Musing on Monday: Digital Rights for the New Millenium

…Or The Reason We Need Big Name Authors to Care about Digital Royalties.

By now, you probably know that the fabulous team of Jane Litte (Dear Author), Sara Wendell (Smart Bitches, Trashy Books), Angela James (executive editor at Samhain), Kassia Kroszer (Booksquare and Quartet Press), and authors Lauren Dane and Maya Banks will be giving a “Rogue Workshop” on Digital Publishing alongside (but separate from) the RWA National Convention in Washington DC this week. (Deets here. The Twitter hashtag for the session, which will be live-tweeted, is #rd09.)

In large part, this fine group of experts in digital publishing decided to put on this workshop because RWA’s final conference schedule include nothing on epublishing. Not, as far as anyone could tell, the barest mention of it. But in the thread at DA that I linked to above, a bit of a dustup erupted over whether the workshop they’ve put together is a) necessary or b) really addresses the needs of broader RWA membership since it’s focused primarily on digital only publishers.

Now, I happen to think that the real crime here isn’t that there isn’t a workshop on epublishing per se (not that I don’t think it would be great and worthy), but that no one’s talking about digital rights and royalty rates at traditional print publishers. Because I’m telling you, folks, this is gonna come back and bite us all in the butt in another 10-15 years (maybe less). Edited on 2/22/11 to add: Okay, I was wrong. Wrong wrong wrong. The time horizon from this post was a little less than 2 years. I posited a 90:10 print:digital ratio in my numbers below. A lot of authors are already at WAY over that ratio.)

Right now, publishers who distribute primarily in digital format offer royalty rates to authors ranging from roughly 35%-50%. (Some may be a little lower, some a little higher.) If the publisher also offers print copies of the books, they pay royalties similar to print publishers.

By contrast, publishers who distribute primarily in print (i.e., the major New York houses) tend to offer royalty rates on digital copies that are less than half what the digital publisher pay. I would have to go check my print contract to see what my royalty rate on my digital copies it, but I know it’s standard for the publisher’s contracts, it’s probably not more than 15%, and we didn’t try to negotiate a higher rate because, at the time, it didn’t occur to me that I should try.

Looking back, I wish I had tried, although I doubt my agent’s efforts on my behalf would have been successful. Because, while digital copies are likely to be a very small percentage of my overall sales, by accepting that royalty rate, I basically made it harder for other authors who follow me to ask for more.

And this is why it’s so important for the big name, bestselling authors to start pushing the royalty rate envelope on digital. Now. Before it’s too late and the paltry 10-25% rates we’re seeing now become so ingrained, they never go away. So ingrained that even the primarily digital publishers start lowering their rates to match. (Because believe me, they will. I frankly don’t wear the rose-colored glasses that say epublishers are “the good guys” who will never take advantage of their authors. Um, maybe a select few, but even they are businesspeople and they publish books to make a profit, not to make authors happy/rich.)

As worried as traditional print authors are now about the possibility that their publishers will follow suit with primarily digital publishers and stop offering advances (a concern I know is out there despite claims to the contrary), they ought to be worried that they’re setting a precedent when it comes to digital royalties which, in the future, will ultimately cost all authors a BIG chunk of money. Including themselves.

It might be hard to see this right now if you’re a bestselling author in mass-market paperback. My bud and critique partner, Amie Stuart did an informal survey about digital royalty rates a while back, and one of the respondents said her royalty rate was quite low (perhaps around 15%) but that it didn’t concern her because while on of her books sold 800,000 copies in paperback, less than 800 digital copies had been sold. In that context, the difference between 15% and 35% is pretty meaningless.

The problem is, of course, that the numbers won’t continue to be skewed that way forever. More and more people are beginning to prefer reading on a digital device, be it a dedicated reader, a smart phone, or even their computers. (My 12yo would rather read on the computer screen than read a paperback. I bet, in his generation, he’s far from unique.) And while the traditional print publishers seem determined to make every effort to keep digital from gaining a foothold in the marketplace (DRM, high prices, and withholding release of the digital book for weeks or even months after the print book is on the shelves), in the end, the revolution will come. Print books will never go away, but those 800,000 to 800 numbers are simply not going to last. And even if we never reach the point where digital sales of New York Times bestsellers outstrip print sales, when they reach even 10% of all sales, the royalty percentages will begin to matter. A lot.

