Author Topic: Why Del Rey and I will be parting ways - from Michael J Sullivan  (Read 7782 times)  

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #100 on: June 08, 2017, 06:12:48 PM »
Michael--

Welcome back!  Thanks for your responses here!

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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #101 on: June 08, 2017, 06:13:32 PM »
You're getting blinded by the dollar signs and missing his point. Does it really matter how much he made? Whether it was 200 grand or 200 million? What matters is what percentage he got for giving up his audio rights and whether in the long run the publishers actually deserved that amount for the value they gave him. Isn't that what all authors should consider when going into any type of deal? As for the kickstarter issue - I have no idea what it's about but it has nothing to do with the matter under discussion.

Agreed. And because some people have confused things...the "subsidiary" thing was with my Hachette contracts, not my Del Rey contracts (which have no audio component). My point was, all they needed to do was "sign a piece of paper" (it was Recorded books that approached  them) and for that they've received half of all the audio income that has been earned and that amount just jumped by $400,000.  I'm not saying I didn't willingly sign that deal, none of us knew the audio would one day be that high, but I do think that the "income of the book" should be distributed in a way that values both parties and for the 30 minutes of of work to review and sign that subsidiary deal Hachette made a heck of a lot of money compared to the decade of work I spent writing the books. 
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #102 on: June 08, 2017, 06:17:39 PM »
Bottom line - publishers are worse than ever on the rights grab thing and authors need to be very careful about what they sign away. The more people who bring these points up, the more newer authors are informed of what to look for and what to ask for. 

Yes, exactly!

The amount is NOT the issue and all the "I wish I had that problem" sort of posts just sound like sour grapes and is one of the biggest reasons that successful authors stop posting here. The only thing that matters is the percentage of profit that publishers are hoarding rather than paying the creator a fair amount for the existence of the product that is supporting everyone. I'm sorry if some of you think the author should be the lowest paid in that scenario. I've alway had a problem with that setup, especially when I was trade pubbed and there were no other options, taking pennies for my work when the other 92% was going to pay for high rises in NYC.

Agreed. Trade publishing has always undervalued the author, who is the MOST responsible for the book's success. It's disheartening to see that yet another step has been taken to make it harder for the content creator to earn a decent living.  I thought this would be something authors should know about, and so I posted.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #103 on: June 08, 2017, 06:24:00 PM »
The issue here is that he's not walking away from Del Rey because of that contract.

Yes you are 100% correct  I didn't walk away from anything! I was locked out because I sold the audio first. Both Del Rey and I WANT to do business together and if Del Rey were allowed to write a contract without audio, we could.

The reason for the post was two-fold. (1) be aware that audio rights are very lucrative these days so before you "hand them over" as a bundled ebook+audio+print deal - you might want to see what you're giving up and (2) For authors to be aware that if they sell audio first they won't be able to get a contract from PRH for print+ebook.  For me, who has a lot of self-publishing experience this isn't a huge problem.  For someone who has been traditionally published and wishes to continue I don't want them to screw themselves by selling a right that makes them "locked out" as well.

Many people in this thread seem to think he's unhappy with his current deal and trying to renegotiate to gain exclusive audio rights, which isn't the case at all. His current deal is for print and eBook only, with him having sold his audio rights before he sold his print and eBook rights to Del Rey. The publisher is the party trying to renegotiate and force the author to take a different deal, which would result in the loss of hundreds of thousands of dollars. Sullivan is not trying to renegotiate for more money, but prevent the publisher from taking 50% of audio sales in which he's currently earning 100%.

Yes, exactly!

My concern with this thread and the tone of some of the replies is that this isn't a matter of opinion, it's a matter of misrepresented or misunderstood facts.

I do think some people have misunderstood the situation. Thanks for helping to clarify the actual situation.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #104 on: June 08, 2017, 06:27:49 PM »
Agreed all around. I'd rather not go back to the good old bad old days when people didn't share their contracts and royalties and newbs were pretty much in the dark. I think that sharing has been a key part of more writers earning more money than ever before.

