Macmillan US opens up new front in battle over e-book royalty rates

<p>Macmillan US has introduced a news standard lower e-book royalty rate, in the latest move by a publisher to establish economically viable rates in the face of increasing e-book sales but falling prices. The German-owned company has developed a new boilerplate contract with authors that would give them a standard royalty rate of 20% of net receipts on e-book sales, a rate that is 5% lower than most other US publishers.<br /><br />In a letter to agents sent Monday, John Sargent, chief executive of Macmillan US, wrote that a new standard contract would set a &quot;single royalty rate, based on the amount received by the publisher&quot; for &quot;all exploitation of the content of the book in digital form&quot;. The new contract would also pay higher rates for books sold direct to the consumer, 10% to 15% of net receipts compared with 5%.</p><p>The new rate was first revealed publicly by US agent Richard Curtis, yesterday (28th October). He wrote on his blog: &quot;Agents are poring over a new contract boilerplate issued by Macmillan, parent company of St. Martin&#39;s, Farrar Straus and Giroux, Henry Holt, Picador, and Tor among others.&quot; He added: &quot;The e-book royalty will come as the biggest surprise to e-book royalty watchers, as it goes contrary to the trend (which some think is a polite word for something darker) among major publishers to pay 25% of net e-book receipts to authors. Unfortunately, Macmillan offers even less than that - 20%.</p><p>&quot;It will be interesting to see if Macmillan will hold the line at an e-book royalty below that of its playmates such as Random House and Simon &amp; Schuster, who in the last year have reduced their e-book royalties to 25% of net receipts. It will be even more interesting to see if the agents fall into the trap of accepting 25% as the &quot;standard&quot; e-book royalty. Who says that&#39;s all it should be?&quot;</p><p>The debate will be keenly followed in the UK, where <a href="../news/100318-soa-to-recommend-authors-seek-higher-digital-royalties.html" target="_blank" title="http://www.thebookseller.com/news/100318-soa-to-recommend-authors-seek-h... Society of Authors is to recommend to its authors that they seek higher royalty rates, to the dismay of many publishers</a>. <a href="../news/92411-random-house-digs-in-over-e-book-rights.html" target="_blank" title="http://www.thebookseller.com/news/92411-random-house-digs-in-over-e-book... House UK has already been criticised by agents for seeking e-book royalty rates that some regarded as lower than standard.</a> </p><p>Currently, the Society of Authors guide for e-books says authors &quot;should receive at least 25% [royalties], preferably 35%, rising at an agreed level of sales. Some publishers offer 50% of net receipts, most others offer 15% to 25%. Resist anything less than that.&quot; General secretary Mark Le Fanu said the society was reviewing its general stance on e-books, and that 25% was not &quot;good enough&quot;.</p><p>Speaking to the <em>New York Times,</em> Paul Aiken, executive director of the US Authors Guild, said that Macmillan was anticipating a time when Amazon, Barnes &amp; Noble and other e-book retailers would try to push down wholesale book prices. &quot;This is Macmillan&rsquo;s attempt to pre-emptively squeeze authors.&quot; </p><p>&nbsp;</p>