Book Publishing Royalties
California Super Literary Agent and Publishing Power Lawyer Discusses The Changing Book Publishing Industry
Author: R. Sebastian Gibson
The publishing world is changing rapidly. No one knows what the book publishing and book selling landscape will look like if Borders Books were to disappear or if they will be closing only a few of their stores. But Borders, which is said to control about 10-12 percent of the bookselling market, is already closing some of their stores around the country. With the worsening recession and the decline of the music bricks and mortar stores where albums and CDs once were sold prior to the purchase and download of individual songs and music sharing over the internet, Borders has reportedly seen its position in the retail of books and music seriously erode the past few years, which is good reason to start purchasing books at Borders. No one in the industry wants to see major players disappear and one can only hope that years from now, they’ll still be around.
If you have a publishing, entertainment or literary rights legal matter, visit our website at http://www.sebastiangibsonlaw.com and call us at any of the numbers easily found on our website.
But there is also the affect on the publishing business by the “big-box” merchandisers such as Wal-mart, Target and Costco that now account for 30 percent of the book market. These stores carry a limited number of titles and reportedly sell them for below cost as a “loss leader” to attract people inside their stores. Book publishers also wholesale their books to these large merchandisers at a discount.
Independent book stores combined only account for approximately 10 percent, Barnes and Noble approximately 20 percent and Amazon the rest. With those numbers, if Borders disappears completely, book publishers have little leverage to play one bookseller off against another in order to sell more books. One can only hope that the economy turns around quickly and that Borders as well as other independent booksellers survive.
Large publishing houses have been laying off their employees as they have seen their sales decrease. While in some cases this is the result of the recession, in other cases it’s the result of bad bets by these publishing houses as to the type of books they have gambled will appeal to the general market. When a publishing house provides a large advance to an author and the book does not recoup that advance and all the other costs of publishing and distribution, the book publisher suffers a loss that can be substantial. If they make too many of these bad bets, they can go out of business.
In addition, Google has been increasing its databank of books. Google scans books and makes them available on their search engine and pays book publishers for the right to do so. There are already over seven million books already scanned by Google.
On the positive side, one can look at the increase in online reading and the flood of people coming into public libraries as a result of the recession to come away with the belief that the demand for books in the future will experience a considerable growth. Libraries can’t keep purchase enough copies of new books to satisfy their ever-growing number of patrons. On top of the increased numbers of people flooding into libraries, reading rates among Latinos and young people in general are rising rapidly.
Amazon has also seen it’s sales grow for all media products, and books in the romance category at all booksellers have recently been enjoying a 7 to possibly 10 percent growth (no one is quite sure since Bookscan, the industry tracking service, doesn’t track sales at the “big box” retailers. It’s believed that Bookscan only tracks about 70 percent of book sales as these “big box” retailers now account for 30 percent of the market.
Some book publishers, however, fear that with Kindle, Amazon may be intending some day in the not too distant future on being a vertical publishing conglomerate of it’s own, avoiding any middlemen, any publishers, and taking the entire business from acquisition to the purchaser. The future of going straight from acquisition to Kindle is already here with two recent biographies going straight to Kindle before ever being published. Simultaneous releases, however, may turn out to be only a short term experiment that is soon forgotten.
There is also concern that if Amazon were to corner the market, they could force publishers to accept whatever they demanded, and many if not most publishers simply would no longer be able to exist. Some agents see the demise of book publishers if Amazon with their Kindle and other acquisitions in the publishing industry take over 10 to 20 percent of the book publishing market in addition to their already strong bookselling dominance online.
While Kindle is the leading product in the e-reader category and now prices it’s books at just under , the Sony Reader is also attracting attention and one can only suspect it won’t be long before Apple and other companies join in the competition for e-readers. Recently, Sony joined Amazon in charging a flat price of .99 for books on its e-readers and lowered the prices of its newest models.
While some publishers are expressing alarm about Amazon and the effect the growing use of e-readers may have on the industry, others are less worried. Some publishers believe they will still be able to charge the same amount to Amazon which it is believed takes a loss on the books that it then sells at a lower price. Book publishers still get approximately half of the hardcover retail list price. Consequently, other publishers fear that eventually Amazon and Sony will become tired of losing money on the books they sell on their e-readers and demand that publishers take a discounted price for the books they wholesale to them.
While Kindle and other e-readers may in the future offer more books released simultaneously in hardcover form and on digital form, the increased availability of these books could lift sales across all forms of distribution, just as audio books did. It is more likely, however, that with e-books selling at the discounted price of .99, if Amazon and Sony demand lower wholesale prices, publishers will want to delay the release of books on e-readers just as film studios delay the release of movies to DVD in order to capitalize on the higher prices for hardcover books. This leverage is what the publishers have on their side to counter any demands by Amazon or Sony for lower wholesale pricing.