Indeed. When I started in publishing, there was so very little known about basic things such as "how many books sold is considered "good." What should I expect for an advance? Heck, I was completely blind-sided when my first traditional contract had a term of "life of copyright" - little did I know that was universal for the big-five - I could hardly believe it.

Forums like Writer's Cafe, and the whole indie movement, has done great things to shine a light in the dark. And I've done my own fair share of pulling back the veil. I do think it helps authors to be well informed.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #105 on: June 08, 2017, 06:32:05 PM »
S&S wanted to buy ebook and print rights from me. I told them it would be at least 2 mil up front. We negotiated for the print rights after that, since they were far less valuable to me in terms of what I could earn over a 5-10 year period.  I probably could have sold the ebook rights also for money that people in this thread would die to see apparently, but I didn't... because it would have been bad business on my part.  I knew my number, based on previous sales and projected sales, and I stuck with it. 

Well done! And yeah, we are both doing what all authors should do. (1) Know your worth (2) Maximize your income and if a publisher is part of that equation - then by all means partner with them but if they aren't giving you FMV - then no reason not to produce the books yourself.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #106 on: June 08, 2017, 06:40:31 PM »
To that end, the OP appears to have omitted significant data from the discussion. On the face of things, considering the big picture, it looked like a reasonable deal if not optimal, especially since Audible only pays 40% and he turned down 50%. But, perhaps he earns more through direct retailing, I don't know. And, at the end of the day, that's our collective problem about analyzing the OP's post, we don't have enough information to make a positive/negative determination, mainly because we don't know what his actual goals are. So again, as far as the audio rights go, the amount of the deal is the only issue, unless the audio conundrum is an excuse to remedy a different contractual concern.

Let me make the various royalties 100% clear because it's easy to be confused.

* If published through ACX AND the author pays for production costs AND they will do an exclusive deal is the only time they'll see 40% (and this is of net BTW).

* The 50% is 50% of what the publisher receives which is 20% of what the organization who bought the subsidiary right from them receives which is 35% of net royalty - if you do that math it's 3.5%. Now some publishers don't sell the audio as a subsidiary, they use their in-house production teams. So in this case the author gets 20% (or sometimes 25%) of what the publisher gets which is 35% (because Audible keeps 65%.  So that is 7% to 8.75%

* If the author negotiates directly with Audible Studios they "generally" get 15% (which is higher than any of the above scenarios that involve a print/ebook publisher. I'm sure that 15% is standard and some authors earn less (maybe 10%) and some earn more -- I do but I can't publicly say what that number is.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #107 on: June 08, 2017, 06:43:41 PM »
ACX pays 40%, Audible Studios pays 15% to authors who sign direct, I'm not sure what Audible pays to other audiobook producers. Michael did not turn down 50%, he turned down 50% of what his publisher would have received, after the audiobook producer they signed took their cut of what was given to them by retailers. That is the main issue he had: the publisher takes 50% for merely signing a contract with an audiobook producer.

Yes exactly. In my Hachette contract (which sold the audio as a subsidiary right) I get 50% of 20% of 35% which is 3.5% (well actually 2.975% because of my agent's 15%) when an author sells the audio rights directly to Audible Studios they make 15% as you already noted.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #108 on: June 08, 2017, 06:53:40 PM »
That was how I read it too. I can't fathom that he was getting 50% of the gross out of a publisher and came to view it as some kind of a raw deal.

