Interesting Fight Between Authors and Their Publisher

By MOTOKO RICH
Published: November 7, 2007
Five authors have sued the parent company of Regnery Publishing, a Washington imprint of conservative books, charging that the company deprives its writers of royalties by selling their books at a steep discount to book clubs and other organizations owned by the same parent company.

In a suit filed in United States District Court in Washington yesterday, the authors Jerome R. Corsi, Bill Gertz, Lt. Col. Robert (Buzz) Patterson, Joel Mowbray and Richard Miniter state that Eagle Publishing, which owns Regnery, “orchestrates and participates in a fraudulent, deceptively concealed and self-dealing scheme to divert book sales away from retail outlets and to wholly owned subsidiary organizations within the Eagle conglomerate.”

Some of the authors’ books have appeared on the New York Times best-seller list, including “Unfit for Command: Swift Boat Veterans Speak Out Against John Kerry,” by Mr. Corsi and John E. O’Neill (who is not a plaintiff in the suit), Mr. Patterson’s “Dereliction of Duty: The Eyewitness Account of How Bill Clinton Compromised America’s National Security” and Mr. Miniter’s “Shadow War: The Untold Story of How Bush Is Winning the War on Terror.” In the lawsuit the authors say that Eagle sells or gives away copies of their books to book clubs, newsletters and other organizations owned by Eagle “to avoid or substantially reduce royalty payments to authors.”

The authors argue that in reducing royalty payments, the publisher is maximizing its profits and the profits of its parent company at their expense.

“They’ve structured their business essentially as a scam and are defrauding their writers,” Mr. Miniter said in an interview, “causing a tremendous rift inside the conservative community.”

Traditionally, authors receive a 15 percent royalty based on the cover price of a hardcover title after they have sold enough copies to cover the cost of the advance they receive upon signing a contract with a publisher. (Authors whose books are sold at steep discounts or to companies that handle remaindered copies receive lower royalties.)

In Regnery’s case, according to the lawsuit, the publisher sells books to sister companies, including the Conservative Book Club, which then sells the books to members at discounted prices, “at, below or only marginally above its own cost of publication.” In the lawsuit the authors say they receive “little or no royalty” on these sales because their contracts specify that the publisher pays only 10 percent of the amount received by the publisher, minus costs — as opposed to 15 percent of the cover price — for the book.

Mr. Miniter said that meant that although he received about $4.25 a copy when his books sold in a bookstore or through an online retailer, he only earned about 10 cents a copy when his books sold through the Conservative Book Club or other Eagle-owned channels. “The difference between 10 cents and $4.25 is pretty large when you multiply it by 20,000 to 30,000 books,” Mr. Miniter said. “It suddenly occurred to us that Regnery is making collectively jillions of dollars off of us and paying us a pittance.” He added: “Why is Regnery acting like a Marxist cartoon of a capitalist company?”

In an e-mail statement, Bruce W. Sanford, a lawyer with Baker Hostetler, a Washington firm representing Eagle and Regnery, said: “No publisher in America has a more acute marketing sense or successful track record at building promotional platforms for books than Regnery Publishing. These disgruntled authors object to marketing strategies used by all major book publishers that have proved successful time and again as witnessed by dozens of Regnery bestsellers.”

The authors also say in the lawsuit that Regnery donates books to nonprofit groups affiliated with Eagle Publishing and gives the books as incentives to subscribers to newsletters published by Eagle. The authors say they do not receive royalties for these books.

“You get 10 per cent of nothing because they basically give them away,” Mr. Patterson said in an interview.

The authors argue that because at least a quarter and as much as half of their book sales are diverted to nonretail channels, sales figures of their books on Nielsen BookScan, which tracks about 70 percent of retail sales but does not reflect sales through book clubs and other outlets used by Eagle, are artificially low. Publishers use these figures when determining future book deals, and the authors argue that actions by Eagle and Regnery have long-term effects on their careers.

Mr. Miniter said that when he was negotiating a book deal with Threshold Editions, a conservative imprint of Simon & Schuster, he could have gotten a higher advance if BookScan reflected the true quantity of sales of his books.

According to BookScan, Mr. Miniter’s “Shadow War” sold 46,000 copies in hardcover, and “Losing Bin Laden” sold 36,000 copies in hardback.

Mr. Miniter, who spearheaded the legal action, said he became aware of the discrepancies in royalty payments while defending a separate arbitration initiated by Regnery over a canceled contract. Mr. Miniter said that during the arbitration, which is pending, he saw royalty statements in which it appeared that about half his books’ sales had not gone through stores, and that his payments for those sales were much lower than the payments for bookstore sales. He contacted other Regnery authors and learned that they saw similar patterns on their royalty statements.

Joel Mowbray, author of “Dangerous Diplomacy: How the State Department Threatens America’s Security,” said he was particularly disappointed in Regnery and Eagle because they had so championed conservative authors. “These guys created the conservative book market,” Mr. Mowbray said. “Before them, conservatives were having to fight, generally unsuccessfully, to get books published.”