Wednesday, August 01, 2012

Harlequin Fail Revisit

Two weeks ago I blogged about the class action suit writers have brought against Harlequin.

Harlequin should be afraid. They should be very afraid. 

Why should a big corporation with the money to hire a squad of lawyers be afraid?

As always, the devil is in the details. To get a better understanding of what the suit means, you need to look at the seven claims in the suit. It also helps to be a lawyer.

I am not a lawyer, nor do I claim understanding of legalese. But I spoke with someone who seems to have some idea what the claims mean, and can translate them into readily understandable English. Feel free to follow along by reading the complaint at http://www.harlequinlawsuit.com/The_Complaint.php.

Let's start with the pronouncement that the Swiss entity of Harlequin Enterprises (let's call them Harlequin Swiss) is the actual Publisher. In actuality, they're not. Harlequin Enterprises, Ltd. is. But the contracts list Harlequin Swiss as the Publisher. Now look at the claims, which start on Paragraph 52 of the Complaint.

Claim 1: Assignment. It means that rather than licensing the rights from the Swiss entity, Harlequin Enterprises was in actual fact assigned the rights. And I believe various earlier Paragraphs of the Complaint give factual information supporting this.

Assignment means transferring the rights held by one party to another. If you recall the problem here, Harlequin Swiss avoided paying authors 50% for licensing ebooks by licensing the rights to Harlequin Enterprises Limited for 6%, giving the authors 3%. But this claim states that Harlequin Swiss assigned the rights. Meaning Harlequin Swiss essentially let Harlequin Enterprises do everything involved in the publishing process. 

In other words, Harlequin Swiss gave Harlequin Enterprises full authority over the book rights. If the rights were assigned, then Harlequin Enterprises licensed those rights, for instance to Amazon, the authors should have been paid in those amounts. Harlequin Swiss "assigned" the rights to Harlequin Enterprises, making Harlequin Enterprises the Publisher. Whatever Harlequin Enterprises received, the authors should have gotten 50% of that, not 50% of the artificial license

Claim 2: Agent. Harlequin Swiss is the agent of Harlequin Enterprises. So Harlequin Enterprises is actually the one in control.

Claim 3: Harlequin Enterprises Limited (hereafter called "HEL") acted as the Publisher, assuming all of its obligations, and therefore must also assume the liabilities. Meaning this lawsuit.

Claim 4: Estoppel. From what I gather, this means that because HEL is acting as if it were the Publisher it can't continue to deny it is the Publisher. It can't represent itself as the Publisher on one hand, but when it becomes legally convenient, suddenly deny it's the actual Publisher on the other. So it gets “estopped” from denying the truth. It is the Publisher.

Claim 5: Alter Ego. Harlequin Swiss is under the control of HEL. Usually the courts keep separate corporate identities distinct or discrete. You can't blame the wrongs of one on the wrongs of the other, even if they're related entities. But when one is directing the other to commit a wrong, the courts may permit the two identities to be treated as one. That's the best I can explain it given these particular circumstances.  There are many factors in piercing the veil; there is no definitive set of rules. Basically, it's in the judge's hands to determine whether this meets the level of alter ego or not.

Those first five are all Breach of Contract issues that assert that HEL is the actual Publisher. It's sort of a giant step back from the narrower focus of the All Other Rights (AOR) clause itself.

Claim 6:  Narrows the focus to a specific clause, the AOR clause. It's the one I focused on in Harlequin Fail Part 2, namely that 6% isn't equivalent to the amount reasonably attainable by an unrelated third party. In fact, it is 50%, which is what authors should have gotten. 

Claim 7: Unjust Enrichment. If the AOR clause only covers the licensing of the right to sell ebooks (as HQ contends) and not the right to sell the individual ebooks, then HQ can only license the right to others, not sell the ebooks themselves. The Complaint actually says it clearer in Paragraph 88.

But guess what Harlequin is doing on its own website? That's right! It's selling ebooks!

So on top of everything, Harlequin may not even have the rights to sell ebooks under these contract terms. Can you say copyright violation?

Recap in layman's terms: Harlequin assigned rights to itself, which I'm pretty sure is a no-no legally, and it licensed those rights below fair market value, which is another no-no, and then it sold ebooks on its website without having the rights to them, yet another no-no.

Ouch.

So here are my questions for Donna Hayes, CEO of Harlequin, assuming she understands the claims as I have laid them out. (If you don't understand them, Donna, I plan on doing an update soon with crayon drawings and smaller words.)

Donna, do you still believe Harlequin authors have been recompensed fairly and properly?

Do you deny Harlequin Enterprises Limited acted as the Publisher? That Harlequin Swiss is an agent of HEL and under its control? That HEL was assigned the rights in question?

Did you know about this all along? If so, how were you able to sleep at night?

Have you brushed up your resume? If so, maybe you don't want to include the part about screwing hundreds of authors and boldly leading your company into a high-profile class action suit.

I don't expect answers, Donna. But maybe discovery will get those answers, and then the rest of us will know the truth.

And, as I said before, shame on you. And shame on Harlequin.

But guess what? You can make this right. You can pay what you owe, and by doing so lead the whole publishing industry into a future where authors are treated fairly. You can be a symbol of reform, and restructure so that those who have made your company rich and powerful--the writers you have exploited--are given their due and just rewards.

And then, after you do that and can finally sleep soundly knowing your wrongs have been righted, if there is any money left over you can hire a good accountant and file Chapter 11, just like the Big 6 are going to wind up doing.

