Wednesday, May 20, 2009

Understanding Your Royalty Statment--Part I

This has been a long time coming. In fact, I’ve been wanting to cover this topic ever since I started this blog—over a year ago—but I kept putting it off. For those of you who don’t know, I spent many of my formative years in New York City, working in the accounting department of a literary agency. A big part of my job (aside from chasing down info from my famous co-workers, storing old documents in the rodent-filled basement, and eating copious amounts of take-out Indian food at lunch) was auditing unearned royalty statements. And yes, we found mistakes. Lots of them.

If you have an agent, the accounting department of your agency will likely be scanning your statements for errors (reason #812 to have an agent). If you don’t have an agent, you’ll need to be looking for errors yourself. Either way, it behooves every author to know how to read a statement and check for errors. Far too many of us right-brained authors are at a total loss when it comes to the business side of things and it’s crucial that we keep ourselves informed. Sure, reading royalty statements is about as much fun as filing taxes, but it doesn’t have to be painful. So open that desk drawer, dig out those unread statements, and let’s have a look, shall we?

The first thing you need to know is that most royalties are reported twice a year. It used to be that all the major publishers reported at the same time, but now the dates are spread out and every house has its own timetable. To find out when your statement is reported, look at the top of the statement. It should say “For Period Ending __________”.

Let’s say your statement says, “For Period Ending June 30, 2009”. Just because the accounting is finished on this date, it doesn’t mean the statement will make its way to you anytime soon. It can take as long as three months for the publisher to compile, print, and send out the report. So that statement for the period ending June 30th won’t make it to you or your agent until the end of September. If you have an agent, you can add at least another month for processing, meaning you might see it in October or November. It might feel like everyone’s sitting on your statement, trying to make the wait as long as possible, but I can assure you that a lot of work goes into getting the statements out to every author. I’m not exaggerating when I tell you that at royalty time, my colleagues and I in the accounting office were surrounded by foot-high stacks of statements, covering every available surface. Be patient; you will get your statement.

There is one quirky instance, however, when you can wait up to a year for your first royalty statement. This happens when the release date of your book falls close to the end of an accounting period. Let’s say then that your book comes out in mid-June and the publisher’s accounting period ends June 30th. The publisher will, most likely, not issue a royalty statement because there isn’t any data to go on. In that case, your first statement will be for the period ending December 31st. Add in the usual four-month wait time for processing and you’re already at the end of April—nearly a year since the release of your book.

So you finally have your statement—now what? We’ll delve into the meaning of those numbers on the next post.

No comments: