Help For Writers

Just the Facts Some Information, Ma’am

When I got serious about publishing my speculative fiction, I did what a lot of writers are doing: I began to investigate and weigh the pros and cons of self- and traditional (including small and independent presses) publishing.  Eventually, I made my way to the topics of contracts and compensation for my work.  Money isn’t my writing goal or motivation.  However, it is a fact of life every writer should be fully aware of when it comes to royalties.  So, I felt I owed myself some research and consideration on that topic, at the very least.  What I’ve learned about publishing has been enlightening in more ways than this blog post will cover.

What I’ve also discovered is that the writing world is full of people like me who just wanted facts so they could make informed decisions about their careers.  So, here are some facts I’ve gathered along the way.  Take what’s useful to YOU and ignore the rest.  I’m not advocating any publishing model(s) for anyone.  I’m just sharing information.  Comments are always welcome on this blog.  If you feel so inclined, here’s an open invitation to share your experiences and data resources to help grow the pool of information and data for novelists.  Please pass the link to this post along to other writers if you think they would benefit from the information in it.

I’m a numbers kinda gal, and I like to see the numbers I crunch in tidy columns and rows that tell me what I need to know.  My first table had two paths for comparison—traditional and self—because those were the options for digital publishing at the time.  In the last year or so, my table grew exponentially, seemingly spawning columns of its own accord.  It now has seven columns because those are the seven publishing models for digital novels that I have come across. Six are offshoots of traditional publishing.  Three of the six are direct publisher models, three are associated in various combinations with literary agencies, and the last model is self-publishing.

Apples-to-apples comparisons aren’t possible for me to do when it comes to the entire scope of publishing.  There are too many aspects of publishing (editorial, production, design, distribution, marketing, promotion, etc.) and too many variables in each area for me to tackle without giving up my full-time job, which is writing.  So, I’m going to focus on a limited set of simple data in this post.  If readers of World Enough and Time want me to share my information from other areas, I’ll be happy to do that in future posts.  This blog post, however, will focus on royalties (though it also will outline who pays for publishing-related services, too, as that is something writers need to know if they want to make informed decisions).

The data and information I’ve collected comes from lots of sources, as I’m not the first to discuss this topic.  All of this information is readily available if one digs through blogs, press releases, social media, and corporate sub-documents in the public domain.  I’ve just never seen all of it in one place, though several authors, professionals, and organizations interested in digital and/or self-publishing have put information out on the Web with comparison charts and examples.  If what I’m presenting here exists in a similar form somewhere out there in the ether, please drop a link to it in the comments section.  Other writers and I will be thrilled to have the information, I’m sure.

So that we’re all on the same page about exactly what defines each model and distinguishes it from another, I’m providing brief definitions.  I’m not examining the traditional publishing model, through which an author would sign with an agent who then would sell digital rights to a publisher.  I am not naming Publishers, Agency Publishers, or Author Services companies, so please don’t ask me to do so.  My purpose is not to “call out” or admonish anyone.  Nor is it to advocate one model over another.  It’s simply to share information I’ve gathered.  I encourage you to seek and verify information for yourself.

Definitions and Abbreviations

Publisher A (PA)

Author submits work to or is contacted by Publisher A.  All publishing expenses are paid for by Publisher A.  Average debut author receives an advance, typically ranging from $100-$1000 while known authors may receive higher amounts.  Author split of net receipts is 25%.  Publisher A holds digital rights for agreed-upon time period.  (See Assumptions)

Publisher B (PB)

Author submits work to or is contacted by Publisher B.  Expenses are paid for by Publisher B.  Author split of net receipts is 30%. Publisher B holds digital rights for agreed-upon time period. (See Assumptions)

Publisher C (PC)

Author submits work to or is contacted by Publisher C.  Expenses are paid for by Publisher C.  Average debut author receives an advance, typically $100-$500.  Author split of net receipts is 70%.  Publisher C holds digital rights for agreed-upon time period. (See Assumptions)

Agency Publisher/Author Services 1 (AP/AS 1)

Author submits work to agency or is contacted by Agency Publisher, who gets a 30% royalty for rights to digital publishing only.  Expenses are paid to an Author Services company through royalties (30% of net receipts before Agency/Publisher takes its cut).  Author split of net receipts is an effective rate of 49% (70% of 70%).  Agency Publisher holds digital rights for agreed-upon time period. (See Assumptions)

