Macmillan's Revised Contract Lowers Digital Royalties, Raises Direct to Consumer

-- Publishers Weekly, 10/28/2009 11:20:00 AM

In a letter sent to agents Monday, Macmillan CEO John Sargent outlined plans for the company to begin using a standardized contract for all of the company’s imprints beginning November 9. The goal, said Sargent, is to make a it easier and more efficient to reach a deal as well as to make sure “our author agreements reflect current business realities.”

To that end, the new contracts make changes in royalties paid on digital content sales as well as on books sold directly to consumers. Regarding digital content, Sargent writes that Macmillan’s intends to acquire both print and digital rights in all book acquisitions. Sargent also said that with changes in digital distribution occurring so rapidly the company has decided to pay a single royalty rate on the sale of digital content which will be paid based on the amount received by Macmillan. Although there is no amount in the letter, Richard Curtis says in his e-reads blog that Macmillan will pay 20% of net receipts, lower than the 25% paid by most of the other major houses. Authors Guild executive director Paul Aiken told the New York Times he believes lowering the payment for e-book sales was a pre-emptive strike by publishers as they wait for Amazon and Barnes & Noble to push for lower wholesale prices on e-books.

The royalty rate is being increased on sales made directly to consumers; according to Curtis the rate is increasing from 5% to 10% for the first 10,000 copies sold and 15% thereafter. Curtis speculated that Macmillan could be doing this as it prepares to move more aggressively in the direct to consumer market. Sargent had no comment on Curtis's view.