The Future of the Ebook

Ebook Authors No Longer Hot for Harlequin, Slap the Romance Publisher with a Lawsuit [UPDATED]

Passions flare! Tempers run hot!
 Ebook Authors No Longer Hot for Harlequin, Slap the Romance Publisher with a Lawsuit [UPDATED]

One of the books at issue.

Three romance novelists have filed a class action lawsuit in the Southern District of New York against juggernaut Harlequin Enterprises, alleging that the publisher is not coughing up the ebook royalties they were promised.

Broken Promises–now that sounds like something that would catch our eye while browsing the bookshelves.

First, a bit of context: Harlequin Enterprises is the world’s largest publisher of romance novels. In the U.S. alone, that’s a billion-dollar market. As the suit points out, the company churns out books for 114 international markets, in 34 languages, to the tune of more than 100 books a month.

Second (and this is why Betabeat gives a damn), Harlequin has embraced digital formats in a big way, going all the way back to the pre-Kindle Dark Ages. And in 2010, the company even launched Carina Press, its own digital-only subsidiary. Carina, it should be noted, eschews the traditional advance model and promises higher royalties. (None of the books at issue were published by Carina, however.)

The allegations in the suit are convoluted (like all contract-related matters), so bear with us. But here’s the thrust: Writers Judith Arnold, Gayle Wilson and Linda Barrett (to use their pen names) basically suggest that they were subjected to contractual rope-a-dope that left them with less money.

Now, the nitty gritty. (Here’s a PDF of the complaint, for anyone who wants to follow the bouncing ball.) Between 1990 and 2004, the authors claim, they were presented (sans much room for negotiation) with contracts that required them to sign with Harlequin Switzerland as “Publisher” (for tax reasons, the explanation went). Harlequin Enterprises therefore had to license the authors’ books to publish them elsewhere.

The reason this is problematic, the writers allege, is that Harlequin Enterprises was, essentially, their actual publisher. The money quote: “Although the Publishing Agreements named Harlequin Switzerland as the “Publisher,” at no relevant time has Harlequin Switzerland performed any traditional publishing functions,” and proceeds to outline, in great detail, how Harlequin Enterprises acted as publisher.

The complaint walks through the damages using a hypothetical $8 ebook: They agreed to royalties of 50 percent, but received something more like six to eight percent. If we assume an $8 book nets $4 in revenue, that’s the difference between $0.24 to $0.32 versus $2, which adds up very quickly.

However, the contract did include a bit of what sounds like legal ass-covering. Again from the complaint:

The Publishing Agreements provided that “Publisher may assign this Agreement to any related legal entity,” and that “Publisher may delegate any of its editorial, administrative and/or other responsibilities pursuant to this Agreement to its parent company or to an affiliate, subsidiary, or other legal related entity.”

Only time (and, we presume, lots of legal fees) will determine whether that’s enough protection.

It’s also worth noting that the period at issue is 1990 to 2004, and none of the books at issue were  published any later than 2006–i.e., the early days of digital publishing. Harlequin has long included language around electronic publishing in its contracts, but a legal cloud has long hovered over the whole business of selling backlist ebooks. For example, in December, HarperCollins brought a lawsuit against the digital publisher Open Road Media for selling a digital version of Julie of the Wolves, originally published by HarperCollins–but without clear digital rights.

UPDATED: Harlequin has released a statement regarding the suit. Here it is, in full:

Harlequin announced today that they have been made aware of a class action lawsuit brought against them by three former authors.

The publisher wishes to make clear that this is the first it has heard of the proceedings and that a complaint has not yet been served.

“Our authors have been recompensed fairly and properly for their work, and we will be defending ourselves vigorously,” said Donna Hayes, Publisher and Chief Executive Officer of Harlequin.

Awkward.

If this were there an actual romance novel, one of the plaintiffs would be madly in love with the cruelly handsome, self-made CEO of Harlequin’s corporate parent, Torstar. Sadly, we doubt that is the case.

Follow Kelly Faircloth on Twitter or via RSS. kfaircloth@observer.com