RH Changes Contract Terms for Digital Imprints In Response to Controversy

PublishersLunch

Random House announced changes to the contract terms for their start-up digital imprints Hydra, Alibi, Flirt, and Loveswept on Tuesday morning, following pointed criticism from the Science Fiction Writers of America, the Horror Writers of America and other author group representatives. The company is adjusting the charges made under their profit-sharing contract model, and also offering authors a separate, more traditional advance-plus-royalty contract model.

The advance-plus-royalty model follows a traditional contract model:  Random House's "standard ebook royalty of 25 percent of net receipts" along with an agreed-upon advance, with the imprints covering all production, shipping, and marketing costs. In the revised profit-share model, there are fewer charges to the author's share. In particular, the percentage-based fees for publishing services have been eliminated, as have the "out of pocket title set up costs" for ebooks, producing more of a true profit-share.

Now the imprints will cover entirely "all marketing costs connected with general, category- or imprint-wide marketing programs" and title-specific marketing plans up to $10,000. Any costs above $10,000 "will be proposed in advance to the author. If the author agrees, the incremental costs of such title-specific marketing activities over $10,000 will be deducted from sales revenue before profits are split." For print books, "actual costs directly attributable to production and shipping of the book" will be deducted from net sales.

Under both models, Hydra, Alibi, Loveswept, and Flirt will still acquire rights for the term of copyright, but there will now be an out-of-print clause where authors can "request reversion of his or her rights three years after publication if the title fails to sell 300 copies in the 12 months immediately preceding the request." The imprints will generally seek to acquire world rights in all languages, with earnings from subsidiary rights split between the imprint and the author subject to the business model the author chooses. Random House added that "If we see opportunities with select manuscripts for performance or transformative digital editions (such as video games), we will seek to acquire additional rights, subject to negotiation with the author."

Writer Beware's Victoria Strauss, one of the initial critics of the original contracts, said the changes "represent a significant improvement" and that she was impressed with Random House's "openness to discussion, and with what seemed to me like a sincere commitment to responding to criticism and making the digital imprints' contracts more author-friendly."