Royalty payment class actions: Opt-in? Opt-out? How does it affect me?

In recent years multiple class action lawsuits have been filed against the biggest textbook publishers, challenging their royalty-payment practices. In 2016, it was a suit against Pearson, alleging (among other things) gray market sales to international subsidiaries, paying lower international royalty rates, and then shipping books back into the U.S. for retail sales.1 More recently, there have been suits against Cengage, challenging “Cengage Unlimited,” Cengage’s all-access, Netflix-like subscription model.2 McGraw-Hill was also sued, in January, for improper royalty payment practices on its “Connect” products.3

What are you not being told?

Your royalty statements only tell part of the story regarding the success of your textbook. Join Juli Saitz, Senior Managing Director, Ankura Consulting Group at 2pm ET on Thursday, July 23rd to understand “5 Things Your Royalty Statements Don’t Tell You“.

The goal of this next session in our TAA Summer Webinar Series is to help authors understand what information is provided by their publishers and help identify gaps in that information.

Your royalties: The devil is in the details

Are you confused trying to determine how your royalty statement matches your publishing agreement? Do you feel like your royalty check is less than expected? According to Juli Saitz, CPA, Senior Managing Director, Ankura Consulting Group during her recent webinar, “the devil is in the details”.

To better understand how your royalties should be calculated, there are several items you may want to look for in your contract – beyond the basic royalty figures – including clauses on: electronic derivatives, subsidiary rights, custom work, packages, and tiering.

Royalties: Past, present, and future

What does the word “royalty” mean to you as an author? In their presentation, “Royalties: Past, Present, and Future” at the 31stAnnual Textbook & Academic Authoring Conference, royalty auditor Juli Saitz of Ankura Consulting Group and veteran publishing insider Sean Wakely of FlatWorld discussed the history and anticipated future of textbook author royalties.

In a traditional author-publisher relationship, the publisher is providing financial capital and the author is providing human capital for the production of a book. The negotiation of royalty on the sale of the book is used to determine how the profit from such sale is divided. Through the royalty model, there is a shared risk between author and publisher and consequently a shared reward for successful titles.

8 conditions affecting royalty accuracy

In his recent webinar, “Royalty Disputes: Legal Strategies in Pursuit of Information and Payments Due”, David Slarskey, a trial lawyer with Slarskey LLC, defined royalty accuracy as the “accurate reporting, accurate calculation, and accurate recovery of royalties due to authors.”

Slarskey proceeded to identify the following eight conditions as some of the dynamics at play that can create friction in the process of achieving royalty accuracy in publishing relationships.

The statutory termination right: One copyright act provision your publisher hopes you never hear about

In the fall of 1977, Ralph Little had just received his Ph.D. in Elfin Studies and was beginning his first faculty job as an assistant professor at Middle Earth College. Elfin Studies was in its infancy – many universities did not even recognize it as a legitimate discipline — and there was no introductory textbook on the market. Each week Ralph prepared lecture outlines on ditto masters for the dozen intrepid undergraduates in his Elfin Studies 101. When a representative of Colossal Publishers, Inc., came by his office, Ralph, sporting the sideburns and bell-bottoms of the day, told him about his idea of writing an introduction to Elfin Studies.

Soon afterward, Colossal offered Ralph a contract to write his Introduction to Elves, for a royalty of 5 percent of Colossal’s receipts on every copy sold. The royalty sounded almost as diminutive as the subject matter. But Ralph was thrilled to become a textbook author, and the editor promised him that when the book came out, he would be invited to Colossal’s Midwestern sales meeting in Minneapolis. He signed the contract early in 1978, and the first edition was published on January 10, 1980.