How to deconstruct and decipher your textbook royalty statement

Deciphering royalty statements to determine whether royalties being reported are accurate can be frustrating for both first time and veteran textbook authors. Royalty calculations should be relatively straightforward. That is, the contractually agreed-upon royalty rate for the Work multiplied by the earnings received by the publisher. However, add in escalation clauses, various rates for different sales categories or channels, co-authorship, packaged products, electronic materials, custom editions, abridgements, agreed-upon deductions, returns for reserves, specific definitions of earnings, multiple titles in various editions etc., and the calculation of royalties becomes much more complex.

When getting rights clearance is tough

We’ve all been there. You have the perfect photo . . . verse . . . song lyrics . . . vignette . . . you name it . . . to open your book or a chapter within it. Having labored long and hard to locate just the thing, you are now certain that nothing else will do. There’s only one problem. It’s not yours and either you can’t determine who owns the rights, or you can’t figure out how to reach them, or they’re dead or out of business, or they won’t answer you.

Tips & tricks for negotiating your first textbook contract

The most important things to negotiate in a first contract are the amount of the advance, the royalty rate and who will control which rights, said Jeff Herman, owner of the Herman Literary Agency in New York.

Keep in mind when negotiating the advance how the publisher calculates it, Herman said: “It will tell you how far they’re willing to go.” To calculate how much of an advance it will offer, the publisher looks at the number of books it will sell during the first year and the dollar amount the author will receive per copy. For example, if the author will receive $2 per copy, and the publisher will sell 10,000 copies the first year, the author will earn $20,000 in royalties. That $20,000, he said, is the highest the publisher will be willing to go in negotiating the advance.

Q&A: What to do when a coauthor transitions toward retirement

Q: “My coauthor on several different titles is transitioning toward retirement. I will soon be starting a revision without his active participation. We have a succession agreement on the royalty split in future editions, so that’s (hopefully) not an issue. However two questions have risen to top of the swirl of concerns that I have as I face this transition: 1) Is this a good opportunity to renegotiate my authoring contract? I suspect that my publisher will want to simply change the authoring designations as an addendum to the current contract. Should I insist on a new contract? Should I avoid that if they insist on a new contract?; 2) Assuming that I should renegotiate, how likely is it that I’ll be able to break them out of their boilerplate?”

A: Stephen E. Gillen, Attorney, Wood Herron & Evans:

“Taking on 100 percent of the writing responsibility is essentially a new deal necessitating some change in the terms of the relationship (royalty share, to name but one important term). There is no magic to how this change in the relationship is memorialized. It can be by amendment or addendum or by substituting a new contract. What is important is that, however it is memorialized, you capture all of the relevant changes.

Q&A: How to determine a good royalty rate offer when negotiating a textbook contract

Q: “I’m in discussions with six publishers right now for my first book. One of them has just made a preliminary offer, including a 12 percent royalty on the first 2,000 sold and 15 percent thereafter. They also offered me a $3,000 advance against royalties to prepare a camera-ready copy over the summer. The editor has informally projected something like 2,000 books/year sold at about $90-100 per, saying it costs them $60-70 per. Here are some of my questions: 1) How common is it to have a lower percentage on the first chunk of books?; 2) Even if it sold only 1,000 at $80, 12 percent of that equals $9,600. Shouldn’t they be willing to part with more than $3,000 of it up front?; 3) How much am I saving them with a camera-ready copy? Doesn’t that cut out a lot of work for them and shouldn’t that translate into a much better deal than this? Sounds like a cookie-cutter offer.”

A: Don Collins, former managing editor at a publishing company:

“First, it is very common to offer a lower rate on the first textbooks published. The publisher is in business for profit and at every point the publisher wants an advantage although in your case it seems slight. Second, up front money is an expense. If the book does not sell then the publisher is out this money. But you get to keep the advance. And lastly, you may think of giving camera ready copy as saving the publisher money. It probably is. But the way publishers play the game is to take only authors who are willing to do this.

Only after your work has proven successful and you have established a reputation will you have much of a chance of negotiating better terms.”

Q&A: Textbook succession planning–What is a reasonable royalty rate for the original author?

Q: “What is a reasonable royalty rate for an author whose name will remain on a (successful) textbook, but who wants to stop doing the revisions? What sort of language in the revisions clause can protect your heirs?”

A: Zick Rubin, Attorney, Archstone Law Group P. C.:

“This is a very important item. Here is a formula that is sometimes proposed by authors and that is sometimes acceptable to publishers for a successful textbook: 75 percent of the royalties (i.e., the contractual rate) in the first edition in which the author does not take part, 50 percent of the royalties for the second such edition, and 25 percent of the royalties for the third and subsequent such editions.