Thursday, February 28, 2013

Second-Class Contracts? Deal Terms at Random House's Hydra Imprint

Posted by Victoria Strauss for Writer Beware

EDITED 3/13 TO ADD:  Responding to a storm of criticism generated in part by this blog post, Random House has announced new contract terms for Hydra, Alibi, Flirt, and Loveswept.

Over the past few years, more and more trade publishers have created digital-only imprints. Another new one just popped up in my newsfeed today: Little, Brown UK's Blackfriars will be launching its first list this coming June.

Last November, there was some excitement over three brand new digital imprints from Random House: Hydra for SF/fantasy, Alibi for mysteries and thrillers, and Flirt for the is-it-or-isn't-it category of New Adult. I was interested by the fact that these new lines were pitched in language reminiscent of self-publishing services:
Under this program, authors will have a complete and unique publishing package. Every book will be assigned to an accomplished Random House editor and a dedicated publicist. They will also have the invaluable support of Random House’s experienced marketing and digital sales teams, who know how to reach out to and expand each book’s dedicated readership. Not only will authors benefit from working with the finest cover designers to ensure irresistibly eye-catching books, but they will also be offered the unique advantage of social media tools and training that will allow them to connect directly with their readers. To reach the widest possible readership, every title will be available for purchase at major e-retailers and will be compatible with all reading devices.
I wasn't alone in this impression--much of the news coverage of the new imprints speculated that Random House was attempting to snag self-publishers, what with the imprints' focus on short content, their willingness to accept previously-published books, and their literary-agent-optional submission procedure.

Authors who are accepted by Hydra and the others will have access to professional editors and designers, and will benefit from Random House's publicity team--just as with conventional imprints. If they desire the prestige of being able to say they're published by Random House, they'll have that too.

Even so, I can't help feeling that, with digital-only or digital-mostly imprints, print-based publishers are offering a kind of second-class publication. Ebooks are still experiencing triple-digit growth, but they're only one of several formats, and publishing in a single format limits your audience. For volume sales, print is still important, and a lot of book discovery still happens in bookstores. There's also the fragility of digital content, where formats are regularly and rapidly rendered obsolete by the advance of technology.

It seems to me that digital imprints require authors to embrace the limitations of digital publishing, without providing any of the offsetting advantages that are available to digital self-publishers--namely, control over format and pricing, and the freedom of not being tied to a restrictive contract. Meanwhile, the publisher can push books into a growing marketplace at a much lower cost than with a conventional imprint, and reap the profits.

Perhaps I'm just too conditioned from having grown up, and begun my writing career, in a time when print was all there was. Not that I'm anti-digital, or resistant to new technology--quite the opposite. But I'm willing to admit that my reservations about digital imprints may have something to do with the fact that I prefer to read print, and am sad at the thought that we're heading for a future in which many books will never have physical existence.

On the other hand...what if digital imprints are offering second-class contracts?

I recently saw the deal terms for Random House's Hydra imprint. A summary:
- It's a life-of-copyright contract that includes both primary and subsidiary rights. 

- There's no advance. Net proceeds (defined as net income plus subrights income less the deductions detailed below) are split 50/50 between author and publisher.

- Deductions for ebook edition: "one-time out of pocket title set up costs" (editing, cover art, design, etc.), plus a "sales, marketing, and publicity fee" of 10% of net sales revenue.

- Deductions for print edition, if there is one: "actual direct out-of-pocket paper, printing and binding costs," plus 6% of gross sales revenue to cover freight and warehousing costs.
Note that authors are not being asked to pay any costs upfront (despite that scary "out of pocket" term). Hydra "advances" those.

However, the costs are deducted from sales and licensing income, and reduce the amount of the author-publisher split. This is reminiscent of what's known as Hollywood accounting, where net proceeds are made to disappear by charging expenses against profit. Authors going into a deal like this can't be certain of what they will earn on a per-book basis--while the publisher is assured that its expenses will be recouped at the point of sale.

I should also note that I've seen only one Hydra deal memo to date. But the author who contacted me was given to understand that these are Hydra's (and by extension, Flirt's and Alibi's) standard offer terms, and I've heard anecdotal reports of other authors who've received similar or identical offers. Hydra does seem to be willing to negotiate--but publishers don't usually budge very far on core items like royalty splits.

If Random House indeed intends to reach out to self-publishers with these new imprints, it may want to re-think its contract terms. It's hard for me to imagine even moderately successful self-publishers finding a deal like this attractive.

23 comments:

LilySea said...

As someone who recently signed with an e-mostly small press I can tell you my contract is better than this.

And I'm not sure being with "Random House" would make up for the difference, given the limitations of e-only/mostly that you note here.

