Royalties

Got a call from my nonfiction publisher, Self-Counsel Press, this afternoon: my royalty statement was available, and did I want to come in and pick it up? Since their office is close to my campus, I dropped in on my way home.

It wasn't much, but more than I'd expected, for sales from May to October. This was for two books: Writing for the Web (in two editions) and Writing Science Fiction and Fantasy. And it gives me a reason to talk about books and money.

Royalties used to be pretty straightforward: 10% of list price for hardback books, 6-8% for mass-market paperbacks. The advance was a prepayment on those royalties, and if you sold enough copies you would "earn out" the advance and then look forward to twice-yearly payments...perhaps for years.

It's more complicated now.

Increasingly, publishers are being beaten to death by "returns": booksellers can accept a batch of books and then ship them back if they don't sell within some (very short) period of time. The bookseller then gets credit for the next batch of books. Without this option, many booksellers wouldn't buy anything from publishers except absolutely guaranteed best-sellers.

But it means publishers can't tell for months if they're really selling any books at all. So modern contracts specify that part of the author's royalties will be held back "against returns" for six additional months.

In addition, publishers increasingly offer royalties based not on the list price of the book (which is almost always discounted anyway), but on the discount price paid by the bookseller--usually 60% of list price, and sometimes even less.

So you've got a novel on the market with a list price of $30. In the old days you'd have received $3 for every copy sold. If you got a $3000 advance, you'd earn out when your book had sold a thousand copies.

Now, however, you may get a royalty based on only 60% of list price: the bookseller paid $18 per copy, so you get $1.80. You'll have to sell a lot more copies to earn out. (Sales to book clubs are nice, but they're at such a deep discount that you get even lower rates.)

Foreign royalties can complicate matters. When I was publishing paperback novels in the US, my royalty was usually 8% of list price: about 64 cents for a $7.95 book. (The royalty would rise to 10% or even 12% on any copies sold beyond 150,000...in my dreams!)

But copies sold in my own country, Canada, were "foreign" sales, and on those I got a royalty of only 4%.

Of course I pay taxes on my royalty income. But under Canadian law I can take some considerable deductions on my income tax as long as I occasionally make more money from writing than I spend to make the writing possible. Five consecutive years of losses, and the tax people will say it's a hobby, and the deductions will stop. Until that evil day, I can claim deductions on my computer lease, software, book purchases, research expenses, travel, office furniture, and so on.

And when I donated my papers and memorabilia to a local university library last year, I got a huge charitable deduction—so don't throw anything away, including those awful first drafts!

We Canadians have another kind of royalty, and it's not the Queen. The Public Lending Right Commission goes out every year and visits ten different public libraries. It has a list of books published by Canadian authors, and every time it finds one of those books in the holdings of a library, the author makes about $40. This is to compensate the authors for sales lost because library users are such cheapskates.

If the book is in all ten libraries, that's $400. And when you've published 20 books, many of them held in Canadian libraries, it begins to add up...even for books that have been out of print for 20 years.

The drawback in the economics of modern book publishing is that publishers are increasingly reluctant to take a chance on a book unless they think it's going to be a blockbuster. The "mid-list" book that would sell slowly but build a readership is almost gone. Publishers can't afford to keep them in the warehouse, and booksellers can't afford to keep them on their shelves. Meanwhile, cash-flow problems keep publishers from gambling on promising new writers...because the booksellers are so slow to pay for the books they sell, and so quick to return the copies they can't sell.

Not a pretty picture. But you weren't really planning to get rich by writing fiction, were you? Or nonfiction?

Comments

[Lauren]

Umm, rich no. But quit my day job at some point was the hope. Oh yeah, I have to actually finish something first. *Smile*

[Crawford Kilian]

Mileages vary, but I'm really glad I kept my day job. Writers who make their whole living from writing have a couple of problems:

1. They have to write whatever comes their way, whether it's interesting or not. On the couple of occasions when I had to write a novel for the money, it was like pulling my back molars with my fingers.

