The Business of Publishing

Q. How much is the typical royalty percentage paid by a New York publisher?

A. The key word in your question is “typical.” There are exceptions to everything, and there may be variability from one publishing house (or contract) to another, but here are some guidelines. Typically, an author can expect to receive the following royalties:

Hardback edition: 10% of the retail price on the first 5,000 copies; 12.5% for the next 5,000 copies sold, then 15% for all further copies sold.

Paperback: 8% of retail price on the first 150,000 copies sold, then 10% thereafter.

Exceptions to the above include sales to warehouse clubs (like Costco or Sam’s Club), book clubs, and special orders; the royalty percentages for these can be half the figures listed above.

Update: eBook royalties through traditional New York publishers are 25%. They should be higher because the publisher does not have the typical costs of printing, binding, warehousing, shipping, etc. that they have with a bound book. Some digital publishers offer royalties at or near 50%. For a thorough discussion of this topic, see the blog post, “Do the Royalties of Traditional Publishing Make Cents?” from the former CEO of Premier Digital Publishing under the Writer’s Toolkit pull down menu.

Q. Are royalties paid in addition to an advance? How is that handled?
 
A. The royalties are a percentage of sales for a particular book. (See the above question as to how much this might be.) The royalties are paid to the author AFTER the publisher has earned back the advance it paid to the author.

Q. How often are royalties paid?

A. Every six months an author’s agent receives a royalty statement that’s a gazillion pages long showing the sales for each book, with a breakdown for each edition (hard or soft back, special orders, book clubs, etc.). In my experience (though I’m not alone), it helps to be a CPA to figure it all out.

Q. I heard something about “reserves,” and that publishers don’t always pay an author for all the copies sold.

A. A “reserve on returns” refers to the number of copies for which the publisher holds back payment from the author. When a bookstore chain orders a thousand copies of an author’s book, it doesn’t really buy those books. They take them on consignment. After a pre-negotiated time frame, the store has to decide whether to keep the unsold copies and pay for them, or send them back to the distributor (at the publisher’s expense). This time frame might be 60 or 90 days. Thus, with books going back and forth between a distributor’s warehouse and a few thousand bookstores, the “sales” figures might not be accurate: the royalty statements list orders, which are not necessarily sales. Thus, a publisher will hold back (or reserve) payment on a certain percentage of copies of an author’s book until they’re absolutely certain of the actual number of sold copies.

It could be a very long time before an author receives payment for reserved copies that were actually sold.

Q. What’s a reasonable royalty percentage for a co-author to ask for?

A. Interesting question…and a tough one to answer because there are so many variables involved. Every situation is different, as well. Here are some guidelines as to how it might be handled. For a definitive take, consult with an entertainment law attorney. That said, here are some things that need to be considered: What type of project is it? Fiction or nonfiction? Is it being published through a legacy publisher or digitally? Whose idea was it originally, or was it a combined effort? Who did most of the work? Did one person do the outlining and brainstorming and the other the writing? Are you both represented by the same agent, or do you have different agents? Who is signing the publishing contract–you or your co-author, or both of you? Clearly, it’s not a simple question. And I’m not sure there’s a right answer that covers all situations, either. If you feel you’re entitled to half the royalties, then that’s what you should ask for. If you’ve done a third of the work required (considering ALL aspects of the project), then ask for a third. Note that a traditional publisher may dictate the terms without your input.

In cases where you have an established blockbuster author who writes a novel “with” a co-author, that co-author is typically paid a salary for his/her work on the project. Very well-known authors have paid their co-authors $150,000 to $250,000 to write (excuse me, co-author) the novel. That co-author does not get any of the royalties; those go to the main author.

If the novel is not being published through a mainstream publisher, and you’re at the beginning of the project, these details should be worked out ahead of time with your partner (and put in writing, preferably by an entertainment law attorney). That way, you don’t invest months in a project only to have a falling out with your co-author–which leaves your project in limbo.

Q. What should I look for in a publishing contract? Are there “buzz words” or certain terms I should be wary of?

A. There are attorneys who have written articles on this very topic, and cover it a whole lot better than I could. Briefly, a publishing contract is a legal agreement between two parties; as such, it contains language that spells out the terms both parties have agreed to. There are definite concerns, from a writer’s perspective, that must be addressed. Do not rely on the publisher to look after your best interests. Whenever entering into a contract, it’s good business practice to have a knowledgeable attorney review the terms and language of the proposed agreement. What might look acceptable to you could be seen as ill-advised to the trained eye. My attorney saved me once from a horrendous situation, and instead of getting the shaft as other contracted authors had, because my attorney had rewritten parts of the contract, I was able to escape relatively unscathed. For publishing contracts, you want an experienced entertainment law attorney.

One of the finest articles I have read on publishing contract pitfalls was written by attorney/author Daniel Steven. His website, in fact, has a number of excellent articles on publishing law. To read Mr. Stevens’ article “The Business of Writing: RX for Contracts,” see “Contracts” under the Writer’s Toolkit pull-down menu. It’s worth the read.

Disclaimer: my posting of Mr. Steven’s article (which appears here with his permission) is not an endorsement of Mr. Steven’s legal practice or abilities; he has never represented me. Seek legal counsel with whomever you feel will best represent your interests.