Yesterday I read this article on J.A. Konrath’s blog:
One of them, Ann Voss Peterson wrote a book that Harlequin published, and she made 2.4% royalties per e-book copy sold. One of the reasons for this was:
While most of my books are sold in the US, many are sold under lower royalty rates in other countries.
In this particular contract, some foreign rights and – ALL e-book royalties – are figured in a way that artificially reduces net by licensing the book to a “related licensee,” in other words, a company owned by Harlequin itself.
Here’s an example: Harlequin has an e-book it lists for $3.99. It sells that to Amazon at a wholesale price of $2.00. The author should make $1.00 for each $3.99 e-book that Amazon sells. But instead of selling directly to Amazon, Harlequin sells the e-book to Company X for 12 cents. So the author only gets 6 cents. Company X than sells the same e-book to Amazon for $2.00, but because they are a sub-licensing company, they don’t have to pay the author anything.
Sub-licensing is common. This is all fine and legal. So why are authors suing Harlequin? Because Harlequin and Company X are the same company! No publishing company would ever sub-license rights for a paltry 6%, unless it was selling the rights to itself. Does Harlequin really expect a judge to believe that it sells a $3.99 e-book and only makes 6 cents? And according to the complaint, the 6% was not equivalent to the amount reasonably obtainable from an unrelated party, as required by the publishing agreements.
Do publishers have such a sense of entitlement, and do they believe that authors are so beneath them, that this is a fair and honest business practice?” Read J.A.Konrath’s full story and the court complaints. It makes for an interesting reading!
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