Book Publishing Royalties

Overview

Authors seek copyright protection for their writing and, traditionally, license the full copyright to a publisher for publication, marketing and distribution. However, modern book publishing deals and their royalty payouts vary widely.

The book publishing industry is best understood as a set of industries running in parallel. There are many types of book publishers, each with unique markets -- textbook publishers, Christian publishers and professional publishers have well-carved niches. These publishers have different business models, service offerings and royalty payouts.

Publishers often pay different royalty rates for different products, including hardcover, softcover, e-books, audio books, large print books and more. Contracts often also establish separate rates for ancillary rights such as film, foreign sale and derivative work rights. Because books vary greatly in marketability -- genre, author profile and target demographic are all factors taken into consideration -- their royalty rates also vary.

Adding to this diversity is an array of options available to those who wish to self-publish. Self-publishing services allow authors to publish exclusively on one platform, such as Kindle, or to invest in marketing and promotion for something closer to a traditional publishing experience. Royalty rates for these services can be as low as 10% or as high as 100%.

Retail v. Net Basis

Traditional publishing houses sell bulk quantities of books to distributers and booksellers at a steep discount, affording a profit to booksellers. When valuating a royalty, it's important to note whether the royalty is paid on the retail price or the net income to the publisher. The retail price is the much higher of the two.

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