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Random House Digital-Only SF Imprint Hydra Outed as a Vanity Press – Author Solutions Would be Proud

March 6th, 2013 by · 15 Comments · scam

Flirt-Alibi-Hydra[1]When Random House launched 3 new digital-only imprints (Hydra, Alibi, and Flirt) last fall there was little information which could shed light on how they would be run. But if there is any truth to a letter the SFWA sent out to their members today then I think RH has a vanity press on their hands.

The Science Fiction and Fantasy Writers of America is now warning their members that any title published by one of the imprint, Hydra, would no longer be counted by the SFWA as a legitimately published work (more on this after the letter):

Dear SFWA Member:

SFWA has determined that works published by Random House’s electronic imprint Hydra can not be use as credentials for SFWA membership, and that Hydra is not an approved market. Hydra fails to pay authors an advance against royalties, as SFWA requires, and has contract terms that are onerous and unconscionable.

Hydra contracts also require authors to pay – through deductions from royalties due the authors – for the normal costs of doing business that should be borne by the publisher.

Hydra contracts are also for the life-of-copyright and include both primary and subsidiary rights. Such provisions are unacceptable.

At this time, Random House’s other imprints continue to be qualified markets.

Note: There’s no information on the website for these 4 imprints that confirms the terms that Random House offers to authors, but there is a post  on the Writer Beware Blog that lists basically the same terms and provides more details that reveal the contract is even worse than it first appears:

  • It’s a life-of-copyright contract that includes both primary and subsidiary rights.
  • There’s no advance. Net proceeds (defined as net income plus subrights income less the deductions detailed below) are split 50/50 between author and publisher.
  • Deductions for ebook edition: “one-time out of pocket title set up costs” (editing, cover art, design, etc.), plus a “sales, marketing, and publicity fee” of 10% of net sales revenue.
  • Deductions for print edition, if there is one: “actual direct out-of-pocket paper, printing and binding costs,” plus 6% of gross sales revenue to cover freight and warehousing costs.

Update: John Scalzi got his hands on a contract from RH Alibi, and it is just as bad as the RH Hydra contract mentioned above.

So why is this a big deal? Well, you could look at the contract terms and be appalled, but the letter itself is an act of censure.

It has no real legal effect, but the market effect could be profound. The SFWA has stated, as a professional trade group, that the Random House Hydra imprint does not meet their standards of conduct for business ethics and that authors should not do business with RH Hydra.

Any title published by RH Hydra won’t count towards the the 3 short stories, 1 novel, or 1 screenplay that a writer must sell before becoming a member of the SFWA.

To put it simply, RH Hydra is now on the SFWA’s shit list. And that is a big deal.

This doesn’t happen very often, and the last time I know that a major publisher was censured was back in 2009. The RWA (Romance Writers of America) put Harlequin on their negotia non grata list after the publisher launched Harlequin Horizons.

Harlequin has always been a trendsetter, and in launching Harlequin Horizons (since renamed DellArte Press) this publisher was one of the first major publishers to directly take advantage of self-published authors by launching a vanity press. Like S&S-Archway or Penguin India-Partridge, Harlequin Horizons was owned by a respectable publisher but was (and still is) actually run by Author Solutions.

Harlequin was censured back in 2009 simply because Harlequin signed a deal with Author Solutions. The censure appears to have been lifted when Harlequin Horizons was renamed and any mention of Harlequin was removed from the site.

Don’t you wish the SFWA had done the same for all of Random House? I do.

In any case, Random House Hydra is officially on the naughty list.

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15 Comments so far ↓

  • fjtorres

    Well, now we know why they decided to merge with Penguin; they share the exact same vision for the future of the industry. Clearly these new imprints are pilot projects for the way the Random Penguin and the other BPHs intend to treat writers in the future.

  • fjtorres

    John Scalzi got his hands on the contract for ALIBI victims.
    http://whatever.scalzi.com/2013/03/06/a-contract-from-alibi/

    He doesn’t like it:
    “I want to be clear: I can say, without reservation, that this is the worst book contract I have ever personally encountered. Not only would I never sign it — which should be obvious at this point — I can’t imagine why anyone whose forebrain has not been staved in by an errant bowling ball would ever sign it. Indeed, if my worst enemy in the world was presented with it and had a pen poised to scratch his signature on it, I would smack the pen out of his hand and say to him, “I hate you, but I don’t hate you this much.”

