Night Shade's Deal or No Deal
April 6, 2013 4:58 AM   Subscribe

"I should have known before Night Shade came to me with a deal that things were rotten. Instead, I got an email immediatley upon announcing that I’d inked the deal saying “You know they aren’t paying people, right?” Everything authors knew about the rotten abuse at Night Shade was shared in private. With a few exceptions (Moon and Williams, most notably) no one was talking out loud about what was happening. The SFWA was accomodating and gracious and gave them chance after chance. We should have spoken up. All of us." Kameron Hurley talks about the culture of silence surrounding the problems at Night Shade Books.

Night Shade Books is an independent publisher of science fiction and fantasy which has been relatively successful, e.g. publishing Paolo Bacigalupi's The Windup Girl, which won basically every major SF award the year it came out. They're one of the bigger independent publishers with a broad range of interesting authors, but over the last few years seems to have had problems actually paying their authors the royalties owned on their books. As Justin Landon explains, most of the problems Night Shade had to deal with seems to have come from the owners being fans more than business people:
Night Shade, throughout its existence, consistently exhibited the kind of behavior that fundamentally precluded them from ever finding success. To my knowledge Williams never consulted people running other independent presses. Instead, he opted to seek my advice – a relatively new blogger whose most illustrative credentials were calling God’s War amazing and Pillars of Hercules a piece of shit. I have no experience in the publishing business, nor have I ever studied it.
Things came to ahead earlier this week, as Nightshade sent a lettre to all their authors about the proposed sale to another publisher and the revised contracts that would need to be signed by them for the deal to go through, with the threat of bankruptcy looming otherwise.

As Michael Stackpole explains, those new contracts are much more unfavourable to an author than the existing ones, e.g. only offering a flat ten percent royalty rate on the net income. Not surprisingly therefore, there has been a lot of agitation against the companies proposing to take over Night Shade, some seeing them as the villains in this story.

Of course, the would-be new owners themselves don't see it this way:
"We're the good guys," insists Jarred Weisfeld with Start Publishing. "We're the ones who are coming in and trying to save something."
posted by MartinWisse (43 comments total) 13 users marked this as a favorite
I've learned a lot of hard lessons as an artist over the years, but probably the hardest is this: it's not called Show Friends. It's Show Business. You can deride salesmenand capitalism and advertising and the word "monetization" as much as you want--but if you want to make a living off of making art, eventually you need someone who knows how to make money to do some dirty work. Maybe that person is you, but if it isn't, make sure you're working with someone who knows what they're talking about, not a buddy, or a fellow artist, or a cool guy. Creators need their Ari Golds, because the world of commerce is dangerous place.
posted by Potomac Avenue at 5:10 AM on April 6, 2013 [11 favorites]

Who are J&J?
posted by Kirth Gerson at 5:18 AM on April 6, 2013

I was working with a publisher when they went bust and... well, just say that it left me feeling very jaundiced about the whole publishing industry. Like the music business, unless you're a big name (or luckier than I've been) you come way down the list of what's important when something happens to the business.

I hadn't had anything published by them for a couple of years before they died so they only owed me a couple of hundred bucks in residual royalties, but I had friends who lost thousands. And the bankruptcy proceedings sold the IP on the back catalog, so I now have no access the stuff I've written, because the new owner is sitting on it.

But "only" ten percent on the net? That's always been pretty much the standard rate in the world of tech writing...
posted by 43rdAnd9th at 5:20 AM on April 6, 2013

Thanks for this post - I've seen some mentions of this on Twitter (I follow some of my favorite authors) but I haven't been clear on what happened. This cleared it up.

Reminds me of the common issue I run into with gaming stores, where the owners are trying to run the store like a hobby instead of a business.

