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Harlequin’s Response to Royalty Concerns & Contract Issues

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.

Response:

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.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

28 Comments

  1. Bob Mayer
    Jun 28, 2011 @ 11:11:37

    I already made the correction on my blog and apologize for passing on incorrect information.

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  2. Christine Rimmer
    Jun 28, 2011 @ 11:16:42

    Whew. I was really freaked over the non-compete news. Glad it’s not so! And Jane, you are the best, as always, to go right to the source and get some answers.

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  3. Linda Thomas-Sundstrom
    Jun 28, 2011 @ 11:30:00

    Jane. Thank you for posting this. It was very nice of you to get to the heart of the matter that concerns a lot of us who write for HQ. I appreciate your concern on our behalf.

    Happy reading.

    Linda

    ReplyReply

  4. Jackie Barbosa » Blog Archive » Caught in the Net that Is “Net”
    Jun 28, 2011 @ 11:39:03

    [...] an improvement. That said, Harlequin has responded via Angela James to some of these concerns on Dear Author this morning, and this analysis of how net is calculated supports the notion that the change is an increase, not [...]

  5. Emeline Danvers
    Jun 28, 2011 @ 15:09:00

    Thank you to Dear Author for asking these questions, and to Harlequin for answering them so clearly. I was concerned about these issues myself. The royalty rates are still well below what I’ve seen other digital publishers pay, but this is a change in the right direction.

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  6. Courtney
    Jun 28, 2011 @ 15:11:59

    Agent Kristen Nelson’s take on this today where she says it’s definitely better, but not equal to what other pubs offer:

    http://pubrants.blogspot.com/

    ReplyReply

  7. Janet Tronstad
    Jun 28, 2011 @ 15:38:55

    The problem with the response is that (a) Harlequin is using the wrong accounting term if that is what they mean,by net (b) most of the series ebooks don’t sell for $5 – in fact most of them sell for less than $4 on other sites like Amazon and B & N which means the most an author will get (best case senario) is 30 cents and it will often be less and, under the new prices coming this fall, a series author would earn 34 cents for all ebooks sold under the old royalty payment, and (c) the reason this hits series authors so hard is they are losing ground — in the old model they received 75% of what single title authors did and in the new model this is decreased to 60%. Since Harlequin is doing nothing different, this decrease is unwarranted and hard to accept,

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  8. Jackie Barbosa
    Jun 28, 2011 @ 15:59:46

    @Janet Tronstad: Harlequin is paid 50% of the cover price for their books by the distributor, regardless of the actual sales price of the book. This is because they don’t participate in the agency model of pricing, where the book is sold for the publisher’s specified price and the distributor gets a cut of 30%.

    In other words, net for Harlequin books is half the cover price, not half the sales price. Which means that whether the book actually sells for $4 or $5, the net to the publisher and therefore to the author is the same.

    ReplyReply

  9. sarah mayberry
    Jun 28, 2011 @ 16:28:23

    Thanks for this, Jane. There’s a lot of back and forth flying around right now. Nice to have a few points clarified. I always talk to my ed about any concerns I have, but everyone is off at RWA at the moment so it’s nice to get this info now.

    ReplyReply

  10. Courtney
    Jun 28, 2011 @ 17:36:08

    This may be an ignorant question, but if HQ’s rates are so low (compared with other publishers), why do so many authors sign with them? Is it because the authors are not represented by agents? Is it because HQ is the only publisher willing to publish their work?

    ReplyReply

  11. elaine mueller
    Jun 28, 2011 @ 17:41:16

    @Courtney:

    some people have been asking that question since at least 1994. my personal answer is unprintable.

    ReplyReply

  12. Jackie Barbosa
    Jun 28, 2011 @ 17:43:36

    @Courtney: Harlequin is the only publisher for series romances (typically 50k-60k in length) in lines like Presents, Desire, Superromance, etc. If you write that sort of romance and you want the distribution and exposure Harlequin can provide you, they are the only game in town. Because of those lines, Harlequin publishes on a monthly basis some ridiculous percentage of all romance titles released (over 50%, maybe)? And these series romances get guaranteed prime shelf space in the retailers that carry each line, because shelving is guaranteed to every title released that month, where in single title romance, only a select few will get primo real estate. Because of the “line” promise, moreover, many readers will buy a category romance from an unknown author because they trust it will be the kind of book they like.

