While an electronic publishing panel at BookExpo was hashing out the issues surrounding digital books, in New York City the Authors Guild was issuing a warning about one of the panel members, NuvoMedia, producer of the Rocket eBook, calling its contract "against the business interests of publishers and especially authors," and describing it as a "low-pay model."
At about the same time the Guild issued its memo on April 29, NuvoMedia CEO Martin Eberhard was jousting with literary agent Timothy Knowlton, president of Curtis Brown, over the Rocket eBook business model. Both were on a panel called "The Future of Electronic Publishing" at BookExpo in Los Angeles.
The Author's Guild memo also expressed concern over the Rocket eBook's two formidable investors, Bertelsmann and Barnes &Noble, noting that each stands to "profit enormously from this arrangement."
Since the memo was released, Eberhard has responded with a breakdown of NuvoMedia's costs. He claims that NuvoMedia's agreement offers publishers reduced costs (despite slightly reduced revenues) to sell Rocket eBook editions, while NuvoMedia must act as distributor and manufacturer for a revenue share that only partially reflects the costs of technical equipment, Internet support and customer service. Eberhard said he was "disappointed" to be blamed for the low royalty structure. "We have designed a system which eliminates all of the publisher's manufacturing and distribution costs," he said, while paying publishers "almost as much for an electronic edition" as they receive for a paper one.
Despite Eberhard's response, the Authors Guild continues to reject NuvoMedia's business model, primarily because author royalties remain static for digital editions, while the distributor's share (NuvoMedia's and the retailer's share combined) increases. Paul Aiken, executive director of the Authors Guild, noted, "While the distribution chain increases its take, NuvoMedia asks authors to hold the line, seeing no increase in their royalties."
