Immediate Thoughts on the Random House eBook Imprint Contract Changes

These thoughts come in no particular order, and represent only my thoughts, not the thoughts of any organization I may belong to. These are first impressions.

Also, these thoughts pertain to what I’ve read here and here. I have not seen any actual contracts reflecting the change in terms and so cannot comment on how the promised changes will be written up and implemented. The devil is always in the details, and the details here will matter quite a bit, considering from where we started with the contracts and their language. Even so.

Here we go.

1. Good on Random House for listening to writers, writers’ organizations, readers and others and being willing to make alterations. That’s a positive thing and should not be discounted. It’s a shame it took a furor for Random House to take a step back from its original contractual position (and that it offered those positions to begin with), but let’s move forward from that.

2. The Random House eBook imprints will offer a choice between their “profit-sharing” model (more on this) and a more traditional contractual set-up, which will include an advance against a backend 25% of net and the imprint covering all other charges and expenses. This is very good in theory; among other things it will offer authors something to compare the “profit-sharing” model to, in terms of what an author could expect to receive both immediately and in the long haul.

What’s going to be interesting to see, however, is how this model is actually handled in practice by Random House’s eBook imprints. Given the imprints’ previous business model, it’s not at all unreasonable to assume they have a bias toward pushing authors to the “profit-sharing” side of things. Something authors (and their agents) will need to be on the lookout for is these imprints underselling the advance-bearing model, both in its initial discussions with the authors and in terms of the actual advances they offer.

Which is to say, if the advances that these eBook imprints offer aren’t equitable — not in line with what advances are at other Random House imprints and/or other major publisher genre imprints (with some calibration for being eBook-only) — then that should be a red flag, and authors (and their agents) may reasonably question how serious the imprints are in offering advances as a genuinely viable choice for their authors. We’ll have to see how the rubber meets this particular road.

3. The no-advance “profit-sharing” set-up still concerns me as a slippery slope for all sorts of reasons but if the advance-offering option is equitable and reasonable and every author is offered it as a matter of course and there is no discrimination between how the two classes of authors are generally treated and serviced by the imprint, then offering a second, riskier option does not strike me as wholly predatory, as the author can turn it down and still publish with the imprint if such is her choice.

Random House’s eBook imprints have said they will take on the set-up costs and sales/marketing costs they previously tried to shove onto authors. That’s good, although again they shouldn’t have tried to do that to begin with, so my congratulations to them for seeing this particular light is, shall we say, muted. It’s important to note, however, that the imprints still intend to shift costs to authors if a book makes it to print, which is still no good. Nothing in the information about audiobooks, and whether the costs for those will also be sent along to the author; in the absence of any new information, I would assume they would be.

Also worth highlighting is the idea that the imprints would cover the first $10k of book-specific publicity marketing (edit: Allison Dobson of Random House notes that the $10k is for marketing costs, not publicity. The error is mine; downstream edits replace “publicity,” with “marketing”) after which the costs would be tallied to the author. This is hugely important for authors to note. One, it doesn’t necessarily mean the imprint will spend $10k on marketing, just that it will cover it up to that amount. Two, $10k seems like a lot, but if a lot of marketing is happening, then you might be amazed at just how quickly $10k disappears — and how any additional money from that point will disappear from your pocket once you have to pay for it.

This is a better “profit-sharing” set-up than it used to be (at least at first glance). This does not mean I think this is a good deal. I don’t. I don’t like the print cost-sharing aspect at all, and I think the marketing cap introduces a whole bunch of weird dynamics which can force authors to choose between effectively capping the reach and sale of the book, or reducing their income significantly in the hope that more marketing will reach more buyers. There’s a reason why marketing is handled by a publisher — the publisher is able to amortize its costs and risks across an entire line. A writer, particularly a new one, doesn’t have the same option. It’s still all too easy in this arrangement for a writer to end up with little or nothing at all while the publisher makes a tidy sum in aggregate.

Personally speaking, I would not sign onto this “profit-sharing” agreement, as it’s been outlined to me, without substantial revision; I’m not convinced the 50% of the net I’d make on this set up would be more than the advance + 25% I’d make with the other set-up, especially if the book were gaining traction and could benefit from additional marketing of the sort Random House could afford as a larger corporation, but I could not as a private individual, or if there were a demand for a print/audio version.

