Royalties & Digital Publishing

The growth in ebook sales has led to changes in royalty contracts offered by book publishers;

1. Reserve for Returns– New royalty contracts often exclude ebook sales from the reserve for returns. Why? The returns rate for eBook sales is effectively zero.

2. Higher Royalty Rates– The royalty rate for ebook sales is 20% of net for traditional publishers. This is twice the royalty rate for printed works; which averages 10% of net.

3. No escalators on eBook sales– New royalty contracts typically pay authors a flat percentage of net receipts on ebook sales. There are no quantity based escalators that pay a higher royalty rate based on unit sales.

Many new publishers are digital only publishers. Royalty contracts for these publishers;

  • Pay royalties only on sales that exceed a specified level. This allows the publisher to cover their production costs.
  • Do not pay authors advances against future royalties.
  • Pay royalties of 30% to 50% on net receipts for digital sales.
  • May pay a royalty of 50% on direct to consumer sales and a lower rate; about 25%, on ebook sales made through distributors such as Amazon and B&N.
  • Pay authors 50% of subsidiary rights income (i.e. translation, permissions, etc.)
  • Pay royalties monthly or quarterly. Traditional publishers pay royalties semi-annually or annually.