DK to 'ring-fence' Canelo's 'no advance, higher royalties' for authors model

A week after DK acquired The Canelo Group for an undisclosed sum, its chief executive has confirmed the independent publisher’s model of “higher royalties and no advance” will continue under its new ownership. 

The Canelo Group, which was founded in 2015 and includes the commercial imprints Canelo, Canelo Crime, Hera and August, employs 22 people and is based in Southwark. It doesn’t currently pay advances to authors, but instead authors get up to 50% royalties. Digital first list Bookouture operates a similar model within the Hachette Group.

Paul Kelly, DK’s c.e.o., said: “[Canelo] currently offers higher royalties and no advance, a model that will remain ring-fenced to Canelo. We have a lot to learn from each other and looking forward we would expect commercial arrangements to evolve to suit an ever-diversifying list.” 

DK is known for its illustrated non-fiction adult and children’s titles, though also has a sales and marketing agreement with US publisher Sourcebooks, which includes a range of fastselling fiction books including author Frieda McFadden. It was founded in 1974, and publishes brands including Lego and Star Wars. It has been part of Penguin Random House since 2000 when it was acquired by its former parent company, Pearson.

The Canelo imprint was acquired for an undisclosed sum at the beginning of November. Kelly said DK made the acquisition of Canelo because: "It offers us a new route into other exciting areas of the fiction market and a launchpad into adult fiction."

He said: “DK was founded on the basis of breaking a mould and doing something different—a spirit that is very much alive today. Canelo was also built on this ethos and what it has achieved in a relatively short period of time is impressive. With limited resources they have helped their authors reach millions of fans—it was clear from the outset of our discussions that the ambition of the Canelo team matches ours.” 

Kelly said the plan is to help Canelo “reach wider markets—particularly internationally, where DK has considerable strength, and across new formats including audio".

Talks to acquire the independent publisher founded by Iain Millar, Michael Bhaskar, and Nick Barreto began earlier this year.

Kelly said there were no planned changes to staff: "Our intention is to build the business, so expansion will be the focus." He added: “With the DK global infrastructure behind them, I think the talented editors at Canelo will be able to deliver extraordinary value for their authors.”

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