On February 12th 1999, The Times Higher Education Supplement published a blistering attack on OUP, Mammon's Imprint, by Oxford English Literature don Valentine Cunningham, and asked the question: "Are the university presses (particularly OUP) ripping off their academic authors by failing to pay them a proper rate for their books?" The definitive answer to this question, well OUP certainly is, was provided by the assessment hearing in Malcolm v Oxford of 10th and 11th July 1991.
My contracting OUP editor Henry Hardy had expressly promised that OUP would pay "a fair royalty" on Making Names, and when it came to the assessment of the damages, I assumed that this would mean the industry average, however arrived at. I took as my first authority on the point the relevant paragraph in The Writers' and Artists' Yearbook, which then (in both 1985 and 1991) cited 10 percent of a book's published price as the norm for a hardback. Oxford blocked my introduction of the WAAY evidence, and OUP's Managing Director (Arts and Reference, then and now), Ivon Asquith on affidavit (24/6/91) swore that:
"A royalty of 10 percent of published price on a hardback may be an average base line figure used by some publishers and most literary agents. But it is not accepted by many publishers, and it is certainly not used by the Press, except in special cases."
Surely no-one will suggest that Asquith could have been perjuring hmself just to shave a few pounds off my damages? In court, on oath, Asquith confirmed his statement (along with much else) at great and dreary length, and on this "fairness" question, Oxford's Q.C. Harvey McGregor, then the Warden of New College and still the editor of English law's foremost legal textbook on the subject of damages, insisted that Oxford's royalties are well below the trade's average. He explained the situation to the judge (Chancery Master Barratt) as follows. The 2-day, 10+ hour hearing was tape-recorded by the Court; these are verbatim transcriptions.
McGregor: The multiplier's the difficult one, I agree, but, erm, first of all we've got to get to the royalty rate, er...
Barratt: Now we had before a proposition I was assuming that you were going agree, but perhaps you aren't, and you're certainly not obliged to, that is: ten percent of the published price of the UK hardback - published price this is working on - seven-and-a-half percent for the export hardback, seven-and-a-half percent for the UK paperback and five percent for the export paperback. That, I think, is what Mr Malcolm said he would agree.
McGregor: Well that is correct, but I would not think they would apply... these figures are far too high in my submission.
Barratt (surprised): Are they?
McGregor: Yes.
Barratt: Yes?
McGregor: Er, you did say that it is OUP's practice we are looking at here, not the world's generally...?
Barratt: Yes.
McGregor: ... and it's true that, er, the Court may have said this is a contract for "fair royalties"... they only said "a fair royalty" of course because of course no royalty had been agreed at the contractual stage but "fair". I think, unless it can be shown that OUP are acting unconscionably in some way in the way they fix their royalties - and there is nothing to indicate that; there are royalties of other publishers which are below theirs, which I can show you - then I think it's what you would anticipate you would get from OUP...
(Extracts from The Remedy)
McGregor went on to explain why over recent years OUP has been switching from 'published-price' to 'net-receipts' royalty agreements. The official story has always been that the switchover has been of no financial disadvantage to authors, and that the proper equivalences have always been maintained between the percentage rates in the two systems. In the exchange quoted below, McGregor for the first time goes on record with a formal admission on behalf of a publisher that this is not in fact the case, and he carefully explains how the swindle works.
McGregor: Now the first thing is that the evidence is clear that you are moving from the early 1980s from the published-price royalty to the net-receipts royalty. Now it may be that it doesn't make all that much difference, but it depends on how you do your calculations. If you do your calculations so that the discount equals the difference, then of course it doesn't, but quite often the discount may be quite high and will therefore give the publisher a better deal and the author not such a good deal, which is one of the reasons why they [publishers] are moving over to net receipts... The other question is that of the discount... Mr Asquith's affidavit tells you that OUP's average discount on UK sales is 40 percent and on foreign sales is higher, generally around 60 percent...
Barratt: I'm trying to work out the figures: supposing you've got £100 worth of published-price books and you get 10 percent on the published-price royalty, that's £10. If they are all sold in the UK, you knock it down by 40 percent, which is £60 for the net-receipts... am I not doing it right?
