Of Carnival Barkers and Sleight of Hand

Unless you’ve been living under a rock for the last week or so, you’ve heard plenty about the problems surrounding Night Shade Books. Now, anyone who is a member of SFWA or who has searched for a science fiction publisher over the few years probably knows that Night Shade has had more than its fair share of problems. There had been talk of de-listing it as a pro publisher by SFWA and authors have reported slow — extremely slow — royalty payments.

Well, everything came to a head last week when Night Shade announced it had decided to sell its assets to Skyhorse Publishing and Start Publishing. That’s when the storm hit the internet and all hell broke loose.

Before getting into why so many of the authors caught up in this situation are worried, let me start by saying this situation is a perfect example of a PR nightmare. It was mishandled in so many different ways. It began with a tweet by one of the owners of Night Shade basically announcing exciting new news. Then came the letter to authors which has been seen by many as nothing more than blackmail. SFWA also hasn’t helped because there has been no official — PUBLIC — statement about the sale that I can find except for a self-congratulatory note about some changes in the terms of the proposed sale (original terms they originally signed off on as best as I can tell).

While I can’t vouch for the authenticity of this “exhibit”, this does seem to be an accurate representation of the letter originally sent to Night Shade authors. Among my concerns with this are: 1) lowering of royalty rates; 2) no accounting to the authors about what they are actually owed; 3) no detailing of the number/percentage of authors who have to ratify the new contract for the sale to go through;. But what really concerns me is the rights grab for audio (and who knows what other rights) not currently held by Night Shade. The way I read the contract — and I am not a lawyer nor am I the only one with this concern — unless an author has already sold audio rights or is currently in active negotiation with someone for those rights, by signing the contract, they are handing the rights over to the new owners for no compensation except 50% royalty on net sales at some point down the line.

I’ll admit right now that I don’t know the folks at Night Shade, nor do I know the folks at the two companies that want to take over its assets. But I know a bad deal when I see it. Nor am I alone. You can read what Michael Stackpole has to say about it here and here. There is also a very informative post by Andrew Zack about the initial announcement and terms. You can find it here.

As I said, this was the “initial” offer of terms. After the internet went wild with disdain (yes, I’m being nice) about the offer to Night Shade authors, there was first an attempt to justify the offer by Night Shade and then the top dogs for the buyers offered their take on things. My biggest issue with all this was the attitude of Skyhorse and Start. We were being told they were the good guys in all this. Of course, if you keep reading, you’ll see they are also wanting to insure they are making their money back — on the backs of authors who have already been harmed by not being paid what they are owed.

So the internet exploded and all was not right in the world of publishing (as if it has been in a very long while).

Then came the announcement that new and better terms have been offered by Skyhorse and Start. From SFWA:

After continuing talks with Skyhorse/Start, SFWA is pleased that the companies have decided to adjust the royalty terms in their author agreement to be more in line with industry standards for Science Fiction and Fantasy. We see this as a positive sign that they are listening to authors and are responsive to their concerns, and we hope that continues. SFWA has remained in close communication with our members who are directly affected by the sale of Night Shade Books assets and will continue to provide them with information and support.

Note that this is after SFWA had already announced it was pleased with the initial offering. Gee, you have to wonder if the powers that be really thought their members would bend over and cough as they accepted the initial lower royalties. Also note that this only deals with royalties and not with the reporting out of the number of authors who need to agree to the new terms for the sale to go through (assuming a bankruptcy court would allow it) or the rights grab or any of the other issues that have been raised about the deal.

Now, I am glad to see Skyhorse and Start have increased the royalty rate. However, I have a real problem with their explanation of why they didn’t initially offer similar terms.

Jarred and I have been listening to and thinking through what the Night Shade authors and agents have said on blogs, on facebook, over email, and during several very long phone conversations. Skyhorse and Start now have a much more complete picture of what the Night Shade authors been through and it’s helped us to understand the reaction that many of them have had to the deal as offered.