43rd - sure, maybe that's the standard royalty rate in genre fic too (I have no idea), but for someone that signed a much better contract a while ago and has been doing the math on the royalties they should be getting paid based on the contract they signed, it would be pretty shit to get a letter that says "you get to choose between this fraction of what you were going to get paid, or nothing at all."
posted by kavasa at 5:23 AM on April 6, 2013

Net? You *never* take net. Net exists to screw the writer/creator 99% of the time.* Every time you hear about "Hollywood accounting" and every plot twist you see in pretty much any fiction where some creative person gets screwed out of their money by greedy executives comes from this. And everyone involved is almost certainly completely aware of this.

(1% is in the rare case where your primary sales fulfillment automatically distributes payments and calculates net before it gets into publisher hands, maybe, but that's it, and not common at all outside of some niches -- RPG e-publishing, for example.)
posted by mobunited at 5:25 AM on April 6, 2013 [9 favorites]

Who are J&J?

Jason Williams and Jeremy Lassen, the guys who run Night Shade. Into the ground, apparently.
posted by Lentrohamsanin at 5:42 AM on April 6, 2013

The perspective from Phil and Kaja Foglio, creators of Girl Genius, which was published by Night Shade. They, to put it mildly, aren't happy.
posted by Halloween Jack at 5:52 AM on April 6, 2013 [1 favorite]

They've put out some great anthologies over the years. Shame to see things turn out like this.
posted by Renoroc at 6:07 AM on April 6, 2013

I received the email offering me the new deal (I have material in a few of Night Shade's anthologies). No one I know is happy with it. Alternatives are being sought.
posted by Prince Lazy I at 6:09 AM on April 6, 2013

To clarify, Night Shade published the Girl Genius (text) novels. The *graphic* novels are safe.
posted by fings at 6:12 AM on April 6, 2013

Not Night Shade, but I have a horror genre author friend who got screwed in a similar way when some other fly-by-night publisher went broke a few years ago. It's appalling to me how publishers aren't required to safeguard royalties for authors. Particularly e-book publishers, where capital costs are so low. As the first comment notes writing is business, not friends, but authors are generally too naive and vulnerable to negotiate anything like a reasonable contract.
posted by Nelson at 6:35 AM on April 6, 2013

Another interesting response from an agent who spells out the questions authors should be asking, and also accuses the SFWA (Science Fiction and Fantasy Writers of America) of not helping authors understand those questions and encouraging them to sign the horrible new contracts in an unusual and secretive way:

Just a few weeks ago, SFWA got a lot of good press for putting public pressure on Random House (each word there is a different link; I want to make it very clear how much well-deserved good press SFWA got here) regarding the contract terms for some new e-imprints that Random House had started up.

If SFWA thinks this is a good deal, it should be willing to be as public in its support and its discussion of the terms being offered as it was in sharing the terms of the Random House e-imprint contract that was provided to it.

But with this Night Shade situation, SFWA is communicating to members or a subset of members known to be published by Night Shade like this: "The purpose of this report is to answer some of the questions we have been receiving from you. We ask that you not share this report outside the membership." Their annotated version of the Night Shade assignment letter is hidden in a non-public area of their website. And most of what they do say is always accurate as far as it goes, but it's what they choose to say or not say that tilts the entire conversation. All the risks of saying "no" are prominently highlighted, all the risks of saying "yes" are obscured. SFWA makes it abundantly clear that there are huge risks in bankruptcy and you may get pennies on the dollar and have your book tied up for years, but the best it can do on the print royalties is say (paraphrasing) "maybe it's better, maybe it's worse" when I suspect the typical author will see a considerable reduction. It tells us that the 50/50 split on audio and second serial rights which you relinquish is industry standard, but it doesn't say with similar clarity that you are giving up control and one-half of potentially valuable rights in order to get your royalties currently owed. SFWA is right to add the "talk to your agent" disclaimers, but why in this instance vs. almost every other instance is SFWA not informing its members regarding the best right questions to ask when having those discussions.

