The public may now be developing a love affair with e-books, but they may have lost their romance for some of Harlequin’s authors. Three such authors are suing Harlequin over a matter of miscalculated e-book royalties.
Barbara Keiler, Mona Kay Thomas and Linda Barrett allege (PDF) that Harlequin used a tax-purposes subsidiary, Harlequin Swiss, to cheat them out of e-book royalties between 1994 by basing their “50% of receipts” rate on the money Swiss received from Harlequin, rather than the money Harlequin received from selling the books. Authors thus ended up getting between 24 and 32 cents per copy, rather than the $2 they should by rights have received.
Harlequin has claimed (PDF) that, since e-books were such a niche market before 2005, low royalties were not unreasonable—since nobody even knew if e-books were ever going to take off, they hadn’t bothered to come up with specific royalty terms for them, and lumped them under a low-paying “All Other Rights” provision. Now that e-books are a big deal, of course, they’re paying more.
The plaintiffs in the suit don’t seem to find this argument terribly reasonable. They are seeking a jury trial and class-action status on behalf of all qualifying authors who signed contracts with Harlequin between 1990 and 2004. Harlequin states it will defend itself vigorously.
I don’t know how much money e-book royalties prior to 2005 account for, but no matter how much or little, the principle of making sure authors get all the money that’s coming to them seems like an important one to see honored.