Yes, you are correct I was getting 50% (left over from my print/ebook publisher) of 20% (which the audio producer pays my publisher) of 35% (which audible pays the audio producer) which is 3.5%. Look, I get it that I have "first world problems" and I also get that I signed that first contract with audio rights attached and no one held a gun to my head. But I also don't feel that the publisher did anything to "value" add for their cut. At the time, the advance was $2,000 a book ($6,000 total). And NONE of us thought the audio on those contracts were worth much.  Since the "extension" hasn't come in yet, the total audio income have been about 3.2 million of which I've earned $95,200. I have THE MOST invested in that project - I wrote it over 10 years. The publisher edited it for 8 weeks and the audio producer did the recording over 4 weeks. So, yeah, kill me, I can't help thinking that the income isn't equity distributed based on "work performed."  I doubt if you were in my shoes you would feel any differently.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #109 on: June 08, 2017, 06:58:53 PM »
And yeah going back yesterday and rereading what happened with Rirdan press and Ann Crispin.... I am just galled people are sitting here acting like it was mean old kboads that made the Sullivans stop posting.

Ann Crispin had to wait 3 extra weeks to get her royalty check because Robin was in California when her father died suddenly and she was the only one of the children who could go there and take are of his affairs. She was paid 100% of what she was owed, and if you don't believe me, send an email to Ann's husband. He'll verify that was the case. People love to "think" they know what happens in certain situations but they rarely know the whole of it.
« Last Edit: June 08, 2017, 07:00:38 PM by Michael_J_Sullivan »
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #110 on: June 08, 2017, 07:04:19 PM »
You're welcome, Michael. It was watching your success and listening to your interviews on the old Adventures in Sci-Fi Publishing Podcast that gave me the confidence to step into the indie game in the first place. I think a lot of the negative posts in this thread came from a simple misunderstanding of the chain of events, so I wanted to chime in with my 2 cents (though I'm probably up to at least a dollar now :-)) and help clear up any misunderstandings. Anyway, thank you for coming back to the Kboards -- it's been a while.

It's great to be back. Robin gives free seminars to authors in the Washington DC area and she's always singing the praises of kboards for new authors as a great resource. The people here are doing a great job helping each other...even if from time to time misunderstandings lead to incorrect information.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #111 on: June 08, 2017, 07:06:09 PM »
Thanks for coming back and responding, Michael. I've enjoyed your books and the workshops you and Robin run in the DC metro area. Looking forward to your next work.

You are welcome.  Are you a member of the DCWrite2Publish group?  I hope you'll be coming to the two seminars on Saturday (one on contracts one on money and publishing).  if you haven't heard those before they are two of the best ones Robin does...and for anyone in the D.C. area - they are 100% free. They are held at the Arlington Public Library and they will be running from 10:00 am - 1:00 pm this Saturday.
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Offline Annie B

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #112 on: June 08, 2017, 07:13:41 PM »
Fwiw Michael, my print-only deal last year was with a big 5, so there is likely still some leeway depending on imprint and editor etc.

Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #113 on: June 08, 2017, 07:14:35 PM »
I think I misunderstood the OP. So, please, someone correct me if I'm still misunderstanding.

Michael decided that, as great as they are, Del Rey did not offer an additional $200k worth of brand enrichment.

So, he didn't refuse a $200k deal, he refused to share the $400k he already had contractually in hand.

Right?

Nope.  It's a bit confusing because my post was about two things.

1. Del Rey (who I have an ebook + print) contract for the first three books in a series is prohibited (by their parent company: Penguin Random House) to enter another print + ebook contract for the rest of the series because I already sold the audio rights Audible Studios (who offered me a seven-figure deal).

2. The $400,000 / $200,000 thing is about an entirely different deal. My first contract (with Hachette) was an audio + ebook + print deal and while my agent tried to get us to keep the audio rights, Hachette made it a "deal breaker" so we signed them.  At the time, no one expected the rights to be worth much ($2,000 a book), so it wasn't a big deal. Now, years later, the audio producer wants to extend their contract with Hachette and to get the right to sell the audio for another 5 years they are offering a $400,000 additional advance. Because my publisher split 50% of audio income that means they get $200,000 and I get $200,000. Outside of that "extended advance" the audio books on that contract have made about $3,200,000 and I've earned $95,000 or so. I was just "kvetching" about the disparity in income between the various parties and using it as an example while it's not in my best interest to bundle audio + print + ebooks since I Hearn 3.2% on those sales (50% of 20% of 35%) when the audio is attached to a publisher and Audible offers 15% when sold directly (although I get more than that, and I'm not at liberty to say how much).

