Pub Rants

Category: royalties

Agenting 101: Royalty Statements: Sales By Account

STATUS: Mondays are usual frantic but today was quiet. I’ll take it. I’ve got two submissions that need to go out by Friday.

What’s playing on the iPod right now? THE CHAIN by Fleetwood Mac

I began with Random House’s statement because it has a lot of detail, but even RH doesn’t have sales by accounts on their statements.

So what is that? It’s the breakdown of sales for your book via the different accounts such as Barnes & Noble, Borders, Amazon, Indies, book fairs (such as Scholastic) etc.

And the answer is no, royalty statements do not contain that information. However, I’ve certainly requested that information when tracking sales for a certain titles. Editors have also volunteered giving that information when a title is doing particular well and we want to chart where the majority of the sales are coming from. Or, equally important, getting on an account who hasn’t bought in for a title—especially when that book is doing well and it’s in their best interest to carry the title.

As hard as it is to believe (especially looking back now), it took Hyperion more than a year to get Borders to seriously buy-in Ally Carter’s YA novel I’d Tell You I Love You But Then I’d Have To Kill You. I know, in retrospect, seems pretty short-sighted of them to take so long. But Borders only had so much room for new YA titles and so Hyperion had to hound them about how good the sales numbers were to make them pay attention to this debut title.

Obviously now they are staunch supporters of the Gallagher Girls series but the break-down showed us what we needed to do.

We actually also use the breakdowns to see which Independent bookstores are really supporting the series and guess where Ally went on her book tour? A very good use of the breakdowns I’d say.

Agenting 101: Royalty Statements: Reconciliation To Print

STATUS: Although I’m not in Frankfurt, I spent a lot of today dealing with stuff from Frankfurt Book Fair. We’ve done 40-plus foreign rights deals so far this year. Bring it on! Sara, however, is hugely sad. She loved this project, offered representation but alas, the author had 7 different offers of representation but didn’t choose us. Unhappy face.

What’s playing on the iPod right now? FUGITIVE by David Gray

Ready to get back into the tutorial? Okay, I promised rec to print. First off, what does that mean?

A reconciliation to print is this and seems simple enough to give you the clause that we insist on having in all our contracts so you can see what it is in detail:

Reconciliation to Print clause: Upon Author’s written request, Publisher shall provide to Author the following information as to any particular six month accounting period: (i) the number of copies printed and bound in each printing of each edition; (ii)the date of completion of reprinting and binding of each edition; (iii)the number of free copies distributed; (iv) the number of copies remaindered, destroyed or lost; and (v) the cumulative total sales and disposals; (vi) reserves against returns; and (vii) licensing income, including licensee’s accounting statements.

I will tell you right now that if you don’t have this information, looking at your royalty statement is meaningless.

Why? Because there is no measure in place to compare the info on the statement to what actually happened with the book.

Without the rec to print, your statement tells you nothing. As you can see, I’m not in the camp of less is more and giving more info just confuses authors and agents and wastes everyone’s time by useless questions.

In fact, because Random house gives this info as a matter of course, it takes the least of amount of time for me to review and assess RH statements.

Do I still find errors. Certainly. But then it’s easy to call the royalty department and say, “look, you have an error here.”

And they always reply with “you’re right. Let us correct that and get the corrected statement out to you immediately.” (And just so you don’t think this is an RH love fest, other houses have done similar but I’ve had to ask for the rec to print; however, if an error was found, they’ve corrected it.)

Analyzing your rec to print with your royalty statement allows you to assess whether an audit is necessary. Given that so many of the big NYC houses are putting limits on look-back for audit (2 years is unfortunately becoming a sort of “standard”), it’s more important than ever to analyze statements and see what action, if any, is necessary.

And I know most of you are thinking that the big NYC houses would never intentionally hurt an author. Call me cynical but if you believe that, then you haven’t been keeping track of the major lawsuits against publishing houses in the last 10 years. Lawsuits that have been won by the way. Now to be clear, that’s not the norm, but it has happened.

So reviewing and analyzing your royalty statements is hugely important. I’ll also tell you right now that not all agents are created equal in this matter. Some agents just look at the statement and lay back and think of England. Others have whole departments devoted to the care and analysis of statements.

Nelson Literary Agency? We hire an outside gun who has been doing reviews, audits, and lawsuits on royalty statements for 25 years.

And let me tell you, together, we have found plenty of errors that needed correcting—always in the author’s favor.

So, that’s the rec to print.

Agenting 101: Random House Royalty Statement

STATUS: Statements and more statements.

What’s playing on the iPod right now? POOR UNFORTUNATE SOULS by Little Mermaid soundtrack.

When talking about royalty statement, first off you need to know that not all statements from different houses are created equal.

Today I’m going to begin by talking about the Random House Statements. They are my favorite. The statements are at least four pages long (sometimes longer depending on formats sold) and always contain all the information I need to evaluate if the statement is accurate.

Now this is not to suggest that every other publishing house has terrible statements. That’s not true. They just sometimes don’t contain all the info needed and then we have to request the extra info we need. All the houses, in general, are great at giving you the reconciliation to print info on request—but you have to request it. With RH, it’s all there.

Love that. (Tomorrow I’ll explain reconciliation to print, what it means, and why it’s important to have it when evaluating the accuracy of royalty statements.)

But for now, back to the Random House statement.

Page 1:
For RH, this is the royalty summary sheet and also highlights the ending royalty period. Then the page looks something like this (depending on what rights were sold to the publisher and how many formats have been exploited—by format I mean hardcover, paperback, audio etc.)

