February 3, 2011

Amazon, Macmillan pay authors for books that were never sold


In a letter to authors accompanying Macmillan royalty statements, CEO John Sargent has two surprising announcements: one, that many authors will be paid at a higher royalty rate than the company is contractually obligated to pay — 25% of net receipts, instead of 15% of list price. And, second, that the company has decided to pay royalties on sales that were lost during the infamous Amazon “buy button” fiasco. According to Sargent, “We believe it was not fair that authors should suffer from the Amazon buy button takedown imposed on us for a week last year when we switched over to the agency model. So we estimated as best we could what Kindle sales would have been for that week and processed the royalties on those sales as if they had happened.” The payment is tactfully being called an “Amazon Kindle Outage Adjustment.”

What’s even more surprising — indeed, almost impossible to believe — Amazon has agreed to split the cost of these royalty adjustments.

Elsewhere in the letter, which is worth reading in its entirety, Sargent takes credit for fostering much of the health and expansion of the e-book market over the last year. “Since we moved to the agency model,” he writes, “Apple has entered the market, Barnes and Noble has increased its investment in the business, and independent booksellers, working with Google, are now selling your books competitively in the electronic book market.”

Kelly Burdick is the former executive editor of Melville House.