Publishing Accounting - Conspiracy or Paranoia?

Kristine Katherine Rusch was once the editor of F+SF, one of the leading pro mags in the genre. She makes her living by her writing. Safe to say she is well known and respected in the field.

It's disturbing, that's for sure. I wish I could view this less skeptically, though, considering who her husband is.

Still, considering all the complications surrounding royalty accounting (from what little I've read across the board, not just this one thing), it seems like there should be a push to fix that and make it less difficult to navigate. I know it's complicated due to how publishing works in general. Due to its complexity, I can see how discrepancies could be hidden and most writers wouldn't even know how to check/cross check.

:/

Captcha, neither of the two links that you supply lead anywhere.

But I have to say that if large publishers are fiddling their accounting, they're almost certainly going to get caught out: people don't keep their mouths shut about things like that; and there are many people on the outside of publishing houses looking in (agents, writers, retailers) who would notice something going on.

It's possible that mistakes have been made, but a deliberate fraud? I don't see that happening.

Old Hack said:

Captcha, neither of the two links that you supply lead anywhere.

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wow - I clicked on the PassiveGuy link 10 minutes ago and I could see the article, but now you can't find it on the site.

Don't click on the google link for her website! It's got an attack virus attached to it now. Norton caught it for me.

Old Hack said:

Captcha, neither of the two links that you supply lead anywhere.

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PulpDogg said:

wow - I clicked on the PassiveGuy link 10 minutes ago and I could see the article, but now you can't find it on the site.

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I opened the passive guy one when Captcha first posted and have the tab open in my browser. But the page still there, from what I can tell, because I just opened it again in a new tab and in a different browser.

Amarie said:

Don't click on the google link for her website! It's got an attack virus attached to it now. Norton caught it for me.

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So glad I didn't click it!

The Passive Guy link is back again.

Old Hack said:

Captcha, neither of the two links that you supply lead anywhere.

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This one works.

The article is very long, and very disturbing.

Captcha said:

...author Kristine Kathryn Rusch has apparently made a post that, if accurate, gives me a LOT to worry about in terms of the accounting practices at the big publishing houses and the negotiating priorities of some agents.

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In many years of working with large and small companies, I've seen that large companies violate contracts and bully and steal because they can. Being big doesn't make them honest. In fact, being big helps them to hide misdeeds and fight back if they're caught.

In my business, I've been stiffed three times in a serious way in 15 years. Twice was by large companies.

So it's not necessarily paranoia on Rusch's part. Fiddling sales numbers is so easy, and so easy to hide, that I'd be surprised if it didn't happen.

I'm not entirely convinced.

First up, the issue with the agent who allegedly renegotiated all contracts to give some of her authors a bigger cut of the royalty pie, while giving her other less successful authors a smaller royalty: contracts aren't negotiated retrospectively; good agents don't do things like this; and if this really has happened, then why isn't Ms Rusch naming the agent concerned? That would be the way to get this particular issue resolved.

Second, the whole basket accounting thing: that's why we have agents, keep copies of our contracts, and read our royalty statements. So that we can see when a mistake has been made, and rectify it. Publishers are staffed by people, and people make mistakes: good agents check all the royalty statements their authors receive against the contracts they result from, and if the two don't comply they make the publisher resolve the discrepancies. This is nothing new.

I'm well aware that some agents aren't as scrupulous as they could be, which is why we all have to check out agents before we submit our work to them: it's perfectly possible that some agents behave in a less than ethical way. But my first reaction while reading that article was that it was written to stir people up; it feels quite heavily biased towards shock and outrage, rather than analysis and straight facts; and some of the conclusions drawn are unsafe, and based on opinion rather than fact.

I would have thought that any dubious accounting practises would get caught in an audit (which all companies, regardless of industry, tend to have regularly and there are statutory audits in most tax laws somewhere along the line) and I agree that naming and shaming is the best way to go about stopping this sort of thing.

The issue with contracts and royalties being complex... I suspect it is like this because it allows this sort of behaviour. Just like bank terms and conditions are changed frequently and you are sent a small print filled leaflet telling you all the changes which you never read and then get caught with charges because you do something that was previously free and now isn't... Its a deliberate and not necessarily very moral practise but is almost certainly legal. Confusion over things like whether it is net or gross profit you get royalties on and other shenenigans do happen a lot.

As for contracts... surely if there is case where contract has apparently been breached (which is the case if they have changed the terms of a contract without the agreement of one of the parties...) then there should be legal action to rectify it?

Also the assumption that tweaking the contracts means "millions in commissions" for the agent in question doesn't seem like something anyone with experience would say.

To make 1 million on the standard 15% domestic commission, the book deal in question would have to sell for / make over six and a half million dollars. Millions, plural, would mean double or triple that.

bearilou said:

It's disturbing, that's for sure. I wish I could view this less skeptically, though, considering who her husband is.

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I'm a bit disappointed in myself that this is EXACTLY my reaction too.

I have to wonder why, whenever this topic comes up, no one looks to Amazon.

If you're looking at all publishers as potential thieves, you have to add Amazon into the mix. What's stopping *them* from misreporting to the publishers?