Screwing authors isn't a smart way to conduct your business when the only reason you have a business in the first place is because of authors.

That's a lesson you're going to learn the hard way.

88 comments:

S.E. Gordon said...

Excellent post, Mr. Konrath! It's a shame it had to come to this. It shows you how much these organizations think about their content creators.

A.G. Claymore said...

I don't think they understand yet that the law applies to them as well. This is just breathtakingly greedy on the part of Hel (not referring to the town in Norway where I once threw a snowball). If they are in breach, now would be a great time for their authors to throw off the yoke and go into business as a collective of some sort. They should be able to pull all of their readers with them.

Could get very interesting...

K. A. Jordan said...

This is just pitiful. Harlequin has such a fan base.

They have what amounts to their own slice of the internet with writers working hard to get noticed and competing in contests...devoting endless hours of their time to write for Harlequin.

For WHAT? 6% of net?

My disappointment in Harlequin knows no bounds.

I'm SO GLAD I don't write for them.

Anonymous said...

Crayons and Cartoons? I want to see that version. Make sure and draw the HQ people as vampires and use the red crayon to draw blood on their fangs.

Been reading the blog while writing a romance series. It seems like an odd time to enter the publishing world.

But I do know that voracious romance readers like me will gobble up anything good, and we are good at finding it, whether it's self published or legacy published. HQ really should have been more careful about this. We'll be buying romance long after they are gutted (and getting better prices that enable us to buy even more books too).

Your arguments for self publishing are compelling, but the absolute moral bankruptcy implied by this lawsuit (and probably soon to be proven by it) makes legacy publishing an impossibility for me. *shakes head*

Thanks for always speaking up author rights. I hope these authors can get what is fair and their rights back. Then I can buy their books, and they get the cut they deserved all along.

Joe Konrath said...

For WHAT? 6% of net?

No. They only get 3% of net.

Anonymous said...

It's 50% of NET in the AOR clause.

But the LICENSE is for COVER. The license is 6% (series) or 8% (single title) of COVER. Authors receive 50% of that licensing fee or 3% of cover. If books sells for $5, authors receive 3% of cover or 15 CENTS for series, 4% of cover or 20 CENTS for single title. They should have received 50% of net.

50% of net is calculated: $5 cover, HQ is on a 50% wholesale license with Amazon, so HQ receives $2.50. Authors should receive 50% of THAT, which is $1.25. Instead, they get 15 CENTS/20 CENTS.

It's confusing because of the cover versus net mixture.

J. R. Tomlin said...

I do wonder how romance readers will take to knowing that their favorite authors are being screwed. Perhaps large numbers won't care, but I wouldn't bet on it.

Ann Voss Peterson said...

An excellent and very clear explanation, Joe. Thanks!

Gary Dobbs/Jack Martin said...

This is all so sordid, and Harlequin as a company are ruined, or should be, by this knowledge. Self publishing certainly empowers authors and should see the back of deals like this.

bettye griffin said...

So glad I didn't shed any tears when Harlequin dropped me back in '07. Instead I kept on going and got into indie publishing...and I don't feel like a chump!

mira said...
This comment has been removed by the author.
Mira said...

"Screwing authors isn't a smart way to conduct your business when the only reason you have a business in the first place is because of authors".

Hear, hear! This should be at the top of the letterhead of every CEO in Publishing!

Bravo, Joe!

Dustin Scott Wood said...

As a lawyer and someone with aspirations of writing, but also just as a human being, I hope Harelequin gets nailed to the wall on this. The damages will be massive and members of the affected class will get some decent sized checks from this.

Adrian Staccato said...

"But guess what? You can make this right. You can pay what you owe, and by doing so lead the whole publishing industry into a future where authors are treated fairly."

This really made me laugh!

It's a fairy tale, and it'll never happen. These white-collar criminals couldn't care less about authors.

D. D. Scott said...

I thank the powers that be every day that because of the horrid way I was treated by a Harlequin Editor-at-Large, I finally decided the TradiPub World could KMA and that I'd go the Indie Epub Route.

Now that I've sold over 100,000 Ebooks sold, I'm even more thankful...because I actually get a terrific percentage of the royalties I earn (up to 70%) and retain all my rights!

I owe that Editor a drink, and she'll probably need me to buy because she'll be out of a job soon.

Diana Douglas said...

How many wake-up calls will it take before publishers start to have a clue?

Mary Stella said...

At an author-based conference in 2010, which high level publishing executive said, "We'll pay 50% royalties when authors stop expecting advances"?

Perhaps the statement should have been, "We'll pay 50% royalties when you catch us, sue us, and win".

If Harlequin goes out of business, there will be authors orphaned. Some will say that's better than being ripped off by a shoddy contract, but it will take some time for them to find their bearings. I hope that nature truly will abhor a vacuum and that someone else who is willing to fairly pay authors steps in.

Gary Dobbs/Jack Martin said...

It's always been the same. This comes from a post I wrote on my own blog about Agatha Christie's first novel sale - "Agatha's initial contract meant that she didn't get any royalties until the book had shifted 2000 copies, and the author was also obliged to offer Bodley Head her next five novels. That didn't seem to matter as Agatha had no intention of writing another, and had only penned the first one after being challenged to do so by her sister, Madge"

Jill James said...

This is what happens from years and years of authors being told to never discuss what they are making with anyone.

Teresa Hill said...

