Royalties

I Have Contract in Hand, Now What?

Normally, this would be a Writing Tip Tuesday post, but I have several questions in the queue and I want to get to them before I start posting the short stories for the contest. (10 more days to submit; tick-tock!)

Dear LDSP, I finally have a contract in hand, (AAaahhhh!!!) but have no idea how good it is. Do you know, 1) is 5% of the net received by publisher for the first 5000 acceptable? Also, 2) how long is the “full term of copyright”? This contract seems relatively innocuous, but what do I know. 3) Is there someone you could recommend to have look a contract over?

Royalties vary from publisher to publisher. 5% of net, IMHO, is low but I’ve been hearing that a lot lately in the LDS market, especially for first time authors. Here is a fairly clear explanation of how royalties work (retail vs net). Keep in mind that many LDS fiction titles never hit that 5,000 mark, some do not even crack 1,000.
Copyright. I’ve had several questions lately about basic copyright, so first let’s define it.
Copyright is a form of protection grounded in the U.S. Constitution and granted by law for original works of authorship fixed in a tangible medium of expression. Copyright covers both published and unpublished works. (www.copyright.gov)

This means, as I said yesterday, that as soon as you put your ideas into a fixed form—write on paper, typed into a computer, recorded on a tape—your work is protected by copyright. You, as the creator of that work, own the copyright.

When you go through a publisher to have that work published, you are essentially selling or licensing to a third party the right to publish (copy) and distribute (sell) that work in various formats. Payment for those rights come back to you in the form of royalties and/or advances against expected royalties.

The term, or length of time, that those rights are available to that publisher is defined in your contract, as are the various formats that the publisher can sell.

Current U.S. copyright law states that the “full term of copyright” lasts for the life of the author, plus 70 years. Therefore, according to your contract, the publisher will have the right to publish and sell your book for your entire lifetime, plus 50 years.

However, before you panic, usually there is an out-of-print clause or a minimum sales clause in there somewhere that states that if the publisher lets your book go out of print, or if sales of the book drop below a certain point for a given amount of time, the rights will revert back to the author. If you don’t have a clause like that, try to get one added.
One of the benefits of having a good agent is that it’s their job to look through your contract and make sure it’s legal and fair to you. In the LDS industry, we don’t have agents. Too small. If you have access to a copyright contract attorney, that’s your best bet—but it’s also expensive. Try to find someone who has a little experience with publishing and contracts to read through it. And if you don’t understand your contract, by all means, have your publisher explain it before you sign.

Royalties & Negotiations Revisited

I’m sorry my answer wasn’t sufficient here.

Did I mention I’ve taken on some new responsibilities at my company, ~~burning the midnight oil & struggling to the limit of my abilities to open~~ opening a new area of publishing? Which now looks like it may be scrapped.

[breathe, LDSP, breathe]

I didn’t mean to be negative or emotion-less. And I’d love to be in a position to entertain author negotiations on royalties. But the reality of the situation is that the LDS market is small and budgets are tight. That means that there is very little wiggle room for negotiation. We’re not like national publishers who only pay 60¢ per copy of a paperback book. Our books can cost us as much as $3 to $4 per copy, depending on the size of the print run. Yet, we have to price our books somewhere in the ballpark with national books. Also, a fantabulous, hit-it-out-of-the-park, run-away best-seller fiction title for us means 20,000 copies sold (almost unheard of); not 200,000.

Royalties are based on the expected sales of a book (for fiction, 2,000 copies). Especially for LDS fiction, we can only go so high, no matter how well you negotiate with us. First-time authors in the LDS market are a risk, therefore, you do not have much room for negotiation at all. If your first book goes bananas, you will have more leeway to negotiate a better royalty deal on book #2.

“Good luck” means “I wish I had better news and maybe you will be able to negotiate a better than average deal and it doesn’t hurt to try.”

Royalties & Negotiation

What is the average royalty a fairly new author should expect to get? And are they negotiable? What about if you’ve already published a couple of successful books with that publisher, should you try to negotiate a higher royalty for your next project? And if so, how do you go about that?

“Average” varies between publishers. Some base royalties on the cover price, others base it on the wholesale price. New authors can be between 6 & 10%; established authors can go higher.

If you want to negotiate a higher royalty, say to your agent or publisher, “I’d like to negotiate a higher royalty for this book because. . .” and you need to have good arguments for why your book is going to sell like hotcakes. Some will negotiate, some won’t.

Good luck.

I understand the basics of royalties. But is it typical for a new author to get a royalty? How much do they usually get? What happens if they don’t sell many books? I guess you have to pay the company back if you didn’t make enough to cover royalty? Thanks for any information.

Yes, all authors should get a royalty. How much they get depends on the contract they sign. Each publisher is a little different but a typical royalty expectation is between 6 and 10% of either the wholesale or the retail price (again, depending on what you negotiate with your publisher).

Some authors may also receive an advance, although there are many LDS publishers who do not pay advances under any circumstances. An advance is a pre-payment of royalties based upon a publisher’s expectation of sales. IF you get an advance, you will usually get a portion of it upon acceptance of your completed manuscript and the rest when the book goes to press. IF you get an advance, you will not earn additional royalties until you have sold enough books to have earned that amount in royalties.

For example, let’s say your royalty is $1 per book. (That’s not likely for a first author in the LDS market, but it’s easier to do the math this way.) Then let’s say you got a $500 advance. (Again, not likely in this market but let’s pretend you’re a good negotiator.) You would not earn any more royalties until you’d sold 500 copies of your book. At that point, your royalties will kick in again and you’ll earn them at the rate of $1 per book sold.

NO. You never have to pay back an advance unless you default on the contract. That only happens if you receive an advance before you submit your finished manuscript–and no publisher in this market will agree to that. Or if your actions make it impossible for the publisher to sell your book.

And NO. You should never have to pay back a royalty because you don’t get paid until the publisher actually sells the book. Some publishers may have a clause in their contract that says if your books are returned unsold from the bookstore, then those books will be credited against your future royalties but you should never have to return a royalty once the check has been sent to you. If this isn’t addressed in your contract, ask for it to be clarified.

Royalties Paid on Cover vs Wholesale

I have a question regarding royalties. My publisher pays by value sales. Are there some publishers that pay a percentage of the cover price or do most of them sell according to value sales?

Value sales refers to the publisher’s receipts, or the price at which they sell the book. It will be somewhere between 40 and 80% of the retail price. In this industry, the average discount is 40%.

Cover price refers to the suggested retail price printed on the cover of the book.

Some publishers pay based on cover price, others on wholesale. Some will pay cover on some books, but wholesale on others. Sometimes this is negotiable, sometimes not. Royalty percentages based on cover price are usually lower than percentages based on value/wholesale price.