Monday, July 26, 2010

Authors Guild Statement on the Wylie Agency's New Epublishing Venture

Posted by Victoria Strauss for Writer Beware

One of last week's major publishing news items was super-agent Andrew Wylie's announcement that he is establishing a brand-new digital publishing venture, Odyssey Editions, to publish his clients' backlists.

The clients in question include some of the most eminent writers of the last century, such as Saul Bellow, John Updike, and Philip Roth. Most of these authors' book contracts pre-date the electronic age--so they don't mention electronic rights. This has become a matter of intense dispute, with publishers claiming that standard book contract language (which allows for publication "in book form" or "in any and all editions") incorporates those rights by implication, giving them the exclusive right to publish in electronic form as well as print; and authors, agents, and authors' estates arguing that since the rights were never explicitly granted, publishers have no claim on them.

Last year, Random House sent a letter to dozens of literary agents, claiming that its pre-digital contracts give it exclusive digital publication rights. But in the months since, a number of well-known authors have bypassed such claims, including Stephen Covey, who in December sold e-rights to two of his best sellers exclusively to Amazon, Ian McEwan, who in January made a deal for his backlist with epublisher Rosetta Books, and the estate of William Styron, which is working with digital publisher Open Road Integrated Media.

Wylie's bold move is the latest salvo in this ongoing turf war--and the most aggressive one yet. But it also speaks to two other issues of great importance in publishing right now: the fact that e-rights--which until recently had very little actual value, despite persistent predictions of an imminent tipping point--are publishing's new gold rush; and the fact that the lines between agents, editors, publicists, and publishers are becoming more blurred by the month, with more and more agents taking on more and more functions outside of just brokering rights and guiding careers.

So far, three major publishers have expressed their displeasure with Wylie: Random House, which now considers him a direct competitor, and says it isn't going to do business with him any more; Macmillan, whose CEO John Sargent referenced the conflict of interest concerns raised by combining the functions of agent and publisher, but was most concerned by Wylie's exclusive deal with a single retailer; and Harper UK, whose CEO Victoria Barnsley said that "the only winners in this are Amazon."

The Authors Guild statement follows (it has also been posted online).

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Wylie-Amazon:  Publishers Have Largely Brought This on Themselves

Thursday's announcement that the Wylie Agency, through its new publishing arm, Odyssey Editions, has a deal with Amazon to exclusively distribute at least 20 books in electronic form has shaken the industry. The 20 books include many important 20th century American works, including Invisible Man, Lolita, Portnoy's Complaint, Updike's Rabbit novels, The Adventures of Augie March, The Stories of John Cheever, Fear and Loathing in Las Vegas, and The Man Who Mistook His Wife for a Hat. These works are all in print and all, apparently, governed by old publishing contracts in which the authors didn't expressly grant electronic rights to the print publishers.

Random House, which holds the print rights to many of these titles, reacted Thursday afternoon by disputing that authors retained electronic rights to these books and saying that it would not do business with Wylie for English-language works "until this situation is resolved."

This is the most important development in electronic publishing since Apple entered the market offering publishers an "agency model" for selling e-books. Several aspects of the Wylie/Amazon/Random House entanglement merit comment:

1. Authors retain e-rights in standard publishing contracts unless they expressly grant those rights to the publisher, as we've consistently said and as a federal court held in Random House v. Rosetta Books. It's fine and proper for these authors and their heirs to exercise those rights, and we applaud the Wylie Agency for finding a way to make it happen.

2. That said, when an agency acts as publisher, serious potential conflicts of interest immediately come to mind. The most obvious of these is the possibility of self-dealing to the detriment of the agency's client, the author. If, by acting as publisher, the agency receives a higher percentage of the author's income than it would normally be entitled to, or if it receives other benefits that the author doesn't share in appropriately, then a conflict seems unavoidable.

Our understanding is that Wylie, as agent and publisher, is taking no more than it would as an agent. That is, Wylie/Odyssey is limiting its total compensation to its rate for commissions. If our understanding is correct, then our concerns about conflicts of interest are considerably eased. Other literary agencies contemplating similar deals should be aware that even non-monetary provisions in e-book distribution contracts could create conflicts of interest. A clause binding the agency to not sign exclusive deals for any of the books the agency represents with other e-book distributors, for example, would present a clear conflict of interest. (We have no reason to think Odyssey's contract with Amazon contains such a clause. From what we know, it appears that Wylie has avoided any conflict of interest.)

3. That the Wylie/Odyssey agreement is reportedly exclusive raises many questions and concerns. Authors should have access to all responsible vendors of e-books. Moreover, Amazon's power in the book publishing industry grows daily. Few publishers have the clout to stand up to the online giant, which dominates every significant growth sector of the book industry: e-books, online new books, online used books, downloadable audio, and on-demand books. (That Random House, by far the largest trade book publisher, has retaliated against the powerful Wylie Agency but not against Amazon, which must be equally culpable in Random House's view, tells you all you need to know about where power truly lies in today's publishing industry.) Adding to Amazon's strength may yield short-run benefits, but it's not in the interests of a healthy, competitive book publishing market.

There must be consideration for this exclusivity, of course, and we can only speculate as to what it is. Though we'll keep our guess to ourselves, we think the consideration wasn't monetary: we doubt that there was an advance paid for the rights or that Amazon has agreed to pay Odyssey more than 70% of the retail price of the e-books, since that might trigger most favored nation provisions in Amazon's contracts with other publishers.

Regardless of the exclusivity issues, any direct agreement between a literary agency and Amazon is troubling. Amazon has, time and again, wielded its clout in the industry ruthlessly, with little apparent regard for its relationships with authors or publishers or, for that matter, antitrust rules. Any agency working directly with Amazon may find its behavior constrained in unpleasant and unpredictable ways. Agencies should proceed with extreme care.

