Fairer ebook royalties and contracts

Although it is now standard practice to include rights for digital formats in publishing agreements, industry standards for these formats are still evolving. This has made it difficult for authors to determine whether or not the terms they are offered are fair and reasonable. The ASA has analysed the various scenarios under which authors may be offered an agreement for digital formats, in order to develop recommendations so that authors may negotiate fairer contract terms.

Authors may be offered agreements for digital formats in the following instances:

  • They have previously published a print book, and the publisher is seeking to publish a digital version. In this case, the publisher will offer the author an addendum to their agreement.
  • They are being offered an agreement for print and digital editions of their book.
  • They are being offered a digital-only agreement for their book.

If a book is being published both in print and electronically (e.g. as an eBook), the ASA recommends the author receives as a minimum an amount of 35–50% of Net Receipts on each eBook sold, or 10% of the RRP of the Primary Australian Print Edition, whichever is the greater. This rate applies to new publishing agreements and addendums to existing agreements for print books.

For digital-only agreements, the ASA recommends a royalty of 50-85% of the List Price where electronic editions (such as eBooks) are sold by the publisher. If the publisher makes electronic editions available for sale through an agency or distributor, the ASA recommends that the author is paid 50% of the amount received by the publisher, provided that the royalty is not less than 35% of Net Receipts. The ASA’s Model E-Publishing Agreement Template provides further information about digital-only agreements.

Regardless of whether or not a print edition of a book has been previously published, the agreement should include an advance. Advances are important as they represent a “publishing discipline”. A publisher who has paid upfront has the incentive to: a) publish and b) publish well, if they are to recoup their investment.

Calculating an advance for a digital-only agreement can be difficult, but the author should try to estimate a figure based on half of the potential royalties. Or as a formula: 

            (list price x approx. number of sales x royalty rate) ÷ 2

If authors are self-publishing a new work or rights-reverted work, they’ll need to agree to the terms and conditions of the aggregator/s they’re using. It’s important to read the terms carefully, as these affect royalty payments.

There are many differences between print and eBook contracts, so authors should seek detailed information before their contract terms are settled.

Update

January 2016

The ASA has included a call for standard ebook royalties to be increased to a minimum of 50% of net receipts as part of its Ten principles of fair contracts initiative.

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