Kristine Kathryn Rusch

I know, I know. I didn’t do a long blog last week because of the hack-attack, now fixed, and I heard from a lot of you wondering what the “missing” post would have been about. Many of you speculated that I would take on Simon Lipskar’s ridiculous letter from the Association of Authors Representatives to the Department of Justice.  My husband Dean Wesley Smith, Joe Konrath, The Passive Guy, Bob Mayer, and others did a fine job with that. [links] In my opinion, David Gaughran did the best post of all: he wrote an open letter to the DOJ, which all writers should read and should probably sign onto. I have.

The thing is, I wouldn’t have written about the AAR letter. What many of you forget is that I gave up on agents as authors representatives about a year ago. Those of you who have agents should be appalled at the lack of legal understanding evidenced in the letter, particularly if your agent negotiates your contracts for you. Not only are the agents who agreed to this letter more empathetic to large traditional publishers, they’re advocating something that ignores the law entirely.

I am not surprised by the AAR letter. I’m saddened to see it, but it simply puts out in public something I’ve seen in private for the past ten years, and only started to understand about a year ago.

Most agents, especially those in very large firms, no longer represent authors. Those agents represent themselves, and exist to make money off writers. It’s that simple, and that disillusioning.

Instead of shooting agenty fish in a rather slimy barrel, I’m going to look at something else. Last weekend, The New York Times published a whiny article about the changes in publishing, an article that has met with derision from long-established midlist authors and newer writers who understand this new world of publishing.

Actually, everyone picks on one paragraph, quoting thriller writer Lisa Scottoline: “Ms. Scottoline has increased her output from one book a year to two, which she accomplishes with a brutal writing schedule: 2,000 words a day, seven days a week, usually ‘starting at 9 a.m. and going until Colbert,’ she said.”

Note that the word “brutal” is not in quotes, so presumably it comes from the article’s author, Julie Bosman. She might’ve been paraphrasing Scottoline or she might’ve made that assumption all on her own. I do want to note that Bosman’s article runs 1165 words. Since it’s in a newspaper, I assume that she did the work within a short time frame, including the interviews, the information-gathering, and the research.  I also note that she had four other articles of similar length published that week, which means she wrote five 1,000 word-plus articles (with research and—since this is the Times—revisions), which means she wrote one per day during her work week.

Assume that 5,000 words of research nonfiction will take at least as long to write as 10,000 words of fiction (without the interviews/research), and you have an equivalent number of words being written each day.

The “brutal” 2,000 words day, apparently, only applies to fiction.

The writers I’ve seen have been very nasty toward Scottoline, making a lot of fun of her. Scottoline wrote those “brutal” 2,000 words over the space of eight to ten hours (or more) in service of two-books per year. However, if you do the math, you realize that she should have completed seven books per year on that schedule. (2,000 x 365=730,000; the average thriller is 100,000 words, so she actually should have gotten a bonus 30,000 words.)

Also realize that most people can type more than 1,000 words in an hour, so how does Scottoline manage to labor over her 2,000 words for eight to ten to twelve hours?

Well, that’s the answer really. She labors. She thinks about every sentence, every twitch, and probably revises extensively as she goes along. Plus, when a writer becomes a bestseller, everyone wants a say in the product before it becomes final. Tough writers like Stephen King, Dean Koontz, and Nora Roberts don’t let anyone comment on a work until it’s finished, but most bestsellers consult editors, agents, and the sales force along the way.

You try to write with a crowd sitting on your shoulder and telling you which plot point will sell the book, and which plot point will tank it. I couldn’t do it. I’m amazed anyone can.

The ridicule Scottoline’s suffering in the blogosphere misses the actual subtext of the article. The article is about a sea-change that the bestsellers are only starting to understand.

Let’s back up.

The New York Times article deals with what seems like, to traditional publishers and bestsellers, a rapid change in publishing. For decades, publishers forced bestselling writers to slow down to create demand for a product.  Traditional publishers ignored evidence that readers wanted as much product as they could get from their favorite writers, calling writers like Nora Roberts, who publishes on average six books per year (plus some novellas), outliers whose fans were “unusually rabid.”

Stephen King writes about the difficulties in slowing down in the opening to Bag of Bones. The writer in that novel writes his normal four-to-six books per year, and puts all but two in a drawer, as “reserve” for times when he’s ill or unable to write.

The slowdown that publishers forced on their writers—with no evidence that it created more demand—was unnatural, and difficult to maintain.

You’ll note that King, who says he writes four hours per day, and Roberts, who puts in an eight-hour day, are hitting close to that 730,000 word mark of the “brutal” 2,000 word per day schedule. King takes his birthday and Christmas off. I’m not sure if Roberts takes any days off. I’ll wager both of them write more than 2,000 words per day.

So why, in reality, did publishers force the slowdown? Money, time, and attention. But mostly, money.

Two months ago, I showed you how much it costs traditional publishers to produce a book. The average cost of a midlist novel is $250,000. It costs more to produce a bestseller—more paper costs, more shipping costs, and primarily more promotion cost. Until a few years ago, the average profit margin a publisher expected to make on a book was four percent. That meant if a book—even a bestselling book—sold fewer copies than expected, the profit margin for that book got eaten up fairly quickly.

Traditional publishers have a two-to-three year publishing schedule. It has some give, but not much. So if the publisher plans to publish four titles by Big Bestseller Guy in 2012, and the second of those four titles sells marginally less than the first, the publisher will start to panic.

Because the money in books three and four has already been invested into those projects. In fact, most of that money has been spent long ago. If Big Bestseller Guy publishes four books in 2012, you can bet he also has four books on the schedule in 2013 and 2014, and a lot of that money has also been spent.

Four books per year by Big Bestseller Guy was a gamble too large for most traditional publishers to take unless Big Bestseller Guy was SuperHuge Bestseller Person, like Nora Roberts, whose books outsold her competition two to one. You could take that kind of gamble on SuperHuge Bestseller Person because her books made more than a four percent profit, so a loss on book two of four books in 2012 probably won’t hurt the bottom line much at all.

But most bestsellers still operated within that four percent margin, and so publishers were unwilling to rock the boat.

Most publishers are also pretty inept at marketing and promotion, even though they throw away millions of dollars annually on those very things. So the thought of throwing away even more millions on something that’s only marginally effective caused them to twitch.

Most bestsellers have advertising and marketing addendums to their contracts, things that the bestsellers can and do enforce. So there is really no way that the publishers can tell Big Bestseller Guy that they’ll do minimal marketing on book one, but they’ll really focus on book two and book four.

Nope. The marketing has to be equivalent.

Then the e-publishing revolution hit. While publishing profits went up, they went up only on the digital side. Every other indicator, from hardcover to mass market went down.

In the March 19^th issue, Publishers Weekly published its annual Facts & Figures for publishing. The article that lead the examination of 2011’s numerical state of hardcover publishing had this headline: “Lower Unit Sales, Fewer Titles.”

Realize that PW’s F&F issue concerns itself with bestsellers only. No one looks at the numbers for the midlist. The only bestsellers that get counted “are based on shipped-and-billed figures supplied by publishers for new books with sales of 100,000+; all reflect only 2011 domestic retail sales for print books.”

No e-books, no self-published books, and tellingly, no returns. Since we’re dealing with print books, we have no idea if these books that have shipped and billed at 100,000 copies actually sold 50,000, 75,000 or 95,000 copies. That’s why publishers hold reserve against returns (which can happen up to a year after publication) and why these figures must be taken with a grain of salt.

That said, realize that these figures are the highest calculation of sales possible. Actual sales will be lower.

And the key here is that fewer books sold at 100,000 copies in 2011 in paper and fewer new authors made bestseller lists in paper in 2011.

The headline for the article on mass market and trade paper bestsellers had this title, “Less Is Just Less,” and has this quote buried in the lead paragraph:

“There were 48 mass market bestsellers with units of more than 500,000+ on this year’s list—the lowest figure we’ve recorded.”

I have no idea how long PW  has published its mass market list, but I can tell you that the magazine has been around over 100 years, and it has covered mass market retailing from its beginning in the 1950s.

Less is less, in paper.

