Wrapping Up 2012: Lawsuits & Silk Ties That Bind

by Lise Horton

While the #1 headline in our neck of the woods would have to be E L James and Fifty Shades of Grey trilogy, there was an overall theme to the year that can be summed up in one word: Litigation. And here’s just a sampling:

The eons long (okay, 7 years) Google Settlement case finally gave its last gasp as Judge Denny Chin refused the settlement proposal and the weary parties went their separate ways, with Google’s “a digital copy of every book in the world” plan falling apart. There’ve been some arrangements and understandings between Google and publishers that will lead to money changing hands, though authors are prominently missing from the discussion. The Authors Guild is attempting to pursue the matter on its own, on behalf of authors, but certain points in Chin’s Opinion make the Guild’s chances of success slim.

The concept of digital scans of every book? Didn’t die, though it is in stasis in the case of the Authors Guild v. Hathi Trust, an academic endeavor that grew out of the Google book scan project and likewise had the same goal. While the Authors Guild, with fair use arguments and the first ever use of Section 108 of the Copyright Act in a suit, did not prevail, the decision is being appealed. And just because the Hathi Trust started with academic and archaic texts? They didn’t stop there….unless Harry Potter’s being studied at the collegiate level!

The other massive lawsuit that hit in 2012, and one which will have far reaching implications for every party involved, but particularly authors who are basically left out of all of these equations, including settlements (in addition to the customer herself) is the Department of Justice price fixing suit against the Big 6 houses. Naturally, we can all commiserate with poor, weak, innocent Amazon ….who has now been handed the freedom to play with pricing at their whim and for their benefit. Meanwhile the publishers who’ve settled (Hachette, HarperCollins, Simon & Schuster and hot off the press, Penguin) (the courts approved the settlement agreement with the first 3, which includes among other things, $62 million in payments, and the Penguin settlement approval is pending) must now comply with a number of restrictions and oversight. The remaining publisher, Macmillan, and Apple, are set to battle it out in court. Macmillan continues to hold that they did not collude. They’ve got their legal work cut out for them, however as, along with the DOJ, numerous individual states have launched their own suits against Macmillan and Apple.

From a recent New York Times piece, it is pretty clear that Amazon was not the one having sand kicked in their face by the alleged bullies with their behind-closed-door pricing discussions:

“For Amazon, whose share of the e-book market has eroded to close to 60 percent from about 90 percent since 2010, the Justice Department action is a major victory over one of its top rivals, Apple. In anticipation of the announcement, Amazon already appeared poised to drop prices on e-books.
“This is a big win for Kindle owners, and we look forward to being allowed to lower prices on more Kindle books,” Andrew Herdener, a spokesman for Amazon, said in a statement.”

Numerous amicus briefs filed from nearly every quarter in the industry, objecting to the DOJ position and outraged that Amazon was being given basically their own playing field, were given short shrift.

If you look at the numbers, it’s rather hard to see how much damage folks were doing to Amazon. Even at a low, they had 60% of the digital sales market. Barnes & Noble had 25% and Apple – a defendant in the case – had a piddling 15%.

In a smaller arena, fast on the heels of a lawsuit brought by authors against another of the Big 6 publishers in connection with foreign sales royalties, a like case has now been brought against Harlequin. From the plaintiffs’ site, the general description:

“A class action lawsuit was filed today against Harlequin Enterprises, Ltd., the world's leading publisher of romance fiction, as well as Harlequin Books S.A., a Swiss corporation, and Harlequin Enterprises B.V., a Dutch corporation, on behalf of authors who entered into contracts with the company.

This lawsuit results from Defendant Harlequin Enterprises Limited, the world’s leading publisher of romance fiction, depriving Plaintiffs and the other authors in the class, of e-book royalties due to them under publishing agreements entered into between 1990 and 2004. Harlequin required the authors to enter into those agreements with a Swiss entity that it created for tax purposes, and that it dominates and controls. However, Harlequin, before and after the signing of these agreements, performed all the publishing functions related to the agreements, including exercising, selling, licensing, or sublicensing the e-book rights granted by the authors. Instead of paying the authors a royalty of 50% of its net receipts as required by the agreements, an intercompany license was created by Harlequin with its Swiss entity resulting in authors receiving 3% to 4% of the e-books' cover price as their 50% share instead of 50% of Harlequin Enterprises' receipts.”

