Although the members of a panel discussing possible changes to standard publishing contracts didn’t agree on all points, there was one idea that gained support from all four panelists on Wednesday morning—the possibility of eliminating different royalty rates for different formats in favor of a flat rate that would cover all book formats.
The panel, moderated by Authors Guild executive director Mary Rasenberger, came one year after the guild began its Fair Contract Initiative aimed at opening up discussions about how authors can become more like true partners with publishers.
Rasenberger noted that the most recent guild survey of author income found a decline in earnings in recent years, especially since the advent of e-books. Morgan Entrekin, president and publisher of Grove/Atlantic, said his authors receive more of the revenue pie than before, a fact reinforced by Hachette Book Group CEO Michael Pietsch who noted that HBG’s author costs have risen by 50% over the last 15 years, driven in large part by higher advances. Both publishers agreed that the authors who are having the most difficult time are midlist authors. Entrekin guestimated that “brand” authors probably have the leverage to get 60% or 70% of all revenue of their book sales.
The idea for the flat royalty came in a debate about whether the e-book royalty rate should move from the current 25% to 50% as advocated by the guild. Entrekin and Piestsch were against the idea and Pietsch pushed back against the contention that the 25% rate is unfair. He noted that while the guild likes to compare the 25% e-book royalty rate to the roughly 30% rate for hardcovers, the e-book rate is much higher than the royalty rate paid on trade paperbacks and mass market paperbacks.
Pietsch said he would be happy to talk to authors about a flat rate across all formats that would cover the lifetime of a book. Entrekin said he is always doing a variety of deals, including a flat royalty rate as well as profit sharing. “I am open to anything at any time,” Entrekin said, adding that being flexible on contracts is one advantage he has over his larger competitors.
Jonathan Lyons, a literary agent and lawyer, said he too would be interested to talk about a flat royalty rate or profit sharing with publishers.
One point of contention between the two publishers and Guild was over the length of contracts and the reversion clause. Entrekin said between one-third to one-half of the books he publishes lose money and that he needs to be able to depend on revenue from long-time sellers to balance his books.
Pietsch also said HBG loses money on many of its books and that a clause that forces publishers to renegotiate with authors of good sellers after seven to 10 years would put the entire financial dynamic of publishing in question. He said he is willing to discuss a renegotiation with successful authors, but is opposed to being forced to open up discussions by a contract clause that could put the book up for competitive bidding.
Pietsch and Entrekin also said they are willing to talk to authors who are looking to get their rights back on a case by case basis. Entrekin said publishers “don’t want to sit on things” that aren’t selling. Lyons said that at a minimum, authors should be able to get rights back to an area that publishers are not interested in exploring any more, such as translation rights.
The session ended with Rasenberger noting that since the guild released the 11 points in its Fair Contract Initiative earlier this year, it has begun talking to publishers about altering the standard contract. “We have got push back from some, cooperation from others. We know this will be a long process.”