Macmillan & Amazon make up lost royalties from agency spat; Macmillan raises e-book royalty rates across board

It’s right around the one year anniversary of the week that Amazon removed Macmillan books’ buy buttons in its snit-fit over the implementation of agency pricing, resulting in a lot of authors losing a week’s worth of royalties. And just in time to mark the anniversary, an interesting tidbit of information pops up on eReads.

Richard Curtis reports that in a cover letter attached to the latest Macmillan semi-annual royalty statements authors have received, Macmillan CEO John Sargent makes note of an interesting adjustment to author royalties. Feeling that authors shouldn’t have to suffer on account of a battle between Macmillan and Amazon, the publisher decided to estimate the amount of royalties authors would have earned during that week if Amazon hadn’t pulled the buy button, and add that into the statement—and Amazon “graciously” agreed to pay half. No hard feelings, eh?

But perhaps more interesting is the other tidbit in the letter, which Curtis doesn’t even deign to mention specifically. Sargent writes that since the publishing industry standard for electronic book royalty rates has settled on 25% of net receipts, and Macmillan is using that rate for all its new e-book contracts, the publisher has decided to adjust all its contracts’ e-book royalty rates upward to that amount going forward and retroactively to May 1, 2010. Thus, authors receiving the old rates (an escalating scale of 10%/12.5%/15% based on list price) received a nice little Groundhog’s Day present: six months’ worth of doubled (on average) e-book royalties, plus double e-book royalties into the future.

Even as I continue to find agency pricing obnoxious and anticompetitive (yes, John, “the consumer does in fact place a value higher than $9.99 on first release electronic books” if he is forced to), I have to say that these kinds of steps forward in channeling more money to authors are very laudable changes, and their effect will only grow as the e-book market itself grows over time. By reducing the publisher’s take to only 45% of list price of the book, it puts money that might otherwise have gone to printing and binding costs in the author’s pocket instead.

(Found via the E-Book Community mailing list.)

Update: Apparently I didn’t read the article closely enough. I was confused by the old rate being based on list price and the new one being based on net receipts. So it’s actually 25% of 70%, which works out to 17.5% of list. Still an increase over what they had been getting, but not as big of one as it looked.

About Chris Meadows (4149 Articles)
TeleRead Editor Chris Meadows has been writing for us--except for a brief interruption--since 2006. Son of two librarians, he has worked on a third-party help line for Best Buy and holds degrees in computer science and communications. He clearly personifies TeleRead's motto: "For geeks who love books--and book-lovers who love gadgets." Chris lives in Indianapolis and is active in the gamer community.

2 Comments on Macmillan & Amazon make up lost royalties from agency spat; Macmillan raises e-book royalty rates across board

  1. The real question is whether the increase in royalties actually managed to balance out the decrease in unit sales since they changed to agency pricing. If not, the authors haven’t really benefited. Too bad the publishing industry is just like the other media industries and couldn’t give an honest answer about money if their lives depended on it.

  2. @Mark, are you sure they’ve seen a decrease? I’ve read things sales have stopped growing as fast as they had been, but last I’d read there was still an overall increase likely due to all the new readers entering the market.

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