Harlequin has issued a new letter to authors and agents updating its June memo. Though the royalty rate for single titles remains 25% of net, the series royalty has been sweetened with an escalation to 20%. Executives Donna Hayes and Loriana Sacilotto remind writers and agents that the series royalty reflects the brand-building that Harlequin brings to the table.

Here’s the memo. Attachments are not included.
Richard Curtis

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Dear Agent:

Re: Proposed Amendments to Digital Royalty Rates

As you know, on June 24th Harlequin sent an e-mail about our intention to amend digital royalty rates. A technical problem with our e-mail security software resulted in most authors not receiving the originally e-mailed letters. Agents however, did receive the letters for their clients and the letters have also been posted online. As a result many of you have by now seen the original letters. Since that time, however, we have had many discussions with authors and agents and have made changes to the terms and amendment process proposed in that initial letter. We would now like to share those with you.

Rates

Harlequin is offering to amend royalty rates for English language sales of digital editions in the US and Canada as follows:

Series: 15% of net digital receipts to $50,000; 17.5% of net digital receipts from $50,001 to $100,000; 20% of net digital receipts thereafter

Single Title Authors: 25% of net digital receipts

If you agree to these amended rates they will be applied to the sales of your front list and backlist titles. The effective date of the new rates will depend on the date by which Harlequin has received your executed amending agreement (see Process below).

The reason for the difference between series and single title rates is the strength and value of the Harlequin brand name in generating demand and sales of series books. Of course, without the talent of our series authors and their Harlequin editors, we would not have a series business. However, it is also true that without the Harlequin brand strength behind series books, the series authors wouldn’t enjoy the level of the sales they do today for both print and e-book formats.

Over many years, Harlequin has invested millions and millions of dollars and continues to invest to make the Harlequin brand name the reason why readers buy our series books, globally. In a combined print and digital world, the Harlequin brand will be even more important as physical displays at retail and search and discovery in digital become the key ways readers find their series books in increasingly diverse, noisy and cluttered environments. The Harlequin brand on print and digital series books immediately communicates great romance stories, the benefits of which the reader understands and can rely on.

Definition of Net Digital Receipts (NDR)

Net Digital Receipts are the actual revenues received by Harlequin North America when it makes the sale of an English language electronic edition, in the United States and Canada, net of trade discounts, commissions and any applicable taxes and duties. The royalty will be calculated on the basis of these receipts.

Territories

The new digital royalty rates will apply to English language books sold in the US and Canada only. At this time, we are not making any changes to the digital royalty rate terms in territories outside the US and Canada.

We will continue to consider the option of world English rates, however the reality is that our other English language companies, UK and Australia, operate independently, with different series names, different covers and varied investments in market-specific promotional plans. At this time, these fundamental differences don’t support a world English digital royalty rate.

Authors Receiving the Revised Digital Royalty Rates

All Harlequin authors are being offered the amended rates. There will be no distinction between “active” and “inactive” authors. Authors will be required to return an executed amending agreement to receive the new digital royalty rates.

Process

We require authors to execute amending agreements in order to receive our new digital royalty rates. As you can appreciate, the number of contracts this amendment is covering is enormous. The modifications to our royalty system in order to make these digital royalty rate amendments possible and to pay our authors accurately are significant and time-consuming. We expect to have the amending agreements issued to authors (and their agents) by mid-October 2011. If executed amending agreements are returned to us by December 31, 2011, the effective date of the new digital royalty rates will be July 1, 2012. The effective date will be later where executed amending agreements are received after December 31, 2011.

Attached is a Q&A where you will find Harlequin’s responses to many questions we have received so far on this issue.

Sincerely,

Donna Hayes, Publisher and CEO

Loriana Sacilotto, Executive Vice President, Global Editorial

Harlequin has announced an increase in royalty rates, bringing the company’s royalties in line with with those paid by Big Six and other legacy publishing houses.

The company issued its announcement in two parts. One was for series titles, raising the rate to 15% of net, the other for single titles, raising it to 25% of net.

Even better news is that the changes are retroactive.

Here’s the key text from the single title announcement.

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).

The full text of both announcements may be seen here.

Richard Curtis

#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.

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#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.

