In the previous post, I set out the results from studies all around the English-speaking world showing author incomes are in dramatic decline. But why is the falls? Here, I set out some of the myriad factors that might explain it.

Unfair contracts and copyright law

In substantial part, global writers’ organisations blame the crisis on the law regulating copyrights and contracts. The British Society of Authors, for example, sent an open letter to publishers in 2016 calling on them to give authors a fairer deal. Here’s what they asked:

‘What we ask is simple: publishers need to revise many of their standard contract terms to make them more equitable. Authors should get at least 50% of ebook revenue, not a mere 25%. Authors should not have their hands tied with contracts which cannot be terminated when a book is no longer being exploited or be subject to non-compete and option clauses that make it even more difficult for them to write and publish new books. Indemnity clauses should spread risk fairly between the publisher and the author. Royalty statements should be transparent and comprehensive. And we ask publishers not to discriminate against authosr who don’t have powerful agents. When negotiating with agents publishers often start from previously negotiated forms that remove, or at least soften the blow of, some of the more draconian provisions offered to unagented authors. Why not do the right thing by all authors and eliminate those provisions for everyone?’

These issues around the law and regulation of books and writing are the main focus of this Author’s Interest project. They are what my team and I will be investigating over the next four years. Australia is something of an outlier in terms of its lack of author protections (in case you missed it, here’s our earlier post on some of the author-protective copyright laws around the world that try to level the playing field.) We want to better understand how better protecting authors can not only help get them paid, but, in so doing, reclaim at least some of the culture that’s lost under current approaches to copyright.

These are vital issues that must be addressed. However, since we’ll be revisiting them often, in the rest of this post I want to tease out some of the other contributing factors at play. Some of the main ones were listed by the then-chief executive of the Publishers Association Richard Mollet in an interview responding to the Society of Authors’ letter. ‘With margins being squeezed across the whole supply chain, books facing increasing stiff competition from other media and entertainment sectors for consumers’ time, and there simply being more writers, as evidenced by the increase in the number registered with ALCS, the reasons for the decline in average author income are wide and varied.’  Let’s take a moment to think about those factors.

Competition for eyeballs, too many writers, the growth conundrum

In a world filled with cat videos, Twitter feeds, video streaming services and a multitude of other entertainment options, it makes sense that it’s becoming more difficult to capture and hold readers’ attention with books. At the same time however, there are more of them than ever before. The advent of online self-publishing has seen numbers explode: Bowker, the US ISBN agency, has reported that there were at least 625,327 individual books self-published in the US in 2015. That’s likely to substantially under report the total number of self-published titles, since many still do not have ISBNs.

We can put that number in context by comparing it to figures out of the International Publishers Organisation, which excludes self-published titles and reports ‘only the output of “traditional” publishing companies’. In 2015 those publishers released 338,986 titles in the US – equal to just 54% of self-published ISBNs. That’s an extraordinary shift.

The rise of digital self-publishing is also undoubtedly changing readers’ perceptions of value, with more and more books being sold at low price points, or included in an all-you-can-read subscription service like Amazon’s ‘Kindle Unlimited’ for US$9.99 per month (A$13.99 in Australia). That could be causing readers to balk at paying A$30 price for a single book in an Australian bookstore (as well as redirecting money that was previously spent on those books) and putting pressure on the business models of ‘traditional’ publishers.

All of this no doubt contributes to the contracting margins that are causing publishers to feel the squeeze. This is not a recent phenomenon, even if the market is evolving particularly quickly at the moment. In the last few decades, overall book sales have largely remained steady. That’s a problem for publishers, because the way most world economies are organised means companies need to grow in order to even stand still. The question they’ve been faced with: ‘how do you achieve significant growth year on year when the market is essentially static?’ John Thompson explores this ‘growth conundrum’ in Merchants of Culture. And after immersing himself in the US and UK trade book industries for four years, and interviewing some 280 participants working across all aspects, he got some fascinating answers. I outline some of the key findings below, but recommend interested folk read Merchants of Culture (or at least pages 188-194) for a fuller picture.

  • To achieve growth, large publishers have achieved economies of scale by merging with other firms and ‘rationalizing’ their sales teams, meaning that marketing staff became responsible for more and more books;
  • To deal with that load, the number of yearly sales cycles was then increased, shortening the ‘shelf life’ of many titles;
  • In a single cycle, sales staff could have perhaps 2,000 titles to handle, and so became obliged to ‘prioritize’ certain titles. That suggests they often cannot provide strong support to even the books in a single (shortened) cycle. One interviewee, the ‘sales director of a large US publishing corporation’, described it like this:

‘Each day of the sales conference we’ll have a session with a core publisher from one of the groups. They come into a conference room, we show covers and so on. Let’s say the summer list will be 2,000 titles. We have our meetings and first of all, we don’t cover every title in the meetings. The publishers don’t even cover all their titles. So if the total number is 2,000, they will cover, say, 1,500. Then what I do is I sit down with my divisional directors, we take the 1,500 and I come up with what we call our ‘priority titles’, and that’s going to be about 500.’ (at p189)

  • Thompson’s work found that, to achieve growth in these consolidated environments, publishers typically limit the titles they publish, thus enabling each book to have a bigger share of the marketing budget and more attention from staff.  ‘Publish fewer books and sell more of the books you publish: this is the mantra that is chanted in nearly all of the large publishing houses, and in many of the medium-sized and small publishing houses too.’ Thompson then goes on to describe how this has led to the industry investing more in certain kinds of books, those ‘big books’ most likely to become bestsellers, and less in ‘small books’, those midlist titles and authors who sell only moderately well but ‘breathe valuable oxygen’. See 192-193.

Since Merchants of Culture was last updated in 2012, the industry has of course only seen further consolidation, with the merger of Penguin and Random House compressing the Big 6 into the Big 5. The industry push towards fewer books each selling more copies must no doubt play a role in hollowing out of incomes for those out of the megaselling leagues. While the Author’s Interest project will be focusing primarily on understanding how the law around copyright and contracts can harm authors and cause culture to be lost, it’s certainly valuable and important to also chew over the role played by other factors such as these.

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