This case bears similarities to the one involving a Big 6 house. Royalties are a morass in and of themselves, and these machinations make it nearly impossible for an author to get a clear grasp of the issue. It is a complicated world out there that an author has to deal with, so this is just another example of how important it is to really have as solid an understanding as possible on contracts and the publishing industry’s current practices.

A number of lingering issues arose from the demise of Dorchester as authors sought to get back their rights as the publisher’s assets were being gobbled up by Amazon, get payment for royalties owed, and in general slog through the mudslide that was the end of the publishing house.

But wait! It’s not just folks suing the publishers. They’re doing some suing of their own. Case in point, Penguin suing a number of its authors to get back approximately $577,000 in advances paid for books the authors (allegedly) failed to produce as contractually required. Sourcebooks sued an author for breach of contract for the same issue: refusing to turn in the 3rd contracted book.

Then there’s author Bill Bryson. No, he’s not suing his publisher – he’s suing his old agent for a variety of nefarious oversights, underreporting, and such.

Fortunately, t wasn’t just the lawyers having a grand year, however.

A number of authors in romance made killings of their own. There were major book deals being made for a number of self-published authors of erotic romance as they rode the wave called E L James and Fifty Shades of Grey. While 50 has sold 40 million copies worldwide (and is still going strong as foreign translations continue), a number of well-known, already bestselling erotic romance authors are vying for supremacy on the bestseller lists. From Bella Andre to Maya Banks, Eden Bradley/Eve Berlin and the lady chasing James, RWA’s own President, Sylvia Day, they have caught the industry’s notice and their titles have been satisfying the cravings that James’ books inspired.

Hollywood’s keeping a close watch on these titles, too, as they seek out authors with a solid brand and more product to feed the passions stoked by Christian and Anastasia. The Shades film is in the works and additional options have been made, including on The Marriage Trap by Jennifer Probst (and Probst’s latest 3-book “major” deal has just been announced as well).

The import of the success of these authors to my mind is that the romance genre is now front and center. As we all know, there’s something for everyone in the genre, and with the popularity of Shades, with millions of new readers discovering the joys of romance, they’ll be looking for more great reads and they’ll find them. Romance continues to drive digital, and is the bestselling genre in print, as well. While there are the communities who will continue to denigrate the genre, money talks, and that’s the true sign of success.

Shades even provoked discussion of book banning and censorship, which on a national stage is another plus.

Economically, the publishing industry began a slow climb back after wallowing for a while. The demise of Borders changed the landscape, Wal-Mart emerged as a book-selling powerhouse and sales there will be, for the first time, included in reports from all the traditional outlets. And the tablet and digital wars continue to drive an evolving business that even insiders cannot predict from day to day.

As digital (now at an estimated possible 20% or more of the market of book sales overall) continues to grow and gain importance, the print landscape will be undergoing yet another major upheaval with the merger (not approved as yet as the deal requires international approval in a number of countries that experts expect will keep the final deal held up until later in 2013) of Penguin and Random House. The prior Big 6 will become the Big 5 and while placating press statements give assurances that there won’t be any elimination of redundant imprints, from an author’s perspective, I gotta say – not buying it. Will it mean fewer titles released? Fewer purchases of new works? Definitely a possibility and we all must keep an eye out as I am sure the digital publishers are doing as they carve out their niche.

Some traditional topics, as well as some new matters, continued to hold sway in the discussion this year. Piracy, the rise of ebook popularity and availability via the B&N/Amazon reader wars, copyright issues, trad houses hanging out digital only imprint shingles, contract changes, royalty rates, subsidiary rights, the rise of self-publishing, Amazon’s continued pursuit of control of the publishing industry along with the e-reader and tablet markets, the evolution of the literary agent’s role in a digital arena, shrinking mid-list opportunities, and the ever hearty appetite for YA paranormal titles were all issues visited routinely in the industry.