    Another way to put it: There is no way I can conceive of any minimally competent literary agent looking at this contract without wanting to immediately set it on fire and then piss on the ashes. So much would have to be changed in this contract that I don’t see a competent agent bothering; they’d just send it back with the note “please send me a contract written by someone who is not currently mainlining Nyquil.”

    A third way to put it: THIS IS A HORRIBLE AWFUL TERRIBLE APPALLING DISGUSTING CONTRACT WHICH IS BAD AND NO WRITER SHOULD SIGN IT EVER.”

  • Frank Skornia

    Ok, so this is probably going to be an unpopular reading of this, but I’m willing to play Devil’s Advocate for a bit.

    I read through Scalzi’s post where he described the Alibi contract and the one thing that jumps out at me is that it is an attempt by Random House to deal with the changing world of book publishing and the additional challenges that have arisen with worldwide distribution and digital platforms. Isn’t everyone always railing that the publishers have their heads stuck in the sand and are not seeing the new realities of the publishing markets? Folks, what you’re seeing here is the result of those new realities. Fewer people are buying books, distribution channels are taking a larger bite out of revenues (thank you Agency Model), and the midlist is getting spread thinner.

    So let’s look at the points. Publishers have been called to task for incredibly inefficient business models. Take the idea of an advance – the publisher is taking a considerable upfront risk with their liquid capital by offering a large advance, especially for debut authors who have not proven their marketability. They have probably begun asking themselves why should they be writing 5, 6, or even 7 figure checks and have the possibility of a book sitting like a dead parrot on the shelf. If the book sells well, then everything is fine. If the book doesn’t, the author still got that pretty lump of cash. Furthermore, there seems to be an extreme case of entitlement on the part of authors to expect an advance (and on the part of the SFWA to demand them). I know the advance gets paid back over time by royalties, but I also have read that many advances never get paid off.

    Next, Scalzi talks about contracts right to print, sell, and license the work in any format and throughout the world. I’m seeing this as the response to all the readers around the world that keep asking why they can’t buy a specific book from Amazon in their country. The answer is always the same – it’s an issue with international rights. A clause like the one described here begins to offer a solution to that problem. For an author that does not want to get bogged down with having to negotiate with publishers in 10-12 countries, this provides a solution. This also allows the publisher to manage the multiple formats and platforms that they need to sell on in order to be competitive.

    Next, Scalzi goes after the proceeds sharing. Again, I see this as Random House seeking a flexible way to handle the financing of a book (which authors and publishers have been telling us for years is expensive and extensive) in light of the changing economics of book publishing. The business people running the publishing houses are probably asking why they should be eating all of those upfront costs themselves, especially as book sales continue to drop. The same can be said about the author’s copies – again that has been costs that have been eaten by the publisher in the name of marketing or just appeasing the author (this was another part where I read an extreme sense of entitlement in Scalzi’s words).

    The final point I’ll touch on is the publication rights for formats. Again, I’m reading this as a response to the changing publishing market and as a means for the publisher to ensure that they’re able to get as much revenue of a product whose development they’re largely financing. We’ve already seen publishers try to do a digital rights grab on many of their older contracts when the eBook rise began. This section is a result of the consequences of their struggles there. They don’t want to be caught with their pants down again.

    So, in conclusion, while this may not be an optimal contract for authors, I feel that it is a way that Random House is seeking to experiment with new ways to do business in a market that has vastly changed in the past decade. They’re using these new imprints as the testing pool for new methods. This upsets Scalzi and the other authors because it’s a drastically different way of doing business, but the publishers have already seen their business models disrupted severely by the digital revolution, and now that disruption is rippling outwards. I think it’s hypocritical to sit back and criticize the publishers for not handling the new markets, and then scoff and criticize when they do try something new. The same reaction occurred when Harper Collins introduced the 26-checkout limit on library ebooks. HC was willing to experiment with a new business model to guarantee their profits (profit is why they exist after all), and then roundly accused of victimizing libraries. Maybe this isn’t the ideal solution, but that solution is never going to be found if the publishers remain hesitant to innovate.

