Question on Royalties

Get away from the term "traditional publisher". There really is not such a thing at all. PA invented the term.

The kind of publisher you mean is "commercial publisher", and the big difference is that commercial publishers sell books to the public not the authors. Commercial publishers DO invest more in their authors and your description of royalties and returns is pretty much on line. Most publishers may hold out a percentage of royalties to cover returns, but that withheld royalty is paid in the next period.

Regards,
Scott

MHWilson,

Welcome to AW.

You might be surprised to know that the thread you started on PAMB was discussed here in the "Never Ending Publish America" thread.

As I recall, you had entitled the thread, "Disappointed". Pa later changed your title to "Returns", and deleted a number of responses to your thread, including one of your own.

I was confused when I read your postings, because I wasn't sure if you were being billed for royalties or if PA was billing you for their cost of printing the books. Six books, as I recall.

In reading your web blog, I see you have answered that question, and you were being billed for royalties.

You were correct in what you said in the thread you entitled "Disappointed". The person who told you commercial publishers bill their authors was wrong. He was also wrong when he said authors have to pay back their advances. An advance is the author’s to keep regardless of how many books the publisher sells. Unfortunately, that gentleman gives out a great deal of inaccurate information on PAMB. He also says that there is a difference between publish on demand and print on demand. The terms are interchangeable.

One of the big problems with PA is their accounting system, or lack of a proper accounting system. I think you are beginning to realize that something isn't right in that department. I assure you, you are not the first to question PA's accounting practices.

One of things that should really be worrying PA authors right now, is PA's new "printing facility". When they no longer out source the printing of PA books, no one but PA will really know how many books have been printed.

Again, welcome to AW. If you chose to stick around, I know you will find that AW's members will welcome you warmly and help you in any way they can. Your posts won't be deleted, unless you swear at the head honcho, and some of the information you will receive will be coming from a number of people who have years of experience in all aspects of writing and publishing.

- brianm

Reserve Against Returns

Since the question has come up again, I figured that it was time to resurrect a post from years ago. (21 September 2005 to be exact)

This is Your Genial Uncle Jim with an explaination of Reserve Against Returns.

Hi, mhwilson

Welcome to AW.
The forum members have been following your PA shenanigans with great interest. I'm glad you've found us, and I hope you will find your questions answered honestly here. We tend to get a little hot about PA, as you can imagine, but our wrath is directed toward the PA owners and not the writers who have been scammed by them. You are in good company.

Hi there, mh. Welcome to the 'Cooler.

You've gotten some good replies already. Let me try to answer as well, in the ever-popular line-by-line format.

mhwilson said:

Hello everyone.
Hello, thanks for your time. I have a question about the royalties writers recieve for sales on their books. I hope no one has already covered this and I hope I can explain it.

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It's a perennial question, but no one minds talking about it again. The first thing you need to know is that royalties, and publishers' practices, vary widely. I'm going to talk mostly about commercial fiction, but you should be aware that things may be different in small press, ebook, textbook, non-fiction, work-for-hire, and other situations.

I was on a message board for Publish America. Most of the writers there think that Publish America is a traditional publisher primarily because Publish America says so.

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I believe that "traditional publisher" is a term that PublishAmerica invented, to give people the impression that they're a commercial press without lying too blatantly.

I tried to explain that Publish America is a vanity press.

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Which they clearly are. On the day the first book is printed, that book belongs to the publisher, and the guaranteed flow of money is away from the author. Among commercial publishers on the day the first book is printed that book belongs to the publisher and the guaranteed flow of money is toward the author.

PublishAmerica's intended customers are the authors themselves. Among commercial publishers, the intended customers are thousands of random readers.

Among vanity presses, on the day the first book is printed the physical book belongs to the publisher, the guaranteed flow of money is away from the author, and the intended customer is the author.

Although, Publish America does accept returns, there is a catch.

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Accepts returns/does not accept returns isn't an iron-clad marker of a vanity press. And there are further catches to the PublishAmerica returns scheme. One of the biggest is that the discount on PublishAmerica's returnable books is only 5%. With a 5% discount even if the bookstore sells the book the bookstore will lose money on the transaction. This discourages bookstores from ordering those books.

In the Publish America contract, the authors are responsible for the royalty for their books if the books are returned unsold. In other words, if Publish America does not get money from the bookstores, then the author has to pay out of pocket for the books.

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If PublishAmerica sends you a bill, my advice would be to refuse to pay it. If they want to make their money back, they'll need to sell some books. They may threaten to sue you: Don't worry, they won't. The one thing that they're desperate to avoid is the inside of a courthouse. They may attempt other harassment (e.g. sending the cops to your house). This is illegal and unethical on their part, and gives you a strong claim against them.

