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. [Read more…]

Reserve for Returns

The reserve for returns clause is found in many trade book author contracts. It says that the publisher can withhold a percentage of that each statement’s royalty payable for one period to cover returns from that period that are expected to be received in the next period.

Reserve for Returns in EasyRoyalties Royalty Contract Screen

Reserve for Returns in EasyRoyalties Royalty Contract Screen

 An author with a 20% reserve for returns clause that earned $1,000 in royalties during period 1 and $2,000 during period 2 would receive;

For period 1, $800 ($1,000 earnings less the 20% reserve of $200)

For period 2,   $1,800 ($2,000 in earnings plus $200 withheld during period 1 less 20% reserve of $400 for the period 2 reserve)