McGregor: ...Well look, first of all, you get 12 percent of the £100, because that's what the document [the PPF] says, you get £12... erm... No, no, do it the other way... Alright, you come down to... you get £7.20, you get 12 percent of £6...
Barratt: £60... Yes, that is where the difference lies: under your system, on £100 worth of published price books, you get £7.20.
McGregor: That's right, yes.
Malcolm: I thought the point of the two systems was that they worked out the same, roughly speaking.
McGregor: Well they don't work out precisely the same.
Barratt: On these figures, as far as I can make out, you in practice would be getting 7.2 percent of published price.
Malcolm: Well that would then manifestly be an unfair royalty wouldn't it?
McGregor: Well, no, it's not an unfair royalty.
Barratt: This, we are told by Mr McGregor is the reasonable, standard amount that OUP pays, and I'm just seeing what that amounts to in percentages of the published price.
Malcolm: But I thought, Master, we had agreed yesterday that it didn't matter which system you choose as long as the percentages are correct.
McGregor: You may have agreed, but I hadn't agreed.
Malcolm: Oh, I thought the courtroom had agreed.
Barratt (laughing): And so did I! I had put forward the proposition that as long as the percentage figures came to the same eventually, it did not matter by which route... But these two examples do not come to the same result.
McGregor: I think one of the reasons is because you don't know what the net receipts are, and therefore sometimes you might do better, and sometimes you might do worse. But on the standard practice of OUP, the discounts are 40 percent UK and 60 percent export. Well, now I don't want to, er, um, to belabour this, and what I would propose is it would come down to 7.2 percent.
Barratt: Yes...
Turning to the royalty rates for the paperback, McGregor went on to plumb even deeper depths:
"Now, Mr Asquith has assumed rates of ten percent UK and eight percent export, both on net-receipts, er, so converted to percentages of cover price, these come out at roughly six-and-a-half percent home and five percent export... [Barratt and Malcolm: six-and-a-half percent?!? McGregor turns graciously to Malcolm]... No, I'll be generous, I'll say six-and-two-thirds percent, six-and-two-thirds percent... [Barratt exhales frustratedly]... for simplicity Master, you can put that up to seven percent, seven percent... I am happy with that... The... the export... the export figure of five percent is the same as Mr Malcolm's... foreign, yes... I would, er, [anxious squeaking and fiddling with calculators]... er, I would be happier if, if, er, if we could have, um... you've, you've put seven percent have you, for the first one?... I'm trying to get easy figures... if you'd accept that putting it up to seven percent is, is favourable to Mr Malcolm, I'm, I'm happy at seven percent... Er... [more fiddling, more squeaking]... May I just support my ten percent and eight percent figures... the exhibit to Mr, Mr, um, Asquith's affidavit I, I, I ...if you look at the paperback, you'll find that there are quite a lot of ten percent and eight percent, which is what Mr Asquith said in his affidavit it ought to be... all net-receipts... [whispering, whiskering]... if I knock, if I knock, er, the ten percent down by, um by forty percent, I would be down to six percent, er, and I've said, I have in fact said seven percent, um... and I think I really should...erm... I think I'm being slightly unfair to myself... Um, I think I ought to knock the seven percent down to six-and-a-half percent... [Malcolm, joking: Or to six-and-two-thirds percent?]... Well, six-and-two-thirds percent. I don't mind six-and-two-thirds percent... I, I, but what I was going to say is that I think that the other perhaps should be below five percent, but let's leave it at that... [Barratt reminds him that the number of copies sold is the important figure; further calculating]... That is, that is true, um, but, but, nev... nevertheless, I am eager just to finalise this... Um, the, er, if, if, if, if, you see, if, if there's a sixty percent reduction on, er, eight percent, it really would only be three-point-two percent and therefore I think that I should... I'm sorry, but I think I should go a little below five percent... [Barratt (amazed): Below five percent?!? Well, so what? The new offer is?]... Well, let's say... four-and-a-half percent... I mean, that's how it would work out... Now we come to the question of the, erm, erm, erm, ermounts..."