In normal commercial publishing, the author is only paid for the books that are sold, true. But the author is never placed in the position of having to repay an advance or any royalty payments.

Publishers delay royalty payments using a plan called "reserve against returns." Since no one at PublishAmerica has any experience in publishing, it is likely that they are unaware of this or how to implement it.

Several people on the PA messageboard told me that all traditional publishers do that--even the big New York publishers. I told them that traditional publishers do not do that.

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You are correct. The folks who said that even the big New York publishers make authors pay back royalties are wrong.

Now, I did say that if there are returned books, they will be subtracted from future royalties, but the author is not charged for them.

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In essence, yes.

If the traditional publisher does not eventually get paid for the book, they take a loss.

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The way publishers make their money is by selling books to the public. If they can't, they take the hit.

I said that is why it is so hard to get published traditionally. The traditional publishers have alot invested in the authors.

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The reason it is so hard to get published commercially is that it's very hard to write a commercial book. Here is the basic fact about publishing: Readers drive the industry. There is nothing on earth that will make a person read a book he or she does not want to read.

Publishers and bookstores cater to readers, not to authors. Editors are the readers' advocates. Reviewers are the readers' guardians. And we authors -- we are the readers' slaves.

Real publishers have a great deal of money invested their books -- from tens to hundreds of thousands of dollars for each title -- of which the advance-and-royalties is among the smallest parts. See these two posts elsewhere for more on this:
http://alg.livejournal.com/84032.html
http://alg.livejournal.com/89781.html

When you see a publisher claiming to cater to authors, not readers, know that you are in the presence of a vanity press.

Please let me know if what my statement is correct in reguard to traditional publishers and royalties. I think alot of people need to know the real difference between traditional publishers and vanity publishers. I hope I explained it well. Thank you.

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You are essentially correct.

It's always a good day, when the truth comes out.

Welcome, MH. I've been here only a few months but I've learned a lot about writing and the business underneath. I browse the PAMB and have been surprised how many realize PA is a vanity publisher, and yet continue to submit.

I prefer to have money flow my way for my work. Just as Uncle Jim said. Maybe I'll submit some short stories to an ezine or small magazine in exchange for a couple of bucks and some contributor copies, but that's all good. A pub credit starts a good foundation when it's time to find a good agent to represent later, larger works.

Hope to see you around on the boards. Ask questions, give your opinions, have some fun; there's a great group of people here. Well....and a few jerks. But most people just learn to ignore me.

Always does me good when another brother sees the light of salvation.

PA is a "traditional publisher" of "fiction novels," and they will fufill your "dreams."

Assuming your dreams are along the lines of "wish in one hand, sh*t in the other, see which fills up first."

Welcome, and glad you're here. Hang out, have fun.

Short version: Writers are only paid for books that are sold. Selling those books is the publisher's problem.

I'm glad to see that there general concensus here at AW is that Publish America is a scam. That's not true at all forums.

Everyone here has pretty much answered everything brought up in the thread, but here's my experience just in case.

The publisher (after negotiating with you or with your agent) pays you an advance. This money is given to you when the book is finished and is yours to keep for ever and ever, even if the publisher decides in the long run not to print your book (for some unfathomable reason).

The publisher prints the books and they end up on the shelves, where hopefully they sell. The author will not see any more money until enough books sell to cover the advance they've already given you. If they never sell enough books, then the author never sees any more money for the book and the publisher has lost money.

However, if enough books sell to cover the advance, then the author will start to receive royalty payments. And this is where things get complicated with the "reserve against returns". The publisher, in the end, does not really know exactly how many books have sold at any particular moment. They get reports that a certain number of books have sold, and they count those books against the advance and for royalty payments. However, alot of the book have simply SHIPPED to a bookstore and are sitting on shelves. It appears that they have sold, when in fact they have not, and will be returned later. To counter this, the publisher sets aside a certain number of books on a "reserve." They don't pay the royalty on these books because they don't know whether they will sell or not, their report only says they've shipped from the distributor. The number of books they set aside for the reserve differs by publisher and by author (new authors have a higher reserve, established author have a lower reserve). The publisher will apply these reserve books to sales or returns when they get further reports down the road.

They key point here is that during all phases of the game, the publisher is always paying the author. They pay for books sold. The author is not responsible for anything except the writing a good book that hopefully sells well.

I'm sure if you want a more detailed explanation of the "reserve against returns" that James MacDonald has covered it in his post linked above by Duncan MacDonald.

jpsorrow said:

I'm glad to see that there general concensus here at AW is that Publish America is a scam. That's not true at all forums.

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If you didn't know, there's an entire sub-forum dedicated to PublishAmerica in the Bewares & Backgrounds Check forum. The phrase "general concensus here at AW is that Publish America is a scam" is a wee bit of an understatement.