If e-only/mostly/first seems to be a writer's best option, I'd say shop around. Small presses can be volatile, of course, but I can only suppose that RH could axe this program if it didn't prove useful to them and therefore could be similarly volatile.

I do think a press (after some reasonable vetting--mine gets a clean bill of health from Writer Beware!) is better than self-publishing, but that doesn't mean ANY press will do--not even an imprint of one of the Big However Many Are Left Now.

Jana Oliver said...

- It's a life-of-copyright contract that includes both primary and subsidiary rights.


That's a deal breaker, for sure. Not that any of the other terms are that cool, either. But both primary and sub rights without an advance? Buzzzz!

Unless folks are desperate to have RH's name on the cover, they should go small press or self-pub. Nowadays you can hire a top quality editor to work over your manuscript and keep those sub-rights in your back pocket.

Thanks for sharing this!

Francis Hamit said...

I see no advantage to this deal. Amazon Kindle, B&N Nook and Kobo (among others) offer better terms and are more established brand names. "Hydra" is not "Random House" and most consumers won;t make the link between the two. Those that do are not likely to care because the real brand is the author.

julesjones said...

Another epub author here -- and I would not touch that contract with a bargepole, it is so appallingly exploitative. My publisher's contract is 3 years, with one year renewals by mutual consent after that, initial print option with an expiry date, first look option on next book in a series. They'd like first look at some other things, but it's first look, not binding, and only things they have a realistic prospect of using. Various subsidiary rights are explicitly excluded. On ebook format I get 35% or 40% of cover on direct sales, and 50% of whatever they get from third party distributors. No deductions for this, that and the other that ought to be the province of the publisher.

Iola said...

Life of copyright - that's author's life plus 35/70 years, isn't it? So an author is signing over all their rights, forever, with no provision to get them back?

Anonymous said...

This is a nightmare deal and, frankly, predatory behavior. I'm more than shocked this came out of Random House. I pinged RWA, hoping they are educating membership to steer clear.

If you really can't go it alone with indie e/publishing, then get the help of an agency with great team but better terms. And join writer orgs to learn about the predatory behavior going on.

And if you need an agent, get a reputable one. A colleague was offered rep by an agent to sell a MS to New York. She wanted a cut from the author's already self-published ebook for "trying". Uh, no, you don't get money for a book you had nothing to do with.

Thanks for this insightful article to help authors avoid falling into the snake pit. Maybe Hydra is apropo?

Best,
Christine M. Fairchild
http://EditorDevil.blogspot.com

Anonymous said...

As an agent, I run into these issues in traditional book contracts. Most boilerplate contracts state that the publisher will acquire the book for the life of the copyright. But they also have a reversion clause which stipulates that the author make request reversion of rights if the book is out of print. Of course, digital books will never go out of print. They simply reside on the publisher's computer. I try to modify the contract to define when the author has a right to reversion. Usually it would be if it is selling less than x copies per year. If you are going to negotiate with Random House, I recommend that you try to get similar language in the agreement

Victoria Strauss said...

Iola--as Anonymous noted above, life-of-copyright is boilerplate for large and medium-sized publishers--and for many smaller publishers as well. There's no need to fear it as long as there's a good reversion clause--one that, as Anonymous says, allows the writer to regain rights when the book goes out-of-print, and defines out-of-print as X number of sales or X amount of royalty income over a specified period of time (say, 12 consecutive months or 2 consecutive royalty periods).

I haven't seen the Hydra contract--just the deal memo and some explanation of it--but what I've seen does confirm that there's a reversion clause. I don't know how precise it is, though, and I second Anonymous's recommendation that authors who accept a deal with Hydra or another digital imprint should try to negotiate sales minimums into the reversion clause if they aren't already there.

John Wiswell said...

Your sense of it being a second-class publishing deal is shared. If a major publisher offers you digital distribution, when their greatest asset is physical distribution, how aren't you being tinkered with? But the life-of-copyright clause is utter madness.

Anonymous said...

I've been hoping for digital imprints to come along, but these are the wrong contract terms.

The advantages to a traditional publisher over self-publishing are: advances; free professional editing and cover design; wide distribution; submission to professional reviewers and award committees; contact with the library markets; and sometimes touring, advertising, and other promotion.

The advantages to digital self-publishing are: total control over the process; better royalties.

This is a deal that asks the author to give up the advantages of self-pubbing without gaining the advantages of traditional pubbing. The publisher is asking the author not only to forgo an advance, but to PAY for the editing, cover design, sales and marketing that are usually part of a traditional deal, but without the degree of control that the author would have if she just flat-out self-pubbed.

It's the worst of both worlds.

Distribution-wise, a traditional publisher has a huge advantage in the print-book realm, but this advantage narrows or disappears in the digital realm, where any author can be stocked by major online retailers side-by-side with traditionally published authors.

