7 Habits of Highly Profitable Authors

In a move sure to send a chill up the spine of publishers—a group whose spines are already thoroughly frozen after a year and a half of declining sales, layoffs, corporate restructuring, and scrapes with Google over digital rights and Amazon, Target, and Wal-Mart over pricing—motivational author Stephen Covey has announced a a deal that would shift his e-book rights away from his publisher, Simon & Schuster, and potentially upend the usual percentages shared by authors and publishers. If it works, more writers could potentially negotiate better deals with or without their publishers as more titles are sold as e-books for the Kindle, the Nook, and other e-readers. In the new equation, publishers would merely become middlemen and -women, an impediment for writers to work around in order to get their works into the hands—or onto the screens—of readers.

According to the New York Times' Brad Stone and Motoko Rich, Covey, author of The 7 Habits of Highly Effective People, among other titles, has given the digital rights for two of his books to RosettaBooks, which will sell the titles on Amazon for one year: Covey will earn more than half of the net proceeds on the digital sales of these titles.

As Slate's Daniel Gross pointed out in October, Amazon actually loses money on the sale of many e-books since the company pays about half the list price for a book and then discounts it to the Kindle's standard $9.99-per-title price. With Covey's new deal with RosettaBooks, Simon & Schuster's list price is no longer an issue: Whatever profits come from Covey's books (which Amazon plans to promote heavily and which still sell briskly in paperback) will flow more directly to the author.

Talk about highly effective!

As Stone and Rich point out, this could potentially impact many publishing houses' back catalogs, which are packed with titles for which the house may or may not retain digital rights. Companies like RosettaBooks—or Jane Friedman's nascent venture, Open Road Media—can then swoop in and cut deals with authors or their estates to repackage older titles for Amazon, offering better revenue sharing because of dramatically lower overhead and more flexible models. Titles that didn't get enough push from their houses can be spruced up and aggressively positioned on Amazon.

Last month, Friedman explained her model at a Center for Publishing at NYU's School of Continuing and Professional Studies forum in New York: "No advances. A very good profit sharing. The way we see it, the holder of the copyright is giving the text, and we are giving the marketing."

If writers are willing to forgo their advances—as well as the prestige of being associated with a big publishing house—they might see the benefit of an arrangement like that. And not just for their back catalog titles, either.

In a New York TImes Magazine interview with Deborah Solomon two weeks ago, Amazon CEO Jeff Bezos was asked about a new self-publishing platform he's developing for the Kindle that would allow writers to completely work around publishers: "Basically, you submit the book, you set the price for it, we charge the customer, and then we give you 35 percent of the revenue."

"Amazon keeps 65 percent?" asked Solomon. "That sounds like a lot."

"Does it?" responded Bezos. "You’re an author, what does your royalty check look like? Are your royalties 35 percent?"

"No," said Solomon. "Let’s not have that conversation."

She might not want to have it, but a lot of other writers may.