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By Mike Gunderloy If you're thinking about writing a book, you need to know how you get paid. The key concepts are royalties and advance. Royalties are the money you get paid for each copy of the book. A typical royalty schedule for a first-time author might look something like this: 8% for the first 10,000 copies, 10% for the next 10,000 copies, 12% for any copies after that. Recognizing that you can't eat future money while you're writing the book, though, the publisher will pay you an advance - more formally, an "advance on royalties". This will be a sum of money (perhaps $8,000 for a moderately-large book, though that number can vary widely), that comes out of your future royalties. That is, until the royalties add up to $8,000, you don't get another dime. After that, you start getting paid. If the royalties never add up to $8,000, you don't have to return any of the advance; it's money the publisher is gambling on. So, the naive first-timer will sometimes look at those numbers and say, hmmm, so I'm sure this book will sell 25,000 copies worldwide at a cover price of $50. That adds up to (8% x 10,000 x $50) + (10% x 10,000 x $50) + ($12% x 5,000 x 50). A little work with Excel comes up with a number of $115,000 -- that seems like a nice bit of pay for the book, even if I don't get most of it until a few years down the line as copies sell. Not so fast, kemo sabe. You need to understand a lot more about the way that your royalties are calculated. The typical language is something like "we will pay you royalties on the Original Edition in US dollars on our Net Receipts from all sales world-wide". So first off, forget about all the foreign-language editions; we'll cover that later. You're only talking about how well that English version does around the world. Second, see that "Net Receipts"? You don't get paid 8% of the cover price; you get paid 8% of the net. That's the money that the publisher collects after all the shipping, distribution, and other miscellaneous costs are taken into account. Rule of thumb: the net will be roughly 1/2 of the cover price. But wait, there's more! Your contract will likely contain a second set of royalty numbers for "Special Discount Sales". These numbers are usually half what the full royalty pays (ie, if your full royalty is 8%-10%-12%, your special discount royalty might be 4%-5%-6%). This scale will apply to "sales made at a discount greater than 58%, but not more than 75%, from the US Suggested Retail Price." Who gets this rate? Oh, Amazon, Barnes & Noble, Borders...just about any place that's going to move a substantial number of books. And if it's over a 75% discount, you're into "Deep Discount Sales" territory, where you get something like 10% of Net Receipts less any Cost of Goods -- in other words, they get to deduct the printing costs here as well. Pretty much forget about getting any serious money from this category (book clubs, electronic promotions, a few other odds and ends.) Remaindered books, should your book last that long, tend to fall into a category called "Sales Without Net Gain". You won't get a dime from that. Then there's the whole foreign-language issue. You should find some language about "Royalties on Translations" or "Royalties on Adaptations" (a broader category that includes translations, motion pictures, video editions, and CD-ROM editions). In most cases, the publisher won't actually produce any of these adaptations themselves; rather, they'll license a third party to produce them (the third party may be their own subsidiary in Outer Mongolia, but it's still technically a third party). You'll get some percentage of the lump-sum licensing fee (perhaps 20-40%) and then nothing else no matter how well the Mongolian edition sells. You might also find a royalty rate for adaptations produced by the publisher; this might be 5%. Either way, you won't collect as much for translations as you do from the English edition. Finally, your dreamsabout how well the book will sell probably have no relation to how many people will actually buy it. Let's go back to the original example and tack some other numbers on to it:
Now the total to you is $11,400 - not exactly that six-figure payout that you were hoping for. Oh, did I mention "Reserve for returns"? You'll probably find a clause like this: "We will withhold 20% of the royalties due to you as a reserve from which to deduct current and potential future returns." So out of that $11,400 you'll only actually get $9,120. And of course you already got that $8.000 when you were writing the book, so for the first couple of years your royalty statements will relentlessly show you as owing the publisher thousands of dollars. But perhaps three years after publication you'll get that $1,120. (Ultimately, the book will go out of print, and at that point you'll get the reserve - if there's anything left after deductng the last returns). And a final depressing statistic: even this is optimistic. From discussions with publishers, the number I hear informally is that only 30% of computer books actually pay out the advance and go into royalties. Hence, my simple rule of thumb when signing a computer book contract: if you wouldn't do the work just for the advance they're offering, don't sign the contract. I'll discuss some other time why you'd write a book for this sort of crappy pay. Right after I figure it out. Update: As James Avery rightly points out, some books do very well indeed for the authors. I know of six-figure success stories in the computer book world. So it's OK to have that dream; I just wouldn't count on it.
Mike Gunderloy is the lead developer for Larkware and author of numerous books and articles on programming topics. |