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Spencer Hill Press

brianm

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You deduct the marketing and promo dollars from your royalties, so you're making the author financially responsible for your job.

Yet they claim this on their submissions page.

[FONT=Arial, Helvetica, sans-serif]Our advance payments tend to be smaller than those of larger publishers, but we commit more resources to marketing our authors' work. [/FONT]
[FONT=Arial, Helvetica, sans-serif]

(Bold is mine)

~brianm~




[/FONT]
 

brianm

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Hi Dreamweaver and Victoria,

Actually, there's a line in the same contract paragraph I quoted earlier that covers this:
" [FONT=&quot]AUTHOR will have the right to approve marketing expenses such as art work (including cover art), promotional giveaways, and advertising prior to campaigns going into effect.[/FONT] "


-Kate

Does the contract indicate who is responsible for the expended marketing and promo monies should the book not earn enough to cover those costs? Is the author responsible for paying back these costs?

~brianm~
 

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priceless1

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Yet they claim this on their submissions page.

Our advance payments tend to be smaller than those of larger publishers, but we commit more resources to marketing our authors' work.
[FONT=Arial, Helvetica, sans-serif]
(Bold is mine)

[/FONT]
I'm sorry, but I see this is a throwaway, nothing statement considering that they pay themselves back out of their authors' royalties. Besides, how does one prove the amount of marketing dollars they spent, and how do they calculate that amount when taking that money out of their authors' royalty statements?

They also said went on to say:
This makes us a good fit for authors at the start of their careers who want to build their following.
How does this make them a good fit for beginning authors? This sounds as though authors have no choice but to go with a much lesser company before they deserve to sign with a better company. That is untrue, and I really dislike the implication. I'm certainly no Random House, but we have a debut author who has sold over 15,000 units in six months. We took 0 marketing and promotion dollars out of his royalty check. Our average sales on our titles are between 2500 - 5000 units - and that was with a crap distributor, whom we have joyfully fired and gone with Consortium.

My point isn't to brag, but to ask why should anyone promote the idea that authors have to settle for less just because they're new?

Additionally, how can an author possibly build a following if their publisher has zero distribution, little marketing dollars, and they take whatever they spent on marketing out of the authors' royalties.

Kate sounds lovely and very graceful in answering everyone's questions - though she has yet to address mine. I'm sure they have the best intentions, but they're also a new company and have yet to really appreciate how hard it is to sell books and remain afloat.

To wit, they still maintain their day jobs, so this is strictly a part time gig for them. Publishing and getting books sold is a full time job. If they go under due to lack of sales, then who loses? It's the author...always the author.

This business model has a few chinks in the armor that make me question how this is advantageous to new authors
 
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KateKaynak

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Sorry, I didn't see that this discussion had gone on to a second page.

U, the "our people" page was added within an hour after you mentioned in your first question posting that you didn't know who owned the company. We hadn't noticed the absence, and we immediately fixed it. Your "deliberately misleading" comment came later.

Brian, Authors NEVER have to pay us. NEVER. The contracts give them (or their representative) the right to audit our books.

As for our business model, I think a few people might be a bit confused.
We pay the author an advance.
We cover the costs of pre-production.
We create a marketing plan, and we budget a $XXXX for marketing.
The author gives APPROVAL for the marketing plan (discussed PRIOR to signing), as well as for specific campaigns. We don't run campaigns that the author doesn't approve, but market in other ways.
The author receives a percentage of the net profits of the book.

I think the confusion comes from the fact that this is a profit sharing model, as opposed to a model in which the author gets a set percentage of the list price. The author doesn't pay for marketing out of royalties--the royalties are calculated as a percentage of the net profits.

I'm sorry that it's caused such consternation in this thread. It's actually worked well for us so far, but you're right, this is a side-business, and we still have day jobs.

I know you mean well and that the purpose of this is to make sure that predatory companies don't hurt aspiring writers, but I've been really shaken by this thread. We've tried to set up a business that minimizes the risk for everyone involved. Those of us working with Spencer Hill love doing so.

