The Business Rusch: Surviving The Transition (Part One)

The Business Rusch: Surviving The Transition (Part One)

Kristine Kathryn Rusch

I know I scared a lot of you last week. Many of you—most of you, judging by my private e-mail and the discussions I had in person in Los Angeles over the weekend—had no idea the industry had changed so much.  Most of my conversations in Los Angeles, when I wasn’t meeting with Hollywood people or doing my own business, were about last week’s blog.

I meant to scare you. I wanted to shock you awake, so that you understand what is happening to the industry that we all love.  I want you to know that most of what you learned, experienced, and understand about the publishing industry—the industry you have worked in for decades—no longer applies.

Just as I expected, a small number of you hid your heads in the sand.  One person even blogged that I had no idea what I was talking about because that writer’s agent keeps that writer informed about changes in the publishing industry, and the agent says nothing of the sort is happening.

To that writer, and other writers like that writer, let me say, if your agent is giving you such silly advice, then I’d reassess your relationship with the agent.  Because it sounds to me like you’re doing the equivalent of taking advice about the financial industry from a pre-arrest Bernie Madoff.

There are still some excellent agents out there, agents who don’t do the things I mentioned in the previous posts, and to a person, they all know how deeply and dangerously this world is changing.  So if your agent is telling you to stop worrying your pretty little head about this, you had better see that as a warning sign and reassess your relationship with that agent.

Most established writers, however, are terrified of the change and the rate of change.  In the past, publishing has been a glacial industry. A change that would “sweep through” the industry would take about five years to make its “rapid” change.

Some of this change—particularly with the agents—has happened over the past ten years. But the most rapid change, in contracts, negotiations, rights deals, and the attitudes in the publishing houses themselves, has happened in the past two.

Why?

Let me give you simple answer:

Traditional publishing has lost its monopoly.  It used to control the distribution of books all over the United States and, indeed, all over the world.  With the success of the e-reader and ease of electronic self-publishing, writers regained control over distribution.

Concurrent with that was the rise of a new model for print-on-demand.  No longer does a writer have to purchase thousands of books at the cost of thousands of dollars. The writer can upload her novel at almost no cost out of her pocket, and not print a single copy until she has an order.  In fact, the POD company, like CreateSpace and LightningSource, will produce the book and ship it for the author, so there is no warehousing, no pile of books rotting in an author’s basement.

In other words, all parts of the distribution chain are now available to the entrepreneurial author.  Including, as of last week, audio books, since Audible has now instituted a system in which an author can do her own audio books.

Traditional publishers got blindsided by this. So did agents, who rely on their contacts in traditional publishing to make their living.  And both groups are now in survival mode. They’re trying to hang onto their hefty incomes in a new world they don’t entirely understand.

Mostly, they’re doing so by making huge rights grabs from authors. Traditional publishers have more draconian contracts with a lot more clauses that they refuse to negotiate.  Agents have decided to get as much ownership in their clients’ property as they possibly can as well,  mostly through putting up backlist as e-books, causing a huge conflict of interest.   An agent who is also a publisher cannot adequately represent you to another publisher, because both the agent and that publisher are vying for your business—and the rights to your property. In the US, no major organizations seem to care about this, but it’s another story in the UK where the conflict of interest is being taken very seriously indeed.

I understand traditional publishing’s reaction. I also understand why the agents are behaving the way they are.  I also know that most longtime professional writers are extremely worried about this, but aren’t quite sure what to do.

So let me give you some tips.

First, let’s define some terms.

1. Indie Publishing: When I say indie publishing, I do not mean electronic publishing.  I mean that the writer publishes her own writing on her own, either with the help of a flat-fee service or by doing all (or most) of the work herself.  This writer, if she’s smart, will produce both e-books and paper books, and will learn how to market them to bookstores.  Sounds daunting, doesn’t it? But it isn’t.  It just takes time.  More on this below and in the later posts.

2. Traditional publishing: anything that uses the old model wherein a writer submits her work to a publisher, gets that work accepted or rejected, and if accepted, signs a contract. The publisher handles everything else from production to distribution.

3. Traditional agents: agents who take a 15% commission on the books they sell to traditional publisher. These agents do not publish anything.  They operate in the old model, acting as their authors’ advocates, and looking out for their authors’ interest.  (And yes, there are still a handful of these agents out there.)

4. Agents/estributors: these people may have been traditional agents as recently as six months ago. Now they will publish a writer’s backlist for 15-50% of the net receipts.  Many big name agencies are moving to this model.  Avoid at all costs.