Oh, I didn't even think of that. They supposedly licensed the books to Switzerland, and they either don't have the right to sell our books through the HQ website or they'd have to have some written agreement to license the books right back to HQ. Which would negate that first agreement, wouldn't it?

I can't wait to hear the explanation for that.

Tracy Sharp said...

I'm so not surprised by this, and knowing this, am SO glad I just got the rights back to the books I had through a publisher. I'm self-pubbing from now on.

The books were removed from all retailer sites and I'm free to edit the publisher info out and upload on my own now. WOOHOO!!

Susan said...

Mary Stella said: If Harlequin goes out of business, there will be authors orphaned. Some will say that's better than being ripped off by a shoddy contract, but it will take some time for them to find their bearings. I hope that nature truly will abhor a vacuum and that someone else who is willing to fairly pay authors steps in.

I would bet that Amazon's romance imprint is looking at this lawsuit closely. They might just contact those orphan authors and get them back online once the dust settles.

I'm not a writer, but books are so near and dear to me, I've been following all of the publishing shenanigans and it's been fascinating. We're living in publishing interesting times, indeed.

Anonymous said...

I would bet that Amazon's romance imprint is looking at this lawsuit closely. They might just contact those orphan authors and get them back online once the dust settles.

Not Amazon, but Entangled Publishing, who shifted a bit of their focus from YA and paranormal romance to category romance this past year. The massive success of Jennifer Probst's The Marriage Bargain (and her stellar royalties has legitimized their radical business plan. And I'm sure this success is why HQN unveiled their own digital-first imprint separate from Carina Press: all of those category romance authors hungry for publication with Harlequin, not Carina? Let's scoop them up after we reject their manuscripts from the real category lines!

Anonymous said...

Rumor has it that Harlequin offered to buy Entangled and the initial offer was turned down. But a newer deal looks to be in the works --those authors might end up working for Harlequin anyway.

Eileen said...

There are a couple interesting posts where a lawyer points out how HQN could defend themselves against the lawsuit. It raises some interesting counter points. Good to understand both sides.
http://legalminimum.blogspot.ca/2012/07/if-i-were-harlequin-potential-defenses.html

http://legalminimum.blogspot.ca/2012/07/if-i-were-harlequin-part-2-two-more.html

Walter Knight said...

So, Harlequin Enterprises Limited is an agent of HELL, or at least HELL can be seen from their offices. Enjoy the warming red glow.

Walter Knight said...

So, Harlequin Enterprises Limited is an agent of HELL, or at least HELL can be seen from their offices. Enjoy the warming red glow.

Anonymous said...

Honestly if (when) they have to fork out 50% retroactively to all the affected writers... they will declare bankruptcy. I doubt that money is sitting in an account somewhere. Plus, and Joe I haven't noticed anyone talking about this yet: a lot of publishers are somewhat less than accurate on their royalty statements. I mean, the few instances I'm aware of where an author challenged a publisher's sales of their books, the author has been right (i.e. more books were sold than they received moeny for).

When the lawyers get into attempting to figure out just how many copies of each book were sold... wow. And if that discovery is allowed to creep into copies of print editions... just, wow.

Which all leads me to think that HQN will attempt to settle, as it's the only way they will stay in business.

Anonymous said...

I received a royalty statement today, and I was pretty happy until I realized the publisher had paid me about twice as much as they should have. They paid ebook royalties based on the list price, whereas my contract specified for ebook royalties based on net revenue. Will I keep the money and hope they never discover the mistake? Of course not. I will abide by the terms of my contract, just as Harlequin and anyone else who signs an agreement should abide by theirs.

Tasha B. said...

The real irony? Harlequin puts DRM on the ePubs it sells on its website. So they can basically steal the rights to their authors' work, but I can't share the file that I paid full price for (thanks agency pricing) with my friends or convert it to another format so I can read on a kindle (well I can, but I have to do the de-DRM hokey pokey dance to do it).

Michael Ardenne said...

I wonder how many authors in the past have been taken in by this type of scam, and how many millions in royalties have been stolen over the years. Any statute of limitations on breaches of publishing contracts?

mymagicalescape said...

Wow...as a new author hoping to be published when my story is finally done, this is definitely eye-opening. Thank you for sharing this with us.

Anonymous said...

Wouldn't it be nice if we lived in a world where the business parters of artists and content creators actually respected them and didn't go to such lengths to rip them off?

I find this whole thing morally repugnant. What a sad world we live in.

Jacob Chastain said...

EH, interesting for sure. But I am more interested in how many people are shocked by this. BIG Business generally screws over the little guy. Granted, Harlequin isn't big in terms of the FED, Monsanto, McGraw-Hill, or CME Group, not by a long shot, but the theme is the same. When one group can control a large part of the market, or in this case their contributors (writers), corruption and a royal bend-over-hump-fest isn't far behind.

Own your rights, in all their forms, or expect things like what Harlequin is doing to happen.

BIG business doesn't need regulation, the people that support the business, or the contributors just need to be educated and wake the hell up.

Anonymous said...

>>the people that support the business, or the contributors just need to be educated and wake the hell up.<<

Jacob, though I agree with you 100%, in this case it’s not about a bunch of uneducated authors who weren’t paying attention. We did not know what Harlequin had done because they were very careful to keep it hidden from us. Lawyers read those contracts. Agents read them. Savvy authors read them (and yes, there are savvy romance authors). No one suspected the clause didn’t mean 50% when that’s what it said or that Harlequin would find a way around it.