But the headline for E-books was “E-Books Boom.” PW has only covered e-books for two years (2010 and 2011) and sets its e-book bestseller limitation at 25,000+ copies. But—and this is an important but—it does not consider backlist titles for consideration here, nor does it consider self-published books. Kinda missing out on the whole point, actually.

Writers make significantly less on their e-book sales, even—especially—bestselling titles. Publishers are doing their best to get rid of the mass market paperback, by producing fewer and by putting most books into trade paper (as the paper format). Publishers are starting to think of the “cheap” edition of the book as the e-book, which is great for publishers, but crappy for bestsellers and other writers, because the e-book royalty terms are abysmal.

No matter what traditional publishers say, e-books cost less to produce. There are no returns on e-books, so publishers don’t have to produce two books to sell one, and publishers pay the authors less. So of course, publishers are moving traditional writers into e-books.

And self-published authors taught publishers something that they should have already known: Readers want a lot of books by their favorite authors.

Which has forced traditional publishing into a complete reversal of the editorial model it held just three years ago. Back then, writers were discouraged from publishing a lot of books. Now, publishers want as many books as possible.

Especially e-book-only novellas. Ironically, as you’ll note from the New York Times story, bestselling authors usually don’t get an advance on the short e-books they write for their publishers. And bestsellers get the same crappy royalty the rest of us do.

When I first heard this from a bestseller friend of mine, I simply assumed he hadn’t negotiated hard enough for an advance. (He hadn’t. He has since gotten better about this.) Then I heard from bestselling romance writer after bestselling romance writer, all of whom were asked to write novellas for no advance and crappy terms—and most of whom did so. (!!!!)

Traditionally published bestsellers are being told that writing the short story/novella length  piece will aid in the sales of the next book, so therefore the short work is simply part of marketing—like a long book tour. Yeah, it’ll take your time from your next paying project, but you’re already doing a tour for free, so why not do this too?

(Musicians get paid when they tour to promote their albums. Why don’t writers? [Okay, that’s another post for another time.])

The key quote in the New York Times article isn’t Scottoline’s “brutal” schedule, which everyone seems to talk about, but a quote from internationally bestselling thriller writer Lee Child:

“Everybody’s doing a little more,” said Child. “It seems like we’re all running faster to stay in the same place.”

Exactly. And it doesn’t just seem that way. It is that way for bestselling authors. They signed contracts that give them spectacular (in traditional publishing terms) royalties on their hardcovers, with escalators that provide even more profit when the book sells more than 150,000 copies, 250,000 copies, 500,000 copies and so on. The escalators and excellent royalty rates exist on the mass market paperback side too (and mass market is being slowly phased out).

The royalties aren’t as good for most bestselling writers on trade paper, because ten years ago when those royalty rates got negotiated, no one thought the trade paper format would ever replace mass market. What no one realized is that trade paper cannibalized hardcover as the hardcovers got too expensive. Even so, the bestsellers still get better royalty rates on their trade papers than they do on e-books.

Every writer gets better terms from traditional publishing on paper formats than they do on e-formats.

With paper sales down and e-book sales up, even if a bestseller sells more total copies of a book than they did of a similar book the year before, the bestseller is going to get smaller and smaller paychecks. Advances are way down, due to the recession—even for bestsellers—and now royalties are down too.

Unit sales are down as more and more books become available, books that readers want to read, books readers couldn’t get before because those books were out of print or because traditional publishing believed that entire genres (I’m looking at you, Western) didn’t sell.

The one thing that hasn’t changed in this digital revolution is that readers still have a budget. Readers only have so many dollars they can spend on books. As they spend more and more money over a wider variety of titles (self-published, backlist, shorter works), they’ll spend less and less money on bestsellers.

We’re seeing it now: sales of bestselling titles (with some exceptions) have flatlined. If television is any guide, this flattening will continue for a decade or more. Think of the advent of cable. Once upon a time, a network television show could get 60% of all people who watched television at a given time period. Now, no television show can get that many viewers. A network show can still win its time slot, but the number of viewers it gets now—actual number, and not a percentage—is so low that the network show would have been canceled in the 1960s if it attracted the same number of eyeballs. And the population of the United States has grown significantly in those five decades. Which means that the percentage of viewers that the network show is getting is laughably small by 1960s standards.

Traditional publishers will not go away, but ten years from now, the bestselling books in the United States will sell significantly fewer copies than they do now. The threshold for bestsellerdom will go down, just like it did in the music industry.   Originally, the term “gold record” in the music industry meant that the record sold one million copies. Now, to get a gold record certification, the piece of music (not necessarily a record, CD or mp3 but some combination) must sell 500,000 copies.

I’m sure publishing will do the same with its bestsellers some time soon. It’s already happening, as the Publishers Weekly articles show. “Lower Unit Sales, Fewer Titles” pretty much says it all.

All of this explains why major bestsellers from Scott Turow to Lee Child don’t understand why most writers are excited about the changes in publishing. From the bestselling writer’s point of view, these changes are harmful to a writer’s bottom line. They represent a terrifying future in which the revenue from a bestselling book goes down significantly.

It also explains why agents like Simon Lipskar are writing silly letters opposing the Department of Justice’s investigation into the publishing industry. Lipskar works at Writers House,  a large agency that represents many bestsellers, including Nora Roberts and Stephenie Meyer.

Writers House and agencies like it are seeing the same thing that their bestselling writers are seeing: profits going way down because of the changes in publishing. Worse for agents, the midlist writers, whose backlist titles have reverted to the writer, are making money on books that have no agency involvement. In other words, the agencies don’t get a percentage of these backlist titles.

Traditional publishers are scared. Agents are scared. Bestselling writers are scared. They’re losing their power with each passing day.

So these three groups will never, ever, defend changes to the publishing industry that benefit the large mass of writers and readers out there. These three groups are in a panic. That’s why the publishers (possibly) colluded, why the agents are in bed with the publishers, and why writers who should know better have become shills for the industry they still work in.

Am I surprised? By that, no. But I am amused at myself. I decided I wouldn’t write about that AAR letter and here I go, writing about it after all.

The best thing the rest of us can do—that mass of writers and readers who are benefitting from these publishing changes—is to fight for our new position. If you feel so inclined, write the DOJ a letter. David Gaughran gives you a lesson in how to do it.

Otherwise, educate your fellow writers about the changes. Writers don’t have to give up their traditional publishing contracts. Writers do have to negotiate for better terms. And writers should probably not hire agents to do so, at least while this change is going on. Hire an IP lawyer instead—if you chose to remain in traditional publishing.

But you don’t have to be traditionally published any more to get your work to readers. You can indie publish if you’re so inclined.

The nifty thing that most writers have now is choice.

The one thing most bestselling writers do not  have is choice. They’ve signed long-term contracts that control their next works. They’re bound to the old system. And unless they lift their heads out of that brutal 2,000-words-per-day, seven-days-per-week schedule, they’ll suffer as the system suffers.

Don’t expect them to defend you. Right now, they can’t even defend themselves.

 I am so happy to be back on my weekly schedule. The hacking issues got resolved thanks to a lot of people and wewatchyourwebsite.com. It took a great deal of work, but I have hopes that we’ll avoid such incidents in the future. Thanks to everyone who reposted the blog that got eaten when the hack attack hit, and thanks to all of you who donated to help defray the expenses of repairing the website. I greatly appreciate it. I found myself relentlessly upbeat as the crisis went on because of all the support I got from my readers.

For those of you who don’t know, the nonfiction part of my website exists because of donations. I make my living on my fiction; my nonfiction doesn’t pay for itself. So to keep me blogging every Thursday, I have a donation button. If you learned something, or if you like what you read, please leave a tip on the way out. Thanks.

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“The Business Rusch: “The ‘Brutal’ 2000-Word Day,” copyright © 2012 by Kristine Kathryn Rusch.

Kristine Kathryn Rusch

As most of you know, my website got hacked last week. In fact, all of my websites–and I have a few–got hacked. So I’ve been busy, even though I don’t have a lot to show for it. Dean and I hired a website security firm to clean up the mess, and to clean up our other sites. The firm will also monitor the website every four hours to make sure it doesn’t get hacked again. We have hired a second security firm to do the same thing, figuring redundancy is our best option.

