Author Taylor Stevens Explains How Authors Get Royalties - Very Illuminating.
Taylor Stevens has written 3 books, starting with The Informationist (which I read several years ago and liked well enough). But, more importantly, she is sharing with her email followers how the publishing industry works and how authors make their money. This segment is about royalties. It's a bit long, but if you have always wondered how authors make money beyond advances, here is an explanation.
Royalties: According to the publisher-author contract, a percentage of every book sold belongs to the author in a form of profit sharing that was originally intended to leave a 50/50 split after all the publishing expenses are factored in. The percentage is laid out within the contract and it varies by format (hardback, trade, mass market, ebook, etc.) and tiered by quantity sold. Typically for a hardback book the tier starts at 10% of cover price (for a $23.00 book, this would be $2.30 per book to the author) and 7.5% for trade paperback (for a $14.00 book, this would be a little over $1.00 per book to the author).
Since the author has already been paid for the work, and that money is his/hers to keep regardless, the author won’t receive any more money from the publisher for this work until enough copies have sold so that the author’s portion earned through sales equals the money the publisher already paid in advance of royalties. This is called “earning out.”
If we assume that our previous hypothetical $20,000 advance was made for a hardback book with a cover price of $23.00, that book would need to sell just over 8,500 copies in order to earn out. [This is not factoring in sales from audio, ebook, or other sources, or the tier breakdown where the author would get more money after the first 5,000 copies—I’m trying to keep it simple.] For a relatively unknown author, 8,500 hardback copies is a LOT of books. Just saying.
Depending on the size of the advance, it’s possible for a book to sell incredibly well and still not earn out. Many books never earn out, and in those cases, the author will never receive more money from the publisher for that book. Once a book does earn out, royalties are accounted for and paid by the publisher typically twice per year. This is with the big six traditional publishers. Indie publishers and small presses may have different schedules, and Amazon also has a more frequent schedule.
Accounting for royalties does not begin for a book until the book’s publication date, and if the pub date falls, say, one month after the accounting period closed out, it could be a year before the first royalty check shows up. THE INFORMATIONIST was sold in July 2009 (contract signed in August), published in March 2011, and the first royalty check (which accounted for only 3 weeks of sales) arrived in September of 2011.
One of the things I find giggle-worthy is when people talk about publishing a book as a way to get rich. It does happen for a small percentage of authors, but even still, as you can see by the way the timeframes are so spread out, even for them book publishing is not get rich quick.
The subject of rights is kind of tedious, so, I’m going to skip a few weeks before approaching it.