Novel Writing Course for Lawyers

I've had enough lawyer wannabe novelists write to me about writing, reading their work and giving feedback, and publishing and marketing, that I thought maybe I should ask: would you, an attorney, be interested in enrolling in such a legal thriller course if I developed it? There would be a certain price threshold because the preparation of such a course would take me away from my writing bread and butter, but it would be a reasonable value, of course.

The course could cover the generalities of the legal thriller novel, such as they are, choice of story, expansion of choice into a novel-length treatment, and all the rest of the craft considerations the noobie novelist will need to review. We could maybe even do some hands-on feedback reading and writing where I would take a look at your chapter and publish it online, along with my comments. This might help us all learn.

Comments please. Is this something you might like to do?

Amazon and AntiTrust - the Real Truth

All the anti-Amazon bashing that’s underway again vis a vis Authors United simply goes too far. As a lawyer, the latest AU letter is presumptuous and just a little insulting.

As a “law,” U.S. antitrust is really a conglomeration of federal and some state laws that seek to address cartels, lessened competition and prohibit either (1) the creation of a monopoly or (2) abuse of monopoly power. It’s the latter which the AU is holding up in its grievance.

The fact is, U.S. antitrust laws do not outlaw cartels, business competition, or monopolies. That’s right, a business that operates as a monopoly is not per se illegal. It is illegal only when it takes action that abuses monopoly power.

But what I’ve seen so far is akin to the guy who runs into the fire station and cries out, “Fire! Red! Hot! Falling roofs! People fleeing!” and the fire department asking, give us an address. Because that’s the crux of all the adjectives being flung about by AU: symptoms, maybe, but address, none. In other words, tell the DOJ the address of the abuse of monopoly power. The DOJ will want an abuser, a fact of abuse, a date, a place, etc., all the stuff that enables it to fight the fire. But "fire, red, hot, falling roofs, people fleeing”—those are not enough. Not if you are seeking warranted action.

Again, it’s just a little bit insulting that some would try to inflame action with adjectives. The DOJ lawyers are much better trained than that.

Authors Guild Calls for DOJ Investigation of Amazon: a New One

Just when I thought the waters over at AG might be warming a degree, I receive this latest email from AG, calling for a huge Amazon bashing by the DOJ. It is republished below in its entirety:



 

The recent decision in United States v. Apple raises the spectre once again of Amazon’s excessive power in the publishing landscape. The federal appellate court in the case agreed with the lower court that Apple had indeed violated antitrust law by cooperating with publishers to establish agency pricing for e-books (which allows publishers to set their own prices and pay the retailer a commission). The irony of this decision is that Apple’s actions actually helped to open the e-book market and to reduce Amazon’s monopoly from a 90% market share in 2009 to around 67% today.

Without commenting on the outcome of the Apple case, or the facts that led the majority to its conclusion, we’d like to point out the long-term dangers of interpreting antitrust law solely to favor low book prices over a thriving, competitive and robust literary marketplace. The majority’s opinion takes a narrow view of antitrust law, assuming that low book prices to consumers trump all, even if the low prices are artificial loss leaders intended to lure buyers into a single company’s shopping platform. The much larger issue in our view is the dominance that Amazon—through its artificially depressed book prices—wields over the book ecosystem, and the potential repercussions on the free flow of information and free expression.

Despite the decision against Apple, Amazon’s tactics seemed troubling to the court. All three opinions, the majority, concurrence and a dissent, referred to the fact Amazon controlled 90% of the e-book market in 2009, and two of the three judges expressed clear concerns regarding Amazon’s anticompetitive behavior.

Judge Dennis Jacobs, in dissent, characterized Amazon’s behavior as so extreme that Apple had little alternative other than to enter the market on the terms that it did in order to create needed competition. Judge Raymond Lohier, concurring in the majority, found some “appeal to Apple’s argument that the e-book market, in light of Amazon’s virtually uncontested dominance, needed more competition.” Judge Lohier, however, felt that “more corporate bullying is not an appropriate antidote to corporate bullying.”

What, then, is the appropriate antidote?

We once again request the Department of Justice to investigate Amazon for its anti-competitive behavior, a far more dangerous variant that Apple’s.

Here is a letter to the Department of Justice, written by Douglas Preston and Barry Lynn in cooperation with the Authors Guild. Preston is a Council Member of the Authors Guild, which from the beginning has been a partner in this initiative. Last summer he spearheaded a grassroots protest against Amazon’s punishment of authors during its dispute with the publisher Hachette. Under the rubric “Authors United,” he gathered over 900 authors’ signatures and took out a two-page advertisement in The New York Times, in a public challenge to Amazon’s actions.

This letter addresses the larger issue of Amazon’s control of the book market and requests an investigation of the company by the Department Of Justice. The Authors Guild supports Preston’s actions and endorses his request, as do the American Booksellers Association and the Association of Authors’ Representatives.

