The US Authors Guild has begun to ratchet up the pressure on publishers to pay authors a greater share of earnings from e-books as part if its “fair contract initiative”. The Guild has demanded a 50% net royalty rate, and called for authors and agents to fight for it.
Its stance has been backed by the UK’s Society of Authors, with chief executive Nicola Solomon telling The Bookseller: “We agree with the Authors Guild initiative for the reasons they explain so clearly.” Just last week the SoA called on the government to protect creators from onerous contracts, including fair remuneration.
The Authors Guild launched its "fair contract initiative” earlier this year contending that book contracts had “not kept up with the changed times”. In this new statement, focused on e-book royalties, the Guild said the unfair industry-standard e-book royalty rate was at the the heart of publishers’ “failure to treat authors as full partners in the publishing enterprise”.
It also claimed that “some bestselling authors have managed to obtain a 50% e-book split, though they’re asked to sign non-disclosure agreements to keep these terms secret”. It acknowledged that some publishers had shifted their rates, but often at the expense of lower advances. “Overall, publishers’ apparent inflexibility on their standard e-book royalty demonstrates their unwillingness to change it,” it said.
The statement added: “Traditionally, the author-publisher partnership was an equal one. Authors earned around 50% of their books’ profits. That equal split is reflected in the traditional hardcover royalty of 15% of list (cover price, that is, not the much lower wholesale price), and in the 50-50 split of publishers’ earnings from selling paperback, book club, or reprint rights. Authors generally received an even larger share than the publisher for non-print rights (such as stage and screen rights) and foreign rights.
“But today’s standard contracts give authors just 25% of the publisher’s ‘net receipts’ (more or less what the publisher collects from a book sale) for e-book royalties. That doesn’t look like a partnership to us.”
In the absence of publishers correcting the imbalance on their own, it added that “it will take a critical mass of authors and agents willing to fight for a fair 50% e-book royalty. We hope that established authors and, particularly, bestselling authors will start to push back and stand up to publishers on the royalty rate—on behalf of all authors, as well as themselves.”
The Authors Guild also criticised Amazon for using “its e-book dominance to demand steep discounts from publishers and drive down the price of frontlist e-books, even selling them at a loss. As a result, there’s simply not as much e-book revenue to split as there was in 2011 when we reported on the e-book royalty math.”
As the Guild acknowledged the “standard” 25% rate developed in the mid 2000s as publishers began to understand that a growing e-book market could also cannibalise their existing print markets. However, some publishers dismiss the notion of a “standard” rate arguing that existing contracts are already flexible.