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Wednesday, December 12, 2007

Money Talk by Angela Benson

Let's talk about money. After you write that wonderful book and sell it to a great publisher, you sign a generous (or, not so generous) contract and wait for the royalties to pour (or, trickle) in.

Publishing contracts typically pay out every six months. The contract states that royalties for the January-June period must be mailed to the author by the end of September, while royalties for July-December must be mailed by the end of March. So, if you visit the blogs of all your favorite authors around these times and they’re deliriously happy, it probably means they got paid. Some authors out there may not be so happy as they may not have earned as much as they wanted. That’s the way it goes.

A couple of contract clauses can make royalty time a bit depressing for authors: joint accounting and reduced royalties on deeply discounted books. Let’s talk about these two so that you’ll know what authors face.

Joint accounting, also called basket accounting. What is joint accounting? I don’t have a definition but I can give an example. Suppose you have a two-book contract that includes an advance for the first book and an advance for the second book. In joint accounting, you have to earn back the money for both books before you get any more money. Let’s say you get $10,000 for the first book and $20,000 for the second book, a total of $30,000 in advances.

Typically, you’d get half of the first advance ($5000) and half of the second ($10,000), a total of $15,000, upon signing the contract. When you turn in book one and it’s accepted, you get the second half of the first advance ($5000), for a total of $20,000 in advances received. When the second book is turned in, you get the second half of the second advance ($10,000), for a total of $30,000 in advances received.

In joint accounting, you don’t get another dime from the publisher until you earn back the full $30,000. Suppose your first book earns $25,000 the first year? You don’t get any money because you still owe the publisher $5000 under joint accounting. Without joint accounting, you would have received royalties of $15,000 on the first book ($25,000 - $10,000 advance already received). Of course, you wouldn’t get any money on book 2 until you had earned back the $20,000 advance paid for it.

So, in joint accounting the payments for the books are lumped together, as opposed to each book standing on its own. Of course, if you’re getting $100,000 for the first book and $200,000 for the second, you may not mind joint accounting. You really have to look at all the terms of the contract.

Reduced royalties on books sold at a discount. Typically, bookstores buy books from publisers at 60% of the cover price. On a hard cover book, the standard royalty rate (the rate the author is paid) is 10% of the cover price for the first 5000 copies sold, 12.5% for the next 5000, and 15% for anything over 10,000. If you sell 1-5000 copies of a book that has a cover price of $22 dollars, you get $2.20/book.

The reduced royalties on discounted books means you’d get 10% of the net receipts of the book, rather than 10% of the cover price. So, if the publisher sells the book to the bookstore at a 50% discount, you 10% of the discounted price. If the book is $22, you get 10% of $11 or $1.10/book. You’ll notice that this is half of what you’d get under normal royalties. [To be fair, I think 55% is the deep discount point for most publishers, but 50% was an easier number to work with in the example.]

These two clauses are reasons enough to get an agent to negotiate on your behalf. Your agent may not always be able to get rid of the clauses, but she can advise you on ways to minimize their impact on your bottom line.

For my most recent book, The Amen Sisters, I negotiated my own contract. This was not a fun experience. I was uncomfortable bickering (that's what it seemed like to me) with the publiser so I finally caved in and signed the conract, even though I knew there were a couple of clauses that were not to my benefit. Somehow I convinced myself that they weren't that bad. They were.

If you're like me and lack the fortitude to endure the negotiation process, then pay an agent to do it for you. It's very easy for me to tell my agent that something is a dealbreaker, but it was impossible for me to say it directly to publisher. I guess I'm a wimp. The cost for being a wimp these days is 15%. I consider it money well spent.



Angela Benson is the author of The Amen Sisters ($13.99, Grand Central Publishing). "The Amen Sisters tells the story of sexual sin and the far-reaching consequences of that sin.. .Ms. Benson aptly captures both the passion and pain that folks bottle up in their lives, and the importance of dealing with situations as they arise. Kudos to Ms. Benson for dealing with one of the last remaining taboo topics in today’s church in such a straightforward and compassionate manner." -FallenAngelReviews.com

You can find Angela on the web at www.angelabenson.com

4 comments:

Maureen Fisher said...

Hi Angela,

Thank you for de-mystifying the royalty / money / accounting issues surrounding the publishing business.

maureen

Cheryl said...

Wow! What a great post Angela. Thanks for sharing this with us. I thik I'll save it so I will have it when I need it.

Cheryl

Angela Benson said...

You're welome, Maureen and Cheryl. Experience is a great teacher!

Thanks for hosting me today, Cheryl. Sorry it's taken some time for me to log-in. End of year grading is taking its toll.

Angela

Theresa Chaze, Wiccan Writer said...

Angela,
Congratulations! May your work continue to be successful.