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, 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.

Kudos to Harlequin for getting proactive in the war on infringers. The romance publishing behemoth has engaged Attributor, an outfit that monitors and combats piracy, to help authors chase file-sharers and other leeches out of the content pool.

“We ask that authors and their agents submit their takedown requests through Attributor’s online portal,” says Harlequin’s release.  “The online portal will provide you with directions on how to enter and submit information regarding infringing pages or sites. We anticipate enforcement will be undertaken more expeditiously and effectively through this service.”

For the complete statement click here.  And to read more about Attributor, click here.

Richard Curtis

Harlequin Editorial

After an impressive thirty-two year career with Harlequin, Karin Stoecker, Editorial Director of Harlequin Mills & Boon UK, has decided to retire. Karin will be leaving Harlequin on April 1, 2011.

Karin came to Harlequin from the newspaper business in 1979 to head up the Proofreading group in Toronto. Her professional talents and numerous accomplishments accelerated her career through successive advancements, and in 1994 she left Canada to assume the role of Editorial Director of Harlequin Mills & Boon, with editorial responsibility for our key programs sourced in the UK, including Presents, Romance, Medicals and Historicals. As Editorial Director UK, Karin has built a strong and dedicated editorial team who will continue the innovative approach she brought to the business, embracing change and creating a vibrant community of authors and readers around the Harlequin Mills & Boon franchise. We are sorry that she is moving on, but wish her every success in the future.

With both Karin and Randall Toye’s recent retirements and the “retirement” of the Silhouette brand, we are also taking the opportunity to review our current Series Editorial structure and we are pleased to announce the following changes.

Glenda Howard, Tessa Shapcott and Birgit Davis-Todd have been promoted to Senior Executive Editors for New York, London and Toronto respectively, effective March 1, 2011. They will report directly to me and be responsible for the overall Series Editorial Leadership for each of our acquiring offices. In addition to the overall management of their Editorial teams, they will play a key role in developing the Series Editorial strategy as we embrace the changing publishing environment and address the impact it will have on our authors and our readers.

In the New York office, Tara Gavin, Joan Marlow Golan and Mary-Theresa Hussey will now report to Glenda Howard. We are also pleased to announce that Kelli Martin has been promoted to Senior Editor Kimani Press, reporting to Glenda. Additionally, Denise Zaza will now report to Mary-Theresa Hussey and Gail Chasan will report to Tara Gavin. In the UK, Jo Grant, Bryony Green, Linda Fildew and Sheila Hodgson will report to Tessa Shapcott. In Toronto, Brenda Chin, Wanda Ottewell and Kathleen Scheibling will continue to report to Birgit. And, as we work to further strengthen the alignment with Series, Marsha Zinberg and her team will now also report to Birgit.

We are confident that Glenda, Tessa and Birgit will continue to provide our Series business with the strong leadership required to grow the Series franchise in the future.

Please join me in wishing Karin all the best as she moves forward in the next chapter of her life and in congratulating Glenda, Tessa, Birgit and Kelli as they take on their new assignments.

Dianne Moggy

VP, Series Editorial and Subrights

Randall Toye, the stalwart 27-year veteran of Harlequin and one of the principal builders of the publisher’s brand, will be taking early retirement, according to a press release issued by the company. His official title was Vice-President, Series Editorial. Moving into his position is Dianne Moggy, who has served as long as Toye and, like him, has put her stamp on every aspect of the firm’s operation.

It’s hard to read the tea leaves but our instincts tell us there is no deep dark significance to the change, nor does it presage any appreciable shift in the company’s direction and policies.

We will miss Randall, one of the truly good guys in the publishing business. But we are confident that Dianne Moggy will meet all challenges with her vaunted competence and good humor.

The complete press release is below.
Richard Curtis
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After more than 27 years at Harlequin, Randall Toye, VP Series Editorial, has decided to take early retirement. Randall will be leaving Harlequin on March 31, 2011.

Randall joined Harlequin in 1984 as Senior Editor, Gold Eagle (our Action Adventure imprint). In 1985 he became Editorial Director for Gold Eagle/Worldwide Library and added MIRA Books to his responsibilities in 1994. Later, Randall was appointed Series Editorial Director, and in May 2008, he was promoted to VP Series Editorial with responsibility for our global series business, including leading our series relevance initiatives.