    So, all in all, Harlequin has a lot to offer authors who write these kinds of books. The Presents line, in particular, sells very, very well. I believe in May, all six of the titles released in the US hit the USA Today list. For some authors, those kinds of odds might be worth the trade-off in royalty rates and other terms.

    P.S. Yes, you might be able to sell your category-targeted romance to a digital publisher or even self-publish it. But you won’t get the marketing push of the line or the shelf space.

    ReplyReply

  13. Courtney
    Jun 28, 2011 @ 17:52:28

    @Jackie Barbosa: Jackie, thanks very much for that response. That makes a lot of sense, particularly the marketing muscle that HQ has and can offer its authors for those types of books. As I said in a different post, I’m intrigued by Amazon’s foray into publishing simply because of their marketing exposure. As a debut author with a smaller publisher, the allure of a publisher who does substantial marketing is attractive (although I guess we’re all waiting to see Amazon’s marketing push for its own authors).

    ReplyReply

  14. sarah mayberry
    Jun 28, 2011 @ 18:11:44

    @courtney. To echo Jackie Barbosa’s comment, if I had written a single title book and submitted it to publishers, I would be competing for one of maybe 24 slots a year from, say, a big 6 publisher who is putting out 2 contemporary romances a month. Harlequin has 72 slots alone in the Superromance line per annum. Straight away my chances of being accepted increase enormously. If I am contracted with a line, my chances of having more than one book a year increase dramatically, too, which gives me the opportunity to build a following quickly with multiple releases. I am also receiving the benefit of a built-in readership – there are dedicated, loyal Superromance readers who will by all 6 books every month, just as they buy their milk and bread, because the line delivers on its promise. The down side of this is that it’s hard to be a big headliner in category, and yes, the royalties are 6% as compared to 8% – 10% for single title. But there’s a lot less risk of failure for me, and, as Harlequin said above, they have invested an enormous amount over years to build their line brands, and I am benefiting from that. Having said all of that… It would be great if that ebook royalty continues to increase! We will watch and wait.

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  15. Lilian Darcy
    Jun 28, 2011 @ 18:14:00

    @Courtney, to add to what Jackie said, Harlequin’s category/series romance also has a huge and automatic international market, with many authors having their work appear in twenty different languages, or more.

    ReplyReply

  16. Lorraine Nelson
    Jun 28, 2011 @ 21:50:27

    Harlequin also has a mail distribution list. If you are published by them, initial sales as a new author are guaranteed. Your books automatically get into the hands of readers by that means alone. Gotta love that scenario. It’s nice to see books on bookshelves and on the internet, but knowing a certain % go straight to readers is awesome. Hqn gets my vote on marketing and distribution for its authors and they still pay an advance for print books. For that, I’ll accept a lower royalty %.

    ReplyReply

  17. Wahoo Suze
    Jun 29, 2011 @ 00:07:30

    Harlequin marketing = win. Lots of big names, including Nora Roberts, Linda Howard, and Suzanne Brockmann became known (to me, anyway) through series romances, and when they leapt to single-title big-times, I followed them.

    Yes, I am old enough to have bought those three, new, when they were just starting out. My goodness.

    Writing category romances for Harlequin seems to be where a lot of really successful writers got the hang of writing (frex I don’t think Brockmann really hit her stride until Frisco’s Kid), and got enough exposure to develop a loyal following when they were ready to expand.

    ReplyReply

  18. Sandra Hyatt
    Jun 29, 2011 @ 00:20:58

    Thanks for putting the questions to Hqn Jane. It’s been good to get some info. Am learning as I go so it’s nice to get the different sides to the story.

