Royalty Statements (sigh)

Kassia Krozser over at Romancing the Blog posted about writers having a small business mindset in order to survive. The point that caught my interest, though, was her insistence that writers check and understand their royalty statements.

I absolutely agree that you should double check the math when your statement arrives, and question anything that just looks weird, but that’s when you step off the edge of the world.

Royalty Statements are a contentious issue. In my experience:

They rarely arrive at the advertised time.
You or your agent often have to nag for them to appear at all.
No publisher compiles and presents their statements the same way the next one does.
Mistakes always happen.
Sometimes, no matter how much you try, you’ll never figure out how the publisher arrived at the figures they did.
Asking your publisher to clarify and/or explain their figures gets them pissed at you (even if it’s your agent doing the asking).
The publisher is required by clauses in your contract (if it’s a fairly standard contract) to produce evidence and support the figures in their royalty statements, but it takes your agent, an accountant, a lawyer, and paying the publishers’ expenses (usually) to get those explanations. Plus, you’re guaranteed never to sell another book to them again if you go this route. And possibly, no other publishers either.

Does that mean you, as an author, are over a barrel, with your pants down?

It may seem that way, but if you reach this position with a publisher, I would suggest that your relationship with your publisher is already dead, you just haven’t sniffed the stench yet.

Yes, there are certain factors out of your control, but there’s a few strategies that help you deal with them:

1) Publishers do aquire reputations amongst authors for their reliability and honesty.

Take note of the gossip and approach that publisher with caution. You’ll never get confirmed, hard news about a publisher’s dishonesty until someone sues them and wins, but rumours are rife.

Don’t shy away from a publisher just because you heard one rumour, though. Author/publisher relationships can be rocky at the best of times, and an unhappy author will whinge to her friends, and it’s a small industry.

But if you hear dozens of rumours, or that publisher constantly pops up on whispers & warnings bulletin boards, then proceed with caution.

2) The time to query a royalty statement is when you receive the first one ever from a new publisher.

Then you ask your editor very nicely to walk you, the dumb stoopid author, through how the statement is built, and what all the acronyms and footnotes mean. Take notes and refer back to them for future statements.

3) If you have an agent, don’t rely on her to vet royalty statements.

Your agent does have your best interests at heart, but she isn’t you, and doesn’t have your degree of self-interest. She’s also busy, and probably had to check a dozen statements that day. She may not remember what your last statement looks like, and therefore miss sudden hikes or drops in figures, and other strange things.

Check your statements yourself. Work the math to make sure everything adds up. Make sure you understand how the publisher arrived at the bottom line. Compare the statement to the last one – actually get the last statement out of the files and look at them side by side, because even if you think you remember the last statement perfectly, there’ll be interesting trends you can spot only if you do the comparison.

For the same reason, keeping a spreadsheet that summarizes all your statements over the long term is a great way of locating long-term trends and averages. You can learn a lot from these comparisons. I know, for instance, that I sell better through Barnes & Noble than Amazon. I also sell far better in electronic sales than paperbacks.

4) Work on the assumption that your publisher is honest and businesslike.

Most publishers are honest and businesslike, so if you work with the attitude that they’ll rip you off as soon as you turn your back, then it will sour all your dealings with the publisher. Assume that any errors on your statements are innocent mistakes and not proof that the publisher is out to get you, because this is the case more often than not.

For every horror story you hear about authors getting only a fraction of their earned royalties, or waiting years and years for advances to come through, there’s thousands of other authors who happily cash royalties cheques every month, quarter or year, and do so year after year without hiccup.

5) Anomalies should be questioned.

If you’re used to getting a certain amount every statement, and the next statement suddenly triples in value and you don’t know why, don’t cash the cheque! Same with any unusually large or small figure anywhere on the statement, or new figures you’ve never seen before. If you have an agent, talk it over with her – especially if she didn’t question the strange figures herself.

Although a lot of agents might disagree with this, I suggest that the first step to sorting it out should be you contacting your editor and asking very casually if they know why xx happened. This keeps everything at an operational level.

The publishing business has evolved from the days when agents took care of all the tiresome and obtuse business matters so the sensitive artiste could concentrate on their next opus. You are a businessman as much as your agent, and should be getting your hands dirty with business matters.

A long and productive relationship with your publisher is a critical factor in your success as an author, so dealing with royalty statements requires the diplomacy of Kissinger. If you can work directly with your editor, or get your editor to refer you to the nice people in accounting, it helps keep everything low key. A writer asking about his statement just means the dumb writer doesn’t get it.

As soon as your agent steps in, though, the matter becomes “official,” and shields go up. It’s assumed that your agent does understand royalty statements, and if she’s questioning the statement, then she must think something is wrong. No-one likes being accused of making mistakes, innocent or not. It puts the publisher on the defensive.

Only push your agent into the front of the fray if you don’t like the answers you get from your editor, but realize that this is going to negatively impact your working relationship with the publisher.

First appeared on Anchored Authors on July 11, 2008

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