Buy the Book

Though he has 81 published books under his belt, Springfield author David Harrison’s found himself in unfamiliar territory with the publication of “Goose Lake” last year.  In December, the fiction, nonfiction and poetry writer self-published his first e-book, available through Amazon and Barnes & Noble.

Harrison is not alone in an industry undergoing foundational change as e-books pick up steam.

“When I go to conferences, one of the hot topics that authors talk about is e-publishing and … how does it work?” Harrison said.

Antitrust trigger
As e-publishing gains ground, Missouri Attorney General Chris Koster has joined an effort to make sure e-books are traded fairly. On April 11, Koster joined attorneys general in 15 other states in a suit seeking restitution from Apple Inc. and three of the largest U.S. book publishers for colluding to fix electronic book sales prices.

The lawsuit claims the publishers violated the states’ antitrust laws and the federal Sherman Antitrust Act.

“The main purpose of the Sherman Act is to protect competition in the marketplace,” said Angela Drake, a partner with Lowther Johnson Attorneys at Law LLC. “It guards against what it calls unreasonable restraints of trade, for example, an agreement among competitors to fix a price or to allocate a market.”

Drake said antitrust laws aim to put a stop to collusive behaviors that interfere with normal market forces.

“For example, if you and I sell gasoline across from each other, and (we) go to lunch together and say, ‘Let’s both sell our gas at $4.50 a gallon,’ that’s what the antitrust laws are designed to prevent,” Drake said. “Because in the normal market situation, you and I would try to out-price each other to get more customers. When you have that sort of competitive atmosphere, it’s better for the consumer, because it drives prices down.”

The antitrust lawsuit stems from a two-year investigation into allegations that publishers Penguin, Simon & Schuster and Macmillan had conspired to raise e-book prices.

For years, retailers sold e-books via a traditional wholesale distribution model through which retailers, not publishers, set the sales prices of e-books. The investigation revealed, however, that the publishers allegedly conspired with other publishers and Apple to raise prices artificially by imposing a distribution model in which publishers set prices for best-sellers at $12.99 and $14.99, according to the Missouri attorney general’s office.

The publishers and Apple relied on contract terms forcing all e-book outlets to sell their products at the same price to enforce the alleged price fixing-scheme, and according to the lawsuit, the coordinated agreement to fix the prices resulted in e-book customers paying more than $100 million more for the books.

“What they’re saying is that if normal market competitive forces would have been in play, the price for the e-books would have been cheaper,” Drake said.

The lawsuit seeks injunctive relief and damages for customers who paid artificially inflated prices for e-books. Missouri and the 15 other states participating in the suit already have reached an agreement in principle with publishers Harper Collins and Hachette for significant customer restitution and injunctive relief, according to the attorney general’s office.
 
Publishing perspective
Author Harrison said “Goose Lake,” a book of poetry and prose, was made available Dec. 15, after about six weeks of preparation.

“Considering that my last nonfiction book took five years, I thought that was pretty good,” Harrison said.

While the time it takes to publish an e-book may be quicker than for print books, that doesn’t mean there aren’t downsides in the shift toward e-publishing.

In mid-April, the Springfield-based Assemblies of God National Leadership and Resource Center laid off 47 employees as a result of restructuring as the organization transitions its publications, including ministry materials, to digital formats.

Most of the cuts are in the Gospel Publishing House printing plant, according to company officials, who noted consumers’ shift “from tree books to e-books.”

Harrison works with numerous publishers, including Scholastic, Boyds Mills Press and Random House.

He said there are two types of payment models for authors – outright purchases and royalty-based fees – and for him, the latter is more lucrative.

Through outright sales, the author gets a flat fee, and the publisher owns the copyright on the work.

In a royalty-based fee structure, the author retains ownership of the work and receives a percentage of the cover price or net sales, granting certain rights to the publishers.“It’s still my property and remains theirs to use as long as they keep it in print,” Harrison said, noting that with the royalty fee structure, if a publisher stops printing a book, the author has the option of pitching it to another publisher.

“I have a book that just passed a million copies in sales, that came in 1986, ‘Wake Up, Sun,’ Harrison said. “It isn’t likely they’re going to take that out of print anytime soon.”  And as long the book keeps selling – in print or electronically – Harrison will receive royalties.

While royalty percentages vary by type of book and publisher, Harrison said a royalty on a picture book would be roughly 10 percent, split equally between the author and the artist. He added that some royalty agreements boost the percentage when a book hits benchmarks for units sold.

He has, however, used the outright sale model, too. He sold his first book, “The Boy With a Drum,” outright for $350, he said, noting that it ended up selling 2 million copies. The money from royalties is better, Harrison said.

“I’ve made as much as $100,000 on a book,” Harrison said.

He said royalty fees for “Goose Lake” are about 70 percent, or $2.80 of the $3.99 cover charge, minus handling charges of about 60 cents, on Amazon. He said fewer than 100 copies have sold to date.

“I’m not making any money on it yet,” Harrison said. “The missing ingredient is promotion. If an author goes through the traditional publishing route, that publisher is going to produce a catalogue and have sales representatives and get in touch with reviewers, all those things that are part of a marketing plan.”

Though he previously co-edited a book for a division of Penguin, Harrison said he doesn’t currently have any relationships with the publishers named in the antitrust lawsuit.

He noted, too, that he’s not worried about price fixing on other books, because he only sells them to one publisher at a time, removing any opportunity for multiple vendors to collude on their pricing.