The authors (and I’m one) were repeatedly assured by Harlequin that we would receive 50% net on digital books. They pointed to our contracts and said, “read this clause.” But they never came out and said that behind the scenes they were doing some sort of accountants shuffle and creating a license with themselves that turned 50% net into 3% cover. Never. And because Harlequin refused to give us unit accounting, we couldn’t look at our royalty statements and call: shenanigans!

In August 2011, Harlequin finally fessed up about what they were doing—in order to get us to sign their new, improved amendment which offered us a whopping15% of their net on digital releases. We figured they wanted us to sign the amendment to cover their butts because maybe they were vulnerable under the old contracts. So we pooled our resources and hired a lawyer.

He wrote an opinion letter and one of our authors—still actively publishing with Harlequin with a decent “name” was used for the letter, even though she knew it meant ending her career there. Our lawyer negotiated for months without success. And that’s how we ended up here, suing them.

So, although I agree—artist beware! I also have to say that when a company decides in retrospect they’ve made a contractual oopsie, a loophole can always be found. The question is… Is it a legal loophole? I’m really, really hoping it isn’t.

LC

Anonymous said...

This is the reason why I'm not going to give Carina any more books, despite how much I appreciate and respect Angela James, who runs it. I don't appreciate authors getting screwed, and the Carina contract was described to me as non-negotiable.

Karen Woodward said...

Joe, thanks for spelling this out for us, it's a great summary. It's nice to have an article to recommend to folks who are curious.

Anonymous said...

The real irony? Harlequin puts DRM on the ePubs it sells on its website. So they can basically steal the rights to their authors' work, but I can't share the file that I paid full price for (thanks agency pricing) with my friends

Tasha B.,
You make a good point, except for one thing--Harlequin doesn't engage in agency pricing. Hq has many sins, but that's not one of them. They use the wholesale model, so retailers are free to discount and set their own price for Hq's books, and most of them do. Hq's ebooks are regularly discounted on Amazon, B&N and most other places (not to mention their own website). So if you're paying full price for a Harlequin ebook, you really have no one to blame but yourself.

Coalbiter said...

This is just more example of a desperate publisher scrambling to salvage an increasingly-irrelevant business model; i.e., legacy publishing. It will be interesting to see what comes of traditional publishing after the dust settles, as I'm finding it hard to believe they will cease to exist altogether (though that may very well happen).

Kelly said...

Ugh, why do writers always get treated as low as possible in every industry they are needed? It's insane.

evilphilip said...

Someone posted this in the comments on one of my Kindle stories,

"J. A. Konrath is writing up slam reviews. This review is used to try to make the author feel better."

-Angelica Rogers

It was so odd and out there and I have idea what they were trying to say. I felt compelled to share.

Joe Konrath said...

It was so odd and out there and I have idea what they were trying to say.

I have zero idea what that means. My review policy is well known. I write 5 star amazon reviews, or else no review at all, except in really rare instances. The only book I've ever slammed is HANNIBAL, for obvious reasons.

Sasha said...

Anonymous said, "Harlequin doesn't engage in agency pricing. Hq has many sins, but that's not one of them. They use the wholesale model, so retailers are free to discount and set their own price for Hq's books [...]"

If I've got it right, the agency model = publisher sets the price of the book and Amazon can't discount.

Isn't the agency model why indie publishers can control the price of their books on Amazon and get the 70% of cover price (as the publisher of their own books)? Isn't the agency model therefore why indie publishers now have the chance to make a living?

Have I got this wrong?

Rob Gregory Browne said...

Isn't the agency model why indie publishers can control the price of their books on Amazon and get the 70% of cover price (as the publisher of their own books)? Isn't the agency model therefore why indie publishers now have the chance to make a living?

In order to get the 70%, there are certain pricing guidelines indie authors must follow. Nothing below $2.99 or above $9.99. So I would say, no, that's not really the agency model.

But I could be wrong.

Sasha said...

Hi Rob - sorry, should have been more specific - I understand about the 70% being within a certain band and the 35% being for above and below that price, but it's the author being the publisher that gets them that percentage, which is much higher than what they'd get if they were trad pubbed, and it's the agency model that means that the indie author/self-publisher sets their book price and Amazon can't discount it.

Joe Konrath said...

it's the agency model that means that the indie author/self-publisher sets their book price and Amazon can't discount it.

I'd trade in a heartbeat.

With the wholesame model, I could sell my ebooks to Amazon for $2 each, than they could sell them at a loss for 99 cents, and I'd still make $2.

That's better than the agency model. The retailer should be allowed to control process.

Besides, who knows which price is best? The author? The publisher? Or the retailer who has all the data and can compare and contrast it?

Sasha said...

Thanks, Joe - I didn't realise the publisher could charge a fixed price despite a discount so what you say makes sense.

So on US Amazon now, the agency model is in force and no new books are discounted? But in Europe they are? I wonder how Amazon UK etc. decide what level of discount to give. Do you think they're experimenting like you?

Jason Christie said...

Hel, of course, being the teutonic goddess of torture and pain...

Laura Resnick said...

Being not a lawyer -or- an accountant, I would nonetheless think that, in terms of demonstrating to a judge what exactly has been going on, the money in question (i.e. that Hq allegedly kept in its shell corp rather than paying as the contracted royaly rate) should be easily traceable unless Hq committed fraud by hiding income from both the government and its stockholders. As long as a forensic accountant can demonstrate that the claim is true, it's difficult to see what sort of defense Hq can argue.