But ultimately, the biggest story of the year was E L James and Fifty Shades of Grey. Not only has it spawned a demand for more erotic romance – a demand already established romance authors have been able to fill, and newer authors can aspire to fill – but it undoubtedly has created a whole new audience of readers for books offering an HEA in this tumultuous world. It’s made romance a serious contender in the entertainment game. Don’t forget after all – we’re not just in the publishing business. We’re in the entertainment business. The books’ popularity is shining the light on women’s sexuality, on physical relationships and the discourse of same which is clearly a timely matter, as evidenced by the fact that our genre is now sharing the stage with: Creative works in film focused on the subjects of sexuality, love and relationships (Sessions, A Dangerous Method, and Hysteria), television (Girls) and theatre (Venus In Fur, Sex With Strangers).

Love her books, or hate them, E L James’ success has made romance fiction a force to be acknowledged – and reckoned with.

And in the year to come that fact will add another layer of complexity to the already wild and crazy world we writers inhabit.

Here's to all you achieved in 2012 - and to New Goals & Challenges in 2013!

Happy Solstice!
Happy New Year!

2010 Roundup

The year is winding down, it’s time for that annual activity known as “looking back at the year that was while we’re all waiting for the old mirror ball to drop in Times Square” so let’s see what we remember about the year in publishing:

Amazon. Nook. iPad. Kindle. Kindle. Kindle. iPad. Google. Barnes & Noble. Dorchester. Digital. digital, digital. Then there was Riggio vs. Burkle. RWA vs. Harlequin. BEA vs. Tools of Change. Wiley vs. Random House. Rowling vs. Meyer. Salinger vs. Colter. E-book pirates against everyone.

Need a bit more to refresh your memory?

I think it is safe to say the word of the year was “Digital”.

Contrary to the predictions of all and sundry, digital did not begin a slow, steady march toward the expected “10% of sales by 2012”. It put on its boogie shoes and made a mad dash for double digits, leaving folks in a state of shock and awe as month, after month, the e-book sales went through the roof. (as reported by PW, digital showed a 171.3% year-to-date increase in digital sales).

One reason? It was the year of the e-reader wars. Sony was already lagging far behind when the Kindle began really heating things up. Then came the newer Kindle. Then came the Nook. And the iPad. And Kobo. Now the playing field is rife with e-reader gadgets and dozens of apps and while Kindle still reigns supreme, the iPad is nipping at its heels. B&N’s bookstore and sales of its original Nook and now the hot and well-received Nook Color, have been managed beautifully and their strategy is paying off (unlike Borders whose dismal third quarter is raising new speculation that they risk “liquidity issues” [PW, 12/13/10], B&N’s 2010 third quarter sales were up 64.3% over last year, based in great part on sales of the Nooks, the success of their new B&N on-line store and digital book sales). Much-anticipated books like Dan Brown’s The Lost Symbol and Ken Follett’s monster Fall of Giants were reported to have sold more in digital copies than hard copies. Other bestsellers did similar business, lending weight to the publishing fears that digital was going to cannibalize print.

From our particular perspective, the recent NY Times article supported what we already knew – that romance has always, and continues, to drive digital sales. Something Ellora’s Cave, Samhain and others could have told NYT! The powerhouse Harlequin has the Carina e-book imprint and the print houses are all on board with simultaneous (or nearly) release of digital formats for all their romance titles, making it not too farfetched to expect similar supremacy, and an even more massive rise in sales for next year.

Several publishing heavyweights have predicted that by 2012 digital will represent 25% of all book sales. No wonder everyone in the industry is scrambling to adjust those business models!

Beyond the issue of sales, comes the other big one-two punch for authors when we’re talking e-books: Changes in contracts regarding the digital format release of books and how it compares to print release, particularly as it pertains to the definition of “out of print”. Agents and publishers are already haggling over how to tweak this definition. It will be a vital issue for authors who are looking to regain rights over titles so that they can utilize the digital format for re-issuing backlist titles. Definitions too favorable to the publishers may mean an author can expect to NEVER see rights to those titles revert. The second sticky wicket as far as authors are concerned is even more contentious: Royalties on e-books. Right now, they are all over the place but generally not favorable to authors. We get 40% from some digital publishers. 25% from print publishers (against an average of 4 or 5% for print format). Arguments that lower production costs to publishers mean they should be paying a higher royalty to authors have so far fallen on (apparently) deaf ears. And the pricing tug of war between sellers like Amazon and publishers, and among publishers themselves over pricing of digital versus print, adds another wrinkle to the problem. As advances shrink, print runs get smaller, shelf-space for midlist titles continues to decrease, and marketing funds are chopped, for authors not in the top tier, might this make digital a more appealing option, if only for the higher royalties available? Except for the bestselling authors who get the full-page print ads and TV interviews, the rest of the pack of authors are out scrambling for ways to market and sell themselves anyway, so the smaller print advances, against higher digital royalties, may well make it a more appealing option.

