Today’s post comes from the question files:
“My contract says that the publisher doesn’t have to send me a royalty check or a sales statement unless the “balance owed” to me is over $25.00. Is this normal?”
Short answer: yes and no.
Many publishing contracts have clauses stating that the publisher doesn’t need to send the author an accounting statement or a payment unless the royalties meet a stated threshold. These are actually two different issues, and authors need to treat them differently.
Here’s what the language this question refers to might look like in a contract:
If the balance owed to Author at the end of any accounting period is less than Fifty Dollars ($50.00), no payment or royalty statement will be sent to Author and the amount due will be carried forward until the total balance owed to Author equals or exceeds Fifty Dollars ($50.00). Publisher will send Author royalty statements any time a payment is due and payable to Author, but no statements are due unless a royalty payment is also due.
Here’s what it means:
If, at the end of any accounting period,* the publisher owes the author less than fifty dollars in royalties, the publisher doesn’t have to make a payment or send a sales statement to the author.
*The length of an accounting period varies – it’s usually 6 months for larger publishers, quarterly for mid-sized and some smaller publishers, and may be monthly with digital-only publishers and self-publishing platforms.
The two issues arising from this language are:
1. The publisher only needs to send a sales statement when a royalty payment is also due. (A problem.)
2. The publisher only needs to send royalty payments when the amount due to the author exceeds the stated threshold (here, $50.00). (A business decision.)
Let’s look at each in turn:
AUTHORS SHOULD GET STATEMENTS AFTER EVERY ACCOUNTING PERIOD
The publisher should send you a sales/accounting statement at the end of every accounting period, whether or not a royalty payment is due.
If the contract doesn’t require this, you can (and should) ask the publisher to insert language requiring a statement at the end of every royalty period, whether or not a royalty payment is also due.
ROYALTY PAYMENTS MAY BE SUBJECT TO REASONABLE MINIMUMS
Normally, the royalty payment threshold exists to ensure that the publisher isn’t paying its accounting department more to process author payments than the amount of the payment.
Consider: if an accounting employee makes $50/hour, and spends an hour processing checks to authors which total less than $50, in the aggregate, the publisher just lost money by sending the checks. Not a good business model.
Many publishers pay royalties at the end of accounting periods regardless of the amount the author is due. However, many publishers (including smaller houses) often do impose some minimum royalty amount to trigger cutting a check. Both are legitimate practices, and whether an author is willing to accept a royalty threshold is a business decision.
If your contract contains a minimum royalty amount required to trigger a payment, make sure the amount is low, and reasonable. A reasonable amount to trigger royalty payment varies, but $20-$100 is fairly standard. Anything over $100 could lead to significant delays in the author receiving payments.
Also, make sure that you get sales statements at the end of every accounting period, whether or not royalty payments have a minimum threshold.
Have questions about this or other publishing legal issues? Feel free to ask in the comments or tweet me, @SusanSpann.
And, to please the Bar, here’s a lovely disclaimer: This post is for informational purposes only, and does not create an attorney-client relationship between the author and any person. If you have legal issues or claims, consult an attorney promptly.