On that basis, my guess is that rather than let a judge rule on this, now that the lawsuit is forcing Hq to negotiate, Hq will try a strategy of attrition, just wasting as much time (years) as possible in "negotiations" until (it imagines) the authors will settle for ANYTHING just to get this resolved.

But I hope not. i'd really like to see a judge rule on this and justice get done.

evilphilip said...

"I have zero idea what that means. My review policy is well known. I write 5 star amazon reviews, or else no review at all, except in really rare instances. The only book I've ever slammed is HANNIBAL, for obvious reasons."

What makes it even more oddball is that you haven't written a review of my story.

I guess I should be happy that someone found my story on Amazon after reading your blog, but I have no idea where that comment came from or what it means.

Jude Hardin said...

The only book I've ever slammed is HANNIBAL, for obvious reasons.

The only obvious reason is that you didn't like it. Because, as we know, taste is altogether subjective. ;)

The book has 721 five star reviews. Apparently a lot of people loved it.

Cyn Bagley said...

Excellent post ...
I have a friend or two who write for Harlequin. I have been talking indie to them, but they are loyal to HEL. it is sad that HEL is not loyal to them.

Joe Konrath said...

The book has 721 five star reviews. Apparently a lot of people loved it

Hannibal worked for those people. It didn't work for me. And I can explain in excruciating detail way, as both and avid reader and fan, and as a writer familiar with plot and characterization. You failed to mention the 695 one star reviews. For a book to accrue that much derision, something is obviously wrong.

Silence of the Lambs has 235 five star reviews, and 3 one star reviews. Harris satisfied damn near everyone with that book, but lost fully half his audience with Hannibal.

Joe Konrath said...

What makes it even more oddball is that you haven't written a review of my story.

I once did a blog that slammed those who wrote one star reviews. That might be the reference.

We live in a society where people cavalierly dismiss art without being able to articulate why it didn't work for them. They confuse subjective taste with inherent quality. I have no patience for people who do that.

The other side of the coin is folks who praise everything. I don't praise everything, but I only review things I like, with very rare exceptions. I don't like writing negative reviews, because I think those who dismiss the art of others do so for petty, personal reasons.

Jude Hardin said...

You failed to mention the 695 one star reviews. For a book to accrue that much derision, something is obviously wrong.

SOTL was a trendsetting masterpiece. That's what was wrong. Whatever Harris followed it with was bound to take a ton of flak. Many of those one star reviews are probably due more to disappointment than objective criteria. Disappointment that Harris didn't maintain the same level of genius as with SOTL.

It happens all the time in the arts, so maybe Harper Lee did the right thing with one and out. At any rate, Hannibal sold several million copies, and Stephen King and I enjoyed it quite a lot. :)

Jude Hardin said...

I don't like writing negative reviews, because I think those who dismiss the art of others do so for petty, personal reasons.

I agree. I only write five star reviews. No exceptions.

I can usually tell if I'm going to like a book or not within the first fifty pages. If I don't like it, I don't feel compelled to finish it. And I'm certainly not going to review a book I haven't finished.

Rich Van Gaasbeck said...

JAK: "My review policy is well known. I write 5 star amazon reviews, or else no review at all, except in really rare instances."

Jude Hardin: "I agree. I only write five star reviews. No exceptions."

Your are gaming the review system in a way that makes the whole system less useful. Everyone posting honest ratings based on how they liked it, rather than their guess as to objective quality, or as a reciprocity exchange, or whatever other motivation would benefit Amazon, readers, and authors. Posting only five star reviews makes matching readers and books harder and causes Amazon to present less appropriate recommendations.

Blogged about purpose of ratings previously

Jude Hardin said...

Your are gaming the review system in a way that makes the whole system less useful.

No, we're just balancing out the idiots who write one and two star reviews because of device problems or personal problems with the author or any number of reasons that have nothing to do with the actual book.

Professional reviews are subjective enough, with one critic sometimes diametrically opposed to another, without adding customers' loading screw-ups and petty vendettas and ingrown toenails to the mix.

I would encourage readers to ignore reviews altogether and buy based on synopses and sample chapters and maybe recommendations from friends.

I recently read Gone Girl by Gillian Flynn, which is absolutely stunning. Fortunately it's selling like hotcakes despite the 200+ boneheads who posted one and two star reviews. Those are the folks who need to be examined for skewing the system, not those of us who only post reviews of books we love.

Daniel Stoller said...

It seems to be a tendency when we see these scandals that they are being preformed by the big companies who think the law will never catch up with them. Great post Konrath!

Frank R. McBride said...

I'd trade in a heartbeat.

With the wholesame model, I could sell my ebooks to Amazon for $2 each, than they could sell them at a loss for 99 cents, and I'd still make $2.

That's better than the agency model. The retailer should be allowed to control process.

Besides, who knows which price is best? The author? The publisher? Or the retailer who has all the data and can compare and contrast it?


So lets say Amazon agrees to buy your book for a fixed price of $2. They either know beforehand what price point is the best for your book or they don't.

If they know - the price point will not be below $2.

If they don't know - what will they do when they find out? Continously selling it at a loss? Or renegotiate with you?

You always bring this example as a reason why you would switch to wholesale pricing in a heart beat. Yet how likely do you think it is that Amazon will sell your book at a loss (and thus you are profiting from this) for an extended period of time?