Roxana Robinson
President
The Authors Guild

Half of Net Proceeds New Standard for Trad Pub EBook Royalties

From Authors' Guild 7/9/15:

We announced our Fair Contract Initiative earlier this summer. Now our first detailed analysis tackles today’s inadequate e-book royalties. At the heart of our concern with the unfair industry-standard e-book royalty rate is its failure to treat authors as full partners in the publishing enterprise. This will be a resounding theme in our initiative; it’s what’s wrong with many of the one-sided “standard” clauses we’ll be examining in future installments.

Traditionally, the author-publisher partnership was an equal one. Authors earned around 50% of their books’ profits. That equal split is reflected in the traditional hardcover royalty of 15% of list (cover price, that is, not the much lower wholesale price), and in the 50-50 split of publishers’ earnings from selling paperback, book club, or reprint rights. Authors generally received an even larger share than the publisher for non-print rights (such as stage and screen rights) and foreign rights.

But today’s standard contracts give authors just 25% of the publisher’s “net receipts” (more or less what the publisher collects from a book sale) for e-book royalties. That doesn’t look like a partnership to us.

We maintain that a 50-50 split in e-book profits is fair because the traditional author-publisher relationship is essentially a joint venture. The author writes the book, and by any fair measure the author’s efforts represent most of the labor invested and most of the resulting value. The publisher, like a venture capitalist, invests in the author’s work by paying an advance so the author can make ends meet while the book gets finished. Generally, the publisher also provides editing, marketing, packaging, and distribution services. In return for fronting the financial risk and providing these services, the publisher gets to share in the book’s profits. Not a bad deal. This worked well enough throughout much of the twentieth century: publishers prospered and authors had a decent shot at earning a living.

How the e-book rate evolved

From the mid-1990s, when e-book provisions regularly began appearing in contracts, until around 2004, e-royalties varied wildly. Many of the e-rates at major publishing houses were shockingly low—less than 10% of net receipts—and some were at 50%. Some standard contracts left them open to negotiation. As the years passed, and especially between 2000 and 2004, many publishers paid authors 50% of their net receipts from e-book sales, in keeping with the idea that authors and publishers were equal partners in the book business.

In 2004, we saw a hint of things to come. Random House, which had previously paid 50% of its revenues for e-book sales, anticipated the coming boom in e-book sales and cut its e-rates significantly. Other publishers followed, and gradually e-royalties began to coalesce around 25%. By 2010 it was clear that publishers had successfully tipped the scales on the longstanding partnership between author and publisher to achieve a 75-25 balance in their favor.

The lowball e-royalty was inequitable, but initially it didn’t have much effect on authors’ bottom lines. As late as 2009, e-books accounted for a paltry 3–5% of book sales. Authors and agents ought to have pushed back, but with e-book sales so low it didn’t make much sense to risk the chance of any individual book deal falling apart over e-royalties. We called the 25% rate a “low-water mark.” We said, “Once the digital market gets large enough, authors with strong sales records won’t put up with this: they’ll go where they’ll once again be paid as full partners in the exploitation of their creative work.”

E-books now represent 25–30% of all adult trade book sales, but for the vast majority of authors the rate remains unchanged. If anything, publishers have dug in their heels. Why? There’s a contractual roadblock, for one: major book publishers have agreed to include “most favored nation” clauses in thousands of existing contracts. These clauses require automatic adjustment or renegotiation of e-book royalties if the publisher changes its standard royalty rate, giving publishers a strong incentive to maintain the status quo. And the increasing consolidation of the book industry has drastically reduced competition among publishers, allowing them more than ever to hand authors “take it or leave it” deals in the expectation that the author won’t find a better offer.

The elephant in the room

And then there’s the elephant in the room: Amazon, which has used its e-book dominance to demand steep discounts from publishers and drive down the price of frontlist e-books, even selling them at a loss. As a result, there’s simply not as much e-book revenue to split as there was in 2011when we reported on the e-book royalty math. At that time, publishers made a killing on frontlist e-book sales as compared to frontlist hardcover sales—at the author’s expense—because, as compared to today, the price of e-books was relatively high.

When we analyzed e-royalties for three books in the 2011 post, “E-Book Royalty Math: The House Always Wins,” we found that every time an e-book was sold in place of a hardcover, the author’s take decreased substantially, while the publisher’s take increased.

Since 2011, we have found that publishers’ e-gains have diminished. But the author’s share has fallen even farther. Amazon has squeezed the publishers, to be sure. The publishers have helped recoup their losses by passing them on to their authors.

These were our calculations for several books in 2011. The trend was obvious. Compared with hardcovers, each e-book sold brought big gains to the publisher and sizable losses to the author when the author’s royalties are compared to the publisher’s gross profit (income per copy minus expenses per copy), calculated using industry-standard contract terms:

Author’s Royalty vs. Publisher’s Profit, 2011

The Help, by Kathryn Stockett

Author’s Standard Royalty: $3.75 hardcover; $2.28 e-book.

