McGraw Hill Publisher charging illustrators a fee to get paid
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@BradAYoo I liked that quote too! I'm going to look into how to properly support the NWU.
At the same time organizations like SCBWI have a mandate* to advocate (not lobby exactly) on behalf of their members. So consistently bringing up this topic at SCBWI events is a good idea.
*For more info on why SCBWI has that obligation check out the concept of "reprographic royalties"
You are right it's not as easy as simply boycotting. But discussing it with everyone will at least shine a light on the practice.
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@Michael-Angelo-Go I think you are mixing some issues a bit.
Publishers do not take 30% of an illustrator book project.
Agents do take a percentage as part of the partnership with the illustrators they represent. That percentage can be as low as 10% and as high as 30%. (A discussion about agents who require 30% is worth having on another thread. I'm not a fan)
In my experience there is no reason to do an illustration project for educational publishers like McGraw Hill with an agent. The rates are too low and the volume of work too high to justify an agent.
But in the event that you did a project for McGraw Hill via an agent then both you and the agent would be splitting that 2.2% "processing fee" proportionally.
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@davido Whoa! Thanks for participating in this thread!
Getting this bit of insight into how Fieldglass got wrapped up in freelance contracts at least opens the door to solving the "problem" McGH is looking to address.Is this just from you googling? Or do you have first hand experience with Fieldglass or SAP enterprise software?
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@davidhohn Primarily googling but I have been involved in the enterprise software space on and off for the last 10+ years,through the lens of the tech startup world and generally trying to disrupt larger players. So over that time you can't help but bump into industry leaders like SAP. I haven't really been involved with Fieldglass at the transactional level, but this category of software and business model follows a fairly standard pattern.
And there is a genuine need for enterprise software to deal with managing higher volumes of contracted/gig workforces or complex supply chains etc. Historically this would be a piece of software that somebody like McGH would pay for directly based on some type of ROI analysis that said we spend X for Fieldglass every year but save Y on managing all of these contractors and or suppliers. And essentially it would just be one of their line item costs.
But in this case SAP (and other VMS software providers) has implemented one of the holy grails of business models for enterprise software: get the downstream user to completely or largely offset the cost of the software to the decision maker, by charging them (the supplier) a percentage of their revenue stream. An infinitely more expandable market value not tied to a fixed monthly cost or annual fee, traditionally paid by someone like McGH. And on top of that they get the network effect from suppliers onboarding into the system now ready to go for the next McGH, already pre conditioned.
So now SAP has a painless meeting with McGH. Something like this: "McGH thanks for meeting with us (SAP) today. Fieldglass is an incredible platform with every industry leader using it to manage the complexities and compliance monitoring for the ever growing volume of contracted workforces and 3rd party suppliers. On average we save companies like McGH 15+% a year compared to trying to manage this with your own team members or in house software solutions. But here's the best news: you dont have to pay us anything. We'll deploy it, train your staff, and maintain the software through a convenient SaaS model and charge your suppliers a small service fee." McGH purchasing team looks at each other and says,"where do we sign?"
It is possible McGH is paying some amount to SAP as there is a spectrum of hybrid to full supplier funded pricing models. And there is a legitimate arguement to be made that a supplier can benefit from this but it is very difficult to see how the illustration contracting world dynamics receive that level of benefit, and certainly not on a revenue based percentage fee that is not tied to any explicit basis for that received "value." What is also interesting is that a number of invoice payment systems , quickbooks, etc do a similar model, but in the opposite direction, where they charge the company trying to pay their bills to the suppliers a service fee.
whew. sorry for the long post.
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@davido No, this is really insightful!
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@davido I can certainly understand how that would benefit McGraw Hill. But it's still really gross for us
As the article points out, since they're using freelancers they already don't have to pay for employee benefits, insurance, vacations, pensions, mat leave, etc. So on top of that not even wanting to pay the freaking invoicing system and being more than willing to have their freelancers, who are vulnerable workers with little rights yet absolutely indispensable to the creation of their products, take on that burden instead, feels just slimy, greedy, and insulting. -
@NessIllustration I totally concur. I don't see how it makes sense for the illustration industry.
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So you do the work and then the boss says they won't pay you unless you pay them a fee? Sounds like extortion. Here's a few definitions:
"Extortion is the practice of obtaining benefit through coercion. In most jurisdictions it is likely to constitute a criminal offense;"
Financial crimes that involve fraud, especially corporate fraud, mortgage fraud, or other investment fraud schemes where significant dollar losses have occurred, including those impacting you or your place of work
This is a type of corporate fraud copied from the FBI website:
Non-payment of funds: Fraud occurring when goods and services are shipped or rendered but payment for them is never received.
If you think any of this applies to MGH, you can always call the FBI and ask.
