Thursday, March 07, 2013

SFWA De-Lists Hydra; Random House Responds

Posted by Victoria Strauss for Writer Beware

Following on my post last week about unattractive deal terms at Random House's new digital-only imprint, Hydra, the Science Fiction and Fantasy Writers of America has determined that Hydra will not be a qualifying market for SFWA membership.
SFWA has determined that works published by Random House’s electronic imprint Hydra can not be used as credentials for SFWA membership, and that Hydra is not an approved market. Hydra fails to pay authors an advance against royalties, as SFWA requires, and has contract terms that are onerous and unconscionable.
In a blistering blog post, SFWA President John Scalzi also criticized** Hydra's terms:
This is a horrendously bad deal and if you are ever offered something like it, you should run away as fast as your legs or other conveyances will carry you.
Today, Random House responded to the critics, including me, in an open letter. As the letter requests, I'm posting it here in full, redacting only Ms. Dobson's phone number.
Dear John, Victoria, Jaym and SFWA Members,

We read with interest your posts today about the new Random House digital imprints and our business model. While we respect your position, you’ll not be surprised to learn that we strongly disagree with it, and wish you had contacted us before you published your posts. We would appreciate you giving us an opportunity to share why we believe Hydra is an excellent publishing opportunity for the science fiction community by posting ours below to them.

Hydra offers a different-- but potentially lucrative--publishing model for authors: a profit share. In the more traditional advance- plus-royalty model, the publisher takes all the financial risk up front, and recoups the advance before the author earns any cash royalties. With a profit-share model, there is no advance. Instead, the author and publisher share equally in the profits from each and every sale. In effect, we partner with the author for each book.

As with every business partnership, there are specific costs associated with bringing a book successfully to market, and we state them very straightforwardly and transparently in our author agreements. These costs could be much higher--and certainly be more stressful and labor-intensive to undertake--for an author with a self-publishing model. Profits are generated once those costs are subtracted from the sales revenue. Hydra and the author split those profits equally from the very first sale.

When we acquire a title in the Hydra program, it is an all-encompassing collaboration. Our authors provide the storytelling, and we at Hydra support their creativity with best-in-class services throughout the publishing process: from dedicated editorial, cover design, copy editing and production, to publicity, digital marketing and social media tools, trade sales, academic and library sales, piracy protection, negotiating and selling of subsidiary rights, as well as access to Random House coop and merchandising programs. Together, we deliver the best science fiction, fantasy and horror books to the widest possible readership, thus giving authors maximum earning potential.

As a last point to the SFWA leadership, my colleagues and I would welcome the opportunity to meet with you at your earliest convenience to discuss the advantages of the Hydra business model, describe the program overall, and respond to any of your expressed concerns. Please let me know a good time for us to set up this meeting.

Many thanks and all the best,
Allison Dobson

Allison R. Dobson
V.P., Digital Publishing Director
Random House Publishing Group
I think we'll have to wait for time to show whether Hydra really represents a lucrative business model for authors (I note RH's careful pairing of "potentially" with "lucrative"). Hydra is speculative in more than just the genre it publishes: it, and digital-only imprints like it, are experiments, with authors as guinea pigs.

I also note that in an email I saw from Random House, ebook setup costs (editing, design, production) were estimated as "usually" amounting to "no more than a few hundred dollars"--so I can't help wondering what level of services authors will actually receive.

In fairness, from what I've heard, Hydra is very willing to negotiate, and some authors seem to have been able to arrange considerably better terms for themselves. (I would love to be more precise, but I don't want to inadvertently identify the people who've contacted me. If you're curious, write to me and I'll tell you.)

I'd welcome the chance to meet with Random House staff to discuss these issues. Hopefully this can be arranged in the near future.

-----------------------------

** While I agree with most of John's points about Hydra's deal terms, I don't agree that life-of-copyright contracts are an automatic red flag. For one thing, they're standard in the publishing industry (and that includes many smaller digital-only publishers). Is this fair? Does the publisher need it? Maybe not. But it's a fact.

For another thing, as long as there's precise reversion language that ensures a book goes out of print when sales fall below a reasonable minimum ("reasonable" being keyed to the publisher's average sales expectations), life-of-copyright doesn't have to be a problem. The publisher does not get to hold your rights indefinitely. When your book stops selling, you can demand reversion and get your rights back. I've done this, so I'm speaking from experience.

I have seen terrible life-of-copyright contracts where reversion was left entirely to the publisher's discretion, or where there was no reversion clause at all. If a life-of-copyright rights grant is not offset by good reversion language, or if the publisher is unwilling to insert it at the author's request, writers absolutely should run away. But in principle, life-of-copyright contracts do not have to be scary.