So, they were offering to buy a company that has a history of problems with paying its authors, among other things, and they didn’t do a full investigation of what was going on? Somehow I find that hard to believe. Maybe I’m a cynic, but I have to wonder if they really thought authors would be so glad to be promised payment, any payment, that they actually thought the original royalty rates would fly. Remember, too, they had supposedly been in discussion with SFWA — an authors organization — and SFWA allegedly agreed to the original terms. Color me very skeptical.

The new royalty structure:

7 1/2 % of retail for all printing books.

25% of net receipts on all ebooks up to 15,000 copies sold and 30% thereafter

50/50 on audio, with a reversion if we don’t sell the rights in six months. Audio rights money to flow through within 30 days of receipt of payment, provided that the advance has earned out.

The assignment clause, clause 7, would only apply if the assignment is part of a sale of “all or substantially all of the assets of the company” purchased by either Start Publishing or Skyhorse Publishing.

Now, I applaud the increase in royalty rates. This is much better than the initial offer. However, I still have concerns. The first is that e-book royalty is 25% of net. If the Skyhorse/Start had any cost involved in getting the ebooks out there, that might make sense. However, these ebooks already exist. The editing, formatting, conversion, etc., is already done. Also, this is merely an announcement and we haven’t seen the actual contract language. That means we don’t know how they are defining net for either print or digital. Then there’s the fact that we still don’t know the magic number of authors who must ratify the contract  before the sale will go through.Finally, it still looks like a rights grab on the audio rights. Again, we are seeing only the announcement and not the actual contractual language. Still….if it looks like a duck and quacks like a duck….

I hate seeing any publisher go under. I hate seeing lousy contract terms for authors even more. There is no reason for it in this day and age when there are so many options available to us. I feel for the authors caught in the middle of this carnival of nightmares. If you are an author with Nightshade, don’t just rely on your agent when it comes to accepting or rejecting the offer. Get yourself to an IP attorney as fast as your feet can carry you. While you don’t want to get tied up in bankruptcy proceedings, you also don’t want to give up the farm just to avoid it. All I know for sure is that this is a long way from being over.

19 comments

  1. Those royalty rates still suck. Just pulled out my last royalty statement from the smallest publisher I’m working with and I’m at 15% on print books (goes up to 18% after initial run of 2000 hits sell-through), audio books are all mine (well, because they’re not out in audio, but the rights are 100% mine) and 50% of ebooks. And this is with a _small_ press.

    I would recommend they (the authors) say no to those new rates and stick to their guns. As you mentioned, there is almost no cost for the new publisher for ebooks (unless they’re considering loading them down with DRM, which would open up a whole new can of PR-nightmare worms).

    1. Jason, I agree. I’d be running long and hard from this contract. Of course, I’d have already been at my attorney’s office getting reversion letters for my work sent to Night Shade long before this came up. You know they have to be in breach of their contracts.

      I’m still shaking my head over this whole thing — not just from the Night Shade/new owner stand but also with regard to the role SFWA has played in it. I find it hard to understand why they would approve either of the offers and not be recommending that their members at least confirm with their attorneys and/or accountants.

      1. This is the… third? fourth? time in the past two years that SFWA has recommended a bad contract for its members. And that doesn’t even begin to cover their response of the whole “Spots the Space Marine” issue or the pulling of SFWA author titles from Amazon last year. It makes me wonder just whose side they’re on.

        1. I think we know whose side, Jason. Remember, they still don’t recognize most e-book sales as pro sales, no matter how many you happen to sell or how much money you make. If you don’t get an advance of X-number of dollars, you aren’t a “pro”. Oh, I know there are all sorts of excuses — pardon me, reasons and justifications — for this, but it is overlooking the fact that publishing has changed.

  2. I’m curious to see what lovely surprises are in the new contract B&N is offering to former PubIt! authors. Nothing as bad as the Night Shade/ Sky Horse mess, I hope, but the trend seems to be for worse and worse “desperation” contracts.