The new contracts are clearly a power grab by Night Shade; using the threat of bankruptcy to snap up audio book rights, e.g., that weren't in many of the original contracts is unconscionable.
posted by mediareport at 6:51 AM on April 6, 2013 [5 favorites]

Another agent, Andrew Zack, calls the deal "bottom-feeding" and "extortionist" and goes on:

So let's ask ourselves a couple of questions:

1. Whose idea was it to change the terms of the existing contracts?
2. Whose idea was it to ask for more rights than those contracts already included?

These are important questions, because they help determine whether these two highly questionable "asks" are Night Shade's or Skyhorse's. And if Night Shade's, then I think Skyhorse should really consider whether or not it wants to be in business with a company that appears to be trying to take advantage of authors who are caught between a rock and a hard place. And if it is Skyhorse's idea, then I think authors have to really ask themselves if they want to be published by a house that is so grossly opportunistic at the expense of authors.

Either way, now that this entire matter and the offer from Night Shade is public knowledge, I think Skyhorse should be pretty embarrassed.

posted by mediareport at 6:56 AM on April 6, 2013 [3 favorites]

It's long, so here's what Zack sees as the key fix:

But the entire situation is also casting a negative light on Skyhorse and so I wonder if Skyhorse wants to step up here and fix this. All it has to do is agree to accept the contracts as they are and not to require additional rights and the deal would undoubtedly be done. But I think Jason Williams and Jeremy Lassen have to walk away.
posted by mediareport at 6:59 AM on April 6, 2013

One of the things that I find very interesting about the way that authors speak directly to readers in the new landscape is the direct discussion of "how to buy my work". This is information I simply wouldn't have had when I was young: when to boycott and when (and where) to purchase to financially benefit the artist.

Here's hoping all the authors get less screwed than they look like they will.
posted by immlass at 7:38 AM on April 6, 2013

This still doesn't answer the question of why an author would agree to the new contracts. Surely they can simply refuse, let Night Shade go under, and then sell their work to another publisher since Night Shade never lived up to the contract signed. I mean, that is what a contract is - the author gives up the rights to their work in exchange for X quantity of money. If the money is not paid, then surely the publisher loses the publishing rights because they have not lived up to the contract... correct?

Are there any lawyers on Metafilter who could weigh in on this?
posted by wolfdreams01 at 7:47 AM on April 6, 2013

wolfdreams1, that's covered in, at least, Phil and Kaja Foglio's comment on the matter:

"A certain percentage of Night Shade authors have to agree to this hose job before the deal goes through. Yay! We’re safe! You’d have to be an idiot to sign onto this! True– So let’s bring out a stick and threaten you! If they don’t get enough authors willing to eat this crap, then Night Shade has no choice but to declare Chapter 7 bankruptcy. Then all the books in question go into a legal limbo. No one has the rights until the bankruptcy is resolved, which might take years- or possibly, NEVER! This has happened before to way better authors than us. This means that once said books go out of print, the authors can’t resell them. Can’t reprint them. Can’t sell any adaptation rights. Can’t write any sequels."
posted by kyrademon at 7:53 AM on April 6, 2013

10% of net profits?

Does anybody actually sign Monkey Points contracts in this day and age?

After New Line tried to argue that Lord of the Rings didn't make a profit and didn't have to pay Peter Jackson, offering net points has to be seen as an insult to the intelligence of the authors, or evidence of just how firm a come-along-grip on the soft-bits the publishers have.

I've got a couple of FPPs in the works related to the music business. My conclusion is that the moment art became a commodity, artists have gotten screwed, and nothing has changed since that day a long, long time ago other than the thievery math getting done on spreadsheets rather than on paper.

Being an artist is the least effective way to make a living off of art.
posted by Pirate-Bartender-Zombie-Monkey at 8:40 AM on April 6, 2013 [6 favorites]

I did, back at the start of my career, sign a royalties-based-on-a-percentage-of-net deal with an RPG publisher (Palladium). This was only after talking to several other authors who'd written for the same company, who all assured me that this was a decent deal—one of them, the late Erick Wujcik, had actually made serious money off his Palladium books. Plus it was a good-sized percentage. And indeed, the royalties I received were decent if not extravagant, and came in bang on the quarter-mark, and I had few regrets.