As of this writing, the warnings are still up that this is a dangerous website. The security firm assures me that the websites are safe. Ye Olde Website Guru has also looked and believes them to be safe. Other experts have looked as well and say the problems are gone. So the warnings are just a vestige of last week’s problem. I’m told that it will take most of a week for the warnings to come down. I hope it takes no longer than that, but as in all things, there are no guarantees.

Because of those warnings, I’m going to keep this post short. I don’t want to do anything big and have folks miss it. Many people simply won’t click through while the warnings are up, and honestly, I don’t blame them. I wouldn’t either.

Last week’s discussion got truncated by this hacker-caused emergency. Initially, I thought the problem was a direct attack on the website. When I write a tough post about traditional publishing, royalty statements, and agents, I usually get trolls, hackers, and once I got a denial of service attack. So I figured last week’s attack was an amped-up version of the same.

Instead, it seems to have been a relatively mundane Word Press incursion, taking advantages of weaknesses in the Word Press system. I never thought I’d be thankful for an average criminal attack, but I am.  I prefer average criminals. They’re predictable. And predictably, I left a couple places open to attack. Not on this site, which was well defended, but on linked sites.  I had no idea that could happen. Live and learn.

A lot of you responded to my initial cry for help with the blog. The post I put up last week is an important one, and I was worried that someone was trying to shut it down, particularly when it literally disappeared from one of my other websites after I reposted. A large number of readers with their own blogs reposted the original post, at some risk to themselves considering we thought it a directed attack at that time. Thank you, thank you, thank you. Ye Olde Website Guru lost all of his Thursday before he realized that he needed reinforcements in battling this attack. Thank you again, Website Guru.

Many of you e-mailed or contacted me on social media to let me know the site had been compromised. You guys helped me catch this early. I had no idea that it had gone down and was merrily working on something else when I learned about it. Thank you all.

And thanks too to the folks who continued to write kind letters and who donated during this mess. As a few of you noted, hiring these national security services isn’t cheap. I appreciate the help.

Mostly, though, I was and am cheered by the kind of support you all gave me. When I started this blog three years ago, I thought I would just be writing a book primarily for myself, with no readers at all. Together, we finished that book, which became The Freelancer’s Survival Guide. What I had planned as a 60,000-word book became a 200,000-word book due to your suggestions, insights, and ideas. The slightly revised 2012 edition came out in April, but I plan a more elaborate revision for the fall. I’ll be adding a section on estates which I had left out of the last one. I think I’d probably better update the posts on websites as well, given the security issues I encountered this year.

Instead of writing primarily for myself, I am now writing for literally thousands each week. The size of the blog attracted the malware hack, which is, as they say, a backwards compliment.  I hope that the site is now secure enough to handle the expanded traffic. The fact that it wasn’t is on me, and I will endeavor not to make that mistake in the future.

Now, before I go, I’m going to point you to three places. First, Joe Konrath hosted a guest post from Ann Voss Peterson about her experiences with Harlequin. She’s talking money here, but she’s also talking contracts. I’ve discussed at length about the ways traditional publishing contracts can hurt writers in this new world of publishing, but she has actual facts and figures, mixed with her personal experiences. The Passive Guy, who vets Harlequin contracts in his day job as an IP attorney, says the clauses that she discusses still exist in Harlequin’s contracts, along with some newer (and nastier) wrinkles.

Speaking of the Passive Guy, he provided great support for me when my blog when down. He reposted the royalty statements post and hosted a discussion about some of the items in the post. He also encouraged others to repost, which I greatly appreciate.

Finally, I’m going to link to last week’s Business Rusch post. It’s an important update on last year’s royalty statement controversy. The comments that many of you made in the wee hours of Thursday morning got eaten by the hacker attack and I can’t reconstruct them.  One comment did get through, and it’s an important one. So rather than repost, I’m just going to add the link here. If you were unable to read last week’s post, click here to read it now. And feel free to comment. I’d love to have the discussion that we missed out on last week.

I have added the donate button here in case last week’s doesn’t work. It seems to, but I’m not trusting any old link at the moment. Again, thank you all for the marvelous support both over this past week and in the past three years.

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“The Business Rusch: A Short Post” copyright © 2012 by Kristine Kathryn Rusch

Kristine Kathryn Rusch

Over a year ago, I wrote a blog post about the fact that my e-book royalties from a couple of my traditional publishers looked wrong. Significantly wrong. After I posted that blog, dozens of writers contacted me with similar information. More disturbingly, some of these writers had evidence that their paper book royalties were also significantly wrong.

Writers contacted their writers’ organizations. Agents got the news. Everyone in the industry, it seemed, read those blogs, and many of the writers/agents/organizations vowed to do something. And some of them did.

I hoped to do an update within a few weeks after the initial post. I thought my update would come no later than summer of 2011.

I had no idea the update would take a year, and what I can tell you is—

Bupkis. Nada. Nothing. Zip. Zilch.

That doesn’t mean that nothing happened. I personally spoke to the heads of two different writers’ organizations who promised to look into this. I spoke to half a dozen attorneys active in the publishing field who were, as I mentioned in those posts, unsurprised. I spoke to a lot of agents, via e-mail and in person, and I spoke to even more writers.

The writers have kept me informed.  It seems, from the information I’m still getting, that nothing has changed. The publishers that last year used a formula to calculate e-book royalties (rather than report actual sales) still use the formula to calculate e-book royalties this year.

I just got one such royalty statement in April from one of those companies and my e-book sales from them for six months were a laughable ten per novel. My worst selling e-books, with awful covers, have sold more than that. Significantly more.

To this day, writers continue to notify their writers’ organizations, and if those organizations are doing anything, no one has bothered to tell me. Not that they have to. I’m only a member of one writers’ organizations, and I know for fact that one is doing nothing.

But the heads of the organizations I spoke to haven’t kept me apprised. I see nothing in the industry news about writers’ organizations approaching/auditing/dealing with the problems with royalty statements.  Sometimes these things take place behind the scenes, and I understand that. So, if your organization is taking action, please do let me know so that I can update the folks here.

The attorneys I spoke to are handling cases, but most of those cases are individual cases. An attorney represents a single writer with a complaint about royalties. Several of those cases got settled out of court. Others are still pending or are “in review.” I keep hearing noises about class actions, but so far, I haven’t seen any of them, nor has anyone notified me.

The agents disappointed me the most. Dean personally called an agent friend of ours whose agency handles two of the biggest stars in the writing firmament. That agent (having previously read my blog) promised the agency was aware of the problem and  was “handling it.”

Two weeks later, I got an e-mail from a writer with that agency asking me if I knew about the new e-book addendum to all of her contracts that the agency had sent out. The agency had sent the addendum with a “sign immediately” letter. I hadn’t heard any of this. I asked to see the letter and the addendum.

This writer was disturbed that the addendum was generic. It had arrived on her desk—get this—without her name or the name of the book typed in. She was supposed to fill out the contract number, the book’s title, her name, and all that pertinent information.

I had her send me her original contracts, which she did. The addendum destroyed her excellent e-book rights in that contract, substituting better terms for the publisher.  Said publisher handled both of that agency’s bright writing stars.

So I contacted other friends with that agency. They had all received the addendum. Most had just signed the addendum without comparing it to the original contract, trusting their agent who was (after all) supposed to protect them.

Wrong-o. The agency, it turned out, had made a deal with the publisher. The publisher would correct the royalties for the big names if agency sent out the addendum to every contract it had negotiated with that contract. The publisher and the agency both knew that not all writers would sign the addendum, but the publisher (and probably the agency) also knew that a good percentage of the writers would sign without reading it.

In other words, the publisher took the money it was originally paying to small fish and paid it to the big fish—with the small fish’s permission.

Yes, I’m furious about this, but not at the publisher. I’m mad at the authors who signed, but mostly, I’m mad at the agency that made this deal. This agency had a chance to make a good decision for all of its clients. Instead, it opted to make a good deal for only its big names.

