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Write More for Harlequin, Receive Less Money

25 June 2011

Passive Guy was ready to hang up his fingers for the day when a perfectly lovely publisher fast shuffle caught his eye.

Romance conglomerate publisher Harlequin recently sent emails letters to existing authors announcing what the emails letters tacitly admitted was a less-transparent royalty structure for ebooks. What’s more, if you had written only a single title for Harlequin, you received a higher royalty rate than if you were a series author.

But Wait! There’s More!

It’s all automatic and retroactive. If you don’t like it, you have to tell Harlequin soon, otherwise it just happens to you, like that tornado that destroyed a city in Missouri a few weeks ago.

e-reads helpfully provides copies of two emails letters.

First, the royalty structure change description:

As you know, until now Harlequin’s position has been that digital royalty rates as a percentage of cover price is a more transparent way to pay authors than as a percentage of net receipts: authors know exactly how many copies they sold at what price and their compensation is not affected by unspecified costs. Over the past several months we have worked to ensure a smooth transition from the current percentage of cover price calculation to a net receipts calculation while maintaining the same transparency.

It’s so nice that the “same transparency” will be retained, but no explanation of how the new royalty structure works is included. “A net receipts calculation” is never defined in the email letter.

“Net Receipts Calculation” sounds like a dial-a-royalty system for Harlequin, a black box that spits out whatever number is most convenient.

Here’s more language from the email letter (bolded in the original):

Effective January 1, 2012, series authors who are actively writing for Harlequin will receive a digital royalty rate of 15% of net digital receipts for each digital unit sold in the English language, United States and Canada, frontlist and backlist. This will include books in Harlequin’s digital backlist program, Harlequin Treasury.

Lovely. The email letter describes a “net receipts calculation” and the bolded language describes “Net Digital Receipts,” evidently retroactively amending every contract for every series author at Harlequin.

If you’re a single title author, you receive bolded language that’s nearly identical, only you get 25% of “Net Digital Receipts.”

The first lesson is that writing a single title pays better than writing a series.

Let’s go to one last paragraph in the emails letters (bolded language included in the email letter):

Given that these are more favorable terms than those in your existing contract(s), this notification will be considered the amendment to those contract(s). If you wish to maintain the existing terms of the contract(s), please let us know by Friday, July 15th, 2011.

Isn’t that wonderful, an automatic email letter-powered contract amendment. With a deadline. You better hope you’re not on an expedition to climb Mt. Everest and out of email letter range until after July 15.

Passive Guy would be greatly tempted to send a email letter back that said, “I hereby terminate my publishing contract(s) with Harlequin. Given that these are more favorable terms than those in my existing contract(s), this notification will be considered the amendment to those contract(s).”

So, Harlequin is telling its authors that a mysterious, undefined “net receipts calculation” resulting in “net digital receipts” are “more favorable terms” without explaining what the new terms are and, PG’s cynical lawyer mind notes, not saying for whom the terms are more favorable.

The tone and tenor of the email letter clearly imply that these black box changes are for the author’s own good and that nice authors should just sit primly with their knees together and not make a fuss. But the specific bolded language representing an “amendment” to existing contracts most definitely does not say who is the beneficiary of the more favorable terms.

The legal and business issues of these emails letters are so obvious and extensive, PG will cut his snarky legal analysis short.

He will simply say that few legal documents (or emails letters purporting to be legal documents) are breathtaking for him any more. But these are truly breathtaking.

The emails letters remind PG of something the kind Old Massah might have sent to the slaves if Old Massah had an email account wrote letters to the slaves in the Old South.

Here’s a link to the most-helpful ereads post containing the full texts of both emails letters.

Contracts, Passive Guy

37 Comments to “Write More for Harlequin, Receive Less Money”

  1. Sitting here scratching my head, trying to figure out how a contract can be altered via an email that may or may not be read by the intended recipient, and that apparently requires only silence on the author’s part rather than a signature to signify acceptance. Does Canada have different contract laws than the US does? I can’t imagine this standing up in court.

    When I signed my digital rights contract with Random House my non-lawyerly eye didn’t even catch the part about the royalty being based on what RH received. I was thinking cover price, and 25% looked pretty good.

    Harlequin authors will have no control over pricing or bundling — and if Harlequin decides to set up its own Pottermore-type website for selling direct, they could could charge hefty of storefront fees that would reduce the authors’ take. I’d love to know what their plans are for ebook marketing/selling well into the future.

    The same thing hit me that hit you Passive Guy, about its not being spelled out who’s favored by the new terms. Tricky.

