Are Publishers Fair to Authors?

Are Publishers Fair to Authors?

At Gear Diary, we often cover eBooks and the upheaval of the publishing system from the viewpoint of the consumer. But what about authors? The “traditional” path to becoming a published author usually heads through publishing companies, agents, editors, and other gatekeepers. But ebooks make self-publishing easier, and more critically, appear to make it simpler and more lucrative. And if Kristine Rusch’s report over at The Digital Reader is a typical experience, it sounds like traditional publishing isn’t giving authors much incentive to maintain the status quo!

Here were a few areas that made my jaw drop with shock. If any other industry treated their producers this way they would rightfully lose business; why shouldn’t publishers if this is how they act?

On eBook contracts:

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.

And here’s a bit of her story on royalties and accounting shenanigans:

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.


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.

The truly amazing part is that these excerpts are just pieces of the larger stories, and they all point to an industry where the people producing the item being sold are being treated as the least important part. This is insane, and I don’t blame authors for abandoning “traditional” publishing for the self-published route. I would ask where the Author’s Guild is in all this, but we already know the answer: complaining bitterly about Amazon while asking authors to take a pay cut. There is something seriously wrong with a system that rewards middlemen for existing while punishing creators.

So at Gear Diary, we would like to do what we can to help authors. If you are an author, either with a major publisher or self-published, and you’d like to tell us a bit about your writing, your books, and your experiences in publishing, email me at [email protected]. We would love to feature your story and help you market your books the old-fashioned way, through word of mouth. Think of it as a “virtual book tour”.

What’s your take on how authors, publishers, and contracts are handled? Do you consciously choose to support independent authors, or does the behind the scenes drama not impact your reading choices? Let us know in the comments!


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About the Author

Zek has been a gadget fiend for a long time, going back to their first PDA (a Palm M100). They quickly went from researching what PDA to buy to following tech news closely and keeping up with the latest and greatest stuff. They love writing about ebooks because they combine their two favorite activities; reading anything and everything, and talking about fun new tech toys. What could be better?

6 Comments on "Are Publishers Fair to Authors?"

  1. It reminds me very much of the tech industry in some ways, honestly.  When unemployment is high, tech companies are real jerks, a lot of them, squeezing you on initial salaries, stock options, perqs, raises, and everything else, as well as implying that you should work long hours and weekends.  And then when business is booming and there are more jobs, they whine and complain that employees “have no loyalty!” and “are holding us hostage!”  (To be clear:  my current employer is *not* behaving this way, bless ’em!)

    You reap what you sow, I guess.

  2. dbmurray | May 7, 2012 at 8:22 pm |

    I agree that a writer should not be penalized for previous failures, but it’s difficult to feel sorry for the authors who signed these agreements without bothering to read them.

    The same thing happens in the music industry. Groups sign a multi-album deal with a label, spend obscene amounts of money, then complain they never “made anything” on it.

    Meanwhile, the label, from the moment the group is signed, immediately begins to invent creative ways to show money was spent on the group’s account so they don’t have to pay the group “anything.”

  3. I agree IF the author didn’t read the contract.

    But in the case of the writer of that editorial, she was not subject to basket accounting but the publisher was paying her as if she was…it sounds more like they are preying on authors who aren’t very business savvy and taking advantage of it.
    Sent from my iPod

  4. dbmurray | May 7, 2012 at 9:46 pm |

    I was referring to this paragraph:
    “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.”

    Yes, it sounds like the agent was complicit in the deception, but they “just signed” it…

  5. Ah, yes. I agree. It is never a good idea to sign any addendum without carefully reading it. Especially if you’re an author and you know the drama in publishing right now.

  6. This kind of stuff is always disturbing to me.  But if everyone self publishes but doesn’t have a single clearinghouse (distribution/retail) like an Amazon, or an iTunes Store (digitally speaking) then it may hurt their chances of discovery as well.  Independent recording artists had the same problem until big services like these started carrying them.  It amazes me that many people don’t realize that the big digital players did NOT always carry independent artists, and in the record and CD era it was nearly impossible to sell anything unless you signed to a big lable!  Independent authors have long had low-volume distribution through the Internet, but being carried by the big players in the digital era is a relatively new concept.  Fragmented distribution just doesn’t work when you are the consumer looking for something to purchase. 

    We need to have that distribution/retail mechanism but without beating the crap out of the content producers, and still recognizing the costs and services offered by the distribution/retail sites.   Unfortunately, Apple was helping the publishers (in order to get them to agree to the service) while Amazon thinks strong-arming everyone so they are the only one left making a buck is the way to go.  Neither offered very appealing models!  At least now there starts, just starts, to be authoring tools and methods.  I strongly hope for their increasing success!

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