5. Intellectual Property (IP) Attorneys: When I started in the business, there were only a handful of IP attorneys who handled publishing contracts.  Now there are dozens of such attorneys all over the country.  They know publishing contract language, charge an hourly fee, and will negotiate publishing contracts from every country in the world. Many of these attorneys also know how to handle Hollywood contracts, gaming contracts, and comic book contracts as well as most auxiliary rights contracts.  You don’t have to use the same attorney on every book.  You can hire different attorneys for different things. I now recommend that writers get IP attorneys instead of agents.

6. Established writers: writers who have published a lot of novels. These writers have survived on their writing income for at least a decade, maybe more. They may have published two novels, they may have published two hundred, but they have worked as a freelancer in this industry long enough to have survived some good times and some bad times.  And let me say to those of you who are unpublished or not-very-well published, there are a lot more established writers out there than you’ve been led to believe.  Each genre has hundreds of them.

So now we all understand what I mean by my terminology, let’s move on.

Most of the established writers are extremely worried about this transition. They’re smart enough about business to understand that the change is here, and that the change will have an impact on them. Established writers aren’t as nimble as unpublished writers or newly published writers. Established writers have existing relationships, some decades-old, with publishing companies and with agents.  Established writers have been doing things the same way ever since they came into the business.  These writers may have hired and fired a few agents, may have had books orphaned or had to change their writing name a few times, but these writers know how to survive.

In the old world.

And they know just enough about this world to realize that they have a gigantic learning curve ahead of them.  By learning curve, I do not mean that established writers must learn how to self-publish or indie publish.  Established writers must learn the industry they’re in all over again.  Because everything they learned in the past ten, twenty, or thirty years no longer applies.  Daunting, yes.  Impossible, no.

Let me help.

Time

First, realize that you have a lot of time to learn this.  I know, I know. Everyone from bloggers to your agent screams at you to make decisions now.  Several established writers who blog believe that you must get your backlist up ASAP.  Agents/estributors want you to give them your backlist to put up ASAP. Traditional publishers want to amend your existing contracts to give them more e-rights ASAP.

We’ll deal with the bloggers in a minute.

Let me assist you with the agents/estributors and the traditional publishers.  Whenever a person who has a financial interest in you or your work pressures you to make a decision quickly, that person wants you to make a deal that is not in your best interest.  This applies to everything from buying a car to amending your publishing contract.  Guaranteed, if you make a new deal or amend an old deal on a hurry-up, hurry-up timeline, that deal will not benefit you.

Breathe.  Consult friends/experts and our new friend, the IP attorney.  Do not make any of these decisions lightly.

Almost every amended contract clause I have seen in the past six months has been a bad deal for the writer. Compare that clause to the clause in your contract.  Make sure the new clause is better, and not just in one aspect, but in all aspects.

For example, an amendment I saw recently seemed better until you got to the last paragraph.  There it said that the writer was not entitled to a deal that a writer of different stature received.  “Different stature” was not defined.  Even if it was, the clause still smelled.  It definitely meant that the  midlist writer couldn’t get bestseller terms.  But it might also have meant that writer A couldn’t get the same terms as writer B even though both of them had sold 10,000 copies of their latest novel and both of them were working in the same genre.  That clause only benefits the publisher, by giving the publisher the ability to turn down any change in the contract by saying it does not apply.

See why you need to take time with these things?

Say no. A lot.

Research everything before you make a decision, and make it in your own time.  Do what’s best for you, not what’s best for the writer down the street.  Make sure you can live with  your decision in all cases—if your book is successful, and if it fails.  Because some clauses only kick in when a book has success.  And others ensure that you can’t get your rights back if a book fails.

Many of you established writers don’t have any out-of-print books. This means that you won’t have to make any decisions in the new publishing world until it comes time to sign a new contract.  That might be six months from now or two years from now. Fulfill your contract, but as you do so, keep a jaundiced eye on two things: first, on the changes in contractual language that other writers are dealing with; and secondly, on what is happening with your agent and your agency.

If your agent is moving from the traditional model to the estributor model, decide if you want to remain with someone who has such a serious conflict of interest.  Also make sure that your traditional agent will be in business two years from now.  Many traditional agents—ethical down to their core—have realized that they don’t like the changes in the industry and are leaving it.  Don’t find yourself in the position to look for a new agent when your contract is up for renewal.  Talk to your agent and figure out what is happening with his business over the next few years.  Keep that dialogue open.

