The Regnery Affair, Cont.

A publishing-industry insider emails:

From what I’ve read of the lawsuit online, at least one of the main points made by the authors is silly; another, misleading.

The silly one is the implicit claim that the authors would be deprived of their ordinary royalties only because of the sweetheart deal between Regnery’s publishing division and book club. In fact, every reputable trade publisher distinguishes between royalties offered to authors for ordinary sales and those that apply to books that must be heavily discounted to clubs and elsewhere. To give one example, authors routinely make only 50% of their ordinary royalty on sales to channels where the publisher has to offer outlandish discounts to the vendor. These include any book clubs (owned by the publisher or not) as well as deals that persuade Barnes & Noble and other major chains to put the books on their New Release tables. (Does anyone really think they do that just because a buyer somewhere closely read the bound galley and wept with pleasure? It’s all about co-op dollars.) In many such cases, the publisher is losing money on every book sold. It’s hardly an injustice that the royalty for those units would go down.

The misleading point is the idea that the authors aren’t, on balance, profiting even when some copies of their books bring in less money per unit sold. You are spot-on when you write: “I've had several in-the-know D.C. types explain to me over the years that if you're writing a conservative political book for the money, rather than the prestige (or the careful editing), you should do it through Regnery because their book club links - as well as their connections to the talk radio outlets that can help pump up a right-wing book's sales - enable them to more or less create best-sellers at will, in a way that other conservative imprints just can't match.” Exactly. Until recently, Regnery distributed nationally through the distributor we use, and I’ve heard their sales pitches to the national sales force before. They were jaw-dropping. When it comes to media predictions months in advance, most publishers can only say where they’ll attempt to place a book based on the publicist they hired or the author’s or publisher’s best guesses; because of their influence within their niche, Regnery was able to report a long list of confirmed hits, such as Drudge or Hannity and Colmes, sometimes even before the books were written. (It should go without saying that every marketing dept. would love such security.) Their book club was an important component of these guaranteed channels.

Still, even if Regnery deliberately funneled sales into the book club (and I have no idea whether or not they did), it doesn’t follow that the authors suffered financially, because this isn’t a zero-sum situation. If you increase the sales through a book club, it would only detract from sales elsewhere if the buying audience was a fixed number. But of course, it isn’t a fixed number: there are many people who might in theory buy a particular book but often don’t. Getting a book strongly into one channel (book club or other) can strongly help the sales of the book in other channels. This is most obviously true with word-of-mouth (which was, to be sure, not Regnery’s strongest weapon). If you buy a book and I see it on your table when I’m over for dinner, then ask you about it and decide to order it myself, I’m probably not going to order it through the same channel. In fact, it’s unlikely you’ll have even mentioned how you acquired it. These things ripple easily across sales channels. Which is why the idea of a book club hurting sales seems implausible – if sales were low there, the authors can’t claim that buyers were pulled away from other venues; if sales were high, it seems just as likely that this got the book out into people’s hands and desks, increasing visibility in a way an ad never could.

Comments

Is there an old saying about lying down with dogs and getting fleas if everyone involved is a flea-ridden dog?

Posted by Woody Bombay | November 8, 2007 4:49 PM

The message here for an un or little published conservative author is to sign with Regnery, which does well at establishing conservative authors, to establish a reputation and then sign a better deal later with deeper pocketed publishers.

It's rather questionable whether Regnery will lose or even settle this lawsuit with these whiny and probably naive authors.

Posted by Peter Leavitt | November 8, 2007 6:03 PM

Barnes and Noble is somewhat of a misleading analogy, isn't it? Because in this case, Regnery _owned_ the book club. It was selling the books to itself at a discount.

Now, maybe that's life, and these people do sound naive, but it also seems like part of their naivete is not being familiar with vertically integrated distribution channels (I backed off of saying "monopolies" since in principle there are other ways to sell books to Hannity's audience, though perhaps not in fact). Fortunately, I'm sure the authors are against antitrust regulation on principle, and have the courage to stand by their beliefs.

Posted by Ben | November 9, 2007 3:08 AM

And having a best-seller, even one pumped up by use of Regneroids, really increases their lecture-circuit fees, probably by far more than the notional loss of royalties.

Posted by DHN | November 9, 2007 1:11 PM

Just for the record, your publishing insider is simply wrong.

Bookclubs are a subsidiary right in standard book publishing contracts. A publisher licenses rights to bookclubs — bookclubs aren't "sales" and certainly they dont count as sales at the high discount clause he or she refers to. That clause is limited to high discounts to "the book trade", meaning retailers. The license generates a royalty per book the bookclub sells (and often an advance against those royalties). Most bookclubs print their own copies these days, or they buy them from the publisher at close to cost. In either case, they still pay the royalty which gets split between the publisher and the author, usually 50/50. Regnery owning the bookclub should mean nothing, standard contracts require that licenses (and sales for that matter) with subsidiaries be on an "arms-length" basis, that is, the same as if they didn't own them.

This is publishing contracts 101. Regnery does business with many agents and experienced authors who wouldn't allow any other language and any attempt to slip it by these authors would be highly unlikely. I suppose it could happen, but I've been in book publishing for more than 25 years, at the very highest levels, and I don't think it likely. These authors have a case or it wouldn't have gotten this far.

No matter what the argument for subsidiary effects, Regnery is being sued for not handling their dealings with a subsidiary on the same basis they would an outside bookclub. They should have paid, in fact, a reduced royalty, but one higher than 10% of net sales on an artifically low price. My guess is that their contracts state this rather unambiguously.

I suspect that Regnery will settle before they go to court, publishers almost never win these sorts of cases. Nor should they. These authors are likely being cheated by their publisher, it happens much more often than people realize.

Posted by d-cubed | November 9, 2007 5:00 PM

d-cubed:

You may be right that the authors have a strong case, but you're assuming far too much. First, it is simply not the case that bookclub agreements are always contractually treated as subsidiary rights, and the closer the connection between publisher and bookclub, the more routine it is that these agreements are reckoned as sales (though, as you imply, this would never happen in cases where the bookclub prints their own books). Second, whether treated as a rights deal or not, the idea that agents "wouldn't allow any other language" presupposes a lot about the relative strength of the agents and the relative weakness of Regnery in the negotiation. If Regnery had routinely offered lower royalty rates for units accounted for in certain channels (whether reckoned as sales through Regnery or units through a subrights deal), so that they knew from experience that they could acquire authors under certain terms, and if the agents knew, or believed, that going somewhere other than Regnery meant the book sales of their authors might suffer, is it so hard to imagine agents going along with it? And, in light of Regnery's track record and market strength in the past five years, are they so altruistic that they would never try to flex their muscle to their own contractual advantage?

Of course, that includes a lot of if's. But so does your suggestion that "These authors have a case or it wouldn't have gotten this far." It will be interesting to see what is made public as the case develops.

Posted by Jay | November 9, 2007 6:09 PM

The point is that Regnery's book club (if the accusations are true) deliberately shunted off sales so as not to have to pay meaningful royalties. The accusations are essentially of fraud via self-dealing. I blogged about this the other day, here.

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