Night Shade Books was an independent publishing company who had a focus on sci-fi and fantasy, with surprising number of bestsellers under their belt. For a long time, they were considered a pinnacle of indie genre publishing, with generous royalties, advances, and contracts for new authors.
I say they were an independent publishing company, because they've since been bought out and are now an imprint of Skyhorse Publishing and Start Publishing. I have no idea how this sort of business works, but it appears that Skyhorse now owns the part of Night Shade that prints, and Start owns the bits pertaining to ebooks. In any case, as of 2013, Night Shade Books was no longer an independent publishing company in its own right. Prior to being bought out, the company was going through bankruptcy. The company was going through bankruptcy in part because of its shady business practices and removal from the SFWA.
In 2010 Night Shade came under scrutiny for its breaches of contract regarding royalties. Night Shade had several bestsellers under their label, but due to the mismanagement of funds, it found itself unable or unwilling to pay out the large royalties of those big sellers. After reporting royalties inaccurately (if at all), it took threats of legal action before Night Shade finally delivered. Night Shade was also found to be distributing books in mediums it did not have the distribution rights for. Night Shade author, Brendan Halpin (AKA Seamus Cooper), had the trifecta of being lied to about his royalties, having his contracts meddled with, and having his ebook rights stolen. In his words,
Night Shade has stolen the ebook rights to The Mall of Cthulhu. They do not own them and are offering an electronic edition for sale through webscription.net, which is affiliated with Baen Books, a real publisher who should know better. Nine months ago, Night Shade made a verbal offer to pay me a small sum for the rights. I agreed. They've never paid me. They claimed their unauthorized edition was an oversight, and that was somewhat credible at the time. Nine months later, it's clear that this is not an oversight. It's a theft of my intellectual property.
According to him, as well as distributing the ebook and not paying him, they also kept sending erroneous versions of his contract back to him and his agent, which then had to be sent back with corrections, to the point where by the end, even he wasn't certain exactly how much he was owed. For what it's worth, he seems to have handled the situation like a champ by (for a while, at least) giving away free copies of the ebook Night Shade had been selling in order to undercut them.
Author Liz Williams also discussed the issues she's had with Night Shade's poor communication. After ages of having phone calls and emails ignored, and getting no responses from the company regarding the status of her books and contract, her agent wound up calling from a different number in order to get Night Shade to pick up the phone, after which they confirmed that they weren't going to be publishing the rest of the novels they had planned on. Author Elisabeth Moon also commented (on Williams post, no less) about her own struggles with Night Shade's lack of communication and how, as with Halpin, they distributed ebooks without paying for the rights.
But we've had trouble with [Night Shade] not responding to my agent, not paying royalties, and they did the same thing with e-books to me, when they didn't have e-rights. My agent suggested dealing with Baen as I have other books in Webscription, and when they realized that NightShade hadn't had the e-rights, they started sending the royalties my way. But Night Shade is way overdue on royalties again, and my agent has BookScan evidence that the book is selling (not wildly, but enough that there should be royalties again this year.) I hadn't been aware of how bad it was--I thought we had them sorted after the e-rights thing--but apparently not, as I got a call about it this week. It's really sad, as they were a good small press and I was so happy to have that collection coming out from them.
Notably, Williams mentions customers having come to her with complaints about the publishers fulfilling (or rather, not fulfilling) their orders. People who bought books directly from Night Shade weren't receiving their books even a year out. This coincides with others experiences with ordering directly from the company. As seen in this thread, customers waited over five years for a limited edition release of Perdido Street Station and never got them. Not only did Night Shade take their money and leave them hanging, they also managed to drag Subterranean Press, a legitimate publisher of limited edition copies of books, into the mess claiming that Subpress were going to supply them with books.
Eventually, the Science Fiction and Fantasy Writers of America (SFWA) organization received enough credible complaints regarding Night Shade's behavior and put them on probation in 2010.
Night Shade issued an apology at the time owning up to their failings and blaming miscommunication within the company, as well as an outdated system for filing/reporting royalties. Unfortunately, according to someone who spoke with the founders of Night Shade, Jeremy Lasson and Jason Williams, the payout of massive royalties coupled with the money mismanagement led to smaller authors also getting shafted, as their smaller payouts went to feed the larger authors.
As can be gathered from previous testimonies, behind the scenes the company had been struggling with things like "release schedules" and "pay schedules" and "documentation" for years, and they became especially notorious for their late payments to authors. However, they were also very generous in their signing on of new authors, with large advances (or promised advances, as it often turned out), so they kept acquiring new talent even while screwing over the old.
While they were taken off probation from the SFWA in 2011, further complaints caused the SFWA to open the investigation back up again.
Numerous other authors began to speak out about their experiences with Night Shade. According to author Bradley Beaulieu, Night Shade was pretty bad about delaying books after their planned release due to bad schedule management, which wound up screwing over many authors. Some authors, such as Catherynne Valente, jumped ship entirely, which was wise because shortly after, things really started to catch fire.
In April of 2013, Night Shade sent this message out to its authors:
As you probably know, Night Shade Books has had a difficult time after the demise of Borders. We have reached a point where our current liabilities exceed our assets, and it is clear that, with our current contracts, sales, and financial position, we cannot continue to operate as an independent publisher. If we filed for Chapter 7 bankruptcy, or liquidation, the rights to your books could be entangled in the courts for years as could past or current unpaid royalties or advances. However, we have found an alternative, which will result in authors getting paid everything they are due as well as finding a future home for their books, subject to the terms and conditions stated in this letter.
