When the UK’s Society of Authors chief executive Nicola Solomon wrote her ‘Profits From Publishing’ commentary on authors’ and publishers’ revenue for The Bookseller last week, she challenged publishers on behalf of the writer community “to state in their accounts how much they pay to authors, illustrators, and translators in advances, royalties, and secondary income.”
Not surprisingly, that call for publishers to reveal what they’re paying writers has triggered applause in some quarters and alarm in others.
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“One of our responsibilities as agents is to remind publishers that authors are their business partners and as such they should be included in conversations about the economics of publishing. We welcomed Andrew’s acknowledgement that an unearned advance does not, in and of itself, signal an unprofitable book. Authors are not a cost to the publishing industry: they are its most precious assets.
“I can also add from my own perspective as an agent,” Kremer says, “that it goes to follow that, as publishing’s most precious assets, authors should be rewarded by at minimum fair royalties and, in many cases, by a greater share of the profit than a standard royalty can allow. In most cases this means that a ‘fair’ advance may well be one that will never earn out.”
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The Society of Authors’ president, Philip Pullman, was quoted in Solomon’s essay clarifying the nature of the authors’ complaint this way: “To allow corporate profits to be so high at a time when author earnings are markedly falling is, apart from anything else, shockingly bad husbandry.
“It’s perfectly possible to make a good profit and pay a fair return to all of those on whose work, after all, everything else depends,” Pullman said. “But that’s not happening at the moment. I like every individual editor, designer, marketing and publicity person I deal with; but I don’t like what publishers, corporately, are doing to the ecology of the book world. It’s damaging, and it should change.”
And when, Solomon writes, the UK’s Publishers Association created its study, The Contribution of the Publishing Industry to the UK Economy, the consultancy doing the survey estimated that in 2016, £161 million (US$224.9 million) was paid to authors in advances, royalties and secondary rights revenue. The UK publishing industry’s turnover was reported to be £5.1 billion (US$7.1 billion), of which book sales contributed £3.5 billion (69 percent) and sales of academic journals £1.2 billion 24 percent.
“That means,” writes Solomon, that “authors received around 3 percent of publisher turnover. Even if we take out journal revenue—where authors are, shockingly, paid next to nothing—authors were receiving less than 5 percent of turnover in the same year that (major) publishers’ profits were around 13 percent.”
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The Bookseller’s response from a publisher comes from Andrew Franklin of the independent house Profile. And one of his first points is that the publisher takes a hit from the beginning, in effect, by paying an advance against royalties that may well not earn out. “Profile’s offer is always for an advance against royalties (and rights income if the publisher is taking, say, translation rights),” Franklin writes.
“In theory, publishers pitch advances at a level that will be covered by the royalties the author earns. In practice, the advance is frequently not ‘earned out,’ so the author is taking a higher share of the total revenue from the book than the royalties would earn.”
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To his credit, Franklin does go on to name the percentage his house is paying to authors, and it sounds comparatively good: “So bookshops take more than half of the total and publishers give almost a quarter of their revenue to the author. In both 2016 and 2017, Profile paid out just over 22 percent of its total revenues to its authors. But where does the rest go?”
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“Profile’s total returns on UK sales,” Franklin writes, “are approximately 14 percent, but that average hides some books with far worse rates. Sometimes more than 40 percent or even 50 percent. Returns are a real cost, because the publisher has paid to print and deliver the books, and when the books come back they are generally pulped.”
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Having given Franklin’s publisher viewpoint careful consideration, [literary agent] Lownie tells Publishing Perspectives, “I only wish authors were being paid a royalty of £1 on each home sale of a £10 hardback or 75 pence on the home sale of a £10 paperback. The reality though is that such a royalty is only likely to be paid on less than 15 percent of trade home sales and in some cases, particular with paperbacks, less than 5 percent of trade home sales.”
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“Given discounts,” Lownie says, “authors’ royalties tend to be reduced by a fifth on sales at between 50 percent at 55 percent discount and by two-fifths on sales between 55 percent and 60 percent discount. The royalty on home sales at 60 percent or more discount in many cases will be based not on the retail price but the amount actually received by the publisher.
“So on home sales of £10 hardback to a bookseller at 56-percent discount, the author will be receiving less than 14 percent of the publisher’s net revenue. It is not at all unusual for the royalty on the majority of home sales to be based on three-fifths of the full rate and/or the amount received. Of course these royalty reduction provisions vary from publisher to publisher, both in the amount by which the full royalty is reduced and the points at which those reductions apply—fairness of which can only be judged once the royalty statements arrive.
“In some cases,” Lownie says, “the structure of these provisions is such that an author could be forgiven for the opinion that they act as an incentive to the publisher increasing the discounts they offer to booksellers by 0.5 percent or 1 percent. The truth then is that very few authors receive a proportion of a publisher’s net revenue from home sales which is anywhere close to the rusty standard of a 25-percent net receipts ebook royalty.”
PG has noticed that when a traditionally-published book does not sell well, it’s always the fault of the author, not the publisher. Even if the publisher did a miserable job with the cover, the marketing and the pricing, it’s the author’s fault. And the author should be ashamed at letting down all the nice people who work at the publisher.
Publishers (and some agents) contend it’s a black mark against the author if a book doesn’t earn out its advance. Again, whose job is it to sell enough books so the advance earns out.
What is an advance? It’s simply the price a publisher is willing to pay up front for the privilege of publishing the book. In some book deals, nobody expects the advance ever to be earned out. There is absolutely no moral obligation on the part of the author to make certain to earn out the advance. It’s the author’s job to write the book and the publisher’s job to sell the book.
If a publisher is financially squeezed, that’s an indication the people in charge aren’t doing a very good job at running a publishing business. Perhaps if they weren’t paying sky-high rents for offices in the most fashionable part of the city, their finances would be better.
PG will note that many more than one author is selling a larger number of books and earning a much larger amount of money by self-publishing and offering their books for sale in the world’s largest bookstore than they ever did while they were working with a traditional publisher. PG will also opine that successful indie authors know their readers better than most publishers do and, thus, are much savvier at pricing their books than publishers are.