This just released from the Authors Guild.

In a letter just released by John Sargent, CEO of Macmillan, Sargent makes reference to discussions with the Authors Guild over Macmillan’s e-book royalty structure. As you know, we criticized Macmillan in October over its proposed new e-book royalty rate of 20% of receipts.

In our discussions, Sargent agreed to “be flexible” on e-royalty rates, since current industry standards provide a royalty of 25% of receipts. The signal was quite clear that 25% was there for the asking. In further discussions on Monday, Sargent confirmed that Macmillan’s standard e-book royalty would be 25% of receipts under their new boilerplate contract.

As we’ve said before, we believe that 25% of receipts is transitional royalty rate for e-books. From our December 15 e-mail alert on Random House’s retroactive rights grab:

Authors and publishers have traditionally split the proceeds from book sales. Most sublicenses, for example, provide for a 50/50 split of proceeds, and the standard trade book royalty of 15% of the hardcover retail price, back in the days that industry standard was established, represented about 50% of the net proceeds of the sale of the book. We’re confident that the current practice of paying 25% of net on e-books will not, in the long run, prevail. Savvy agents are well aware of this. The only reason e-book royalty rates are so low right now is that so little attention has been paid to them: sales were simply too low to scrap over. That’s beginning to change… [W]e strongly suspect that e-royalty rates are at a low-water mark.

That said, Macmillan’s e-book royalty rate is now similar to that of other major publishers. We look forward to continuing to discuss with Macmillan other provisions of its proposed new contract.
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That said…

As much as we appreciate the Authors Guild’s role in pressing publishers for higher e-book royalties, we’re not sure why Authors Guild has taken it upon itself to negotiate royalties with a publisher. Even though publishers, of late, have publicly announced their terms for e-books, neither authors nor agents are committed to accepting them. In fact, because of anti-trade statutes agents must exercise caution in doing anything that even appears to be negotiating contract terms as a single body.

And we do want to reiterate that neither authors nor agents should get comfortable with 25% of net as the “standard” royalty. Macmillan’s increase to 25% has brought it into line with its Big Six playmates but that is no grounds for complacency among authors and agents. Indeed it could even be viewed with alarm. Beware of publishers marching in lockstep.

Richard Curtis