Harlequin Authors Sue Publisher Over Creative Royalty Calculations
from the I-get-how-much? dept
Creative accounting from legacy players is nothing new. We have seen many repeated examples of ways in which legacy publishers, labels and producers try to limit the amount of money they pay out to the artists they depend on for their incomes. We have the fact that Return of the Jedi, despite being the 15th highest grossing film of all time, is still not profitable. There is also the crumple zone inducing idea from the major labels that digital sales are licenses except when they are not. So would it be a surprise that we would find a similar situation within the legacy publishing industry?Enter Harlequin, publisher of fine romance novels. Harlequin has been accused, according to a class action lawsuit, of using some very creative accounting to reduce the ebook royalty rates paid to authors from 50% of the net receipts to a paltry 3-4% rate:
This lawsuit results from Defendant Harlequin Enterprises Limited, the world’s leading publisher of romance fiction, depriving Plaintiffs and the other authors in the class, of e-book royalties due to them under publishing agreements entered into between 1990 and 2004. Harlequin required the authors to enter into those agreements with a Swiss entity that it created for tax purposes, and that it dominates and controls. However, Harlequin, before and after the signing of these agreements, performed all the publishing functions related to the agreements, including exercising, selling, licensing, or sublicensing the e-book rights granted by the authors. Instead of paying the authors a royalty of 50% of its net receipts as required by the agreements, an intercompany license was created by Harlequin with its Swiss entity resulting in authors receiving 3% to 4% of the e-books' cover price as their 50% share instead of 50% of Harlequin Enterprises' receipts.Basically, these authors are just not happy with these reduced royalty rates. The authors claim that Harlequin Switzerland was set up for no other purpose but to syphon out as much money as possible before calculating any royalties for the authors. Hardly something that any publisher should do if they actually care about their business.
What this means to the authors can be illustrated by an e-book with a hypothetical cover price of $8.00. The “net receipts” made by Harlequin Enterprises Limited from the exercise, sale or license of e-book rights would be at least $4.00, of which authors would be entitled to $2.00 based on their 50% royalty. Computing the “net receipts” based on the “license” between Harlequin's Swiss entity and Harlequin Enterprises, Plaintiffs’ 50% royalty amounts to only 24 to 32 cents.
There was once a time where such a tactic would not have reached the point of a lawsuit. There was a time when publishers actually had a strangle hold on publishing and could force any terms they could conceivably get away with. However, with the introduction and proliferation of self publishing, that stranglehold is weakening. As authors are looking at the deals they are getting from publishers vs the deals self published authors are getting from the likes of Amazon and even Apple, they are beginning to lash out.
Of course, if Harlequin were smart about this, meaning it realizes the mistake of using such accounting methods, it would seek a quick settlement that results in the authors getting paid their proper royalties. If for some reason, as many publishers claim, it cannot afford to pay authors the true 50% then it will see a quick decline of new authors and a drop off of existing authors. Then, it will fail.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Reader Comments
Subscribe: RSS
View by: Time | Thread
Cannot help myself..sorry XD
[ link to this | view in thread ]
[ link to this | view in thread ]
Thanks for defending the artist for a change
(1) screwing over the artist is impossible to stop whether it's done by piracy or accounting so why bother trying to stop it;
(2) creators should just chill out whenever anyone wants to make a copy of their work without paying them;
(3) suing anyone is wrong, wrong and wrong again;
(4) trying to stop this will break the distribution mechanism whether it be the Internet or the publishing network
It's nice to see some sympathy for law suits to enforce copyright and the fact that artists don't need to take it when either Big Search or Big Publishing is pushing them around.
Alas, my guess is that you're only doing this because of the old enemy-of-my-enemy-is-my-friend rule. The publishers are annoying to Big Search and therefore they must be bad. Anything that hurts an enemy of Big Search, Big Hardware or Big Piracy.
Once this suit if finished, I'm guessing you'll go back to arguing that pirating Harlequin romance is cool -- unless you're in the accounting department at Harlequin. Sigh.
[ link to this | view in thread ]
Re: Cannot help myself..sorry XD
(No, seriously, don't look that up.)
