Even Conservatives Need the Help of the Activist Courts From Time to Time

A bunch of politically conservative authors are suing Regnery Publishing for business practices which artificially deflate the authors’ royalties. More specifically, the suit alleges the Eagle Publishing, which owns Regnery, “orchestrates and participates in a fraudulent, deceptively concealed and self-dealing scheme to divert book sales away from retail outlets and to wholly owned subsidiary organizations within the Eagle conglomerate.” Or as one participant in the suit told the New York Times, “Why is Regnery acting like a Marxist cartoon of a capitalist company?”

On one hand, there’s a part of me who takes a positive delight in the idea that people like Jerome Corsi, the fellow who co-penned Unfit for Command: Swift Boat Veterans Speak Out Against John Kerry are finding their own royalties from such work swift-boated; karma works, people. But the other hand is the one that I use to sign my own royalty checks, and verily this hand cries for justice. So my inclination is to hope they have a good case.

The real question here — or at least what I think the real question is here — is whether the authors can show that the giveways and books sold through these books club and other Eagle subsidiaries represent lost sales in retail; i.e., that if the folks who got the books from the Conservative Book Club would have purchased the books at bookstores instead, had they not gotten them at book club rates. I think this is probably a tricky question to answer. Hell, I belong to the Science Fiction Book Club, and there are books I bought there that I wouldn’t have otherwise picked up (although if I end up liking the book, I buy the author’s next book in the bookstore). I very strongly suspect that there’s a very fair percentage of book club sales that don’t represent lost bookstore sales, simply from behavior like this.

But then, Regnery apparently gives authors a $4.25 royalty (on average) for a hardcover sold in a bookstore, and a single thin dime for books sold in the book club, so perhaps all they need to do is show that at least 3% of book club buyers would have gone to the bookstores in order to show lost profits. That might not be as difficult.

(I don’t know that Regnery is particularly screwing the authors with book club sales; incidentally, since I suspect all book clubs offer a royalty along those lines — if not an actual dime than still significantly less than in bookstore. In my last royalty statement I got about $200 in royalties for the SFBC book club version of Old Man’s War; at a dime a book that translates to a couple thousand books sold over those six months, which given my sales overall does not seem out of line. Don’t worry if you bought a book club version — I’m doing just fine, thanks, and overall I think the SFBC has been useful, rather than detrimental, to my career.)

This struggle over royalties is interesting in the case of books that these authors pump out, because they’re the sort that sell in a particular political moment rather than over time. It’s not as if very many people are queuing up now to read about Kerry and his swift boats, after all. Unlike fiction writers, these authors can’t hope that their back list will sustain them; they have to make their royalty money quickly or not at all, and people aren’t necessarily buying the books for the authors — these guys aren’t Rush Limbaugh or Ann Coulter — so there’s no promise that good sales will track from one book to the next. So in these cases, book club sales could represent a real hit relative to book store sales.

Ironically, Regnery could make the argument — in a realpolitik rather than legal sense, I suspect — that it’s more important for the conservative political cause to get the word out to as many people as possible by any means necessary, even if that means the author taking the hit himself; i.e., all those book club sales and newsletter giveaways and what have you are building the permanent conservative majority and what have you. But that does seem awfully collectivist. Likewise, there is snark to be had in the observation that conservative authors can hardly complain about Regnery’s practices when they are the very model of Bush-era corporate profiteering, which is to say the corporation vacuuming up all the profits while screwing its workers, in this case the authors. Welcome to the real world, boys, we hope you enjoy your stay.

But as I said, regardless of my snark level, I hope these guys can make a cogent case; authors have a hard enough time making money without publishers screwing them unnecessarily. I’ll be very interested to see what happens.

Update: in the comments, lawyer C.E. Petit suggests I missed the point and notes (excerpted here): “It’s not a question of substitution of book club sales by an independent book club for retail sales (and, even then, courts will ordinarily calculate the ‘loss’ by treating all sales from the club as if they had been retail sales). It is, instead, a question of self-dealing. What the authors are alleging is that the publisher’s parent purposely made retail sales difficult, but sales through the book club that it owns both easy and less expensive for the consumer. In other words, this is simple accounting fraud — ok, perhaps not so simple — rather than a substitution of vendors issue.”

Excellent point.

