Harlequin Raises E-Book Royalties (Retroactively!)

#1 Letter to Series Authors Actively Writing For Harlequin

Digital Royalty Rates Changes

Dear Author,

The landscape of digital publishing continues to evolve at a fast pace and Harlequin is at the forefront of this evolution. In 2007 Harlequin was the first publisher to simultaneously publish print and digital editions of our entire frontlist. Since then we have also digitized and brought to market our backlist and now have a current catalogue of over 11,000 ebooks! The Harlequin brand has always offered an advantage other publishers don’t have and this is especially true for ebooks. Our digital marketing efforts focus on building the Harlequin brand to drive the sales of your books through newsletter programs, advertising, search engine marketing, social media properties, the Harlequin website and leading ebook retailers. All this means better search and discoverability by online shoppers and an endorsement of the quality of the read, which is critical in the midst of the online clutter.

Harlequin has been closely monitoring developments in digital publishing, including author compensation. As you know, until now Harlequin’s position has been that digital royalty rates as a percentage of cover price is a more transparent way to pay authors than as a percentage of net receipts: authors know exactly how many copies they sold at what price and their compensation is not affected by unspecified costs. Over the past several months we have worked to ensure a smooth transition from the current percentage of cover price calculation to a net receipts calculation while maintaining the same transparency. As such, Harlequin will be amending digital royalty rates.

Effective January 1, 2012, series authors who are actively writing for Harlequin will receive a digital royalty rate of 15% of net digital receipts for each digital unit sold in the English language, United States and Canada, frontlist and backlist. This will include books in Harlequin’s digital backlist program, Harlequin Treasury.

Given that these are more favorable terms than those in your existing contract(s), this notification will be considered the amendment to those contract(s). If you wish to maintain the existing terms of the contract(s), please let us know by Friday, July 15th, 2011.

**************************

#2 Letter to Single Title Authors Actively Writing For Harlequin

Digital Royalty Rates Changes

Dear Author,

The landscape of digital publishing continues to evolve at a fast pace and Harlequin is at the forefront of this evolution. In 2007 Harlequin was the first publisher to simultaneously publish print and digital editions of our entire frontlist. Since then we have also digitized and brought to market our backlist and now have a current catalogue of over 11,000 ebooks! Harlequin invests heavily in digital marketing efforts to promote our authors and their books, with activities ranging from newsletter programs, advertising, search engine marketing, social media properties, website development and distribution through leading ebook retailers.

Effective January 1, 2012, single title authors who are actively writing for Harlequin will receive a digital royalty rate of 25% of net digital receipts for each digital unit sold in the English language, United States and Canada, frontlist and single title backlist.

Given that these are more favorable terms than those in your existing contract(s), this notification will be considered the amendment to those contract(s). If you wish to maintain the existing terms of the contract(s), please let us know by Friday, July 15th 2011.

Tags: e-book royalties, Harlequin
Posted in Book Pricing & royalties, E-book Industry (news), E-books (business), Excerpts | 17 Comment »

Brenda Coulter wrote on June 24, 2011 at 4:48 pm

That “retroactively!” in your headline is misleading. Harlequin’s letters say quite clearly that the new rate won’t go into effect until January 1, 2012. So while the old contracts of “current” authors will be amended to reflect the new rate, those new percentages will apply only to sales from that time forward. There is nothing “retroactive” about that!

Marsha Canham wrote on June 24, 2011 at 4:48 pm

Wow. Harlequin wants to be commended for giving series writers HALF the royalty percentage they’re giving single title authors? When there is no overhead, no shipping costs, no costs for ebooks once the file is formatted and uploaded to the seller’s site. And they wonder why so many authors are asking for their rights back and going indie? Or just going indie with their next book?

Amazing. Simply amazing.
Head. Sand. Ostrich.

Lori Devoti wrote on June 24, 2011 at 7:20 pm

And the old rate was 6% of COVER. This is 15% of NET. Sounds like this at best is the same deal and could be a royalty cut.

Richard Curtis wrote on June 24, 2011 at 7:34 pm

@Brenda Coulter,

Re retroactivity, the key phrase is: “Given that these are more favorable terms than those in your existing contract(s), this notification will be considered the amendment to those contract(s)”
RC

Richard Curtis wrote on June 24, 2011 at 7:35 pm

@Lori Devoti

Good point. Someone should do a comparison.
RC

Brenda Coulter wrote on June 24, 2011 at 9:10 pm

Richard, I’m afraid I didn’t make myself clear. I do understand that current authors’ existing contracts will be amended to reflect the new rates. But those rates will only affect e-book sales from January 1, 2012 onward. There is nothing “retroactive” about that. It’s a simple amendment to existing contracts, and all it means is that GOING FORWARD, authors will receive the higher rate. Saying that the rate is “retroactive” implies that Harlequin plans to make adjustments to royalties already paid to authors–in other words, send the authors some more money. And THAT, Harlequin will never do.

