More Thoughts on the Night Shade Books/Skyhorse Publishing deal

I’ve had a few more thoughts on the NSB/Skyhorse Publishing deal.

1) Jeremy Lassen, co-owner of Night Shade Books, posted a letter talking about the deal. In it he mentions, straight up, that the folks who are going to purchase Night Shade need “to make back their investment.” This is cited as the basis for asking authors for concessions.

I did some quick, back-of-the-envelope calculations. In the Kindle store alone, there are approximately 150 Night Shade Books titles. The average price is roughly $9.99. If the ebooks sell at a rate of 100 a year, which is the minimum they need to avoid reversion, and if Start will be paying 25% of what they receive to authors, that group of books will generate (((150 x $9.99 x 100) x.5) x.75) approximately $56K and change per year for Start. That’s without Start having to do a thing but cash checks from Amazon, since the ebook conversion is already done.

I don’t know what the overall deal number is, but the above is a rough ballpark of the minimum they’ll be earning each year on ebooks alone. That should go a long way to helping them make their money back.

2) A really unsettling part of this deal is that we’re being asked to sign off without seeing any numbers or having any chance to verify the amounts that we’ve been told we’re owed. Basically, this is a request to trust NSB and Skyhorse that the numbers are right. Assuming they are, the numbers (which were due in the beginning of March by contract anyway) could also allow authors to address another point. (See below.) The fact is that we’re being asked to make a very important decision, and not being given the information upon which we can make an informed choice.

Let’s make no mistake about it: sign the agreement, accept the payment, and the Night Shade slate is wiped clean with no recourse. You’re signing off on a number that you can’t verify. That’s someone who owes you money handing you an envelope, telling you it’s all there, and asking you to agree that the debt is paid before you get a chance to count the cash. And while it’s likely true that folks on the Skyhorse/Smart side are more than willing to talk about what they’ve been told you’re owed, the fact is that such numbers should have been sent to all of the authors for consideration along with the offer.

3) Here’s the really nasty point: What is the real viability of any book or series that’s been caught up in all this? Given the current publishing environment, I’m not terribly optimistic.

Take, for example, my Crown Colony series. My first book, At the Queen’s Command, sold fantastically. Everyone was thrilled with the numbers. The second book, Of Limited Loyalty, tanked. Sales were off over 50% from the previous book. In a conversation with Jason Williams, he said the reason was because NSB failed to let folks know the book was out there. Failure of book promotion is nothing new in the industry. It happens.

The trick is that NSB’s failure has long-term repercussions for me. Bookstores regularly look at the numbers for the last book in a series and order fewer than that for any new volume. This means the preorders for An Ungrateful Rabble might not even be enough for a publisher to print the book. If you don’t think books can be canceled because of a lack of pre-orders, you’ve not been in the business very long.

The transfer of the contracts sets up a new dynamic. Since a publisher who has picked up the contract would owe me the advance for delivery, they could decide to cut their losses and reject the book because until they accept it and put it into production, their cost and risk is zero. They could decide that paying the acceptance advance is just throwing good money after bad.

Authors really need to think about that. With ebook and audiobook sales generating income from the NSB backlist, the only way Skyhorse/Start go further into the hole is by deciding to edit, produce, print and distribute new books. Unless a book is a clear winner—and a book in a series or by an author where the previous book was a sales disaster because of NSB’s failure is not a winner—Skyhorse has no incentive to accept or produce the book. None.

It pains me to write those words, and not because I’m talking about the future of my own book. It’s because I’m talking about every book that hasn’t been delivered yet. Authors complete a book, the publisher rejects the book, and the authors are stuck with an orphan volume that no other publisher is going to touch. And, given how the rights assignments are set up in the contract, Skyhorse could accept it for print publication, sell the audio rights to cover the advance, and use Start to make money off the ebook sales, without ever doing a print edition—unless the ebook took off. They make plenty of money, minimizing the riskiest part of their business, and eventually set it up for POD to establish minimal sales so the book won’t revert, or they let the physical rights revert and still end up ahead of the game.

Skyhorse could also take a page out of professional sports. They refuse to accept a book, and then tell the author, “We ran the numbers. The book doesn’t work at your NSB acceptance advance. But, if you’re willing to take half that, we can do business.” The author, who has spent time completing that volume, is over a barrel—especially so if the book is one in a series. Does he take a lump of cash, or does he start down the road to self-publishing that tome?

4) I goofed badly yesterday when I failed to note that the rights grab for audio and second serial rights clause did not include payment pass-through language. It notes that money gained will be split 50/50 between publisher and author, but said nothing about when authors would be paid. While I don’t like that clause at all, at least including a provision that would pass the money through 30 days from receipt by the publisher would have made it a bit more attractive.

