Negotiating Author Payments in the Digital Age
“In the old days, people could speak about a standard royalty,” he says. “Those [standards] have eroded, and they’re really all over the map now.”
Royalties based on old business models and supply chain requirements are quickly becoming obsolete in an era of Internet sales and the rise of print on demand (POD).
With the savings in printing, storage and shipping made possible by POD, online sales and e-book devices such as the Amazon Kindle, “the argument from the author’s point of view is ‘we should get more money because your costs are going down and your risks are going down,’” Kirsch says.
One contract negotiated recently by Kirsch involved a publisher deducting from the net proceeds the cost of a POD vendor to create a book, and then paying an author 25 percent of the amount that was left over, an unusually high royalty.
“They gave with one hand and took away with the other,” Kirsch says, by agreeing to a higher percentage rate in exchange for essentially passing production costs on to the author. “The publisher’s argument is a very simple [one]: We’re in a brave new world, and we don’t know how this will shake out. So we’re not going to take a financial risk on the old royalty model, which would essentially be ‘off the top’ without any recoup for the cost of goods.”
Even publishers that do not factor in production costs have abandoned percentage payments based on gross receipts.
“Years ago, it was more common for royalties to be based on the retail price of a book,” says Rod Colvin, publisher of Omaha, Neb.-based Addicus Books. “If the book sold for $19.95, the author would get 6 [percent] to 10 percent. But many publishers have switched to a percentage of net.”