Wednesday, December 12, 2012

Indentured Servitude by Design

Often when I read one of Brad Whttington’s posts, I get the feeling of “being behind the power curve.” That’s an aviation term for an undesirable condition in which full engine power is offset by very high aerodynamic drag, resulting in minimum airspeed. That same power setting with the airplane ahead of the power curve would result in maximum airspeed. You can think of it as using the most fuel to travel the least distance. In your automobile, it would be like pushing the accelerator pedal to the floor and spinning the tires trying to get out of the mud.

Two characteristics of Brad’s posts put me there: 1) I always learn something in retrospect that I should have known, and 2) he has a tendency to throw down the gauntlet with a statement like, “Now maybe we can convince Tosh to do a post on paying people royalties to do day-rate work.”

This subject relates to an essential consideration for any author when comparing the pros and cons of indie versus legacy publishing, especially now that literary agents are scrambling to offer publishing services to authors. Let’s ignore the fact that this is in violation of the Association of Authors’ Representatives canon of ethics and deal with the practical result of agents acting as publishers.

At the core of the current turmoil in the industry lies the prime motivator for agents and publishers alike, to carve out a piece of landscape in the new world out there. They no longer have a monopoly on printing and distribution, and it’s easier than ever for authors to create their own books and put them up for sale with the potential for reaching a market limited only by how aggressively the products are promoted. We have an alternative to legacy publishing that is more viable than ever before.

Authors and prolific bloggers Dean Wesley Smith and Kris Rusch have written an extensive series of informative articles on how to think like a publisher. Two of their specific topics relate directly to the issue at hand, and they serve as the cornerstones of the title of this post.

Today’s publishing contracts typically contain addendums to the standard boilerplate of the past. One such alteration is to what’s called “the sunset clause” and refers to the criteria in the contract for determining when a book is declared out of print and all rights revert to the author. When sales drop below a defined number of units for a specified number of successive months, the author has the right to request and receive control of the book’s future, whatever that may be.

This is a very important point, because over 40% of all print books published end up as remainders, sold at deep discount or tossed into the maw of a pulping machine to become recycled paper. If a publisher has thousands of copies of a stagnant book lying around in a warehouse, they have every incentive to declare it out of print.

But with ebooks, unlimited virtual online shelf space costs them nothing. Why not hold on to the book rights and benefit from whatever profit potential exists in the future? The result is that publishers don’t want authors to utilize this escape clause, so they alter it to effectively retain rights to the book in perpetuity.

Let’s combine that with how publishers, and now their mutinous agent-cum-publisher sidekicks, establish the structure of royalty payments. They deduct expenses from the list price and pay the author a fixed percentage of the net. To toss a gauntlet back to Brad, we’ll let him provide the figures on how much he earned per copy in his traditionally published Fred trilogy. (Hint: Comparing list price to his cut of the profit pie was a jaw-dropper for me.)

The egregious result of this business model is most apparent when considering how the old guard is positioning itself to snatch control of the ebook from authors, most of whom don’t want to bother with production details. Understandably, they want to spend their time writing and leave the business side of publishing to others. And therein lies the trap.

“Let us handle all that,” they say, which supposedly will cover content/developmental editing, copy/line editing, proofreading, manuscript conversion to ebook digital format, cover design, and promotion/marketing.

“Oh, boy,” says the author. “That sounds like a great deal. No money upfront, and they just take a percentage of each book sold. What’s not to like?”

A lot, actually.

It’s as if you have just made a deal with your lawn maintenance company to pay them a percentage of the value of your home for a task worthy of no more than hourly-rate compensation. Your legacy-inspired and -trained compatriots in this business endeavor have just tricked you into paying in perpetuity for something that cost them a few flat-rate hours. The number of ebooks sold divided into their total venture capital expense quickly turns the concept of net into a dinosaur. After they get their money back, you are giving them the lion’s share of the list price forever. (Please pardon the mixed metaphor . . .)

Authors thereby become indentured servants to the new, improved legacy business model, and it’s totally unnecessary. Hire someone to accomplish each of the production tasks under the simple concept of this service for that compensation and be done with it. Don’t fall for the temptation of making it easy.

In the long run, it’s just not worth setting up your lawn guy to inherit your house.
Tosh is the author of the aviation mystery/thriller Pilot Error, the second-in-series Red Line (Spring 2013), and two non-fiction series: Book One of Wings On My Words, tales from the writer's desk, and Book One of Words On My Wings, tales from the cockpit. Visit him online at

Thursday, December 6, 2012

In legacy publishing your book is a high-risk stock

When you ask a legacy publisher why you should look for a contract with the Big Six, now the Big Five, soon to be the Big Four, you will get a predictable list of questionable responses. Most of them involve day-rate services that they provide (copy editing, cover, formatting for pbook and ebook) for which they want to take a percentage in perpetuity. The one legitimate point they can offer is the advance, the publisher serving as an investment banker, fronting $50K to $100K or so (their inflated costs as a dinosaur) to make it all happen and get your book on the shelf for 30-60 days.

