When discussing the rejection of the settlement agreement by Judge Chin, Scott Turow, the head of the Author’s Guild, had this to say:
“Regardless of the outcome of our discussions with publishers and Google, opening up far greater access to out-of-print books through new technologies that create new markets is an idea whose time has come,” said Mr.Turow. “Readers want access to these unavailable works, and authors need every market they can get. There has to be a way to make this happen. It’s a top priority for the Authors Guild.”
This is either deeply disingenuous or deeply ignorant. Mr. Turow, let me introduce you to Kindle Direct Publishing. And PubIt. And Smashwords. And iTunes Connect. These are places where authors can monetize their backlist. You’re right–the time has come for this one. In fact, it’s already here, which is why it is happening at an incredible pace.
So, how’d the Author’s Guild do on negotiating the royalty rate? Let’s see.
iTunes Connect: 70%.
And the Author’s Guild got us…. *drumroll*
70%! Not bad, Author’s Guild.
Except, wait. That’s 70% of net. There are costs that will be deducted–like the cost of the transaction and financial services fees, so this is at least something less than 70%. Still, it’s not terrible.
But the terms that are most damaging to authors are buried after the royalty rate. Those are the terms that allow Google to set any price it wants, so long as it pays you the royalty on the List Price you have set internally. Yes, you can set your price to any price point. But Google has the right to discount off the price that you set.
Why is that worrying? Because in order to get Amazon’s 70% revenue, you have to let Amazon match prices online. So if Google had rights to your backlist titles, and you put your books up on Amazon, and Google lowered your price (as it was allowed to do), Amazon could match that price lowering. And if Google lowered its price below $2.99, Amazon would match… and you’d get bumped from the 70% royalty to the 35% royalty.
How much does that hurt? Just ask Lee Goldberg, who through a technical glitch had his prices on Kobo slashed to 99 cents, and therefore his prices on Amazon cut to $0.99 from $2.99. He’ll lose thousands in a week.
So if you were a member of the class of the Google Books Settlement, and you think there’s a chance you might bring out those backlist titles on your own, breathe a deep sigh of relief. If the Settlement had gone through, it could have cost you 35% of your revenue through Amazon forever.
One of the reasons I opposed the Settlement was because it makes no sense to set terms over electronic distribution forever when the landscape is changing on a monthly basis. We didn’t know what Amazon’s new terms would be when the settlement was negotiated. We don’t even know what its terms will look like in 6 months. But in light of the massively changed digital environment, if the Authors’ Guild truly represents authors, they need to back away from any settlement that purports to give an author’s backlist to a third party for the life of the copyright.
So look at what Goldberg is losing because someone is cutting the prices to his books: he’s losing thousands in one week because of an error. Now multiply that by the backlist of every author covered by the Google Books Settlement, times the number of authors, times the number of weeks until the work goes out of copyright. Add in corrections for decreased sales over time, if you want, but I think you see the problem quite quickly: This is a massive loss, and had the settlement gone through it would have required authors to preemptively set their prices on the Google Books Site so prohibitively high, to prevent Amazon from price-matching a discount, as to render the Google Books site useless.