At least one publisher’s imprint is trying to work out contracts with booksellers and authors capping advances at 0,000 and reducing the number of returns pitching profit-sharing proposals to authors as the way of the future. Some independent publishers sees the future as one where eventually, books will be produced and distributed electronically for little cost.
Just as the music industry suffered under its years of transition to the current situation where individual songs are downloaded or shared and the sale of entire albums or cds will never again see sales of the magnitude of Michael Jackson’s “Thriller” album, so to in the publishing world, as their world changes around them, some publishers will adapt to change, some will not, and some will die a slow or surprisingly fast death depending upon how fast e-publishing takes hold and Amazon gains market share, how quickly they adapt to the changes in the publishing industry and depending on whether they continue to make good bets or bad on what they believe the public will want to read.
While the bar may be raised for new authors to have their works accepted by mainstream publishers as these publishers become more careful in what they publish and the advances they offer new writers, there will always be independent publishers willing to take chances and able to take advantage of the opportunities offered when those mainstream publishers focus on more established authors.
One thing is clear. The industry is changing and change will come faster than most can imagine it. The other thing to remember is, books will always be with us. They may be in different forms as e-readers gain in popularity and audio books continue to be popular, but in general, new technologies tend to help an industry rather than hurt it. In this case, the new forms of distribution will probably help the book publishing industry to become more flexible and reach a wider audience than ever before.
Visit our website at http://www.sebastiangibsonlaw.com and call us if you have an entertainment, publishing or literary rights legal matter and wish to retain attorney Sebastian Gibson.
As a California publishing lawyer and literary rights attorney with knowledge of the changes taking place in the publishing industry, Sebastian Gibson provides legal services to his entertainment clients in the literary and publishing world. A California lawyer for writers and authors, Sebastian Gibson is a knowledgeable attorney in the publishing industry and experienced negotiator. Sebastian Gibson does not accept unsolicited submissions. Indeed, unsolicited submissions must unfortunately be returned unopened and certified mail submissions are regretfully refused.
Only those authors who have been unable to secure the services of a literary agent willing to represent them for a percentage of their book royalties and who have the ability to pay for attorney fees and who still wish to seek the services of Sebastian Gibson for his assistance may send an e-mail requesting such services. Writers should keep in mind, however, that hiring an attorney to perform what may amount to scores if not a hundred hours or more of an attorney’s time is a costly venture.
A return e-mail to writers seeking to hire Sebastian Gibson on this basis will provide a cost estimate for the assistance of Attorney Sebastian Gibson in editing the author’s cover letter for submission to publishers and editors, the editing or revision of any book proposals, editing of the manuscript, copying charges, materials and/or determining which agents and publishers are best suited for the author’s project. Additional attorney fees are charged for submitting the project to publishers for the sale of foreign translation rights, and submissions for television and film rights.
A power attorney or super literary agent such as Sebastian Gibson represents writers and assists them in having their manuscripts and projects bought at auctions by editors on behalf of their publishers and either for a flat fee or based on his hourly rate, will assist an author with preparation of a book proposal and its submission to publishers in the U.S. and abroad. Attorney Sebastian Gibson will also assist an author in selling foreign translation rights, dramatic film and television rights, multi-book deals, and the negotiation of all contracts and the terms such as the royalty percentages and the author’s advance.
About the Author
Visit our website at http://www.sebastiangibsonlaw.com if you have an entertainment, publishing or literary rights legal matter and wish to retain Attorney Sebastian Gibson. We have the knowledge and resources to be your California Publishing Lawyer and California Literary Rights Attorney . We act as literary agents and attorneys for celebrity clients and can be retained at an hourly rate for non-celebrity authors and writers. Our office also represents musicians and models, and we handle copyright and trademark issues, sports law, film, music and television law, contracts, and business matters in the U.S. and internationally.
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There’s really no hard numbers, but in general an author would get an advance equal to the royalties on the expected year to year and a half of sales.
Royalties are often computed on an escalating scale: 8% up the first 10,000, 10% from 10,001 to 24,999, and 15% afterward, less returns.
The real question comes whether the royalty is on net or on list (that is, the amount of money the publisher received from each book or the amount that is printed on the cover of the book as the list price). It’s much better as an author to get list, but much better for the publisher to pay on net.