Does that help clarify it?
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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #114 on: June 08, 2017, 07:15:55 PM »
Good to see you back around these parts, Michael! Thanks for taking the time.

So, yeah, kill me, I can't help thinking that the income isn't equity distributed based on "work performed."  I doubt if you were in my shoes you would feel any differently.

I get that, and I appreciate your candor and transparency. Hopefully I'll be lucky enough to wind up in shoes like yours someday, and I hope we can compare notes at a con if it comes to that. Drinks on future me!

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #115 on: June 08, 2017, 07:18:13 PM »
Thanks for explaining everything, Michael.

The big question for non-hybrid Indies then is...does self-publishing with audible (I think it's a 7 year commitment now) screw up the potential for landing a deal with a publisher (or even generating any interest)? Audible appears to be a fantastic distribution channel. Should we hold off or jump in? Is mainstream publishing even still looking at Indies, or are those deals so few and far between as to be meaningless? I think these are headaches we'd all like to have, but I think most of us would rather not shoot ourselves in the foot right out of the gate either.

Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #116 on: June 08, 2017, 07:22:27 PM »
Michael can clear this up better than me, but I think it was this:

1) He had the previous $400k audible rights deal where he left $200k on the table.
2) He learned from that deal that he was leaving a lot of money on the table
3) In his NEW deal, he negotiated the audible rights right off the bat for 7 figures
4) Since he had done #3, he later learned that Del Ray was now prevented from entering into print contract negotiations with him (by RP).

He's not trying to back out of the $400k deal. That's already baked in.

He's just saying that that $400k deal made him realize how much money there was to be made and he wised up with his next contract.

And because of him doing that, he found out that RP is not even going to consider contracts that do not include the audible rights.

Which is why he is no longer with Del Rey.

Which is why he posted in Reddit (to clear the air and also to educate)

Well done! The only thing that isn't 100% correct is the #1.  And it is complicated. so I'm not surprised.  Let me try to address that.  In 2010 I signed an audio + print + ebook contract with Hachette for three books - it was a low six-figure deal.  Later, Hachette sub-contracted with Recorded books (for $2,000 each) for them to produce the audio. Because Hachette sold the audio as a subsidiary right we split the audio income 50/50. What this means is I earn 3.5% of net on audio sales because I earn 50% (Hachette takes the other 50%) of 20% (Recorded Books takes the other 80%) of 35% (Audible takes the other 65%).  After my agent's fee I earned about $95,000 for a book that netted 3.2 million. And that kind of "share" is not something I want to be involved with in the future--which is why I've adopted a policy of selling audio first (Which worked out fine for the first half the series, but now "locked me out" for the second half of the series.  The whole $400,000 / $200,000 thing has to do with the fact that the license that Recorded books bought for $2,000 a book in 2010 is now MUCH more expensive -- to the tune of $400,000.  And I was kvetching that I have to split that with Orbit even though they did nothing more than sign a piece of paper.

Al the rest of your points are dead on. Thanks for filling in.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #117 on: June 08, 2017, 07:29:49 PM »
Actually, I think there was one more step to it.

1. Audio rights originally sold for only $2,000
2. When the contract was renewed it was for $400K
3. Because of how trade deals are structured, all subright sales done by the publisher are split 50/50
4. What wasn't a big deal when it was $2K became one when it was now $400K
5. Knowing his value had gone up, Michael sold the audio rights to the next series himself for seven figures
6. Publisher refused a print deal because audio wasn't available

Yep, you have the right of it.