This is why authors should remember that it’s not only the percentage of the backend that’s important, it’s everything else around the percentage, too. If you’re just focused on the 50% and missing all the rest of it, then you’ll have a problem. Make sure you know what you’re getting into. If you don’t know, ask; if you don’t know what to ask, that’s what SFWA and RWA and MWA and other writers organizations are for (not to mention, you know, agents). Even if you’re not a member yet they’ll still have information you can use and learn from.

3. The imprints appear to be taking fewer but still a substantial number of rights, some of which it doesn’t appear that they intend to do much with other than keep them in their pocket. If I were an author making a deal with them I would (or I would tell my agent to) ask for those rights or at least ask for a reversion clause if the rights were not exercised in a specific (fairly short) amount of time.

4. The “out of print” terms here are much improved, which is important because the imprint is still asking for rights for the life of the copyright. The OOP terms are what allow an out for this. Before they were nebulous. Now this is definitely not the worst reversion clause I’ve ever seen.

In short: Better, but I find the profit-sharing setup still very worrisome, and I wouldn’t recommend that option, especially for a newer author or one without much experience with contracts. The most important change — and the most welcome and critical change — is now writers have the option of being paid first and upfront, with no other costs assigned to them. That’s huge. It’s what should have been there in the first place.

Which bring us to a very important question: Will Random House extend these changes to authors who have already signed contracts with these imprints? If they do not, we still have a very, very, very big problem. There’s no point proclaiming your new, better contracts if you still have a class of author still beholden to the egregious old ones. This will be a test of legitimacy for Random House, I think. Given how much they’ve been willing to move from their old positions, I’d like to think they’ll pass it.

(Edit: Allison Dobson of Random House responds: “If this deal compares favorably to that which we have already given authors, we will happily amend those agreements.” So that answers that, and good on Random House.)

In any event: I’ll be happy to see the actual contracts.

28 thoughts on “Immediate Thoughts on the Random House eBook Imprint Contract Changes

  1. To note again: These are immediate thoughts — deeper thoughts may come at some point.

    And also, again: These are my thoughts only. They do not reflect any position SFWA may take (because among other things I am not the only person on the SFWA board).

  2. It’s probably all speculation for now, without a copy of the contract, but I have to wonder… if this is a sign of things to come, it does look like there’s even less of a reason to consider Random House as a viable publishing choice. They’d go this far, if there wasn’t a giant stink about it… who knows what else they’d do?

    They’ve lost my trust after this, especially with the Penguin merger after Penguin bought AuthorHouse. I feel bad for the good people still working for them, but if the overall corporate strategy is toxic? Not much they can do.

  3. $10k disappears REALLY fast. Without speaking to what side of the line it falls on, your books have ads on Gwaker, for example, and their packages start at $25k. So if they are offering $10k, that doesn’t even get half of that. Not to say it can’t be spent effectively (and it’s more of a budget than most people will have to self-publish), but if one is expecting ads all over every major site, they’ll be disappointed.

  4. I’m glad organizations like SFWA will remain on the case here, because it remains to be seen how well Random House will behave toward its ebook imprint authors going forward. Vigilance will be key.

    I’m far more gratified that changes have indeed taken place in such a relatively short amount of time, and that RH has back down from its more egregious contracts and, most importantly, will offer realistic contracts to authors, making their profit-sharing deals optional. The fact that this occurred in short order points to the strength we authors have if we stand up and make a kerfuffle.

    Moral of the story: Don’t irk people who use language for a living. You’ll get lonely fast.

  5. This change seems to underline the assumption that this was a “test the fences” manoevre in the first place. Manoeuvre. Manooooovourer. Dammnit, spellchecker…..

  6. I must’ve missed something — does the revised scenario actually give the author the right to choose which package to take? I haven’t read that it does, and absent that, I’m thinking perhaps some authors will be offered the profit-sharing contract as “this is what we’re offering — take it or leave it” while others may be offered the other option.

    John also doesn’t say whether the author gets any right of choice in the publicity modes they’re paying for once the $10K ceiling is reached. I’d hate to have a house spend the abovementioned $25K for an ad, then spend $20 more and advise me that all their choices are now on my dime.

    Thoughts?

  7. It’s a start. Glad to see they aren’t falling into an entrenched siege mentality like so many self-destructive corporations that fuck up. This shows at least that they are nominally interested in getting authors on board with their dubious “profit-sharing” model, rather than corralling them into it with “changing market” excuses. Whether the choice is real will depend, as you point out, on whether their traditional contracts are more than token gestures.

