AP Watt's King attacks 25% digital royalty rate

AP Watt's King attacks 25% digital royalty rate

A P Watt chairman Caradoc King has become the latest agent to attack the 25% royalty rate on e-books, with agency pricing and piracy also among topics under discussion at today's Westminster Media Forum.

Speaking at the event, King, who is also A P Watt joint m.d., said he had a number of issues with the 25% rate currently understood to be offered by publishers to authors. He said the rate "disregards the fundamental principle of publishing contracts" that an author is paid more the more books they sell. He also objected on the grounds that it treats all authors identically, whether they are a bestseller or a debut; that a publisher's outlay on the development of its publishing back catalogue is more to the benefit of publishers than individual authors, and so should not be used as a reason for the lower royalty rate; and that the rate makes no difference between frontlist and backlist titles, where publisher's initial investment in the editorial and marketing processes will have been recouped.

King said he had gone to publishing c.e.o.s with these concerns and they had responded with a variety of reasons to support the royalty rate, including that e-books are subject to VAT; that digital production is a fixed cost; that more successful authors are paid higher advances and so that goes some way to redressing the balance; that a 25% e-book royalty rate is higher than the average royalty rate authors get on physical books, and that a publisher must expend additional costs on policing piracy. However, King added: "I don't think any publisher has offered a convincing profit and loss model to explain the 25% royalty model."

He said: "Unless publishers swiftly address the need to be more transparent and flexible about digital royalties, and compete rather than collude with each other, there may be damaging fragmentation of the publishing business, in which authors may decide to sell their own books direct from their own websites, agents may be increasingly editorial and sell only final digital files to publishers and distributors, and Amazon and Google both become publishers."

Author and playwright Maureen Duffy, also on the panel, also called for higher royalty rates, and said: "It is disgraceful that we have been forced down to 25% when we started with a suggestion of 50%." She also drew attention to the plight of mid-list authors and said: "We need to know how authors who are not bestsellers are going to be paid at all."

King also added confusion was arising over the lack of clear definitions of digital terms in contracts. He said: "We are now in a troubled limbo in which the definition of e-books, digital versions, enhanced editions, multimedia versions, all have different meanings in different publishers' boilerplates and none of them have a legal definition."

Meanwhile, Penguin chief financial officer Coram Williams defended current e-book pricing levels, and said the growth of the market on both sides of the Atlantic "suggest[s] people are willing to pay the prices that they are". Penguin's policy on pricing was deliberate, in order to "share the benefits [of e-book sales] with everyone in the supply chain". Williams also added it was a challenge for the industry to "counter the stream of negative coverage of the death of the physical book".

Director and co-founder of Love Reading Peter Crawshaw said that from a consumer perspective, multiple formats and pricing was still an area of confusion, with the onus on the publisher to inform consumers. He said: "People don't value e things as much as physical things. It is beholden on the publisher to educate consumers on why e-books cost so much". Michael Evans, partner at lawyers Davenport Lyons, backed up this thought during his speech, which concentrated on educating consumers on intellectual property value to cut back on piracy. He said: "We need to make illegal downloading as uncool as drink driving."

During his speech, Booksellers Association chief executive Tim Godfray called for publishers to consider whether their e-books are available readily enough to high street bookshops. Godfray repeated the BA's support for Google Ebooks, which he expected to launch in either June or July in the UK, and said: "We believe we are losing a lot of sales through the difficulty of access . . . Smaller booksellers will have to obtain digital content via aggregators."

Meanwhile, Sony suggested it will be making a move into the book aggregation business in the UK. While details were unspecific, Sony UK head of corporate affairs Adrian Northover Smith said during his speech: "You haven't heard so much from us in Western Europe, but that is going to change . . . Reading is going to be a very important part of our portfolio going forward."

He added: "We are looking to have an aggregator site on our Qriosity platform [a multimedia platform which streams video and music on demand from Sony products], but we haven't exposed any specific details on that yet." He confirmed that Sony has no plans to publish books itself.

The Westminster Media Forum was held at the Royal Over-Seas League in central London, with All-Party Parliamentary Group on Publishing member Gisela Stuart MP, and Baroness O'Neill of Bengarve chairing the event.