32 thoughts on “Even Conservatives Need the Help of the Activist Courts From Time to Time

  1. Well, wacko conservative Libertarian that I am, I should point out my pet peeve that corporate profiteering ala Tyco, Enron, and perhaps Regenery is not capitalism– it’s the form that abuse of power takes in a capitalist economic system. In an old-style communist system the same people running Regenery would be skimming boxes of cigarettes of the backs of trucks and selling them on the black market, and in a modern socialist context they’d be diverting UN funds for environmental remediation into the pocket of their son, the consultant.

  2. The end of your second-to-last paragraph nailed my reaction to reading your first paragraph. What goes around, indeed. I can’t wait to hear the squeal when Regnery starts outsourcing ghost-authorship of these screeds to Poli-Sci grad students at a Mumbai university. Oh, yes, hi-larity will ensue.

  3. How do the publishers get away with paying the authors so little for book club versions? It sounds like a hardcover book club edition pays even less royalties than a paperback.

    Also, how did the practice of making a different hardcover for book clubs come to be? I know in the collectors market a book club edition isn’t worth much at all, even in “first edition”. I’ve lost count of how many time’s I’ve run across what I thought was a rare SF 1st ed, only to find out it was book club.

  4. My friends and I have tried to ‘direct’ revenue toward authors by buying their books first run, particualrly when we are first turned on to them in used book stores or libraries. Preston and Child’s joint and individual books were a used book store find in th mid 90’s which we gobble up now in hardback; we read Jasper Fforde’s first book quickly after seeing it in the library and then cleared out the local bookstores entire stock of trade paperbacks (resulting in extremely strange looks from the clerk); and we’ve been tempted to fire off checks to the authors whose collected work we’ve mongered out of yard sales and swap meets over the years.

    What do you think, John? Can I get my own book deal out of this, recounting my experience of sending my favorite authors belated royalty payments my bargain hunting ways cheated them out of – pithy anecdotes about how and why I like the books, who took the money and ran, who did nothing, what was returned uncashed and who (if any, perhaps) wrote back a short note of thanks? Is this just a silly idea? How much do I owe you for my used copies of OMW and GB? Should I just Paypal it to you?

  5. Mensley:

    “How do the publishers get away with paying the authors so little for book club versions?”

    Generally speaking the publishers don’t own the book clubs, so it’s the books clubs that pay the authors so little. That said, contractually, publishers often have the right to license the books to book clubs, and take some percentage of the income. In the case of OMW, there’s a 50/50 advance and royalty split between me and Tor.

    As to why publishers who have the rights would make such a deal, I suspect two reasons: First, the money the book club pays to license the book is a bit of a hedge in case the book doesn’t earn out. Second, particularly for newer authors, being a book club selection is useful because it gives reader a cheaper way to sample your work; if they really like it then they may buy the next book in the store.

    The book club editions are generally more cheaply made, and sometimes a different size, which is why there’s a variance there. I notice that the book club versions of my books have slightly rougher paper and covers without embossing.

    bensdad00:

    You owe me nothing, of course. But I won’t mind if you buy my future books when they come out.

  6. I suspect these kind of ‘books of the moment’, in which I would lump books about swift-boating in the same vein as ‘what will happen in Harry Potter 7′ tomes, will become less and less relevant as the web’s continued popularity increases and it’s availability (particularly in the wireless realm) become more ubiquitous.

    I mean, the main appeal of such books is to read in a downtime, such as during a train commute, plane trip or a road-trip where you aren’t the driver. And, as Scalzi would surely hasten to point out, the Bathroom reader. If you have an appropriate handheld unit that can give a similar experience by reaching websites, be they conservative blog or boingoing or harrypotterfans or the Whatever.

    The content distribution channels are changing. Into what, I don’t know…but the game is changing for lots of media, and I think this is an indicator. And while I want authors (even hacks who write crap books) to get their deserved payouts, I think that these kind of screeds in particular are going to be the first ones with their backs up against the wall when the revolution comes.

  7. Your last paragraph reminds me of my dad’s parable of the communist pig farmer. The pig farmer was asked how communism dealt with his neighbours’ produce. His answer was always a variant of “the farmer keeps enough for him and his family, the state takes the rest and distributes it according to need”. When asked how communism dealt with his pig’s his answer was “wait a minute, those are my pigs”.

    The first comment (S andrew Swan’s) alludes to this as well. I guess regardless of economic and political systems, there are always scum who would exploit others if they could.

