Words as numbers, and making words count.

I want to reiterate some of the issues that started this blog, and started my return to writing, because not everyone is going to read all the old stuff and because the old stuff is relevant to the new.

The three items that prompted it all were:
1.  The report of the Dorchester boycott listed at AAR.
2.  The article about Connie Brockway's adventures into self-publishing, also on AAR.
3.  The obituary of Walter Zacharius that a friend showed me from the New York Times.

It actually began maybe a year before, when the same friend who told me about Walter's death had told me about Kate Duffy's.  That kind of prompted me to slide back toward a writing hobby -- not yet a career, if it ever really was one -- that I had been seriously, seriously away from for at least five years.  But it wasn't until last spring that the ideas started to coalesce again and I began surfing the review sites and so on to see what was going on in the industry.

On reading the Brockway tale, I discovered that self-publishing, which had for so long been considered anathema for "professional" authors, now offered a legitimate means for authors to by-pass the parasitic publishers who often did more harm than good, to the individual authors, to the readers, and to the various genres as classes.  And so I began to pursue my own self-publishing ventures.

When the issue with Dorchester arose last week, I spent considerable time locating the warning letter I had written to RWA in 1993, unaware during my search that that letter also contained the cost analysis of a mass market paperback.  The two are, of course, inextricably linked.  I'm not sure that this issue was ever examined after that 1993 analysis was printed in PANdora's Box.  I do know that I followed up briefly.

In a letter I wrote to PANdora's Box sometime after the publication of the original analysis -- my file is not dated and I do not yet know for sure if it was ever sent -- I brought out additional financial facts about royalties:

If indeed the publisher makes a profit of even a modest 10% on the sale of each and every paperback romance novel sold, and the authors of those same novels are paid the slave-wage royalty of only six, perhaps a paltry four, and all too frequently an insulting mere two per cent royalty, what I failed to see was that I was still comparing apples to Nerf basketballs. For the publishers' profit of 10% is a net profit, whereas the royalty to the author is a gross (!) income.

From that income one must further deduct all the costs and expenses already deducted from the publishers' receipts. Their ten percent is what they have left after paying taxes and insurance, printers and shippers, advertisers and distributors. Authors, out of their pittances, still must come up with agents' commissions, taxes (including the full social security contribution), postage and copying, bookmarks and RT ads, conference fees and mileage to those book signings at which we sign two or three copies.

We also have no control over our "wages." If the publisher wishes to give away 1500 free copies of our book at a conference, they chalk it up to promotional expense and we get -- nothing. Fifteen hundred fans have now saved the cost of the book, money which they will probably spend on someone else's novel. They will also share that book (just as they share their others, including the ones from the used book stores) with two or three friends. Or, if they don't happen to like the type of book we've written, it goes immediately to the used book store. Unlike the baker who supplies bread for the grocery store, we can't tell the publisher, "Hey, wait, guys! I worked my ass off for that book! What gives you the right to give it away for free?"

Why does this all this matter?  Because we as writers matter.  We are human beings.  For many of us, writing is our livelihood.  For others writing is an obsession, and I don't mean that in a bad way.  But it also matters because readers matter.  Because publishers have traditionally been the means for getting written material from the author's pen or typewriter or computer into the hands of the reader. 

We who are living in the 21st century take our technology pretty much for granted, especially printing because the printing press has been around for over 500 years.  But it hasn't been all that long ago that a musician had to perform live for anyone to hear him.  We cannot watch Edmund Kean's theatrical performances, we cannot hear Paganini on the violin, but we can read the words written about them.

The recording of a theatrical or musical performance requires the coordinated effort of a lot of people: It begins with the script writer or playwright or composer, progresses to cast/performers, crew, set designers, camera operators, and finally the distribution medium, whether that is Lionsgate Films or YouTube.  Computer technology has progressed over the past few years that allows some diminution of the process, but it hasn't completely eliminated the need for a coordinated effort involving a lot of people.

Writing, on the other hand, has always been primarily a solitary endeavor and it's only the distribution process that has required the input of others.  The writer writes, and was more or less done with the project until it landed in the hands of the publisher, when all production activity took over.  The publisher did all the work, granted the writer a small cut of the revenue, and walked away with the majority of the profits.

