Hi mongolia~
As the author of a dozen books (published by a variety of publishers),
I can tell you that there is no simple answer to your question.
However, there *are* some industry standards that I can detail for
you.
1. HOW ARE ROYALTIES CALCULATED? In almost every case in both the U.S.
and the U.K., royalties are based upon the exact number of books sold.
In more rare cases, the author doesn’t receive a royalty at all, but
the publisher pays a flat fee for the book.
2. WHAT FRACTION OF THE RETIAL PRICE GOES TO THE AUTHOR? The industry
standard follows this basic formula:
Cover price x royalty % x number of books sold = author’s
royalty
The industry standard for the royalty percentages varies according to
what sort of book is being published:
• Hardcover books are typically 10 to 12%. Some publishers will offer
much less (as little as 6 or 7%), especially if they are not one of
the “big” houses.
• Mass market paperbacks usually begin at 5%; if the publisher really
wants the book, an author might be fortunate to receive 10% or more.
• Textbooks are, unlike most books, calculated upon the publisher’s
gross receipts, which typically ends up being 60 to 80% of the retail
price. Because this lowers the author’s royalty so much, some
textbook publishers will offer authors 15% or more in a royalty, but I
have seen textbook royalties offered as low as 5%.
In addition, some publishers (especially small houses) will sometimes
offer a low royalty percentage for the first few thousand books sold,
and then gradually increase the royalty if sales reach certain
benchmarks. These benchmarks vary from publisher to publisher.
It’s important to realize that there are a number of ways royalties
can be subtracted “from the author’s wallet:”
• Discounted sales typically make up at least half of a book’s sales.
Commonly, publishers sell books to bookstores and other sales outlets
for about 40% to 50% off the retail price, depending upon the quantity
of books ordered. (And it does not have to be just the authors’
books…it can books from a variety of authors.) This is why it’s very
important for authors to insist that words like “net receipts” be
defined in their contracts. Foreign sales can also dramatically reduce
an author’s royalties, so it’s important to know what sort of discount
the publishing house offers for these. (Often, authors get about half
the royalty they normally would for books that are exported.)
• All books that are returned to the publisher (from a bookseller,
wholesaler, or consumer) will be subtracted from the author’s
royalties. In other words, although an author may initially see that
they’ve received a royalty for book number X, in their next royalty
statement, they may see that it’s been returned, and the royalty for
that book sale subtracted. (This is assuming, I must add, that the
royalty statement is set up in such a way that the author can actually
make sense of it. Unfortunately, it is very common for royalty
statements sent to authors to be3 lacking vital information that would
allow them to double check the publisher’s calculations.)
• The industry standard is for authors to receive an advance. The
amount of the advance varies widely (from token amounts like $100, on
up) depending upon the type of book and the fame of the author.
However, until the book has earned enough royalties to pay for the
advance, the author won’t see another dime. (Note: If the author’s
book is being published with a small publishing house, they may
receive no advance at all.)
• Miscellaneous expenses may be subtracted from the author’s
royalties, if their contract allows it. For example, it the publisher
has incurred unusual expenses like re-setting the book at a late stage
in production due to the author’s insistence, the costs for doing so
may be subtracted from the author’s royalties. Legal expenses may also
be deducted…it all depends upon the author’s contract.
3. WHAT IS THE AUTHOR’S TAX LIABILITY? In almost all cases, the author
is an “independent contractor;” therefore, the publisher does not pay
taxes for the author, the way an employer would. Therefore, the author
must pay taxes on their royalties, just as any self employed person
would. This means authors should keep careful track of their expenses
(as well as their income), because they can “write them off” to lower
their taxes. You may also find this article on tax liabilities for
“foreign artists” helpful:
http://www.mpaonline.org.uk/tax%20article%20winter2002.html
For a good basic resource on writer’s contracts and industry
standards, I recommend “The Writer’s Legal Companion” by Brad Bunnin
and Peter Beren. Here’s a link to the book’s Amazon.com listing:
http://www.amazon.com/exec/obidos/tg/detail/-/073820031X/qid=1054407106/sr=1-1/ref=sr_1_1/102-8150101-8136924?v=glance&s=books
The book is written with American publishers and writers in mind, but
as you can see, the basic standards are the same in both countries.
I hope this helps, but don’t hesitate to ask for clarification, if I
wasn’t perfectly clear.
Kriswrite
Research Strategy:
Researcher's personal knowledge
U.K. tax writer royalties
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