    ReplyReply

  19. Nina Harrington
    Jun 29, 2011 @ 03:00:01

    Excellent reply – and exactly what I was going to say. For me, genre fiction is a business controlled by things – Branding and Distribution.
    Some people would actually say that the latter is the more important but put those two things together? That is precisely why I targeted Harlequin as my publisher. I want readers to enjoy my books. I am a reader and I know how bewildering it is to walk into a large bookshop trying to find a compelling and entertaining read.
    Harlequin gives me shelf space.
    Oh – and even more shelf space in 26 overseas markets in over one hundred languages.
    And yes I am a professional businesswoman who walked into category fiction with my eyes open.
    Thank you for raising this topic and the opportunity to dispel some very old and very silly prejudices which only serve to insult the terrific authors who write for Harlequin [ and many do have agents] and demean the readers who enjoy the books.
    Thanks. Nina x @Jackie Barbosa:

    ReplyReply

  20. Ros
    Jun 30, 2011 @ 03:49:25

    @Courtney, I think for me it’s the fact that all the category romance authors I know make good money on a regular, reliable basis. Most single title authors have a much more precarious income, unless they really hit the big time. That reliability is worth a slightly smaller percentage to me.

    ReplyReply

  21. Francine Howarth
    Jun 30, 2011 @ 04:19:02

    Hi, great post.

    Why would anyone go for a low royalty rate of less than 35% with a mainstream/e-book publisher when in reality they can get 70% for a self-pubbed book? The answer SNOB factor, and belief that if a mainstream publisher has picked up their book, in itself that confirms their work of a publishable standard. Plus, with Harlequin Mills & Boon paperbacks a book will grace a book shelf in Tesco and will for sure to make it to WHS and other book stores!

    But, what of authors published by mainstream publishers and have lost contracts due to editorial restructuring or that of mergers and conglomerate takeovers of smaller publishers. Are these authors now considered to be unpublishable? Of course not, mere circumstance of fickleness and greed of publishing has placed these authors out in the cold.

    Given the number of books published each month by publishers, books on book store shelves change frequently and no one mentions the returns policy (remaindered books),those that are returned to the publisher unsold: the ones that go in thousands to paper recycling plants when finally storage space is full to bursting. Every one of those remaindered books happens to be lost income to the author. Remaindered books are the dark secret of the publishing world, the one thing publishers do not like talking about, but it does impact on their finances and inevitable cutbacks!

    Ironically, electronic books can remain on bookshelves indefinitely. The downside, the newest/latest are in the limelight the rest somewhere in the archives and who bothers looking beyond ten web pages, unless someone has recommended a particular book?

    So really, when push comes to shove, a lot of indie authors are laughing and reaping 70% royalties. Lesser sales but better profit margins. With the right marketing some are coining it big time!

    I’ve been published before and fell out of publishing due to a serious riding accident, by the time I was ready to put pen to paper again my publisher had been taken over by a conglomerate. I’ve recetly signed a contract with a well-known romance publisher and, I’m self-pubbing a historical romance novella as well! I’m just curious and want to see how well my self-pubbed book will sell on my own marketing abilities, inclusive book trailer. Why not?

    best
    F

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  22. v
    Jul 01, 2011 @ 15:37:36

    Snob factor? Earnings are royalty times sales. If a self-publisher knows how to sell as many copies of their book as Harlequin will, more power to them. I certainly couldn’t.

    ReplyReply

  23. Janet Tronstad
    Jul 01, 2011 @ 18:15:38

    I totally agree, ‘V.’ I’ve had friends say ‘oh, you should self-publish and get all the profits instead of just a small royalty.’ I just shake my head. I’m a small fish in Harlequin’s big pond, but I make a whole lot more money with them than I would self-publishing. It allows me to support myself with my writing and not to need a day job. Most e-book folks I know consider it good if they sell a thousand copies of their book in six months. I run circles around them in terms of income. And would even if they sold ten times as many books.

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  24. RWA Roundup Post « Writer's Diary
    Jul 04, 2011 @ 13:22:09

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  26. Karen Knows Best » Are Harlequin All About Screwing Over Their Authors?
    Feb 06, 2012 @ 22:46:22

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  27. Doubts About a Diatribe – Playing the Devil’s Advocate for the Publishing Industry » jesshaines.com Blog
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  28. Claire
    Mar 31, 2013 @ 07:59:29

    Where can I find out about royalty/advance rates for Harlequin? I’m particularly interested in their Love Inspired range.

    ReplyReply

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