An open letter to publishers from Society of Authors chief executive Nicola Solomon
The Society of Authors would like to invite all IPG members to sign up to our seven steps to ensure that special sales do not damage authors’ earnings or the markets for full-price sales. It would be really powerful if publishers and authors worked together to maintain book prices and curb the grey market in books.
We are not talking here about ordinary high discounts, but about sales where the purchaser pays a very low but firm price per copy for a large quantity. We appreciate that knowing that payment is guaranteed, and factoring in economies of scale, can influence a publisher’s budgeting decisions. We know that such deals can reach purchasers who would not pay full price and can be useful for books that have been selling poorly. They can also boost backlist titles.
So what’s the problem?
Our first concern is competition. The huge discounts on these books mean that they can be sold on very cheaply. The internet has changed the way we buy books, and cheap copies, which used to be sold to discrete markets, can end up competing directly with conventional titles. The sale of discounted books on Amazon Marketplace is a major concern, since they will be listed alongside full-price copies.
Publishers have no control over the price at which a book is sold to the customer, except where they use the agency model. And no matter what market restrictions a publisher tries to impose, once they’ve made a sale in the European Union, no-one can prevent re-sale due to ‘exhaustion of rights’ in the EU. So we urge publishers to exercise caution. All deals should be considered carefully. Don’t supply books at an ultra-high discount unless the author and the publisher agree that the deal is worth it.
There are other concerns too. Special sales can be hard on authors. Income is usually based on net receipts rather than cover price, so authors can earn far less from these deals. In some contracts where royalties are based on net receipts, the percentage rate payable to the author illogically reduces when the discount increases. And it isn’t always clear if a large proportion of an author’s sales will be at the discounted rather than contractual headline rates.
Becoming associated with bargain books can damage an author’s brand. And special sales are not recorded by Nielsen BookScan, so don’t appear in official sales figures. Publishers record special sales as subsidiary licensing and don’t show the number of units, leading to underestimates of how many copies have sold—but publishers consider previous sales when deciding whether to commission another book.
High street bookshops, wholesalers and distributors cannot compete with low-priced sales and may decline to stock the books. And seeing books for sale so cheaply can damage the price that readers expect to pay. This was less glaring when special sales editions were branded, of a cheaper quality or had different jackets. These days they are often indistinguishable from full-price editions.
The seven steps
We invite all publishers to agree to the following steps on special sales.
1 Consult and involve
Give your authors a right of approval over every special sales deal, even if the current contract does not include that right. Discounting is sometimes a valid strategy, and publishers also suffer if deals cannibalise conventional sales. But an author usually only has a handful of books from which to earn, while publishers have many, so an author is more at risk if the strategy does not work. Always explain why you want to do a deal, the likely receipts for the publisher and author, and the impact on traditional sales.
When negotiating a contract, tell authors which royalty clauses you anticipate affecting a significant quantity of sales in the first couple of years. Without such explanation, contracts can be extremely misleading.
3 Share the hit
If an author’s royalties are based on net receipts, the percentage rate payable should not reduce when the discount increases.
Take steps to ensure that books do not leak back to full-price outlets. Give a separate ISBN to each special sales edition, and add appropriate restrictions, where lawful, to make the books traceable and non-returnable.
Differentiate special sales from full-price editions. If they are cheaper the quality should not be as high.
Monitor closely and follow up suspicious sales on Amazon. Stop selling to purchasers who leak books.
Include special sales figures in your records of a work’s lifetime sales. Tell authors the size of print runs. Encourage Nielsen BookScan to record special sales alongside traditional sales.
We urge every publisher to contact the SoA
and openly agree to these seven steps. It will help authors, publishers and booksellers to maintain the best prices for books, reduce unfair competition, reward authors appropriately and maximise sales revenues.
Nicola Solomon is chief executive of the Society of Authors. This is an edited version of the SoA’s recent open letter to publishers. For more about the SoA’s work on special sales, click here.