There would be four columns for the formats listed:
Current Copies, Current Earnings, Cumulative Copies, Cumulative Earnings

Hardcover
Trade paperback
Mass market
Audio
Electronic book

Then of course the above columns would be filled with numbers. The rest of the remaining sheets in the statement are to show detail for this summary sheet so you can see sales broken down by the individual ISBN numbers for the various formats.

So the next page or pages will have six columns:
Market, Royalty Rate or external market, royalty per Unit or net receipts, current copies, cumulative copies, cumulative earnings.

Then of course all these columns would be filled it with numbers.

But the next page is my favorite at RH—the Print Summary (this is all the reconciliation to print info that’s so necessary to review statements). Three columns for all this info.

Description, Current Copies, Cumulative Copies

Shipments
Returns
Reserves released
Reserves held
No Charge

Total reportable sales

Printings
Returns to stock
Scrapped from stock
Adjustments
Internal Summarization
Inventory

Total Shipments

Then we have the Sales Summary by Market with four columns:

Market, Gross Copies, Return copies, Net copies
US
Canada
Export
Spcl disct
No Charge
Total

Then we have Rate of Movement by Month with three columns

Month, Shipments, Returns
Oct
Nov
Dec
Jan

As agents, we stay on top of print runs done, how many copies in print, what is Bookscan reporting. Does the info we have match up to what the statement is telling us? If not, we are going to have a lot of questions.

In order to grab the columns, I was looking at a statement where only North American rights were sold to the publisher. (In other words, translation was not given to the publisher and the agency kept them to sell separately.) If the publisher has World rights, then that detail will also show on the royalty statement.

That’s all I’ve got time for today. More tomorrow!

Agenting 101: Royalty Statements: Accounting Periods

STATUS: Cross-eyed from reviewing statements all day.

What’s playing on the iPod right now? OUT OF AFRICA by John Barry

So I have to admit that it’s been a while since I did some nuts and bolts type blog entries. Personally, I find them a little tedious as I LIVE the nuts and bolts of publishing every day. But I don’t want to forget that a good majority of my blog readers have not been published yet and may actually be endlessly fascinated by some nuts and bolts blog entries.

Either that or I’ll bore y’all to tears. Both are equally possible.

Since I’ve been yammering away about royalty statements all week, let’s dig in to this topic. I’ll have to start off a little light because it’s just now occurring to me that this might make a couple of interesting posts and I’m typing this from home (rather than from work where I would actually be looking at a royalty statement).

Obviously I can’t share specifics about any given statement (as that is client confidential) but I can certainly tell you about what is generally on royalty statements (or is missing) and what information agents end up digging for.

So flex your fingers and kick off your shoes; we are diving back into some Agenting 101 entries that I’ll need to bookmark on the sidebar.

Because it’s a little late in the day (and I really need to finish up a client manuscript read), let’s start with something simple.

The accounting period.

This is a lovely and archaic system that publishing houses have in place despite all our digital technology. I imagine that at one time, this sort of accounting period made sense. In today’s world, it’s a relic and I wish it was like a dinosaur and would become extinct.

The traditional NYC Publishing houses do reporting in 6-month increments. For ease of explaining, imagine a royalty period that begins January 1, 2009 and ends on June 30, 2009.

Six months.

Then the publishing houses, and this cracks me up, get four months (oh you read that right—4 months) to generate and mail that royalty statement (with a check if monies are owed). Why four months is necessary in this day and age is rather a mystery. Or maybe not a mystery. Publishing houses want to hold on to your money for as long as possible. (As an aside, I love Holt Uncensored and Pat Holt’s idea of revolutionizing the royalty system by making online royalty accounting available for authors). Brilliant—but then there would be no reason for taking four months to mail you the statements.

But I digress. So if you have a royalty accounting period that ends on June 30, 2009, the author is going to have a royalty reporting period of April/October (October for the June-ending statement and April for the December-ending statement).

All information on the statement will be for sales (in all formats) from that six-month period. So when you get the statement, you’re already months behind in knowing current numbers.

Got that?

Time For A Cool Change

STATUS: I’m working on two different contracts this afternoon. So necessary, so time consuming, and always delightful when it concludes.

What’s playing on the iPod right now? P.Y.T. (PRETTY YOUNG THING) by Michael Jackson
(of course!)

It’s no longer okay for Publishers to say to me in a negotiation: “we have a policy that we won’t do that.”

Especially when I’m talking about royalty structures and for this rant, the royalty structure for a trade paperback.

Just to be clear, there are three main types of print formats for books. There is hardcover–which is of a certain size and has a hard cover covered by a dust jacket. There is trade paperback—which is usually the same size as a hardcover but with, funny enough, a soft cover and no jacket. Then there is mass market—which is the smaller soft cover usually associated with “pocket” size (although some of them are tomes that wouldn’t fit in a back pocket or otherwise).

Today I want to rant about trade paperback royalty structures. For twenty years, the “standard” royalty percentage authors earn from trade pb sales from publishing houses has been 7.5% flat.

Why is that? Why is the trade paperback royalty lower than the mass market version where “standard” starts at 8% and usually escalates to 10% (typically around 150,000 copies)?

Trade pb has a higher price point for point-of-sale so that’s not the reason. Yes, it’s more expensive to print than a mass but it’s not as expensive as a hardcover. And why is there no escalation?

Especially now when publishing is rapidly changing and there is a movement away from doing hardcover publication and doing original trade paperbacks instead—even for debut literary authors.

So why in the world are we stuck with an outdated royalty structure that doesn’t match how publishing is currently operating today?

And it’s not enough to tell me, “well, we’ve never done an escalation for a trade paperback royalty. It’s just not done here at our house.”

Just because it hasn’t been done in the past doesn’t mean we can’t talk about it in the here and now. Publishing is not the same as it was 20 years ago so why are the royalty structures?

Very good question I think.

I’m out. TGIF!