Michael, how do you think they'd handle a potential hybrid author who has put their books into audio?  Does that mean that any self-pubbed series that's already in audio and locked up for seven years because of audio terms is no longer a consideration for a print deal with one of the Big 5?

Well, I can't speak for the entire Big-5, but history has proven that they tend to walk in "lock step" in such matters. What I can say is you would be locked out of Penguin Random House. I can also tell you (from some deals I didn't sign and from information that I heard from other authors) that Harper Collins has a similar "no audio, no deal" policy.  Also, I couldn't shake free audio rights from Hachette (but I don't know if that was a "corporate" thing or just for my contract). 

But, yeah, I suspect that you couldn't get a deal while that audio deal is in place. Now if you don't auto renew -- and let the rights revert then you probably could get a n audio + print + ebook deal, and you would have some good track record to value the worth of the audio. Personally, I don't think they'll pay FMV for the audio, again based on people who have been making deals where audio was attached). Also, your sales figures for audio may help or hurt. In the words if they started strong and then declined, they won't be excited by them. But if they were increasing, then they are more valuable.

Best advice I can give, before you "auto renew" ask your current publisher what additional advance they are offering, if they say none, then shop it around.  Then go back to them with competitive numbers from others, and see what they'll say - I suspect they'll beat the best offer.  And then armed with that you'll have to decide if it's worth rolling that into a print + audio + ebook deal.  Here's hoping you get a deal that is in your best interest!
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #118 on: June 08, 2017, 07:32:13 PM »
Thanks Jerry. That was not clear at all from the OP.

But I'm still confused, I have no idea what the lesson is here. Given that publishers want ALL of the rights...

Do we horde our rights for maximum leverage or parcel them off to the highest bidder?

The point I was making was.

1. Audio rights may be worth more than you think.

2. You should know what they are worth before you negotiate with a traditional publisher and make sure your happy that the advance is providing value for all three rights.

3. If you don't want to be "locked out" of a traditional deal, don't sell your audio rights first.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #119 on: June 08, 2017, 07:36:12 PM »
Publishers have always wanted as many rights as they can grab, for as little as possible. That's not breaking news.

Yes, publishers have always wanted as many rights as possible...but audio rights WERE negotiable until just recently (a few months according to my publisher). Now they are 100% deal breakers - at least for Penguin Random House, and I think Harper Collins has a similar "corporate policy" and while I'm not sure if Hachette's policy is "corporate wide" I wasn't able to break them free on the two contracts I have with them. It's quite possible that the entire big-five (who typically walk in lockstep) have made a new "corporate decree" that audio is just like ebook rights in that they MUST be included in EVERY deal.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #120 on: June 08, 2017, 07:37:16 PM »
That in the past he was able to get a major traditional publisher to give him a not-including-audio deal, and now that same publisher is totally unwilling to consider such deals. He feels the industry's stance on the issue has hardened. For people considering seeking a traditional deal, it could be useful to know that selling audio off separately is probably not going to be possible.

Yes, exactly.
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #121 on: June 08, 2017, 07:40:52 PM »
Nice to see you back here, man.  :)

Thanks!
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Offline Michael_J_Sullivan

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #122 on: June 08, 2017, 07:42:41 PM »
Michael--

Welcome back!  Thanks for your responses here!

Betsy

Hey Betsy - thanks for the welcome. You've alway done such a great job moderating the Writer's Cafe. Robin sings this forums praises all the time in the free classes she does in the Washington DC area.
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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #123 on: June 08, 2017, 07:48:49 PM »
While I'm familiar with Michael's name, I'm new to his transparency (and patience).

His responses in this thread are heroic.

Michael, thanks for showing us how the sausage gets made.
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"Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat." - Sun Tzu

Offline This_Way_Down

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Re: Why Del Rey and I will be parting ways - from Michael J Sullivan
« Reply #124 on: June 08, 2017, 07:50:03 PM »
What have we learned boys and girls? You never know who is watching.

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