Let’s make the numbers easy. Say you’re the author of a book that sells 100,000 total copies. Let’s assume 90% of those are print copies at an $8.00 cover price ($7.99 is very common, but I’m rounding for simplicity) and your royalty rate for print copies is 8% (that’s pretty standard for mass market paperback, I believe), so you make $0.64 for every copy sold. You’ll bring in a tidy $57,600. Not bad, you say (and I agree; I’d be thrilled with that, lol).

But let’s look at the 10,000 copies sold in digital format (because we’re in the world of 90/10–and believe me, that’s coming fast!). Let’s say you got a fairly standard 15% royalty rate on your digital sales. Let’s further assume that your publisher is forward-thinking enough to offer digital books at a slightly reduced cover price, so they only cost $6.50 instead of $8.00 (in part because Walmart/Target/et al. probably doesn’t charge a full $8 for your print book, even though you get paid as if it did). You still make more per ebook sale than mmpb sale–97 cents per copy, and that means an additional $9,700 in royalties for you, which is quite nice. But…if you’d held out for the kind of royalty rates digital publishers off, even at the low end of 35%, you’d be earning 2.275/copy or $22,750. So even at 90/10 split in terms of sales, your income for the 10% digital sales are nearly half your total print sales earning.

Who wouldn’t want that? Especially since the percentage of readers who’ll be buying digital is only going to increase. At the point at which it reaches even 25% of gross sales, your digital royalties will account for fully half your income.

Now, maybe there are some folks who don’t believe that authors should get a significantly higher royalty rate for digital books than for print. If anyone wants to make that argument, go ahead, although a lot of folks also claim that the only reason digital publishers offer such high royalty rates is because they don’t have to support the overhead of print costs and returns. So, you know, either the digital distribution model is cheaper or it’s not, but if it is, why shouldn’t the author get a larger percentage of the return. Why willingly give up 85% of the profit to the publisher in that scenario.

But here’s the thing: we need print authors with bestseller status to be the ones to demand better royalty rates for their digital books. Because those of us still in the shallow end of the publishing pool just don’t have the clout. If we walk away from contracts with poor digital royalty rates, the publisher will just find someone else who will take it. We’re kind of a dime a dozen to them. It’s the big name authors who regularly hit the New York Times and USA Today lists who have the ability to make publishers sit up and notice.

Please? Because even if it never makes much of a difference to you, the next generation of writers is going to thank you.

Why RWA Needs to Revisit PAN Eligibility Rules

Last week, Emily Veinglory reprinted a fantastically perceptive Absolute Write forum post by Xandra Gregory, a Liquid Silver Books author, on the EREC blog about RWA’s current rules for Published Author Network (PAN) eligibility. I hope Xandra (whom I’ve never met) won’t mind my reproducing here what I think is the most interesting and salient point of her post:

RWA’s biggest problems stem from the dual need it has to both encourage its members in their careers (providing markets, growing readership and increasing visibility for the genre, etc.) and act as a guardian/advocate against the career paths that take undue advantage of authors. For starters, there’s just no real good way to do that except on a case-by-case basis. RWA’s best intentions are setting up an environment where the organization “norms” include a career path that enables a writer to earn decent money, see his or her books in places where they can be bought by customers, and retain reasonable rights to his or her intellectual property.

What this does is sets up a tacit approval of the “proper” way a career should progress. What this fails to do is take into account new markets, emerging markets, or “breakout” situations where an author can expand the reach of romance, grow her audience, or explore new methods of getting stories in front of people and getting money for said stories.

This is a perfect assessment of the “devil and the deep blue sea” dilemma in which RWA has found itself. Any set of rules it defines for determining what constitutes a “professional” career path for a romance author will inevitably result in some very professional authors falling through the cracks.