I can’t really give you hard numbers. A poet, for example, might get a couple of hundred dollars (if that!) for a book, which some authors (Stephen King, Jackie Collins) get advances well into six figures per book, plus a large percentage of subsidiary rights like permissions, translations, first and second serial rights, and so on.
Well, there is one possible problem, albeit minor. It appears you had the right to the royalties and this is known as constructive receipt. In order for your way to work. there needs to be some sort of contract in place that assigns away the royalty rights altogether.
Without this contract, then technically, you need to report the royalties as income and then take the charitable contribution as a deduction on Schedule A. The IRS would want it done this way mainly for three reasons:
1) By reporting the royalties as income, it increases your adjusted gross income (AGI), which limits certain deductions and tax credits,
2) You may not have enough itemized deductions to get a tax benefit from the contribution, and
3) If all you have are the royalties and contributions, your contributions are limited to 50% of your AGI.
Your publisher may have some sort of form letter/contract that you sign that assigns your rights. Otherwise, you could probably type something up that does the same thing.
Sounds to me as if this is the time to look into some contracts with some folks. Publishing with a private party is a contractual agreement and though there may not be some “hard” rules concerning it, it’s pretty much how the two of you decide the “who gets how much?” of the project.
You asked about royalty information. The spectrum for that runs from the sublime to the ridiculous but most of that information is proprietary, thus it’s very closely held within the big houses. In fact, authors themselves sometimes have trouble getting accurate royalty data from their own publishers. Why is that? The book business is so very competitive and cuttthroat–nobody wants anyone else to know what kind of sales are being generated. As a rule of thumb, figure on 8-12% royalties for most hard cover books, a little more for paperback.
Some publishers also pay very small advances while others pay astronomical amounts. For a first timer, you shouldn’t expect much–perhaps as little as a $1,000. However, that’s good news and bad news. Remember, we’re talking advance money, which means you have to earn all of that back before you see another dime from your publisher. The more you get up front, the longer it takes to get the next check.
Figure on 3 years from when you first start shopping your book around until you see it in print (assuming it’s good and you can find an agent to rep it.) But hey, what’s 3 years? Trust me, it’s WORTH it when you hear, “Your book is like Braveheart meets the Lord of the Rings,” which a Hollywood producer just said to me a few days ago.
I hope this helps. Good luck with your writing.
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you can treat this as a business so you would use schedule C or schedule C-EZ. Since this amount is small i would suggest using C-EZ. Also you would have to use a standard 1040 not a 1040a.
This sounds like you are planning to do a book with someone who is newsworthy or has a special interest story? First query a publishing house to find out if they are interested in publishing the story. Then, when you find a publisher who will back you, have the person who the book is about, listed as ‘co-author’ or give him/her some other title, but make sure that the royalty division is written into your contract. You can write anything you want in your contract, and it’s much easier if the royalties are sent out from the publishing house, rather than going to you and you dividing them out. For one thing, you would have to pay taxes on the full amount of the royalty. If it’s divided at the publishing house, you’ll only pay taxes on your half.
Good luck with it.
As far as I know, AuthorHouse has never released figures, but in 2005 iUniverse did. IIRC, the average number of sales was 48 per title–that average pulled way up by 32,000+ copies of Amy Fisher’s book sold.
An adjusted average is probably closer to 35 or 40 copies, tops. It’s no coincidence that number parallels the number of friends, family, and/or close colleagues a person might have.
In short, pay-to-publish fiction just doesn’t sell to the general public. POD publishers generally don’t promote your book *at all* beyond offering you a page at their website–where book buyers don’t go.
Usually 10% – sometimes 15% depending on the deal your agent cuts for you.
This is how it is all figured out.
First the publisher determines the price of the book which is based on printing and other costs x 6. Let’s say they decide on 24.99.
Then they decide what the initial print run will be. 15,000 is about average right now.
They will give you an advance of 50% of what your total royalties for 15,000 books sold – less 15% which goes directly to your agent. Which means your advance would be $18,675 less 15% or $15,873.75.
Once you sell 7,501 books, you start earning royalties based on sales at the rate of 2.49 per book less 15%.
If the entire print run sells out, the publisher may do a second run and if your agent has negotiated a good deal for you, your royalties may go up a bit too.
However, if the entire first run doesn’t sell out and some of your books end up on the bargain tables at Barnes and Noble, your royalties on those sales is ZERO. Authors never make money on bargain books.
There are many other factors. A good agent might get you a higher advance. More than one publisher might be in a bidding war for your book and you could end up with a bonus.
The downside is that more and more, books are being sold at discounters like Costco and those places are negotiating with the publisher for volume discounts which effects your royalties. You will likely sell more books because of the number of stores they have selling them, but get paid less royalties. Also some of the stores like Barnes and Noble are now charging publishers a premium of up to one dollar to have their books featured on the main tables inside the door. Part of that will come from your royalties as well.
