Sutherland House Publishing

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Another way to do this

Introducing Sutherland House Experts
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As stated a few weeks ago in SHuSH 216, the current conventional publishing model isn’t working well for anyone these days.

Few authors are reasonably compensated for their efforts, and fewer still are able to make a living from writing.

Revenues at most publishing houses are flat or shrinking. Layoffs announcements have become routine. Particularly at the big firms, employees are miserable and in some instances striking.

Literary agencies, according to their own surveys, are finding things tough. Their mostly young employees are working long hours for low pay; many are burning out and abandoning the business.

At least half the North American bookselling community has disappeared over the last twenty years and many of the survivors are struggling.

This has always been a “perilous trade,” to borrow Roy MacSkimming’s excellent phrase, but there can be little doubt that we’re in a dead season of conventional book publishing.

I’ve written a lot about this. In retrospect, four years of SHuSH can be read as an extended critique of the publishing industry, or a four-year search for ways to improve it or, at least, survive it.

I’ve been drawn to new or unusual business models. Presumably because my frustrations with the existing business model are widely shared, there has been plenty to talk about: the rise of self-publishing; Richard Charkin’s new direct-to-consumer publishing house; the hyper-focused American independents; and the Australian subscription model, among much else. The one thing a lot of these alternatives have in common is an ambition to bypass the intermediaries—sales agents, distributors, and booksellers—that collectively take as much as 75 percent of the retail price of each book, leaving the publisher with 25 percent out of which to pay the author, the editor, the designer, the printer, the landlord, etc. It’s far more profitable to sell directly to readers, although finding those readers outside of normal bookselling channels remains a challenge.

A whole other sphere of experimentation is taking place in the hybrid world, which we haven’t discussed at all.

As Publisher’s Weekly says, “the simplest way to think about hybrid publishing is that the author pays some or more of the production and editorial costs in exchange for the publisher’s expertise—and for higher royalties.”

My friend Thad McIlroy, probably the most experienced book publishing consultant in North America, runs a blog called The Future of Publishing and also produces an authoritative company-by-company guide to new business activity in the book world. We had dinner last spring at a US publishing convention and I asked him where he saw the most energy and investment in the industry today. His answer: hybrid.

Literally hundreds of hybrid firms have been launched in recent years—so many that deep-pocketed investors are starting to roll up all the little firms into bigger firms.

There’s a high degree of variation among hybrid publishers. Some, like Friesens, a division of a large printing company, are what we used to call vanity presses—they’ll publish anything so long as the author pays for it. Even worse is Archway Publishing, which industry commentator David Graughan has described as “disreputable,” “sleazy,” and “scammy.” It’s a division of Simon & Schuster, believe it or not.

At the other end of the spectrum are firms like Forefront, a Nashville publisher run by former Big Five executive Jonathan Merkh. It was recently number two on the Publisher’s Weekly list of fastest-growing publishers. He’s attracting proven authors, including John C. Maxwell, Joan Lunden, Glenn Beck, and Peggy Rowe, who would not have difficulty landing conventional publishing contracts. They choose to work with Forefront because the standards are equal to a conventional publishing house and they like its terms. Those terms aren’t for everyone: the author contributes to the cost of publishing the book, but earns far more on each sale. For entrepreneurial authors with their own followings, their own platforms, and confidence in their ability to sell books, it makes sense to invest something upfront in exchange for a much higher percentage of sales revenue. Depending on the size of the upfront fee, the writer might get anywhere from 30 percent to 100 percent of the sales revenue instead of the usual 10 percent.

If it were up to me, we’d use the ‘hybrid’ designation exclusively for garbage-in, garbage-out publishers like Friesens and Archway. We’d call more the discriminating houses that work to reasonably professional standards ‘co-publishers.’

Co-publishing was fairly common in the nineteenth century. Royal A. Gottman’s A Victorian Publisher: A Study of the Bentley Papers (1960) has many examples of presses that required (or permitted) authors to make a contribution toward the cost of producing the book in exchange for a greater share of revenues. It was one of a whole range of alternative business models then available to both authors and publishers. For instance:

  • It was not unusual for authors to sell their books to a publisher for an upfront lump sum, rather than taking a royalty on each sale; the publisher took all the risk and all the upside if the book happened to outperform. Wilkie Collins insisted on this model. He wanted to know exactly what he would earn and get on with his next book.

  • Some authors sold their copyright to a publisher but arranged for a schedule of bonuses should the book outperform, a form of profit sharing.

  • Some authors effectively rented their copyright to the publisher for a limited amount of time—eighteen months appears to have been common.

  • Some authors would sell their next several books to a publisher for a single upfront fee and cash a big cheque. It didn’t always work out. Young Dickens signed a deal of this sort before his popularity and sales took off and later found that he had, as one observer said, “unwittingly sold himself into quasi-bondage.”