I simply don't see them do this. I think the more likely scenario is that they don't negotiate with you, but present a "take it or leave it" offer - just like the KDP royalties are now. And I simply don't see them offering a wholesale price that will have them selling your books at a loss for an extended period of time. I'd even venture a guess that the wholesale price will be lower than what you can conceivably get with the 70% option.

Joe Konrath said...

Yet how likely do you think it is that Amazon will sell your book at a loss (and thus you are profiting from this) for an extended period of time?

Why does it need to be for an extended period of time? I simply would like Amazon to have the option to put my book on sale if it wants to, without me taking a royalty hit.

Pretty much everything in stores is sold via the wholesale model. Amazon can choose to mark products up to whatever profit margin they desire, and they certainly have data that shows which price points work best.

If I sell an ebook to Amazon for $3, I doubt they'd sell it for $10 or $12. I'd guess $4 or $5 to be likelier, and then they have the option of selling for $3, or even less. Amazon understands loss leads. They also want to sell Prime memberships and Kindles, the sales of which make up for the loss leads.

Frank R. McBride said...

When you talk about "selling my book to Amazon for $2/$3" - are you talking about them offering it through KDP or are you talking about you personally negotiating with Amazon?

If the former - not gonna happen. Not at this price. KDP is a mass user platform, there won't be individual negotiating. So Amazon will not offer $2 - probably not even half that.

If the latter - then your whole argument of "wholesale is better than agency" is highly flawed.

The few promotional periods where you don't take a hit through in royalties will be more than made up for the rest of the time, when your book is priced in a way so that the wholesale price is less than 70% of cover.

I just don't think the wholesale model is the awesome option you make it out to be.

Rob Gregory Browne said...

Silence of the Lambs has 235 five star reviews, and 3 one star reviews. Harris satisfied damn near everyone with that book, but lost fully half his audience with Hannibal.

I couldn't make it through Hannibal. And with Silence of the Lambs, I was disappointed, because the first book, Red Dragon was, to my mind, a masterpiece. Silence paled in comparison. In fact, I thought the movie version was much better.

Joe Konrath said...

I just don't think the wholesale model is the awesome option you make it out to be.

And yet every retail business in the world, including publishing, uses the wholesale model. It's a wonder there are any stores or supplier left. ;)

You do know what the KOLL is, right? And how Amazon loses $2 for each ebook it lends out?

Amazon keeps prices low to attract customers, and pays authors well so they'll continue to publish through Amazon. And yet everyone fears that this is suddenly going to change, and Amazon is going to screw every person on the planet.

Sorry. Not buying it.

Merrill Heath said...

Rob said: I couldn't make it through Hannibal. And with Silence of the Lambs, I was disappointed, because the first book, Red Dragon was, to my mind, a masterpiece. Silence paled in comparison. In fact, I thought the movie version was much better.

I agree, Rob. I loved Red Dragon and the original movie, Manhunter, starring William Petersen.

Frank R. McBride said...

I am not saying Amazon is out to screw us. If you get a $2 wholesale price for your book that is a good deal.

For the sake of argument, lets say the do this. As long as the book is retailed between $2.01 and roughly $3 a) Amazon doesn't lose money and b) you get the same or an even better deal than through KDP now (with $2 roughly being the 70% of $3).

But if Amazon discovers that the best price point for that book or genre is above $3, you make less than could make via the 70% option.

This is my argument. I just think that the majority of the time the majority of authors will make less than 70% cover, if Amazon switches to a wholesale model. Amazon doesn't screw them per se - just that the wholesale model is less beneficiary to KDP authors in that case.

And at $2 it would basically eradicate the 99c novel.

Merrill Heath said...

Frank R. McBride said: For the sake of argument, lets say the do this. As long as the book is retailed between $2.01 and roughly $3 a) Amazon doesn't lose money and b) you get the same or an even better deal than through KDP now (with $2 roughly being the 70% of $3).

But if Amazon discovers that the best price point for that book or genre is above $3, you make less than could make via the 70% option.


Agreed, Frank, but only if the author is able to determine the best price and adjust accordingly. IMHO, most authors struggle with pricing, either going too low or too high. I think Amazon is in a better position to find that sweet spot that will maximize sales.

I'm not saying that either model is better. Personally, I like being able to set my own price.

Jude Hardin said...

I couldn't make it through Hannibal. And with Silence of the Lambs, I was disappointed, because the first book, Red Dragon was, to my mind, a masterpiece.

I read SOTL and HANNIBAL back to back, years after they were first published. I enjoyed them both for what they were: thrillers. I didn't approach them with any sort of high expectations or preconceived notions or reverence, but more as learning tools. Then I read RED DRAGON later on. I liked them all, but I thought SOTL was the best. Definitely one of the most influential crime novels of the 20th century.

Rob Gregory Browne said...

Jude, for me, RED DRAGON was a vacation book. I was in Vegas for a long weekend, came across the paperback in one of the hotel gift shops, started to read AND COULD NOT PUT IT DOWN. I thought it was brilliantly written and plotted, head and shoulders above most of the thrillers being written at the time.

When SILENCE came out, I scrambled to get it and found I was ultimately disappointed. I felt as if Harris hadn't tried as hard with the book as he had with DRAGON.

Maybe it was just a case of expecting too much. I can see why those who started with SILENCE might like it better.

Alexandra Sokoloff said...