Do I know for a fact that this is what happened? Yeah, I do. Can I prove it? No. Which is why I won’t tell you the name of the agency, nor the name of the bestsellers involved. (Who, I’m sure, have no idea what was done in their names.)

On a business level what the agency did makes sense. The agency pocketed millions in future commissions without costing itself a dime on the other side, since most of the writers who signed the addendum probably hadn’t earned out their advances, and probably never would.

On an ethical level it pisses me off. You’ll note that my language about agents has gotten harsher over the past year, and this single incident had something to do with it. Other incidents later added fuel to the fire, but they’re not relevant here. I’ll deal with them in a future post.

Yes, there are good agents in the world. Some work for unethical agencies. Some work for themselves. I still work with an agent who is also a lawyer, and is probably more ethical than I am.

But there are yahoos in the agenting business who make the slimy used car salesmen from 1970s films look like action heroes. But, as I said, that’s a future post.

I have a lot of information from writers, most of which is in private correspondence, none of which I can share, that leads me to believe that this particular agency isn’t the only one that used my blog on royalty statements to benefit their bestsellers and hurt their midlist writers. But again, I can’t prove it.

So I’m sad to report that nothing has changed from last  year on the royalty statement front.

Except…

The reason I was so excited about the Department of Justice lawsuit against the five publishers wasn’t because of the anti-trust issues (which do exist on a variety of levels in publishing, in my opinion), but because the DOJ accountants will dig, and dig, and dig into the records of these traditional publishers, particularly one company named in the suit that’s got truly egregious business practices.

Those practices will change, if only because the DOJ’s forensic accountants will request information that the current accounting systems in most publishing houses do not track. The accounting system in all five of these houses will get overhauled, and brought into the 21^st century, and that will benefit writers. It will be an accidental benefit, but it will occur.

The audits alone will unearth a lot of problems. I know that some writers were skeptical that the auditors would look for problems in the royalty statements, but all that shows is a  lack of understanding of how forensic accounting works. In the weeks since the DOJ suit, I’ve contacted several accountants, including two forensic accountants, and they all agree that every pebble, every grain of sand, will be inspected because the best way to hide funds in an accounting audit is to move them to a part of the accounting system not being audited.

So when an organization like the DOJ audits, they get a blanket warrant to look at all of the accounting, not just the files in question. Yes, that’s a massive task. Yes, it will take years. But the change is gonna come.

From the outside.

Those of you in Europe might be seeing some of that change as well, since similar lawsuits are going on in Europe.

I do know that several writers from European countries, New Zealand, and Australia have written to me about similar problems in their royalty statements. The unifying factor in those statements is the companies involved.  Again, you’d recognize the names because they’ve been in the news lately…dealing with lawsuits.

Ironically for me, those two blog posts benefitted me greatly. I had been struggling to get my rights back from one publisher (who is the biggest problem publisher), and the week I posted the blog, I got contacted by my former editor there, who told me that my rights would come back to me ASAP. Because, the former editor told me (as a friend), things had changed since Thursday (the day I post my blog), and I would get everything I needed.

In other words, let’s get the troublemaker out of the house now. Fine with me.

Later, I discovered some problems with a former agency. I pointed out the problems in a letter, and those problems got solved immediately. I have several friends who’ve been dealing with similar things from that agency, and they can’t even get a return e-mail. I know that the quick response I got is because of this blog.

I also know that many writers used the blog posts from last year to negotiate more accountability from their publishers for future royalties. That’s a real plus. Whether or not it happens is another matter because I noted something else in this round of royalty statements.

Actually, that’s not fair. My agent caught it first. I need to give credit where credit is due, and since so many folks believe I bash agents, let me say again that my current agent is quite good, quite sharp, and quite ethical.

My agent noticed that the royalty statements from one of my publishers were basket accounted on the statement itself. Which is odd, considering there is no clause in any of the contracts I have with that company that allows for basket accounting.

For those of you who are unfamiliar with basket accounting, this is what it means:

A writer signs a contract with Publisher A for three books. The contract is a three-book contract. One contract, three books. Got that?

Okay, a contract with a basket-accounting clause allows the publisher to put all three books in the same accounting “basket” as if the books are one entity. So let’s say that book one does poorly, book two does better, and book three blows out of the water.

If book three earns royalties, those royalties go toward paying off the advances on books one and two.

Like this:

Advance for book one: $10,000

Advance for book two: $10,000

Advance for book three: $10,000

Book one only earned back $5,000 toward its advance. Book two only earned $6,000 toward its advance.

Book three earned $12,000—paying off its advance, with a $2,000 profit.

In a standard contract without basket accounting, the writer would have received the $2,000 as a royalty payment.

But with basket accounting, the writer receives nothing. That accounting looks like this:

Advance on contract 1: $30,000

Earnings on contract 1: $23,000

Amount still owed before the advance earns out: $7,000

Instead of getting $2,000, the writer looks at the contract and realizes she still has $7,000 before earning out.

Without basket accounting, she would have to earn $5,000 to earn out Book 1, and $4,000 to earn out Book 2, but Book 3 would be paying her cold hard cash.

Got the difference?

Now, let’s go back to my royalty statement. It covered three books. All three books had three different one-book contracts, signed years apart. You can’t have basket accounting without a basket (or more than one book), but I checked to see if sneaky lawyers had inserted a clause that I missed which allowed the publisher to basket account any books with that publisher that the publisher chose.

Nope.

I got a royalty statement with all of my advances basket accounted because…well, because. The royalty statement doesn’t follow the contract(s) at all.

Accounting error? No. These books had be added separately. Accounting program error (meaning once my name was added, did the program automatically basket account)? Maybe.

But I’ve suspected for nearly three years now that this company (not one of the big traditional publishers, but a smaller [still large] company) has been having serious financial problems. The company has played all kinds of games with my checks, with payments, with fulfilling promises that cost money.

This is just another one of those problems.

My agent caught it because he reads royalty statements. He mentioned it when he forwarded the statements. I would have caught it as well because I read royalty statements. Every single one. And I compare them to the previous statement. And often, I compare them to the contract.

Is this “error” a function of the modern publishing environment? No, not like e-book royalties, which we’ll get back to in a moment. I’m sure publishers have played this kind of trick since time immemorial. Royalty statements are fascinating for what they don’t say rather than for what they say.

For example, on this particular (messed up) royalty statement, e-books are listed as one item, without any identification. The e-books should be listed separately (according to ISBN) because Amazon has its own edition, as does Apple, as does B&N. Just like publishers must track the hardcover, trade paper, and mass market editions under different ISBNs, they should track e-books the same way.

The publisher that made the “error” with my books had no identifying number, and only one line for e-books. Does that mean that this figure included all e-books, from the Amazon edition to the B&N edition to the Apple edition? Or is this publisher, which has trouble getting its books on various sites (go figure), is only tracking Amazon? From the numbers, it would seem so. Because the numbers are somewhat lower than books in the same series that I have on Amazon, but nowhere near the numbers of the books in the same series if you add in Apple and B&N.

I can’t track this because the royalty statement has given me no way to track it. I would have to run an audit on the company. I’m not sure I want to do that because it would take my time, and I’m moving forward.

That’s the dilemma for writers. Do we take on our publishers individually? Because—for the most part—our agents aren’t doing it. The big agencies, the ones who actually have the clout and the numbers to defend their clients, are doing what they can for their big clients and leaving the rest in the dust.

Writers’ organizations seem to be silent on this. And honestly, it’s tough for an organization to take on a massive audit. It’s tough financially and it’s tough politically. I know one writer who headed a writer’s organization a few decades ago. She spearheaded an audit of major publishers, and it cost her her writing career. Not many heads of organizations have the stomach for that.

As for intellectual property attorneys (or any attorney for that matter), very few handle class actions. Most handle cases individually for individual clients. I know of several writers who’ve gone to attorneys and have gotten settlements from publishers. The problem here is that these settlements only benefit one writer, who often must sign a confidentiality agreement so he can’t even talk about what benefit he got from that agreement.