    • Patricia – This is an extremely dodgy way to try to amend contract terms and could be picked apart in a dozen ways.

      I recently read some excerpts from Harlequin contracts and they seemed bizarre, even by the abysmal standard of publishing contracts in general. This isn’t a question of Canadian vs. US law, this is more a question of on-world vs. off-world law.

  2. This is why in my research before writing my novel, I scratched Harlequin off my list. Since I’m writing a romantic women’s fiction piece, that pretty much killed my chances to be traditionally published. But, I’m okay with that ;)

    The real writing on the wall came for me when I bought three Harlequin ebooks off their site (they already sell their ebooks direct and could deduct “site costs”) for $1.99-$3.99. That’s the same price I planned to price MY book. So why would I settle for 25% or 15% when I can get 35%-70%?

    I wonder if this will help push the RWA into accepting self-published writers into their membership? The money has to come from somewhere…..

    • RWA already accepts self-published authors. Publication was never necessary to be a member, but you cannot join PAN (Published Author Network) within RWA unless RWA says you’re published.

      • Nadia – So indie authors are second-class citizens?

        • Certain Indie pubs and their authors meet the RWA specs for PAN eligible requirements. In other words, they meet whatever standards RWA has in place to be considered a ‘real’ publisher and a ‘real’ author. There was a big to-do over this a couple years ago, because for a long time RWA refused to recognize e-pubs as ‘real’ pubs and their authors could not become PAN eligible. Now then do recognize some, if not many of the e-pubs. I became PAN eligible via Siren-Bookstrand over a year ago.

        • If you self-publish, you don’t count as being published.

          But if you publish through a small independent press or Big Six, then you count so long as you made at least $1k from one title.

          • Nadia – So a writers association wants to make sure some publisher is making money off of its members?

            • i was wondering when someone would address what stance RWA is taking on this whole thing.

              iirc, RWA never batted much of an eyelash over the direct mail subscription royalty rates harlequin was paying 15 or so years ago. but then, RWA was always more supportive of the unpublished members #1 and the publishers #2 and then, finally, bringing up the tail end of the gravy train, the published authors #3. and because the publishers (legacy, paper, whateveryouwannacall’em) were ahead of the published authors on that train, there was damn little gravy for the authors.

              elaine

              • Elaine – The Harlequin post has been a real revelation. I didn’t realize how abused romance authors have been.

            • I guess? Let’s just say that I never saw any benefit of being an RWA member unless you have a very supportive local chapter near you.

        • The RWA lets you into the “real” author group if you can prove you made over $1,000 at an indie publisher or epublisher. As far as I know, though, self-publishers still don’t get past the velvet rope.

          (It’s not all that sparkly though. I did all that paperwork and I didn’t even get a tiara. Or a pony. Total let down.)

          • Bree – I’m not familiar with the RWA, other than what I read here, but my experience with other organizations is that sometimes the velvet rope is what the organization is all about.

    • Elizabeth – I think you made a good decision to indy pub.

  3. When I mentioned that Harlequin could sell the books direct, I didn’t mean the usual kind of direct selling that publishers do on their sites . . . I meant they could go the Rowling route and sell ONLY through their website, thereby having complete control of the costs (which could be whatever they felt like charging). With them controlling both the book price and the distribution/selling costs, it’d be pretty much a fixed game all the way around.

  4. (Some Harlequin author is welcome to wander along after me and correct the following.)

    It’s a lot harder to have a MS for a single-title romance selected by Harlequin than to join their stable of series-romance writers. Some of the series writers do graduate to single-title eventually (e.g. Nora Roberts).

    As for Canada vs. U.S., I have a feeling Harlequin’s contracts with U.S. authors have a U.S. locus, probably their office in New York. I have an “e-wave” sort of acquaintance with a couple of local Harlequin series authors but even if I were to hit them up for a favour and ask them about their contracts, I’m not sure they’d know if their contracts are different from the contracts their U.S. sister-authors sign.

    • LP – Thanks for the clarification of the class system within Harlequin.

      • Patricia Sierra

        A friend of mine used to write for Mira (owner of Harlequin) and all her contracts came out of Canada (she’s in the US). I don’t know if their romance authors have different deals.

        • Harlequin is a Canadian company.

          • Yeah, for clarification, Mira is a single-title imprint within the Harlequin stable.

            In the same way, Harlequin operates Carina Press, their e-only imprint. It’s sort of a challenger to the very successful e-only imprints like Samhain.