2. They end up writing novels about novelists writing novels.

Still, Robert Heinlein did pretty well as a fulltime writer (until he got old and successful and self-indulgent). He also left us his five rules for writers:

1. Writers write. They don't wait until they "have enough time" or "inspiration strikes."

2. Writers finish what they write. No matter how much they hate the current project, they slog through to the last page.

3. Writers never rewrite except to editorial order. Writing a novel is like building a deck or renovating a bathroom--you don't want to rip everything up and do it all over again. So you plan carefully, do it right the first time, and don't keep fussing with the story.

3a. (Kilian's Exemption) When you're starting out, you need your novel in progress to teach you a lot, so it's OK to go back and revise your ms. on the basis of what you're learning.

4. Writers put their work on the market. They don't just inflict it on friends and family.

5. Writers keep their work on the market until it sells. So the first 15 or 20 rejections don't matter; you send it out again.

Heinlein argues that writers fail by breaking one or another of these rules, and he's right. I wrote my first novel in the army in 1966, sent it to one publisher, got rejected, and never sent it out again. Bad as it was, some wretched publisher would eventually have bought it, and my career would have started a decade earlier than it did.

[Teresa]

1. Writers write. They don't wait until they "have enough time" or "inspiration strikes...

I was coming over to search for this particular quote and here it is. I was looking for those wise words so I can get motivated to finish an essay I'm entering in my local paper's Christmas essay contest. $50 prize. Not a lot, but I'm not motivated by the money, I need to be writing and submitting just like you say - not talking about writing and submitting. The deadline is Friday; I am determined to make it!!

[Crawford Kilian]

Go for it, Teresa! Here it is only Monday evening--you've got plenty of time, and editors like writers who get stuff in well ahead of deadline.

[glo]

Writers write. They don't wait until they "have enough time" or "inspiration strikes...

Yes, yes, yes, I need to remember these words!

[Steve]

Another option: self-publishing

This page was conformation that my decision to self-publish instead of do the royalty thing was a good one. Here's the math...

I sell my books for $7.99 (which currently equates to $10.40 for my US customers). Subtracting my initial editing and printing costs, plus the royalty I pay to the fellow who illustrates my covers gives me an approximate profit per book of $2.50 for Canadian sales and $4.40 for US sales. I've sold 1000+ copies of my first book and 600+ of the second one; the third book was published Dec. 1st and already it's taking off.

Going by Crawford's royalty numbers I'm probably way ahead of most published Canadian authors, except for the handful who are in big leagues. Life is good! Check out http://www.autumnjade.com/ to see how I do it...

[suhaIl khawaja]

Publishers typically pay large advances to authors, Why and how does this benfit both the author and the publisher?

[Crawford Kilian]

Actually, large advances are pretty rare. A typical advance for a mass-market US paperback might be anywhere from $5,000-$10,000--not really very much if you figure out how many hours the book required to write. In some genres, the advances for first-time authors are even lower.

In many cases, the author gets no advance at all; this is especially true of textbooks. On the other hand, a successful textbook may make a huge amount of money and go through several editions.

When a publisher pays an advance on a novel, there are several reasons:

1. To keep the writer from going to a competing publisher.

2. To establish a relationship that will, the publisher hopes, last through many books.

3. To reflect the publisher's estimate of how well the book will do (if your first few books do poorly, expect the advances to fall).

4. In the rare cases of very big advances, to recruit or retain a successful author, and to use the size of the advance as a marketing device ("First-Time Author Wins Million-Dollar Advance!").

Isaac Asimov, a very prolific author, stopped demanding advances. He didn't need the money, and publishers were happy to bring out his books without the up-front expense of an advance. Asimov knew the books would make somemoney, but could wait a year or two for it.

And the publishers were more willing to bring out even a money-losing Asimov book because the next one would do well enough to cover the costs of the money-loser.

[Frances]

Hi! I just wanted to thank you for putting up an explanation of how royalties work - I have to write a pamphlet on my career choice and one of the things I have to include is "salary and benefits". Hah!

[More royalties for your articles.]

They companies listed here create a market place for your writing and offer lifetime royalties for your creative work. If you have a creative flair, if you have a unique ability to express yourself and after all, if you are hard working, I can bet that you are going to make a difference.