PG is trying to extricate a client from a nasty publishing contract with a large romance publisher. Both the client and the publisher shall remain nameless.
PG is frustrated. The client is frustrated.
PG has conducted extrications from enough publishers to have come to a conclusion.
Across the broad range of different types of books and different varieties of publishers with which PG has dealt, as a group romance publishers are the worst. Worst contracts, worst behavior, worst attitude towards writers.
A public event PG can talk about began in 2012 when a class action was filed against the company on behalf of Harlequin authors who signed book contracts with Harlequin between 1990 and 2004. The suit was filed in 2012 and settled in 2016. You can find information about the settlement of the class action at Harlequin Class Action Settlement.
The lawsuit was based on Harlequin’s practice of sublicensing e-book rights through a Swiss subsidiary, which resulted in authors receiving 3% to 4% of net profits from their works rather than the 50% Harlequin agreed to pay in its publishing contracts.
PG has previously blogged about this case. You can see prior posts, including some court documents, by Clicking Here
Basically, the story was that HQ didn’t mention ebook royalties in its publishing contracts. Those contracts included a catch-all clause which essentially said HQ could license other rights and split the proceeds on a 50/50 basis with the author. The contracts also included a provision which said if HQ licensed the other rights to an affiliated entity, the royalties paid to the author had to be equivalent to market rates for licensing those other rights to a company not affiliated with HQ.
When ebooks appeared on the scene, rather than asking its authors to sign new contracts or ebook addenda to their existing contracts, HQ decided to license ebooks to a related Swiss company for a royalty of 6% of the cover price. The Swiss company then sublicensed each book to HQ print and ebook companies to distribute, so HQ-Switzerland kept 94% of the ebook proceeds and paid 6% to HQ-SorrySucker.
Under the “other rights” clause in the publishing contract, the author would be paid 50% of the amount of the license fees received by HQ-SorrySucker. HQ-SorrySucker paid the authors 50% of 6%. Even English majors know that results in a royalty paid to the author of 3% of the cover price each ebook.
This was at a time when Amazon would license ebooks from authors under KDP for royalties of 70% of the cover price. If HQ-SorrySucker had taken the normal route taken by other publishers, HQ authors would have received royalties at the rate of 35% of the cover price.
The following is from an Amici (the plural of Amicus or Friend of Court) Brief filed in the case by Romance Writers of America and the Authors Guild:
In the spring of 2011, Amicus The Authors Guild began receiving reports from its members that their e-book royalties from Harlequin were extremely low. These members believed Harlequin was self-dealing by licensing e-book rights to one of its corporate affiliates for 6% of the cover price (i.e. suggested retail price). Because the royalty payable to the author under the “all other rights” clause is 50% of the amount received by the publisher, a 6% royalty to the publisher results in a royalty to the author of only 3% of the cover price – far below the customary range for sales in secondary media. The Authors Guild contacted Harlequin to voice these concerns and to request a copy of Harlequin’s inter-affiliate license agreement. Harlequin declined to provide the document on the ground that it was proprietary.
During the same timeframe, Amicus RWA was also in communication with Harlequin regarding e-book royalty issues. Harlequin provided to its authors, RWA, and other industry participants the following explanation of Harlequin’s inter-affiliate licensing practice:
Our authors contract with Harlequin Books SA (“HBSA”), our related Swiss company. HBSA licenses the right to publish an author’s work in print and digital to our operating companies and to third-party publishers, which then bring books to market in their country (incurring costs of translation, production, distribution, marketing, branding, etc.). In return, HBSA receives a license fee.
The NAR [net amount received by the Publisher] is the license fee. For editions where the author is to be paid 50% of NAR, the author’s royalty is therefore 50% of the license fee received by HBSA. The license fees are expressed as a percentage of cover price. Historically they ranged from 6% to 8%. The author’s 50% share of that fee would then equal 3% to 4% of the cover price.
As noted, the publishing contracts at issue require that in any affiliate licensing arrangement the “Publisher” must receive license proceeds that are “equivalent to the amount reasonably obtainable by Publisher from an Unrelated Licensee for the license or sale of the said rights.” Based on their considerable reservoirs of knowledge and industry data sources regarding royalty rates in the publishing industry, the Amici confidently represent to this Court that the 6% to 8% royalty that Harlequin Enterprises elects to pay to its Swiss “Publisher” subsidiary is a small fraction of the proceeds that the “Publisher” could obtain from an unaffiliated licensee in the open market for e-books.
. . . .
Generally speaking, a book publisher makes money by exercising the rights that it has licensed from the author of a given work, through the sales of books or sub-licenses of publication rights in various sales and distribution channels.
Historically, the primary sales channel for print book publishers was through retail book stores. In the modern era of e-books, publishers sub-license their digital copyright rights to online “e-tailers.” The most well-known e-tailers of e-books are Amazon, Barnes & Noble, and Apple, but there are many others in the field.