One company that I know of has revamped its royalty statements. They appear to be clearer. The original novel that I have with that company isn’t selling real well as an e-book, and that makes complete sense since the e-book costs damn near $20. (Ridiculous.) The other books that I have with that company, collaborations and tie-ins, seem to be accurately reported, although I have no way to know. I do appreciate that this company has now separated out every single e-book venue into its own category (B&N, Amazon, Apple) via ISBN, and I can actually see the sales breakdown.

So that’s a positive (I think). Some of the smaller companies have accurate statements as well—or at least, statements that match or improve upon the sales figures I’m seeing on indie projects.

This is all a long answer to a very simple question: What’s happened on the royalty statement front in the past year?

A lot less than I had hoped.

So here’s what you traditionally published writers can do. Track your royalty statements. Compare them to your contracts. Make sure the companies are reporting what they should be reporting.

If you’re combining indie and traditional, like I am, make sure the numbers are in the same ballpark. Make sure your traditional Amazon numbers are around the same numbers you get for your indie titles. If they aren’t, look at one thing first: Price. I expect sales to be much lower on that ridiculous $20 e-book. If your e-books through your traditional publisher are $15 or more, then sales will be down. If the e-books from your traditional publisher are priced around $10 or less, then they should be somewhat close in sales to your indie titles. (Or, if traditional publishers are doing the promotion they claim to do, the sales should be better.)

What to do if they’re not close at all? I have no idea. I still think there’s a benefit to contacting your writers’ organizations. Maybe if the organization keeps getting reports of badly done royalty statements, someone will take action.

If you want to hire an attorney or an auditor, remember doing that will cost both time and money. If you’re a bestseller, you might want to consider it. If you’re a midlist writer, it’s probably not worth the time and effort you’ll put in.

But do yourself a favor. Read those royalty statements. If you think they’re bad, then don’t sign a new contract with that publisher. Go somewhere else with your next book.

I wish I could give you better advice. I wish the big agencies actually tried to use their clout for good instead of their own personal profits. I wish the writers’ organizations had done something.

As usual, it’s up to individual writers.

Don’t let anyone screw you. You might not be able to fight the bad accounting on past books, but make sure you don’t allow it to happen on future books.

That means that you negotiate good contracts, you make sure your royalty statements match those contracts, and you don’t sign with a company that puts out royalty statements that don’t reflect your book deal.

I’m quite happy that I walked away from the publisher I mentioned above years ago. I did so because I didn’t like the treatment I got from the financial and production side. The editor was—as editors often are—great. Everything else at the company sucked.

The royalty statement was just confirmation of a good decision for me.

I hope you make good decisions going forward.

Remember: read your royalty statements.

Good luck.

I need to thank everyone who commented, e-mailed, donated, and called because of last week’s post. When I wrote it, all I meant to do was discuss how we all go through tough times and how we, as writers, need to recognize when we’ve hit a wall. It seems I hit a nerve. I forget sometimes that most writers work in a complete vacuum, with no writer friends, no one except family, who much as they care, don’t always understand.

So if you haven’t read last week’s post, take a peek. More importantly, look at the comments for great advice and some wonderful sharing. I appreciate them—and how much they expanded, added, and improved what I had to say. Thanks for that, everyone.

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“The Business Rusch: “Royalty Statement Update 2012,” copyright © 2012 by Kristine Kathryn Rusch.

Kristine Kathryn Rusch

In 2009, Mat Kearney came out with a song called Closer to Love, which is, apparently, a favorite of the DJs on the station I listen to. It still plays in rather heavy rotation for an older song, and I hear it at least once a week. The song isn’t one of my favorites, but it has a line that stops me every time I hear it, because it’s so true.

We are, as Kearney states, just a phone call from our knees.

Dean and I have had those calls throughout our lives together—when my father died, when Dean’s stepfather died. The calls that just take your every day life and turn it into a completely new life, one that changes things so utterly, you can barely remember what life was like before that moment.

We had one in August. Our friend Bill Trojan had died, leaving Dean as the executor of an estate so messy that a lawyer friend of mine (who handles estates) called it one of the top ten estate stories of all time. My friend did not mean that in a good way.

Our lives changed in that moment and, I swear, almost cost Dean his life one night. He blogged about this after the estate closed in February. Even though his blog is extremely clear, it doesn’t quite convey the pressures of living in this high-stress environment for months on end.

And that comes after years of dealing with changes in our profession, some of which we’ve only begun to understand in hindsight. It comes on the heels of some difficult changes in our personal life, which I’m not going to go into here. We went from high stress to high stress for almost a decade, and then, just as it seemed the stress would ease, Bill died, and we realized that we had no idea what stress was.

I’m not writing about this to complain. We’re both honored by our friend’s trust in us, and we’re trying to do our best by him. We both miss him every day that we go without a curmudgeonly phone call, filled with both complaints, laughter, and trenchant observations about the world.

It is simply an acknowledgement of the fact that Bill’s death not only caused a disruption in our day-to-day lives, tore up our hearts, and changed how we live, but it also had an impact on our writing.

Professional writers who’ve been to our Oregon workshops—the Master Class in particular—call these events “life rolls.” When we taught the Master Class, we (along with Loren Coleman) invented a role-playing game that mimicked the way a long-time professional writer’s career works. Before I go any farther, no, we’re not teaching the Master Class right now, because publishing is in such flux that we have no idea how to present it in a way that will be useful to professionals five years from now.

Maybe, some day, we’ll do it again. Once things settle down.

Back to the role-playing game, which we called (unoriginally) the Game, we had disruptive events coincide with every writer’s role-played career. Those events were called “life rolls.” Sometimes they were positive—for example, you got married (of course, you’d lose money for the cost of the wedding plus weeks (maybe months) of work, but you might not have to pay all the bills on your own any more).  More often than not, the rolls were disruptive. We took one bestseller (in the game) out for five years with a succession of life rolls that prevented her from working.

For years after the Game’s invention, our students would send us personal experiences and add, “This belongs in the Game as a life roll.”

Yep. Bill’s death belongs in the Game as a life roll.

In order to deal with this monster estate in a timely way—a way that wouldn’t permanently eat up what little funds Bill had left and our own savings—Dean let almost everything else go.  He tried to write in September and somehow managed to finish some really good stories, but as October and November came along, he simply couldn’t concentrate any longer—at least, not on something like writing.

He is only now turning his attention back to writing, eight months after we got that knee-dropping phone call. And I’m pleased he’s doing so. I also understand the struggle. When my dad died, I couldn’t read or write for six months (which plunged me into a living hell, because everything I do involves reading and writing). The counselor I was seeing at the time told me such reactions are normal, and it would ease, but in the middle of it all, it seems like there is no way out.

When we realized how hard it would be to deal with Bill’s estate, we agreed that one of us had to keep our day jobs, which meant that I had to keep writing rather than go to Eugene every week with Dean to clean up the mess that Bill had left behind.

I finished a novel, continued to write this blog, wrote some other nonfiction, and finished three novellas. The novel and the novellas were real struggles, which I blamed on the projects themselves. The nonfiction wasn’t as hard, partly because I used to work in radio on a daily (sometimes hourly) deadline, and I’d trained myself to write fact and opinion under the most difficult of circumstances.

I started the next novel on the schedule and wrote, and wrote, and wrote, and wrote, and wrote, never feeling like I was getting traction, always feeling confused and out of sorts. I wasn’t finishing anything, even though I produced my daily word count plus, and I’d often have to review what I wrote just to remember where I was.

The year from hell continued, with lots of other disruptions, so that we got to the point where we actually hated to hear the phone ring in the hours before we got up. (People who don’t know us call then; our friends call in an emergency.) I keep track of the day in my desk calendar, and not a week went by without me losing an entire workday to an emergency of one sort or another.  Yet I persevered, continuing work on the never-ending novel, taking time to write a short story or two under deadline, and this column as well.

Until earlier this week, when I swear that my brain melted. I looked at the book and realized I had 100,000 out-of-order words with no real hope of figuring out what I was doing or where I was.

I talked to Dean about it, and he finally convinced me to let him help. He would read the book and see if he could find the common thread or if I had written past my ending or if I even had a book at all.

I told him I had no idea why this book wasn’t working and why, even though I was writing, I couldn’t seem to wrap my brain around what was happening.

