Thursday, June 07, 2007

The Dangers of Net

It seems that a few erotic romance epublisher have quietly swapped over to calculating royalties on a net basis. I am by no means a lawyer but thought I would raise a few issues to keep in mind as an author, and I would be interested in hearing your opinions.

1) Unless otherwise stated royalties should be able to be assumed to be based on cover price. So 40% means that you get 40c of every dollar a customer pays for your books. In some cases it might be considered easier to calculate sales through a distributor based on wholesale, so 40% means you get 40c for every dollar the distributor pays the publisher. As the percentage taken by distributor is public information in most cases this is still pretty clear. 40% of wholesale through fictionwise is 20% of retail as they take 50% of retail for themselves.

2) "Net" has no uniformly agreed meaning in general, in publishing or in epublishing. So when choosing a publisher that calculates royalties on net you do not really know exactly how much you will end up getting paid unless they specify net costs and you have a way of estimating how high these will be over the life of the contract. Your 50% on net may in fact be less than someone else's 40% on retail. When you receive the contract net should absolutely be defined in black and white--specifying what costs the publisher is effectively asking you to pay. Some of these might be borderline reasonable, such as some set up fees. But all the same, use of net calculations may suggest a publisher that sells in low volumes and is therefore wouldbe in danger of not recouping these costs through profits.

The question that occurs to me is this: should authors pay these costs at all? If you would not pay up front cash money for them, why would you pay for them through royalties? Some authors do not have a problem with paying some set-up fees (e.g Whiskey Creek Press's set up fee for a print option) others hold a firm line of keeping the money flowing towards the author. Ultmately I see the author as providing the prose, and the publisher as setting royalties where they need to be so that all costs are covered by the publisher's share--anything else begins to enter the realm subsidy or co-operative publishing.

As such, moving without a clear announcement and explanation from retail to net calculations of royalties might be seen as a less than transperant way of dealing with a short fall in profitability. Backlist royalties should still be paid according to a retail percentage unless the author signs a new contract or addendum.

Once again, all just my semi-informed opinion. If you know more or better, please comment. :)

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