A couple of years later I wrote some game tie-in novels for a good-sized UK publisher (Virgin, now under different ownership), for gross points. The advance was small but I lived in hope of getting some good royalties out of the deal. They sold the entire print run to a book-club at a huge discount and I got nothing.

Sometimes the swings go round and round better than the roundabouts.
posted by Hogshead at 9:00 AM on April 6, 2013 [7 favorites]

This still doesn't answer the question of why an author would agree to the new contracts. Surely they can simply refuse, let Night Shade go under, and then sell their work to another publisher since Night Shade never lived up to the contract signed.

The contracts - the books - are considered assets of the company, so if Night Shade files bankruptcy, those assets get tied up in court for an indeterminate length of time. The anecdotes I'm seeing suggest that this is a good way for a book to basically become legally unsellable more or less indefinitely. It's a bad outcome for the authors. (It may not be a worse outcome than signing a terrible contract, which is the debate.)
posted by restless_nomad at 9:34 AM on April 6, 2013 [1 favorite]

Paying people is so 20th century.
posted by vibrotronica at 9:35 AM on April 6, 2013 [5 favorites]

Ouroboros capitalism.
posted by Slackermagee at 10:02 AM on April 6, 2013

I met kaja foglio at sakura-con this year, we had a great conversation about girl genius. I'm pissed now that I didn't buy anything at their booth.

These are artists, real people living in Seattle trying to make a series, trying to make more light in the world.

posted by roboton666 at 10:14 AM on April 6, 2013

This still doesn't answer the question of why an author would agree to the new contracts. Surely they can simply refuse, let Night Shade go under, and then sell their work to another publisher since Night Shade never lived up to the contract signed.

Some of the authors are owed non-trivial sums -- I know people who have five-figures owed to them. Signing this deal is almost certainly the only way they get paid, and a lot of them are counting on that money to buy food and shelter and medical care and so on. If the deal falls through, bankruptcy proceedings are probable, and the results of that are unpredictable... but as a rule, writers tend to be at the back of the line of creditors when a publisher goes bankrupt.

Even people who recently worked to get their rights back -- often winning reversion due to breach of contract because of non-payment -- might be out of luck in the case of a bankruptcy, because a bankruptcy court can nullify reversions that happened recently, arguing that the book contracts are assets that deserve to be liquidated to pay creditors. (My agent compared it to Bernie Madoff trying to give away millions to friends and family shortly before his fraud was found out. The courts got most of that money back too.) Basically, if your book gets caught up in a bankruptcy proceeding, you're stuck, potentially for years, unable to resell the rights elsewhere, etc. So people are looking at writing and delivering books, never getting paid, and then potentially having that book tangled in a bankruptcy. It's an ugly scene.

I have five books with Night Shade, and have good-sized royalty payments due to me this summer, so I've been watching this closely. The Skyhorse/Start deal is weird, and not ideal, but it's not quite as bad as some people are making out. The boilerplate contract is awful, yeah... but so are all publisher contracts. That's why it's good to have an agent or a lawyer or a background in contract negotiation yourself, so you can negotiate and win concessions. My agent will be talking to the potential new publishers next week, and how they respond will decide whether I sign the deal or say goodbye to four-figure royalties and hope for the best if and when it goes to bankruptcy.

Basically, it's lose-lose, and a question of figuring out the least-bad option, which varies according to authors. I'm in a position now where I can eat the loss of a few grand if the alternative is too noxious (though it'll hurt -- there goes my travel fund for the year). If they owed me $25,000, though? I'd sign. I'd have to. I'd need the money. So I don't judge writers who choose to go that way at all.
posted by timpratt at 10:15 AM on April 6, 2013 [11 favorites]

Hey, Tim Pratt! Welcome! Always fun to see an author pop in literally the day after their books were recommended over on AskMe.
posted by restless_nomad at 10:24 AM on April 6, 2013

I am a longtime lurker and very occasional commenter. :)
posted by timpratt at 10:26 AM on April 6, 2013

As ever, Freakazoid has the most useful advice!