- Kate
 

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I think the confusion comes from the fact that this is a profit sharing model, as opposed to a model in which the author gets a set percentage of the list price. The author doesn't pay for marketing out of royalties--the royalties are calculated as a percentage of the net profits.
Kate, not to put too fine a point on it, but when you first came to this thread, you never mentioned anything about a profit-sharing model. You stated that you pay on net - then went on to explain what "net" meant:
We pay authors a percentage of royalties on net ... The contract states:
" Net sales are defined as the Total Dollar amount received by the PUBLISHER from the wholesale or retail sale of the WORK minus the printing expenses, costs to produce, costs to sell, costs to market, costs to ship and/or distribute, and total dollar amount of any returns of the WORK. "
What this looks like to me is that you're socking it to the author for your hard costs - printing expenses, production costs, selling costs (?), shipping/distribution costs (?), and returns. But in this post you say that you cover pre-production costs. How do you calculate pre-production costs out from production costs - which you ding the authors' royalties?

Can you see where this looks washy?
The author gives APPROVAL for the marketing plan (discussed PRIOR to signing), as well as for specific campaigns. We don't run campaigns that the author doesn't approve, but market in other ways.
All publishers discuss their promo plans with their authors. But where this goes off the reservation is that your authors are footing the bill (at the back end) for whatever promotion you do.

Publishers who do charge-backs to the author for printing, production, selling, shipping, distribution costs are operating under a vanity type setup. You said that money flows to the author, but I don't see where. They are shouldering all the risk of being in business with you, and you get a rather large bite out of whatever sales they have. Compounding the problem is that you have no distribution, so how are you going to make sales?

As for profit-sharing, I see the author having to share a great deal with you before they ever see a dime. If this is the way you want to do business, then that's your call. But it's important for authors to fully understand the implications of being in business with you.

Lastly, I'm sorry my posts have shaken you, but this is a Bewares Board and everyone is in the habit of asking hard questions because writers work too hard to see their books circle down a drain of anonymity. Everyone wants to go into any venture with their eyes wide open - hence the tough questions.
 
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KateKaynak

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Hi priceless.

We do have distribution, through Ingram and through Quality Books.

I understand the need to ask tough questions, and I'm doing my best to give you the information you need. It's important to me that people understand how we do business, and the part that's shaking me is the part where people keep implying that we're somehow trying to cheat authors. We're not. We have a contract that we feel is fair. We're very clear with authors as to how we work. We're PROUD of how we work, since we give authors more creative control in how their books are brought out and we limit risk to everyone involved. We only take on projects we truly love, books we feel passionate about. We have an AMAZING series debuting this coming year, and I'm delighted that we're going to be able to put it into the hands of readers.

As for fine points, a percentage of the net IS profit-sharing (net IS the profit!). Money flows to the author in quarterly royalties with a detailed statement. There are NEVER charge-backs. We NEVER charge editing fees, or set-up fees, or reading fees, or ANY fees to the author. EVER. We pay the author a small advance, and we pay all the costs of pre-production ourselves. The author MAKES money from this; they NEVER pay it. It's going TO them, not FROM them.

- Kate

PS - If you still have questions, please ask. I really want to clear off this cloud of suspicion.
 

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Hi priceless.

We do have distribution, through Ingram and through Quality Books.
Kate, Ingram and Quality Books are centralized warehouse distributors who sell to the bookstores. This means that when a bookstore wants to order a book, they simply call Ingram rather than calling a thousand different publishers to stock their shelves. They call Ingram because they know the book exists. They do not employ sales teams to push your books to the national accounts.

That is what real distribution handles. They have sales teams have in-house sales teams who take your catalogue and pitch it to the national accounts like B&N, Borders, Wal-Mart, Target, etc. and also to libraries and specialized marketplaces. This is in concert with the marketing and publishing that the publisher and author do.

There is a world of difference.

the part that's shaking me is the part where people keep implying that we're somehow trying to cheat authors. ... we give authors more creative control in how their books are brought out and we limit risk to everyone involved.
I never implied that you were anything other than someone who has good intentions but lacks the experience or knowledge to know how tough it is to sell books.

I admit that I hear the "creative control" mantra a lot, and it never fails to make my teeth itch because I'm never sure what they mean by that. Are you talking editing? Cover design? And is it a good idea to hand over creative control to the author, someone who invariably doesn't know anything about publishing? Editors have creative conversations with their authors all the time, so I don't see where this is an advantage.


