Most new authors look carefully at a contract’s royalty terms but pay almost no attention to the provisions governing statements of sales and revenue.
When I mention this topic at live presentations, I hear a variety of responses. The most common:
“That’s my agent’s job.” (From the represented author.)
“As long as I get paid, I don’t really care.” (Most likely from the independent crowd.)
And, most common of all, “I tried, but I couldn’t understand the legalese.”
None of these is a good excuse.
While authors do often care more about the numbers in the royalty terms themselves, royalty statements are a vital tool for ensuring the publisher is paying authors the proper amounts at the proper times. A proper contract description of royalty statements includes at least four obligations:
1 & 2. Statement Period and Frequency. The statement period means the amount of time each statement will cover. Frequency means how often the statements are sent to the author (or the author’s agent). The contract should state what period of time each statement will cover and how often statements will be sent. The contract should also state whether royalties will be paid on the same frequency as statements or on some other basis.
Most publishers send statements (and pay royalties) on a quarterly basis, with each statement covering a single calendar quarter. This means the author can expect four statements (and possibly four royalty distributions) per year. Statements are sent and royalties paid “in arrears,” which means the publisher collects information and money during the quarter (or other stated period) and sends the statement (and payment, if any) to the author after the period ends.
3. Statement Due Date. The due date is the date by which the publisher must provide the author (or the author’s agent) with statements and payments of royalties due. The publisher’s accounting department needs time to prepare statements and calculate royalty payments. Contracts often permit “retention” of some percentage of royalties to cover potential returns, and sometimes royalties must be adjusted for other reasons, too. (For example, to reflect actual returns on previous quarters’ sales.) The publishing contract should also state how long the publisher has to prepare and deliver statements (and royalty checks). Due dates vary. Some publishers send statements 60 days after the end of a calendar quarter, while others may require as much as 180 days. That said, authors run a risk in allowing publishers to deliver statements and royalties more than six months in arrears. There isn’t usually much an author can do to change statement timing, but it’s worth making sure that your contract contains the publisher’s standard terms. It’s also worth paying attention to make sure statements and royalties are delivered as required.
4. Dispute Rights.The contract should give the author the right to dispute statements (and royalty calculations), and should ensure that the publisher must cooperate with investigation of disputes.
There are other beneficial statement provisions that authors may obtain through negotiation (or, sometimes, find in the publisher’s standard terms). These include termination rights, detailed descriptions of what statements must contain, and beneficial timing on the release of retained royalties. We’ll cover those topics in next week’s Wednesday #Publaw post.
In the meantime, and as always, if you have questions about this or any other publishing law issues, please post them in the comments or ask me on Twitter, @SusanSpann, using the #PubLaw hashtag.