Most people that work in the publishing industry will tell you they have come across a number of people looking for a book deal without an actual book to publish. But sometimes, you meet people who seem to have it all figured out; they have a manuscript they think will be the next best novel of the year. If you fall in the latter category you have probably thought about getting a publishing deal for the prestige and perks that come with it or maybe you want to go the self-publishing route. Whatever the case, there is always the question of how income from the book will be earned. This is where royalties come in.
What is are royalties?
Royalties are simply a percentage (or flat fee) per book sale paid by the publisher to the copyright holder of the book, usually the author, to compensate them for their work. The size of the percentage varies depending on the size of the publisher and the general book trade.
Royalty percentages will also vary on each type of sale (Paperback, Hardcopy, e-book etc.) This is all agreed upon between the publisher and the author in the book contract.
How are they calculated?
Here is an example of how royalties work: let’s say you published a book and the retail value of the book is K100. And the agreed-upon royalty rate is 10%.
10% of K100 = K10
That is how much the author will get for every copy sold. The publisher will not pay out the percentage every time a copy is sold. The book contract will also state how much time the percentages will accumulate for before they are paid out to the copyright holder, this is usually every six months.
What Determines the Royalty Percentage?
There are a number of reasons that would cause variations in the royalty percentage, such as:
• Author popularity
• The size of the publisher
• The current market for the type of book
The rate of the royalties will differ for different types of book sales (hardcopy, paperback or e-book) and for each of those types of books, the royalty rate may change as the book continues to sell e.g. 10% of the book’s retail price on the first 5000 copies sold, 12.5% on the next 5000 copies and 15% thereafter.
Most publishing houses prefer to pay royalties based on the net income from the sale of a book rather than the retail price because a lot of chain booksellers demand discounts from publishers. While this may be ideal for the publisher, it is not always the case for the author: historically, some publishers like HarperCollins were known to have sold overly discounted books to their affiliate publishing houses and then later sold them at standard retail prices. Meanwhile, the author only got royalties from the discounted sells. It is important that you are aware of all your options when agreeing your book deal.
Royalties in Self-Publishing
Using self-publishing platforms has its advantages; the writer gets to keep most (sometimes, all) of his book rights and he can distribute it as they please. Like traditional publishing, income from self-publishing will come in the form of royalties: a percentage or flat fee from every book sale. However, unlike traditional publishing, the author does not get an advance meaning his or her royalties will not be withheld until they sell a certain number of covers. A self-published author has a lot of control on the distribution of the book. In most cases, they have to supply their books to the bookstores.
In Zambia, most self-published authors get to decide the retail price of their book and the bookstore only demands a percentage, the standard being 30%, from every sale. The copyright holder will then receive a check from the store every couple of months. Some bookstore will only pay the author his share when all his books have been sold.
An advance is an amount given to the author against royalties, it based off what the book is projected to earn. The amount of the advance is determined by how popular the author is, the size of the publishing house and the market available for the type of book.
An author will usually receive his advance in installments based on the stages in the book’s development. By receiving an advance, the author agrees to not receive royalties from the book until the accrued royalties from the book sales surpass the advance received. In most cases, when receiving an advance, the author may also give up certain rights to the publisher i.e. the publisher will have exclusive rights to the distribution of the books. All this will be in the book contract.
When the book earns out its advance the author will start to receive a regular royalty check, usually every six months, for as long as the book is still selling.
Disclaimer: The purpose of this article is to give you a general idea of how book publishing and royalties work. The writer, of this article, is not a literary agent or a lawyer. You should get in touch with one of the two or both if you wish to make any legal decision concerning book publishing.