  • Some authors opted for a joint-account arrangement: the publisher assumed all costs of manufacturing and marketing the book and the profits, presuming there were some, were divided equally between publisher and author (Rhoda Broughton managed to negotiate a two-thirds share for her sensational novel Cometh Up as a Flower). This option required the author to trust that the publisher would not reduce profits by padding expenses.

  • Yet another common model was straight commission: the author covered all the costs and paid the publisher a 10 percent royalty on each sale, keeping 90 percent for himself. In 1890, a spokesman for the UK Society of Authors said “at least three-quarters of modern fiction” was published on commission. Ellen Wood, author of the popular East Lynne, made a fortune in this manner.

The model used by almost all conventional publishers these days—a royalty of between 6 and 15 percent on each sale together with a non-returnable advance against those royalties—was a late addition to the Victorian menu. Also a controversial one: it was seen to make negotiations needlessly complex.

There’s nothing particularly wrong with the standard model, although there’s no reason it should be inviolable, either. Different authors and publishers have different needs, resources, and appetites for risk. It’s silly, thinking about it, to presume that one model serves all purposes, especially when that one model, as we said at the outset, isn’t serving anyone particularly well.

Earlier this week, Neil Seeman and I launched Sutherland House Experts, a new publishing company operating on the co-publishing model. As Neil explains: “We are a new co-publishing press reserved for proven experts willing to share publishing costs in a manner that is entrepreneurial and commercially sensible in what we see as a new and exciting era of non-fiction book publishing.”

Authors will apply to Sutherland House Experts through a competitive process. They will contribute to the cost of publication and receive dramatically higher royalties than are offered by conventional publishers. “So far,” says Neil, “the 2024 expert cohort includes a sleep-science entrepreneur, a glass-ceiling busting feminist pioneer, and a highly decorated US Army veteran and business leader.”

Sutherland House Experts is affiliated with Sutherland House, but separately incorporated. (We had to separate them because granting agencies support only the standard business model—yet another way they stifle innovation in the industry.) Books will be edited, designed, and marketed to the same high standards at both houses. We won’t be publishing books at Sutherland House Experts that we wouldn’t publish at Sutherland House.

Neil and I go way back. He is the founder of a publicly traded Internet software firm, a senior fellow in the Institute of Health Policy, Management and Evaluation at the University of Toronto, The Fields Institute for Research in Mathematical Sciences, Massey College, the HIVE Lab, and the Investigative Journalism Bureau. He is also author of Accelerated Minds: Unlocking the Fascinating, Inspiring, and Often Destructive Impulses that Drive the Entrepreneurial Brain, published by Sutherland House. We’ll both be involved in every Sutherland House Experts project, but Neil will be running things day-to-day as I continue to concentrate on Sutherland House.

The venture is off to a good start. We’ve got a bunch of interesting books on the way and while the model is not for everyone, we’re finding that the established, entrepreneurial people it’s intended for appreciate the opportunity to increase their upside. If you’d like to learn more, go here.

While the Sutherland House Experts model is distinctive, we’re hardly the first Canadian publishing house to venture into the hybrid/co-publishing space. I’m reliably informed that the majority of Canadian publishers have at one time or another produced books outside the standard terms. Some call it custom publishing, others contract publishing or sponsored publishing. Sometimes payment comes in the form of a fee, other times a guaranteed sale of a certain number of books. I know of one conventional publisher who employed a person to chase down institutional clients (corporations, clubs, churches, governments, etc.) who would pay to have a book produced. Another developed a specialty in expensive art books that were underwritten by galleries or museums.

I think we’ll be seeing a lot more of this in the years ahead. Difficult economic times tend to generate innovation and experimentation.


Misguided and unwarranted

In recent weeks, Indigo owners Heather Reisman and Gerry Schwartz have been accused of sponsoring genocide in Gaza, funding the Israel Defense Forces and supporting the killing and displacement of Palestinians, breaking Canadian tax laws, and keeping company with a war criminal. Their stores have been vandalized and targeted by boycotters.

I don’t know how anyone can feel anything but anger about what’s happening in Gaza right now and people have a right to protest (even at the Giller). Still, these accusations and attacks are unwarranted.

At issue is the HESEG Foundation in Tel Aviv, which the Schwartz-Reisman’s founded and support. It does not fund the IDF. It provides academic scholarships to help former soldiers move on with their lives. It is unobjectionable from a tax point of view. The supposed war criminal is not a war criminal (the British foreign secretary apologized for his treatment in the UK).

I’ve had my differences with Heather over Indigo’s commitment to bookselling (which now seems to be improving—you’re welcome), but I have nothing against her personally and it’s indisputable that she and her company are important members of the Canadian literary community. They are undeserving of this malicious abuse.

Here’s wishing Indigo an end to this nonsense and a busy holiday season.

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