Throughout his career Randall has dedicated himself to our publishing business and our authors. In recent years, he has worked tirelessly to ensure that our series franchise has remained relevant and vibrant. Randall has been a mentor to many in Editorial and other departments, and we would like to thank him for all of his talented editorial leadership at Harlequin and wish him well as he begins this new chapter of his life.

While we are sad to see Randall leave, we are also pleased to announce that Dianne Moggy has been appointed VP, Series Editorial and Subrights effective January 31, 2011. As many know, Dianne has also been with Harlequin for almost 27 years. She has worked in our Series business (both Gold Eagle and Romance); led the MIRA editorial program and the expansion of our single title business with the launch of HQN; and, most recently, as VP Overseas Editorial Strategy, Dianne worked closely with our Overseas partners to develop publishing programs with the greatest potential for success. We look forward to the insights and contributions Dianne will bring to the series business.

Please join us in congratulating both Randall and Dianne and in wishing them both well as they move forward.

Harlequin, the world’s leading romance publisher, is undergoing a brand-lift, but in the process it is phasing out Silhouette.

Silhouette, a key imprint of the parent company for decades, is a portmanteau for numerous romance lines, many of them beloved of both readers and authors. A press release issued by two leading executives, Publisher & CEO Donna Hayes and Executive VP Global Editorial Loriana Sacilotto, confirms the attrition that HQN-watchers have noted from such recent developments as the shift of the Nocturne imprint from Silhouette to Harlequin

They Were Expendable

“In April 2011,” states the October 7 memo to the company’s authors, “our Silhouette series will become Harlequin series… Special Edition, Romantic Suspense and Desire will appear with their new Harlequin brand in April. Rebranding the Silhouette series as Harlequin will ensure that these series benefit from the promotional resources dedicated to the Harlequin brand and will strengthen the Harlequin consumer brand as the market leader in romance fiction.”

What’s behind this transformation?

It seems that the brass engaged a New York-based outfit called Pentagram, a “world-renowned design and branding company” that has redesigned both Harlequin’s corporate and consumer logos. But obviously the branders feel that Silhouette creates consumer confusion and is redundant.

A Marriage Made in Toronto

Unless you’re a veteran of book industry mergers and acquisitions (we are and have the scars to prove it) you may not be aware of Harlequin Silhouette’s fascinating history. Though the couple (up to now at any rate) have been compatible in the 26 years since they tied the knot, their romance was forged in the molten heat of a nasty corporate war that brought about nothing less than the birth of the modern romance industry. We have Wikipedia to thank for refreshing our recollection.

By the mid 1970’s the list of Harlequin, then distributed by Simon & Schuster/Pocket Books, consisted entirely of British authors published by the parent company Mills & Boon. But American readers, who constituted the majority of the company’s readership, yearned for something sexier and more muscular than the often treacly fare produced in England. Spearheaded by Janet Dailey, the ranks of American writers swelled and the company began to prosper. But the British owner was not comfortable with what was taking place in the American colony across the sea.

We’ll let Wikipedia take it from there (and for the full article with footnotes visit the Wikipedia entry here:

Dailey’s novels provided the romance genre’s “first look at heroines, heroes and courtships that take place in America, with American sensibilities, assumptions, history, and most of all, settings.” Harlequin was unsure how the market would react to this new type of romance, and was unwilling to fully embrace it. In the late 1970s, a Harlequin editor rejected a manuscript by Nora Roberts, who has since become the top-selling romance author, because “they already had their American writer.”

Harlequin terminated its distribution contract with Simon and Schuster and Pocket Books in 1976. This left Simon and Schuster with a large sales force and no product. To fill this gap, and to take advantage of the untapped talent of the American writers Harlequin had rejected, Simon and Schuster formed Silhouette Books in 1980. Silhouette published several lines of category romance, and encouraged their writers to experiment within the genre, creating new kinds of heroes and heroines and addressing contemporary social issues.

Realizing their mistake, Harlequin launched their own line of America-focused romances in 1980. The Harlequin Superromance line was the first of its lines to originate in North America instead of in Britain. The novels were similar to the Harlequin Presents books, but were longer and featured American settings and American characters.

