I’d rather have an investor than a publishing contract

In pursuit of a better book deal (and record deal and podcast deal...)

There is a very big market for art, but a very limited market for each individual artist.

This is natural. We generally prefer some music and books more than others and they will outperform the rest. But the music labels and publishing houses don’t need any individual artist to perform well—as long as they get a cut of every sale, they win.

It doesn’t matter, for example, if every book on Amazon sells only 100 copies. If 2.7 million authors sell 100 books each year, Amazon takes 30 percent of every sale and the aggregate makes their whole payday. The same goes for publishing houses. And record labels. And Spotify. And Netflix. 

The house wins every time. 

The problem is that the house is taking more than its fair share. 

No entrepreneur would ever get on Shark Tank and say, “If you invest in my company I’ll give you the whole thing!” Instead, the entrepreneur asks for investment while retaining ownership of the company (more than half), and the investor earns a smaller percentage of the profits if it does well. 

Why does it work the opposite for artists? Why does the investor get full creative control and the artist only gets a small cut if it does well? In the publishing world, a publishing houses isn’t even investing in an artist, they are giving them a portion of their earnings upfront. It’s more like getting a loan. 

Authors give away full creative control of their stories when they enter into a traditional publishing contract. Though an author technically retains ownership of their intellectual property (IP), they don’t actually own the rights to use it. The publishing house does and may use and sell those rights however they’d like, with the author earning only a small percentage (12 to 15 percent) of that success.

This is a bad deal. That’s how you get stories like middle-grade author

Marion Jensen

’s. He sold his first book to Covenant Communications, now Deseret Book, only to find out they sold the film rights, made a film and a sequel, and sold it to Netflix and Amazon Prime, all without consulting or paying him until he found out about the project by accident. Though a clause in his contract specified that he would earn 50 percent of the royalties in the case of a film production, creative accounting meant at least one person at Covenant was named as a producer on the film and likely earned an income for it, even as the film itself, according to the books, earned no royalties. 

Everyone on the film’s payroll made money except the author who wrote it. They gave him $2,000 for the rights.

This same kind of creative accounting is responsible for the “high discount royalty clause,” a major loophole in many traditional publishing contracts. Because authors earn royalties on a percentage of the book price, this clause allows publishing houses to sell the book to retailers at a discount, thus earning the author a much smaller amount of the sale, even as the publishing house earns way more. 

The fantasy author

Michael J. Sullivan

explained how this works in a comment. “For my contracts I think I go from 15 percent of list to 5 percent of net if they give the retailer just a bit higher discount. It used to be that I had NO books in that category and now I have thousands. And why not. If we look at a $28 hardcover with a 56 percent discount rate, looks what happens when they change the amount they pay the retailer from 55 percent to 56 percent:

• 55% analysis:

  • $15.40 to the retailer

  • $4.20 to the author

  • $8.40 to the publisher

• 56% analysis:

  • $15.68 to the retailer

  • $0.62 to the author

  • $11.70 to the publisher

“So the retailer makes $0.28 more, the publisher makes $3.30 more and the author makes $3.58 less—talk about robbing Peter to pay Paul!”

Yes you heard that right. By selling the book at a discount, the retailer makes more, the publisher makes way more, and the author makes way less. What a deal for the publisher and retailer! 

This kind of “out-lawyering” has been de rigueur in creative industries for decades. It’s the reason Taylor Swift is currently re-recording her old albums. Right now, her masters are owned by an investment firm—she has no control over her early work and how it is used. She was blocked from performing her own songs at the American Music Awards in 2019 and from using her own music in a documentary about her entitled Miss Americana. At one point, her record label released a previously recorded live album without her consent. 

Similar questions of accounting have affected TLC who, despite selling millions of albums, filed for bankruptcy after their record label left them only a sliver of the earnings. More recently, the musician Jojo sued her record label after they refused to release her albums for years. She re-recorded the album several times, with her label choosing not to publish it each time. Halsey’s record label similarly held her music hostage, saying they wouldn’t release her next single until she had a “viral moment” on TikTok.

Creative firms can remove their support for a project at any time. In the film industry, Warner Bros. decided not to release Batgirl (which was already in post-production) because of budget cuts. When Alena Smith, director of the Apple TV series Dickenson heard the news, she panicked. “The Batgirl/ HBO Max situation is why I spent my last day on set of Dickinson calling an exec at apple and *begging* for a physical recording of my show…they actually gave me one, I have the ONLY copy,” she said in a since-deleted Tweet. “People said I was crazy but dude, that’s ten years of my life.”

In the podcasting world,

Gizzi Erskine

and her friends, who created and hosted the popular podcast “Sex, Lies, & DM Slides,” were surprised to find themselves replaced as hosts after they sold the rights to their podcast to Spotify. With no warning, Spotify deleted their previous episodes from the platform, filed the copyright for the name, and recast the podcast with two new hosts. The girls tried to fight the decision in court, but the unfortunate reality is they lost the rights to their podcast when they sold it to Spotify. 

And now it’s gone. 

“Yes it was our idea, our format, and our friends who put their private lives out there, but this is an intellectual property rights issue and, from my experience, the law never services the creative,” Erskine said in a post about it. “None of us believed we gave away the rights of the concept. I supposed we never imagined that this would happen and the truth is, we were stupid to be naive.”

Erskine lost years of work in the deal and she might never get it back. 

The same thing happens prolifically in the book world, where books can be canceled or put out of print depending on the goals of the publisher. 

Richard Dawkins

,

Salman Rushdie

, and

Michael Moore

have all spoken out against their publishing houses for limiting the reach of their work in certain markets. Anthony Burgess’s publisher removed the final chapter of his seminal work A Clockwork Orange when it was published in the US, drastically changing the redemption arc of his protagonist. Terry Goodkind’s Sword of Truth series was hindered when his publishing house decided to let earlier books in the series go out of print, impeding his ability to attract new readers. 