Beyond the digital news, sadly, the world of books lost some major authors, and, by extension, some much loved characters. Robert Parker died at his desk, leaving one last Spenser novel to enjoy. J. D. Salinger slipped away, but we’ll always have Holden to remember him by. Belva Plain, whose epic romantic novels swept us away died at 95. Genre authors Dick Francis, Philip Carlo and popular romance author Elizabeth Thornton passed away, as did Eric Segal, author of that iconic three-hanky book of 1970, Love Story.

In our little corner of the world, we saw RWA quietly back away from their hard-line stance against Harlequin. Further, they have made baby steps toward studying the issue of digital and how it affects – and stands to benefit – the 10,000+ RWA members. We found some new confidence in the Dorchester situation as the independent publisher changed commanders at the helm. As authors of genre-blended romance and romantic fiction that doesn’t quite fit in the “box”, we saw our stories being accepted in greater and greater numbers by the e-pubs who are willing to give us – and our readers – a chance to embrace more diversity. Erotic romance and its steamy brethren continued to surge ahead, and Amish and Mennonite romance became a “thing”, but the real story was the continued rise of YA paranormal. We saw Publisher’s Weekly begin a romance review section (what were they waiting for?) and there was increased coverage of our genre by the news media, as well as a starring role for romance novels in the film RED.

What will 2011 bring? Obviously – more discussion and debate. More jockeying for supremacy on line and in the hearts of readers. Perhaps a Google settlement, once and for all. There’s bound to be new readership figures, contract quagmires, store closings, higher digital sales, new apps (by the dozen), better and cheaper e-readers. New strategies by the old-timers, and more innovation by the new kids on the block. There’s sure to be a “surprise” bestselling hit that makes a new star out of someone (perhaps even a digital-only novel!), and no doubt we will see the slew of books optioned for films resulting in yet another blockbuster motion picture.

What is the one thing that we can all be sure of?

People will keep reading.

So keep writing.

Here’s to success in 2011.

And now back to our regularly scheduled program...

With apologies for having been in absentia for the last few days (due to unfortunate familial illnesses over the Thanksgiving holiday), here I am, back in the saddle again, with oodles of news and thoughts on the publishing front.

First up, the Amazon Kindle bestseller list shows that Stephenie Meyer rules - all 4 Twilight titles in the top 10. And despite lukewarm reviews, the film version of Twilight RULES at the box office, racking up a cumulative gross since it's opening day of $119.7 million. According to Daily Variety (11/24/08), "Twilight is a ready-made film franchise, and the opening reps a resounding victory for the relatively new Summit, which didn't even wait for weekend's end before announcing plans for a sequel, 'New Moon' ".

Borders announced their nominees for their 13th Annual Original Voices series in four categories. The fiction nominees are Dear American Airlines by Jonathan Miles; The Cellist of Sarajevo by Steevn Galloway, The Good Thief by Hannah Tinti; The Lace Reader by Brunonia Barry; The Somnambulist by Jonathan Barnes and The White Tigeter by Aravind Adiga.

But Borders' bad news eclipsed the Voices when they reported on their earnings (fiscal third quarter fell 12.8 at superstores, with Waldenbooks falling less, only 7.7%) (Publisher's Lunch, 11/26/08).

Borders also reported "management is no longer contemplating a transaction to sell the entire company".

In addition to Twilight, upcoming films based on novels abound (due in part to the difficulty coming up with original scripts during the recent WGA strike), including The Reader, starring Kate Winslet, based on Bernard Schlink's novel, Defiance, based on the book, Defiance: The Bieleski Partisans, a non-fic title that will star Liev Schrieber and James Bond himself, Daniel Craig, in a less frivolous role; Flirting With Forty by Jane Porter, starring Heather Locklear in the title role; and Daily Variety (12/3/08) reports that Johnny Depp's acquired the film rights to In The Hand of Dante by Nick Tosches.