    • fjtorres

      Okay, try *this* contract format:
      “We, (the publisher) will over six months staring on xx/yy/zz work with (author) to edit/format/and publish the manuscript (title) and distribute it to (list of major ebookstores) and commit xxx dollars over xxx years to market and promote the title. (author) grants (publisher) a ten year renewable license to publish and distribute the title globally in the english language, in textual form, in return for 50% of the gross revenue the title brings in over that period. (Author) will have final say over the finished version of the but will make required changes totalling up to 20% of the original manuscript. In the event agreement cannot be reached on editorial changes within 90 days the contract will be declared null and void without prejudice to either side.
      Fully detailed and accurate notarized account statements shall be provided along with quarterly payments due via electronic transfer on the first of every third month beginning on xx/yy/zz. (The author) will be able to request a full audit of income and support every other year for the duration at (the publisher)’s expense. Should (the publisher) fail to perform any of the abovelisted services they will become instantly liable for (xxxxx) in penalties and the termination of their license to the manuscript. Should the title fail to deliver at least (xxxx) in revenue over any 12 month period, the contract will be terminated without prejudice to either party.
      (Author) will grant (publisher) a 30-day courtesy look at their next 3 manuscripts along with a succeeding 30-day exclusive negotiation window but without any obligation on either side.
      (publisher) will be eternally grateful to (author) for the opportunity to partner and deliver quality content to the masses.

    • Brian

      “I think it’s hypocritical to sit back and criticize the publishers for not handling the new markets, and then scoff and criticize when they do try something new”

      What are they trying that’s new really? Vanity press scams have been around long before eBooks. The only thing new here is who’s offering it.

  • Thomas

    I can’t help but think that a writer spends a better chance of making money by teaming up with a Nigerian prince than by signing one of these contracts. The author is giving up all rights to his work and 50 percent of net proceeds, and still has to pay the costs that he would if he self-published. Worse, since the costs he has to pay are determined by the publisher, there is enormous potential for fraud.

    For the publisher, it’s a license to steal. At one time, an author who signed a bad contract could at least hope to get his rights back when the book went out of print. Ebooks never go out of print, and copyright is now effectively infinite.

  • Ben

    Juts self-publish…if you got a hit on your hands, they will come knocking with better contracts. Just because we are seeing changes, it doesn’t mean it’s improving, publishers still got their heads in the sand. They really don’t understand how fast new technology is changing their readers.

  • Rob Siders

    Scalzi got the contract for Alibi, too. It’s the same as the one for Hydra. Up at the Whatever now.

  • the rodent

    Life of copyright contract? You mean one that binds the authors even after death for another 70 years? What a concept. Sounds more like a scary religious enslavement cult than a publisher…

  • Douglas Penick

    It would seem that the underlying motive for publishers who are moving into overt or oblique “author services” is that there is a lot less risk and a lot more money to be made in this model than there is from publishing most books outright.

    While publishers used to retain copyright based on how long a book remained in print, formulae with such a basis are irrelevant when production is in any digitized format. Thus the life of copyright contracts have emerged in this void even in cases where authors assume all financial risks involved. It’s a kind of long-shot possible profit center.

    I have had books printed in traditional arrangements, under my own imprints, and, most recently, by Publerati (Caleb Mason, President), an agency/e-publisher. Though there have been advantages in each, Publerati’s contract has been exemplary. It retains copyright only so long as the contract is mutually advantageous and allows severance in completely reasonable way. There has been no money up-front. The royalties are more than fair. The editing and book design have been excellent, and they have been utterly straight-forward to deal with.

    The point here is that perhaps large publishing houses with large fixed costs find it difficult to treat their client/authors this way, but new companies with new models are out there developing serious and better alternatives.

  • Brian

    Looks like the bad pub they were getting everywhere might have helped RH to see the error of their ways, somewhat. They’ve announced a change in the terms they were offering.

    http://accrispin.blogspot.com/2013/03/random-house-announces-new-terms-at.html

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