The Authors Guild

July 26, 2010. We don't know the details of the Odyssey-Amazon agreement, but we can make some informed guesses. The agreement is most likely under the agency model, with Amazon paying Odyssey 70% of the retail price of the books. Wylie and Odyssey are together taking a typical agent's commission as compensation: 10 or 15% of the 70% received from Amazon. In round figures, this means that the author receives 60 to 63% of the retail price of the book.

For comparison, a typical contract with a traditional publisher pays e-book royalties of 25% of net proceeds. If the e-book is sold under the agency model, the author's share is 25% of 70%, or 17.5% of the retail price of the book. After the agent's commission, the author receives roughly 15 to 16% of the retail price of the book. More...

July 26, 2010. Thursday's announcement that the Wylie Agency, through its new publishing arm, Odyssey Editions, has a deal with Amazon to exclusively distribute at least 20 books in electronic form has shaken the industry. The 20 books include many important 20th century American works, including Invisible Man, Lolita, Portnoy's Complaint, Updike's Rabbit novels, The Adventures of Augie March, The Stories of John Cheever, Fear and Loathing in Las Vegas, and The Man Who Mistook His Wife for a Hat. These works are all in print and all, apparently, governed by old publishing contracts in which the authors didn't expressly grant electronic rights to the print publishers.

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

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

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

2. That said, when an agency acts as publisher, serious potential conflicts of interest immediately come to mind. ...

3. That the Wylie/Odyssey agreement is reportedly exclusive raises many questions and concerns. Authors should have access to all responsible vendors of e-books. Moreover, Amazon's power in the book publishing industry grows daily. ...

Regardless of the exclusivity issues, any direct agreement between a literary agency and Amazon is troubling. Amazon has, time and again, wielded its clout in the industry ruthlessly, with little apparent regard for its relationships with authors or publishers or, for that matter, antitrust rules. ...

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

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

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

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June 16, 2010. From the start, informed consent has been our primary concern regarding Wiley's proposed amendments to the Bloomberg authors' contracts. In our view, Wiley's initial letter was a spectacular failure, destined perhaps for law school textbooks, in obtaining informed consent to a contract modification. After reviewing several Bloomberg Press contracts, we couldn't imagine why any well-informed author would agree to the proposed amendments. Wiley has now said, repeatedly, that we have it all wrong, that the proposed amendment is actually good for Bloomberg authors. (Here are our three earlier alerts on this matter: one, two, and three.)

This week, we discussed a proposal with Wiley to help sort things out. In a press release yesterday afternoon (you can find it below), Wiley rejected our proposal, but agreed to disregard any signed contract amendments at the author's request. While this is progress, and we're relieved that Bloomberg authors will have this opportunity, we still don't know whether those authors will be given the clear information they need regarding how the changes will affect their royalties and other material terms of their book contracts.

Our proposal to Wiley, which we agreed not to share with the press without first informing Wiley (Wiley took it upon itself to share part of it with the press), had three parts:

1. After the conclusion of a standard Wiley royalty period, Wiley would allow an independent royalty auditor to review a reasonable sample of actual Wiley/Bloomberg royalty statements under the Wiley system and prepare a report on how the Wiley amendment affected authors' royalties. The auditor would compute royalties under the Wiley amendment and under the original Bloomberg terms, to arrive at a clear, side-by-side comparison of the two. Wiley would disseminate that auditor's report to its Bloomberg authors. This report would end the argument between Wiley and the Authors Guild: real data would replace rhetoric. More...