Agency Publisher/Author Services 2 (AP/AS 2)

Author submits work to agency or is contacted by Agency Publisher, who gets a 30% royalty for rights to digital publishing only.  Expenses are paid to an Author Services company through royalties (30% of net receipts after Agency/Publisher takes its cut).  Author split of net receipts is an effective rate of 49% (70% of 70%).  Agency Publisher holds digital rights for agreed-upon time period. (See Assumptions)

Author/Author Services through Agency (AU/ASTA)

Agency has a partnership with Author Services company, which agrees to perform editorial, distribution, and marketing services for agency’s authors who wish to self-publish.  Expenses are paid to an Author Services company through royalties (30% of net receipts).  Author split of net receipts is an effective rate of 70%.  Author retains digital rights.  (See Assumptions)

Author Self-Publishing (AUSP)

Author arranges or performs editorial, distribution, and marketing/promotion services.  Author split of net receipts is an effective rate of 100%.  Author retains digital rights.  (See Assumptions)

 

Table 1.  Rights, Expenses, and Royalties per Publishing Model

Model

Who owns digital rights?

What is method for paying editorial, production, distribution, marketing, promotion expenses?

Publisher’s Royalties on Net Receipts

Agency’s Royalties on Net Receipts

Author Services Royalties on Net Receipts

Author Royalties on Net Receipts

Publisher A

Publisher A

Arranged and paid for by Publisher A

75%

25%

Publisher B

Publisher B

Arranged and paid for by Publisher A

70%

30% plus advance

Publisher C

Publisher C

Arranged and paid for by Publisher A

30%

70% plus advance

AP/AS 1

AP

Arranged by AP and paid for by royalties after AP takes split

30%

30% of remaining 70% (after AP)

70% of 70% (after AP and AS)

AP/AS 2

AP

Arranged by AP and paid as royalties to AS before AP takes split

30% of remaining 70% (after AS)

30%

70% of 70% (after AP and AS)

AU/ASTA

AU

Through AP connection, Author works with AS, which takes royalties as payment

30%

70%

AUSP

AU

Arranged and paid for Author

100%

Example of Royalties and Expenses

Table 2 shows who gets what in each of the seven publishing models for each book sold through Amazon’s KDP program for 9.99 (maximum sales price to qualify for 70% royalty).  Advances cannot be calculated because of variations across publishers/authors.  Because authors have choices about which providers they will use for editorial, production (cover design, interior formatting, and file conversion), and marketing/promotion services, author expenses per book in the self-publishing model can only be calculated after the sale of books, with the cost per book decreasing with each sale.  The assumptions and exclusions that apply to the examples in Table 2 are listed below the table.  They are important, and I encourage authors to be familiar with them.

Table 2.  Examples of Amazon KDP Select Sale and Author Cost per Book by Model

PA PB PC AP/AS 1 AP/AS 2 AU/ASTA AUSP
Other splits /author split of net receipts 75/25 plus advance 70/30 30/70 plus advance 30/70 AP before 30/70 AS 30/70 AP after 30/70 AS 30/70 ASTA 100
Advance No advance Advance No advance No advance No advance No   advance
Amazon sale of $9.99 with .08 delivery charge

9.91

9.91

9.91

9.91

9.99

9.91

9.91

Amazon cut  = 30%

2.98

2.98

2.98

2.98

2.98

2.98

2.98

Net Receipts

6.93

6.93

6.93

6.93

6.93

6.93

6.93

% taken from net receipts

5.21  to PA

4.86 to  PB

1.08  to PC

2.08  to AP

2.08 to AS

2.08  to ASTA

0.00

Balance

1.72

1.07

4.85

4.85

4.85

4.85

6.93

% taken from net receipts

0.00

0.00

0.00

1.46 to AS

1.46 to AP

0.00

0.00

Author’s split

1.72  after advance payout

1.07

4.85  after advance payout

3.39

3.39

4.85

6.93

Advance

 

Advance

Author cost of publishing per book (does not count royalties or charges paid to Amazon)

5.21

4.86

1.08

3.54

3.54

2.08

Dependent on service provider fees, if any.