As I said in the previous post, I like Jeremy and Jason and everyone else at NSB. I don’t know the folks at Skyhorse, but I’ll happily assume they’re fine, upstanding people. Just for the sake of argument, we’ll toss the folks behind Start Publishing in that mix, too. As Jeremy’s letter makes clear, they want a return on their investment. I get that. I respect it. I applaud it.

That same desire for a return on investment tells me that authors have to be very careful in analyzing what will make the best business sense for Skyhorse/Start. To me, the plan that makes the most sense is to squeeze the ebook market for all its worth, sell audio rights in bulk for quick cash and then cherry-pick the projects that have a high return potential going forward. Any property that doesn’t, I sell as literary scrap. I don’t know that this is what they are going to do. This is what I would do were I in charge. You know, to get my money back.

When I read Jeremy’s letter, I feel for him. I feel for everyone at NSB. Having been in the gaming industry for ages, and publishing for almost as long, I’ve seen circumstances put dozens of companies down. I very much appreciate the fact that Jeremy and Jason have worked to broker a deal that will let them get out from under, and get their authors some money. I can see that this would be a great relief for them.

But, as a business man, I have to ask, “What’s in it for me?” So far, I don’t see that anything is.

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11 Responses to “More Thoughts on the Night Shade Books/Skyhorse Publishing deal”

  1. Paul Witcover 05. Apr, 2013 at 2:59 pm

    I had a very limited but not encouraging interaction with Skyhorse. This was about two years ago. I pitched them an idea for adding a speculative fiction component to their publishing program. The response was very positive. Tony Lyons asked me to put together a comprehensive proposal. This I did. Now, I am a professional editor with many years experience in the field (and out of it). So I have a pretty good idea of what a sensible business proposal is. And I crafted a good one. The result? Nothing. No acknowledgment. No refusal. Total radio silence. Okay, maybe my proposal stunk. I don’t think so, but maybe it did. Still, it was not professional for Skyhorse to solicit that proposal and then sever all communication without an acknowledgment. At the time, I shrugged it off. But now that they are looking to acquire Night Shade authors to launch their own sf line, I can’t help but recall the unprofessional behavior cited above. It doesn’t make me feel confident about how they might treat their writers. As ever, caveat scriptor.

  2. Okay. I get it. I’m a published author so I see this from the authors standpoint. This is a sucky situation.

    However, as much debate that has gone around I want to know why these are the only two option for you guys.

    There is a third option, but the parties in power don’t want to address it. Night Shade screwed up. However it happened they cannot stay in business. Now they want to sell to someone else and get out from under.
    But if the authors don’t want the terms then no deal.
    So maybe Night Shade should face facts. They blew it. They can close the doors and revert the rights and call it a day.

    That’s the third option.

    That’s the one that should be discussed in my opinion.

  3. If the only investment they care about is their own, without regard to the return on the authors (their clients) investments, then i really can’t see them succeeding.
    It shouldn’t be that hard to maximise Start’s investment by helping authors to maximise their own.

  4. Agreed. That’s the third option.

    And the fourth is that someone else comes in, buys NSB, and moves forward.

  5. I remember reading about your troubles with FASA on your original website, Mike. I think maybe the reason you’ve been burned so many times is because your hands are on so many projects (which is a good thing!)

    Your point about trust is completely right. Even if you trust the folks at Skyhorse, what if the leadership changes? What if they have their own financial problems and “have” to sell your contract to people who don’t mind abusing those clauses?

    If trust were enough for doing business, there would be no contracts.

  6. Russell Davis 09. Apr, 2013 at 1:05 am

    Why don’t the licensing contracts for this IP include a clause stating that if the publisher fails to meet it’s obligations (IE paying the author it’s royalties) then the licensed IP is returned to the author.

    I hate to use what i’m sure is a huge oversimplification but if I stop making my car payment they repossess the car. I don’t understand how NSP can keep something and not pay for it.

  7. Russell,

    If authors could repossess their rights as easily as a car is repossessed, you’d see a lot of that going on. At a minimum, to gets rights reverted (which is what you’re talking about), a lawyer has to get involved. NSB, in the past, has been good about this, but with so much depending on the sale, I don’t know how flexible they’ll be.

  8. Hey, Mike. Any thoughts on the revised terms that Skyhorse is said to be offering?

  9. Heather,

    I’ve heard about the terms generally, and know they’ve talked to my agent. I’m waiting to see the actual letter before I make any final decisions. If what I have been told is accurate and a few questions can be answered, I’d see the changes as very positive and likely would consider signing.


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