    Also as you say, the devil is in the details. One detail I’ll be interested in is whether the new contracts clearly establish parameters for the costs they still intend an author whose work doesn’t totally tank to pick up. Either the author should have veto over those expenses or the publisher should have a spending limit. When I gave my employees access to expense accounts, it was never a blank check. At an absolute bare minimum, if they are even remotely interested in giving credence to their claims of profit sharing, the contract should require the publishers to match any expenses.

    @ Claire Ryan

    They’d go this far, if there wasn’t a giant stink about it… who knows what else they’d do?

    Trust us not always necessary; that’s why written contracts exist in the first place. All firms compete for four things: capital (investment), market share (customers), able and/or skilled workers, and profit share. They’re raptors because raptors survive in the ecosystem marketplace. Whether being the raptor to test the fences and risk getting shocked was smart is highly debatable. But suffer no illusions of corporate altruism, it does not survive in economy we inhabit. Most of all, do not get complacent about Random House’s competitors. You can be sure that if authors (workers) and readers (market share) do allow Random House to change the market to the detriment of their workers, the other houses will follow or fall.

    “He who can destroy a thing, controls a thing.”

  8. What about the clause that stated Random House had the right to apply the same contract to the author’s next book – which of course included the right to apply the same contract to the author’s next next book – such that Random House, if it wished, wound up essentially owning the writer?

  9. Not in the information we have to date, although I would not be surprised if the option still exists, as it’s not an entirely unusual clause to have. An agent would chip away at that clause or modify it substantially.

  10. @ Gulliver
    Publishers may be out to maximize profits, but these contracts look to be highly short term gains with long term consequences. Squeezing new authors like this would lead to less incentive for high quality writing, and fewer authors staying in the field and contributing/improving their work. A little enlightened self interest would see that having a slightly smaller profit margin would be out-weighed by having a better/larger group of authors.
    Or to use a parable, and then horrifically mangle it, think of the goose who lays the golden egg. Sure it’s a little scrawny, and lubing up the liver-plumping tubes and shoving it down said goose’s throat for some foie gras might net some satisfied, albeit ethically ambiguous, meal goers. It still misses out on all the tasty gold omelette’s it could have provided for, not to mention the eventual backlash from ethically minded eaters who find treating any geese in such a manner as a no-no. Geese = authors, foie gras cooks = Max profit publishers, ethically minded eaters = discerning readers. Or somethinglike that.
    All I’m saying is that good corporations can maximize profits, that’s just numbers. Great ones can create the environment to generate future profits as well.

  11. @NT: See points 3 and 4. The “life of copyright” isn’t all that unusual. It was not having a reversion clause that made it so bad. Take note that while the publisher would keep whatever rights they had negotiated for, the author would also still get any royalties those rights generated. If the work falls out of print, most contracts have a specific clause that would then return the rights to the author.

    And speaking of, that reversion clause seems to set a rather low bar for the publisher to keep the rights. 300 units sold over a 12 month period? That just seems too low to me.

  12. I’m baffled by the positive response here. This is really no better—and, frankly, worse because of its cynicism—than where RH started. First, the egregious profit-sharing model is still being presented as a viable option (albeit, as John notes, with stuff taken out that should have never been there in the first place). Sure, no one has to sign it, but it’s still predatory and exploitative as a standard offering and we all know–publishers especially–that this is a field where people will sign anything to say they got published. Call me naïve, but I thought the advantage of the digital world would be to force publishers to provide more equitable business models for authors, not get a pass on a crappy one because—woohoo!—they give you the option of the horrible old model as an alternative. Come, guys. Really? This makes RH the good guys?

    Worse, I think the advance model is equally evil. Basically, it’s the equivalent of signing a print book contract that does not guarantee print book production, only one subright format, with poorer terms and conditions than already bad industry standards. Those advances are going to be way worse than the lousy ones offered on print.

    This isn’t progress.

  13. Definitely some things I would negotiate regarding, even so.

    The marketing thing… If I read their statement correctly, they would not exceed that $10K cap without the author’s approval. Either way, that’s what I would insist on. No one spends my money without asking first. If once the book is published they really think it would benefit them for someone to go past $10K in marketing, then I might hold out at that point for them to sigh and amend the contract.

