Textbook Authors Say Their Publisher Is Shorting Them on Royalties. They Blame Its Digital-Subscription Service.
By Liam Knox
August 14, 2019
Textbook authors on Tuesday sued the publishing company Cengage for allegedly violating the terms of their contracts by altering how it calculates royalties for some digital sales.
The authors’ contention revolves around the company’s new digital-subscription service, Cengage Unlimited, which gives students access to all of Cengage’s digital textbooks and multimedia products for a yearly or semesterly premium.
According to the lawsuit, Cengage — whose merger with McGraw-Hill is under review by the Department of Justice — has not been calculating authors’ royalties based on net sales, as specified in the authors’ contracts. Instead, the company assigns a royalty base to all Cengage Unlimited sales and increases or decreases that rate based on factors not specified in the contracts. For example, an author’s royalty rate would increase if subscribers used their books more often than others available on the service, thus increasing that book’s “relative value.”
We're sorry. Something went wrong.
We are unable to fully display the content of this page.
The most likely cause of this is a content blocker on your computer or network.
Please allow access to our site, and then refresh this page.
You may then be asked to log in, create an account if you don't already have one,
or subscribe.
If you continue to experience issues, please contact us at 202-466-1032 or help@chronicle.com
Textbook authors on Tuesday sued the publishing company Cengage for allegedly violating the terms of their contracts by altering how it calculates royalties for some digital sales.
The authors’ contention revolves around the company’s new digital-subscription service, Cengage Unlimited, which gives students access to all of Cengage’s digital textbooks and multimedia products for a yearly or semesterly premium.
According to the lawsuit, Cengage — whose merger with McGraw-Hill is under review by the Department of Justice — has not been calculating authors’ royalties based on net sales, as specified in the authors’ contracts. Instead, the company assigns a royalty base to all Cengage Unlimited sales and increases or decreases that rate based on factors not specified in the contracts. For example, an author’s royalty rate would increase if subscribers used their books more often than others available on the service, thus increasing that book’s “relative value.”
ADVERTISEMENT
Six plaintiffs are named in the lawsuit, all of whom entered into contracts with Cengage more than 20 years ago, long before a digital-subscription model like Cengage Unlimited was even a consideration. Their lawyers, who are seeking to have the case certified as a class action, said that there are “thousands” of authors in the same position, and they hope to ensure the company abides by the terms of its contracts with all of them.
As other publishers move to similar digital-subscription services, the lawsuit may inform how they deal with old contracts for materials they plan on including in those new platforms.
“We want it to be clear that regardless of the changes to the technological platforms that Cengage may make, the contractual obligations that Cengage has really don’t change unless they make changes to them,” Kalpana Srinivasan, a lawyer with the firm Susman Godfrey, told The Chronicle.
In a statement released on Tuesday, the company denied violating any of its contracts with authors, and said that by introducing new models like Cengage Unlimited, the company was working to increase authors’ royalties by making textbooks more affordable and shoring up declining student demand.
“We are disappointed to see this complaint against our efforts to improve students’ access to affordable, quality learning materials,” the statement reads. “Our authors, like those at our competitors, saw declining royalties as a result of high prices that lowered students’ demand. The Cengage Unlimited subscription service was created to address this longstanding problem.”
ADVERTISEMENT
Cengage has faced similar lawsuits before. Last year the company settled with two authors who had said it was “unclear” how their royalties would be calculated in light of the new Cengage Unlimited sales model.
New Sales Model Creates Confusion
Lawyers representing the plaintiffs said that one of the major issues authors face is the lack of transparency around how Cengage calculates author royalties based on the new subscription model.
“It’s a black box, and it’s not clear what Cengage is doing to determine what they call the appropriate value or relative value of the work,” said Chanler Langham, also of Susman Godfrey.
Michael Spinella, executive director of the Textbook and Academic Authors Association, said that when it comes to authors’ royalties from digital book sales and new digital-subscription models like inclusive access, clarity remains a major problem.
“Part of what we are advocating for from all publishers is that they work more closely with their authors, both informing them but also actually soliciting their opinions, before they roll out these big strategic changes,” he said. “There is a lot of confusion about it all.”
ADVERTISEMENT
In its statement, Cengage said it had been transparent with authors about changes in their revenue model since introducing Cengage Unlimited.
“Since the service launched, we are in regular communication with them about the impact of the subscription on their royalties,” the statement reads.
Nicole Allen, director of open education for the Scholarly Publishing and Academic Resources Coalition, said the lawsuit illustrates a growing gap between publishing companies and their customers and authors.
“It’s a true sign of a broken market when both the creators of content and the users of content are frustrated,” she said. “The publishing industry is finally starting to transition to digital in earnest, and I think a lot of people are going to experience consequences from that, including authors, students, and institutions.”
ADVERTISEMENT
But Langham said that although the lawsuit may have implications for digital-publishing models, it is not trying to litigate the future but ensure Cengage is following the contracts it signed in the past.
“I really do think this is a simple breach-of-contract case,” Langham said. “We just want to hold them accountable for what they agreed to do for these textbook authors and professors.”
Spinella added that based on his conversations with authors about their concerns, they’re not opposed to digital-subscription models and alternatives to traditional publishing; they just want to be fairly compensated.
“Our authors are open to new models,” he said, “but they would not expect to sort of get the short end of the stick.”