Harlequin Fail

This post, by Ann Voss Peterson, originally appeared on J.A. Konrath‘s A Newbie’s Guide to Publishing blog on 5/8/12.

This is a guest post by my friend Ann Voss Peterson. But it’s more than that. It’s a call to arms, a cautionary tale, and a scathing exposé.

Don’t believe it can be all those things? Read on…

Ann: In this world, there are a lot of things I can’t afford to do. A trip around the world, for instance, although it would be amazing. Remodeling my kitchen. And until recently, sadly, braces for my son.
There’s one more thing that I find valuable and enjoyable that I can no longer afford to do, and that is write for Harlequin.

I published my first novel with Harlequin’s Intrigue line in August of 2000. My twenty-fifth was released in November, 2011. I had a lot of fun writing those books–taut, page-turning, action-packed romantic suspense staring a myriad of different heroes and heroines and a boatload of delicious villains. I had four editors during that time, and all of them were great to work with. The senior editor has a strong vision for the line, and that vision appeals to readers all over the world. My books were in bookstores and Target and WalMart, and my office overflows with foreign copies from countries I’ve never visited. I have around three million books in print, and Harlequin throws the best parties in all of publishing, hands down.
But as lovely as all that is, I can’t afford to write for them anymore.
If you do a (very) little digging into publishing companies, you’ll discover that while the industry standard royalty rate for mass market paperback sales is 8% for US retail, Harlequin pays its series authors only 6%.
The royalty goes down from there.
All Harlequin series authors know that US retail royalties are going to be lower than industry standard going in. We also know that Harlequin pays rather low advances. My largest and most current advance was only $6,500 per book, but here’s the kicker; the books are widely distributedand sell a lot of copies. I have NEVER failed to earn out in my first royalty statement. That’s right, ALL of my books have earned out and then some.
So why can’t I afford to write for them any longer?
Let me share with you the numbers of a book I wrote that was first published in January, 2002, still one of my favorites. My life-to-date statement says this book has sold 179,057 copies so far, and it has earned $20,375.22. (bold text by Joe) That means the average I’ve earned is a whopping 11 cents per copy. If you use the cover price to calculate (the number used in the contract), which was $4.50 at the time of release, I’ve earned an AVERAGE of 2.4 % per copy.
Why is this?
irst, while most of my books are sold in the US, many are sold under lower royalty rates in other countries. In this particular contract, some foreign rights and -ALL ebook royalties- are figured in a way that artificially reduces net by licensing the book to a "related licensee," in other words, a company owned by Harlequin itself.
Harlequin uses the Wholesale Model (not the Agency Model) with retailers, including Amazon. So the money Harlequin receives is determined by the list price, and retailers can set any price for the consumer that they want. This is how the numbers break down when Retailer X lists the ebook for $4.00 (doesn’t matter what they sell it for).
Retailer – $2.00 (any discounts are taken from this amount)
Harlequin’s related licensee – $1.88
Harlequin – $.06
Author – $.06
So Harlequin makes a total of 1.94, and I make .06.

Read the rest of the post on A Newbie’s Guide to Publishing.

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