The Shatzkin Files: It’s official: putting books in stores is a subsidiary right

http://www.idealog.com/blog/its-official-putting-books-in-stores-is-a-subsidiary-right

The Shatzkin Files

It’s official: putting books in stores is a subsidiary right

Posted by Mike Shatzkin on April 4, 2011 at 11:27 pm · Under Authors, General Trade Publishing, Licensing and Rights, New Models, Publishing, Self-Publishing, Supply-Chain, eBooks

The headline in a number of places was that Amazon was now aggressively going after exclusives for their Kindle line and actually bid against the publishers for Amanda Hocking’s trade books.

The enabling component, as reported in Publishers Lunch, was that Houghton Harcourt is now Amazon’s trade book distributor. Except please don’t call it that.

Lunch reported that Harcourt had acquired a range of titles from Amazon’s Encore and Crossings imprints, as well as securing a first-look relationship.

From one standpoint, this makes a lot of sense. Amazon can sell the hell out of a book online, and they have long made print available through their CreateSpace program. But they can’t merchandise books in stores. Even paying extremely high print and ebook royalties, as they do, they can’t maximize an author’s revenues if they can’t deliver store sales of print in today’s world.

On the other hand, virtually all of the Big Six CEOs (a club Houghton Harcourt stands just outside of) have said that they wouldn’t acquire print only, a clear signal to authors that their ebook rights were hostages to secure their print sale. After all, they wouldn’t have ever given up book club rights or paperback rights when those were important and didn’t require a scale organization to reach.

Harcourt’s adult trade publisher Bruce Nichols told Lunch that his arrangement did not constitute Houghton Harcourt doing a print-only deal. Quoting from Lunch:

“I’m sure some people will say in principal ‘we never split print and electronic’” rights, but he sees the Amazon deals as “no different than licensing reprint rights,” in which ebook rights are not available. Just as Houghton still intends to compete with Amazon on new projects, Nichols says the house will not bid for print-only rights to new properties. While “there are certainly agents and authors who want to” split rights, he underscores that “we’re refusing” to do so. “This is different; Amazon already owns all rights.”

So, there you have it. Houghtons’ full-fledged print publishing efforts are a subsidiary right.

This simply reflects the most fundamental publishing economics. Somebody can afford to write a check (the initial advance, or what might be called “the enabling transaction”) to buy the opportunity to exploit a copyright because they control the means of reaching the largest single piece of its revenue and the relationships to license others to generate revenue from smaller pieces.

Five years ago, the lion’s share of the revenue from any book-type property would have come from the sales of print in retail stores.

Five years from now, the lion’s share of the revenue from any book-type property will come from the sales of print and ebooks through online channels.

We’re in a period of transition. Houghton’s deal, just like Barry Eisler’s decisiontwo weeks ago to decline a half-million bucks from a house so he could self-publish, are first times for business practices that will soon be normal