What is the issue?
Publishing contracts often contain clauses that greatly reduce royalty percentages in instances of discounted sales of books. This can mean a serious loss of royalty income for authors when their books are sold in bulk at deep discounts outside the traditional retail sales stream. These clauses give publishers incentive to offload books at deep discounts instead of promoting and selling them in the traditional marketplace, which can reduce author profile and development.
What’s more, since major online retailers and big-box stores are using their market heft to demand larger discounts than the traditional 40% for retail (sometimes more than 50%), even those sales to traditional markets can trigger royalty reduction.
What TWUC is doing
TWUC advises authors to carefully examine the royalty percentages section of their publishing contract, and to negotiate a higher discount amount as a trigger for any royalty reduction. Along with our international colleague organizations, TWUC is now recommending a minimum of 60% discount before royalty reduction is triggered. That should protect author royalties, and the escalation clauses for them, in most traditional sales scenarios.
TWUC also advises that royalty amounts should be based on retail price and not net receipts. Large bulk sales at steep discounts should be reported separately by publishers.
What you can do
Download and review TWUC’s Model Trade Contract (free to Union members). Always carefully review publishing contracts before signing.