive Director of the Authors Guild.

The Authors Guild is a unique organization; no other group does what we do. We’re a trade association for authors, with over 9,000 members. We advocate for authors on issues including copyright, fair contracts, and free expression. We provide our members with a variety of services related to the business of writing, including free legal services and free or low-cost web services, in addition to information about the writing life. We also aim to provide a sense of community to our members through events, seminars, and our soon-to-be-launched website forum.

Prior to coming to the AG this past November, I practiced law here in New York City, specializing in copyright and media. I worked for the Copyright Office and Library of Congress and did a good amount of copyright policy work in D.C. I even worked at a record company—way back in the day when record companies actually made money.

I tell you this because in both my practice and my copyright policy work, I’ve represented both authors’ and publishers’ interests, and I’ve always seen authors and publishers as partners, because their interests are ultimately aligned. While we might argue over contract terms, we share the same bottom line: we’re both here to sell books. We all favor a vibrant literary culture, strong markets and copyright protection. I’d like to talk about that partnership today and how we can reinvigorate it together in the new publishing landscape.

The New Publishing Landscape

As we all know, the publishing industry is undergoing rapid disruption and disorientation; the way we deliver and read books has changed a lot. Even the way we write books has changed. Digital publishing, for instance, has ushered in shorter formats for books. Authors have begun adapting, some successfully and happily, some not.

Let’s look at the new landscape. We have Amazon controlling 65% of the total online book market (print and e-book) and 67% of the e-book market. Never before has a single distributor had so much control of distribution markets, nor has a retailer been able to drive down the cost of books singlehandedly.

We also have new subscription models, library e-lending, publishers selling e-books directly to readers, and authors self-publishing. And while readers have many new ways of finding books, at the same time they find it harder to discover books they don’t already know about because, online at least, it’s like finding a needle in a haystack. For example, Amazon now has 50 million book codes for sale in the U.S. Even Amazon’s algorithms are just not good enough to make new books as discoverable as they once were in a bookstore. And Amazon doesn’t have anyone who knows you or your kids and can recommend books you’ll like.

As a result of this disruption, the relationship between the author and publisher is changing. Amidst all this change, authors and publishers need to work together. Publishers need authors because publishers still need quality works. And even though authors don’t necessarily still need traditional publishers to publish their books, most of our authors still rely on traditional publishers—for all or at least some of their books.

Nearly anyone can self-publish these days. For some authors, that has turned out to be a good model, when they’re just starting out, for example; or, particularly for some writers of genre fiction, self-publishing has proven to be a good alternative to the traditional publishing house. Successful indie authors can replace some of what publishers bring to the table through freelance designers and editors, etc. Some authors love the freedom and control this gives them; but it is not for everyone, and probably never will be. Very few indie authors make enough money to support themselves. And they have to absorb the financial risk of spending their time writing books on their own, without an advance to fund that process.

But most of our authors still rely on publishers. They depend on the “joint venture” aspects of the publisher-author relationship, where publishers shoulder much of the risk in the form of advances. For many books, especially works of nonfiction that require years of research, travel and writing, or works of literary fiction that might take years to write, those advances are essential. I don’t have to tell this audience: writing a quality book can take years. Advances enable authors to put food on the table and pay the mortgage during those years—or they used to, at least. Then, once the book is written, is still must be edited—even the best writers are not their own best editors—and it must be packaged, marketed, sold, and distributed. Most authors do not have the time, desire, or skills to do these things.

We also know that most traditionally-published books sell better on average than indie-published books. Digital Book World’s 2015 author survey found that authors hoping to reach the largest audience are still best served by traditional publishers. Books published by advance-paying publishers sold a median of 5,000–9,999 units, while books by all other types of traditional and indie publishers sold a median of only 1–499 copies.

Publishers are obviously an important part of the equation; you bring a great deal to the partnership.

But…(of course there is a “but”) we see publishers selling a lot of books and making good money, while the vast majority of our authors are making less than ever. So, what’s the disconnect?