There is no hard and fast rule or convention in the publishing industry on the royalty rates or license fees paid by e-tailers to publishers for e-books. There are, however, numerous sources ofdata on the market’s behavior. In the experience and collective knowledge of the Amici, publishers are almost universally able to extract from an e-tailer at least 50% of the cover price of an e-book. A 70% split for the publisher is quite common and can be obtained even from industry power houses such as Amazon and Apple.
It is clear to the Amici that if the Harlequin’s Swiss “Publisher” subsidiary operated as a normal market participant, it could readily license the new e-book versions of its backlist for license fees of 50% to 70% of the cover price of each work sold. In this scenario, the 50% royalty payable to authors under the 1990 to 2004 publishing agreements would be 25% to 35% of the cover price of each work sold. Instead, however, the Swiss “Publisher” licenses the e-books to its parent, Harlequin Enterprises, for 6% to 8% of the cover price, and the authors’ 50% royalty is thus only 3% to 4% of the cover price. From the perspective of the Amici, it appears that Harlequin Enterprises has simply siphoned off 42% to 64% of the cover price before the money reaches the Swiss “Publisher” subsidiary, so this amount will not have to be split with the authors.
PG has calmed down now, but he still wonders whether romance authors are treated worse than other authors by the publishing establishment.
PG does know Amazon loves romance authors and it shows its love by paying them money.
PG has never had a client ask him whether he thinks the author can make more money from HQ than from Amazon.
PG was not a math major, but he could probably figure out his answer to that question without a spreadsheet.
I suspect the intersections of two dynamics is at work.
1) The authors are mostly women–socio-historically underpaid vis-a-vis men and perhaps viewed as easier to take advantage of
2) Supply and demand. There’s always another (or another hundred) romance author(s) trying to sell a book contract. The genre is overcrowded. Authors are viewed as disposable. Publishers can treat them badly and always find more.
I have no basis for comparison, but I confess I frequently do have a reaction to “woe is me” stories. First and foremost, there are generally other avenues open, and with the current state of technology, easy to identify disruptive influences. Yet people still keep returning to their usual haunts and common treatment. While it might have been true 20 years ago, it was also true that in those days, the market for romance was extremely pulpy. With very near “write for hire” terms.
Second, there is a “group think” mentality that frequently can dominate online discussions, including romance forums. Person one complains they had said problem; person two agrees that they also had the said problem (although without specifying it was not QUITE the same, a little different). Then person three says it. All of a sudden, three people who self-selected their forum for sharing are all convinced it’s a problem endemic to the whole genre, etc. Not unlike customers of cable or cell phone service. It’s almost amusing in those circumstances to see the confirmation bias of those who complain that this means the entire company is evil, or generally bad at least. Frequently, the forums are parallel — the same comments are made in each forum and then conclude with “I’m switching to the other one!”.
In some cases, the issues are real and pervasive (Harlequin). In other cases, there is more noise than reality (often around how Amazon is evil).
P.
There’s a definite lack of respect from certain publishers. FREX, Nora Roberts was with Random House for something like 20 years, yet after the Randy Penguin merger, she no longer felt comfortable there. (http://fallintothestory.com/ch-ch-ch-changes-2/) My reaction–still–is WTF? Nora Roberts (who also writes as JD Robb) is a fricking CASH COW. What the hell was RP thinking to let her get away? In fact, given her statement that making the move was stressful, I’m guessing they all but drove her out.
I don’t know about HQ blackballing authors, but I know Jennifer Crusie has not had good things to say about them. As far as I know, she’s never said anything specific, but she mentions them occasionally and there’s clearly a long-held distaste for HQ.
Interestingly, both Roberts and Crusie seem to be happy at St. Martins, so I suspect St. M treats their authors better.
Suzie, re: the “blackballing” comment I made above–I have come to suspect that this is a romancers’ urban legend. Possibly has never happened, possibly has. But I think it’s been made into a big scare tactic that abusive publishers can use against authors, along with the Christian fic “if you offend the reader in any way, they’ll take the book back to the store and complain” urban legend. Nobody can prove or disprove these tales, so they continue to be useful as levers to move the author into acquiescence.
Deb, it’s not correct that “[n]body can prove or disprove these tales.” Those who could provide such proof are almost always bound by nondisclosure agreements (sometimes from employment contracts, sometimes from settlements, sometimes in the underlying publishing contracts) “arising from or relating to” the issue. So, too, are their lawyers, who are stuck saying “Trust me, I’m a lawyer,* I’ve seen/obtained proof but I can’t provide you with any details because I’m equally bound by the NDA signed by my client, even if I advised the client against signing the NDA.”
* Yeah, right there most people usually stop listening. Not that I blame them an awful lot given the profession’s refusal to actually deal with the problem of active misrepresentations by lawyers.
To my mind “unable to prove” and “unwilling to prove due to NDA” equates to the same thing. The overall effect is that the information writers must use to make a fair judgment about a publisher is simply lacking.
