The Authors Guild: Advice to Authors on Protecting eBook Royalties

Stack_of_books Sometimes we authors are so desperate to see ourselves in print, that we forget to protect ourselves when it counts most: during contract negotiations.

Truth is, if you don't push back, you can't survive.

Don't be stupid. Take the advice from the Authors Guild that I've reprinted here, below.

Just another reason to join, by the way, is taht there is power in numbers!)


Random House, HarperCollins Look to Lock In Low E-Book Royalty
Rates: 5 Ways to Protect Yourself

March 18, 2010. Random House and HarperCollins are sending
letters to authors and agents seeking amendments to contracts regarding
e-book rights.  These letters, although some suggest that the author's
work was "selected" for digitization, appear to be going to virtually
all authors who have no stated e-book royalty rate in their contracts. 
In some cases, the letters have gone to authors who have never granted
e-book rights to the publisher. 

These amendments should be treated with extreme care.

royalty rates are low at the moment.  Both publishers are trying to lock
in e-book royalty rates at 25% of net receipts.  As we've previously
, we believe this will prove to be a low-water mark for e-book

Authors and publishers have
traditionally split the proceeds from book sales.  Most sublicenses, for
example, provide for a 50/50 split of proceeds, and the standard trade
book royalty of 15% of the hardcover retail price, back in the days that
industry standard was established, represented about 50% of the net
proceeds of the sale of the book.  We're confident that the current
practice of paying 25% of net on e-books will not, in the long run,
prevail.  Savvy agents are well aware of this.  The only reason e-book
royalty rates are so low right now is that so little attention has been
paid to them:  sales were simply too low to scrap over.  That's
beginning to change.

Here's how to protect yourself:

1. Get the absolute right
to renegotiate
  If you accept these low royalty rates, don't lock
yourself in.  Try to obtain the unconditional right to renegotiate the
royalty rate after a period of, say, two years.  If you don't get the
unconditional right to renegotiate, then, at a bare minimum, you should
have the right to renegotiate if industry standard royalty rates change
or if the publisher's standard royalty rate changes.  We can help you
with the contractual language.

2. Negotiate for a royalty
   Insist that your royalty amount (in terms of dollars and
cents, not percentage points) for e-books will never fall below the
royalty amount for the print edition of the work.  It's best to peg the
minimum to the royalty amount for the hardcover edition of your work. 
If not, then have the minimum royalty tied to the royalty for the
prevailing print version at the time the e-book is sold.  This will keep
e-book sales from eroding your royalties.

3. Double-check
your reversion of rights clause
  This is critical.  If your
reversion of rights clause doesn't have sales thresholds in it, your
publisher can argue that availability in any edition — regardless of
the number of sales — means your book is "in print." (We don't agree
with this interpretation of older contracts, but some publishers argue
this with a straight face.)  Take this opportunity to clarify your
reversion of rights clause by inserting a minimum number of annual sales
for a work to be deemed in print.  Again, we can help with the

4. Check your contract; you may control e-rights. 
Some of these letters have gone to authors of books for which the
author hasn't granted the publisher electronic rights.  Others have gone
to authors for books in which all rights have reverted.  Please contact
us or your agent if you have questions about your contract.

If you can't obtain adequate safeguards, you may want to bide your
  The e-book market is still a small, developing market, with
uncertain economics.  Publishers and distributors are fighting major
battles over business models.  For some books (children's picture books,
for example), the market has been especially tiny, although some
believe Apple's new iPad may soon change that.  In any event, e-book
publication isn't a now or never proposition, and signing the contract
amendment will prevent you from seeking e-book publication deals with
other publishers.  Take your time, weigh your options carefully.

always, if you need help evaluating the terms of your existing Random
House or HarperCollins contract to see whether it contains a more
favorable e-book royalty rate or whether you granted e-book rights to
those publishers in the first place, send in your contracts.  We're here
to help.

2010 The
Authors Guild

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