"Always ask for a piece of the gross. Not the net. The net is fantasy."
posted by Pope Guilty at 11:23 AM on April 6, 2013 [7 favorites]

The three clauses for any creative to insist on are 1) Percentage of gross, and 2) Independent accounting audits at regular intervals, and 3) The ability to buy back rights at a reasonable price.
posted by klangklangston at 12:08 PM on April 6, 2013 [6 favorites]

Neil Asher has five books with NSB, so has some thoughts.
posted by Auz at 2:30 PM on April 6, 2013 [1 favorite]

Tobias Buckell made a roundup post about this on Thursday for anyone who wants to keep following along.
posted by RakDaddy at 2:48 PM on April 6, 2013

It's odd that John Scalzi hasn't commented on this situation.
posted by Justinian at 3:16 PM on April 6, 2013 [1 favorite]

Is it possible to make a contract that self-destructs in case of bankruptcy? Or will the bankruptcy courts not be pleased with that?
posted by Pyry at 3:22 PM on April 6, 2013

Is it possible to make a contract that self-destructs in case of bankruptcy? Or will the bankruptcy courts not be pleased with that?

Many contracts have a clause that says rights revert automatically in the case of bankruptcy.

That clause makes bankruptcy judges laugh and laugh and laugh, and it is generally ignored.
posted by timpratt at 4:49 PM on April 6, 2013

Justinian: considering it's a fairly recently public (though I'm certain he's been aware of the publisher's issues for some time in more private quarters) and complex issue and he's taking Saturday off, I don't think it's that odd yet. I'd be surprised if he didn't make some essay on it within the next week, though.
posted by foxfirefey at 5:21 PM on April 6, 2013

Yeah, but the first rule of PR is to get out in front of the story. That supersedes taking Saturday off, one would think. When one is the head of an organization.
posted by Justinian at 5:33 PM on April 6, 2013

To go a bit more into timpratt's fairly apt summery of the law above, the idea of a contract that "self-destructs" in the case of bankruptcy is considered in the bankruptcy code and shot down.

11 U.S.C. §541(c) provides that any ownership interest (i.e. lease, sale, interest, transfer of copyright, or any other type of ownership interest) is in the power of the bankruptcy court to decide what to do it(i.e. becomes part of the bankruptcy estate); even if the terms of the interest say it is not to be considered part of the bankruptcy estate.

Meanwhile 11 U.S.C. §365(e)(1) stops you from drafting (well, not drafting, but actually following through on) a contract which allows a party to withdrawal from the contract for some other reason which might (or might not) include bankruptcy. So you can't have a contract which says, "the author can cancel this transfer at any time!" and then try use that once the bankruptcy starts up.

I do have some ideas of what authors can do to protect themselves from this situation, but I haven't been hired to litigate the situation, so a lot could be wrong, but I believe a contract could be written with a fairly high chance of being enforceable that gives the the author the ability to continue to sell some rights, create derivative works, and so on in the event that their publisher went bankrupt. The kicker would be that the publisher would have to NOT lose the rights that they have during the bankruptcy.

What I envision is a situation where the publishers rights don't change upon the bankruptcy, but the author's rights expand. I.e. The debtor's rights don't change (and sections 541(c) and 365(e)(1) are arguably only written to effect the debtor's rights, but the creditor's rights expand, and are hence outside the control of 541(e) and 365(e)(1).

Of course, this is untested legal grounds. When you get right down to it a lot of the imagination and work that's put into contracts in other areas (trusts, corporate mergers, etc..) haven't been put into publishing contracts because, well, if you did you would pay more than the book's advance to lawyers like me trying to come up with clever ways around the Bankruptcy code and other problems.