    Cheers
    Andrew

  8. John, I think you’ve missed the point here. It’s not a question of substitution of book club sales by an independent book club for retail sales (and, even then, courts will ordinarily calculate the “loss” by treating all sales from the club as if they had been retail sales). It is, instead, a question of self-dealing. What the authors are alleging is that the publisher’s parent purposely made retail sales difficult, but sales through the book club that it owns both easy and less expensive for the consumer. In other words, this is simple accounting fraud — ok, perhaps not so simple — rather than a substitution of vendors issue.

    This is not the first time I’ve seen these allegations. Neither is it the first time I’ve seen evidence to back up the allegations, even within speculative fiction. Doubleday used to have a speculative fiction line, back when — if one followed the money — it had a substantial, and perhaps controlling, interest in the SFBC; and the less said about certain other shenanigans involving media fiction, the better.

    So, I think your analysis is interesting… but what you described is not what the authors are complaining about.

  9. John, as a conservative I have to say that it is quite conservative to use civil suits to redress business related grievences. I mean, the original treatise for US civil law is Black’s Law (written before the formation of the US). “Activism” in the courts refers almost always to positive legislative demands stemming from civil suits.

    On a far ligher note, I hear John Kerry is finally ready if the SBVFTs come for him again.

  10. My question is: are these book sales even real? There have been acusations of bulk buying to push books onto the best seller lists.

    http://query.nytimes.com/gst/fullpage.html?res=9E05EED6153CF936A35753C1A9659C8B63&sec=&spon=&pagewanted=print

    The partisan competition has become so intense that the best-seller list itself has been drawn into it. In a recent interview with Publisher’s Weekly Daily, an e-mail newsletter, Mr. Franken accused unnamed right-wing organizations of artificially inflating sales of conservative best sellers through bulk buys. The proof, Mr. Franken hinted darkly, was the dagger — a tiny icon that appears next to some titles on The Times’s best-seller list.

    According to the fine print on the list, the icon ”indicates that some bookstores report receiving bulk orders.” To discourage manipulation, The Times’s method for generating its best-seller list is a closely guarded secret. But Deborah Hofmann, the list’s editor, said the dagger ”is not a pejorative, but it is a communication to the reader that if you don’t see a lot of people reading this book on the street, you’re not the only one.”

    In theory, then, the icon could imply that a book’s popularity is due to well-financed institutions, not avid readers. At least that’s how Mr. Franken sees it. ”They say they’re winning the war of ideas,” he said in a telephone interview, referring to his conservative rivals. But really, ”they’re winning in the marketplace of bulk buying.”

    It’s true that during its long run on the list this summer, Ms. Coulter’s book ”Treason” appeared with a dagger each week. And though the hardcover edition of ”Slander” made the list for 15 weeks last year with no dagger, the paperback edition currently carries the icon, as do two conservative titles on the hardcover list.

    But then the liberal Michael Moore’s book ”Stupid White Men,” a best seller for 37 weeks last year, bore a dagger on four of those weeks, as did Mr. Hightower’s book last month.

    Conservative groups deny that they make bulk buys of ideologically appealing books. And many authors, publishers and booksellers say they’re baffled by the icon. Mr. Ross, whose Crown Forum imprint published ”Treason,” said sales of the book have been strong in chain stores, independent book stores and on the Internet. Paul Slovak, the associate publisher of Viking, which published Mr. Hightower’s book, attributed its popularity to the author’s ability to sell copies through speaking engagements. In a telephone interview, Mr. Hightower said he had spoken at more than 50 events in 34 cities in the past six weeks.

    So what to make of the dagger?

    ”The New York Times best-seller list has as much art and artifice as science,” said Michael Cader, the creator of PublishersLunch.com, an industry newsletter. ”The whole argument about whether a book with or without a dagger is more legitimate is laughable.”

  11. This controversy brings to mind the adage that while the problem with communism is communism, the problem with capitalism is capitalists.

  12. Re nisleib:

    That whole bulk buying complaint makes me want to quote The Princess Bride: “I do not think that word means what you think it means.”

    A best seller list is a list of books that have a lot of sales. I have the urge to point out that sales is sales regardless if they were bought by the ‘public’ (whoever they are), the Christian Coalition, or my Uncle Fred. If some group wants to purchase a large number of books for whatever reason, and paid money for them, well, those are sales. I’d only ague about the legitimacy of the numbers if it’s the publishers themselves buying mass copies– but if some third party wants to support an ideology by buying a hundred copies of some book or other, more power to them. If someone thinks this “devalues” the NY Times list, it’s their own fault for investing meaning into the list other than as a measure of book sales.

