ebooks | Traditional publisher royalty statements

If you're interested in the business end of publishing, ebook, traditional, or other, you need to check out Kristine Kathryn Rusch's blog. (AKA Kristine Grayson and Kris Nelscott.) She has two very interesting posts up on the number of sales of ebooks the Big Six are reporting vs. the number that are actually being sold, and how writers are getting screwed on their royalties.

Royalty Statements
Royalty Statements Update

Apparently, some of the Big Six publishers are significantly underreporting the actual number of e-books sold on writers’ royalty statements.

I heard from dozens upon dozens of traditionally published writers last week, and to a person without exception, they had all looked at their royalty statements and found discrepancies like the ones I found. Some—and I find this terrifying—had the exact same numbers reported on their statement as were on my statement.

That’s not possible, folks. In a six-month period, each individual book title sells a different number of copies than another individual book title, even if the titles are in the same genre.

But within one company at least, the one I was most familiar with, several of us had identical e-book sales for the same period. Some writers in that company who had published books in a series had identical e-book numbers for each book in that series. Again, not possible.

Because of my blog post, at least a dozen writers sat down with numbers and calculators in hand. These writers compared the sales of their self-published e-book titles to the sales of their traditionally published e-book titles, and found startling discrepancies. Even adjusting for price differences (Big Six e-books were priced higher than the self-published books), these writers discovered that their Big Six publishers reported e-book sales of one-tenth to one-one-hundredth of their indie-published titles.

Some of these writers are bestsellers. Their bestselling frontlist novels (released in the past year)—with full advertising and company wide support—sold significantly fewer copies than their self-published e-books, books that had been out for years, books that had no promotion at all.

As I said in last week’s post, the reported sales numbers from some of the Big Six publishers do not pass the sniff test. I still stand by last week’s statement that this comes not from malice, but from an unwillingness to improve accounting systems to accommodate the new technology.

I hope this all leads to changes in the way they do accounting in the industry.

Flat | Top-Level Comments Only

One of the issues that got swept aside during the agency pricing discussions was "why did Random House hold out for traditional pricing?" There was some speculation that it was to keep authors in the dark:

I agree, but don’t think Random is afraid of lower prices. Instead, like many publishers, the company fears that clear sales numbers might give authors access to information they’re not supposed to see.
...
For the most part, the transactions are clear and the exchange of money straightforward to follow. A publisher sells a given number of copies and gets a fixed percentage of list price for each. Forget reserves, confusing discount levels, and effectively dropping author royalties. There is no way to obfuscate the business details, and authors can demand what they should make, rather than have complexities and “mistakes” that leave authors poorer and a publisher richer.

Of course, there's always the option of "just LIE on the royalty statements." (And like she says, I think malice is less likely than "we don't want to pay thousands of dollars and change our whole accounting system to deal with all this new weird information.")

I hope the discrepancies are enough to get a subpoena for accurate numbers, perhaps directly from Amazon & B&N. A really cool long-term outcome would be authors having the right to demand their sales numbers directly from the ebook stores... after all, it can't be too much of a hardship to email a sales report to an additional person. (I know, is more complicated than that. Publishers may get numbers for all their authors combined in a single report. But I know Amazon can run single-title reports; they do it for indie authors.)

And like she says, I think malice is less likely than "we don't want to pay thousands of dollars and change our whole accounting system to deal with all this new weird information."

How is that not malicious? I mean, yes, I could see also calling a failure to upgrade their systems a "bad business practice" but there seems to be a big difference between a "bad business practice" that loses the publishers money vs. one that loses the author money. Another term for it might be "malicious neglect" and misreporting financial statements can be accidental or it can simply be illegal.

Frankly, I'm astounded by how in-the-dark authors are about sales as it is and find it even more amazing that more aren't flocking to go independent.

It's criminal in some cases. (For those publishers that are publicly traded, inaccurate financial statements can be felonies.) And it's greedy and self-serving. But I mark a difference between "fuck the authors; just give 'em some money and throw some numbers at them" (malice) and "um, the software doesn't have spots for these info-bits, so we're gonna run some estimates and make payments based on those. Conservative estimates, natch" (standard corporate greed & shortsightedness). "Malicious neglect" I could agree with; I tend to think of just "malice" as being more deliberate.

find it even more amazing that more aren't flocking to go independent

For a very long time, the choice was "publish yourself--have fun getting three local stories to carry your books--or hand your manuscript to us, and we'll take care of EVERYTHING; don't worry your pretty little author head over the numbers."

That system's got a lot of inertia. And the options only changed very recently; I don't blame authors for not having noticed that something that wasn't financially viable 5 years ago might now be their best career option.

And until recently, they didn't have access to anything to compare their royalty checks to. They knew the payments didn't always match what they'd heard, but with the vagaries of distribution timing, sales & returns, and when payments from bookstores actually reach publishers, it made sense that "I know 1,000 copies of that book sold in February, 'cos I was at a convention and I saw them sell out" didn't necessarily result in 1000 sales in their 1st quarter royalty check.

Now, though... they're seeing numbers from several sources, and the ones from other places aren't matching the ones their publishers are giving them.

I hope the lawsuit that will almost certainly occur results in a BIG sunshine ruling, and massive back payments to many authors. (Hey! Maybe midlist authors weren't doing badly--publishers just didn't want to bother tracking which ones were doing well.)

Maybe midlist authors weren't doing badly--publishers just didn't want to bother tracking which ones were doing well.

Wow, there's a thought. I mean, I've long believed that publishers allow more money to escape than they bother to try for (legitimate money, not theft from authors). By and large they've been very reluctant to try and expand their market in favor of simply hiking prices to their existing customers, even if they're willing to keep hiking them until they destroy their customers' ability to buy. But it's just sad to think how many people might have made a decent living had the people they partnered with been any good at their job.

find it even more amazing that more aren't flocking to go independent.

Well, if they're not someone who likes ebooks themselves, it would be a lot less attractive. It would be easy to think "I don't read them myself, why would anyone want to read them, there can't be enough people out there who buy ebooks to make up the difference." You can go into a bookstore and see your books on the shelf, but ebooks are a lot less visceral. And once the publisher gives you your advance, you have that money whether the book earns it or not. You might make more money selling ebooks; but a bird in the hand can be worth two in the bush. Not to mention, ebooks are still only a fraction of the total book trade. That's changing rapidly, but is still true today (won't be five years from now, may not be true two years from now, but it is true--or at least widely believed to be true--today). If you go independent, you miss the majority of the potential audience. So someone who's willing to take risks and is tech/internet savvy, may look at all that and figure it's worth it. Someone who doesn't like taking risks, or who isn't tech/internet savvy (or both!) would still go with the traditional publishing company.

Oh, I definitely recognize that there are advantages to working with publishers. Another factor are the tax consequences of erratic income, something which can be smoothed out with publishing contracts and advances.

I guess it's just that my own perspective that as little as I'd trust publishing companies, being able to have more control and information over my career as opposed to less would definitely appeal to me. Then again, I think I'm more business oriented and some writers would find it more valuable to spend that time doing what they enjoy!

I read and blogged about her posts too. Scary! I hope something can be done about it soon or else traditionally published authors will keep getting ripped-off.

Melissa Douthit

Traditional publisher royalty statements

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