Magnanimity Running Away
Strangely, McGregor failed to divulge the royalties he earns from his own masterwork, currently retailing at a moderate £195, but he did then go through Oxford's offered Parfit, Hare and Raphael models, rounding down their sales figures. He contemptuously dismissed Nagel, focussing instead upon Glover as the most appropriate. At about five-thirty, he seemed ready to offer its 30,000 sales ("It could be a possible parallel." Barratt: "Yes"), but almost as soon as it slipped out, he bit it back, veering off into an analysis of some mistake he thought he had found in Glover's own arithmetic. By this time, the chatter of calculators was continuous, and even McGregor himself started angrily poking at one, apparently with little luck. Smyth was pacing about with his phone jammed permanently to his ear, and Anderson was spewing notes like a tickertape machine, but every time His Great Eminence seemed at last ready to spit out a figure, there would be another flurry and he would dive back into the royalty-rate waffle, obviously stalling while the flunkeys did the necessary maths. At five-forty-five, already way over time, Barratt yet again reminded him that the multiplier was the important factor and that still none had been offered. McGregor's final virtuoso performance I will quote in full and unvarnished (readers are here invited to sketch their own Michael Heath cartoon):
"You may think that's the last of my submissions, er, on this, but it isn't... now it may be thought that £2,100 [the PPF figure] after all this is a little too little, er, on royalties to propose, erm, and, going on to Lord Justice Leggatt's, erm, er, judgment, um, I am proposing to indulge in an exercise in magnanimity in my coming submissions... er, one... we have tried to, to see if we can avoid the need for an inquiry, er... it hasn't been... proved possible... I will do what I will, and I, I, I, I stress this on, on, the, on the basis that, um, the, the, the figures I'm proposing may be a little over what, er, speculation might lead you to... but I'm content to accept, um... the, the, the figures that you have... (frantic calculating and whispering)... um, can I, can I come to the question of rate?... um, if you take the, the, the hardback... if you... take the price of £15, which is agreed... now, I'm going to assume for the moment, if I may... and this is the most complicated part of the calculation, er, and I think this is entirely fair, that we assume for the purpose of calculation that there is a hardback and a paperback throughout the five-year period, er, and that we then assume that 75 percent of those sales comes in the first two years, er... and that the sales are going to be one-fifth hardback, four-fifths paperback... er, now, to that extent I don't think it is necessary to consider, er, I mean, even if the paperback had come in the second year, er, to consider the rise, the rise in the price to £23 because that would have happened at a time after the hardback had fallen away, er, and the, the... without trying to trouble you, although I may, er, have to look at the one, um... er, one set of figures again (shuffling of notes), er, is that I think it therefore is reasonable to multiply by 15 and not by an increased figure... if we then take, er, my, um, er, er, my, um, um, erm...(long pause, whispering)... figure of eight percent of the published price for UK and six percent for, um, er, for, for abroad, you'd come down to £1.05 a copy... hardback... um, if you were to... even, even if you were to, to, to take, er, Mr... and Mr Malcolm's of course would be, um, er, is, is... if you're going on the £1.50 price, erm, his wouldn't be all that much higher because he's got ten percent for the hardback, er, in, in, in the UK and he's got seven-and-a-half percent for export, so it would probably come out at, um, er, if you take it in between the two, eight-and-three-quarters percent, er, it's going to come out at that model... it's going to come out about £1.25... (pause) at £1.30... about £1.31... so there's not a great deal between us, but I mean those... that's the range there in my submission... when it comes to... and then we have to multiply by a figure... (urgent whispering) um, when it comes to the paperback, er, we are pretty well agreed, er, that it's going to be moving from, um, £7 in February 1987 to £8 in 1988, to £9 in 1989, to £10 in 1992... um, I would be prepared to, er, take an overall... I mean what if... if one was to take... if... one starts at £8... let