I asked Harlequin about a couple of things regarding the new royalty rate as well as whether Bob Mayer’s claims that Harlequin was inserting a non compete clause in its new contracts to prevent authors from self publishing. Here is their response (from Donna Hayes, CEO of Harlequin)
Concern: These new rates aren’t actually better than what we were already earning — maybe worse.
Series: on a $5 book, a series author receiving 6% of cover would earn royalty of 30 cents per copy; at 15% of net receipts, she’ll earn 37.5 cents per copy ($5 x 50% discount to distributor = net receipts of $2.50. 15% of $2.50 is 37.5 cents).
Single Titles: on an $8 book, a single title author receiving 10% of cover would earn royalty of 80 cents per copy; at 25% of net receipts, she’ll earn $1.00 per copy ($8 x 50% discount to distributor = net receipts of $4.00. 25% of $4.00 is $1.00).
The net receipts calculation is transparent and we are comfortable moving to a net receipts model for digital sales.
Concern: Some authors are included and others are not.
Response: We had to select an effective date for the new rates to be implemented. Some programming work will need to be done for Harlequin to move to this new net receipts royalty model. We chose Jan 1, 2012 as the effective date. So authors who are active Harlequin authors at that time, will receive the revised digital rates. And the new digital rates will apply to front and backlist units sold as of Jan 1, 2012.
Concern: If a Harlequin author leaves Harlequin after Jan 1, 2012 , the digital royalty rates will be reversed or reduced to what they previously were.
Response: No. Obviously we hope that authors will continue to publish with us, but if they stop publishing with us they will continue to received these new digital rates when we sell their digital copies.
Concern: Series royalty of 15% of nr is less than the single title royalty of 25% of nr.
Response: The series royalty is less than the single title royalty because the Harlequin brand is an important purchase trigger for readers. We invest heavily in the Harlequin brand and the brand is a key influence in the purchase of series books. In single title fiction, the author becomes the brand and sells the book and in nonfiction, the author platform and subject matter sell the book.
The difference between series and single titles exists in the print cover price model of royalties as well.
Concern: Harlequin is asking authors to agree to a self publishing non-compete clause.
Response: No, Harlequin has not asked for this or included it in contract negotiations.
The changes we have announced provide all current authors with higher royalty income than we are contractually obliged to provide. If Harlequin authors want clarification on these points or any others, we encourage them to contact their editor to discuss them.