Second-Class Contracts? Deal Terms at Random House’s Hydra Imprint

Posted by Victoria Strauss for Writer Beware

Over the past few years, more and more trade publishers have created digital-only imprints. Another new one just popped up in my newsfeed today: Little, Brown UK’s Blackfriars will be launching its first list this coming June.

Last November, there was some excitement over three brand new digital imprints from Random House: Hydra for SF/fantasy, Alibi for mysteries and thrillers, and Flirt for the is-it-or-isn’t-it category of New Adult. I was interested by the fact that these new lines were pitched in language reminiscent of self-publishing services:

Under this program, authors will have a complete and unique publishing package. Every book will be assigned to an accomplished Random House editor and a dedicated publicist. They will also have the invaluable support of Random House’s experienced marketing and digital sales teams, who know how to reach out to and expand each book’s dedicated readership. Not only will authors benefit from working with the finest cover designers to ensure irresistibly eye-catching books, but they will also be offered the unique advantage of social media tools and training that will allow them to connect directly with their readers. To reach the widest possible readership, every title will be available for purchase at major e-retailers and will be compatible with all reading devices.

I wasn’t alone in this impression–much of the news coverage of the new imprints speculated that Random House was attempting to snag self-publishers, what with the imprints’ focus on short content, their willingness to accept previously-published books, and their literary-agent-optional submission procedure.

Authors who are accepted by Hydra and the others will have access to professional editors and designers, and will benefit from Random House’s publicity team–just as with conventional imprints. If they desire the prestige of being able to say they’re published by Random House, they’ll have that too.

Even so, I can’t help feeling that, with digital-only or digital-mostly imprints, print-based publishers are offering a kind of second-class publication. Ebooks are still experiencing triple-digit growth, but they’re only one of several formats, and publishing in a single format limits your audience. For volume sales, print is still important, and a lot of book discovery still happens in bookstores. There’s also the fragility of digital content, where formats are regularly and rapidly rendered obsolete by the advance of technology.

It seems to me that digital imprints require authors to embrace the limitations of digital publishing, without providing any of the offsetting advantages that are available to digital self-publishers–namely, control over format and pricing, and the freedom of not being tied to a restrictive contract. Meanwhile, the publisher can push books into a growing marketplace at a much lower cost than with a conventional imprint, and reap the profits.

Perhaps I’m just too conditioned from having grown up, and begun my writing career, in a time when print was all there was. Not that I’m anti-digital, or resistant to new technology–quite the opposite. But I’m willing to admit that my reservations about digital imprints may have something to do with the fact that I prefer to read print, and am sad at the thought that we’re heading for a future in which many books will never have physical existence.

On the other hand…what if digital imprints are offering second-class contracts?

I recently saw the deal terms for Random House’s Hydra imprint. A summary:

– 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.

Note that authors are not being asked to pay any costs upfront (despite that scary “out of pocket” term). Hydra “advances” those.

However, the costs are deducted from sales and licensing income, and reduce the amount of the author-publisher split. This is reminiscent of what’s known as Hollywood accounting, where net proceeds are made to disappear by charging expenses against profit. Authors going into a deal like this can’t be certain of what they will earn on a per-book basis–while the publisher is assured that its expenses will be recouped at the point of sale.

I should also note that I’ve seen only one Hydra deal memo to date. But the author who contacted me was given to understand that these are Hydra’s (and by extension, Flirt’s and Alibi’s) standard offer terms, and I’ve heard anecdotal reports of other authors who’ve received similar or identical offers. Hydra does seem to be willing to negotiate–but publishers don’t usually budge very far on core items like royalty splits.

If Random House indeed intends to reach out to self-publishers with these new imprints, it may want to re-think its contract terms. It’s hard for me to imagine even moderately successful self-publishers finding a deal like this attractive.