[ link to this | view in thread ]
Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Thanks for defending the artist for a change
Go Big or go home.
[ link to this | view in thread ]
Re: Re: Thanks for defending the artist for a change
http://www.techdirt.com/articles/20100712/23482610186.shtml
And this one for Movie Studios:
http://www.techdirt.com/articles/20100708/02510310122.shtml
And now we have book publishers. As it turns out, they're all crooks.
[ link to this | view in thread ]
Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
[ link to this | view in thread ]
Re:
[ link to this | view in thread ]
Re: Thanks for defending the artist for a change
I don't know Zachary well enough at all to know if he espouses this, but that is a thing I will readily say, because it is going to happen whether they accept it or not. The only reasonable thing to do about it is chill out.
6/10. you got me to reply.
[ link to this | view in thread ]
Re: Re: Cannot help myself..sorry XD
[ link to this | view in thread ]
Re: Re: Thanks for defending the artist for a change
TechDirt has a tortured relationship with content creators. Mike claims to love them the same way that he claims to support copyright. It's just if the content creators ever do anything to threaten the revenue stream of his favorite gatekeepers-- Big Search, Big Hardware and Big Piracy-- he takes the side of the billionaires.
Really. TechDirt loves gatekeepers as long as they're not sharing any money with the content creators. The creators are supposed to be cool and not sue anyone. Or as someone in Texas said, "If you're going to be raped, you might as well lie back and enjoy it."
It's great to see them understand that sometimes lawsuits are necessary.
[ link to this | view in thread ]
Re: Thanks for defending the artist for a change
"(1) screwing over the artist is impossible to stop whether it's done by piracy or accounting so why bother trying to stop it;"
Not once has that been stated on this site. What has been stated is that piracy will occur, no matter what. Dealing with it then means beating it, not through ridiculous and broad laws, but by offering something better. Basically, make your product (whatever it is) better than the free version. However, if you don't feel like putting out something better and do want to go the legislative route, do so but do so in an intelligent manner and with actual facts and evidence to support you.
"(2) creators should just chill out whenever anyone wants to make a copy of their work without paying them;"
This has never been stated on this site. What has been said is that sometimes overreacting in certain manners does more harm than good. And, in point of fact, more and more creators every day are supporting some of those methods used to share their works. Not necessarily saying, "Hey, copy my stuff." But making use of technological innovations that allow them to do things, which sometimes also allow others to copy their works.
"(3) suing anyone is wrong, wrong and wrong again;"
Not even remotely close to accurate. What has been said is suing for stupid reasons is wrong. Apple suing others for making their tablets rectangular is stupid. Suing others for creating something you hold a patent to, but don't actually make is stupid. (Patent trolls.)
"(4) trying to stop this will break the distribution mechanism whether it be the Internet or the publishing network"
No, again, you are wrong. There is nothing wrong with trying to stop piracy, as long as it's done in an intelligent and reasonable manner. Overly broad laws ala SOPA are bad and have the capacity to be abused (and will be abused, the DMCA which was asked for and supported by idiots like you is now being routinely abused, and they are now crying that the thing they asked for isn't enough and requires work).
"Alas, my guess is that you're only doing this because of the old enemy-of-my-enemy-is-my-friend rule. The publishers are annoying to Big Search and therefore they must be bad. Anything that hurts an enemy of Big Search, Big Hardware or Big Piracy."
Jesus christ, bob. Do you stop and listen to yourself? The world is not at the center of some Google orchestrated conspiracy. Just say the goddamn word. GOOGLE! GOOGLE! GOOGLE! Stop saying "Big Search". You're new name is "Big Idiot". Because that's what you are acting like every time you pull Big Search out of nowhere, especially when you do so in articles that have nothing to do with Google.
[ link to this | view in thread ]
Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Thanks for defending the artist for a change
This case has nothing to do with copyright. It is a contract dispute regarding how the publisher is calculating it's payments to it's authors.
[ link to this | view in thread ]
Re: Re: Re: Re: Thanks for defending the artist for a change
The same goes for all of the USENET sites that charge for downloads. All of the sites try to give a tiny, useless amount of services away for free and then they charge for everything else. That's Big Piracy and boy is Kim Dotcom Big.
