How to Read a Royalty Statement
The numbers are nuts!
“Authors can no longer tolerate being at the mercy of the publisher to accurately and honestly report the actual numbers behind these revenue streams as opposed to just some bottom-line figure computed in secret; it’s essential to know how many people are accessing a work and the income attributable to it in clear and precise terms.” — Author’s Guild
Hello Loreates,
I was working on a serious craft essay for you today when one of my semi-annual royalty statements popped into my inbox. It’s for my book Gaining: The Truth About Life After Eating Disorders, which was released by Wellness Central in hardcover in 2007. Understandably after all these years, sales of this book have slowed to an occasional dog paddle, but the statements keep coming, in all their many pages. And as I glanced through the cumulative figures, I thought they might offer a useful object lesson for you.
Some of you have yet to publish your first book and have never seen a royalty statement. Others have recently become authors and will soon receive your first statement. Still others are, like me, seasoned authors who meet each statement with bewildered exhaustion. So many numbers, so little sense.
Royalty statements are notoriously confusing, and publishers are forever promising to streamline and make them easy-to-read. But the industry itself, with its opaque practices and apparently infinite pricing variations, thwarts that promise. To give you just one wild example, my statement reflects pricing on the electronic version alone that ranges from $1.99 to $75 per copy. Each price variation requires a separate royalty calculation and report. Which is how a statement for a book that’s sold just 44 copies in this period winds up being 16 pages long.
But learning to track your royalties is a necessary part of becoming an author. So I’m postponing this week’s craft essay to instead give you an industry insider’s trip behind the screen of numbers that bedevils every published author.
Because I will be sharing actual numbers, including advances and licensing fees, I’m paywalling this adventure. Thank you to my paid subscribers for your trust, and I hope you enjoy this week’s prompt!
Aimee
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What’s in a Royalty Statement?
The first thing to know about royalty statements is that there’s no real industry standard, especially among independent publishers. The Authors Guild has been advocating for more transparency for years:
“Authors can no longer tolerate being at the mercy of the publisher to accurately and honestly report the actual numbers behind these revenue streams as opposed to just some bottom-line figure computed in secret; it’s essential to know how many people are accessing a work and the income attributable to it in clear and precise terms.”
But progress is limited. In theory, you should receive a royalty statement at least once a year for as long as your book is available in print. But one of my publishers sent me a grand total of two royalty statements over my book’s first five years, and those statements never included any mention of the French edition, for which I was entitled to a cut.
IMHO, a lot of the indie publishing world operates on the principle that the spoils are so small, no author can afford to fight for them. Yes, you can request an audit, and the Authors Guild can help you do that, but if you know you’ve only sold a couple thousand copies, there’s really no financial justification for all that effort. So some small presses will pocket a few hundred here or there without recording them. This is one of the many reasons I urge emerging authors to push hard for deals with established, reputable publishers.
Mainstream publishers have accounting departments that produce sales reports for every title, and most send royalty statements to their authors twice a year. These statements basically provide a publishing history for every book. They reflect the initial advances, subsidiary licensing revenues, and sales for every version of the book that’s handled by the publisher. If the publisher makes a foreign sale of your book, you’ll see the licensing fee on your royalty statement; actual foreign sales will be reflected in statements from the foreign publisher… if you’re lucky. As with indie presses, a lot of foreign publishers simply swallow their sales figures without a word to the author. That’s why it’s important to cut a good licensing deal and collect the money up front.
All right, so I’m going to walk you through my current royalty statement for Gaining: The Truth About Life After Eating Disorders. Not all 16 pages, but the main sections.
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