Night Shade Books' would-be owners on their controversial deal: "We're the good guys"S

Night Shade Books has published some of the coolest books of the past several years, but it's also run into financial difficulties. Now Night Shade is trying to sell out to two other entities, in a deal that authors and agents have criticized. We talked to the prospective buyers, and they explained their side of things.

"We're the good guys," insists Jarred Weisfeld with Start Publishing. "We're the ones who are coming in and trying to save something."

In our half-hour phone interview with Weisfeld and his partner in this buyout, Tony Lyons with Skyhorse Publishing, that theme came up several times: Weisfeld and Lyons see themselves as rescuing a sinking ship, and they're not thrilled about being painted as the bad guys on the internet because they want to offer what they see as realistic terms to Night Shade's authors.

Lyons: The old terms were unrealistic

In Lyons and Weisfeld's view, Night Shade was shockingly unprofitable, and a big reason for this was its high royalty rate. "Night Shade was losing like 25 percent per year," says Lyons. "They were losing more than almost any publishing company I've ever heard of." And a big reason for this was the fact that "they were paying royalties which really nobody else pays."

"If you went to Knopf and you were a bestselling author, you would negotiate the kinds of royalties they have" for all authors, adds Lyons. Night Shade's royalties escalated from 8 to 10 to 12 percent of retail price for paperbacks. "I don't believe that New York Times bestselling authors get that from the best and biggest publishers," says Lyons. "Those are not realistic royalties in the kind of print publishing environment we have now."

Night Shade proved that "there was no way to run a book publishing company in that field, with those kinds of royalties, and make a profit," adds Lyons. So he tried to come up with a realistic royalty rate, "where I felt pretty confident that we could make a small profit." And that meant shaving those 22 to 25 percent losses that Night Shade was making out of the author's share — because other costs in publishing are fixed, like printing and binding.

Meanwhile, Start will be handling the ebook side of things, and Weisfeld says that the deal only makes sense if they drop the ebook royalty, from between 30 and 50 percent to 25 percent. That original, higher royalty rate is just another sign that "bad decisions were being made by editors and business people," says Weisfeld, adding: "We're not bad guys, we're here to turn a profit and at the same time keep our end of the deal and make sure all our authors get paid." This is definitely better for authors than if Night Shade enters bankruptcy, he adds.

Not a golden handshake

Jeremy Lassen and Jason Williams, the company's current management, will suffer too as a result of this deal, Lyons says:

Jeremy and Jason are being punished by losing their company, by having salaries that are much less than they were before, and they're going to be out of the business. They're going to be consultants, and their future in the publishing field is going to be precarious. They've paid for their mistakes, and they're going to continue paying for [them.]

At the same time, he says Lassen and Williams were "shockingly clear" that their top priority was making sure Night Shade's authors got paid all the money they were owed. Lyons has been involved in "four or five" similar deals in the past, and when publishers are at the point of talking to bankruptcy lawyers, it's rare that they worry about the authors getting paid.

And yet, says Lyons, "many of the authors seem to think that this is a very bad deal."

The problem with negotiation

One of the biggest question marks about the Night Shade/Skyhorse/Start deal has been how negotiable the terms for authors are going to be. Will one of Night Shade's top-selling authors have to accept the same terms as someone whose book barely sold a few hundred copies?

Night Shade Books' would-be owners on their controversial deal: "We're the good guys"S

Lyons says that the bloggers and other people who have been weighing in on the deal, and posting on the Skyhorse Facebook page, seem to believe that "everybody ought to get the most that anybody's getting." So he fears that if they offer a better deal to someone who's a successful author, "then before you know it, that contract is going to be up on the Internet, and people are going to say, 'Why are you giving this person what you're not giving to that person?'"

So he sounds like he's loath to negotiate, lest he wind up giving away concessions that he'll end up being pressured to give to everybody.

"I was not surprised htat there would be some people who would be unhappy with [the deal], because I've found that with every deal that I've been involved in," says Lyons. "The book publishing field is very difficult now. There are half the physical stores that there were even three years ago, and print publishing especially is very difficult. It's very complicated. Books are selling much more slowly, and it's a tough market." A lot of authors still remember when there were hundreds of Borders stores, and a hundred more Barnes & Noble stores.

