Despite the fact that most trade book publishers are paying authors a 25% net royalty (25% of what the publisher actually receives after retailer discount), Random House UK is offering considerably less than that – indeed, considerably less than what its own US sister-house is paying. In October 2008 Random House US set its e-book royalty at 25% net and four months later Simon & Schuster followed suit.

Some agents are so ticked off at Random UK that they’ve stopped offering books to them. “I find it completely ludicrous that one branch of an international publisher is trying to say that 17.5% or 20% is the norm, when every other publisher in the UK has gone public on 25%,” Carole Blake of Blake Friedmann is quoted as saying. Another says, “Random House is the only publisher not offering 25% as its best standard rate but not all agents are getting 25% from all publishers.” “Industry sources said that a figure of 25% was becoming standard, though some admitted that it could be ‘variable’,” writes Benedicte Page in the article.

(As a matter of full disclosure, E-Reads pays a 50% net royalty to all authors.)

It’s probably a good idea right now to make something clear to authors, agents, and other members of the book community: it is against the law for publishers to collude in the setting of royalty rates, at least in the United States. Though 25% of net receipts may be settling down as the the standard e-book royalty, it would be in restraint of trade for publishers to sit down in a room and agree on that rate. Though we often, in negotiations, agree on a “standard” royalty for an adult hardcover – 10% of the list price on the first 5,000 copies sold, 12.5% on the next 5,000, and 10% on all sales thereafter – there is no written code fixing the royalties at those rates. If there were, it would be considered price-fixing. Same goes for e-book royalties.

Random House UK defends its position by asserting that “The e-book market is still a very young market which will continue to evolve and our royalty rate is just part of an overall very attractive author package.”

We can’t comment one way or the other on how attractive the rest of Random UK’s author package is, but we can certainly support its right to pay 2/3rds of what the rest of the industry calls standard; we will certainly support them if they decide to pay twice what the rest of the industry calls standard. What we don’t support is agents and authors rolling over and accepting a “standard” royalty. Any time a publisher tells you “That’s the going rate,” ask where is that written? I guarantee you won’t find it written in the minutes of the American Association of Publishers or any other book industry trade organization.

More importantly, it should not even be an unwritten law.

At any rate, you can read about the fracas here.

Richard Curtis