This all applies to large publishers. If you are dealing with a small publisher, you will likely make royalties only. They usually do not have the cash to lay out for advances. You are entitled to see their books annually, so make sure you are being paid for all the books you sold. They are famous for not reporting all of your sales to you. You can also check with the distributors like Ingram and find out exactly what your sales were.
Then lastly there is the self published book. Then you are on your own. Your books aren’t distributed anywhere unless you market it and make deals with the bookstores yourself. Then you earn based on what you sell directly. That’s one of the reasons self publishing is not a good idea.
Hope that helps. Pax- C
Major publishers won’t read an unsolicited manuscript; don’t waste your time sending them. You/he might have better luck with smaller houses if you do some homework and find one that pubs titles similar to yours.
If you think the book is really good, try finding a literary agent who’ll shop it around. This is easier if you’ve already published something in a journal or magazine. Creative writers sometimes know other writers who have representation and can give a recommendation.
Payment and royalties are part of contracts that are individually negotiated. It’s complicated and I don’t know all the ins and outs, but it comes down to this: You sell rights for them to publish in a certain region. Selling limited rights gets you less up-front. Selling all rights will yield more but you get nothing else later.
American fiction rarely sells outside of the English-speaking world, so publishers usually buy only First North American rights (“First” means a single printing, the amount they hope to sell). They won’t pay for rights to reprints and other regions unless you’re a known, bankable author. But if it’s so popular it sells out and people want the book translated into different languages, whoever owns reprint or worldwide rights reaps the harvest.
Finally, don’t fall for subsidy publishers that advertise in magazines. They’re known as “vanity presses” and you pay for everything.
yes, I guess it is. Royalties depends how much your book sell minus the publisher’s and agents share.
How do royalties work in the book publishing world?
I have an idea how they work but I don’t know for sure. What is it that the author gets for thier work and what would be an example of a good offer?
What are the royalty rates for publishing companies?
I’ve been having trouble finding the rates on royalties for book publishing companies. If you were to publish a book, how much money would you get back for the following publishing companies?
Random House, Hyperion, Bloomsbury, Amulet, Aladin, Puffin, LBF, and Eos (HarperCollins).
Any information will help!
Make that Aladdin
Can someone explain the process of publishing a book?
My boyfriend has been working on a novel and while he’s almost done with it he’s now claiming it isn’t “worth” finishing and that he has no idea how to go about getting it published.
So, how does publishing work? Does a person get paid a base value based on how successful their book is estimated to be? Or do publishers already have a value set for new writers? Does an author get royalties as it sells?
How does it work?
Need tax advice for “royalties” paid on self published book?
My husband self published a book just for fun. It is sold on-line and he receives a tiny royalty everytime a book is sold. At the end of the year the company that published the book sent him a 1099-MISC form with the royalties amount listed (which is under $100). This was a one time event so I wouldn’t call him self-employed as an author. He is a full-time employee elsewhere so we usually file form 1040A. Where do I plug in this information on our tax return? Can I file 1040A? Do I need special forms? Please Help!
what is the standard book royalty fee when working with a publishing company?
Are there any IRS tax problems in giving one’s book royalties directly to charity?
I self published my book. The company who prints and distributes my book has said that if they get the tax code no. of the charity and a letter from the charity saying they will accept the royalty payments that they will send my royalties directly to that charity. I cannot take credit for a charitable donation but neither will the royalties be reported as income to me. I would appreciate it if anyone could advise me if there are there any tax problems with this plan?
If you co-author a book and someone else pays for the publishing do you still have rights to some royalties?
…for example if the total profit from the book is 20,000 dollars and the person who payed for the publishing to occur spent around 5,300 dollars… following the reimbursement of the person who payed the publisher, who legally recieves the remaining 14,700 dollars, assuming that there are 16 co-authors of the book?
Any help is greatly appreciated.
What is the average amount in royalties a person makes per year, per book, published through AuthorHouse?
I’ve been told that POD publishers don’t promote your books very well. Just curious to see what others know about this.
How do I write a book and give royalties?
I wrote a book once before…but it was self-published. Now, I want to write another book…but how would I make it so the person whom I interview in the book also gets royalties? Use a publishing house? How?!
Question about book royalties?
Just got a book published last year. Contact signed , sealed and delivered
What is a average royalty for an author?
That would be my question. Also is it normal for a book to be on over 300 web sites world wide?
Thank you and have a nice day ISBN 9781615462667