  13. On a related topic, how deeply (if at all) do author royalties get hit when sold through sites like Amazon?

  14. John — as to your earnings from Old Man’s War from the SFBC; the current club price (according to their website) is $11.99. I’m pretty sure I know what the royalty rate is, but — just in case that’s insider information I shouldn’t reveal — I’ll instead say that it seems that bookclub royalties are in the 4-10% range (here is a listing of romance advances and royalty rates; book club rates are generally said to be lower). And, according to this site, a 50-50 split of book club moneys between author and publisher is pretty typical.

    So an $11.99 book, like Old Man’s War, would generate somewhere between 48 cents and $1.20 in royalties, and probably half of them would go to the author. (And thus I suspect, even on the low end, that you’re getting a bit more than a dime per copy.)

    Also, I haven’t found myself agreeing with C.E. Pettit a lot lately, but he’s absolutely right here — the central issue is self-dealing on the part of Eagle, which would be very illegal if proved to be correct.

    (On the other hand, for much of the past decade there was a competing conservative book club, American Compass, which may have put some competitive pressure on Eagle’s Conservative Book Club.)

    On bulk buying: there are many reasons that someone may buy a number of books, and “evil conservative publisher trying to deceive the world” is perhaps the most unlikely and underpants-gnome-like one I’ve ever heard. Books are bought in bulk for seminars or other educational uses, as mass gifts, and for many other reasons. nisleib‘s comment mentions “speaking engagements,” which also can move a lot of books like this. But, yes, there really are large audiences out there for politicially conservative books — as with anything else, some books sell better than others, but there is a strong audience for, in particular, books bashing liberals.

  15. Not at all, Steve. At least, mine don’t. That said, if a book gets sold at a particularly deep discount (more than 40% of the cover price), then the royalty allotment changes.

  16. Swann, he say: “…sales is sales…”

    True enough. But isn’t the point that there’s a difference between selling 10,000 copies of your treatise to individuals you might persuade to your line of reasoning, and selling 100,000 copies to the BigBoxMart distribution center, where they’ll languish or maybe be paroled to a store for a couple months before boomeranging back for their trip to the liquidator?

    It’s why one should be suspicious of a Coulter — or a Moore — debuting in any Top 10 on Day One. They’re all pre-orders being held for resale; there were no midnight parties of little kids in suits and cocktail dresses waiting to snap them up.

  17. Even if the question is about self-dealing, won’t one of the questions the court has to answer in a suit like this is what constitutes a legitimate sale.

    For example, how many book clubs are there that would carry these conservative publications and there were only a few, isn’t it a legitimate business purpose to sell the books to its own subsidiary so long as the Eagle Publishing book club was legitimate?

    A book club is a legitimate business channel. If part of the books are given away in newsletters as a marketing technique to promote the newsletter and the book, is the author entitled to a royalty from a giveaway, assuming that the contract is silent on that issue.

    I think Scalzi’s original point is still valid regardless of the question being one of self dealing because ultimately the damages question would be how many books would have sold at retail instead of through other channels. If that is a question that is considered (and should be) it could have far reaching ramifications. I.e., wouldn’t it throw into question any book given away for publicity purposes that is entitled to a royalty if sold at a retail store.

  18. It would be a mistake to assume that Regnerey’s motives in running a book club are necessarily evil. During the runup to the last presidential election you could find Michael Moore’s screeds piled high at my local Barnes and Noble, but none of the output of the more conservative publishers.

    An inquiry for one of the anti-Kerry books brought a sniff and a “we don’t carry that kind of book” response at their order desk. Perhaps not actual corporate policy, but there are barriers, informal and otherwise, to the distribution of conservative material. So starting a captive book club may well have been a rational response to increase distribution.

    Whether Regnerey’s compensation is vastly different from other book clubs is a question that the courts will probably settle eventually. But, if your options for publication are limited, is not some royalty better than none?

  19. Not to be unduly pedantic, but the conservative publisher’s name is, I’m fairly certain, “Regnery”. You’ve got an intrusive e in most of your uses of the name.

    As much as my worse demons cry out to rejoice at internecine warfare among conservatives, the current WGA strike reminds me forcefully that I should, and do, give the benefit of the doubt to workers over management, until proven otherwise. So, go conservative writers! I loathe you, and will never read your books, but may you get every penny you deserve.