We’re seeing less and less of the sorts of advances that can constitute a livelihood and keep the lights on while the hard work of authorship is being done. And with the dwindling of advances, we’re in danger of seeing the disappearance of the midlist author.

Traditionally, many authors looked to publishers to nurture their careers. They could often count on a publisher to take risks on their books, publishing another book even if the previous title hadn’t cracked the bestseller list or even earned out. A number of very talented authors had careers writing books that advanced us as a culture, and filled library shelves for future learners (and later, the Google Books project)—even if none of those books was a blockbuster. Nonetheless, a talented, hard-working author could actually earn a living through writing. Those were the days!

Most of our professional midlist authors now struggle to earn decent incomes writing and have in many cases sought other sources of income. It’s true, writing as a profession has always been a struggle, but for many it is now becoming impossible. Even if the midlist author is able to keep writing full-time, he or she lives check-to-check—without employee benefits or the security of a regular salary. It does not take much lost income to make their ability to continue earning a living as an author untenable.

One of our Council members, Pulitzer Prize-winning author T.J. Stiles, broke down an author’s financials in a speech he gave last fall at Columbia Law School. I’d like to paraphrase it here, because he does a great job demonstrating how financially precarious the profession of writing books is for authors. He starts with the example of a very successful author who pulls in an advance of $200,000—which is a very high advance these days. The advance is broken into four equal parts: the author gets 25% on signing, on delivery and acceptance of the manuscript, on hardcover publication, and on paperback publication. That’s $50,000 each payment—minus 15% to the agent.

So the author has $42,500 to live on while writing the book. Let’s say it takes only two years to write (which is difficult for a research-heavy nonfiction book)—that’s $21,250 each year. Out of that comes self-employment tax, which is double the payroll tax, as well as health insurance and retirement benefits. And some have families to support. Some authors, of course, supplement their income with other jobs. But these take a toll: T.J. estimates that the necessity of making extra money has probably cut his productivity in half. You see how hard it is for authors trying to support themselves by writing books alone. And most of them are getting advances that are a mere fraction of the $200,000 he uses in his example.

The fact is, many authors who made ends meet writing books for decades now need to find alternative sources of income. This means they write less—or not at all. The causes of this are multifold, but its implications are clear: we will lose out on the type of quality writing that sustains and advances us as a culture unless we figure out how to allow a class of professional authors to devote themselves full-time, or close to full-time, to their craft. This state of affairs is not good for authors—and, I submit, it is not good for publishers either.

The Authors Guild’s mission is to support working writers. We advocate for authors’ rights, we defend free speech, and we believe that writers should receive a living wage. Our goal is to ensure that working authors can continue to work as authors. To do this, it helps to understand what an author looks like in the year 2015. We’d like to say a working author is a person who makes a living writing. But, if that were true, we’d have only a handful of members. A study released last summer by our sister organization in the UK—ALCS—found that the typical income in 2013 for a professional author was 11,000 pounds, 5,000 pounds less than the socially acceptable standard of living in the UK And only 11.5% of professional authors in the UK—defined as those who dedicate the majority of their time to writing—earned their income solely from writing. That is down from 40% in 2005. That’s a big drop in eight years. We don’t have data from the U.S. yet—though we’ll be doing our own survey this year. Many of the professional authors who are not or are no longer making a living wage do not lack talent, imagination, commitment, or sacrifice, but they simply can’t make ends meet by their writing alone.

In 2015, it appears that a professional author is no longer someone who is able to make a living wage writing, but rather someone who strives to make a living writing, but likely comes up short.

As many authors’ earning potential with traditional publishing houses has decreased, the prospect of independent or self-publishing, naturally, has broadened its appeal and become more attractive—even to established authors. By the way, many of these authors prefer to be called independents or “indie” authors as opposed to “self-published.” As they say, they are not really publishing by themselves (they are not investing in e-book technology or printing shops), but are using third-party vendors and print-on-demand technology to publish and distribute their e-books. They consider themselves independent in that they control how, when, and through what channels their books are marketed and sold. One of the benefits these authors see is that they can retain their own copyrights. They like the ability to keep their rights, and they like being able to control cover art and the timing of publication. This is particularly true for those who write serials and whose readers are demanding faster sequels.

