11 June 2010

Chocolate Ration Raised to 25gm a Week!

Yet more reason to be concerned about publishing consolidation emerged this morning, when John Wiley & Sons — a notorious bad actor on contracts1 — responded to criticism of its attempts to screw authors of an acquired imprint. Of course, Wiley doesn't see it that way... but one must call into question the acuity and intent of its spokescreatures.

Wiley sent a letter to authors that is in substance, albeit not in form, a contract amendment (HT: GalleyCat). We'll leave aside the deceptive rhetoric in the letter, in the Authors Guild's response, and in the Wiley rebuttal, and focus on the two critical changes that Wiley would impose.

  • The less-dangerous of the two changes is an attempt to change the royalty calculation basis from list price to net receipts. I'm astounded that Wiley's rebuttal claims that this will not result in a net reduction of royalties to authors. This is pretty damned simple math:

    10% of list price > 10% of (list price – discount from list price)

    for all list prices > 0, on a per-book basis. The implicit claim in the Wiley proposal is that Wiley will, through its greater marketing power, sell more than the discount from list price more in copies, meaning that the total compensation to authors will (purportedly) at least equal that under the list-price royalty scheme. This, however, is both uncertain and illusory, and further misstates the basis... because unless Wiley intends to work less for books that earn royalties based on list prices than on net receipts (which would constitute bad faith under the law of just about any state except New York), the better way to understand this in the aggregate is

    10% of (total sales calculated on list price) > 10% of (total sales calculated on net)

    ... and it's not even close, unless the mere fact of doing net-receipts pricing by itself raises the number of copies sold by greater than the difference between list price and net receipts. In short, Wiley's rebuttal is not just deceptive or incomplete, but a knowing and willful deceptive statement intended to influence a person who would reasonably rely on that statement.2

  • The more-dangerous change is a POD rights grab that essentially turns "out of print" into "on a day not ending in 'y'"... at an even-more-reduced royalty rate. The prospective change allows Wiley to keep the book "in print" merely by making it available for POD fulfillment, while cutting the royalty rate on POD copies in half. That's right: Less risk to the publisher (no returns, no inventory carrying costs!) means less money for the author. Umm, right. But it's the semiperpetual nature of this particular change that is most disturbing, particularly in the face of the problems with termination rights.

And the other annoyances in Wiley's proposal also reflect a pretty serious disdain for its authors: No payments until they reach a $100 minimum (in this day of PayPal?), the dubious claim that Wiley "does not need to rely on distributors the way Bloomberg did" (somehow implying that "relying on distributors" has anything whatsoever to do with final sales figures based on list price), and — perhaps most important — the directive:

We are sending you two copies of this letter, one for your files and one to be signed by you and returned to Wiley in the enclosed self-addressed envelope.

No notice that this is a contract amendment; no notice that this is optional on the author's part; and the author gets to pay the postage. The best of all worlds.

Perhaps the most disingenuous aspect of Wiley's actions, though, is its rebuttal, which claims:

This morning — without speaking with Wiley concerning its specific assertions — the Authors Guild issued an 'alert' to its authors, claiming that the Wiley letter is deceptive and inferring that the Wiley changes it effects will reduce royalties for all or most former Bloomberg authors. This is simply not the case. We believe former Bloomberg authors will be paid higher royalties in most instances. The limited number of contract amendments the AG apparently chose to select are not therefore representative; nor are their 'calculations' accurate. In any event, Wiley stands by its offer to discuss their individual contracts with all affected authors.

Bluntly, this is a deceptive statement that, if directed at a consumer, would violate the FTC Act and the various versions of the Uniform Deceptive Acts and Practices laws of virtually every state. Nobody should have to contact the writer of a contract amendment for what that amendment means. Wiley's unsupported and unsupportable belief that royalties will be higher for authors than they were under Bloomberg is completely irrelevant to whether they will be higher under Wiley with a list-price or a net-receipts royalty basis. And so on. Most disturbingly of all, characterizing a contract amendment (in the form of a letter) that implies it merely acknowledges procedural changes as an invitation to discuss contract content is completely unjustified.

However, authors are not consumers. They are engaged in business transactions with their publishers; so they must, instead, fall back upon the much-harder-to-prove common-law fraud cause of action... and that's expensive to litigate, in addition to being difficult to prove, and the damages are even harder to prove up than the cause of action itself.

In short, shame on Wiley for its actions, and shame on the Authors' Guild for not being more explicit in its reasoning. There is no hero here — only villains and victims.

Meanwhile, it's 1 all right now... so please excuse the typos.

  1. I do not think it coincidental that some of the most-abusive contracting practices in publishing come from publishers that also have extensive lines of legal reference works, or (as in Wiley's case) in-house counsel who write purported "treatises" and "practice guides" on publishing and/or entertainment contracts. This is more probably a chicken-and-egg problem than a cause-and-effect problem... but it's not a credit to the legal profession.

    A publishing relationship, including contracting, is supposed to be for mutual advantage — that is, both economically and ethically, the contracting process and relationship between author and publisher needs to maintain a win-win orientation for either party to have long-term profit. The tyranny of the quarterly report and corresponding loss of long-term perspective, in both legal and business education, combined with the occasional element of ego and/or bad faith, is enough to skew things permanently.

    At least Wiley is not known for mistreating its authors during the editorial process as some of its competitors/contemporaries are. That's a small comfort — slightly larger than the world's tiniest violin, but small nonetheless, given the poor marketing and sales support endemic in the serious and professional nonfiction segment in which Wiley operates.

  2. Yes, those are in fact the elements of common-law fraud in there. Go ahead, Wiley: Sue me. It's not defamation if its true.