But there are ways RWA could improve the definition to better identify and distinguish between members who are making a serious effort at building a publishing career versus those who are primarily hobbyists. This isn’t to say that I think all writers who have yet to receive a publishing contract aren’t serious about having a publishing career, but to say that I think the RWA PRO designation does a pretty good job of identifying those people. (For those not “in the know,” a member can apply for PRO status by submitting a copy of a completed manuscript and evidence that said manuscript has been queried to an agent or editor.)

While I’m sure my suggestions won’t meet with universal agreement (nothing ever does), I think they are a darn sight more fair and realistic than the current rules. With that in mind, here are four (IMO) modest proposals:

  1. The income eligibility guidelines should be scaleable based on the length of the published/contracted work. At present, an author must earn a minimum of $1k, either in the form of advance or royalties, on a single published novel or novella. This is patently absurd because an author who earns $500 on a single 20,000 words novella is clearly getting a better rate of return on her work than one who earns $1,000 on a 100,000 word novel.
  2. Recognize authors of short stories (works under 20,000 words) into the “published” club, again using the sliding scale for payment. I know authors who have earned upwards of $2,000 on short stories in the 15,000-19,999 word range, yet because those stories don’t qualify as novellas, RWA doesn’t allow them to enter PAN. That’s just silly, IMO.
  3. The requirement that the minimum income threshhold must be met on a “single work” within 18 months of publication should be revised. The epublishing model works best for authors who put out multiple, relatively short works in a calendar year. As the author builds readership, sales build steadily for her backlist, which allows her to increase her income over the years as new readers discover her and purchase her backlist. Moreover, I would argue that the epubbed author with multiple releases over several years has clearly established a pattern of publication that indicates she is serious about pursuing a writing career. In fact, I believe I could make the case that the multi-published epubbed author has a better “career” in publishing than the print author who received a single two-book contract five years ago but has never sold since (and that’s not making any judgments about why that author hasn’t sold again–it may be by choice or by fiat, but the principle holds either way).
  4. Authors who do not meet these eligibility criteria should be permitted to enter the Golden Heart. If they are not “professional” enough as writers to be recognized as such by one set of criteria as published, their publication credits should not count against them when it comes to the premier unpublished contest.1

I believe that adopting these proposals would go a long way toward meeting the needs of RWA’s published members. If RWA truly believes in advocating and supporting its members’ publishing careers, it can’t continue to be blind to the changing landscape of publishing and the new ways iin which savvy authors are working new markets and new models to their advantage.

1This doesn’t mean that I think the RITA must be restructured to allow all members who are published to enter it. After all, not all unpublished members can enter the Golden Heart, either. To enter the Golden Heart, the member must have a completed novel-length manuscript. If a member’s manuscript is either unfinished or less than 40k in length, she’s out of luck. So, I have no particular problem with the notion that a published author can only enter the RITA if her book meets the contest’s requirements, including by being bound in print by the publisher.

The Meaning of “Published”

If you’re a member of RWA (Romance Writers of America) or are at least tangentially interested in the organization, you’re probably aware that it sponsors two annual contests for writers:

  • The Golden Heart: For completed, uncontracted manuscripts in one the romance/YA genres by authors who are not published in novella or novel-length fiction.
  • The Rita: For published romance novels and novellas (though novella is its own category) with a first print run in the past calendar year (i.e., the Rita in 2009 will be presented to a book first published in 2008).

There has, for some time, been a bit of heartburn on the part of epublished authors that, due to the print requirement of the Rita, they are ineligible to enter either contest. But this year, the low, slow burn has been fanned into a full-blown conflagration by the addition of these words to the Rita eligibility guidelines:

Be mass-produced by a non-Subsidy, non-Vanity Publisher in print book format.

The “mass-produced” is the problem.

First, this wording is completely vague. How many copies must be printed in order for the book to be “mass-produced”? Without any clarity on that subject, how is an author to determine whether or not her book qualifies for the Rita? In fact, a fair number of people entered their books in the contest only to be informed that their book didn’t meet the “mass-produced” requirement.

But second, why should it matter? It’s pretty clear that this clause is designed primarily to eliminate print-on-demand books from the competition, but I have yet to understand why that is either necessary or desirable.