Author’s E-Loss = -39%

Publisher’s Margin: $4.75 hardcover; $6.32 e-book.

Publisher’s E-Gain = +33%

Hell’s Corner, by David Baldacci

Author’s Standard Royalty: $4.20 hardcover; $2.63 e-book.

Author’s E-Loss = -37%

Publisher’s Margin: $5.80 hardcover; $7.37 e-book.

Publisher’s E-Gain = +27%

Unbroken, by Laura Hillenbrand

Author’s Standard Royalty: $4.05 hardcover; $3.38 e-book.

Author’s E-Loss = -17%

Publisher’s Margin: $5.45 hardcover; $9.62 e-book.

Publisher’s E-Gain = +77%

What’s happening now? We ran the numbers again using the following recent bestsellers. Because of lower e-book prices, the publishers don’t do as well as they used to, though they still come out ahead when consumers choose e-books over hardcovers. But authors fare worse than ever:

Author’s Royalty vs. Publisher’s Profit, 2015

All the Light We Cannot See, by Anthony Doer

Author’s Standard Royalty: $4.04 hardcover; $2.09 e-book.

Author’s E-Loss= -48%

Publisher’s Margin: $5.44 hardcover; $5.80 e-book.

Publisher’s E-Gain: +7%

Being Mortal, by Atul Gawande

Author’s Standard Royalty: $3.90 hardcover; $1.92 e-book.

Author’s E-Loss= -51%

Publisher’s Margin: $5.10 hardcover; $5.27 e-book.

Publisher’s E-Gain: +3.5%

A Spool of Blue Thread, by Anne Tyler

Author’s Standard Royalty: $3.89; $1.92 e-book.

Author’s E-Loss: -51%

Publisher’s Margin: $5.09 hardcover; $5.27 e-book.

Publisher’s E-Gain: +3.5%[1]

Exceptions to the rule

It’s time for a change. If the publishers won’t correct this imbalance on their own, it will take a critical mass of authors and agents willing to fight for a fair 50% e-book royalty. We hope that established authors and, particularly, bestselling authors will start to push back and stand up to publishers on the royalty rate—on behalf of all authors, as well as themselves.

There have been cracks in some publishers’ façades. Some bestselling authors have managed to obtain a 50% e-book split, though they’re asked to sign non-disclosure agreements to keep these terms secret. We’ve also heard of authors with strong sales histories negotiating 50-50 royalty splits in exchange for foregoing an advance or getting a lower advance; or where the 50% rate kicks in only after a certain threshold level of sales. For instance, a major romance publishing house has offered 50% royalties, but only after the first 10,000 electronic copies—a high bar to clear in the current digital climate. But overall, publishers’ apparent inflexibility on their standard e-book royalty demonstrates their unwillingness to change it.

We know and respect the fact that publishers—especially in this era of media consolidation—need to meet their bottom lines. But if professional authors are going to continue to produce the sort of work publishing houses are willing to stake their reputations on, those authors need a fair share of the profits from their art and labor. In a time when electronic books provide an increasing share of revenues at significantly lower production and distribution costs, publishers’ e-book royalty practices need to change.

[1] In calculating these numbers and percentages for hardcover editions, we made the following assumptions: (1) the publisher sells at an average 50% discount to the wholesaler or retailer, (2) the royalty rate is 15% of list price (as it is for most hardcover books, after 10,000 units are sold), (3) the average marginal cost to manufacture the book and get it to the store is $3, and (4) the return rate is 25% (a handy number—if one of four books produced is returned, then the $3 marginal cost of producing the book is spread over three other books, giving us a return cost of $1 per book). We also rounded up retail list price a few pennies to give us easy figures to work with.

Likewise, in calculating these numbers and percentages for the 2015 set of e-books, we are assuming that under the agency model—which is reportedly the new standard in the Big Five’s agreements with Amazon—the online bookseller pays 70% of the retail list price of the e-book to the publisher. The bookseller, acting as the publisher’s agent, sells the e-book at the price established by the publisher. The unit costs to the publisher are simply the author’s royalty and the encryption and transmission fees, for which we deduct a generous 50 cents per unit.

I Like Sci-Fi, I Like Dystopia, I Like the Idea of Law in the Future

Vortice is the name of a novel I'm writing in fits and starts. The book is set in 2055 and takes a hard look at where law will be when machines can access the quantum information inside a person's microtubules where consciousness is--it is thought by some--stored.

It is the story of a young woman whose mental images have been read and who is found to be guilty of a murder.

Except...she didn't commit it.

Her grandfather, Thaddeus Murfee, has a role.

What do you think?

Whew, Christine II is Finished!

Today is July 4 and I spent the day finishing the first draft of Hellfire: I, Lawyer, a Sisters In Law series novel. It's a terrific book with a fuse burning down at the end and my fingers were flying as I wrote it, excited to see what came next. Hopefully lots of people will read it and like it and word will spread about what a fun six or seven hours of reading Hellfire is.

Should be published by mid-July.