Or maybe you could see that women might like SILENCE better, Rob? ;)

I love both books, but SILENCE more.

Hi Jude!

Jude Hardin said...

Hi Alex!

Congrats on HUNTRESS MOON. Great reviews, great rankings. You must be very happy with that.

David L. Shutter said...

You do know what the KOLL is, right? And how Amazon loses $2 for each ebook it lends out?

And for every dollar they lose on various e-books sales, they probably make FIVE from prime memberships.

Me and the wife had prime. We had to get rid of it. We we're clicking BUY almost every single
day.

Tim Easley said...

These charges, and what they apparently did, was sickening. This is why after a year or two or reflection, decided unless the money was awe inspiring, that I would NEVER do a traditional deal. Sure I may never sell 10 million copies. But my books would be MINE, and I wouldn't be screwed out of money that was owed to me.

On an unrelated note, Mr. Konrath, has your buddy Carl Graves had a complete lost of communication again? I've been trying for a few weeks to contact him about possibly buying one of his predesigned e-book covers.

jry said...

I was very happy to read your entry on the Harlequin fail and truly hope the authors end up getting their due. I am much more a mystery, romantic suspense, thriller kind of reader but have spent a lot of hours reading romance as well and have always credited reading those in my high school and beyond days as helping me get in the top 10% on the MAT exam as much as any study guide - the names they gave their heroines alone helped with a lot, not to mention the composers and other cultural references that yes I rediscovered later but first found them and remembered them from mentions in those early romances I read.

Oh, and I too think Red Dragon (and the Manhunter film) was great with SOTL coming in a close second (altho the
Clarice/Lecter scenes were great) with Hannibal being in the dreck (author must now write with Hollywood script in mind) section!

P.S. Power said...

This may seem off topic (and is) but the subject here got me thinking...

In what other ways have the major publishers been holding not only authors, but reading itself, back?

Here's my premise.

Readers tend to like what they are comfortable with. (Same with music listeners, movie goers and so on. This is part of human nature. Yes, some will have broad tastes, but few people enjoy everything equally. Viva diversity!)

By holding authors to one or two books a year how many readers slowed down in their appreciation of reading as a whole?

Sure, the kid that raided the library of twenty books a week isn't really being slowed down, but what about the people (and they do exist) that read only one or two authors?

If they were reading more often, it would become a bigger part of their lives, a more entrenched habit and that could lead to more reading as a whole.

But instead a lot of authors were told that they'd saturate their market if they wrote more than a book a year and a few were even held to one every few years.


Granted, Harry Potter probably made more money coming out as slowly as it did, but would the kids learning to read because of those books have been better served if they came out over the course of even seven years rather than twelve or whatever it was?

What if it had taken only three years? Would they have really not been popular if people had access to them?

I think more kids would have looked at the books, found reading immediately rewarding and wanted to try different types.

But the publishers seem to have really stopped that from happening.

At one time a book every year made sense. Writing was slow, printing was labor intensive and all that. Translating from cribbed long-hand to smooth type face was a chore.

The mail was slow and things got lost.

But now?

It seems counter to good business.

Tom Simon said...

P.S. Power:

Harry Potter is perhaps not the best example. After it became clear that the first book was a monster hit, J. K. Rowling was under continuous pressure to write the sequels as fast as possible so that her publishers could take advantage of the fad (as they no doubt saw it) while it lasted.

What slowed down the Potter books was that Rowling wrote longer and longer books, with more padding, more digressions, and more general self-indulgence. I know a lot of Potter fans who complain that the later books are not as fast-paced, that they ramble over minor issues instead of sticking to the story as the first three did. Her publishers were as impatient as the fans to get the next book, and they were not impresss when she started turning in 800-page doorstops.

However, I think your general point is good. And I think it will mean that the death of traditional publishing will happen without anyone noticing.

Right now, publishers are still releasing books that they acquired before ebooks became a viable medium — at a time when ‘self-publishing’ still meant a handful of lunatics with their basements full of unsold books and no way to distribute them. Now writers have more choices, and increasing numbers are seeing that the ‘value proposition’ (as the MBAs say) in trade publishing is no longer there.

As more writers jump ship to self-publishing, trade publishers will have to make some ugly choices. Either they publish fewer books, or they publish lower quality books because they can no longer control all the best writers.

If they publish fewer books, they suffer a financial double whammy. Sales will decline, which means less money to pay their bloated overheads and (what is more important) the interest on their often gigantic debts. Profits will disappear, despite rights grabs like 75 percent of net on ebooks.

If they publish worse books, they suffer more slowly, but in the end it will kill them. At the moment, publishers are trying to shut down self-publishing by pretending that all self-published books are rubbish — that a ‘real’ publisher’s colophon is the sole guarantee of quality. But the quality of self-pubbed books is rising, and the more junk the trade publishers put out, the sillier this claim will look. In the end they will be left with a dwindling base of aging writers who are afraid to handle their own business matters, and a large but unprofitable supply of clueless wonders who don’t know any better than to tie their fortunes to a publisher. You can already see this happening with Penguin’s foray into the vanity-publishing business.

My guess is that the publishing industry will generally prefer the slow way to bankruptcy. They will kick the can down the road, denounce the ‘traitors’ who leave them, and publish more and more bad books; and they will go on pretending that everything is fine until Chapter 11 comes to kick down the door.

Kimberly Steele said...
This comment has been removed by the author.
schnell abnehmen said...

very good post

Rob Gregory Browne said...

