From the President's Desk

Publishers Colluded with Apple … What Does That Mean for Authors?

By Minda Zetlin | From the July 2013 Issue

As I write this, the news is filled with blow-by-blow accounts of the weeks-long trial of the Justice Department vs. Apple. The DOJ says that Apple conspired with some of the nation’s largest publishers to raise the prices of their e-books in the marketplace and fundamentally change the ebook market in the process.

It worked like this: Publishers had been selling ebooks the same way they sold paper books, at wholesale prices negotiated with retailers who then set their own prices when they sold the books to the reading public. Apple proposed an alternative: Let the publisher choose the price and pay Apple a 30 percent commission.

That sounded pretty good to Hachette, Simon & Schuster, Penguin, Macmillan, and HarperCollins, who’d become exasperated at Amazon’s habit of selling ebooks below cost. Apple’s deal required that no other retailer could undercut its price on the same item, so the publishers went back to Amazon and insisted it use the agency model for their books as well. Some of them had been pulling their books out of Amazon altogether, so Amazon agreed. Apple—which never admits wrongdoing—is fighting on gamely, but the facts of the case seem pretty clear. So much so that all five publishers have settled with the DOJ, paying as much as $75 million (in Penguin’s case) to avoid going to court.

What does all this mean for writers?

Whatever comes of the Apple prosecution, the story is pretty much over as far as writers are concerned, and it’s not a happy one. The DOJ settlement forced the publishers to go back to letting retailers set prices, which means Amazon can pretty much sell books as cheap as it likes. That’s good news if you like getting cheap Kindle books but bad news if you depend on ebook sales as part of your living. Meanwhile, Apple’s agency model applies not only to its own ebooks but to all content sold through apps on its devices. That’s driven some small independent bookstores in the app world out of business. It’s another example of the old African saying that when elephants fight, it’s the grass that suffers.

Most of all, it tells us something we always knew about the publishing industry. The DOJ’s “spider web” graphic of interconnections, phone calls, and emails among publishing executives leaves no doubt: Yes, they all talk to each other, and they’re colleagues more than competitors. It makes it easy for them to set the rules by which we writers work.

It used to be “standard” that book contracts figured royalties on gross revenue, the cover price of a book multiplied by the number of copies sold. Now the standard seems to be figuring royalties on net revenues, which is whatever the publisher actually receives for the books. How do we know what that is? We have to take their word for it.

The standard of 25 percent royalties for ebook sales seemed to materialize quickly. Around the same time standard book advances all dipped lower. Once upon a time it was standard for publishers to send authors on book tours. Now, most of us are on our own.

This isn’t confined to book publishers. Way back in the good old days, standard magazine contracts bought first North American serial rights. In spite of much struggle by ASJA and other writers’ groups, that is no longer the standard and some publishers argue that the standard is all rights or, worse, “work made for hire.” This last standard is absurd on the face of it, since it’s intended to cover actual employees with health benefits and vacation time.

At some point it became standard not to pay magazine or newspaper writers separately when their work was used on a website as well—even though publishers receive separate payment for the ads displayed there. As you may know, a disgruntled freelancer named Nate Thayer exposed The Atlantic website, which expected him to write an article for free. The move brought him instant fame and much support from outraged writers but it may have had the unintended consequence of setting up a new standard. “See?” the argument from other websites goes. “If The Atlantic doesn’t pay its online contributors, you can’t expect us to, either.”

Then there are the standard deals we haven’t been offered yet but will be soon, for instance, loaning our books through a subscription service such as Amazon Prime, as opposed to selling them outright. We haven’t seen these yet (anyone with a book in Amazon Prime who’s been offered something other than straight ebook royalties for it, can you let me know?) But they’re coming. And they won’t be designed to benefit us.

Publishers and editors may not have colluded to create these new standards, but they do talk amongst themselves, just as we do. They trade information in their own organizations, just as we do in ASJA. I don’t mean to suggest that there should be some standard we ourselves put in place—that would just get us in trouble with the DOJ. What I am suggesting is that we pay close attention any time anyone tells us that a particular contract, pay rate, or deal is standard.

What is that standard? Who put it in place, and for whose benefit? Was it the result of evenhanded negotiations with writers? Almost certainly not. We may have to accept low pay—writers often do. We may have to accept crummy contracts or crummy deals—writers do that too. But we shouldn’t accept that just because something is called “standard” it’s fair to us—it very likely isn’t. And we shouldn’t assume that standard is impossible to change.

Minda Zetlin

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Minda Zetlin is president of ASJA, a columnist for the Inc. magazine website and author of several books, including The Geek Gap: Why Business and Technology Professionals Don’t Understand Each Other and Why They Need Each Other to Survive (Prometheus Books, 2006), co-authored with her husband, Bill Pfleging. Connect with her on twitter at @MindaZetlin.

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