Sarah Baker with an E to Z on e-books

Electronic rights are the chaotic bazaar of book publishing. Here authors barter with agents, agents haggle with publishers, and publishers brawl with e-retailers. Everyone is vying for his or her claim on the best pomegranate.

This frenzy, and a barrage of media attention, has left most people involved feeling confused. Agent Laurie Liss, vice president of Sterling Lord Literistic, says, “I have never felt such a divide between publishers and agents as there is now about electronic rights.” And Mark Gompertz, executive vice president of digital publishing at Simon and Schuster, acknowledges an “anxiety on the publishing side, too. We’re on the threshold of something new.”

So what should a writer know in a labyrinth of twisting alleys and ad-hoc product stands? Here are some key terms and general guidelines to the unstable warren of the U.S. market.

E-book

According to PC Magazine Encyclopedia, an e-book is “the electronic counterpart of a printed book, which can be viewed on a desktop computer or a portable device such as a laptop, PDA or e-book reader.”

E-reader

The Free Dictionary states that an e-reader, or e-book reader, is “a small, portable device onto which the contents of a book in electronic format can be downloaded and read.” Although there are more then two-dozen different brands of e-reader available, the most popular are Amazon’s Kindle, Sony’s Reader, and Barnes and Noble’s Nook. Then there’s Apple’s iPad Tablet, which will be available April 3, 2010.

Enhanced e-books

These are e-books with bells and whistles. Think of a DVD—you get the movie plus the option to watch cuts or interviews with the director. An enhanced e-book could include audio, a video interview with the author, passages cut from the final text, slide-shows, or illustrations. You might even be able to click on a recipe, or a footnote, that takes you to a full citation. Enhanced e-books are interactive e-books.

How big is the e-book market?

Publisher’s Weekly recently reported that “e-book sales from the 13 publishers that report figures to the Association of American Publishers soared 176.6 percent in 2009, to $169.5 million.” The jump in sales increased the e-book’s share of trade sales from 1.2 percent in 2008 to 3.3 percent in 2009. And, five million e-readers sold worldwide in 2009 and an estimated twelve million will be sold in 2010, according to The Wall Street Journal.

Who is the market?

“Most e-book devices were bought by baby boomers (or older) and, mostly, women,” says Gompertz. At $259 a pop for a Kindle, or around $500 for the iPad, it’s understandable that they are selling to a more mature market. Peter Miller, director of publicity at Bloomsbury Books says that these readers are devouring “genre fiction.” In other words, the e-book market so far is most popular for “people who read for guilty pleasure.”

What should I be aware of in my contract?

Get an agent or have a publishing lawyer check over your contract. “You wouldn’t have your spouse pull your tooth for you,” says agent Wendy Strothman. That isn’t just a plug for her industry; contracts are confusing and if a professional looks at them, you’ll sleep better. Some things to look for in particular:

  1. If you have been previously published, now is the time to check your contract to see if you control e-rights, says Liss. In other words, be on top of it.
  2. For new contracts, “publishers will demand e-book rights. “No book publisher will allow e-book rights to be retained by the author,” adds Strothman.
  3. Double-check the reversion of rights clause and insert a minimum number of annual sales for a work to be deemed “in print,” suggests The Author’s Guild.
  4. Agents and publishers are in battle mode over enhanced e-books and there is no standard yet. A big question is whether they will be classified separately from regular e-books. Many publishers want these rights, but most agents are trying to retain them.
  5. Read the fine print regarding the format of book. If the publisher is considering publishing straight to e-book, you want to be aware of that.

Don’t rush into anything. The e-book market is uncertain and changing.

What royalties should I expect?

Most publishers (“about 90 percent” according to Liss) are offering rates of 25 percent of net receipts for e-books. The Author’s Guild thinks these are low and suggests ways to protect you if industry standards change: First, because the market is changing so quickly, don’t lock yourself into a rate. Try to obtain the unconditional right to renegotiate after a period of, say, two years. Second, negotiate for a royalty floor. Insist that your royalty amount for e-books will never fall below the royalty amount for the hardcover edition of your work.

Do books ever go straight to e-book?