What digital self-publishing has done, however, is to make the publisher redundant.  Publishers, obviously, don't like this, and some writers are reluctant to take on the additional responsibility that self-publishing puts on them.  But let's look at the numbers, so that we, as writers, can at least make an informed decision.

Looking at the figures I posted originally -- based on a 1993 cover price of $4.99 (rounded to $5 for ease of calculation) -- on a sale of 25,000 copies, the author earns $7,500 in royalties.

If the author digitally publishes that novel on Amazon Kindle at $2.99 -- that's a major discount from a 20-year-old price, let alone from a 2012 price of $7.99 or $9.99 or $12.99! -- at a 70% royalty rate she earns approximately $50,000.  I say approximately because there is a download cost associated with Amazon's Kindle Direct Publishing program that's based on the size of the download file.  However, the comparison kind of makes you sick to your stomach, doesn't it?  Imagine paying for a little bit of online promotion out of that $50,000 compared to buying a print ad in Romantic Times  or having bookmarks make up to distribute at conferences?  How does $50,000 in royalties compare to $7,500?

Look at another financial scenario.  Even selling on Amazon for $.99 -- a 99-cent bargain for the reader -- and only 35% royalty, that 35-cent royalty per copy is still -- STILL -- higher than a 4% royalty on a $4.99 book, and lots higher than a 2% cut on foreign sales.

Financially, digital self-publishing is a no-brainer.  Added just to the raw numbers are the considerations that digital self-publishing can be done in a matter of days and payment usually arrives in 90 days or less after sales.  Traditional print publishing requires at least six months and often as much as 18 to 24 months before a print edition is released, and royalties are paid long after that.  While the "advance against royalties" may be paid sooner than that, it is increasingly industry standard that advances are paid in more chunks and not until the completed manuscript is delivered and approved.

There are, of course, non-financial considerations.  With a traditional publisher, along with that up-front advance, the author gets cover art (which she may or may not like), proofreading and editing services (which may or may not make the book any better), and status (like membership in a "professional" writers' organization).  Oh, yes, and the delight of actually autographing print copies.

But what if the publisher, whose primary concern is the bottom line, their profit and not yours, indulges in activities that hurt your bottom line?  Looking at those 1993 Leisure/BMI editions again, they carried a UPC bar code for a cover price of $4.99 -- or even $5.99, as on the copy I found buried in my stash last night -- but I don't know what they actually sold for.  Did they reach a discount place in Kansas, as Jaye Manus reported, to be sold for 99 cents?  How did the "cover price" affect what, if any, royalties were paid to the authors?  At least I know the "cover price" on my 27,780 copies of Touchstone was actually $1.00.

As I went through some of those old issues of PANdora's Box and read comments of published romance writers who lamented over and over the eagerness of new writers to accept any terms just so they could be published and who further lamented the acquiescence of RWA on the really shitty terms and shabby treatment offered to new writers, I was quite literally moved to tears.  It's been almost 20 years since we tried to get that stopped.  By "we" I mean those of us who advocated for a stronger, more professional RWA: Margaret Brownley, Jaye Manus, Susan Wiggs, Betty Duran, among so many others whose complaints were voiced only by "Name Withheld."

I refuse to withhold my name any longer.

Wait a minute! Who wrote those words?

Given all the discussions relating to the business and financial aspects of writing, it's not surprising that writers are urged to adopt a more business-like attitude toward publishing.  What this usually means, of course, is they need to learn the legalese that comprises their contracts so they can avoid literary slavery.  That's all well and good, but understanding the fine print gobbledygook and being able to do anything about it are two different things.

For instance, if your standard contract with a standard publisher says your royalty rate is 2% of the publisher's net on special bulk sales, understanding it isn't all that difficult.  But how much you wanta bet that when you tell the acquiring editor you don't like those terms and you don't want any of those special sales made of your book, the acquiring editor is gonna tell you, "Honey, sign it, 'cause if you don't, I got twenty more who will."

As I've documented previously, publishers routinely tell the authors that whatever format pays the low royalty rate, whether it's mail-order subscription sales or digital backlist, the reason is the higher cost and lower profit.  I've already shown that as recently as 2004, Pocket Books was able to print, bind, and ship 27,780 copies of Touchstone for ~47 cents each.  I mean, that's not difficult to figure out, because they put it right on the royalty statement.

