Special sales and ultra-high discounts

We are campaigning for seven simple steps that will give authors the right of approval over special sales or ultra-high discounted sales of their work, for such sales to have separate ISBNs and be recorded on Nielsen Bookscan, and for publishers to monitor more closely how discounted books are distributed.

(Illustration © James Mayhew)

What do we mean by special sales and ultra-high discounts? his is not about ordinary high discounts, such as those demanded by Amazon (although those cause concern to authors and booksellers), but about sales where the purchaser pays a very low price per copy for a large quantity of copies, paying up-front and ‘firm’ for all those copies. This is a particularly complex area of publishing. It can be enabled via many different contract clauses, and when it happens it can take several different forms. We are not against special sales, but whenever it happens the author should be involved in the decision-making process, discounted sales should never compete directly with standard sales, and the numbers should be recorded in Nielsen’s book sales figures.

So what’s the problem?

There are several issues with special sales:

  • The huge discounts offered on these books, and the fact that the purchaser has bought them ‘firm’ so will want a way to dispose of surplus copies, mean that they can be sold on for a very low price. The internet has changed the way we buy books, and cheap copies can end up competing directly with conventional titles. For instance, the sale of discounted books on Amazon Marketplace is a major concern, since they will be listed alongside the full price copies. In the UK, any book listing defaults to the copy sold by Amazon. However, in the US, the book listing system has been brought in line with the other product listings, meaning that a highly discounted or pristine secondhand copy could be displayed by default. Known by Amazon Marketplace retailers as winning the Buy Box, this means that a conventional, full royalty-bearing sale could be demoted to promote a copy that either pays a far lower royalty to the author or nothing at all. At present, this change in policy only affects Amazon.com.
     
  • Even in the UK it is clear some heavily discounted titles intended for export or book clubs are being leaked onto Amazon marketplace. Paperback copies are usually available on Amazon from other sellers well before they are available from the publishers, often on publication of the hardback. Authors receive very low royalty rates on such sales, much less than on a full priced home market sale of the book – on second-hand copies, including e.g. the resale of special copies and remainders, neither author nor publisher earn anything, but such sales may cannibalise ‘proper’ ones.
     
  • Of course, publishers have no control over the price at which a book is sold to the customer (except where they use the agency model). And no matter what a publisher might say to a customer about market restrictions, once they’ve made a sale in the EU no publisher can prevent them from re-selling the books (due to the ‘exhaustion of rights’ in the EU). For that reason, we would urge publishers to exercise caution. Deals about which we have heard regular complaints over the years include partial remaindering (notably tag-end of hardback in anticipation of paperback launch), covermounts or bookclub loss-leaders (e.g. a romantic novelist’s one and only title being used as a giveaway to promote the wider romantic list) and – the most prevalent – special deals being permitted at the peak of a title’s life. The children’s market seems to be especially subject to special deals.
     
  • Special sales income for authors is usually based on the money received by the publisher, NOT the cover price, so authors can earn far less (sometimes nothing) from such sales.
     
  • In some contracts where royalties are based on net receipts the percentage rate payable to the author reduces when the discount increases. This is simply illogical and is unfair to the author.
     
  • It isn’t always clear that a substantial proportion of an author’s sales will be at discounted rates rather than the headline rates in the agreement.
     
  • Special sales are not recorded by Nielsen Bookscan, so they don’t appear in official public sales figures. They are also often not recorded by publishers since they are treated as subsidiary sales. This can damage an author’s careers as publishers will typically look at previous sales figures when deciding whether to commission another book.
     
  • High street bookshops, wholesalers and distributors cannot compete with low priced sales and may decline to stock these works.
     
  • Seeing books for sale so cheaply can affect full price sales by damaging the perceived value of books and the price that readers expect to pay for them. This was less glaring when special sales editions were branded, of a cheaper quality, had different jackets and were clearly destined for a different market. These days they are often indistinguishable from full price editions.
     
  • If an author is associated too often with bargain books, it could damage their professional brand.

What are we asking for?

(Illustration © James Mayhew)

The seven steps

  1. Consult and involve
    Publishers should give the author a right of approval over every special sales deal (even if the current contract does not include such a right). Discounting is sometimes a valid strategy and publishers risk losing as much as the author if deals cannibalise conventional sales. But an author usually only has a handful of books from which to earn, while publishers have many, so an author is more at risk if the strategy does not work. Authors may also have more than one publisher so have a broader view of the overall sales picture. A publisher should always explain the reasons why it wants to do a deal, the likely receipts for the publisher and author, and the likely impact on traditional sales. All such deals should be considered carefully and publishers should not supply books at an ultra- high discount, unless the author and the publisher agree that the deal is worth it.  Hachette has already given us an assurance that it will always consult authors and seek permission before entering into special sales.
     
  2. Inform
    When negotiating the contract, tell the author which royalty clauses you anticipate affecting a significant quantity of sales in the first couple of years. Without such explanation, contracts can be extremely misleading.

     
  3. Share the hit
    If the author’s royalties are based on net receipts the percentage rate payable should not be reduced when the discount increases.

     
  4. Protect
    Take steps to ensure that books are only sold in the channels for which they are intended and do not leak back to full-price outlets, particularly on Amazon. Give a separate ISBN to each special sales edition, and add appropriate restrictions, where lawful, to make the books traceable and non-returnable. Hachette has agreed to this.

     
  5. Differentiate
    Differentiate special sales editions from the full price edition. If they are cheaper the quality should not be as high. This will help protect bookshops and other full-price outlets.

     
  6. Monitor
    Monitor closely and follow up suspicious sales on Amazon. Stop selling to purchasers who leak books.

     
  7. Record
    Include special sales figures in your records of a work’s lifetime sales. Tell authors the size of print-runs. Join us in encouraging Nielsen BookScan to record special sales alongside traditional sales.

We urge every publisher to contact the SoA and openly agree to the seven steps. This will help authors, publishers and booksellers maintain the best prices for books, reduce unfair competition, reward authors appropriately and maximise sales revenues.

What are we doing?

(Illustration © James Mayhew)

In line with our CREATOR campaign for fairer contracts we urge publishers to act fairly and respectfully, and agree to the seven steps above We will be seeking meetings with the main publishers and writing to others.

We will be seeking amendments to the Publishers Association’s Code of Practice. We are contacting Neilsen Bookscan to discuss how such sales are recorded We are helping authors to understand the issues so that they can negotiate appropriate clauses, with the help of their agents where relevant.

What Can You Do?

  • As your publisher to commit to the seven steps.
     
  • It is always reasonable (and if you are in doubt, strongly advisable) to ask your publishers to clarify which royalty provisions are likely to apply to any significant quantity of sales, at least in the work’s first year.
     
  • Ask for a right of approval over all ultra-high discounted and special sales. Feel free to contact our advisers for appropriate clauses.
     
  • If your royalties are based on net receipts then do not agree to the royalty rate being reduced on special sales.
     
  • Ask that all special sales or highly discounted editions have separate ISBNs and are clearly differentiated from full price editions.
     
  • Ask to be automatically informed of the size of print-runs, including special and subsidiary sales
     
  • Inform your agent, if you have one, or highlight the issues when you negotiate contracts. Remember that the Society of Authors will vet your contract for you.. Download our Publishing Quick Guide
     
  • Ask your publisher to discuss special sales with you, even if your current contract allows them.
     
  • Let us know if you have any difficulty or experience any loss from such sales.
     
  • Refer agents and publishers to this page so that they can understand the author perspective.
     
  • Share this page with fellow authors and help to spread the word.

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