4. To a large extent, publishers have brought this on themselves. This storm has long been gathering. Literary agencies have refused to sign e-rights deals for countless backlist books with traditional publishers, even though they and their clients, no doubt, see real benefits in having a single publisher handle the print and electronic rights to a book. Knowledgeable authors and agents, however, are well aware that e-book royalty rates of 25% of net proceeds are exceedingly low and contrary to the long-standing practice of authors and publishers to, effectively, split evenly the net proceeds of book sales.

Bargain-basement e-book royalty rates will not last. Low e-book royalty rates will, as e-book sales become increasingly important, emerge as a dealbreaker for authors with negotiating leverage. Publishers will, inevitably, agree to reasonable royalties rather than lose their bestselling authors to more generous rivals and startups. We suspect publishers are well aware of this and are postponing the unavoidable because it seems to make sense in the short run. We believe this is short-sighted.

A major agency starting a publishing company is weird, no matter how you look at it. This sort of weirdness will only multiply, however, as long as authors don't share fairly in the rewards of electronic publishing. Publishers seeking to manage this transition well should cut authors in appropriately. The sooner they do so, the better. For everyone.

16 comments:

Kay said...

Why are so many publishing-types willing to give one corporation control over what people read?

Victoria Strauss said...

It's author-types too. Look at Stephen Covey.

Marta Daniels said...

Seems like the best route is self-publishing?

Jenny said...

What I'm missing here is why would the authors, or estates of authors be paying a commission for putting a book up as a Kindle edition, when this is most people can easily do themselves, of if they are really clueless about technology, with the help of a high school kid.

What am I missing? What has the agent "negotiated" here worth giving them 15%?

catdownunder said...

Weird as well wired.

Anonymous said...

I can see the day when the word "publisher" will be like typewriter: obsolete. Authors will soon sign up directly with Amazon and go out and promote themselves. There will be no need for agents or publishers. The more dedicated, energetic and hardworking will be more successful. All those snooty, all-powerful types, picking and choosing, will be out begging. I might toss them a dime...

Anonymous said...

I agree with Jenny. Why do the estates need an agent for this at all? We don't need publishers either. Kindle must have a ginormous chunk of the book market by now and grows daily. Signing up on your own with Amazon and cutting out all the middlemen is just great. I spent years looking for an agent and publisher. Today I don't need either of them. With Kindle, anyone in the world can get your book instantly without all the shipping and handling and two weeks for delivery. The future is here, and it is being welecomed with open arms by all but a few who try to cling to their little money spinners. To all agents and publishers: GOOD RIDDANCE!

Anonymous said...

So it's "e-rights" and "e-book," but then "epublishing"? Yuck.

Victoria Strauss said...

What I'm missing here is why would the authors, or estates of authors be paying a commission for putting a book up as a Kindle edition, when this is most people can easily do themselves

I think it makes sense to assume that Wylie has negotiated better terms with Amazon than it offers to self-publishers.

Here's the Authors Guild's guess about the compensation Amazon is offering the Wylie authors:

The agreement is most likely under the agency model, with Amazon paying Odyssey 70% of the retail price of the books. Wylie and Odyssey are together taking a typical agent's commission as compensation: 10 or 15% of the 70% received from Amazon. In round figures, this means that the author receives 60 to 63% of the retail price of the book.

Amazon is already offering a 70% royalty to Kindle self-publishers--but only if they are willing to accept a bunch of restrictions. Very possibly the Wylie authors aren't subject to those restrictions. I would also guess that part of the deal is promotion by Amazon--plus, Amazon and the agency will take care of all the tasks self-publishers must handle themselves, including converting print books to digital format (remember, none of these books has ever been digitized). One of the perks of being an established author is that you don't have to DIY.

Anonymous said...

It makes me laugh how so many people, the writers of this blog included, were not so long ago trashing e-books and saying they had no future. Now they're all fighting over the right to e-publish. Some people can't see too far down the road it seems...

Anonymous said...

Ah Victoria, you couldn't resist a little dig at the unpublished, could you? Disappointing. But you'll soon have to face the fact that publishing is going to change big time pretty soon. Anyone will be able to publish. Of course, those with more money will have the edge as always and be able to advertise more, etc. But agents and publishers are on the way out, thank God for that.

Victoria Strauss said...

Anonymous, I'd say that you're the one who's indulging in wishful thinking.

Anonymous said...

When the last literary agent chokes on the last 30-page manuscript with double spacing, then I will have peace.

Mad Scientist Matt said...

I can only speak for myself, but while the current system isn't perfect, I like having at least one layer between writing and picking up a book to read.

While buying a book that an acquisitions editor or agent has selected is no guaranty it won't bore me to tears, it does at least promise the book will not be an incoherent, incomprehensible jumble of words. Which I have seen all too often on websites that have minimal editorial gatekeeping. Gatekeepers - and having to please them - are a necessary part of publishing.

That said, I'll be paying a bit more attention to e-book royalty rates the next time around. My contract did include e-book rights, but I hadn't even realized they had a Kindle edition set up until a couple days before the book's launch.

Brooke said...

I agree with Matt. The problem with anyone being able to publish is that there is no filter and anyone can publish anything. I did a stint as a PR rep for self-published books, and it was difficult to represent poorly written books. But most were poorly written. As a reader, I am always much more skeptical of self-pub'd books.

I know that publishing is changing and likely moving more toward that model, and I may have to change my opinion as it does.

Anonymous said...

Brooke, I agree but I also find that despite all the screening and editing by publishers and agents, most published books are not that good either. Maybe I'm a bit fussy but I find that 8 out of every 10 books I read are not all that good. Going through the traditional model is also no guarantee of high quality.