[ link to this | view in thread ]
Re: Re: Thanks for defending the artist for a change
And so now that you play the old generic game of saying that you're okay with fighting piracy, why don't you give me a concrete example of what's okay. Is it okay to sue Kim Dotcom-like "innovators"? Is it okay to sue that punk down the street who has three terabytes of content that he's never bought? Or should the punk actually be put in jail?
[ link to this | view in thread ]
Re: Re: Re: Re: Thanks for defending the artist for a change
And the museum was probably paid for with taxes which were never free either.
[ link to this | view in thread ]
Re: Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Re: Thanks for defending the artist for a change
If we use your definition, lots of piracy isn't a copyright issue at all, it's merely a violation of a shrinkwrap license dispute.
[ link to this | view in thread ]
Fabio needs Hair Mousse
Put a short, fat, older guy like me on the book covers and your overhead costs will evaporate....of course so will your sales!
[ link to this | view in thread ]
[ link to this | view in thread ]
[ link to this | view in thread ]
Re: Re: Re: Cannot help myself..sorry XD
[ link to this | view in thread ]
Re: Thanks for defending the artist for a change
So no doubt you'd be surprised if you actually read about what Mike believes
[ link to this | view in thread ]
Re:
Have you met bob by any chance?
[ link to this | view in thread ]
Re: Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Re:
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
Hey bOB! Welcome back! Please GFY, STFU, DIAF, FOAD and any other acronym you'd care to shove up your vile rapist asshole!
Your hateful comments are hereby tl:dr and auto-report from now on.
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
The punk down the street with three terabyte of copied copyrighted material is most likely protected by the scale clause unless he can be proven to sell it. It was done to prevent the 1000's of cases against private citizens and the horrible precedence of no defence of the pirate and therefore a completely retarded battle from the prosecuter to claim more and more absurd precedence of how to presume a pirate to have worked. At year 2000 it was assumed that if you ever had access to any way of replicating media, like on a library with a cd-burner, you would end up using it 8 hours a day to make illegal copies. At the same time you would be assumed to share it through pvp at obscene amounts. Was that the good times?
Where I live, fines can be turned into sentences and though fines and damages are different things it can be used to gauge proportionality. A single copyrighted song was worth at least 30 days in prison if you used the highest exchange rate in 2000. Given the linearity of exchange from fine to prison, posessing 100 illegally downloaded songs would be at least 7˝ years in prison, which is up there with murder 1... Talk about disproportionality...
With the DMCA and EU equivalent, we saw a turn towards reason and no prosecution of single persons, but instead the men behind the illegal networks. Hit the thief, not the fencer...
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
And we don't give examples because there aare no known good ways of doing it.
Hell everything solution that's been thought up by the content industry could be listed in an article titled: "top ten solutions that are worse than the problem they intend to solve" and the solutions to piracy would fill all the slots.
[ link to this | view in thread ]
Re: Re: Re:
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Cannot help myself..sorry XD
But I dont know what it is.
Anyways.. Harley Quinn is named as such because its a "clever" pun on the word harlequin which is as old as dirt itself. You can look up the definition of harlequin yourself. You will find it fitting to the character Harley Quinn on many levels.
[ link to this | view in thread ]
[ link to this | view in thread ]
Re: Re: Re: Re: Thanks for defending the artist for a change
1) He is, but is taking in VERY slow strides
or (where my money is)
2) Not a damn thing.
[ link to this | view in thread ]
Book publishing math
Self publish on Amazon/iTunes, etc: get $.70 on a $1 sale, probably selling more copies as well.
You know what. Schumer is right: publishers are doomed.
[ link to this | view in thread ]
Re: Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Re: Re: Re: Thanks for defending the artist for a change
Click. The sound of RD's mind closing because you offer non-koolaid solutions to life.
How are your meds, BTW?
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
There, that's bob's thought processes in a nutshell. He can't be weaned off the idea that authors' issues are always copyright issues.