What slowed down the Potter books was that Rowling wrote longer and longer books, with more padding, more digressions, and more general self-indulgence. I know a lot of Potter fans who complain that the later books are not as fast-paced, that they ramble over minor issues instead of sticking to the story as the first three did.

I couldn't disagree more. What you call padding and self-indulgence was character and world development, and this is where Rowling excelled. The longer books are much better than the shorter ones and the sixth book was a near masterpiece despite its doorstop size.

Rowling got better with each book and sucked us into her world as few authors can do. Say what you will about some of her stylistic choices, she never shorted us—or bored us—with story and character development and those of us who loved the books wish she'd revisit that world again.

Tom Simon said...

@Rob Gregory Browne:

You may disagree, but you are in fact talking about your own tastes. I’m talking about the actual reaction of considerable numbers of Harry Potter fans as each of the later books came out — and about the actual circumstances in which they were published (i.e., as soon as Rowling delivered a completed draft to her editor).

It was, in fact, only today that I read a blog post about fan fiction, making the subsidiary point that by the time Deathly Hallows came out, some readers were saying that HP fanfic was better than anything Rowling was writing herself. In effect (rather like George Lucas with the Star Wars prequels) she was losing the confidence of her readers. That doesn’t happen unless something has gone far wrong with the writing.

Brian Rush said...

Thanks for a blog that makes me grin maliciously with each new entry.

I have to say that, while Harlequin is way over the line here (the legal line, that is), the behavior of the Big 6 publishers more generally is probably predictable. I've heard authors and agents say that the big publishers have turned nastier in recent years, inserting contract amendments that hurt authors, doing their grab of ebook revenues -- there was a time when they weren't as bad as they are today.

The rise of e-publishing and consequent easy and cheap self-publishing doesn't mean the end of publishing companies in my opinion, but it certainly does mean the end of the Big 6 not only as individual companies but as a phenomenon. The dominance of the industry by a few companies is dependent on barriers to entry, which no longer exist. Not only is it easy for an author to self-publish nowadays, it's also very easy for anyone with some skills at editing and marketing to start a publishing company focusing on e-books. A company that offers an author a nice package of services including editing, cover design, and (most important) marketing TO READERS can quite easily earn a reasonable share of revenues, say reducing the author's share on ebooks from 70% to 50%. I expect that will become the norm for publishing companies in the future.

But while it's certainly possible for the current Big 6 to adapt and survive and make a profit in such a publishing world -- not likely, but possible -- there's no way their dominance can be preserved. I'm sure on some level they know this, and the attempt to screw authors over to increasing degrees (of which this disgusting behavior by Harlequin is merely an extreme example) is a move of desperation in the face of doom.

Rob Gregory Browne said...

You may disagree, but you are in fact talking about your own tastes. I’m talking about the actual reaction of considerable numbers of Harry Potter fans as each of the later books came out — and about the actual circumstances in which they were published (i.e., as soon as Rowling delivered a completed draft to her editor).

Well, ultimately, we're talking about everyone's tastes, aren't we? Including yours. It's all a matter of opinion.

In addition to my own tastes, I tend to believe the numbers in regard to sales, and I don't recall the growing length of the books or Rowling's writing affecting those numbers other than to raise them. She must have been doing something right.

But obviously sales don't necessarily equal quality. So I guess we'll just have to disagree about the quality of Rowling's later work.

Rob Gregory Browne said...

You may disagree, but you are in fact talking about your own tastes. I’m talking about the actual reaction of considerable numbers of Harry Potter fans as each of the later books came out — and about the actual circumstances in which they were published (i.e., as soon as Rowling delivered a completed draft to her editor).

Well, ultimately, we're talking about everyone's tastes, aren't we? Including yours. It's all a matter of opinion.

In addition to my own tastes, I tend to believe the numbers in regard to sales, and I don't recall the growing length of the books or Rowling's writing affecting those numbers other than to raise them. She must have been doing something right.

But obviously sales don't necessarily equal quality. So I guess we'll just have to disagree about the quality of Rowling's later work.

Veronica - Eloheim said...

Hi Joe, One of my books has been released in RUSSIAN! I sold the rights last year and a reader in Moscow just emailed me!!!!!!!

Thank you so so so so so much for the inspiration and continuing education in the indie publishing world.

Holy shit....this is beyond cool!

http://sophia.ru/book/book1532.html

Thanks again!
Вероника Торрес AKA Veronica Torres

Brenda Wright said...

It's unfortunate for Harlequin, but this is one of the reasons independent publishing can be good.

Gretta Curran Browne said...

No matter what Legacy publishers or anyone else may think or say about Joe Konrath, one thing I know for certain - in his own career as an Indie author, he has never once thrown the ladder down behind him in his own pursuit and achievement of success - he has always tried to help ALL writers out there thinking of going it alone - and his advice on pricing, DRM and everything else, has always proved to be right and spot on. And the same goes for Barry Eisler too. Both are always trying to pull others up the ladder with them,and share as much facts and data as they can for the benefit of all.
tWO GREAT GUYS IN MY ESTIMATION.

Anonymous said...

Does your independence include the Amazon publishing organizations (Thomas & Mercer, etc). Because you seemed to be pretty happy with them in the past.

Anonymous said...

More about fake reviews on Amazon. Was anyone aware of this?

http://www.nytimes.com/2012/08/26/business/book-reviewers-for-hire-meet-a-demand-for-online-raves.html?_r=1