us take a, a, an overall figure of £9... I think that's generous... rather than multiply different years... you then have to multiply £9, er, um, by... the, um, er, the net receipts, and now we're down from twelve percent and ten percent to ten percent and eight percent, er, no, so... of the net receipts... and we came to my six-and-two-thirds percent and my four-and-a-half percent or something like that... um, in an attempt to be generous, um, I would be happy to multiply by something like, er, six percent, er, or five-and-a-half percent... this is the percentage you're multiplying the published price by... the percentage is six-and-two-thirds for home and four-and-a-half for... so it's got to be somewhere in between the two to cover both... and the reason that I say, um, five-and-a-half percent is that if you multiply that by £9, £9, £9, you come out at about 50p a copy... so that my figure would be to multiply by 50p. Now Mr Malcolm's is not going to be all that different because he's got... he's got, um, seven-and-a-half percent for UK and five percent for export... er, if you were to bring that down... take it halfway between that six-and-three-quarters percent and multiply... again he can't be multiplying by more than £9, er, you're still only, er, at, um, um, you're still only at, um... (long pause, passing of notes)... six-and-three-quarters times nine... at 60p, 60p and 75p, so it's somewhere between 50p and 60p on, on his figures and mine... so we're not all that far apart, but of course if you immediately start multiplying that by 100,000 copies, it's going to make a lot of difference... um, now, Jonathan's Glover book... and that's going to the top of the range, er, has sold 30,000... (urgent whispering)... now you cannot, Master, er, if you assume that that is an appropriate book, er, and it's true that Mem Nagel has done 60,000 in a slightly shorter period... I think that's an inappropriate book, it's an American book, it's cheaper, it's not in context, so I'd rather concentrate on, on Glover... but if you take Glover at 30,000, you cannot, er, assume the same a number of sales... this is a gamble; it might have worked and it might not have worked... Chaplin & Hicks and other cases talk about loss of a chance... you may get five percent because you didn't enter the beauty competition in time... er, I am prepared to say, let's take half of the Glover sales... (Barratt heaves sigh of relief, sinks back in chair, makes note... more frantic whispering stage right)... well, at 15,000... I mean... it's not my submission of what I think would have sold... I don't believe they'd be sold... I think this is magna, magnanimity running, running away... now, could, could we take... could we take... er... could, could we start with 10,000, just because it's an easier calculation... if we take 10,000 sales... Perhaps, Master, you'd like to write this down..."
And so it was that at ten minutes past six on the second day of a two-day hearing held seven months after the Court of Appeal had delivered its judgment, Oxford finally, fleetingly proposed an estimate of Making Names' lost sales. And so it was too that this "offer" was immediately accepted by the court. McGregor then turned to loss of reputation and laughingly enunciated an interesting new damages principle that, as far as I know, has yet to feature in his book: "If we are going to award money on publicity, I shall have to retract my money on earnings." He went on to cite Joseph v National Magazine Co. (a dispute in 1956 over the mis-editing of an article about jade carvings), equating the status of Oxford University Press with that of The Connoisseur antiques magazine, and valuing OUP's imprimatur at £2,000...
Go to Malcolm's Statement of Claim, to the Case History, to the Affidavits: Ivon Asquith (1); Asquith (2); Henry Hardy; William Shaw (solicitor) (1); Sir Roger Elliott (1); Margaret Goodall; to the Witness Statements: Elliott; Hardy; Richard Charkin; Nicola Bion; Goodall, to the courtroom testimony of the Oxford Six, 14/3/1990: Elliott; Goodall; Bion; Asquith; Charkin; Hardy, to the testimony of Andrew Malcolm 13/3/1990, to the CHANCERY COURT JUDGMENT, to the Cambridge package and the Adrasteia package, to the publishing contract affidavits: Giles Gordon (1); Mark Le Fanu, to the APPEAL COURT JUDGMENT, to the damages affidavits: Alan Ryan; Asquith (3); Jeremy Mynott; Giles Gordon (2); Fred Nolan; Roy Edgley, to McGregor on Royalties (transcript), to the DAMAGES FINDINGS, and to the Settlement agreement.