    Otherwise, I smell some push-selling there. “Hey, we’ve spent to $10K. But we think your book could do more, if you just let us spend more of the money we think you could earn. I mean, it’s not as if you already have this money in hand, right?”

    And then I would want to check how they do the math. If they’re taking out the marketing money from the earnings of the book, and then splitting the remainder 50/50, then they, too, are footing half the marketing overage. But if they’re splitting the earnings 50/50 and then deducting the marketing overage from the author’s half, I say FUCK NO.

    As for the author shouldering the cost of a print edition… again I say FUCK NO. In fact, what I say is, “You can have ebook rights, but I’m keeping all print rights.” If they’re not going to do a proper print-book edition, then why bother with taking those rights? If RH thinks the print edition can make money, then they can pay for it and do what they’ve been doing so well for 85+ years. They’re not rookies.

  14. The “300 sales” thing bugs the heck out of me — especially if they get to drop the price to “free” and still have it count as a “sale.” I can make 300+ freebie “sales” in a year from Smashwords alone, and I’m probably in the same zip-code as “Unknown.” All it takes is one download a day. (My worst-”selling” freebie has had 342 downloads since it was put up on December 7th, 2011, on Smashwords alone. 375 downloads on B&N alone. Add 65 from Sony and however much Apple’s distributed, and wasn’t that an easy number to hit?) If the price can go down to 99 cents, but not free, that’s a little better — but I’m still highly dubious. 300 is way too easy a a target to hit if the publisher is trying to hang onto the rights.

    I would think that a minimum amount of profit (or at least credit to the author’s portion of the “profit-share”) would be a far better way to determine the contract’s duration — and provide a minimum base should “Hollywood accounting” come calling.

  15. So I’m curious, for people who think that the 300 sales in 12 months thing is still exploitative.

    1. What would you consider the right number of sales to trigger reversion?
    2. Why would a publisher want to make up the sales each year just to keep the reversion clause from being triggered if your book is regularly selling <300?
    3. If you honestly have so little trust in publishers that you think they might cheat you out of getting your reversion clause triggered through underhanded means, aren't you never going to sign a contract with a publisher anway, because you''ll also be convinced they'll be looking to cheat you in every other way as well?

  16. @ Prochlater

    All I’m saying is that good corporations can maximize profits, that’s just numbers. Great ones can create the environment to generate future profits as well.

    Only to a certain extent. Certainly a privately held firm has more leeway than a publically held firm, but both must operate in the real world. Random House didn’t need to test this fence, and I’m of the opinion that they were unwise to do so, but they still operate in a marketplace where, if their workers and customers let them or their competitors get away with shafting their geese, the market will change. There are some other problems with your metaphor, but I get, and somewhat agree, with where you were going with it. I’m as big a proponent as you’ll find of enlightened self-interest, but the need for eternal vigilance in the market at large, and not only with regards to Random House or this incident, remains crucial to making certain companies can afford in the short term not to overhunt their game. Because although doing so will indeed hurt them long-term, the short term always comes first.

    @ markdf

    I’m baffled by the positive response here.

    You mean the guarded encouragement to Random House to be a better corporate citizen? Strange definition of positive response. Cynicism is unconstructive, IMO.

  17. If I count as someone who thinks the 300 number is exploitive? (…and thousands scream, “Nooo! You gave Beth an opening to talk!”)

    1: I would want to be seeing at least… Hm. {beth opens her spreadsheets} I personally would want to see at least $800 a year as the “paid to author and/or paying off investments” share*. I am basing that off a year of sales of my worst-selling self-published ebook** and rounding down, because if a big publishing company can’t make at least that much for me… I can make about that much for me, using free Project Wonderful ads and maybe a buck’s worth of brochures in the local cafe.

    * This is almost certainly not nearly enough to give up an advance for, unless you are amazingly prolific and have or plan to have about 60 of these suckers out in various venues.

    ** I price my short stories at 99c. The novel in question is $3.99 and I haven’t touched its price since I established it.

    2: If keeping the rights is as simple as lowering the ebook price to “free” after 3 years (by which time they probably expect to have made whatever profit there is to be made) whenever they look to be under 300 sales, and they still have the option to raise the price in the future (e.g., if “Free” gets enough exposure to make them the Next 50 Shades), not to mention foreign rights, audiobook rights, print rights, etc…. There is very little continuing cost to them after 3 years, and it might well be worth that incremental cost in order to retain the potential profit of the rights. I.e., it’s effectively free for them to hang onto the rights, so there’s no reason not to.