Harlequin had also failed to adapt quickly to the signs that readers appreciated novels with more explicit sex scenes, and in 1980, several publishers entered the category romance market to fill that gap. That year, Dell launched Candlelight Ecstasy, the first line to waive the requirement that heroines be virginal. By the end of 1983, sales for the Candlelight Ecstasy line totaled $30 million. Silhouette also launched similar lines, Desire and Special Edition, each of which had a 90-100% sellout rate each month. The sudden increase in category romance lines meant an equally sudden increase in demand for writers of the new style of romance novel. This tight market caused a proportionate decrease in the quality of the novels that were being released. By 1984, the market was saturated with category lines and readers had begun to complain of redundancy in plots. The following year, the “dampening effect of the high level of redundancy associated with series romances was evident in the decreased number of titles being read per month.” Harlequin’s return rate, which had been less than 25% in 1978, when it was the primary provider of category romance, swelled to 60%.

In 1984, Harlequin purchased Silhouette. Despite the acquisition, Silhouette continued to retain editorial control and to publish various lines under their own imprint. Eight years later, Harlequin attempted to purchase Zebra, but the deal did not go through. Despite the loss of Zebra, Harlequin maintained an 85% share of the North American category romance market in 1992.

Got Along Withoutcha Before I Metcha, Gonna Get along Withoutcha Now
.
Can Harlequin live without Silhouette? Obviously it is confident it can. As for the rest of us, we’ll wait and see. In publishing (as in other industries) consolidation inevitably means displacement of some of the work force. So, if history is any guideline, we may see a shrinkage of opportunity for authors. On the other hand, given the vibrant history of Harlequin and its never-ending experimentation and reinvention, we won’t be surprised if HQN is the exception to that rule.

We certainly hope so

The letter to authors issued by Hayes and Sacilotto is reproduced in full here. Images of logos referred to are not included in our posting.

Richard Curtis

October 7, 2010

To Our Authors,

In the rapidly changing world of media and entertainment, publishing, too, is experiencing exciting new changes. To position ourselves for opportunities and growth in the future, we want to expand and celebrate our strength and diversity as the leading publisher of entertainment for women.

Our current solid reputation in this arena and our strong identity continues to be the envy of many publishers. In the past 15 years, Harlequin has come to mean much more than series romance. We have expanded into mainstream fiction and romance, Christian fiction, African-American fiction, teen fiction and nonfiction. As we move toward the next 15 years, we hope that Harlequin will mean even more.
This summer, we worked with the world-renowned design and branding company

Pentagram, in New York, in order to re-envision both our branding strategy and our look. In 2011 you will notice a number of changes relating to the Harlequin brands. We have redesigned our Harlequin corporate logo, which you can see at the top of this letter: the four diamonds have been replaced with the letter H inside one larger diamond.

Because Harlequin is increasingly recognized as a publisher of a broad range of women’s reading, we will be placing the corporate logo on the back cover of all the books we publish. In the digital future, search and discovery will become even more important, and customers’ ability to find our authors and books will be enhanced by the use of the Harlequin brand.

We have also redesigned the Harlequin consumer logo associated with our series romance programs. For the consumer logo, we have replaced the harlequin figure inside the diamond with a stylized figure representing our reader, placing her first and foremost in our brand.

We will also be rebranding some of our series. In April 2011 our Silhouette series will become Harlequin series. As you know, Silhouette Nocturne became Harlequin Nocturne in June of this year. Special Edition, Romantic Suspense and Desire will appear with their new Harlequin brand in April. Rebranding the Silhouette series as Harlequin will ensure that these series benefit from the promotional resources dedicated to the Harlequin brand and will strengthen the Harlequin consumer brand as the market leader in romance fiction.

Also in April 2011, Love Inspired will replace Steeple Hill as the primary brand for our inspirational fiction publishing program. The Steeple Hill logo will no longer appear on the books.

While we are broadening what our corporate brand represents, we will continue to support and strengthen the many individual imprints that fall beneath the Harlequin umbrella, and that includes growing you, the authors, into strong brands of your own.

