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Legal Briefs: The Royalty Rates Publishers Are Actually Offering

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by Stephanie Beard, Executive Editor, Turner Publishing —

Stephanie Beard

I was recently in a conversation with a colleague, and the discussion turned to whether or not the publishing industry has a common enough set of business practices—from royalties to release formats—for us to really refer to an “industry standard” when discussing these business points.

The publishing house I work for has provided me with direct insight into many different types of deals, and we work under the expectation that our rates are fair and above average, but without opening up the discussion with other publishers about what rates are actually being offered, it is impossible to say whether or not there is an industry standard to refer to as a cornerstone for these figures. Accordingly, I set out to explore some of the most impactful aspects of the industry to offer insight to that question. Over 100 publishers offered data for this article and responded to questions about royalty rates and release formats.

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What resulted from our request for data was a remarkably complex and broad set of statistics that makes one conclusion abundantly clear: There is no industry standard. The industry has evolved to accommodate so many different interests and options for sharing intellectual property and, accordingly, the business of publishing has changed in an overwhelming way. Due to the broad array of responses and the narrow nature of my own experience, this article sets out only to address observations with respect to a specific type of publishing house: traditional publishing.

For these purposes, I am defining traditional publishing as a publishing house that releases books in print and, usually, e-book form that are then distributed through “ordinary channels” (retailers, libraries, online sellers, etc.). These books are acquired by the publishing house’s editors, and the rights are granted to the publisher through the signing of a publishing agreement wherein the publisher bears all (or most) of the editorial, marketing, and distribution costs, and the author is, in exchange, paid royalties on the sales derived from their books. There are many other options when it comes to hybrid and contract publishing, but those are for another article.

As discussed, the results of the poll were quite varied, but there were certainly measurable consistencies across responders. With respect to responses about royalty rates, authors should expect to see rates based on either a percentage of the retail price set by the publisher or a percentage of net receipts or sales. For royalty rates based on retail price, most publishers responded that their rates for paperback and hardcover formats were as low as 5%, averaged 7.5%, and were as high as 10% on hardcover. In our poll, most publishers who responded pay their royalties based on net receipts or sales, which is the amount actually received by the publisher for sales of the books after discounts. These rates were surprisingly quite varied. For paperback books sold, most publishers responded that their rates were between 10-15% (with the average being just shy of 12%) of net, with nearly every publisher noting that their hardcover rates are the same as their paperback rates. The most surprising revelation came from e-books, which average 25%, but were sometimes as low as 10% and as high as 50%— proving that we are quite far from consensus across the industry when it comes to digital books.

Publishers were also asked to share their subsidiary rights rates, which traditionally include audio, book club, foreign language, and other rights depending on the publishers’ own abilities and rights programs. The majority of publishers responded that their rates for subsidiary rights are 50% of net, while there were some who offered as low as 10% and very few who offered rates as high as 70-80% (typically for audio rights). Lastly, publishers were asked to provide details about what formats they release their titles in on the initial publication date. Most publishers have moved to a concurrent publication schedule—releasing a combination of hardcover, paperback, e-book, and audiobook at the same time. A few, however, elect to release a hardcover or paperback book first and then stagger the release of a paperback, audio or e-book for six months to one year after the initial publication date. Given the competition in the market, price sensitivity of buyers, and changes to bestseller lists, it seems that we are moving full force toward seeing most books being released in at least two different formats, if not more, upon the initial publication.

What this data shows us is that publishers are evolving and adapting their businesses to the changing culture of publishing in a variety of ways when it comes to setting royalty rates and releasing their books.

Stephanie Beard is the executive editor at Turner Publishing, an industry leading independent publisher based in Nashville that has a backlist of over 5,000 books and publishes 36 new books per year across all genres. In addition to acquiring all of the books for the front list, she is also the subsidiary rights director. Turner has a J.D. from Vermont Law School.

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