"I expected some people to unhappy, but I also expected a lot of people to be relieved," said Lyons. And indeed, some authors have written to him asking whether their books would be able to stay in print in physical book form, and their plans for running the imprint, and how they would publicize books that might have slipped under the radar. Those are valid questions, says Lyons. "But just to start bashing Skyhorse and Start is unproductive."

The thing about audiobooks

Another feature of the proposed agreement that some authors have objected to is that Skyhorse and Start claim audiobook rights to Night Shade titles — even if Night Shade didn't have those rights before. But Lyons says the contract clearly says that if those rights have already been sold, or if they're in active negotiation, then this doesn't apply.

That means if a book has even been submitted for consideration with an audiobook publisher, then Skyhorse and Start don't get to claim any rights.

"In cases where the agents have attempted to sell the [audiobook] rights and have been rejected or haven't even tried, it makes perfect sense for the authors and for us to use our stronger muscle to negotiate with companies that produce and sell audiobooks, and try to make a deal for them," says Lyons.

Night Shade Books' would-be owners on their controversial deal: "We're the good guys"S

"The one guy who wrote about that issue made it sound like some travesty of justice, that we were trying to grab audio rights," Lyons adds, but in any case they would split all proceeds with the author 50-50. And Skyhorse and Start, which already have a lot of audiobook deals in place, may have "more muscle" to negotiate with publishers.

"Why on Earth wouldn't [authors] be thrilled that we're trying to negotiate on their behalf?" asks Lyon. "Why wouldn't they want us to sell rights that are as yet unsold, and give them half the money? That seems like it ought to be a good thing, and yet it's being portrayed as, 'Oh, they're trying to grab rights that weren't included in the original contract.'"

"Not a backlist play"

Both men stress that this deal isn't just about acquiring Night Shade's backlist so they can make money off the titles that Night Shade has already published. "It's not a backlist play," says Weisfeld.

Rather, they want to do with Night Shade what Skyhorse has done with other failing companies it's bought in the six and a half years since Lyons founded it: turn it around, make it profitable, and massively boost its output. Case in point: Two years ago, Skyhorse bought Arcade Publishing, a literary imprint whose authors include Nobel Prize winner Mo Yan. Before it was bought, Arcade was publishing 20-25 books a year — now it does 50-60 per season, or over 100 per year.

So for Night Shade, Lyons says he and Weisfeld aim to put out 90 new titles over the next few years. They want to hire brand new staff to run it, including a new acquiring editor, "an expert in the field" who's got a lot of experience in science fiction publishing. They've already asked a couple agents for editor recommendations.

Overall, including its five existing imprints, Skyhorse puts out 650 titles a year and currently has about 3000 titles in its backlist.

Originally, Weisfeld was the one who was approached about rescuing Night Shade, and he brought Lyons in because Skyhorse and Start had collaborated on a few titles before. Start is an ebook-only publisher, and Night Shade has "a lot of moving parts," so it made sense to rope in a print publisher to collaborate on the project. Both Weisfeld and Lyons will have to agree on whoever they bring in to edit Night Shade.

"Tony and I have a longstanding relationship, and we've always talked about doing something like this together," says Weisfeld.

Excited about science fiction

Both publishers say they're excited about getting into science fiction. Skyhorse has already published a little science fiction, and Lyons had been talking a while back to an acquiring editor who was interested in acquiring SF, among other fiction categories, for Skyhorse's main imprint. Meanwhile, Start's parent company Start Media is producing the movie version of Neil Gaiman's Graveyard Book for Disney, and the new space adventure The Europa Report.

Weisfeld and Lyons stress that they're available to answer questions from anyone who has concerns about the Night Shade deal. Lyons has gotten about 200 emails in the past 48 hours and has answered about half of them. In some cases, where he's gotten a three-page screed about Night Shade's past dealings, he hasn't been able to craft a response. "I've been bashed on the internet for being non-responsive," he laments.

"This is a huge mess, and we're trying to clean it up," says Weisfeld. Authors "have to understand that we're not the past, we're the future — the potential future — and I understand their frustrations and concerns, but they shouldn't be directed at us. Basically, we're trying to do a good thing here. If it works out, great. If it doesn't, it doesn't."

If the Night Shade deal falls through, or they decide not to go through with it, both Weisfeld and Lyons say they might still try and start a science fiction imprint together.