As for fine points, a percentage of the net IS profit-sharing (net IS the profit!). Money flows to the author in quarterly royalties with a detailed statement. There are NEVER charge-backs. We NEVER charge editing fees, or set-up fees, or reading fees, or ANY fees to the author. EVER. We pay the author a small advance, and we pay all the costs of pre-production ourselves. The author MAKES money from this; they NEVER pay it. It's going TO them, not FROM them.
Yes, I know how net works. I never said that you charge UP FRONT fees - I said you charge them at the back end via your royalties. And yes, technically, money flows to the author...but I'm looking at the part that you're taking out BEFORE they get their "profit." You have a ton of non-standard fees that you take out of the author's cut - and I'm quoting you here:

  • printing expenses

  • production costs

  • selling costs

  • shipping/distribution costs

  • returns
These are all costs that the publisher carries. To offer anything less is a vanity type model. Not sure how else I can put it.
 

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Kate, would you be willing to disclose your boilerplate royalty rate? And the approximate per-copy profit that SHP makes after all those costs are deducted? Because that might clear things up.

If, after deducting printing/shipping/whatever, the per-copy profit is $1.20 - $1.40, and the author is getting 8% royalties on that -- yeah, that's a different story to the author getting 50% royalties on a per-copy profit of $6.50 - $8.50.

Editing to add: Could you also tell us the min/max/mean copies sold per title?
 

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I agree that knowing the actual royalty rate could make a lot of difference. If author and publisher are splitting profits 50/50, for instance, that would make the net profit deal sound much less unpalatable.

Kate, we are tough here, for the reasons that priceless mentioned. But we do understand that it's not easy to be put on the spot this way--and I think that everyone appreciates how you're hanging in there with the questions, and not losing your cool.

- Victoria
 

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I've seen all kinds of publishing models introduced on the BR&BC thread. Vanity, Payment on Gross, Payment on Net, "Net" that includes everything under the sun, publisher taking larger percentage of revenue until investment is earned out, etc, etc. As new pubs come on the market new business models emerge.

I think we can safely say that Spencer Hill is not a vanity press. Does the author subsidize the publishing of their work on the back end somehow? I don't know. If they did would that make them a vanity press? I don't think so. As long as under no circumstance is the author required to pay something to the publisher.

Vanity press implies that the risk is on the shoulders of the author. They pay, up front, the costs associated with the production of the work. If that work tanks and doesn't sell anything, they don't recoup their investment. If the publisher says, "we're going to take 100% of the profits until we get X$ (our investment) back, after which we're going to give you X% of profits" then it may not be a model I'm interested in, but depending on what the costs are, and what the percentage would be, and what the history of sales have been on other titles, it might be something that another author would want. Either way, the risk is on the publisher, so it's not a vanity model.
 

Stacia Kane

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Kate, we are tough here, for the reasons that priceless mentioned. But we do understand that it's not easy to be put on the spot this way--and I think that everyone appreciates how you're hanging in there with the questions, and not losing your cool.

- Victoria


I was just about to say this, actually. Given the behavior of most new "publishers" I've dealt with lately--especially lately--I'm seriously impressed. :)

Thank you so much, Kate.
 

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Thanks, everyone. This model works for us, particularly since we're new and still small. Furthermore, since we publish YA, our market is heavily library and school-based, which changes how we market.

So, here's a hypothetical case. The percentages are accurate and the sales estimates are realistic.

If we receive a per-copy net of $3.00-4.00 AFTER all contracted charges (printing, etc.), and we put $1200.00 into the marketing and other contracted expenses for the specific book, we (the company) break even after 300-400 sales.

Our standard royalties on net for authors is 30%, so $0.90-1.20 for every sale thereafter (paperback). The model for e-books is similar, so for each e-book sold the author will earn about $1.50-1.70.

For a year in which the book sells 2000 paper copies and 500 e-book copies, the author receives royalties in the $2200.00-2900.00 range.

Is it huge? No.
Is it realistic? Yes.
Do we give this information to the author up front? Absolutely.

