Top Author Shifts E-Book Rights to Amazon.com; New York Times, 12/15/09

Brad Stone and Motoko Rich, New York Times; Top Author Shifts E-Book Rights to Amazon.com:

"Ever since electronic books emerged as a major growth market, New York’s largest publishing houses have worried that big-name authors might sign deals directly with e-book retailers or other new ventures, bypassing traditional publishers entirely.

Now, one well-known author is doing just that.

Stephen R. Covey, one of the most successful business authors of the last two decades, has moved e-book rights for two of his best-selling books from his print publisher, Simon & Schuster, a division of the CBS Corporation, to a digital publisher that will sell the e-books to Amazon.com for one year.

Amazon, maker of the popular Kindle e-reader and one of the biggest book retailers in the country, will have the exclusive rights to sell electronic editions of “The 7 Habits of Highly Effective People,” and a later work, “Principle-Centered Leadership.” Mr. Covey also plans to gradually make other e-books available exclusively to Amazon, which will promote them on its Web site.

The move promises to raise the already high anxiety level among publishers about the economics of digital publishing and could offer authors a way to earn more profits from their works than they do under the traditional system.

Mr. Covey is making his books available to Amazon through RosettaBooks, an electronic book publisher that primarily traffics in the older works of authors like Kurt Vonnegut and Virginia Woolf.

Arthur Klebanoff, chief executive of RosettaBooks, said that Mr. Covey would receive more than half of the net proceeds that RosettaBooks took in from Amazon on these e-book sales. In contrast, the standard digital royalty from mainstream publishers is 25 percent of net proceeds...

His move comes as publishers ratchet up their efforts to secure the digital rights to so-called backlist titles — books published many years, if not decades, ago. These books can be vitally important to publishing houses because they are reprinted year after year and provide a stream of guaranteed revenue without much extra marketing effort.

“The 7 Habits of Highly Effective People,” originally published in hardcover in 1989, is a steady seller for Simon & Schuster. This year alone, it has sold 136,000 copies in paperback, according to Nielsen BookScan, which generally tracks about 70 percent of sales.

Many authors and agents say that because the contracts for older books do not explicitly spell out electronic rights, they reside with the author. Big publishing houses argue that clauses like “in book form” or phrases that prohibit “competitive editions” preclude authors from publishing e-books through other parties.

Adam Rothberg, a spokesman for Simon & Schuster, declined to comment directly on Mr. Covey’s moves, but said, “Our position is that electronic editions of our backlist titles belong in the Simon & Schuster catalog, and we intend to protect our interests in those publications.”

Other publishers have moved to stake their claim on e-book rights for older titles. On Friday, Random House sent a letter to dozens of literary agents stating that on all backlist books, it retained “the exclusive right to publish in electronic book publishing formats.”...

The skirmish over e-books is part of a larger multidimensional chess match being played among publishers, authors, agents and book retailers. The big publishing houses hate the uniform e-book price of $9.99 that Amazon and others have set for newer titles. Although the retailers are subsidizing that price, executives say they believe that such pricing harms the market for more expensive hardcovers, and some publishers have reacted by announcing they will delay the publication of certain e-books by several months after they are made available in hardcover.

Last week, Simon & Schuster said it would delay by four months the e-book versions of 35 titles being published in hardcover from January to April. Both the Hachette Book Group and HarperCollins Publishers Worldwide have also indicated they will delay e-book editions.

Reacting to that move, Drew Herdener, an Amazon spokesman, directly criticized Simon & Schuster and its chief executive, Carolyn Reidy.

“Simon & Schuster is backward-leaning,” Mr. Herdener said. “Carolyn wants to corral readers, force them to buy what they wouldn’t buy if they had a choice. It won’t work. The better approach is to embrace the evolution of the book and give customers what they want. Forward-leaning publishers are going to clean up.”

Mr. Rothberg, the Simon & Schuster spokesman, said that his company wasn’t trying to upset anyone. “The notion that we have done anything other than wholeheartedly embrace the digital revolution, whether it be for e-books, new formats, reaching out to our readers wherever they may be, and every other opportunity provided in the new digital era, is patently absurd,” he said.

He added, however, “We understand that there’s a lot at stake and we look forward to further discussions with Amazon about how to grow this business without making our discussions of a personal nature.”

Mike Shatzkin, the chief executive of Idea Logical, which advises publishers on digital strategy, said that publishers were trying to minimize Amazon’s outsize influence in the book business and preserve their own. “Publishers are trying to herd Amazon back into their corner and keep it there,” he said. “But I think that this is going to be a very difficult situation for the big publishers to control.”"

http://www.nytimes.com/2009/12/15/technology/companies/15amazon.html?scp=1&sq=covey&st=cse