Posted by Victoria Strauss for Writer Beware

Following on my post last week about unattractive deal terms at Random House’s new digital-only imprint, Hydra, the Science Fiction and Fantasy Writers of America has determined that Hydra will not be a qualifying market for SFWA membership.

SFWA has determined that works published by Random House’s electronic imprint Hydra can not be used as credentials for SFWA membership, and that Hydra is not an approved market. Hydra fails to pay authors an advance against royalties, as SFWA requires, and has contract terms that are onerous and unconscionable.

In a blistering blog post, SFWA President John Scalzi also criticized** Hydra’s terms:

This is a horrendously bad deal and if you are ever offered something like it, you should run away as fast as your legs or other conveyances will carry you.

Today, Random House responded to the critics, including me, in an open letter. As the letter requests, I’m posting it here in full, redacting only Ms. Dobson’s phone number.

Dear John, Victoria, Jaym and SFWA Members,

We read with interest your posts today about the new Random House digital imprints and our business model. While we respect your position, you’ll not be surprised to learn that we strongly disagree with it, and wish you had contacted us before you published your posts. We would appreciate you giving us an opportunity to share why we believe Hydra is an excellent publishing opportunity for the science fiction community by posting ours below to them.

Hydra offers a different– but potentially lucrative–publishing model for authors: a profit share. In the more traditional advance- plus-royalty model, the publisher takes all the financial risk up front, and recoups the advance before the author earns any cash royalties. With a profit-share model, there is no advance. Instead, the author and publisher share equally in the profits from each and every sale. In effect, we partner with the author for each book.

As with every business partnership, there are specific costs associated with bringing a book successfully to market, and we state them very straightforwardly and transparently in our author agreements. These costs could be much higher–and certainly be more stressful and labor-intensive to undertake–for an author with a self-publishing model. Profits are generated once those costs are subtracted from the sales revenue. Hydra and the author split those profits equally from the very first sale.

When we acquire a title in the Hydra program, it is an all-encompassing collaboration. Our authors provide the storytelling, and we at Hydra support their creativity with best-in-class services throughout the publishing process: from dedicated editorial, cover design, copy editing and production, to publicity, digital marketing and social media tools, trade sales, academic and library sales, piracy protection, negotiating and selling of subsidiary rights, as well as access to Random House coop and merchandising programs. Together, we deliver the best science fiction, fantasy and horror books to the widest possible readership, thus giving authors maximum earning potential.

As a last point to the SFWA leadership, my colleagues and I would welcome the opportunity to meet with you at your earliest convenience to discuss the advantages of the Hydra business model, describe the program overall, and respond to any of your expressed concerns. Please let me know a good time for us to set up this meeting.

Many thanks and all the best,
Allison Dobson

Allison R. Dobson
V.P., Digital Publishing Director
Random House Publishing Group

I think we’ll have to wait for time to show whether Hydra really represents a lucrative business model for authors (I note RH’s careful pairing of “potentially” with “lucrative”). Hydra is speculative in more than just the genre it publishes: it, and digital-only imprints like it, are experiments, with authors as guinea pigs.

I also note that in an email I saw from Random House, ebook setup costs (editing, design, production) were estimated as “usually” amounting to “no more than a few hundred dollars”–so I can’t help wondering what level of services authors will actually receive.

In fairness, from what I’ve heard, Hydra is very willing to negotiate, and some authors seem to have been able to arrange considerably better terms for themselves. (I would love to be more precise, but I don’t want to inadvertently identify the people who’ve contacted me. If you’re curious, write to me and I’ll tell you.)

I’d welcome the chance to meet with Random House staff to discuss these issues. Hopefully this can be arranged in the near future.

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** While I agree with most of John’s points about Hydra’s deal terms, I don’t agree that life-of-copyright contracts are an automatic red flag. For one thing, they’re standard in the publishing industry (and that includes many smaller digital-only publishers). Is this fair? Does the publisher need it? Maybe not. But it’s a fact.

For another thing, as long as there’s precise reversion language that ensures a book goes out of print when sales fall below a reasonable minimum (“reasonable” being keyed to the publisher’s average sales expectations), life-of-copyright doesn’t have to be a problem. The publisher does not get to hold your rights indefinitely. When your book stops selling, you can demand reversion and get your rights back. I’ve done this, so I’m speaking from experience.

I have seen terrible life-of-copyright contracts where reversion was left entirely to the publisher’s discretion, or where there was no reversion clause at all. If a life-of-copyright rights grant is not offset by good reversion language, or if the publisher is unwilling to insert it at the author’s request, writers absolutely should run away. But in principle, life-of-copyright contracts do not have to be scary.