  20. Hentosz sez:
    “…there’s a difference between selling 10,000 copies of your treatise to individuals you might persuade to your line of reasoning, and selling 100,000 copies to the BigBoxMart distribution center…”

    Actually, no. My point was that it’s a fallacy to try and equate bestsellerdom with anything other than a marker meaning a godawful number of books changed hands. The people arguing that book X’s place on the list means the rise/fall/emergence of some ideology in the public consciousness are just as deluded as the poor sops that say, “but wait, those books weren’t sold to real readers, that means the numbers are wrong.”

    The numbers are only wrong if you try and get them to say something they don’t actually say.

  21. S Andrew Swann –

    I know that you’re right, books sold is books sold, from an accounting standpoint I get that. And no, I don’t even know for a fact that conservative author’s book sales are being overstated.

    Here is my point: Haven’t you ever seen Coulter on TV and wondered why in the world is this monster on TV? Then whoever is interviewing her congratulates her on her best selling book “How To Hate Anyone Who Disagrees With You” and you wonder why anyone would ever by such a book?

    Doesn’t that little conspiracy nut inside all of us wonder if maybe someone, maybe someone like Richard Mellon Scaife, is buying 100,000 copies of her book only to turn around and feed them to a wood chipper? Why would they do that? To get them on the best seller list and, therefore, on TV.

    Sounds crazy, doesn’t it? Of course Scaife loses 30 million dollars every year on his newspaper, but he keeps paying it, year after year, so that conservative ideas can thrive where they otherwise would not.

    I don’t know if I believe it, I was just throwing it out there.

  22. finding their own royalties from such work swift-boated

    In context, what does this mean? I’ve read it a few times, and I’m still stumped.

  23. nisleib: “Doesn’t that little conspiracy nut inside all of us wonder if maybe someone, maybe someone like Richard Mellon Scaife, is buying 100,000 copies of her book only to turn around and feed them to a wood chipper?”

    *shrug* ideologues with money will spend it to get their message out. Air America is essentially a massive vanity project. But there’s an interesting subtext here that reads, “I refuse to accept that X many people are willing to by this crap. . .”

    Accept it. The universe of book sales is small enough that a vanishingly small percentage of the general population needs to buy a book to make it a best-seller. If Dan Brown can do it, I’ll believe anyone can.

  24. In re: why publishers make book club sales
    There are several more reasons why publishers will choose to sell books to the clubs at the standard 80% off list price. (And why authors are not getting ripped off in the process.)
    –Standard sales through stores (the publisher gets an average of 45 to 50% of list) usually rise after the release of a bookclub’s circular listing the title. It’s one more bit of exposure. That helps everyone.
    –Bookclubs tend to reach a different demographic than the publisher’s marketing. So the sales don’t cannibalize your retail sales. If you don’t lose money on the deal, you’re all better off. Especially the author, who’s at least getting something.
    –Bookclubs often have the bookblock printed as a run-on, reducing the per unit cost for all involved. (Obviously, that didn’t happen if it’s a different size or paper. Different bindings come later in the book making process, though.) This helps only the publisher, but it certainly doesn’t hurt the author.

    I haven’t heard what discount and royalties were in the book club agreement under discussion. It could be that the authors were indeed ripped off, if Regnery used a lower than market rate.

    But if the authors didn’t know that 20% of list price was the normal price, and that the subrights royalties come out of what’s left after the cost of printing the books is covered, and if Regnery did sell for an arm’s length rate, then Regnery’s error is in failing to preserve the appearance of propriety, and in failing to communicate well with their authors. And far too many publishers have trouble explaining royalties to authors.

  25. I have found that generally speaking amazon is so competitive in price that I just don’t buy from the book clubs any more.

  26. Mark: “swift-boating” means different things depending on who is using the term.

    To a Kerry opponent, it means “individuals who know a person and his actual record better than anyone banding together to publicize their memories and beliefs on the topic, in the time-honored fashion of American political free speech.”

    To a Kerry supporter, it means “a dirty trick perpetrated by big-money conservatives, who use a front group of willing-slaves to spread vicious lies about a person’s record.”

    However, I’m unable to figure out what it means in the context John used it here. Could you explain, John?

  27. He is probably using it in the same way that “borked” became a verb.

    I was rather surprised to find out that Bork was a person.

Comments are closed.