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RockWay Press ® If Maxwell Perkins were alive, he'd want to work here.™ |
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ADVANCES, ROYALTIES, & ROYALTY STATEMENTS
Advance Against Royalties Most people assume that all authors are wealthy beyond imagination. They hear that someone like Stephen King or Anne Rice got $35 million as an "advance" for the next novel, or that J. K. Rowling, of Harry Potter fame, is now richer than the queen of England, and they assume that every single person who gets a book published is just as rich as those celebrity authors are. Unfortunately, this is not at all the case. When readers pay for a book, they often assume that the author receives the entire cover price of the book. Thus, if the reader pays $13.95 for a book at his local bookstore, he assumes that the author gets the entire $13.95. Not true. For each book sold, the author usually receives 10% of the cover price. In this case, it would mean that the author would receive $1.395 for each book sold. Out of the 10% that an author earns, he must pay his agent (20% of the total sales, not just of the author's part), federal tax, state tax, local tax, and social security self-employment tax. If the author has a subsidiary rights agent, that agent also gets a percentage of sales, usually 10-15%. Out of every dollar that an author earns on a book sale, he actually receives only between 39-49 cents. Where does the rest of that $13.95 cover price money go? Most bookstores, for example, get 45% of the cover price of every book they sell. Amazon.com gets 55% of the cover price of each book sold. The distributor, who gets the books from the printer to the bookstore, also receives a % of the cover price for his services. The printer gets paid a per-page-printed-fee and a cover-fee. The publisher gets any remaining monies, out of which he must pay author royalties (a % of the cover price), overhead, publicity, storage, shipping, and other miscellaneous costs. Some publishers take these additional costs out of the author's 10%, which, of course, seriously undermines an author's earning capabilities. In short, most authors who are published make no money at all, or very little compared to the celebrity authors we're always hearing about. At the signing of the contract, an author is usually granted an "advance" against future royalties. This is the amount of money that the publisher reasonably expects the book to make. The entire 10% that the author makes from his book's sales goes into his account until the total amount of the advance has been paid back, or "earned out", as the publishers call it. The author receives no additional royalty monies until his advance has earned out. One of the difficulties of an author's earning money is that bookstores are always allowed to return books that don't sell, no matter how long the books have been in the stores, no questions asked, and with all money refunded. Thus, the bookstores never lose any money since they can always return books which don't sell. To prevent the company from losing money, most publishers hold a "reserve against returns" on the books they sell. This means that if the author has sold enough books to earn out his advance and has an additional $100 in royalty monies due to him, the publisher can hold the entire $100 (or any portion thereof) as the "reserve against returns." That way, if and when the bookstores don't sell the books and return them to the publisher, the publisher doesn't lose any money. The author does. How do publishers hide the information on how many copies of a book is selling or being returned? How do publishers keep an author from knowing how much money his book is making? It's easier than you think. The publisher often doesn't tell the author how many copies are in the first printing, and those numbers aren't listed on the royalty statements. If all those books sell out and the book goes into a second printing, the publisher is supposed to indicate this on the copyright page, but many publishers do not. They simply print more books, as if they were originally in the first printing, and continue to sell them. Thus, the author has no idea how many books are printed and are available for sale. Royalty statements often neglect to list the number of sales of the author's book, listing only the number of returns from bookstores and the money the publisher is "losing", which, of course, is passed on to the author. At RockWay, all authors are told how many books are in the first printing (and every printing thereafter), the exact number of books sold, the number of books returned, etc. In this way, RockWay authors can keep track of their own sales, and royalties. At this time, RockWay Press is not able to offer advances against future royalties to its authors. However, this means that our authors begin earning royalties from their very first sale. RockWay does not take distribution or publicity fees from its authors. All distribution fees (which are a percentage of the cover price), bookstore earnings (% of cover price), online bookstore fees (% of cover price), and printing costs come out of RockWay's money, not the author's. Our authors will always be treated fairly and get their entire percentage of all the monies their books earn. \
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