One of the more amusing, and debatable, justifications is that they will finance marketing your book to generate exposure.


I got a legacy publishing contract in 2001, long before the era of the Kindle, and was happy to do so. When Welcome to Fred was released, and also the subsequent books in the trilogy, I was dissatisfied with the publisher's marketing efforts. I'm afraid I became a pain and was ungracious in expressing my displeasure.

The fact was that I was unlearned in the ways of the industry. Now I see things differently. The publisher did everything they said they would do to make my book successful and in retrospect I appreciate what they did. But whatever they did, it was not enough to push my novels past the tipping point into financial success. And in my mind I (wrongfully) blamed the publisher.

At the time my day job involved marketing for an international telecommunications testing manufacturer. My company spent millions of dollars to develop a product and then marketed the beans out of it to generate the required revenue to turn a profit and pay the bills. I couldn't understand why my publisher wasn't doing the same thing with my novels. It seemed that the A-list, king-of-the-mountain authors got all the marketing dollars when they didn't really need it and up-and-coming authors such as myself were virtually ignored. It made no sense to me and I wasn't reticent on the subject.

Then one day I stumbled upon an analogy that explained how legacy publishing allocates their marketing dollars between competing books in their catalog. At a mixer at a recent Writer's League of Texas Agents and Editors Conference, I posited this theory to a veteran agent in the industry and he said, "I just learned something about the publishing industry." I was a little surprised. After all, this was his day job and had been for a few decades. He should have been teaching me.

The paradigm comes down to managing risk.


A legacy publisher's catalog is very similar to a stock portfolio for a risk-averse investor. Put most of your money behind blue-chip stocks, proven earners, but dedicate a limited amount of your portfolio to unproven, high-risk stocks in the hopes that one of them will take off and become the next Apple or Google or Facebook.

In book terms, that means that Stephen King and James Patterson, et. al., will get the lion's share of the marketing dollars, even if it seems they don't need it. Does anyone think that the next Patterson novel will fail due to lack of advertising? Don't you think fans will buy it when it comes out, even if they don't see an ad?

But for the first-time author very little marketing is done, and it continues to decrease as budgets tighten. Most of the budget for the book was spent in production and getting it on the shelf. The publisher won't be placing ads or financing book tours or slots on the morning news shows. They may get review copies out to their usual media outlets, perhaps finance a blog tour, do things that costs hundreds of dollars rather than tens of thousands. And then they will wait for one of their high-risk speculations to take off. If one does, they will follow it with money to see if they can ride the wave. But the publisher will never create the wave for a first time author.


Back in 2001 I met my editor for the first time in Atlanta. He drove down from Nashville. I was at the premier telecom industry trade show, exhausted from a day on the show floor and a month of travelling North America and Europe marketing test gear. I wanted two things desperately: to go home to Honolulu to collapse for a week, and for my not-yet-written novel to break out and rescue me from this rat race.

I spent a break from the grueling trade show floor wondering what would make thousands of total strangers buy my novel and grant me financial independence. I put the question to the editor after dinner. He described the things the publishing house would do for my novel. I told him that, with all due respect, that sounded like a lone guy pissing into the ocean. He said I had just described self-publishing, that an established publisher taking on a book granted it a significant level of credibility. I conceded the point and modified it to say it sounded like a fire department directing a fire hose into the ocean. Perhaps the stream was hundreds times the strength of the lone guy, but it was still the ocean.

He answered with the truth as I now understand it. A daunting truth.

"You have to write a novel so good that when someone finishes it, they immediately call their friends and say, 'You have to read this book!'"

I said, "Then we're screwed. I can't write that book."

He smiled and said he thought I could do it or he wouldn't have signed me.

Obviously his faith was misplaced. As good as I thought Welcome to Fred was, despite the fact that it won awards and garnered favorable reviews from Publisher's Weekly and many fans, it didn't cause thousands of people to demand that their friends and family read it immediately.

It comes down to my post on How to sell lots of books. Write a good book.

So, if you go looking for a legacy publisher, remember one detail. That marketing thing, they're going to treat your book like a high-risk stock, whereas if you believe in it and publish it yourself, you'll probably treat it more like a blue-chip stock.

Now maybe we can convince Tosh to do a post on paying people royalties to do day-rate work.

Brad Whittington is the author of the Fred trilogy, What Would Jesus Drink? and Muffin Man.