Harlequin E-book Royalty Settlement

Discussions of fair royalty rates for e-books abound in book world, with different ideas of what is fair coming from authors and publishers. So I thought the Harlequin e-book royalty settlement that Publishers Weekly wrote about two weeks ago is pretty important for authors seeking a traditional publishing contract.

Back in 2012, a group of authors brought a suit against Harlequin for not paying enough in royalties on e-book sales. The problem stemmed from a clause in contracts that referred to the licensing of books and the amount that authors would receive under such licenses. Additionally, the issue involved which entity was, legally, the publisher under the terms of the contract. Without getting into all the nitty gritty on the suit, the dispute was whether authors were to receive 50% of the income which was calculated as 6-8% under one entity as publisher (which is how they were paid) or, if as the authors alleged, they should have received 50% of income calculated as 50% under a different entity as publisher.

The original suit was dismissed in 2013 but upon appeal several of the claims were reinstated in 2014 leading to mediation. An agreement was reached in early 2016 and the final settlement was approved last month and will pay the authors in the suit around $3 million.

The clause in the contract has long since been changed, of course, but it is still important to recognize that in all contracts there are clauses that can be interpreted different ways. It is up to authors to be sure that their interpretation of a clause in their contract is the same as the publisher’s interpretation.

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