            Harlequin has editorial offices in Toronto, London, and New York.

            Harlequin is owned by Torstar, a Canadian public company with various publishing interests. (As such, info on Torstar is easy to come by.)

  5. The first lesson is that writing a single title pays better than writing a series.

    Your otherwise decent analysis is missing the boat on this line, mostly because I suspect you don’t do romance.

    In romance, “series” refers to the category lines you see in grocery stores: Harlequin Presents, Harlequin Blaze, Harlequin American, etc., which are branded by line and numbered, and each line has various criteria that must be met (word length, heat level, type of story) for a story to be accepted. These are sold to the bookstores as slots, without reference to the author. So there are guaranteed slots in grocery stores, Target, Walmart, Borders, B&N for the series books.

    “Single Title” refers to HQN, Mira, Luna, and Spice, which are imprints that publish individual authors, and sell them in to the bookstores on individual author merit. There is very little branding, they’re not part of a category line. The author is the brand. So Debbie Macomber’s books with Harlequin were single titles, even though they were all part of the same series.

    Series authors have always had lower royalty rates than single title authors, almost certainly because for the last some-odd years Harlequin has been the only publisher of series romance.

    • Courtney – Thanks for the clarification.

      Do series authors make more money because of sales volume than single-title authors or does the royalty difference have a real impact?

      • Depends on the author and the line. Some Harlequin Presents authors make more than some single title authors. Debbie Macomber (who was single title at Harlequin before she left) was making more than almost any category author could, though.

        But technically, all the Harlequin reissues of Nora Roberts books are done through their category lines, and I bet she makes more on one of those reissues than the rest of us mere mortals could dream of.

      • Julianne MacLean

        But once we get into e-books, the distribution “slots” make no difference. It’s a level playing field, so I feel this distinction of two different royalty rates is unfair.

  6. LOL! To do this at all, Harlquin must really be feeling the heat. Still, I believe you are being unfair to Old Massah. He would have been smarter than to send out such a missive only a few days before the RWA congestion, when his overseers were going to have to be surrounded by angry slaves :-)

    I do consider it a good sign, though, that the previously unbudgeable Harlequin has begun to recognize they are going to have to deal with the unfair 6% royalty rate they have writes under contractually at this point.

    • Kelly – Perhaps Young Massah sent out the email and he needs some learnin’ from Old Massah about how to keep the slaves quiet.

  7. I don’t think Harlequin really cares what the majority of their authors think about this or any other issue. There are so many unpublished (and published) authors who would stand in line to be published by Harlequin, no matter the terms of the contract. That particular fact makes it very hard to negotiate better terms.

  8. Vanessa,
    That may be true for 1-3 books. Then the newbies will see they’ve been shafted and leave.
    This is just ugly.

    • Lyn – I wonder how many organizations manage to stay in business because of an endless stream of newbies.

      • They do give their top authors mucho big bucks. Like most publishers, that’s where the focus goes. If they can retain their most popular authors, the rest of the midlist can pretty much go to hell. And who knows? Maybe a lot of midlisters at HQ and other pubs are happy to get steady contracts that give them a steady stream of income. It may take a while for it to sink in that digital rights are going to be the most important rights under a contract.

  9. While I am not “actively” writing for Harlequin, they are republishing my backlist there, which includes a single title, tied to a series and novellas. The backlist books they have of authors who have not applied for their rights is astounding. The definition of authors “actively writing” cuts out a high-high number whose books are held by Harlequin. These backlist books are not repackaged, actively marketed, etc. I question this “actively writing” term along with whatever.

  10. Just got email notice that RWA is checking into this newest Harlequin wrinkle.

  11. Passive Guy had no idea how extensive and complex the World of Harlequin is.

    The Pottermore discussion of online gaming in a mythical world seems like Harlequin could set up one of those itself.

  12. […] Guy has received a rapid-fire education on all things Harlequin since blogging about Harlequin royalties four days […]

  13. Yes, Debbie Macomber moved on from HQ. As has every writer I know who has had some success. Certainly HQ is a great place to learn the business and get paid to write.
    They run a business and they can do what they want. The thing writers have to decide is if they want to be part of that business. If you do, good for you.
    But one has to wonder where their business model breaks down as authors who break out flee HQ as fast as they can.
    I’m in PAN because of previously published books. But my current publishing situation would exclude me. Even though I sold more books last month than 99% of HQ’s authors in a year.
    But it’s not a big deal.
    I always say when I teach that RWA is the most professional writing organization around, after having been members of almost all of them.

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