Quote:
Originally Posted by GeoffR
I don't know about Costco, but how could selling a book through Amazon, B&N or Kobo be considered "outside of ordinary retail trade channels"?
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By declaring by fiat that they are.
(Few authors can afford to litigate predatory contract clauses they already signed. Plus, in the olden days even something as basic as asking for an audit could get you blacklisted. Even those that could afford it dared not.)
The "logic" they can argue is that "ordinary retail channels" are the thousands of full price channels served by Ingram and Maker & Taylor, mostly independents and newsstands, and that Amazon, Costco, and the chains are deep discount outlets. Which is something they can control simply by setting high list prices and discounting off that.
Tradpubs are middlemen.
And, like all middlemen, they try to maximize their take from their distributors and minimize their payout to suppliers. High list prices combined with deep discount clauses let them do both. The dual model system works because the high list price bakes in enough margin into the old-school distribution channel to satisfy all the middlemen while letting the publishers meet the deep discount terms on direct deals with the big retailers. (It's not a bug, it's a feature.)
Thing about it: they can price a book at $20 or $30.
At $20 with a 40% discount, they gross $12 and pay a royalty of $3.
At $30 with a 55% discount, they gross $13.50 and pay a royalty of $3.15.
Many authors would look at the total payout and not see the 50% drop in royalty rate.
As for ebooks...
Well, ebooks are hardly a traditional channel, are they?
They are even accounted for separately with separate royalty rates. The deep discount clauses don't distinguish, though, and if crafted "correctly" (and crafting gotcha clauses "correctly" is a core competency in Manhattan publishing) by specifying the discount royalties in terms of fractions of the base royalty instead of specifying the actual rate they can reduce ebook royalty rates as low as into the 8% range. And, of course, if they declare the baseline list price as the print list price (which most ebook retailers do) the result is that even $14 ebook sales qualify for deep discount accounting.
Interesting game, huh?
Used car salesmen are in awe of BPH execs.
Contract clauses are a lot like tech product features; it they exist, they will be used. If they are used, eventually they'll be abused.