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Dealing with royalty

If you are an author, one of the mixed joys and horrors of your life is the royalty statement. The joy part is that this could be a piece of paper telling you that you have earned some money. The horror is two-fold. Sometimes instead, the royalty statement tells you the reverse. Because books are sent out to stores sale or return, it is entirely possible in a six month accounting period to have negative sales when returns outweigh outgoings. This is highly dispiriting the first time it happens. But the other horrific aspect is that royalty statements often suffer from byzantine complexity. And this means it is very easy for the publisher to make mistakes. This is not malicious - it is just that as an author you are one of many and there is only a limited amount of effort they can put into getting it right.

Because of this, I recommend that all authors check their royalty statements with a fine tooth comb. If you have an agent you may feel 'It's okay, I don't need to do this, my agent will do it for me.' And perhaps he or she will. But in my experience agents have neither the time nor the inclination to do this properly (and some, I suspect, struggle with the numbers). It really is on the author's shoulders.

Here is a royalty statement:

As you can see it is quite a loaded document. (Incidentally this particular format has one oddity which is that it is almost impossible to find the name of the book. It is positioned where I have put the little green arrow, quite difficult to spot.

I have accumulated a whole list of possible mistakes that have been made in royalty statements - not all to me, and not all from the same publisher, but all things that the sensible author should check. So here we go:

  • Is it the right kind of book? Contracts often have different rates for, say, a hardback, a trade paperback and a mass market paperback. If they use the wrong category, you could get the wrong rate.
  • Are the basic values right? Are, for instance, the percentage royalties the same as the ones in your contract?
  • Have escalators been applied properly? The percentage the author receives often increases after a certain number of sales, but this isn't always reflected in the statement. This is one of the most common errors.
  • Do the return numbers make sense? If you have returns, add up the total for a particular type of sale across all periods. If the final value is negative there is a problem: it seems they have had more returned than they sent out.
  • Have any special triggers been reflected? Contracts sometimes have special triggers, providing, say, an extra advance if a certain number of books are sold. Make sure these are applied.
  • Are returns being counted at the same percentage as sales? If there is an escalator you could have  several different percentage royalties. If for instance your base percentage is 10% and the escalated value 15%, but it hasn't been triggered, make sure that returns are not being made at 15%.
  • Are translations, rights deals, serial rights etc. in there? A lot of money can be made from, for instance, giving rights to another publisher to do a translation. As these are not part of the normal accounting it is easy for the publisher to forget to include these. Don't rush this one - they may not come in until the period after the deal is set up, but if there's nothing by then, flag it up.
I'm sure there are other possible mistakes - these are just the ones I'm aware of, so please do let me know of any others! I am not suggesting you should be a thorn in the flesh of your publisher - you are both on the same side - but they can make errors, and it is in your interest to check. If you do think you've found an error, don't be aggressive - ask nicely. Apart from anything else, you could have got it wrong!

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