Blacklisting by the Manhattan mafia is real.
George R.R. Martin was a victim.
He had to move to Hollywood and switch to screenplays and series development to make a living.
https://en.m.wikipedia.org/wiki/George_R._R._Martin
If they do, there’s possible compensation in the fact that romance is by far the most lucrative genre for self-publishing; I’ve heard credible claims that many authors make more by self-publishing romance than they could by trade publishing. (Unlike most sf/fantasy, and very, very unlike lit fic. Guess what I write…)
I can confirm those credible claims, Alice, and add that many experienced authors who were formerly writing for traditional publishers are making more (and in some cases, much more) on their indie writing than they ever did in trade publishing.
The current buzz in author loops which serve romance: that traditional publishing and agents are ceding the ground to indies because they can’t compete financially. In response, they are steering their stable to women’s fiction, especially bookclub women’s fiction, because these books still command semi-reasonable advances and are comparatively print-centric.
If true, that will be a seismic shift in the publishing landscape.
Also, most romance writers are skeptical about their readers being willing to follow authors to a different genre. So if women’s fiction flops, you can see where things are headed in the next few years or months…
Thanks for the comment, A., but it doesn’t surprise me.
It also won’t surprise me if indies move into women’s fiction if women’s fiction heats up. It’s interesting that traditional publishing thinks it can out-maneuver indie authors and that it knows more about what women west of Manhattan want to read than female authors do.
If women’s fiction doesn’t take off, guess what happens to advances. And you’re right about where things are heading.
As far as book club women’s fiction is concerned, I don’t think you can pay New York rents and salaries (particularly for the male ceo) from your sales to that market segment.
The romance authors I personally know are some of the most nimble authors around. And most prolific. If a genre heats up, they are quick to fill demand.
Five people strategizing in NY at some publishing house with a few dozen authors and a couple of debuts will never be able to match the 1000s of these awesome indie authors as they try to build their businesses and exploit the opportunities they see.
I understand why they are doing it but I agree with your conclusion.
I remember years ago when there were a couple of romance writers I really loved. They shifted to women’s fiction and did very well, very well. But I didn’t follow. I didn’t want to read about all the family, sisters’ issues, mom/daughter issues, etc. I wanted romance. I assume many did follow as the books in WF thrived and one of the two is still a major bestselling author. BUT…I haven’t read her since her romance days.
I suspect I know who you are referencing with respect to the switch to women’s fiction. If so, the same is true for me. I love HER, love her writing, but the stories don’t hold the same appeal.
Academic press contracts can be… not as blatantly awful as what I’ve heard about romance, but all the ones I’ve seen (four different publishers) required you to sign over all rights in perpetuity of copyright, for all versions of the work. There is no revision clause that I have seen thus far.
Not to excuse the unethical and unfair-trade-practice norm of romance, but I’d nominate the “religious books” segment as being equally egregious. Perhaps the contract terms aren’t quite so bad, but willingness to negotiate is worse and the proportion of outright scams is substantially higher… and I don’t just mean “evangelical protestant” when I say “religious books,” either. It should surprise exactly no one that some of the media conglomerates that own major bad-actor romance imprints also own major bad-actor religious-books imprints, including one “New Age”/”Spiritual” imprint that makes Torstar/Harlequin look a paragon of virtue… if, that is, there’s any virtue to be had in media conglomerates in the first place.
Also, d’accord with Anonymous 2, romance has a huge number of authors who want to build a career. We’re told frequently (not always) that we must accept a contract’s terms as handed to us, because “Harlequin never negotiates terms” and because “you don’t want to piss them off because there’s an industry wide blackball list, and if you get on that list you’ll never sell anything to a publisher again.”
Being mostly women, we romancers have an unfortunate tendency just to shut up and sign.
Low hanging fruit.
Romance is the biggest with the most writers begging for a contract – of course the publishers write up the best contracts for themselves – for every writer smart enough to say ‘no’, there are a dozen desperate enough to say ‘yes’ to anything.
So this is what PG looks like when he gets pissy.
Now we know, LOL. 😉
It’s what I write like, Nate.
To know what I look like, you have to imagine a handful of thunderbolts.
I stand corrected. 🙂
😉
I’m likin’ that image: PG as Zeus! Yeah! 😀
Coincidentally, I am re-reading the Iliad, so I’m having a particularly easy time picturing him with the thunderbolts right now.
Careful, that looked like a MLP reference he gave you!
(Maybe he was taking a break and one of his grandkids replied for him. 😉 )
Across the broad range of different types of books and different varieties of publishers with which PG has dealt, as a group romance publishers are the worst. Worst contracts, worst behavior, worst attitude towards writers.
No doubt someone at Authors United/the Author’s Guild is planning a full page New York Times ad with concomitant FedEx packages to Congress to help fight this injustice. I’m sure they’ll be along … any minute.