There’s a story going around this weekend about a new class action lawsuit filed against Simon & Schuster. Doctor and author Sheldon Blau is alleging that S&S is paying him for ebooks as sales when they are in fact licensed, only the story is not nearly that simple.
A book is a book, except when it comes to eBook royalties. That’s the premise of a class action lawsuit filed on Thursday, May 19, 2016, in the Supreme Court of the State of New York by class representative Sheldon Blau, MD.
The lawsuit alleges Simon & Schuster has been cheating its authors by improperly categorizing eBook transactions as “sales” rather than “licenses.”
The distinction is significant, because the royalty rate for sales is much lower than the rate for the license of rights. If categorized as a license the author receives 50% of net receipts, rather than 25% of net typically paid to authors for the “sale” of an eBook.
The eBook royalty class action looks back approximately six years, the statute of limitations on contract actions in New York State. It alleges Simon & Schuster engaged in a “pattern and practice of paying Plaintiff and others similarly situated royalty payments for the distribution of licenses for electronic books, or “e-books,” at a rate for book “sales,” or some other lower rate than that required for “license” transactions.”
You can find the filing, as well as commentary, over at The Passive Voice.
This case should immediately remind you of Eminem’s lawsuit against his record label over royalties. Like S&S, Aftermath Records (a UMG sub) was collecting license fees on mp3 sales and passing them along as “sales”.
This case was filed in 2007 and decided in Eminem’s favor in 2010, and Blau’s case shows every sign of following the same pattern, right?
I wouldn’t be so sure.
We don’t have all the details, but there’s a less than obvious complication. Law360 noticed this detail, but apparently no one has realized its significance.
The problem is that while Simon & Schuster has a contract with Blau, it isn’t publishing his book. The book is still carrying the S&S name, but:
A spokesman for Simon & Schuster told Law360 on Thursday that the company sold the division handling Blau’s 1997 book to another company the following year and are no longer its publisher. In addition, the spokesman said Simon & Schuster never published an e-book edition of Blau’s book.
According to the listing on Amazon and every other retail site I checked, this book is actually published by Wiley. (WorldCat says S&S, however, and the Kindle edition still mentions S&S on the copyright page.)
So rather than this being a straight-forward situation where a publisher is allegedly underpaying royalties, what we have here is some complicated contract quagmire which might end up having nothing to do with ebook royalties at all.
And without seeing the contracts in question, we really don’t know what is going on.
P.S. Anyone else wonder why Blau is under the impression that his book is published by S&S?
image by XWRN