Industry & Advocacy News
May 27, 2016
When a reader buys an e-book, is it purchased or licensed? It’s an important question for authors because licenses are paid at a much higher rate than e-book sales, with authors generally receiving a 50% royalty for licenses, while e-books are generally paid at only 25%. It is the central question at issue in a class action claim filed on May 19 against Simon & Schuster, alleging that S&S has been underpaying authors for e-books.
The lawsuit states that e-books written by Sheldon Blau, MD and other similarly situated authors were not actually “sold” to readers, but rather distributed under “licenses.” By considering e-book transactions “sales” rather than “licenses,” the suit alleges, S&S has been underpaying its authors.
The complaint, however, may have named the wrong publisher. Blau, the named plaintiff in the case, originally published his book How to Get Out of the Hospital Alive with a Simon & Schuster division in 1998. But according to a Publishers Weekly report, the Simon & Schuster division that published Blau’s book was sold later in 1998, and never even published an electronic edition of How to Get Out of the Hospital Alive. The book is currently being published by Wiley.
Although the case seems unlikely to proceed against S&S, it can easily be filed naming the current e-book publisher. The underlying issue—whether an e-book transaction is a sale or a license—could have big implications for many older contracts. Most book contracts signed in recent years are unlikely to be affected, though, because now publishers’ contracts clearly identify an e-book transaction as a “sale,” often setting the royalty at 25% of the publisher’s net receipts (a rate we’ve denounced for making the author an unequal partner in the joint venture of publishing).
Photo credit: Kindle by John Blyberg licensed under CC 2.0