24 comments:

Ben Baker said...

There has to be a happy medium between the ebook self publishing industry and traditional houses becoming more involved in ebooks with a reasonable revenue sharing agreement. Hydra is a step toward that, but RH ain't made it all the way.

roach said...

In regards to the life of copyright clause, Scalzi has seen a copy of an Alibi contract: http://whatever.scalzi.com/2013/03/06/a-contract-from-alibi/.

There seems to be some reversion language but it's in the terms of "out of print" which isn't defined.

Joris M said...

So if I read this correctly they are valuing the contribution of the author at $0.00. Since none of the time spent at writing needs to be paid for until the costs made to produce the book at their side have been recouped.

C. M. Albrecht said...

I like that they share the profits. Who do they share them with?

Joe Wilson said...

No matter how they defend it, the deal stinks. They may indeed bring many fine qualities to the writer, but asking the writer to bear their cost does not make it a cooperation as they are trying to frame it. A true cooperation would mean that the writer brings their expertise, the writing, to the table, and then they bring their expertise, which is all of the stuff they want the writer to pay for. That's not a cooperation, that's buying a service,and on top of that they expect to earn 50% of the revenue as well. Sounds like a decidedly unfair deal to me.

Further, as an artist, if their estimate of a "no more than a few hundred dollars" is accurate, that isn't paying for any kind of decent cover, let alone all of the other things they say they are bringing to the deal.

Joe Wilson said...
This comment has been removed by the author.
PT Dilloway, Grumpy Bulldog said...

Without knowing anything else I'd be leery of a place named after an ancient Greek monster and a Nazi-affiliated organization in Captain America.

J K Hoffman said...

If I understand correctly, it looks like they're trying to move from a model where the publisher bears any financial risk, or at best a minimal financial risk, while pushing as much of that risk as possible to the author. Certainly a sound business practice, as long as it's not being done to you and you're doing it to someone else. But, in my mind, that begs the question, what are they bringing to the table that I can't pay for myself as a self-publisher, who would then enjoy *all* of the profits? Do they have a special agreement with Amazon and Barnes and Noble that will ensure more people will buy what I might publish through them?

I applaud them for trying to take advantage of the lucrative ebook market, but, until they can show me a good reason why they're better than self-publishing, I don't see why I'd want to share profits with them for a minimal investment and risk on their part.

David Wood said...

If RH were to put a concerted effort behind marketing said books, then maaaaybe I could see the value. Considering the stories I hear about how little support mid-list authors receive, I'm not convinced Hydra is anything more than an expensive vanity press publisher.

Larry Kollar said...

That response from RH boiled down to the same "I'm sorry you feel that way" you get when you call a professional scammer on the scam.

A couple years ago, I decided to not bother with traditional publishers and struck out on my own. I've learned a lot, joined a loose publishing co-op, and my third eBook was the charm as far as getting some traction. I'm nowhere near quitting my dayjob, but I'm making more than beer money (and more than Crown Royal money).

It looks like all the majors are pulling stunts like this now—for example, Simon & Schuster is hooking up with Author House. It seems like the universe is validating my decision at every turn.

Victoria Strauss said...

I think the moral of this story is not "traditional publishers suck" or "self-publishing is better," but "writers need to watch their asses no matter which path to publication they choose to pursue."

Amber said...

There's an awful lot of indignation in that "defense" despite the fact that they didn't manage to refute a single claim.

The fact is that no advances are common in the digital-only world. That's okay; there are plenty of authors who make a living on royalties. I don't know enough about copyright-length to comment on that. It's the Hollywood accounting that is bogus, and it's a Catch 22 for Random House. If the costs are high, then small time authors may not earn ANYTHING on a book (and that won't look too good when it goes public). If the costs are too low, then we're all going to wonder whether they're quality and whether someone should even bother with RH over hiring direct (AKA self publishing).

And if the standard fees are really only a "few hundred" dollars, then why tarnish the RH name by charging for them at all!? Don't they think a book can earn out that much? And if not, well, that tells me what I need to know right there.

Patti Larsen said...

No matter how they try to soften the edges with pretty language, it's still horrid.

Emily Wenstrom said...

While authors definitely need to be guarded and cautious when choosing a publisher, this shift into a digital world also demands that new approaches be explored and experimented with. So while only time can tell if the Hydra imprint proves to be fair to authors, or if it lives up to its claim to be "potentially lucrative," I am relieved to see a big publisher giving a new model a try. Experimentation, while risky for authors and publishers alike, is exactly what the industry needs right now.

But as you say, only time will tell whether it proves fair to authors or a successful business model.

Lauri said...

