Of all the comments and reactions to the Wylie Agency's decision to launch Odyssey Editions and sell its e-books exclusively through Amazon, the Authors Guild message to its members best captures the complexities and ramifications of the agency's actions. The memo finds fault with all parties involved in the arrangement. It criticizes Wylie for making the single-party deal with Amazon and warns against potential conflicts of interest when a literary agency turns into a publisher. It criticizes Amazon for being, well Amazon, a company, it says, that has "time and again wielded its clout in the industry ruthlessly, with little apparent regard for its relationships with authors or publishers, or, for that matter, antitrust rules."
As for publishers, the guild says that by not offering authors higher royalty rates on e-books, publishers brought the current situation on themselves. Agents, the guild observes, are correctly refusing to sign over e-book rights to backlist titles because the reigning 25% royalty rates are too low. And that is where the guild comes down on the side of Wylie. The guild estimates that under the Wylie/Amazon deal authors will receive 60% to 63% of the price of the book. Under a typical contract with a traditional publisher, the guild estimates that authors receive 15% to 16%. Based on a price of $9.99, authors get between $5.94 to $6.29 per book with Wylie/Amazon compared to $1.49 to $1.57 per book with a traditional publisher.
While Odyssey Editions authors are getting a good royalty rate, there's still the irksome issue of where their e-books are being sold or, in this case, not being sold. Since these e-books are only being offered through Amazon, will the higher royalty rate offset sales that could have been made through other channels? Wylie is betting, or calculating, that with Amazon's current dominance of the e-book market, those titles won't lose enough sales to matter. But having signed a two-year exclusive with Amazon, Wylie risks watching other players steal market share—BN.com continues to move aggressively in the e-bookstore space, and the iBookstore is constantly gaining more traction. While the guild concedes that an agency starting a publishing arm is "weird," it predicts the weirdness will multiply if authors don't get a better royalty deal from publishers in the digital world.
As the week concluded, both Random House and Wylie were standing firm. Wylie told the Financial Times Friday that unless publishers agree to higher royalty rates, he is prepared to expand Odyssey Editions to 2,000 titles. In response, Random House spokesman Stuart Applebaum said the publisher "will not do new business deals with a literary agency which sets themselves up as a direct competitor of ours with our titles."
Many in the publishing space are now wondering whether this issue will wind up in court. Although Random House v. Rosetta Books, which began in 2001, is being cited as a precedent by industry members—in that case Random House sued then e-book upstart Rosetta Books (founded by agent Arthur Klebanoff) over essentially the same issue, the publishing of e-book editions of some of Random's backlist titles—the case doesn't provide solid footing for the Wylie Agency. The guild touted the case as proof that authors retain e-book rights in contracts drawn up before the existence of e-books. In fact, the case was settled, and Rosetta wound up paying a licensing fee to Random House for the e-books it published. In other words, the legality of Odyssey Editions is still very much up in the air, from an intellectual property standpoint.