On the smaller screen, True Blood held it's own and a second season has been ordered. Golden Globe buzz indicates the show is also in the running for nominations, no surprise given the much lauded Alan Ball (he's won the following awards - Oscar, Emmy, Golden Globe, WGA, DGA, Producers' Guild, BAFTA) is at the helm of the Gothic crowd-pleaser based on Charlaine Harris' titles - which now have reappeared like mushrooms after a rain on all the bestseller lists.

And this brings up the point of the importance of film, television and dramatic rights in your works. In a publishing contract an author should retain these rights or, at the very least, retain no less than 50% of them. If a contract says all these rights go to the publisher or a heavy percentage? Have your agent, or, better yet, an entertainment attorney specializing in publishing, negotiate this so very important provision. This is one of the areas where beaucoup bucks are involved as well as all the stuff down the line - sequels, novelizations of the film, and merchandising.

Recent deals in the romance world have been made by Barbara Poelle at the Irene Goodman Agency, and Kim Whalen at Trident Media Group - get a bit of background on these agents' houses via the links at right.

The November 30 NYT had a thought-provoking editorial by non-fiction author James Gleick (science essayist and author of CHAOS and GENIUS:THE LIFE AND SCIENCE OF RICHARD FEYNMAN) discussed the positive ramifications of the Authors Guild/Google digital settlement. He pointed out that books out of print will be made available to readers, and that e-publishing will continue to grow and expand what readers can tap into, but that the printed book will never go away, because "As a technology, the book is like a hammer. That is to say, it is perfect; a tool ideally suited to its task. Hammers can be tweaked and varied but will never go obsolete...". Good news for us paper book lovers.

On the marketing front, Penny Sansieveri, The Book Marketing Expert discusses ways to get your name out there and attract attention to your blog - including writing articles. There's a million subjects for articles in this naked city. Try your hand at some and get them published, along with links to your blog and website. Try such sites as articlecity.com, goarticles.com, submityourarticles.com and ezinearticles.com.

And you ARE keeping track of traffic on your blog, right?

If you haven't checked out Penny's site, scroll down for the link and give it a look. Marketing may or may not blow your skirt up, but it's a fact of an author's life that you're going to have to participate in some way, shape or form in today's ever poorer publishing world.

More to come in upcoming posts: a great issue of Writers Digest, the e-publishing future (as seen by yours truly) and the value of putting on your business hat for marketing, promotion, PR and branding purposes.

Monday, November 10 - Technology Advances Lead News

NY Times Business Section: Google's officially in the E-publishing game now. The deal reached (Authors Guild v. Google settlement) concerns Google's publishing of electronic versions of out-of-print books, but books that are still under copyright protection. The settlement is subject to the court approval process, which is pending, but it is a harbinger of the varied future of publishing. A particularly salient point is that "Google would share online sales revenue with publishers and authors."

The article examines numerous other new ideas that are being explored by publishers (including e-books on iPhones, for example). In support of the concept that the industry is expanding, technologically, from the tried-and-true print & ship to stores version, the article quotes Eileen Gittins, chief executive of Blurb, a company that aids self-publishers using the internet: "The book business model is under siege, just as the music industry earlier came under siege."

Kindle/Sony Readers/ cell-phone and iPhone "publishing" are just the tip of the technological iceberg and Genevieve Shore, digital director for Penguin in London said in the Times' article "We will have some interesting new business models on the market in 2009."

In fact, the Times reports that while books sales in the US fell 1.5 percent in the first 9 months of this year, e-book wholesale sales are up 55 percent from a year earlier. Look for this to add impetus to the industry's pursuit of electronic delivery methods.

Electronic books have been available for a while, including Project Gutenberg, which makes more than 25,000 books available for download. Their focus, however, is on books whose copyrights have expired, unlike Google, who will be providing titles that still enjoy copyright protection.

This is just one salvo in the war on the traditional paper book. Given the plethora of electronic delivery options, increasingly "green-minded" consumers, and continuing glum fiscal news, look for everyone in the business to invent, explore, expand and promote alternative publishing and distribution of books. Particularly as the legal ramifications are more completely identified, the various parties weigh in, and precedent for these issues are straightened out.

