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A tipping-point for e-books?

2 August 2010

It will surprise no-one who read the STOP PRESS at the end of last week's News Review to know that Andre Wylie's Odyssey Editions and what's happening to e-books have dominated the publishing news agenda this week.

Using the aggressive approach which has earned him the soubriquet 'The Jackal', Andrew Wylie decided to push ahead with launching his new imprint, designed specifically to seize his authors' e-book rights and offer them a better deal than they were getting from publishers. Wylie represents over 750 mostly quite literary authors, including many famous literary estates , so the new imprint would not be short of material.

In taking this action Wylie has offended publishers, some of whom complained about it, and Random House have taken the extraordinary action of saying that none of their book companies around the world would do any deals with the Wylie Agency until this was resolved. He's also upset booksellers, as Odyssey Editions will be sold exclusively through Amazon's Kindle.

The publishers' position revolves around a specific contractual point. Many older author contracts do not mention e-books, which had not been thought of at the time the contracts were drawn up. Publishers claim that they are included in the grant of volume rights and that they are specifically part of electronic rights, which are often mentioned, but you could argue this either way. What is clear though, as was pointed out by Evan Schnittman of Oxford University Press, was that publishers buy rights in a title, not an edition. All the overheads involved in initially producing a book except the actual printing costs are still there for e-books and that is why publishers argue that they are part of the rights they have acquired in purchasing volume rights.

Amazon have come back into the fray by announcing a new, improved, cheaper version of the Kindle, which will be available outside the US too later this month. In the American market e-book sales are already becoming substantial, with first James Patterson and then Stieg Larsson having now sold a million e-books.

There has however been a lot of argument about e-book royalties. Publishers have been offering 25%, but many agents think they should be 50% or even more. It looks like publishers will have to offer more, but they are reluctant to do so because there are the general start-up costs of the book to consider, even though making the e-book costs very little once you have the text digitised. What they are really worrying about it whether the e-book version replaces the hardback or the paperback edition. This may seem a slightly academic question at the moment, but it doesn't look as if it's going to be so for long. Mike Shatzkin in his Idealogical blog said last week:

'Even if the publishers pushing back manage to win this round with Wylie, and they well might, I don't think the 25% royalty can hold for very long. As more and more of the business shifts to ebooks, companies without the legacy costs that big publishers have will find it easy to pay higher royalties than that and agents will keep doing the math about how many sales they can afford to lose and still end up ahead in dollars with a higher ebook royalty. As Amazon should have learned in their fight with Macmillan in January, it isn't smart business to draw a line in the sand marking a position you ultimately can't defend. I hope every big publisher in town will take that lesson on board... When ebook sales get to 50% of the total (2014-15), even 50% is not going to cut it.'

Are we getting close to a tipping-point?

Mike Shatzkin's blog