    2a: It should be noted that the author has the option not to demand rights-reversion, even if the sales drop; if the author is happy with the arrangements and does not feel she could do better, then she can just let things putter along. If the publisher doesn’t believe they have enough to offer that would retain an author beyond the minimum duration, without the fetters of a contract specifying a trivial number of downloads… What does that say about the relationship the publisher expects to have with the author?

    3: Yes and no. You might trust that a given person at any place will want to only enforce the contract in a fair way, but if that person gets swapped out a week after you sign, and your worst enemy is put in their place… You should still be reasonably secure that your contract outlines how you wish to be treated. (This is why it’s good to have an auditing clause… Make sure that you get to pick the accountant, and that the accountant’s hands are not tied in arcane ways.) Companies are liable to follow the path of least resistance, once the contract is signed; cheating someone is more likely to get them in trouble than just exploiting a sucky contract, so they are less likely to cheat. But if the contract allows them to make your life miserable while potentially benefiting the company? Then the path of least resistance is to exploit the contract.

    The first contract I ever negotiated was a work-for-hire with someone who I consider a friend; he said that if the company was bought out by [other company famed for being a PITA], I should still be able to be satisfied with what the contract said, and made the requested modifications. I have taken that to heart.

    That said… Yeah, if you really do think someone is liable to fudge the numbers as a matter of course? Don’t sign the contract at all! There are plenty of companies whose contracts I wouldn’t touch with a twelve-foot barge pole.

  18. I’d still be concerned about the rights issue. If they say a book is theirs for the term of copyright unless it’s out of print, what does “out of print” mean for a digital-only book? Can’t they continue to offer the book somewhere, even if it’s only through a RH-owned shopfront where it is only costing them a tiny bit of bandwidth, and say the book is still “in print”? Am I missing something here?

    (Not an author, but a compulsive reader who wants to see authors stay happy so they keep making things for me to read.)

  19. If they say a book is theirs for the term of copyright unless it’s out of print, what does “out of print” mean for a digital-only book? Can’t they continue to offer the book somewhere, even if it’s only through a RH-owned shopfront where it is only costing them a tiny bit of bandwidth, and say the book is still “in print”? Am I missing something here?

    I think you are, yes – the bit where, quoting the Writer Beware post, “Three years after publication, the author can demand reversion if sales fall below 300 copies over the 12 months preceding the demand.” That’s what John’s referring to when he says the out-of-print terms are much improved.

    (From Victoria’s description, it sounds less like RH are saying “until out of print” and more like they’re saying “here are the conditions under which you have the contract terminated.” I comes to the same thing, or nearly so, but it makes it hard to find if you’re doing a word search for “out-of-print”.)

  20. This is corporate profit engineering as I have never seen it before. “Let’s present an entirely imbalanced contract in our favor and let the vocal writers serve as our editors to reconstruct it to what THEY feel would be a fair one.” RH has, in effect, relinquished it’s interest in being a publisher that regards value in having a moral center; it is quite obvious that RH wants nothing more to do with the “pesky obstacles” of fair deals as they only see them as ultimately getting in the way of greater profits.

    Let’s ALL be clear then; the time is over for assumed pleasantry. Not only are we done with publishers like RH blatantly chipping, nay clearcutting, away at our livelihood but we’re also done being satisfied with the status quo. Whatever we feel was fair before this Hydra/Alibi debacle is no longer acceptable. If the standard was 25% to us as creatives, then it’s time we demand 35%.

    The publishers (and they know who they are) who constantly look to the basest actions of fattening their bottom line as opposed to creating TRUE greater equity for all involved are on full notice. We are DONE with just holding the line. You’ve had roughly a CENTURY to develop and improve a business model that should have grown stronger and healthier for everyone involved but instead you’ve chosen the cliche’ model of profit first, over everything. That model’s day is numbered. We all talk among ourselves and we will work, quite and in private conjunction, to create better models for ourselves that do not have to include YOU.

    But don’t be hurt or surprised if suddenly one day we, ALL of us, don’t come to you or ever have need of you. It’s only money, right? No big deal, everyone has the right to earn as much as possible in any way possible. It’s nothing personal, it’s just business. Right?

    Get changing or get ready to be ousted. You are no longer in control.

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