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@Kim-Hunter This is an interesting take. I imagine the response from McGH would be: "You agreed to this in the contract". I would be very surprised if this payment method isn't specified in the contract. Perhaps someone with first hand experience can clarify this?
The next question to be raised is: Given the size of McGH does a children's book freelancer have a reasonable choice NOT to work with McGH?
I would say "Yes. A freelance illustrator does have the choice not to work with McGH" -- as I don't happen to work with McGH.
But I can easily see other illustrators saying "No. I HAVE to work with McGH. They are my biggest client. Therefore I HAVE to agree to this new fee." This of course is a slippery slope because agreeing to this new company practice makes it easier for other publishers to adopt the same practice, or for McGH to pass on yet another operational cost to freelance illustrators in the future.
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I think it could be argued that a business does not have a right to pass on their cost of doing business to an entity that is not their customer. The freelancer is not their customer. MGH is the customer of the freelancer. This would be like me demanding a 2.2% rebate before I hand my crumpled dollars to the cashier and, if they didn't comply, walking out the door with a full shopping cart without paying a cent.
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As a freelancer it'd be tempting to return the contract with a change charging McGraw Hill my OWN administrative fee, bringing the contract back up to the original amount.
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@Braden-Hallett You could absolutely do that!
BUT both you and McGH would have to sign (i.e. agree to) the change otherwise it's not binding. -
@davidhohn Yeah, I'm not arguing that it's a good thing by any means. I was just trying to get an idea of where it fit in in the scheme of service charges and knew about the 3% because my sister owned a gift store.
It would probably take a really famous illustrator going elsewhere to get their attention, or like you said, maybe they would listen if all of us said something together. It certainly does feel like a huge power imbalance, and as someone still trying to break in, it's yet one more hurdle in a field that already has so many. We may argue that this is capitalistic freedom, but when a company is so big that it wields disproportionate power (and most publishers are now part of conglomerates), it hardly feels like a free choice.
And it's not just publishers. This conglomerating thing and the getting nibbled to death by fees thing are everywhere right now.
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@davidhohn said in McGraw Hill Publisher charging illustrators a fee to get paid:
@Braden-Hallett You could absolutely do that!
BUT both you and McGH would have to sign (i.e. agree to) the change otherwise it's not binding.Oh for sure! I don't think I'd ever expect them to sign it (unless the sign it accidentally). This is just another way to say to them 'I don't like this'.
If I say "I don't like this clause" they'll laugh and say "well then lick my unmentionables first illustrator of a long list! You'll sign it and like it or we'll go with the next person!" Well, they probably won't say THAT, they'll be perfectly polite, but still!
But If I say "I made some changes. Please review the contract" then there MIGHT be a little bit of back and forth where I get to tell them the administrative fee is predatory garbage. Honestly enough though, come to think of it, they'll STILL probably just chortle as they toss the contract in the shredder and give me the boot out the door.
Unless they don't read the change and sign it anyway, in which case they'll probably ignore MY 'administrative fee' and it'll be an uphill battle to get my two point whatever percent back... at which point I'll never be able to work for them again, even if I'm interested.
So I suppose in the end there wouldn't really be much point in doing any of this, but for some reason it'd feel satisfying? If they're gonna charge an administrative fee I'm gonna make 'em work fer it, gosh darnit!
Seriously though, that fee is bull*&^%.
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@Braden-Hallett I see where you are coming from now!
It's a little passive aggressive but fundamentally I'm on board for it.
Heres why:
It will make things a bit harder and more difficult for the AD's you are actually in contact with. Now, these are fundamentally good people who don't make these kinds of policies. They do have contact with those policy makers though! And if word gets around that it's this new payment method that is sucking up time negotiating AND that their preferred illustrator said "I'm sorry but I can't agree to this project" BECAUSE of this new company policy -- well that has a cumulative effect.
The people McGH who are perfectly fine with a fee like this aren't the ones working directly with the freelance illustrators and authors.
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@LauraA I knew you weren't arguing in favor. And I could see how a comparison to what is currently "normal" could be made to this new McGH policy/fee.
Your post simply encouraged me clarify my own thoughts as to why this both "feels" and is fundamentally different.
I apologize if it seemed I was making you advocate for a position you don't hold.
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@davidhohn said in McGraw Hill Publisher charging illustrators a fee to get paid:
It's a little passive aggressive
Oh, it's COMPLETELY passive aggressive
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@davidhohn No problem! I was doing the same.
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Here's a lawsuit against them from 2012, Another class action lawsuit was filed in January 2021 by authors over unpaid royalties after MGH re-defined electronic books.
https://www.courthousenews.com/author-says-mcgraw-hill-cheats-on-royalties/
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