Hi Old Hack, nice to meet you! I read your question:
"I don't know of any good publisher which "takes your royalties": trade publishers pay for editing, typesetting etc and then pay you your royalties as your book sells, and we wouldn't publish our work with a bad publisher, would we? I suspect I'm missing your true meaning here, but I'd love it if you'd explain this bit of your post."
Yeah, I should expand on this. There are two issues here. I think this will also answer Alitriona's question too:
The first issue being that, as we all know, trad pubs offer a writer a contract which spells out the terms of the deal. Usually, they give the writer 5-15% of net and an advance that is essentially a loan (that they can reclaim if they want, if the book does not do well) The pub takes the MS and pays for all the tasks that are involved in pubbing - editing, artwork, etc. Then they see to the distribution. When the book sells, every party involved gets their cut (retailers, agent, etc.) and what is left over (net) is the money from which the writer is paid. The percentage the publisher gets is part of what I mean by publishers "taking your royalties."
Here is the other part: I'm not sure if any of you have read Kris Rusch's blogs on Royalty Statements but I strongly recommend it:
http://kriswrites.com/2011/04/20/the-business-rusch-royalty-statements-update/
In her blogs she describes how she came a cross a huge discrepancy between her trad sales and her indie sales. She first noticed it with e-books by comparing her Bookscan numbers and also by comparing her Amazon rankings to her sales. Then she came to find the same discrepancy in print books. I don't have time to explain all the details so if you want to know what she did, I suggest reading her posts. By doing some digging and talking to other authors, she discovered that some of the major publishing houses are under-reporting both e-book and print sales, some by up to 90%.
Dave Farland talked about it in one of his Daily kicks:
"Recenlty some friends of mine have been examining royalty statements and finding that the e-sales seem ridiculously low. Been doing a bit of checking, it appears that some of the major publishers in New York are under-reporting their e-book sales by 90%. In other words, even if you do go to a New York publisher, the chances are good that they’re stealing your money. Some of them are very up-front about it. Books that should be reverted to authors are being sold as e-books by some publishers—without any royalties even being reported. One major romance publisher is sending out letters telling authors that their out-of-print books are being entered into “an exciting new program. . .” In such a world, authors really may have no choice but to walk away from the New York model."
This is the other part of what I mean when I say the pubs are "taking your royalties." They are under-reporting sales. Pretty soon you may be hearing about this in the news.
Now, how did I get onto this topic? I think I was comparing trad pubs to Lucky Bat. Oh yeah, with Lucky Bat you pay a flat fee to them for publishing services but you keep all the royalties (which is 70% on the pubbing sites.) You don't pay them any percentage of your sales. This is their publishing model and for me, it fits. I prefer it.
So I hope that answers your questions. Feel free to let me know if you have any more. Thanks!