You can self-publish straight to an e-book. The advantages are obvious: no rejection letters from editors, no distribution costs, no royalties to an agent. Plus, you’ll get marketing for you or your business. The disadvantages are that—unless you are a jack-of-all-trades—you must now pay someone to copyedit, proofread, design your cover, market, advertise, and publicize. And you don’t have the advice and expertise of editors and designers. There are many sites on-line that offer self-publishing services including Amazon.com and Lulu.com. Or you can set up PayPal on your own Web site. Publishers have started publishing a few books straight to e-book. According to Gompertz, this is still experimental. Simon & Schuster published a book straight to e-book because it was topical, but then published it as a regular book.

Are there any pitfalls to e-books?

Piracy. It happens. If you are self-publishing and want to make sure that nobody steals your content, copyright every page or install PDF security features. If you are working with a publisher, check with them about protecting your content.

The other pitfall? Things can go wrong, Orwellian wrong, like in 2009 when Amazon removed 1984 from people’s Kindles.

What’s the lowdown on the pricing of e-books?

There’s been a lot of press about e-books, but a little history might help. It all started with Amazon and its Kindle and an e-book price of $9.99.  Amazon and the publishers used a wholesale model, whereby publishers would sell the books to Amazon at about half the list price and then Amazon would set the Kindle price. So, if a book was priced at $24.95, Amazon would pay the publisher $12.50. But since the online giant was charging $9.99, it was actually losing money ($2.50) on the e-book. It didn’t matter to Amazon because it was making up for it in Kindle sales. In the process, however, consumers got used to paying that lower price.

This price started a dispute between Amazon and publishers because, as Mark Gompertz points out, “publishers are against devaluing content.” Two years of disagreement led to Amazon temporarily removing the “buy” button from Macmillan books in January, although they were still offered on the site by third parties. Eventually a resolution was reached; soon an e-book on Amazon will be priced at $12.99 to $14.99.

Then publishers came to a pricing agreement with Apple, known as an agency model, for the downloading of e-books on the iPad.  Apple will give publishers 70 percent of the consumer price, which the publishers set. But Apple wants a guarantee from the publishers that no other retailer will sell e-books for less then their iBookstore price. Consequently publishers and Amazon are back at the negotiating table. Now, according to The New York Times, Amazon is insisting that publishers sign a three-year contract guaranteeing that no other competitor will get lower prices or better terms.  Mark Gompertz says, “We felt like we were losing ground, but now we have possibility because of competition.”

Next up, Google. Publishers are currently in discussion with the Internet giant over its plans to enter the e-book world. Because of the Amazon and Apple discussions, Google is now open to talking about an agency model and to paying publishers 70 percent of each sale, according to Mokoto Rich of The New York Times.

For the moment, publishers and e-retailers have devised a formula that works. But if e-book sales outpace hardcover sales—or if bookstores can’t compete—the equation might not work. This would mean that publishers aren’t making the money they need to acquire, edit, design, support, and promote books. And, as Jonathan Galassi wrote in The New York Times, “An e-book distributor is not a publisher, but rather a purveyor of work that has already been created.”

So, check regularly. The offerings at this bazaar change daily–new vendors, new products, new prices, and new customers. I’ll do without enhanced pomegranates, though. I like them just the way they are.

{Formerly a book editor at Viking/Penguin and Simon & Schuster in New York City, Sarah Baker is now a freelance writer and an independent producer for Word of Mouth on New Hampshire Public Radio. She lives in Cambridge, Massachusetts.}

Sources:

Motoko Rich, The New York Times, “Amazon Threatens Publishers as Apple Looms

Douglas MacMillan, Business Week, “E-Readers Everywhere: The Inevitable Shakeout

Motoko Rich, The New York Times, “Math of Publishing Meets the E-Book

Jim Milliot, Publisher’s Weekly E-Book Sales Jump 176 % in Flat Trade Year

Louisa Ermelino, Publisher’s Weekly PW’s Panel on Going from Book to e-Book

Nicholson Baker, The New Yorker, “A New Page

Jonathan Galassi, The New York Times, “There’s More to Publishing than Meets the Screen

Geoffrey A. Fowler, The Wall Street Journal, “More Makers Jump into the E-Reader Market

Ina Fried, CNET News, “Amazon recalls (and embodies) Orwell’s ‘1984’

Steven Pearlstein, The Washington Post, “The Amazon-Macmillan book saga heralds publishing’s progress

Sarah Weinman, Daily Finance, “Enhanced e-books

Kevin Kelly, The New York Times Magazine, “Scan This Book!

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