He smiled at me. He then gently reminded me that we’d had a heck of a life roll in the fall.

I shook my head. He had the life roll. Look at that blog post of his: he went through a lot. I stayed home and worked.

“Sometimes,” he said, “being the support staff is harder.”

I disagreed then, and I disagree now. I’ve never seen a man work that hard in my life. That hard or that long or with that much focus. I was, and am, impressed.

Yet I know he was right about being support staff. My brain was busy these past eight months with Real Life. Imaginary worlds just weren’t as vivid or as important as they usually were—and that included other people’s books, television, and  movies. I had little patience for anything that didn’t grab my attention immediately.

I had an unacknowledged life roll.

And I had to acknowledge it—not just acknowledge it, but also acknowledge that for me, at least, it still continues. In the past two months, two more friends have died and so has my uncle. The friends, while not close friends, were still people I enjoyed and who passed away too soon (one at 50, the other at 62). My uncle, whom I hadn’t spent a lot of time with since I moved out West, was an influential person in my childhood, and so losing him was,  in a sense, the reminder of the loss of an era.

Plus the deaths resonated with Bill’s, and with my thoughts of late. Dean and I are putting our own estate in order, and I have started a series that will eventually appear on the blog about estate planning and small business. Part will go in the Freelancer’s Guide, because I realized I had missed that topic, and part will appear here, in the Business Rusch. And then I’ll combine it all into something that stands alone.

Yep. Another project. But one that’s necessary, I think.

The brain is starting to come back. And as it has, I realized I haven’t written about life rolls in quite this way. I wrote about setbacks in The Freelancer’s Survival Guide, but because I was dealing in general with freelancers, I didn’t talk about the way life rolls can impact writing.

And they do. Because like it or not, life rolls mess with our brains, our creativity, our energy, and our ability to concentrate.

I know this. I’ve known it for a long time. I have taught professional writers about this for more than ten years now.

In fact, I’ve just watched another friend go through this same kind of slog during the same period. Her father died a few days before Bill, and she had a novel due (and a real day job). She did her best, was just a little late, and only recently mentioned that writing feels fun again.

I reminded her about life rolls.

Pot, meet kettle. Kettle, pot.

The fact is that no one does a job at 100% when something major is happening in life. We all lose focus and concentration. Some places offer family leave or compassionate time. Others put employees on reduced duties or take the employees off the complicated problems and put someone else on that job.

It’s just, as writers, we don’t have the luxury of putting someone else on the task. We either delay the deadline, slog through, or abandon the project altogether.

In the middle of this mess, a book dealer told me about Tony Hillerman’s first missed deadline, which occurred when Hillerman’s brother died, and Hillerman became executor of the estate. Hillerman had a long career and, from what the dealer told me, this happened in the middle of it. I’m sure the dealer—who is a good friend—was offering a sideways life lesson that I was ignoring.

I did my job. I finished my deadlines—except the one, the 100,000-word novel that needs an editorial eye, which it’s getting at the moment. I’ve kept my editor at the traditional publishing house informed as to what’s going on, and he’s understanding.

I’m not. I want to be robo-writer, the person who can write through anything. But I don’t know any writers like that. That’s why we included life rolls in the Game.

Some things just slow you down or take you out for a while. And while I understand that, I sure as hell don’t like it.

The thing is: I’m not sure if that 100,000-word novel would have been a mess even without the life roll. Every now and then, I take on a project that’s a stretch. Or sometimes it’s even beyond my current skill set. And I do that with or without a life roll. Those projects get tossed and restarted, redrafted usually, because I told the story in the wrong order or from the wrong character’s point of view, or I wrote until I figured out what the story was, and then I had to actually write that story, not the story about writing the story.

In other words, even when life is normal, my process is a messy one.

It all goes back to something Neil Gaiman said once. He said that something you write with a headache is as good as something you write when you’re feeling fine. And it shouldn’t be.

But it is.

So as messy as my life has been these past few months, as hard as it’s been to concentrate, I’m probably putting out the same ratio of good to bad stuff that I always do. It just feels worse than it is.

The key is something I tell my students: You have to give yourself a break. You must look at your work as if you still had a day job. If you’d call in sick to a real job, then don’t write today. If your boss would tell you that you’re being ineffectual and you need some time off so go home, dammit, then you should really knock off writing for the day. If you’d take a vacation or compassionate leave or family time at the day job, then do so as a writer.

Oh, that advice is so easy to give. So hard to take.

Dean told me two weeks ago, as more stuff happened in our lovely little spat of life rolls, that I should take April off. Instead, I’ve written my usual number of words of fiction, my weekly blog, and a few other nonfiction pieces. I’ve also started the major research on the estate article.

I didn’t want to take April off. But I did want to quit focusing on the Impossible Book. So I started a project just for me, something fun. And I’ve knocked off early more nights than not. I’m actually caught up on my television viewing for the first time in years. I’ve read two novels on the day they arrived in the mail, something I haven’t done in longer than I care to think about.

And I’m starting to noodle the idea of a vacation. Somewhere easy. Somewhere close. Somewhere fun.

Life rolls knock all of us to our knees, whether the rolls come by telephone or via e-mail or by a simple knock on the door.  We’ll all spend some time on that floor wondering how the hell we got there.

The key is not that we’ve fallen, not even how long we remain on our knees with our hands hiding our faces, but how many times we’re willing to get up. Once we get up again, then we go forward in the new reality, forging a new path.

My students have heard me say that countless times, and I’ve spoken from experience. But it doesn’t matter how many times I’ve said it or how many times I’ve lived it: I still need someone else to remind me about how difficult life rolls are and how different we are after we’ve recovered from them.

Don’t hear me wrong: I’m not giving anyone an excuse to skip writing. I’m telling you to evaluate your life and realize that at times, the writing will be hard, the business will be hard, life will be hard.

All we can do is get through that, and then go back to what we love.

Sometimes the key to surviving a life roll is to just get through it.

I hope I will do so with the same grace under pressure that Dean has shown these past eight months. He’s been amazing. In fact, when that knee-knocking phone call came last August—and it was a phone call—I’m not even sure Dean went down. He just started moving forward with great purpose and a built-in recognition that everything had changed.

Apparently it takes me longer.

I guess it’s time to deal with the fact that I’ve had a life roll. Now I need to deal with the fallout from it.

Time to stand up and face the music.

I just hope the music isn’t a three-year-old Mat Kearney song with a devastating lyric. I’d like to listen to something else for a while.

I’ve written this blog now for three years (Jeez, as long as that stupid song has been out), and I generally focus on business. When I was writing the Freelancer’s Guide in this space, I remembered the emotional component of business. I’ve been ignoring it of late. I’ll bring bits of the emotional side back in as I continue.

Thanks to all of you who support the blog. If you like what you read, if you’ve learned something, if you’re a frequent visitor, please leave a tip on the way out. The interaction, from comments to donations, keeps me writing the blog. So thank you.

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“The Business Rusch: “One Phone Call From Our Knees,” copyright © 2012 by Kristine Kathryn Rusch.

Kristine Kathryn Rusch

This week, the announcements for the Pulitzer Prize shocked the publishing world because, for some reason, the Pulitzer board declined to chose a winner from the three fiction nominees. Lost in the controversy (besides the hurt feelings of the fiction nominees and the fact that no award was given in the editorial writing category either) was the fact that David Wood won in the National Reporting category for a series he published in  The Huffington Post.

A few news outlets mentioned this, but very few, because it scared them. And because they really prefer a juicy, meaty, why-the-hell-didn’t-these-novels-measure-up scandal.

What’s so important about Wood’s win? It marks the first time that an online-only outlet won in the national reporting category. Or as Rem Reider, editor of The American Journalism Review, commented in the Huffington Post on the win itself:

“I think it’s very healthy to see the Pulitzers have moved, albeit slowly, from a solely print focus. The world has changed dramatically. There’s an awful lot of exciting developments with digital news operations.”

The Pulitzers have acknowledged “new” media in the past, including ProPublica and PolitiFact, both of whom are affiliated with “old” media, like (ahem) newspapers. But this win is a first for an online publication only in a reporting category.