Richard Curtis wrote on June 24, 2011 at 10:34 pm

@Brenda Coulter

Distinction accepted. Harlequin could have said “All new contracts will be at the new rates but the old ones will remain at the old rates.” But by saying the old ones will be at the new rates, I felt “retroactive” was justified. But on behalf of any confused readers I greatly appreciate your fine-tuning the definition.
RC

Richard Curtis wrote on June 24, 2011 at 10:47 pm

Lori’s comment that “the old rate was 6% of COVER. This is 15% of NET. Sounds like this at best is the same deal and could be a royalty cut” is wrong, though by a narrow margin. If you figure that the average retailer discount on e-books is 50% off the list price, than 15% net royalty is the equivalent of 7.5% of the list price.
RC

Penny Tomlinson wrote on June 25, 2011 at 12:09 am

Harlequin’s rate on earlier books if they come out in an electronic version, contracts signed prior to 2003, grant 50% of revenues received–but it’s revenues to their “Parent company” in Switzerland who licensed the books to be issued by Harlequin Toronto. So in essence the author will get 50% of 6% which the Parent Company receives, or 3%. So for older digitized books, HQ wasn’t even offering 6% of the cover price. Now they say they’re offering 15% of net, but what is net? And if they do specials where they sell the ebooks for $0.99, 15% of net could be nothing where at least 6% of cover (absolutely outrageously low royalty) was a fixed number no matter what they sell the books for.
A question, can they change a contract without the author agreeing?

Maggie Shayne wrote on June 25, 2011 at 12:22 pm

I very much appreciate the breakdown you give her, Mr. Curtis, of the difference between 6% of cover and 15% of net. This was information I really needed in order to decide whether to request they keep the current terms in place on all my contracts, including my single titles. (If 15% of net is better than 6%, one can assume 25% of net is quite a bit better than 8% of cover. Thank you very much.

Richard Curtis wrote on June 25, 2011 at 2:03 pm

@ Maggie Shayne

Here’s the math. Let’s assume for sake of argument that an e-book title lists for $5.00. The retailer takes its cut, anywhere from from 30% to 50%. Even if it’s as much as 50%, that nets out at $2.50. It it’s a series book, 15% of that is 37.5 cents. That compares to the old 6% list price royalty of 30 cents.

The net on the single title is 62.5 cents compared to the old 40 cents.

Richard Curtis wrote on June 25, 2011 at 2:05 pm

@Penny Tomlinson. Technically they can’t change your contract without your consent, In this case you have the option to notify Harlequin only if you want to stick to the old royalty. By not notifying Harlequin by the deadline they stated in their notice, you have in effect signed their amendment.
RC

Linda Barrett wrote on June 25, 2011 at 3:32 pm

I have a lot of questions about the transparency of this new system.

What other items can be charged against cost to arrive at Net besides the retailer’s cut? Taxes? The cost of digitilization, editing, covers, etc? Perhaps all those items will add up to more than 50% in the example given.
Unless Harlequin explains this clearly, authors will still have questions and feel uneasy about these changes.

What about defining who is a current author? Only those under contract? How about those submitting proposals which have been rejected? How about everyone who gets a royalty statement – that seems to say we’re still doing business together.

Why the 10% difference between remuneration for category authors and ST authors? (15% vs. 25%) All authors need to market themselves these days regardless of where their books fall, and series pulls in over 50% of Harlequin’s sales.

Thanks, everyone, for sharing your thoughts. I’m afraid I’m adding to the muddied waters.

Patricia Rosemoor wrote on June 25, 2011 at 4:58 pm

>>Here’s the math. Let’s assume for sake of argument that an e-book title lists for $5.00…Even if it’s as much as 50%, that nets out at $2.50. It it’s a series book, 15% of that is 37.5 cents. That compares to the old 6% list price royalty of 30 cents.

Except that the series books are going to start at 3.99 and go down from there. They plan to release 9 of my books on July 15 for 3.99. So at a 50% discount, that would be 30 cents instead of 24 cents. But if they lower the price to 3.44, which is what they have done with several other of my Intrigues, that would only be 25 cents. And they have gone down to the $2 level, as well, which would be a loss.

So how is this good for us?

Carolyn Jewel wrote on June 26, 2011 at 6:01 pm

It would be worthwhile to ask Harlequin about their digital file process agreements. If they use a 3rd party distributor for their eBooks (and some distributors also create the files), the usual take for that vendor is 20%. That 20% will count against the net when author royalties are calculated. So in the examples here, you’d reduce the dollar amounts by 20% first.

Bob Mayer wrote on June 27, 2011 at 12:33 pm

Hmm. At Who Dares Wins Publishing we give our authors 50% of net. Only seems fair. Then again, we don’t host a big party at Nationals.

Neil Marr wrote on June 27, 2011 at 12:58 pm

Sod the math and royalties rates. Does the company intend to make use of these rights by actually PRODUCING ebook editions of all its titles immediately or is it merely double-establishing digital rights to prevent author, agent, other publisher from making practical use of them? Neil

17 Comments - “Harlequin Raises E-Book Royalties (Retroactively!)”