A book is a book, except when it comes to eBook royalties. That’s the premise of a class action lawsuit filed on Thursday, May 19, 2016, in New York Supreme Court by class representative Sheldon P. Blau, MD.
The lawsuit alleges Simon & Schuster has been cheating its authors by improperly categorizing eBook transactions as “sales” rather than “licenses.”
The distinction is significant, because the royalty rate for sales is much lower than the rate for the license of rights. If categorized as a license – rather than a sale — the author receives 50% of net receipts, rather than 25% of net typically paid to authors for the “sale” of an eBook.
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The eBook royalty class action looks back approximately six years, the statute of limitations on contract actions in New York State. It alleges Simon & Schuster engaged in a “pattern and practice of paying Plaintiff and others similarly situated royalty payments for the distribution of licenses for electronic books, or “e-books,” at a rate for book “sales,” or some other lower rate than that required for “license” transactions.”
This issue arose, in a different context, in F.B.T. Productions v. Aftermath Records, a 2007 federal lawsuit brought by Eminem’s management company against his record label over digital royalty rate splits. Like the music industry, publishers have taken the position that digital downloads should be accounted for as sales not licenses.
Link to the rest at Copylaw
PG is pleased to hear about this and wishes the plaintiffs well.