What I find most fascinating isn’t the win, which was inevitable for an online news site at some point, considering the good work being done by so many online sites, but Wood himself. He’s not an upstart blogger or a thirty-something reporter who has only worked online.

He’s a sixty-six year old reporter who got his start in 1970 with the Pioneer Press chain in the Midwest. The farther back in his resumé you read, the more you realize that this man worked for dozens of traditional outlets, most of which no longer exist.

He joined The Huffington Post in early 2011, not as an early adapter, or an early cross-over pioneer, but as a legitimate reporter whom the Post hired (along with others) to beef up their reporting credentials. (Well, he definitely did that.)

I would also wager, given his age and his resumé, that he would have been a tough hire at what Jay Rosen of New York University calls “legacy media companies.” Wood still has a lot of reporting in him, and he clearly wasn’t ready to retire or slink off into obscurity.

New media worked for him, as it’s doing for so many of us.

Also this week in the Huffington Post came the news that one-time indie sensation Boyd Morrison is returning to indie publishing. And not entirely willingly. It seems that Simon & Schuster, which had published four of Morrison’s novels, abruptly canceled his new three-book contract in January.

Morrison was, so far as anyone can tell, the first Kindle bestseller to get a traditional publishing contract, based on his indie sales. His sales were good, but not spectacular. He was selling 4,000 copies per month of three books.

I’ll wager—and I do not know exactly—that he received a helluva deal from S&S, a deal that did not match those sales figures. Someone at S&S believed his sales would jump once a “legacy” publisher got involved. I’ll even wager that those sales did jump, just not as significantly as expected.

I’ve seen this before. Anyone who has been in publishing a long time has. Something changes in the marketplace, and traditional publishers jump on that something with too much money and too little sense. The one I remember clearly happened twenty years ago because of The Firm. The Firm sold to the movies first. There was a lot of excitement in Hollywood over the book, and the excitement traveled backwards to New York.

Grisham got a sizeable advance, and The Firm became a bestseller, partly riding on Scott Turow’s Presumed Innocent wave and the fact that Turow wrote too slowly to meet the demand for the legal thriller genre that he essentially started. Because The Firm became a bestseller, Hollywood gave the book a green light, and in 1993, the movie came out.

Fast forward to 1994. At that point, publishers seemed to believe that whenever a book sold to Hollywood first, that book would become a bestseller, not thinking, of course, about the differences in the two businesses. What works in Hollywood often differs from what works in New York. A novel with a spectacular pulse-pounding plot, thin setting, and even thinner characters will work in Hollywood because real locations provide the setting and the actors develop the characters into something memorable.

(Before you all jump on The Firm, let me say that I like the book a great deal, and believe it does have good characters and a helluva setting. The books that followed Grisham’s onto this bandwagon usually did not.)

So for about three years, New York bought books that had sold into Hollywood. Those books came out first, sold poorly, and the movies never got made.

That wave ended with a violent whimper. Publishers vowed never to do anything like that again.

The new wave? Buying books from successful indie authors for outrageous sums of money. From a traditional publishing perspective, this actually makes a lot more sense than buying something Hollywood loved. The indie book is proven: it can attract an audience.

But here’s where traditional publishers’ vaunted gatekeepers screwed up. They seemed to think with their editorial paws on the book, their interior and cover designers improving the exterior, and their sales force (such as it is) on the game, they could increase sales to justify those advances.

And guess what? They couldn’t. Because they didn’t—and don’t—understand that indie publishing can reach a national (and international) market. So Morrison sold 4,000 copies per month of three books. That’s 1,333 copies per book per month on one site (Amazon) or a  mid-list level of sales for a thriller.  Yeah, the book might greatly improve on that number with a bit of publicity or promotion behind it. It might sell similar numbers in paper as well.

Or it might not.

From the looks of what happened to Morrison, his books didn’t do a hell of a lot better through a traditional publisher than they had from an indie publisher. The fact that S&S canceled his contract meant that the claim that the book needed a hefty revision was just an excuse. They were losing a lot of money on this contract, and they wanted it off their financial books.

Expect to see more of these kinds of stories in the future. As Morrison says, he was the first indie author to get a traditional publishing deal. Now he’s the  first indie author to get dumped by a traditional publisher for not performing to expectations. Of course, the expectations weren’t his, but that publisher’s, but when has traditional publishing ever owned up for its own errors?

Note that Morrison is doing better in the UK. He has an editor who loves his work and is championing it, and if you look at the deal notices on Publishers Marketplace, Little Brown UK clearly paid less for the privilege of publishing him than Simon & Schuster did.

The kind of books he’s writing (see the comparison to Steve Berry) have a European flavor, which do better there than here (at least according to traditional publishing). And then there’s this important fact: when Boyd Morrison began his indie publishing venture, it was 2009. He didn’t have access to Europe or anywhere other than the US. The Kindle store hadn’t gone into the UK yet, the iPad was just a glimmer in Steve Jobs’s eye, and Kobo didn’t have a good e-reader.

In other words, Little Brown UK brought him into a market which he hadn’t tapped yet. Those 1300 readers per month hadn’t already downloaded a copy of the book—which, by the way, has to be good, or it wouldn’t sell at those numbers.

And what is the possibility that S&S screwed up the marketing of Boyd Morrison’s traditional published books? Excellent. I did fifteen minutes of digging and found that the first books were sold for six-figures on a pre-empt, which means the offer had to be high enough for Morrison’s agent to recommend that he forget about the other players. Then I looked at the promotion for his books, and the covers he has.

Um. I read the kind of thrillers that Morrison writes, and while I remember hearing about The Ark when it sold, and seeing a Publisher’s Weekly ad for it, I don’t remember hearing or seeing anything else about it. S&S paid too much money for a book selling 1333 copies per month on Kindle, but not enough to put the real promotion machine behind it—the TV interviews, the planted stories in Vanity Fair (I’m looking at you, The Art of Fielding), and so on. And they actually had a story that could have gone to the media. They could have had a media blitz on these books when they came out.

I note that St Martin’s Press is making the same mistake with Amanda Hocking. If I didn’t follow her twitter feed, I would have had no idea that the first book in her Trylle series came out in January. In fact, the marketing is so poor on her books that I didn’t realize that the second book came out last week until I went to Amazon to double-check the spelling of Trylle.

With the public failure of Morrison’s traditional books (which got more press than the initial sale had), and the upcoming mishandling of other indie writers books, traditional publishing will soon jump off the non-existent gravy train.

What traditional publishers will do is take a nice-selling indie book, like Morrison’s, and make the writer an offer that actually reflects its current sales. As one friend said to me at our weekly professional writers’ lunch, “If a traditional publisher offered me a midlist deal, I’d laugh at them.” Not just because of the money, although the money is a huge factor, but because of everything the writer is supposed to give up.

If you want to see the difference in the money that a writer can make indie publishing these days and the money that the writer will make publishing traditionally, go to my husband Dean Wesley Smith’s blog. He has a post in his New World of Publishing series called “No Balance.” It’s accurate and a bit frightening.

If you understand contracts—which most writers don’t—then it gets even more terrifying. The writer is expected to give up years of copyright, not write a “competing” work, and essentially chain herself to that publisher for as little as $5,000. But as my writer friend said at lunch, it’s the lack of consideration that bothers him.

Consideration, in this instance, isn’t a term for politeness. It’s a legal term. What he meant in this case was that traditional publishing contracts expect the writers to give up a great deal for almost no money, while the traditional publishers give up only the cost of producing the book. For example, if traditional publishers want a writer to stop publishing loosely defined competing works, then the publishers should do so as well. If you sell a vampire romance to a traditional publisher, then your vampire romance should be the only vampire romance that they publish. Not that month or that year, but for as long as they expect you to forgo competing works as well.

See what I mean?

But writers are used to that. The problem isn’t the lack of consideration (well, it is a problem, but an age-old one), but that traditional publishers have gotten more dogmatic in their contract negotiations, not less. I’ve been through three rounds of contract negotiations since 2009, and the contracts have gotten nastier and nastier. What’s worse is that clauses we used to be able to negotiate are now non-negotiable.