The reason this has caused massive unrest and anger, I think, is that epublished authors were willing to accept (if sometimes grudgingly) that the Rita is a contest for print books and that their ineligibility was solely a format issue. But when RWA moved to exclude some print books as well, it looked suspiciously like the rules had nothing to do with format and everything to do with trying to limit the competition to books published by major New York houses. And that, in turn, looked suspiciously like a statement that authors published by epublishers (with or without print programs) and small presses aren’t “published” at all.

This brings me back to the eligibility guidelines for the Golden Heart. The manuscript must be uncontracted at the time it’s entered and the author must not have published a fictional work of 20,000 or more words with a non-vanity, non-subsidy publisher. No problem, right? Except–here’s the kicker–an author could be eligible to join RWA’s published author network (PAN) by virtue of having earned $1,000 or more on a single work in the romance genre, and yet remain eligible for the Golden Heart because that published work was under 20,000 words!

My first published manuscript was just shy of 15,000 words, and therefore, qualified as a short story, not a novella. While I didn’t earn the $1,000 minimum for PAN membership on it, Harlequin’s Spice Briefs program offers (I’ve heard; maybe it’s not true!) advances in the range of $1,000 for stories under 15k in length, and I did (belatedly) get an offer on that manuscript from them. In other words, I could have earned the PAN minimum on a short story, yet remained eligible for the Golden Heart.

/blink

Now, I’ve heard some authors argue that PAN eligibility and Rita eligibility have nothing to do one another, and rightly so. After all, I’m a PAN member now, but my print book isn’t eligible for the 2008 Rita because it doesn’t come out until May of 2009. It would be ridiculous for me to bellyache that I can’t enter because my book’s not out yet.

Notwithstanding the accuracy of that observation, the fact remains that what’s getting up people’s noses here less to do with the Rita than with what it means to be “published.” Authors who have been offered a contract for publication by a non-vanity, non-subsidy publisher want (by and large; I imagine there are exceptions) to be considered published by the professional organization to which they belong–and they want that regardless of how long the manuscript is, how much money they’ve earned from its publication, or what format(s) it was released in.

The current system for PAN eligibility is, IMO, both unnecessarily invasive and unfairly restrictive. To join, authors must submit proof of their earnings (in the form of either royalties or an advance or a combination of the two) on a single published work over a period of 18 months. RWA’s argument in favor of the earnings clause is twofold:

1) It establishes the notion that money should flow from the publisher to the author, not the other way around.

2) RWA wants to support the idea of professional writers; that is, writers who earn a decent income from their work.

I think those are both worthy goals. The problem is that the non-vanity, non-subsidy clause already makes #1 clear. And as for #2–the percentage of published authors who earn sufficient income from their writing to do it as a full-time job is very, very small. It’s greater than zero, but my understand is that the majority of published authors either have a wage-earning spouse/partner or work a day job in addition to writing. Writing has never been a “get rich quick” scheme, and it never will be.

Furthermore, requiring that authors earn a minimum of $1,000 on a single work to be treated as published ignores and excludes many epublished authors who actually are making a living from their writing. These authors have multiple books, none of which individually breaks the $1,000 threshhold but which, together, easily provide $10,000 or more in income each year. These authors are, IMO, as “professional” and “published” as an author who has received a $10,000 advance on a two-book contract from a NY house, yet they are excluded from being treated as such by the very organization that claims to represent their interests!

In the end, it isn’t about whether or not an author can enter the Rita; it’s about receiving a modicum of respect for what you’ve accomplished. Published ought to mean “published.” And I am radical enough to think that a short story writer is just as published as a novella or novel writer. Brokeback Mountain is a short story–does anyone really think it’s less worthy of recognition as a “published” work because it’s less than 20,000 words long?

I honestly believe that resolving the issue of what constitutes a “published author” would go a long, long way to resolving the internecine battles within RWA over the Rita. Granted, it won’t make the “print” vs. “ebook” problem go away, but that is going to go away in the next twenty years or so, regardless of what RWA does. Because print is on the way out as the primary method of distribution for books; ebooks are the future.

But that’s another post!