The author gets the advance at signing, so they start out with money. The author NEVER pays fees. The ONLY thing we charge the author for is ADDITIONAL copies of the book (they get 20 without charge, as per the contract) at the AUTHOR DISCOUNT rate.

I hope this helps. I appreciate that the tough questions are being asked to protect authors.

Take care!

- Kate
 

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Our standard royalties on net for authors is 30%, so $0.90-1.20 for every sale thereafter (paperback). The model for e-books is similar, so for each e-book sold the author will earn about $1.50-1.70.

Here's the thing, though. Based on the cover prices that Amazon shows for your print books ($12.99-$13.99), authors would earn roughly the same if you just paid 8%-10% on cover price, which would be a very competitive royalty for a small press. And your own break-even point would remain the same. So I just don't see the need for the complicated net profit calculation, especially since it sets off so many warning bells for contract geeks like me, and is potentially misleading for authors who will be wowed by the 30% but may not do the math on the back end.

- Victoria
 

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Thanks for the explanation, Kate. I see how it works with the 30% royalty rate. I have one more question or perhaps just an observation...

Let's say you make back your investment in the first year, and the book continues to sell well. At this point, you are paying the author basically 30% minus printing costs, since all the other costs have been recovered. So let's say, it works out to 25%. That's great for the author, but have you considered how paying out that extra 15% to 17%, year in and year out, may affect your ability as a publisher to weather the losses for the books that don't break even? What I'm trying to say is, publishing is a well-established business with a fairly thin margin. There's a reason behind the industry standard royalty rates. I hope you've considered the long term.
 

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Thanks, Victoria and Dreamweaver.

This thread has given us a lot to think about. We'll take a look at how a more typical model would work for us, model some sales projections, and also discuss these alternatives with authors in future contract negotiations. We actually did consider the increased royalties long-term, and, since all of our current titles are parts of larger series, we considered that to be a strong point in favor of the authors, as the release of a later book in a series often produces a bump in the sales of the earlier installments.

Take care!

- Kate
 

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We actually did consider the increased royalties long-term, and, since all of our current titles are parts of larger series, we considered that to be a strong point in favor of the authors, as the release of a later book in a series often produces a bump in the sales of the earlier installments.
I think most publishers have scaled royalties, e.g. 8%, rising to 10% after X000 copies sold, rising again to 15% after X0,000 copies sold. If you combined that with Victoria's suggestion of just using a straight % of cover price royalty (a suggestion I highly endorse), you could match industry standards and attract more authors, and also reward those who sell well or whose backlist continues to sell.
 

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I am very uncomfortable with the idea that a publisher pays its authors NOTHING until the book turns a profit. It reduces the publisher's motivation to make the books as good as they can be, and is going to put writers off submitting to the publisher concerned.

Victoria makes a very good point.
 

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Old Hack, the author gets an advance, so they aren't paid "nothing."

U, your suggestion is an excellent one, and it might work with our model.

Take care!

- Kate
 

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I do appreciate all that's been brought up here and the answers you have given Kate, but I agree I'm still on the fence as to whether, when the time comes if I would submit to Spencer Hill.
At least not until a few more of the issues that have been brought up are worked out.
But thank you Kate, I appreciate you taking the time to answer the brought up questions.
 

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Old Hack, the author gets an advance, so they aren't paid "nothing."

Kate, I'm so sorry: I've read this thread back again now and see that you pay advances. My mistake.

Let me rephrase that, then: it seems to me that you pay a small advance; but THEN you pay nothing until not only has the advance been earned out, but also all the costs of production, marketing and sales have been covered by the book's sales. And once your costs have been covered, you then only pay royalties on net profits, not on cover price or net receipts.

I'll agree with other posters here: it would make a big difference if we knew what percentage those royalties amount to. I'm also impressed by how coolly you've answered everyone's questions here, and how keen you are to explain everything and get it all right. That makes a welcome change, and in my view is a benefit for Spencer Hill Press.
 

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Hi Old Hack,

I gave an example of our numbers in a previous post (#38 in this thread); our royalty rate is 30%.

Thanks for the support. Take care!

- Kate
 

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So, they look like a good press. They have Jennifer Armentrout as an author, which is definitely a plus. Any updates with them?