Why would I sell a book for five figures or even six figures into a system that will not promise me good treatment—a new cover, for example, if the first cover sucks—and yet expects me to give up most rights to my own work (and often adding a legal injunction against creating other work) when I can publish the book myself, write other works, and make the same amount of money in less time than it takes to receive the entire advance?

It really makes no sense.

As traditional publishing digs in and starts treating writers worse than ever, it’s going to lose even the mystique that it had of being able to take a product, improve it, and sell it at a premium.

Professor at the renowned Interactive Telecommunications Program at NYU, Clay Shirky, sent ripples of fear through the traditional publishing community last week by talking about this very thing. Worse, he gave it a label that’s going to stick.

He said that publishing is a button.

A button.

Here’s the exact quote: “Publishing is going away. Because the word ‘publishing’ means a cadre of professionals who are taking on the incredible difficulty and complexity and expense of making something public. That’s not a job anymore. That’s a button. There’s a button that says ‘publish,’ and when you press it, it’s done.”

Then he goes on to discuss what parts of the old industry matter. Editing matters. Fact-checking matters. For some kind of texts, designers matter. But editors, fact checkers, and designers can be hired individually. He sees most content creators acting on what he calls the movie system—hiring a professional to do a particular job, combining that professional with other professionals until the job is done. Then the band breaks up and goes their own way.

Think of it like this: a movie studio hires a director, cinematographers, actors, extras, costume designers, etc. to work on a movie. When that movie is over, the professionals from the actors to the directors can work on a different movie for a different studio. That’s how Shirky envisions the creation of a book working. The content creator hires the designer, the editor, the fact-checker, and maybe even someone to sell the book, and then launches it herself.

With the touch of a button.

Shirky ends that section of his piece with this: “Now publishers are in the business not of overcoming scarcity but of manufacturing demand. And that means that almost all innovation in creation, consumption, distribution and use of text is coming from outside the traditional publishing industry.”

You can take that phrase “manufacturing demand” two ways. He means it the way movie studios manufacture demand, by getting the film into theaters, by advertising, by doing all that hype that we’re used to when a film gets released.

But the first time I read his phrase “manufacturing demand,” I saw it as something else. Publishers must now manufacture demand for their own services. They must convince the content creators to join forces with them to release a product.

And, judging from my last few contract negotiations, the publishers are failing at this.

One thing I’ve asked for in all of my recent negotiations is a limited license. Meaning the publisher has the right to publish the book for a limited period of time. Industry standard—and yes, there is a publishing industry standard on this—is ten  years. The license would then be up for renewal after ten years.

Amazon’s publishing arm just acquired a ten-year license to publish the James Bond books.  The Bond estate’s previous ten-year license—with Penguin—expired in March. At the same time, the estate sold a ten-year license in the UK to Random House.

I’ve signed license agreements in the past, mostly with my overseas books. It’s not unusual. I routinely sign limited license agreements for my short fiction. I plan to continue traditionally publishing short fiction because the editors in short fiction treat the writers well, and because the stories do act as a loss leader. And because it makes good business sense in many instances.

Yet when I told my traditional book publishers that I was moving to the license model for my novels, I got a tremendous amount of pushback. One publisher completely refused to consider my next work. Another told me that “only bestsellers” can have a license. A third considered it, but we decided to part ways over other matters.

Mostly, though, I’ve been told that “licenses aren’t done,” or I got the who-the-hell-are-you? treatment.

Well, who the hell am I? I’m a long term professional writer with more publications that I’ve written than some editors in New York have edited. I have a dedicated following of fans for all of my pen names all over the world, and I have guaranteed sales whenever I release a book.

Who the hell am I? I’m someone who can now make a living publishing her own work electronically and in print.

So here’s what I figure. If traditional publishers want me on their list, then they have to make it worth my while. Not just financially, but in the contract terms as well. Then they must live up to those contract terms or risk termination. That’s what a limited license would do. If I don’t like the way Publisher A treated my books, I do not have to renew the contract when it comes up after ten years. I can move to Publisher B.

Chances are I’m not going to play that game, because from what I can see, no traditional publisher can offer me anything that I can’t get on my own at less risk to me and my work, and at less cost to me and my work

And about that whole loss-leader idea I had a year back, when I thought maybe it would be worthwhile to have a book published traditionally for the access to a traditional publisher’s ties to help my indie books? That’s out the window, primarily because of traditional publisher’s contracts and their screw-ups.

I’m seeing more screwups ahead. As traditional publishers try to justify their positions (manufacture demand for their services), they’re talking out of both sides of their mouth. Digital Book World had an article this week about consumer reactions to high e-book prices in the face of the Justice Department suit (yes, Rick,  you were right about this). In that article, Molly Barton, Penguin’s global digital director said that e-book production “costs 10% less” than print book production. “But,” she added, “the largest expense is author payment and always has been.”

Let me say, simply, bullshit.

Most writers get paid $,5000 to $20,000 as an advance on their book. They get 25% of gross (theoretically) for their royalties after that $5,000 to $20,000 gets met, if creative accounting allows it to ever get met. If that’s the largest expense on an e-book for a traditional publisher—larger than their overhead—then e-books truly are cheap to produce.

Her argument assumes ignorance on the part of consumers who think all writers are rich.

But her argument should strike fear in the heart of all writers who want to remain in traditional publishing. Because the argument traditional publishers are now giving for their ridiculously high e-book prices is that authors cost too much.

Got that? Authors cost too much.

I’ve seen that argument time and time again as the e-book pricing wars with traditional publishers have heated up. What does that mean? It means that authors who want to go traditional will be asked (or, more accurately, forced) to take even more of a cut in advances and royalties.

Think traditional publishers will pay writers well? Think again. Traditional publishers will look at failed contracts like Morrison’s and take the wrong lesson from it. They will think either that indie books don’t translate into the traditional publishing realm  or that they shouldn’t pay so much for indie books.

Never ever does a traditional publisher take responsibility for their own failures. And they did fail Morrison. They expected to publish the books with little effort and reap the profits. They probably sold double what he could sell, but that’s not enough to cover their overhead or their production, shipping, and manufacturing costs. Ooops.

Better that traditional publishers believe that indie books don’t translate. That’ll protect more writers from the insanity to come.

Want to sell a book traditionally? Sign away your copyright,  your ability to publish books with another company, let the publisher pay you $2,500 to $10,000, with 10% of net royalties, and maybe, maybe the publisher will buy your book.

And oh, the publisher will not guarantee that they will do a good job of publishing that book. Doing a good job is not their responsibility according to the contract.

According to the contract, the only person who has to do a good job in traditional publishing is the writer. If she doesn’t, she has to pay back her advance and the contract gets canceled.

Oh, and who decides who does a good job? The publisher, of course. Never the writer, never another publisher, never an impartial third party.

If I were traditional publishing, I would look at this year’s Pulitzer Prize results and tremble. Not because some jerks declined to make a decision in the fiction category, but because non-traditional media is moving into the mainstream.

Move aside, traditional publishers. You’ve already lost your monopoly. And you don’t know how to justify your jobs any more.

Publishing is a button.

Get used to it.

In 1988, I co-founded a publishing company. In those days, publishing was hard and costly. We spent thousands, tens of thousands really, every month to produce books that had a large impact on the sf/f field. We also got our education in a system that’s akin to manufacturing buggy whips now.

Instead of putting this blog in a magazine that will then need to go to a printer and get sent to you through the US mail, I can write the blog on Wednesday, post it Wednesday night, and you can start reading it on Thursday in places like the UK and Australia, places I couldn’t even mail that magazine without incurring tremendous costs.

Publishing is a button. And the button that will keep me publishing this blog is the PayPal link below. Because my overhead is low, so I only need you to leave a tip on the way out—if (and only if) you get some value out of this blog.

Thanks to everyone who does contribute, not just financially but with comments, e-mails, and links. For example, I’m not sure I would have found Shirky’s piece in a timely manner without you. So thanks, and thanks for returning week after week.

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“The Business Rusch: “The Changing Definition of Publishing,” copyright © 2012 by Kristine Kathryn Rusch.