The problem is that authors aren't cost accountants, and it's easy for the publishers to pull out the numbers and convince the authors that money is lost on bulk sales that cost more but sell for less and therefore authors don't get as big a cut.

Imagine my shock this evening then, reading through more of those old PANdora's Box newsletters, to come across an article from September 1993 titled "Question: Do book clubs screw authors?" written by/attributed to A Romantic Bean Counter.  A quick skim of the page told me it was a cost analysis of a hypothetical mass market paperback print run, and I thought, "See, someone in RWA knew about this way back when. . . ." and then of course I realized I was that Romantic Bean Counter. 

I actually do have a degree in accounting and cost accounting was my specialty.

The figures I used for the Box article were nothing new or surprising, and in a day or two I'll transcribe the whole article for everyone's benefit.  Even though today's trend into digital publishing can make these numbers for ink and paper somewhat irrelevant, I believe skewing the numbers in favor of the publishers is par for the course.

Ah, but there was one other little gem tucked into this article which has helped me on part of my other quest.

The cost analysis is based on a print run of 50,000 copies and a 50% sell-thru that leaves the publisher with 25,000 unsold copies in a warehouse somewhere.  All of the publisher's costs were completely recouped from the sale of 25,000 copies with a profit of ~$10,000.  However. . . .

The publisher can sell those leftover 25,000 copies at $1 each to some discount broker -- like Book Margins, Inc, if BMI were legitimate -- and make another $25,000 profit.  [emphasis in the original]

This was published in PANdora's Box in September 1993.  I'm sure I wrote it at least a month earlier.  BMI -- the phantom distributor for Dorchester/Leisure -- was known about in RWA circles at least as early as summer 1993, which would have been the St. Louis conference Jaye Manus referenced here.

The words were said but no one heard them

As this whole thing with Dorchester continues to unfold/unravel, the issue with what RWA could or couldn't have done to better protect the writers has come up.  DISCLAIMER:  I'm no longer a member of RWA and was never on the board of RWA so I can't speak for RWA on this or any other issue.

What I can do, however, is document what I personally did when confronted with some of what I call shenanigans by publishers.

I'm not sure exactly when I discovered the reissued copies of the Leisure imprints.  My records of my RWA correspondence are filed away and not as easily accessible as the books themselves and it's going to take me a few days to locate everything and sift through it.  I thought I may have see the first BMI books as early as 1991 but in fact it may have been as much as a couple years later than that.

To give some background:  There had been a lot of grumbling in RWA for a number of years about the low royalties paid on subscription or "book club" sales, particularly with Harlequin/Silhouette but also with Dorchester/Leisure and Kensington/Zebra.  Readers signed up for these subscriptions usually through cards bound into the books; after receiving a bundle of "free" books, the reader then received a set number of releases each month at a discount.  For Harlequin/Silhouette, the reader subscribed by line (Silhouette Desire, Harlequin Intrigue, etc.).  I'm not sure how the Zebra and Leisure subscriptions worked, but the premise was basically the same. 

While the basic royalty rate on the author's contract might be 8% or 6% or 4% of the retail cover price, the royalty rate on book club sales could drop significantly.  In some cases, the rate dropped to 1% or less, and of course this was all in the contract language for anyone who really cared to find it and wasn't blinded by the glamour of Being Published. 

Even though the subscription sales were recognized as a "cash cow" in the publishing industry, representatives from the publishers routinely showed up at RWA events to "explain" why they couldn't pay higher royalties on subscription sales.  Usually the explanation included something about the high cost of advertising for the clubs which included the initial free books and the high rate of non-payment on the part of the subscribers.  No matter how often RWA members asked, "Then if you're losing so much money on the subscription deals, why do you keep doing it?" there was never an answer that made any sense.  They wouldn't come right and tell us "We're making money hand over fist on these things but we don't want to give any of it to you," even though many of us suspected that was the case.

When I first noticed the repackaged Leisure titles, I wasn't sure what to make of them.

On the left is the original Dorchester/Leisure edition with the title embossed and foiled, the old cursive L logo.  On the right is the BMI edition, with no embossing, no foil.