Assumptions in Table 2

  • Royalties are for digital copyrights and sales
  • Net receipts  = sales price of $ 9.99 – $0.08 delivery charge
  • Royalty rate is 70% through Amazon KDP program (some foreign markets may pay less than the 70%, and this would be applicable to all models)
  • AP/AS 1 and AP/AS 2 models do not consider author payment of a percentage of net receipts for agency representation, as the agency is acting as a publisher
  • AU/ASTA model does not consider charges an agency may pass on to author for “access” to their partner Agency Services company

Exclusions in Table 2

Because publishing contracts are complex beasts with a plethora of variations, the best I can do to compare apples with apples is to point out what my examples do NOT take into consideration.  Authors considering publishing through any model other than AUSP should be sure to address the exclusions listed below in their contracts.  As I am not an entertainment lawyer specializing in publishing, I am sure there are many additional considerations not covered in the exclusions below.  I strongly advise authors to contact a legal professional qualified to review publishing contracts before signing ANYTHING.  The following items are not considered or addressed in the simple examples in Table 2:

  • Length of Publishers’ or Agency Publishers’ ownership of digital copyrights or territories (i.e. foreign digital rights beyond those in the Amazon KDP program)
  • Publisher holding back a percentage of royalties for returns
  • Sales tax deduction from sales price
  • KDP Select monthly payout for books lent while in the program, as the calculations are for enrollment in KDP only so that sales can be made through other channels and still qualify the book for the 70% royalty rate
  • Deductions for charges for accounting, royalty statement preparation, or other expenses passed on to author by Publishers, Agency Publisher, or Agency Services company
  • Time from sale to receipt of payment from Amazon, Publisher, Agency Publisher, Agency, or Agency Services company
  • Digital sales on Publisher, Agency Publisher, Agency Services sites, or through other (non-Amazon KDP) retail channels, as these sales may qualify for different royalty rates (as per the author’s and/or retail channels’ contracts)
  • Expenses not normally paid for by traditional publishers, such as author Web site fees or author marketing and promotion beyond contract-determined activities (i.e., book launch party or book-signing tour).

Miscellany

The pricing of digital books is in flux.  In the last report I read on 4/17/2013, traditional publishers holding digital rights were setting prices between $4 and $8, so the $9.99 sales amount figure in Table 2 is just an example, not what authors should EXPECT if they decide to pursue publishing through any model in which they do not have control over pricing.

Distribution through the KDP Select program is not used in this example, as monies received from the pool of available funds each month that a book is enrolled in the program cannot be estimated.  If a book is enrolled in the program, however, royalties paid on sales remains the same.  Monies received from the pool depend on how many times the book was loaned out and calculated as a percentage of all loans.  For instance, if a book was loaned 100 times and all loans of all books that month totalled 1,000,000, the book would earn 100/1,000,000 (or 1/10000th) of the pool.  Any royalty agreement with other parties would apply to that amount, as well.

Advances present a difficult calculation for a “bottom line” to authors because they vary across publishers and authors.  Some authors can get substantial advances, but most do not.  The cost an author effectively “pays” through reductions in royalty percentage (final row in Table 2) might best be looked at in Publisher A and Publisher C models by using a formula that calculates how many books would need to be sold before the author starts receiving royalties, as advances must be paid back before an author receives anything more from a publisher.  Clearly, the less an author gets up front, the more quickly s/he will start receiving royalty payments from publishers.

Examples:

If an author received a $500 advance in the Publisher A model, 291 books would need to be sold before the author started receiving $1.72 for each additional book sold at $9.99 through the Amazon KDP program.

If an author received a $500 advance in the Publisher C model, 104 books would need to be sold before the author starting receiving $4.85 for each additional book sold at $9.99 through the Amazon KDP program.

Conclusion

As you can see, there are some vast differences between some models when it comes to what an author receives.  There also are vast differences between what an author has to pay for or do for her/himself, too, and those differences are not addressed in this post.   I have absolutely no doubt that the models and royalty rates I’ve highlighted in this post will change, and probably dramatically, in the next few years.  These are a starting point for authors exploring their publishing options.  Nothing more and nothing less.

What are your thoughts, experiences, resources you’ve found helpful?

One thought on “Help For Writers

  1. Pingback: A few numbers and a lot of words about current publishing models and royalties . . . | World Enough and Time

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