Self-publishing has exploded in the last six years—it was up 437% in 2014 over 2008, according to a recent report by Bowker. And although its growth may be levelling, it’s not going away. Though some complain that indie publishing has glutted the market, I think it’s a good thing, because it has lowered the barriers to publication. There are all kinds of reasons a book might not be bought by a traditional publisher, and that book can now find an audience. Increased access to readers is heartening to authors—and it’s good in the long run for the diversity of our literary culture.

But as a result of indie or hybrid authors getting used to setting their own terms, you publishers may start to find best-selling authors coming to expect things like holding onto their copyrights or having more control over the publishing process. Authors may come to take these things for granted. This kind of shake-up has happened in the recording industry already.

My point is that things are bound to start changing in the author-publisher relationship, including in your publishing agreement boilerplate. Honestly, there’s no reason standard publishing agreement terms shouldn’t change. Given how much the landscape has changed, why shouldn’t the author-publisher relationship be reviewed after 100 years of being the same? I’m just saying…I think it might be time to start thinking outside the box.

A Challenge to Publishers

I’m going to offer a challenge to publishers to do what you can to make the publishing enterprise work for authors as well as it does for publishers. It’s in your interest, too.

Like authors, publishers have had to adapt to the new realities of the digital age. Our concern is that, in doing so, publishers have started thinking about authors as just another item on a profit-and-loss sheet. We hope that you consider the welfare of authors generally—and the future of authorship—as part of your business plans, because if you don’t, authors will become a dying breed. There will still be people who write books, but the less they get paid, the fewer books there will be, and the less quality books there will be. We will have very, very few full-time professional authors.

To begin with, I’d like to take issue with the standard e-book royalty of 25% of net receipts. While it might help publishers deflect losses from lower pricing, it is a step back for authors. And it is not reflective of publishing’s traditional “joint venture” spirit, where authors and publishers effectively split the net proceeds of book sales. Songwriters, for instance, always get 50% of royalties from music publishers. Book authors should be treated the same.

So, we’re going to start pushing back on this. At least we’re giving you some warning! We will start reviewing standard publishing agreement clauses to see if they are over-reaching in the new economy. We will look at both traditional and self-publishing agreements. No one will be singled out.

In addition to putting some pressure on you regarding the 25% e-book royalty rate (which, according to my personal informal survey, 100% of authors hate), we will take another look at some of the cobwebbed provisions that may no longer be appropriate in today’s publishing economy, as well as certain clauses that have gotten more restrictive in recent years. For instance, option clauses have in some cases become overbroad, as have non-compete provisions.

To provide some data to help us and our publishers understand what is actually happening to authors’ earning, we are about to undertake major survey on authors’ earnings, as I just mentioned. The last time we gathered hard data about our members’ incomes was in 2008. A lot has changed since then. We’ll let you know what we find so we can provide you with more than anecdotal information.

We know, of course, that publishers need to meet their bottom lines. But we ask you to think creatively about how to better support your partners, professional authors. We challenge publishers to think more creatively and openly to find ways to cut authors in on the profits, so that authorship can once again be a sustainable career, and so that authors can continue to give you the sort of work your publishing houses have staked their reputations on—the kind of work that made us all want to get into this business in the first place.

Let me end by saying this: in the spirit of collaboration, and in our mutual interest, I know we can work together to make book authorship sustainable for the working authors, not just celebrities. We can help you with your challenges, but we need you to help authors with theirs, because at the end of the day, we all share a desire to sustain the strength and diversity of our literary culture. And we are very grateful for your abiding belief that you’re not just delivering content to consumers, but offering enlightening books to readers.

Thank you.