As a valued Harlequin author, you should feel free to contact your editor with any questions or concerns that you may have. We look forward to hearing from you.

With our very best wishes,

Donna Hayes
Loriana Sacilotto
Publisher and Chief Executive Officer
EVP, Global Editorial

For an in-depth analysis of Harlequin’s phasing out of the Silhouette line, click here.

E-Reads has learned that at a specially convened board meeting of the Romance Writers of America, the organization reaffirmed its stand against allocating conference space to publishers promulgating subsidized, vanity or similar self-publication programs.

After a controversy erupted last fall about granting permission for conference space to a publisher that had recently announced formation of a self-publication venture for romance authors, RWA formed a task force to evaluate the emerging publication landscape, review definitions and recommend options. These options are limited by the organization’s non-profit charter, which some officers feared might be compromised by permitting subsidy publishers a seat at the table.

Fiduciary obligations notwithstanding, there were strong moral grounds for RWA’s opposition, some of it bordering on outrage. Those sentiments were supported by the Mystery Writers of America and the Science Fiction Writers of America.

Though the task force and RWA board deliberated diligently and judiciously they were under some pressure to clarify their position in view of the impending annual conference taking place in Nashville in July, where the publisher in question and possibly others in the self-publication field need to know their status. Also, it was incumbent on the board to clarify whether self-published books qualified for RWA’s prestigious Rita awards.

The task force modified or expanded some definitions but RWA’s fundamental position is unchanged.

Michelle Monkou, the organization’s president, announced its findings thus:”RWA will extend invitations to a wide pool of publishers. Invitees may only represent their non-subsidy/non-vanity publishing programs (imprints, divisions, or lines) at RWA’s conference. Space for spotlights, workshops, and booksignings will be allocated to lines, imprints, or divisions that best meet the requirements for ‘Qualifying Markets’. This new process of evaluation will likely increase opportunities for small presses and e-presses that previously have been excluded.

“The potentially broader array of publishing companies present at RWA’s national conference in no way signals a change in our mission or core values. RWA has no intent to tell publishers how to conduct their business, but as a professional writers’ association, RWA stands firmly against any attempts to directly solicit RWA members to pursue vanity/subsidy publishing or other author-financed forms of publication. Members can be assured that publishers and agents allowed to participate at our national conference will have met this criterion.”

It is notable that the name of the publisher that started the fracas was not specified in Ms. Monkou’s memo (you can refresh your memory here), but we hope that the underlying message is that the parties have reached an accommodation that will enable the Nashville conference to proceed without distraction.

Richard Curtis

Donna Hayes, Publisher and Chief Executive Officer, Harlequin Enterprises Ltd., has responded to Mystery Writers of America’s removal of Harlequin from MWA’s list of Approved Publishers.

“Harlequin takes its relationship with the Mystery Writers of America very seriously,” Hayes says. “In response to your letters, I would like to share our perspective on the changing book publishing industry and Harlequin’s recent moves to keep pace with and lead innovation in our market. It is our hope that sharing our point of view will demonstrate our respect for the MWA and explain our motivation behind the launch of Dellarte Press.”

Hayes then goes on to explain why publishers cannot and should not ignore the “mega trend” of self-publishing on today’s book landscape.

“Mega trends” affecting the industry include, but are not limited to, the questions raised by Google surrounding ownership of copyright, the rise of eBooks as a viable commercial format, and the swell of user-generated content throughout the Internet. Amazon’s growing influence in nearly all aspects of book publishing – from a book’s conception to its ultimate delivery in a reader’s mailbox – can be interpreted as a source of increasing pressure on traditional publishing models.

In the wake of these changes, self-publishing has emerged as a new force in the publishing industry, providing a forum for thousands of authors who would not secure a contract with traditional publishers. According to Bowker reports, 285,000 new titles and editions were self-published in the US last year, a number that exceeds the 275,000 titles published by traditional houses. Harlequin sees the rapid growth in self-published titles, up 132% since 2007, as validation that writers perceive self-publishing as a viable path to literary fulfillment. In recent weeks, Harlequin has heard from countless writers, either directly or via blogs, that self-publishing played an important, positive role in their writing careers.

You may read Hayes’s statement in full here.

RC