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High Discounts Hit Authors

30 December 2002

There is mounting concern amongst literary agents in the UK about the practice of reducing authors' royalty payments on books sold at high discounts. Originally introduced into authors' contracts in the early '90s to allow for bulk orders when the retailer would ask for a special higher discount, the increasing pressure on margins caused by active discounting has meant that the lower royalties are now being paid on a much larger scale. The way it works in most of these contracts is that authors' royalties are cut by a fifth when their publishers' discounts to wholesalers or book chains go above 50% on hardbacks and 52.5% on paperbacks. Originally seen as opening the door to special deals which would help to promote the individual author's book, this practice has now become so widespread that some sources claim that 90% of royalties are paid at the reduced rate. The dramatic loss of royalty income for authors can easily be imagined.

The argument is about the level at which the lower royalties should kick in. What is a 'normal' discount when all business is being done at a high discount? And should authors effectively be asked to finance book trade discounts out of their royalty income? Jonathan Lloyd, managing director of Curtis BrownSee Curtis Brown listing and president of the Association of Authors Agents, speaking to the Bookseller, said: 'We're sympathetic to the pressure on publishers, but in the end we have to draw a line in the sand. At some point publishers are going to have to do the same with retailers, or margin will continue to be chipped away.'

This may be a particularly British problem, but it is one which affects all book markets where there is heavy discounting and book-buyers are becoming used to the idea that books should be available at a considerable discount off the published price.

(See News Review 9 December 2002 Do Books Cost too Much? and Inside Publishing on royalties and advances).