On the left is the Leisure back cover, with the complete ISBN bar code and a retail price of $3.95; on the right is the BMI edition, with no ISBN and just a UPC bar code with a $4.99 retail price.

The Leisure edition shows a copyright date of 1981 but lists Dorchester Publishing as the copyright holder, not Harriette de Jarnette.

The BMI edition is clearly identified as such, with the same 1981 copyright date and no indication when it was actually printed.  I can only determine by comparing cover prices that this BMI edition is from the early 1990s.

These are the front and back of another example from my personal collection which appears to be some kind of reprint, at least to judge by the UPC bar code without ISBN.  The copyright page shows a date of 1987 and Gloria Pedersen is listed as holding the copyright.

I was able to find this image on the web of what appears to be an embossed, foiled cover with the Leisure cursive L logo.

And this one from Paperback Swap is clearly a BMI reprint.

I took the information I had -- which was the two editions of Golden Threshold and the Pedersen reprint -- and gave it to RWA, probably via Margaret Brownley who was the PAN Liaison in the early 1990s.  I'm not sure of the exact date on these reprints, but the copyrights are not indicative.  What Margaret and various minions at RWA were able to determine was that BMI most likely contracted with Leisure for a special sale at a deep discount, then offloaded the copies to discount retailers like today's dollar stores.  Somewhere in my files I have a copy of a note from Margaret to that effect, but I haven't been able to find it yet, and there remains a possibility that I may not find it.  Remember, I gave up writing in the late 90s and I may actually have discarded something!  (I know, it's hard to believe, but I do occasionally throw things out.)

What Margaret's research also revealed, however, was that Leisure/Dorchester was probably operating well within the terms of their contract with the authors.  Golden Threshold may have been purchased outright; Dorchester was going through severe financial difficulties in the early 1980s, which is when that book was published, so it may have been a work for hire or they may have just bought it outright.  The important point was, however, that Dorchester/Leisure had done nothing obviously wrong, absent contract terms to the contrary.   As with other standard contracts with the same terms, the publisher did not have to notify the author of the deal, certainly did not have to get their permission, and the royalty rates were set by the contract.

Like the book club sales that Harlequin was paying obscenely low royalty rates on, these "special sales" transacted by Leisure generated very very low returns for the authors.  Depending on the contract terms, it was possible that the author earned nothing at all; the royalty might be based on the publisher's net of cost, and if all they got back was the cost of printing, there was no net profit and therefore no royalty.

About this same time -- early to mid 1990s -- Kensington/Zebra was packaging books for Sam's Club or whatever the big box discount stores were called then.  A cello-wrapped collection of four Zebra Heartfires was available at a huge discount, maybe 50% off the cover price.  Again, I had notes on this, because at least one of the titles I saw was by Janis Reams Hudson, who was either VP or President of RWA and I contacted her directly.  As far as I could tell at the time, these copies were not reprints but carried all the pertinent Zebra logos.  Also as far as I can tell, I don't have any copies in my personal collection that indicate anything different, such as a non-ISBN bar code.

And again, it all came down to contract terms -- these deep discount sales were quite legal and carried very low royalty rates.

All of this was openly discussed in RWA, through email and other online discussions, and at conferences.  As soon as I have time, I will go back through all my old PANdora's Box issues and see if there was something in those.  The point is, however, RWA knew all along this was going on and they said virtually nothing.

As I wrote in an earlier blog post the contract I signed with Pocket Books in 1994 contained the same kind of language, which is what enabled Pocket to reissue 27,780 copies of Touchstone  in 2004 with a cover price of $1.00, sell them for 50 cents each, and pay me a royalty of 2 1/4 cents per copy.  Never mind that my stated royalty rate was 8% of cover -- on a deep discount special sale, the rate was based on what the publisher got.  Understand, then, that in 2004, Pocket/Simon & Schuster was able to make a profit selling the books at 50 cents each.  Their cost was less than 50 cents a copy. 

And I don't think Simon & Schuster is in anything close to Dorchester's current financial straits.  Do I have any idea who bought those 27, 780 copies of Touchstone?  No, I don't,  I do know that I have one copy, which like the BMI editions of the Leisure titles has no ISBN and the UPC barcode shows a retail price of $1.00.

My day job is demanding my attention, but I will put up scans of the two different editions of Touchstone tomorrow.