The Fight Over Formats: All or Nothing

Random House and the Jackal are going at it and I can’t blame them. They are fighting over some very valuable territory. We’ve all read lots about trying to claim backlist ebook rights, about the conflict of interest in becoming an agent-publisher, about single-channel exclusives being a bad idea, blah, blah, blah. Yes, neither side is squeaky clean and maybe neither was acting like the sharpest knife in the drawer at different points in time, but this turf war has raised a bigger problem:

Does it make sense to separate ebook rights from print rights?

It doesn’t—at least not if you’re the one who only has print. Here’s why:

Michael Shatzkin wrote a very long and very intelligent blog post about the abovementioned skirmish on Sunday. In it, he nodded to Evan Schnittman for pointing out that “Ebooks don’t exist in a vacuum” and “can’t be evaluated with stand-alone economics” and then quoted John Schline of Penguin who says “you don’t do a P&L on a format; you do a P&L on a title.”

The ebook-in-a-vaccuum assumption, which is so popular these days, is dead wrong. As Andrew Franklin says, “e-books are not a separate market from physical books. … Some would say they are parasitical on them. The editorial work, design, marketing and selling are all done for physical books, and e-books sell on their back.” This is probably the best way to frame the House versus Jackal dustup (running out of adjectives for fight here…).

By only grabbing ebooks rights, an ebook publisher is profiting from someone else’s investment—and this is true for frontlist and backlist titles. (Just because something has earned out does not mean the current profit isn’t deserved. The profit on backlist titles that have earned out is a result of the initial investment. In other words, if a title is successful it is at least partially due to having been published at all.) Print publishers invest a lot in creating the book’s files from which print or electronic book versions are made. Print publishers also spend considerable resources marketing and publicizing the book. Let’s not forget that this investment is also a risk; it’s a show of faith in the book and the author.

Until ebook-only publishers start sharing those substantial publishing costs, you could, technically, call them parasitic. They benefit from the quality of the edit, proofread, design, etc., and then profit from the advertising, marketing campaigns, media coverage, and resulting popularity—all paid for by the print publisher.

What does this imply about authors who want to work with a print publisher and self-publish the ebook format themselves? It does seem hard to have it both ways and claim the moral high ground. If an author sees a benefit to having a publisher they should recognize the publisher’s contribution to the entire life of a title, not ignoring its impact on one format. (To be clear, I’m not claiming the author doesn’t invest a lot in the book as well, but the proper time to address this is during advance and royalty negotiations, and yes this includes generous backlist ebook royalties.)

So to refute all the wild accusations that publishing companies are being evil, I point out that publishers have very legitimate reasons for insisting on buying all the rights to a book. They also have a legitimate complaint if a new format of a title they have worked on gets taken away. Calling them greedy is unfair (depending on the ebook royalty they offer, of course). As ebooks become increasingly popular, it is just bad business for a publishing company to invest the same amount it used to spend on publishing all formats into a smaller piece of the pie. In other words, would you want to be the sole investor in a project you don’t completely own, especially when your investment will result in beefing up someone else’s profit margin? No, you wouldn’t. It’s all or nothing.

Michael Shatzkin’s piece on the debacle.

Evan Schnittman’s related post on ebook royalties.

Andrew Franklin’s editorial on the kerfuffle.