Analog contracts in a digital world

College level textbooks and their publishers have been in the news a lot lately, with all of the major higher education publishers emphasizing a shift to a digital first market strategy. The vast majority of publishing agreements for established textbooks were written in a world where print books were the dominating market offering. As the world shifts, there are certain contractual provisions to be mindful of when evaluating one’s royalty statements and in negotiations over amendments.

In reality, print sales still dominate, but publishers are trying to move away from the model, and the future of higher education materials is uncertain.

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Will Cengage’s rising tide lift all boats?

Subscription models for reading materials are not unheard of in other industries, but they are a new model emerging within the higher education publishing industry. Late last year, Cengage announced Cengage Unlimited, a subscription based model offering access to its entire catalog of textbooks and related learning materials to college students for a flat price of $119.95 per semester calls Cengage Unlimited.Royalty structures under these models vary. Newer contracts provide broad leeway for publishers to allocate royalties on in a way they deem reasonable.

While boon to students, especially those assigned multiple Cengage texts, it has left Cengage authors wondering about the impact to their royalty earnings.

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5 Things to consider when negotiating your textbook contract audit clause

One of the most important provisions in your textbook publishing contract is the audit clause, which will specify the conditions for how and when you can request and conduct an audit. In the absence of an audit clause, some publishers will still comply with a request to audit, although they are not contractually required to do so.

While the large publishers have calculated and paid royalties to thousands of authors, contract terms can vary, automated royalty systems have limitations, and the accounting teams at publishers are made up of human beings who can make mistakes. If an author wants a better understanding as to the calculation and accuracy of his or her royalties, the best course of action is to request a royalty audit.

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How to deconstruct and decipher your textbook royalty statement

Deciphering royalty statements to determine whether royalties being reported are accurate can be frustrating for both first time and veteran textbook authors. Royalty calculations should be relatively straightforward. That is, the contractually agreed-upon royalty rate for the Work multiplied by the earnings received by the publisher. However, add in escalation clauses, various rates for different sales categories or channels, co-authorship, packaged products, electronic materials, custom editions, abridgements, agreed-upon deductions, returns for reserves, specific definitions of earnings, multiple titles in various editions etc., and the calculation of royalties becomes much more complex.

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