    1. Yeah. I need to go through their FAQs and then all the linked pages to see exactly what all is changing. The fact that you have to actively roll your PubIt account over is troublesome.

      1. Have you seen Holly Lisle’s take on it? Over here http://hollylisle.com/writers-barnes-noble-nook-press-contract-terms-are-insanely-bad/?awt_l=FkN3U&awt_m=JROVpwGRmm.TgP

        My reading of the key points is:
        1. You provide a list price.
        2. B&N sets the retail price at their “sole and complete discretion.”
        3. B&N will pay you a royalty.
        4. When? within 60 days after the end of the calendar month when an ebook is sold (make that within 90 days! aka quarterly). EFT… B&N determines all rates, fees, charges, etc.

        NOTE: The royalty rate is NOT included in the contract. Which means they can change it at will?

        Yep. See http://cp-barnesandnoble.kb.net/kb/?ArticleId=4327&source=Article&c=12&cid=28#tab:homeTab:crumb:7:artId:4259
        which sets if out very clearly. B&N can update or alter the pricing and payment terms and aty time, and changes will be effective and binding on you within 30 days.
        $2.99 to $9.99 — 65% of list
        below $2.99 or above $10.00 — 40% of list

        Not exactly what I would consider encouraging.

        1. Yeah. I read her post earlier today and am in the midst of going through all the different pages and faqs etc., that BN has posted on the new venture. Like you, I’m not especially encouraged and, at least for my own stuff, am considering removing it from their store. Folks who want an epub can find it on other venues. I’ll probably post on what my decision is either here next week or on my personal blog later this week.

  3. It seems like the more things change, the more they stay the same. Especially in publishing, where even smaller presses such as Night Shade can get devoured by other presses such as Skyhorse — and that’s exactly what I think is happening, even if Night Shade has basically done the equivalent of coating themselves in honey and prepared to be devoured. (The staff of Night Shade, anyway. The authors are a whole ‘nother story.)

    I am extremely bemused by this whole thing, because I agree that all of the authors affected need to talk with attorneys, stat. Why SFWA would get involved beyond that doesn’t seem credible at all no matter how long I think about their involvement. Especially considering the, at best, wishy-washy advice they’re giving SFWA authors . . . and the royalty rates for e-books are still way off because, as you said, Amanda, Skyhorse doesn’t have to do thing one to get these books together as they already exist.

    I just don’t get this at all on any level except one: Night Shade does sincerely seem to want to do the right thing. Which is why I don’t understand how they couldn’t just do something like an automatic reversion of the rights (maybe it’s too hard?) _unless_ you want your books to go to Skyhorse. That way, most of the authors would at least have the option to take the book over themselves. And if they didn’t act on that option, they’d have only themselves to blame.

    1. I think the whole problem is that Skyhorse will only do the buyout if the majority of the authors go along. This way they get ready assets without having to do any of the work. The fact they were so willing to screw the authors in the process — and their “new terms” aren’t much better — just shows it. Of course, that’s just my opinion.

      1. I agree, Amanda. I’m just glad that I’m not in this particular situation. Most of these authors don’t have much in the way of leverage. SFWA has apparently come in on the side of Skyhorse, which is deeply perplexing, so there’s no help coming from them. And unless these authors have agents as on the ball as Andy Zack, it really sounds like they’re in deep trouble.

        Overall, this is one big, fat mess. But I’m glad you’re keeping your weather eye on it.

  4. I’ve been designing covers for Nightshade books, and I’m thinking their graphic designers are even lower on the priority list for getting paid than the authors (rightly so, I suppose). Even though the amount of money involved is very low. I currently have several unpaid invoices, from as long as 8 months ago– don’t imagine I will ever see that money now.

    1. Martha, sorry to hear that. And, to be honest, I’d been wondering just how badly you guys were being hit by all that’s going on. Hopefully, things will be corrected and you’ll get paid.

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