So do I think stuff can be done to stop this type of situation? Oh hell yeah! The bit I'm talking about above is just one idea I have.

Do I think my ideas, and others like them, will stop this type of situation? Well, do I think that novelists will get together to spent the many millions they would have to to get attorneys to plan, convince publishers to work against their short term interest (and make no mistake, some of the stuff that would protect novelists would not be in the interest of publishers), and litigate various strategies through bankruptcies until a fix is found that satisfies the novelists and the courts? Nope. I don't. But that's what it took to find the "tax loopholes" people complain about, and that's what it'll take to find a "bankruptcy loophole."

There is, sadly, just not enough money at stake for the individuals involved.
posted by bswinburn at 5:34 PM on April 6, 2013 [2 favorites]

Wow, I'd forgotten Scalzi's now president of the SFWA. Yeah, I'm definitely interested to see his response to the accusation that SFWA has been handling this bullshit in an unusually non-transparent way.
posted by mediareport at 9:07 PM on April 6, 2013

My read is that SFWA as an organization knows a bunch of stuff that is nominally in confidence and, while everyone else doesn't have a problem talking about it, they can't really publicize stuff that they agreed to keep quiet about.
posted by restless_nomad at 9:43 PM on April 6, 2013

I think the argument Joshua is making at Brillig is that SFWA was very vocal and very transparent about what exactly was wrong with the new Random House e-imprint contract and how it was a bad deal for authors, and should be equally transparent about its position on the new Night Shade contract power grab, and how it's a bad deal (or at least an arguable, questionable deal) for authors.

Why the very public openness in the Random House case but a hiding of SFWA's email to authors "in a non-public area of their website" in the Night Shade case? That's the question/accusation here and I think it's fair to wonder how SFWA will respond to it.

I say this simply as a fan with no direct stake in this game except that I liked one of Jonathan Strahan's Eclipse anthologies and hate to see the free online version disappear before I had a chance to really explore it - "The sale of Night Shade Books is killing the best new science fiction magazine of the past year."
posted by mediareport at 10:06 PM on April 6, 2013

Yeah, it's probable SFWA can't comment on some aspects of the deal. But they clearly have to make some sort of statement given their very public thrashing of Random House and the public questions raised as to the difference in their handling of the two situations. Jscalzi's vacation is certainly just a case of unfortunate timing.
posted by Justinian at 10:30 PM on April 6, 2013

Uh, that's not sarcasm. He's always pretty forthright about SFWA's positions. I actually do mean that it's just bad timing.
posted by Justinian at 10:30 PM on April 6, 2013

No worries.

Also, while Scalzi is president, that doesn't necessarily mean he has had much to do with how the SFWA was handling the whole Night Shade situation untill it blew up earlier this week.

I would guess that the SFWA right now is busy talking to / advicing their various members caught up with this, as well as determining if and what their public policy on the proposed sale should be. As we've seen from the various writers commenting on it, what's good for somebody with a decent profile/career like Neal Asher or Kameron Hurley might not be the best option for newer writers or those only published by Night Shade for now.

I also guess they're a bit wary of barging in right now, when Night Shade is so close to bankruptcy and the deal ont he table, bad as it looks to be, may still be the best chance for most of the writers to get at least some of the money owned back.

On the other hand, it is clear that this whole situation is a classical management scam, where incompetent / greedy management has run what should've been a profitable company into the ground, then blames it on the workers earning too much. So under the cover of avoiding bankruptcy, the new publishers are trying to force worse contracts on the writers and grab more rights for less money at the same time.

It might therefore be a good thing if the SFWA took a stance against this powergrab, regardless of the situation of individual writers caught up in this.
posted by MartinWisse at 1:49 AM on April 7, 2013 [1 favorite]

io9 has an update including notes on a new deal from Skyhorse, and a statement from SFWA. Sounds like the print terms are better, but they're still only offering a percentage of net on e-books?
posted by Lentrohamsanin at 7:03 AM on April 9, 2013

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