Agent Kristin Nelson discovered something that will make Random House authors want to double-check their ebook royalties.
Since we’ve been speaking of 25% of net receipts and it would have been easy to miss, if you publish with Random House, you might want to take a look at your April statements again.
Random House decided they were arbitrarily just going to use the 25% of net receipts to calculate their authors’ eBook royalties in this last accounting round—regardless of what is stated in the contracts. There was no mention of it to agents or letter circulated to authors–that I know of anyway. I’m assuming some folks just weren’t going to notice?
Link to the rest at Pub Rants
Passive Guy has to admit he likes Kristin’s style. She runs the numbers and determines that some RH authors will win and some will lose under the new regime.
The bigger point for PG is how this was done and what it may reflect about the publisher’s attitude toward its authors. (Remember, PG has been hip-deep in Harlequin for a few days.)
If we consider a publishing contract at a high level, it’s a license of the author’s copyright that carries an obligation to pay royalties for the license. The amount of those royalties and how they are calculated is included in the contract. Everybody signs at the bottom and the contract is binding on both parties.
There are lots of other provisions in the contract, but this is the heart, the fundamental purpose – author gives publisher the right to do something and publisher pays author for that right.
So, how does the amount of payment change without the author agreeing to the change? Assuming the author has an agent, that agreement, probably called an amendment to the contract, would go through the agent.
Let’s look at contracts in the reality-based world.
What would happen if PG decided to change his mortgage contract and thought 50% of the old payment was just right?
What would happen if the producers of Jersey Shore decided Snooki was receiving too much money under her contract and cut her per-show payments in half in the middle of the season?
Kristin is rightfully perturbed on behalf of her clients and herself, but PG looks at the bigger picture and asks a simple question. What kind of company would try to pull something like this by changing the money calculation and issuing royalty statements that, on their face, breached its publishing contracts?
Kristin writes that nothing was mentioned to agents and authors received no letter from Random House. There’s something more fundamental, however. Unless the signed publishing contracts says Random House can exercise dial-a-royalty rights by sending out a letter (don’t sign a contract like that if you see one), the only way Random House can adjust royalties is if the author agrees to the change – in writing.
It’s also interesting that the royalty rope-a-dope happened with ebooks. Once again, a publisher appears to be miscalculating royalties on ebook sales. No wonder traditionally-published authors believe there’s no money to be made in ebooks.
PG is a natural-born troublemaker and is probably not worthy of emulation, but if he received a weird royalty statement, he would be inclined to read his audit paragraph and go do an audit. Authors pull back from these because it’s possible to spend a lot of money hiring people to do audits.
At some time in the future, PG will write about audit clauses he has seen. Some are awfully loose and provide an author and an author’s cousin Vinnie who took an accounting class one time a plethora of opportunities to dig all over the place and cause a lot of grief for the publisher.
As just one hypothetical grief example that a sensitive and reticent author would never consider, no audit clause PG has ever read prevents the author from sharing what she finds in the audit far and wide.
PG can see it clearly in his mind’s eye. Vinnie pulls out a piece of paper and says, “This looks fishy to me.” Sitting beside Vinnie, Annie Author tweets, “My accountant just found evidence of royalty fraud at Random House.”
Guerrilla warfare is how oppressed people sometimes fight their battles.
Just a couple of thoughts in passing.