I don't know where you folks live, but here in Southern Africa we do not get advances and that actually is the case throughout Africa except for the rare occurance. We write books, they get published and we earn royalties straight away. I suspect that this is the case in most of the world.

This to me seems fair enough. Also I don't think one should discount the power behind Random House in terms of marketing. I have tried self publishing on Amazon, "like dropping a rose petal into the Grand Canyon and waiting for an echo" (stolen from a prominant SA writer who spoke of poetry but it applies here). They will be putting their marketing machine behind these titles.

And in my experience, all contracts need to be negotiated. I don't see why this one would be different.

Claude Nougat said...

I have to agree with Lauri (from where I'm sitting in Italy). I don't see what's so wrong with the Hydra contract, 50% share in profits sounds good to me - much better than the traditional super low royalty rate that used to be given out to authors in the pre-degital days,

But there's a big proviso: that the costing of expenses incurred for book production and marketing is fair and not jacked up to eat away at the author's share...If it's fair, then it's ok because you get Random House's marketing machine behind your book. But if you don't get that, well, then, forget it!

That would be for me the BIG question: for a digital imprint only like Hydra, would RH move its marketing machine? Would Hydra titles be allowed to run in major literary contests, would ARCs be sent to literary critics at major journals as is done for "normal" traditionally published books?

Will Lutwick said...

One problem with this kind of agreement is that terms like profit, net profit, costs, and even revenues can be subject to many interpretations and manipulations and the publisher is keeping the books. Even if spelled out very distinctly, it is very easy for the publisher to cook the books, and most authors, not being cost accountants, will not understand the fine print. And even if they do, they would need an auditor to confirm the numbers---at great cost to the author. Even the best auditors can be fooled if the publisher wants to cook the books.

So IMHO, this is not a realistic agreement for an author. And as one who also used to be a cost accountant, even I would never get into such an agreement.

Will Lutwick
Author of "Dodging Machetes"

Stephe said...

THANK YOU for posting about life-of-copyright and reversion language.

moonbridgebooks.com said...

So if the author is "charged set-up costs... taken out the back-end" is that much different from getting an advance and not receiving royalties until that advance is made up for in profits? I think that's how many trade publishers operate, please correct me if I'm wrong. The bigger the advance, the more it seems the author is paying back for cover, editing, etc.?

Victoria Strauss said...

moonbridgebooks--An advance is an advance on royalties. It has nothing to do with profit or production costs. It's simply advance payment of a portion of what the publisher estimates the writer will earn--a good-faith gesture by the publisher as part of its assumption of the risk of publishing.

The author doesn't get any more money until book sales have generated enough royalties to recoup the advance (this is known as "earning out"). Once that happens, payments resume.

If book sales never do generate enough royalties to recoup the advance, the author still gets to keep the money. It's a common notion that authors have to give back the unearned portion of the advances, but that's a myth.

moonbridgebooks.com said...

Thanks for clearing that up, Victoria. I see they offer quite the publishing package to save us "stress and labor." If they're sharing profits so favorably with the author, that package has got to cost a bundle for them to make a worthwhile profit. Many questions unanswered. And hey, I see not just Hydra, but Loveswept, Alibi and Flirt for other genres!

Cathleen Ross said...

For those of you who have self-published, costs are not extensive, but if it is shared by the publisher who is to negotiate how much they spend? Digital contracts do not generally get advances, so I have no issue with this, however digital books never go out of print and this is the sticker for me. A writer could sell one a year, so the rights reversion clause needs careful negotiation.

BuffySquirrel said...

Publishers take all the risk in trade publishing? Well, here's news: they can afford to. Can authors? Mmmm, not the ones I know.

Erica Verrillo said...

Hydra is simply an effort by Random House to have their cake and eat it too. It allows them to avoid any obligation to their writers, while cashing in on the self-publishing market for pennies. First, Random house does not waste its "marketing machine," on new authors. Anybody signing up to do an ebook with RH will get the bare minimum, which is less than a motivated writer could do on his or her own. Second, advances against royalties are a new author's boon. The more a publisher pays out, the more they have invested in the writer. Even if the publisher doesn't sell enough books to cover the royalty, the author keeps the payment. Third, publishing houses pay nearly nothing for cover designs. You can hire your own designer for less than $200, with the advantage that you get to choose the cover. (No matter what they tell you, RH does not work "with authors" on book covers.) Last, but not least, the 50/50 split doesn't compare with the 75% an author gets from Amazon. (Amazon doesn't spend anything on its authors either, but KDP Select is God's gift to marketing a book - provided you now how to work it.) Frankly, this "deal" is a shell game. Random House is preying on gullible new authors who think that Hydra will give them a pedigree. It won't.