Random House has responded in an open letter to critics, specifically some very well-followed folks in SFWA (Science Fiction Writers of America) including John Scalzi. You can find some great commentary and comments here at Writer Beware, a blog every writer ought to follow.
Here is the text of the open letter:
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 R. Dobson
V.P., Digital Publishing Director
Random House Publishing Group
I have to beg to differ with a few things in the letter, namely, that they would give the authors maximum earning potential. Really?
Will they market for me? I assume that if they do, I'll get charged for it. If I'm getting charged for it, why not just buy it myself? And I'm not sure I'd want to buy advertising. Since we're partners, do I get a say in how much is spent and where?
What is Hydra offering that I can't get for myself and then receive 100% of the profits? They're fronting the money for production? Yes, they are. Are they spending more than I can afford, which I have to pay back with all of my side of the profits from the book (while they pocket their half--do they spend their half of the profits to help pay down some of those production costs or is it all on me?) or are they spending something I can afford, which couldn't I just spend that money myself and keep all the profits instead of paying them back and then only getting 50% of the profits until they cut me loose?
Am I reading this right?
My tweets - - *Thu, 14:34*: What crazy, improbable alt-universe is this from? https://t.co/tPwkO5Phfb - *Thu, 14:48*: science at its best! https://t.co/j...
1 day ago