Authors Guild Warns on S&S e-Book Royalty Proposal

Simon & Schuster out to take money out of the pockets of their writers again.

The Authors Guild has sent out an advisory to its members suggesting that they carefully review a letter from Simon & Schuster that looks to add an amendment to their contracts that will set the standard royalty for e-books at 15% of the catalog retail price for e-books. The Authors Guild alert makes three points about the proposal: members should discuss the amendment with their attorney or agent; warns that, depending on a member’s particular contract with S&S, the amendment may grant S&S rights that otherwise would be retained by the author; and notes that members should be aware that the amendment may affect their ability to obtain a reversion of rights.

The alert further advises that members should “keep your powder dry,” when negotiating e-book royalty rates, suggesting that members try to retain the right to renegotiate e-book royalties. “The Authors Guild expects that the 15% of the retail list price will be the low-water mark for e-book royalties,” the Guild speculated. “As the e-book market develops, authors with clout will doubtlessly insist on a more reasonable share of e-book revenues, and the industry will have to adapt.”

S&S spokesperson Adam Rothberg said the amendment was sent to a "long list" of authors whose books have not yet been adapted to e-books, with most of the letters going directly to agents. He said the overall goal is to sell more e-books in a rapidly growing market, "and we want to work with our agents and author friends to do that." But that in order to move forward, S&S believes it is important to determine what the royalty rate should be, Rothberg added. Noting that it is still "early days" in the e-book industry, Rothberg said S&S remains willing to talk to authors and agents about any questions they have about the e-book market.

This is the second time the Guild has challenged a proposed change in contract language by S&S. Last year, the organization protested the publisher’s plan to alter the conditions for when authors could get back their rights. The two sides eventually worked out a compromise.

by Jim Milliot w/ PW 07/18/08

07/20/08
12:40 am

Authors Guild Looking at Antitrust Issue of Amazon’s POD Plan

By Jim Milliot -- Publishers Weekly, 4/6/2008 10:03:00 AM

Saying it is reviewing the antitrust and other legal implications of Amazon’s “bold move,” the Authors Guild sent an e-mail late Friday to its membership questioning the motives—and implications—of the e-tailer’s new position on print-on-demand that makes publishers use its BookSurge division if they want the sell their titles on Amazon in the traditional manner. While Amazon is pitching the move as a consumer-friendly change that will improve the speed of shipping books and other products, the Guild says it suspects the motivation has more to do with profit margin than customer service.

If Amazon is successful in wresting a large chunk of pod business away from current leader Lightning Source (which the Guild says does a good job), they will have taken a huge step in controlling publishing’s supply change and thus control much of the industry’s long tail business, the Guild said. “Once Amazon owns the supply chain, it has effective control of much of the "long tail" of publishing,” the statement reads. “Since Amazon has a firm grip on the retailing of these books (it's uneconomic for physical book stores to stock many of these titles), owning the supply chain would allow it to easily increase its profit margins on these books: it need only insist on buying at a deeper discount -- or it can choose to charge more for its printing of the books -- to increase its profits. Most publishers could do little but grumble and comply.”

If Amazon does impose deeper discounts, the big losers, other than Lightning, will be authors, since many are paid for on-demand sales based on the publisher’s gross revenues, as well as publishers, the Guild says.

The statement closes by inviting anyone who has information that could help the Guild investigate the matter to contact it by phone at 212-563-5904 or through its site, authorsguild.org.