Publishers offering lower royalties for ebooks

[Elfwreck]

Digital Rights and the Changing Landscape:
Back in October 2008, Random House sent out a letter to industry agents informing them of a change in policy regarding ebook royalty rates on all future contracts. Previously, RH had paid 25% of the suggested retail price of the title. The new policy was that they would be paying 25% of the amount received for all titles.
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Now we have another bump in the road. MacMillan, parent of such companies as St. Martin’s, Farrar Straus and Giroux, Henry Holt, Picador, and Tor among others, announced earlier this month that they would be making changes in their ebook royalty rates as well.
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Carina insists on taking ALL RIGHTS, including print rights, despite the fact that they are a DIGITAL ONLY publishing house.
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The market continues to change and authors need to be aware of how small changes in contract terms and language can have significant impact on their bottom line.

[AnemicOak]

Originally Posted by Elfwreck

Carina insists on taking ALL RIGHTS, including print rights, despite the fact that they are a DIGITAL ONLY publishing house.

I wouldn't be surprised if they eventually went the route of pubs like Samhain and did a print release after a certain amount of time following the ebook release.

[Kali Yuga]

I guess I concur. To me, it's just standard policy to go over any contract that you have to sign with a fine-toothed comb and the best lawyer you can afford.

That said, no one should be too surprised that publishers are now negotiating electronic rights from the get-go. I don't really see much of a reason for royalties on ebooks to be differentiated from paper, either.

Don't the standard rate for paper book royalties start at 10%, though? And isn't Carina more like a self-publishing project than an edited publishing house?

[AnemicOak]

Originally Posted by Kali Yuga

Don't the standard rate for paper book royalties start at 10%, though? And isn't Carina more like a self-publishing project than an edited publishing house?

I think it's around 8%.

Carina isn't a self-pub at all (that's Harlequin Horizons). Carina is Harlequin's new e-publishing arm (similar to Samhain, Liquid Silver, Whiskey Creek).

[Steven Lyle Jordan]

Originally Posted by Kali Yuga

I don't really see much of a reason for royalties on ebooks to be differentiated from paper, either.

I do: e-books are a new market, with different pricing (hopefully lower), easier distribution and purchasing, and a different infrastructure for support. Publishers should be looking at a very different set of sales figures compared to print, and adjusting royalties to reflect that reality.

Of course, that means a royalty structure that pays the author more when they have more sales, as opposed to the publisher pocketing the difference...

[DMcCunney]

Originally Posted by Steve Jordan

Of course, that means a royalty structure that pays the author more when they have more sales, as opposed to the publisher pocketing the difference...

Which might be meaningful if more books actually accrued royalties.

Standard practice when contracting with a publisher is to receive an advance against royalties. The author will receive actual royalties after the book has sold enough copies to cover the advance.

Guess what? Most books don't accrue actual royalties, because they don't sell enough copies to cover the intitial advance. In publishing terms, they never "earn out". And when an agent negotiates a contract with a publisher, that's what they want. They want as high an advance as they can get. (After all, the agent gets a percentage, and if the author makes more money up front, so do they.)

Books that do earn out accrue royalties, and publishers issue quarterly royalties statements and checks (or are supposed to, but failure to do that is violation of contract and a different issue.)
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Dennis