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New guidance on ebooks published in the latest issue of The Author

Ebooks and authors’ rewards

Members will be aware that sales of ebooks in the UK are said to be increasing rapidly, although they still account for only a small proportion of publishers’ turnover. The launch of Amazon’s Kindle, already the dominant ebook reader in the USA, is expected to expand the market considerably. Experts predict that sales of digital products are going to rise fast, but forecasts of where the market will be in a year’s time, let alone 10, vary hugely.  

The major publishers have invested heavily in establishing their digital infrastructure and ebook lists. Conscious of their large write-offs, they have been negotiating very firmly with authors and their agents over ebook royalties. At present trade publishers tend to insist on royalties between 15 and 25% of their receipts (not the retail price). Authors writing for academic, educational and specialist non-fiction publishers will find that they are frequently stuck with even less.

It is perhaps revealing that no publishers have yet explained in any convincing detail how they arrive at fair ebook royalties. Yet authors are being invited to sign contracts which last for the duration of copyright (the author’s life plus 70 years). We are very uneasy about members being obliged to accept, so early in the development of ebooks, fixed royalty rates that could apply for many years.

In our view publishers need to explain to authors and agents far more persuasively the economics of publishing ebooks and to justify much more precisely why they consider that authors should not receive a substantially higher proportion of their receipts. Meanwhile, we make the following proposals to agents, bestsellers and other authors who are in a strong bargaining position:

1. Consider granting publishers a licence for 10 or 20 years, rather than for the full duration of copyright;

2. Limit any grant of ebook rights to the verbatim text.  Wider electronic rights (e.g. for enhanced ebooks) should be negotiated separately and only if there is a definite intention to exploit the rights.

3. Royalties on ebooks should be much higher than they are. Until the economics and scale of the market become clearer, we consider that publishers should share ebook income equally with their authors.  In any event we particularly encourage authors to try to negotiate steep increases to their royalties at agreed sales thresholds (as publishers recoup their set up costs).  When a book has become well-established, it may be reasonable for the author’s share to rise to as much as 75%. On other forms of electronic access – e.g. rental and pay-per-view – authors should receive at least 50%, preferably nearer 85%, of the publisher’s receipts.

In suggesting these royalties we have taken into account that:

(a) publishers need to cover their overheads and make a profit; but

(b) the direct costs of originating, producing and keeping an ebook ‘in print’ are low (e.g. no printing costs); and

(c) the cost of making an ebook available through a third party distributor such as Amazon is minimal. Publishers’ warehousing and distribution costs are eliminated, as are losses from dealing with returns and unsold stock.

4. Authors should have the right to initiate a review of ebook royalty rates every 2 years and have the right to insist that royalties be increased to match those then prevailing in the trade.

5. When enhanced ebooks are developed, authors should have the right to approve – and be involved in – adaptations, abridgements, and dramatizations, as well as decisions on musical, interactive or other embellishments.

6. Contracts must allow authors to regain rights, if they so choose, once sales have all but ceased. When the work is POD and / or ebook only authors should be able to terminate their publishing contract on one month’s notice if sales in the home market in traditional and/or electronic form fall below an agreed level (or if the author’s income falls below an agreed amount) over 12 months, once the advance has been earned or more than, say, three years have passed since publication, whichever is the sooner.

You are reminded that members are welcome to seek advice from the Society when negotiating their contracts. General guidance is given in our Guide to Publishing Contracts, which can be found in the members’ section of our website or sent to members free of charge on request.