Hell, you could even have a case where an author was sexually harassed by her publisher, sued them and won, and if Techdirt reported that, bob would pop by and say, "That's right; thanks for supporting artists. The success of this case wouldn't have happened if copyright didn't exist; if copyright didn't exist that woman would have been raped for sure. If you're against sexual harassment, you're for supporting greater copyright enforcement."
Yeah, my brain hurts after typing that. It takes some special kind of scum to be bob. Or maybe an amoeba. Anything that's single-celled and doesn't have the capacity for a brain.
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
Bullshit.
http://www.techdirt.com/articles/20091115/1833556944.shtml
http://www.techdirt. com/articles/20100201/0223487985.shtml
http://www.techdirt.com/blog/casestudies/articles/20111227/0 3144517198/cee-lo-green-making-millions-even-if-his-albums-dont-sell.shtml
It's got nothing to do with tweaking major companies. I want those companies to stop fucking up their own business opportunities and help people make more money.
http://www.techdirt.com/articles/20070201/004218/why-i-hope-riaa-succeeds.shtml
Oh, the truth. It burns.
[ link to this | view in thread ]
Re: Re: Re: Re: Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Cannot help myself..sorry XD
[ link to this | view in thread ]
Re: Re: Re: Re: Re: Thanks for defending the artist for a change
I used it. I got ROMs from there (which are sadly no longer available).
Megaupload DID NOT slow down "the feeds" until you sucked it up and paid. You could download as much as you wanted (of course the limitation was only one file at a time) with a usual speed of around 300 kb/s (which, fyi, isn't that slow).
You weren't forced to pay if you didn't want to and the speeds weren't bad at all.
YOU ARE A FOOL.
Oh and the comment demolishing yours below is also mine. I hate writing from my phone it always just puts Anonymous Coward (and never lets me see all of what I write at times, but I guess that's what I get for using experimental or Alpha ROMs).
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Re: Re: Re: Re: Re: Thanks for defending the artist for a change
[ link to this | view in thread ]
Re: Re: Re: Re:
[ link to this | view in thread ]
Re: Re: Re: Thanks for defending the artist for a change
So what you're saying is my correcting you and pointing out how wrong you are you refuse to acknowledge, that correct?
Because no one here has ever said anything even remotely resembling what you accused them of saying. Just because you're too whatever and interpret things differently doesn't change what was said.
"And so now that you play the old generic game of saying that you're okay with fighting piracy, why don't you give me a concrete example of what's okay. Is it okay to sue Kim Dotcom-like "innovators"? Is it okay to sue that punk down the street who has three terabytes of content that he's never bought? Or should the punk actually be put in jail?"
bob, I told you one example up above. Others have given other examples. The best way to fight piracy, and I'm not going to give more examples after this one, is GIVE THE PEOPLE WHAT THEY WANT! Digital content, DRM-free, available in a plethora of formats, with no windowed releases, at reasonable prices (NOT FREE) in one centralized place (no signing up for 50 services). That's it. That alone can combat piracy and do so effectively. Any other examples you want see me previous comment, stop with the stupidity that doesn't work to solve the problem.
It's not okay to sue Kim Dotcom-like innovators. People are innovating. You may not like what they're innovating or you may even feel threatened by it, but if they're doing nothing illegal (and thus far the case against Kim Dotcom is going horribly and failing in every single way) then you can't sue them just because.
It is okay to sue that "punk" down the street who has three terabytes of content. Assuming of course you can prove all that content was illegally downloaded and have proof and evidence to convict him or win said suit in a court of law. But try and sue for reasonable amounts. Not for what an item cost if purchased legally, but going for the full $150,000 isn't going to endear you to anyone or make you many friends. If they can't make that much in several years of work, there's no point in going for the full "win".
And no, the "punk" shouldn't go to jail. Unless said person is committing COMMERCIAL copyright infringement. But even then, I say no. We barely have any space in the U.S. prison system as it is. You want to fill it even more? With people who downloaded a movie or a song? Your priorities are out of whack.
[ link to this | view in thread ]
Re: Re:
Should make it easier to seperate us ;)
[ link to this | view in thread ]
Re: Re: Re:
[ link to this | view in thread ]
Re: Re: Re: Re:
[ link to this | view in thread ]