The October 27 edition of PW (which arrived in my mailbox on 11/7), the Deals column highlights new deals for fiction authors Beth Hoffman ("Saving Ceecee Honeycutt - woman's fiction) and William Ryan (The Holy Thief and 2 addtl. titles, historical crime), both by agents at InkWell. Sounds like a "happening" place for authors to be! Check out their website for more details on this agency (see link to the right).

Lots of romance titles got reviewed in the issue, including a great one for Janye Ann Krentz' new HC title, "Running Hot" (Putnam) "The plot is fast, steamy and wildy entertaining..." Also - Meg Cabot's "Ransom My Heart" is an historical romance "...thoroughly enjoyable and funny."

Other general reviews included "Midnight Sins by Cynthia Eden (Kensington/Brava), "Night Shadow" by Cherry Adair (Ballantine). Mass Market reviews of "Untamed", (starred review) Pamela Clare (Leisure) - about this historical they say: "Clare's detailed attention to the history of alliances forged and battles fought near Fort Ticonderoga adds authenticity, and the characters evolve and change with a realism that readers will love"; "Dying for You" Beverly Barton (HQN) "fast pace and hot-tempered romance"; "Wicked is the Night", Catherine Mulvaney (Pocket Star) - "a diverting if pedictable tale"; and "What a Pirate Desires", Michaelle Beattie's debut title (Berkley Sensation) - "This very traditional but fun romance features a feisty heroine, a tortured hero and a sassy parttot, along with strong doses of betrayal, action and plenty of cunning". The number of reviews give romance a nice plug - not always the case in PW which sometimes reviews a mere one or two romance titles.

And the 11/9 Publishers Lunch Deluxe provides details on 12 new deals for romance novels/authors, more than any other genre covered; 11/10 (hooray!).

Lastly, you might wish to consider looking into membership in the Authors Guild. Their membership fee is $90, but they include contract review among their member benefits. Given the diversity of contracts - e-contracts particularly deviate from the old standard publishing contracts - and the recent propensity of publishers to include new provisions, and to change what had been some traditional provisions - for those of us without agents, it is a good source of legal advice that can help you avoid pain, heartache and wasted efforts later. Their link is on the right!

The Secrets of the Book Biz

Welcome, one and all to my first post on my new blog, The Publishing Game. No, I'm not a publishing "insider". I'm not going to have tricks, or dirt, nor can I provide the inside track. So, you ask, what good are you? Aha! What I intend is to provide a clearing house for the information that I gather in my "travels". As a business-minded author of romance and women's fiction, I nose about around this mysterious world. I pick up news and info and rather than keep it all to myself, I'll spread the wealth.

What makes an editor buy a book? Or turn up her nose? Why do some books turn into mega-bestsellers, surprising everyone, author and publisher alike? How do books get to market? What publishers are leading the way with new trends, and which ones are lagging behind? How goes the e-publishing business when compared with traditional? Who's in, who's out, what changes are being implemented that will affect how we authors do business?

And what's up with the agenting world? Who's making the deals, who's hanging out a new shingle and looking for talent?

For those of us breaking out, first-timers or mid-listers, how do our fellow authors score those reading gigs? Where do they come up with the cool and effective marketing tools? How's that internet-thingy work, anyway? Blogs, websites, Amazon, Twitter, Facebook, book trailers - what's a technophobe to do in this electronic age of sales and promo?

What's coming down the pike for the book lover? Audio books, e-books, books on your cell phone, new formats, new prices, new imprints. I hope to make this the place to find it all out.

Then there is the fun side of the game - the conferences, contests, winners, losers, movie deals and publicity events.

From the New York Times Book Review, to Publisher's Weekly. Writer's Digest, Poets & Writers, The Writer, Romantic Times, Book and the rest of the people that write about the people who write.

My goal is to gather, like a literary squirrel, all those golden nuggets of publishing goodness, secreting away the interesting bits and tids and provide them to you, along with ideas, advice, gossip, direction and motivation.

Every once in a while, us creative types have to hang up our authors' chapeaux and plunk on our businessman's hats. It's not always fun, but you've got to play nice with the other publishing types, and knowing who they are, what they want, where they work, and how to get to them, can only help smooth the path on your road to literary greatness. So, pull up a chair, hang your hat, and make yourselves at home!