Provided that a sufficient number of Night Shade authors agree to certain changes to their contracts with Night Shade, Skyhorse Publishing, Inc. and Start Publishing, LLC have agreed to acquire all Night Shade Books assets. To be clear, this is an acquisition of assets, not a purchase of the company as a whole. The revenue received from the sale would go towards paying off the debts of the company. If you sign below, and a sufficient number of other Night Shade authors and other creditors also agree to these terms, you will receive full payment to bring all royalties and overdue advances current.
True to their word, Night Shade started selling off its assets to Skyhorse, and in an open letter (different than the one quoted above), Jeremy Lassen essentially begs authors to sign off on the deal to allow Night Shade to get bought.
If Night Shade wasn't bought, then they'd file for bankruptcy. The SFWA put it this way:
If [Night Shade files for Chapter 7 bankruptcy], you may be unable to have your rights reverted. Your contracts could be purchased during the bankruptcy process by another publisher as an asset. That can mean purchase for pennies on the dollar. Bankruptcy could also mean that the contracts would remain in limbo during the bankruptcy proceedings.
So Night Shade authors were left with two choices: let Night Shade go bankrupt on its own and potentially lose rights to their own work, or sign off on the buyout and join an uncertain future with Skyhorse, which at that time had been known for publishing nonfiction, and Start, which at the time had been known for nothing.
Adding to the batshittery is that someone leaked the deal on Scribd.
Author Michael Stackpole elaborated on some aspects of the deal that he (and his agent and lawyer) found questionable. Specifically, he notes that Night Shade said the money earned from the deal would be going towards paying the outstanding debts to authors, but nowhere was that in the writing of the agreement. He also describes the severe cut in royalties for both print and ebook copies. In his words,
The agreement requires authors to accept a royalty rate of 10% of Net income. Net is defined as the amount of money the booksellers and distributors pay Skyhorse—usually 50% of cover price. For me this net amount is a 50% reduction in my royalty rate. More importantly, net income is illusory. Let’s say that Skyhorse, in order to get more of my books into a store, offers a distributor or chain an extra 30% off, on the condition that they buy an extra dozen books. So, 36 copies of a $15 book pays Skyhorse $189, of which I make $18.90 as opposed to the $27 I’d make if all 36 had been sold at a normal price, or the $54 I’d make under the NSB contract. (Extra discounts for promotion happen all the time, and might even rope in my books to promote another author’s work.) Moreover, the accounting to make sure that all the right amounts were paid will be all but impossible without an audit. . . The agreement requires me to lower my cut of ebook income from 50% to 25%. Skyhorse might have a shred of an argument if they actually had to put money into the production of the ebooks, but they don’t.
The agreement also has Skyhorse taking audio and second serial rights to books, regardless if Night Shade had those rights, and without needing the authors' permission unless the author had already sold those rights to someone else.
On top of all of that, it came out that the deal would screw over freelance editors, designers, and artists who worked on the books, who also hadn't been paid, but were mentioned nowhere inside the agreement.
People lost their shit, with authors, agents, and anybody with even a passing interest commenting on the absolutely rotten deal being offered.
Representatives from both Start and Skyhorse came forward to try and spin things in a positive light, but nobody was believing them. A choice quote from Skyhorse's Tony Lyons:
"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."
This did not go as Lyons and Weisfield (of Start) were hoping, and people continued to raise a stink. Harried backdoor conversations were had, and on April 8, a revised deal was offered to authors.. This time, they would get 7.5% of royalties on all books, still be stuck with the 25% of ebooks (though that would increase to 30% after 15,000 were sold), and a 50% cut on the sale of audio rights, with the rights reverting back to the authors if they were not sold within six months.
While still not perfect, the deal was considered by most to be infinitely preferable to dealing with the fallout of a bankruptcy, and as we now know, the deal went through, and Night Shade became Skyhorse and Start's fantasy/scifi imprint.
Despite taking place almost ten years ago, the fallout of Night Shade going under can still be felt. Authors were yanked around for years by Night Shade, enduring an untold amount of stress from worrying about money. Many who started series with Night Shade were never able to complete them, such as Catherynne Valente's A Dirge for Prester John books, the third of which has been in limbo since 2012 and will likely never see the light of day, or the speculated third book of Stina Leicht's the Fey and the Fallen.
As a reader, I don't often take particular notice of publishing houses. So long as the book is in my hand, I tend not to think about the ephemeral and complex process it took to get it there. In this case, it was only when the book wasn't in my hands that I took notice. What happened to the authors of Night Shade was a travesty, and the fact that an indie publisher that had been well-known for giving many talented authors their start was eventually reduced to this trashfire, all due to the gross mismanagement of its owners, is a tragedy in itself. Other indie publishers survived the closure of Borders (which Night Shade blamed often for their woes). Other indie publishers could pay royalties and managed to make the money earned on big sellers work to them. Night Shade's collapse was one born of incompetence, and it was completely preventable, and I can only hope that it serves as an object lesson for other publishers on what not to do.