Finally, let’s deal with this pressure to put your entire backlist up now.  If you have no out-of-print books and you’ve been in this business for ten to twenty years, then many of your previously published books will not have an e-rights clause.  Your publisher will know that, and will try to get the e-rights from you. Think hard about what’s in your best interest before you sign an amendments granting your publisher e-rights.

You might be better off retaining those e-rights for yourself and indie publishing those books.  Or finding someone else to indie publish them for you.  Before you give those rights to your agent/estributor, however, research other methods of publishing them.  I will deal with this aspect in depthin next week’s blog.

Finally, let me add one more thing about amendments.  I recently got an e-rights amendment to my contract from one of my publishers.  The amendment had two clauses. The first clause reiterated what was already in my contract.

The second clause gave the publisher the right to adapt, amend, enhance, abridge, and alter my book so that it could be used in any technology that exists or might be developed, including, but not limited to, smart-phone technology, video, sound, and imagery.  This clause would allow my traditional publisher to tamper with my book in any way that the publisher saw fit.  It also gave them a backwards way to make my book into a movie or a television show.

I wrote the publisher a curt letter, saying I would not sign the amendment.  The publisher wrote back and promised in the e-mail not to exercise any of the rights that bothered me.  But the publisher would not remove the  language from the amendment.

For those of you who do not understand contract law: the publisher’s promise means nothing.  Only the wording of that amendment will apply in any dispute I might have with the publisher.  Unless the publisher is willing to change clause two of the amendment, I will not sign it.  And here’s the thing most writers do not understand: I have no legal obligation to sign it.  Just because the publisher wants me to sign that amendment doesn’t mean I have to.  I can say—and am saying—no.

For the rest of you, those who have an out-of-print backlist, you do not have to publish it tomorrow.  In fact, it would be hard to get your entire backlist up tomorrow.

The reason so many agents/estributors are getting established writers to sign with them is that established writers believe a brand-new myth, promulgated by bloggers.  That myth states that you must get your backlist up now or miss the gravy train.

No. Not true.  Readers who want your backlist now will want your backlist two years from now.

Take the time to make a decision that is right for you.

I consistently recommend that established writers do not pay a commission to someone to get their backlist up in e-book.  The writer will lose a tremendous amount of money over time.  But most established writers don’t have enough money to pay a flat fee for every backlist novel they have. Let’s use my backlist.  As of last summer, I had 30 novels that were not in print.  If I spent $1000 flat fee per novel to get them all up last August, I would have had to have $30,000 to do so.

I didn’t have $30,000 to spare last August.  I’m sure most of you don’t either.  This is why most writers have signed up with estributors who take a percentage, so that they won’t have to pay money up front.

But if you don’t hurry, if you take 30 months or 60 months or 90 months to get those books up, you’ll still make money on your backlist.  You’ll retain all of your rights, and you’ll eventually make money—a lot more money than you will if you trust an agent/estributor. These people are unregulated, and do not have the accounting systems in place to deal with the problems that are coming down the road.  As I’ve discussed in the past, and as so many other writers who e-publish have mentioned, this percentage/commission system is ripe for embezzlement.  See my trust-me post if you do not understand this.

Many of you can afford $1000 per month to get your backlist up.  Many of you can afford $500 or $250 or $125 per month to get the list up. Figure out what you can spend, then save that money until you can afford to hire a flat fee service.  Put up one book at a time. Realize that you’re  not losing anything by waiting, and are, in fact, gaining control over your work.

Time is on your side.  Don’t be pressured into making any decisions, no matter what your friends are doing, what your agent says, or what your publisher wants.  Make the decision that’s right for you.

And please, do whatever you can to keep control over your career.  You need to learn this new business. Take the time to do so.

Next week, I’m going to deal with other survival skills for the established writers, from how to deal with your agent’s changing business to how to handle your new publishing contract.  I will also deal with how to financially survive the transition (although I am not sure if I can do that in part two; there might have to be a part three).

Just remember: it took you years to learn the business the first time.  It’ll take you at least six  months to learn this new business.  Don’t panic.  You can do it, and if you do, you’ll be much better off.

Because the changes in the industry benefit the writer who is willing to learn the business.  We are gaining control over our own work and our own careers.  Please don’t let anyone steal that control from you.  Understand what you sign, learn how the changes in the industry will impact you, and remember: you have all the time in the world.

“The Business Rusch: Surviving the Transition (Part One)” copyright 2011 by Kristine Kathryn Rusch.