I don't understand why any author would sign with this, as opposed to going with a traditional print deal or digital self-pubbing.

If a digital pub offered 50-50 royalties and a low or no advance, but covered the costs of producing and marketing the book, then it might be worth looking into.

Anonymous said...

This is a horrible deal, and I wouldn't even think about negotiating from their starting point

I understand the boilerplate stuff, that that is how business is done and we are supposed to start our side of the negotiation from the worst possible starting point, which is dictated by the publisher - but I won't stand for it. I'm doing okay as a 4th tier player. The couple of chances that I've had with 'real' publishers have been lousy deals and not that hard to turn down.

Claude Nougat said...

Is the Blackfriars imprint also offering that kind of deal, do you know?

I am curious about this whole new scene opening up not so much from the standpoint of contracts but from the standpoint of (perhaps) increasing/encouraging publishers to look for new talent. Since they invest less upfront (no avances etc, everything you pointed out) presumably they might be ready to take some risks and bet on new talent, new ideas, new forms of writing, new genres?

That's my hope. I'm thinking of course of Boomer lit, a new genre recently much talked about on the net. Like YA lit, it is audience-centric and spans across many sub-genres, from thrillers to romance, comedy and drama. Likewise, the central issue is transition to another stage in life, but here is where it differs from YA lit: it is not about "coming of age" but all about "coming of aging". There a lots of good writers in that genre since it attracts authors with a talent that is shaped and deepened by life experience!

Daven Anderson said...

Signing for Big Five contract terms without getting paper books in return is like marrying a celibate supermodel or buying a Ferrari with a 55-mph speed limiter.

Victoria Strauss said...

Claude--Hydra's is the only deal offer I've seen to date, so apart from guessing that the same terms apply to Alibi and Flirt (because they're in the same imprint family), I can't comment on the terms offered by any other digital-only imprint, including Blackfriars.

I'm very curious, though--so I would welcome contact from anyone who has a deal or has received a deal offer from a digital-only imprint of a print-based publisher.

Betting on new talent is wonderful. Tossing it out into the world as cheaply as possible to see what rises to the top is less wonderful.

I've seen some discussion of so-called Boomer Lit. Like New Adult, I think at this point it's more of a wish than a fact. Plus which, looking at things from a cynical perspective, if Boomer Lit is written by boomers, a debut novel in that genre is likely to be a tough sell simply because Boomers, being older, have shorter potential career spans.

Pamela K. Kinney said...

As an author who has e-published books, they never charged for Deductions for ebook edition: "one-time out of pocket title set up costs" (editing, cover art, design, etc.), plus a "sales, marketing, and publicity fee" of 10% of net sales revenue.

- Deductions for print edition, if there is one: "actual direct out-of-pocket paper, printing and binding costs," plus 6% of gross sales revenue to cover freight and warehousing costs.

None of my contracts has this, or in my print publishers either, one who is a traditional medium-sized press.

These are something I am sure a "vanity press" does. If this is what Random House and who now knows other NY publishers are offering, make me sad that they are no better in offering these to writers.

Writers, read that contract an if anything appears off color to you, even if have to pay for a literary lawyer to double-check for you, then do so. We the writers have the talent and make the stories and the nonfiction manuscripts--without us, well, no books/eBooks in the long run.
This is why writers are going the self-pub route, If you must spend some money, do it on your own for a good editor before publishing it on Kindle, etc... Really.

Lucianne Poole said...

Thanks for this post and to all who have commented. I was thinking of submitting to Hydra, but now I will think twice and look at all my options!

Laura Resnick said...

But a big up to Random House for clearly identifying the nature of this egregious program by naming it after an evil serpent monster from classical mythology that had to be killed and killed and killed again by the good guy.

Anonymous said...

Anyone know if the same problems dog the Random House Loveswept line?

Shelli (srjohannes) said...

is this for Flirt and Alibi digital imprints too? I only saw Hydra

Victoria Strauss said...

According to PW last year, Loveswept does pay advances. That's all I know about it.

I've only seen deal terms from Hydra, so I can't comment on Alibi and Flirt. But considering that they're all part of the same initiative from Random House, and were all started at the same time as Hydra, it doesn't seem like an unreasonable guess that they have the same terms.

Stephe said...

A question... I've heard that the Big Print Publishers take one-time setup costs and printing costs and such out of you on the back-end too, like this. Is that true? (Not being funny, I'd really like to know.)

Victoria Strauss said...

Stephe--No, it's not true. You do sometimes run into this claim, but those who make either don't know what they're talking about, or have an economic incentive for misleading you (i.e., they want you to pay fees to them).

Stephe said...

Thanks, Victoria. Doesn't matter how long I live -- this kind of stuff still makes me feel like a babe in the woods.