“Nowadays the team not only judges your book but your entire life—spelled out in the morality clause now inserted in many book contracts,” the author

Ted Gioia

shared in a post about why he decided to publish his next book on Substack. “The wording is extremely vague—and leaves me wondering whether Hunter Thompson or Allen Ginsberg or Anaïs Nin or James Baldwin (or Baudelaire or Wilde or Dostoevsky in an earlier day) could have confidently accepted a book deal with such vague threats hanging over their head… But the penalties are crystal clear. Not only can the team terminate your contract, but can also demand you repay your advance—which might cause problems if, like most writers, you have already used it to pay your rent.”

Early on, musicians needed studios to make albums and market them and authors needed publishing houses to distribute books and market them. But those deals have always been, and continue to be, increasingly extortionist to the artists themselves. We need a better book deal. And a better record deal. 

Artists who get famous enough can get them. Taylor Swift negotiated to retain ownership of her work going forward. Olivia Rodrigo followed in her footsteps and demanded the same of her label. Stephen King negotiated with his publisher to receive 40 to 50 percent of his book earnings rather than the industry standard 15 percent. As he said during the trial, “I’m the only one I know of that had that deal.” That’s why J.K. Rowling started her own company so she could earn more of her earnings from Harry Potter licensing deals. Brandon Sanderson created Dragonsteel Books where he can release books and special editions unrelated to his publishing contract. 

Everyone else who is not famous is still stuck with the bad deal.

But we could create a better deal: These organizations could invest in artists rather than owning them outright.

Music studios could invest in musicians and Spotify could invest in podcasts, giving those artists the capital they need to distribute their work on a grand scale, but the artist could retain majority ownership and creative control over their work. In the publishing world, Penguin Random House could invest in books, giving authors the capital and distribution networks that would help them succeed, while the author retains majority ownership and creative control over their work. 

That’s much more like the kind of deal you would find on Shark Tank. 

There will still always be a limited market for each individual artist. My various writing projects are decidedly niche and unlikely to attract a massive following. Most musicians will not have a massive reach nor will most podcasters. Thankfully, we have ways to reach those audiences directly now without the need for a third party. Because of that, we have writers like Colleen Hoover and Brandon Sanderson and Michael J Sullivan who have all released books directly for their fans; romance and sci-fi novelists like Stephanie Hudson who self-publish for their communities, and musicians like Chance The Rapper who are navigating the music industry without a record label. 

If we can do that and make it work, that is by far the better way to do things. I would rather own 100 percent of my work and handle my own marketing and distribution—especially now that platforms like Substack have given me direct access to readers and supporters. But if I need more funding to reach a larger audience or take on more ambitious projects, I would take an investor over a publishing contract any day. 

I’d rather own 51% of my work than none of it. 

“We need a minimum wage for artists,” Jensen told me. “And the way I interpret that is that, by law, the artist should receive 51 percent of the profits, because you have created something of value and you can't be exploited. The publishers will say, ‘well, we can take that on, we wouldn't be able to.’ But everybody has to adjust. It's now a more level playing field.”

Jensen went on to publish two books with Harper Collins, and he acknowledges that they have been incredibly helpful at getting him into certain market segments. “They put up a lot of money, and it took them a while to earn that back. It was probably eight years,” he says. But now it’s paid back. “I just sold out my hardcover and they just went into a second printing of my paperback. So they made their money back. I would be all for ‘give me 5 or 10 percent upfront,’ but as soon as you make your money back, let's enjoy the profits after that 51 percent to 49 percent.”

I agree. Every artist should retain creative control of their work and earn the bulk of their profits, even as they should be able to get the investment and support they need to take their art out into the world. Publishing houses and record labels and any other creative entity should invest in their artists, not own them and their work outright.

And that would be a much better deal for artists.

But I’d love to know your thoughts!

Thanks for reading and supporting the artists you love,

Elle Griffin

P.S. If you enjoyed this post, please consider sharing it. That’s how I find new readers and earn a living as an artist!

Marginalia

Here are some notes from the margins of my research:

• In 2022, I wrote an article for Esquire that asked the question “what if you could invest in your favorite book?” The article spelled out the idea that artists should retain ownership of their work while being able to take in investors who could help it reach a larger audience. At the time, I looked into web3 companies who were hoping to make that happen, but we don’t need the blockchain to get investors involved in art, we can do that the way we invest in startups now—using regular contracts not smart ones.

• In “A tale of three k-pop disputes” Tamar Herman outlines how abusive k-pop deals are being overturned by bad press. “Entertainment companies are, of course, still on top of the industry pyramid. But in recent years the power of talent and their fans have grown, and have resulted in public opinion not just siding with talent, but arguably leading to more positive, swifter resolutions. Gotta love the power of a good, or bad, viral news story.”

• Creative control has been the impetus behind Hollywood’s writer’s strike. As

  Robert Reich
  asked: “How much of the value of what’s created goes to those who do the creating versus to those who manage those creations?”

• I once listened to a podcast featuring

  Nicolas Cole
  who said: “I think it's SHOCKING how many writers still take legacy book publishing deals. They are so outrageously bad for writers, and yet despite all the digital and independent alternatives, writers cling to these legacy business models and accolades of approval because that's how we've been ‘taught’ to define what it means to be a ‘successful writer.’ If you can train yourself out of this mindset, you can unlock RADICAL forms of freedom, agency, creative, and financial abundance for yourself. But it means saying ‘No’ to a LOT of opportunities the old world still wants you to value.”

  • He also wrote a very powerful Twitter thread responding to various arguments against his.