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I've been asked to explain why net profit royalties are Not Good. A lot to unpack here, so this will be a thread. 1/13 https://twitter.com/victoriastrauss/status/1286348901050613764
Reputable traditional publishers assume the full cost of publication in exchange for exploiting authors' intellectual property for profit, and pay authors a percentage of the income from their book sales in the form of a royalty. 2/13
They don't charge those costs back to authors in any form, whether asking them to pay a fee, to buy books--or by using publishing costs as a sneaky way to reduce the amount on which authors' royalties are calculated. 2/13
Bigger publishers calculate royalties as a percentage of a book's cover price. So if royalties are 10% (just using that example because it's easy) and a book is priced at $15, your royalty is $1.50. 4/13
Smaller pubs often calculate royalties based on net sales income (aka net sales or net income or publisher's net)--the money they receive from wholesalers, retailers, and other vendors, which buy books to sell to the public at large discounts (can be 55% or more). 5/13
So: $15 cover price less 55% retailer discount = $8.25 net sales income, x 10% royalty = $0.83. Less than you'd earn per book with a big pub, but still straightforward. 6/13
Most publishers use one of these methods for calculating royalties (whichever one they use should be clearly laid out in the publishing contract, with terms--such as "net income"--clearly defined). 7/13
But some pubs calculate royalties on net profit. From net sales income, they further deduct a menu of expenses. Essentially, this is a scheme to pass publishing costs on to authors at the point of sale, & to significantly reduce the royalties the publisher has to pay. 8/13
So, for instance: $15 cover price less 55% retailer discount = $8.25 net sales income, less $6 combined cost for printing and shipping = $2.25 x 10% royalty = $0.22. You can see how much less it is. 9/13
And that's just deducting printing & shipping. Cayelle's contract deducts waaaaay more expenses than that--which actually is unusual; most net profit royalty schemes stop at printing and shipping, & don't deduct things like marketing or artwork. 10/13
Will Cayelle provide an itemized list of these costs? Or itemize them on your royalty statement? I have no idea, but if not, you won't know how or why deductions are being made. Even if you do, how will you verify that they're real expenses? 11/13
Bottom line: net profit royalties are a way for a publisher to pay its authors less--sometimes much less...and sometimes, if they're really good at manipulating those expenses, nothing at all. 12/13
Regardless, net profit royalties are a major contract red flag, not just because of the reduced author income, but because of what they say about how the publisher regards its authors and its obligations toward them. 13/13