As usual this adds more fuel to the "only idiots go trade pub" argument...

Sheryl Nantus said:

I have to wonder why, whenever this topic comes up, no one looks to Amazon.

If you're looking at all publishers as potential thieves, you have to add Amazon into the mix. What's stopping *them* from misreporting to the publishers?

As usual this adds more fuel to the "only idiots go trade pub" argument...

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I think it's that illusion of control. Amazon for the 'every-man', looking out for your pocketbook, Mr/Ms Consumer, bringing you the best deals around. See? They're taking a hit on their profit so you have what you want at affordable prices. Never mind their accounting is also complex, never mind that trying to get any relevant data on sales and ranking is difficult to understand; that they don't post the algorithms they use and it's a closely guarded secret.

willietheshakes said:

I'm a bit disappointed in myself that this is EXACTLY my reaction too.

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Yeah...I felt kind of bad about it.

areteus said:

I would have thought that any dubious accounting practises would get caught in an audit (which all companies, regardless of industry, tend to have regularly and there are statutory audits in most tax laws somewhere along the line)

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And you'd be right.

It's important to remember that mistakes are usually made because people are human, and not because people are part of a big conspiracy.

Confusion over things like whether it is net or gross profit you get royalties on and other shenenigans do happen a lot.

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Again, you'd be right. There is often confusion about these terms. Which is why agents check royalty statements very carefully against contracts, and ensure that publishers correct their mistakes.

As for contracts... surely if there is case where contract has apparently been breached (which is the case if they have changed the terms of a contract without the agreement of one of the parties...) then there should be legal action to rectify it?

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When publishing contracts are breached by a publisher it's very rare for there to be legal action because usually, an agent or author will point out the problem and the publisher will apologise and rectify the problem.

This whole article reads to me like paranoia rather than the uncovering of a big conspiracy. Conspiracy is too complicated.

A publisher in financial trouble will pull the same dirty tricks as any other business that's in financial trouble, but my experience is that things are not as bad as Rusch paints them, though caution in any business is always wise.

Shoot, I know I've seen this accusation before and now I can't recall where. It would be interesting to see if it was a different source or not.
It could very well have been something on her husband's site.

Here's something I'm not clear about: If I'm reading this right, she's claiming that agents took a kickback from the publisher to get their clients to sign a contract amendment that would give benefit the publishers and screw authors over on ebooks. Again, if I'm reading this right, she claims that she knows this because she talked to other authors who had signed the contract.

I'm just wondering how she would have gotten the information about the conspiracy between the publisher/agent? Wouldn't that be something that, if true, they wouldn't brag about? Where did she get that information?

I might be missing something here, and I'm not saying she's lying by any means. It's entirely possible that she's right. I'm just trying to see if there is anything to this beyond authors getting together and comparing notes and assuming they know what's happening and spreading that around the rumor mill.

Shoot again. I think I can actually remember where I saw the original comment about this topic months ago, and now I can't find the link.

I suspect that this is part of the issue.

But I am underwhelmed by Ms. Rusch's prose, her logic, and general attitude. And I remember very well her history as a fan and neo pro.

Mistakes happen; but I don't see the people I trust—publishing attorneys, SFWA, Victoria Strauss etc. getting up in arms.

Nor do I see the larger SF blogs and pubs like Locus, or writers like Scalzi or Stross getting worried.

Old Hack said:

I'm well aware that some agents aren't as scrupulous as they could be, which is why we all have to check out agents before we submit our work to them: it's perfectly possible that some agents behave in a less than ethical way.

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I suspect that it's more important to an agent to keep his contacts at publishers happy than it is to keep his clients happy. And any contract can be 'renegotiated' if both parties agree. By signing, the authors agreed to the changes whether they knew what they were signing or not.

So-called 'basket accounting' has been going on forever in the music industry, where artists have to make up their publishers' losses on all their prior releases before they get any money of their own. So it's not a new idea.

I remember that the law firm who filed the price-fixing lawsuit against publishers announced an investigation into e-book royalties many months ago. I don't know what happened with that.

She should check if there is an audit clause in her contract.

Miss Snark had some stuff to say about this sort of thing waaaaay back in the day.

http://misssnark.blogspot.com/2006/04/audit-clauses.html
http://misssnark.blogspot.com/2006/09/why-ky-is-on-staff-at-snark-central.html
http://misssnark.blogspot.com/2006/09/reading-your-royalty-statements.html

Medievalist said:

I suspect that this is part of the issue.

But I am underwhelmed by Ms. Rusch's prose, her logic, and general attitude. And I remember very well her history as a fan and neo pro.

Mistakes happen; but I don't see the people I trust—publishing attorneys, SFWA, Victoria Strauss etc. getting up in arms.

Nor do I see the larger SF blogs and pubs like Locus, or writers like Scalzi or Stross getting worried.

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Well, her prose has made her a lot of money, and won her quite a few awards, so I wouldn't begin to question that.

But, yes, as much as I hate to admit it, I think she may be biased on this issue.

At the same time, the notion that publishers are squeaky clean, or that some very big name writers haven't had serious complaints over the years, is laughable.