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Show Me the Money: Royalties, Rights & Riches for Indie Authors

Posted By Erika Liodice On In Independent Publishing | 20 Comments

The Indie Way with Erika Liodice

I made my independent publishing debut back in 2011, and if this journey has taught me anything it is that realistic expectations are critical to a productive, rewarding experience. Back then, “indie publishing” was still relatively new and largely untested. Indie wunderkinds, like Amanda Hocking, were making headlines for earning millions overnight. Many authors flooded in, hoping to cash in on the Kindle gold rush. Some did very well and others ended up disappointed.

Since then, we’ve all learned a lot about the independent publishing space, and it’s become a legitimate way for writers to make a name for themselves and reach readers. We’ve seen the arrival of career indies who are in it for the long haul as well as traditionally published authors who have crossed into hybrid territory to reap the benefits of both models.

But for writers who may be considering their options, it’s still not clear what one can realistically expect to achieve with independent publishing. Fellow Writer Unboxed contributor Donald Maass [1], president of the Donald Maass Literary Agency in New York, sent me a list of questions he frequently hears from authors who are considering going indie. Today, I’m going to address three questions that pertain to royalties, rights, and riches to help the undecided gain a realistic view of this path. As a point of comparison, be sure to check out Kathryn Magendie [2]‘s recent post “Royalties: What This Writer Made, Once Upon One Time” [3] for a candid view of her experience with traditional publishing.

Before we dive in, I should mention that I’m not a lawyer, accountant, financial advisor, or literary agent, so read the fine print in your contracts and user agreements, and seek professional counsel when needed.

  1. When an author publishes through a self-publishing platform, what share of revenues is paid?

Royalty structures vary by platform. The author’s cut is typically determined by the book’s list price, its physical attributes (which impact production costs), and distribution model. Let’s take a high-level look at how several key publishing platforms currently structure their royalty models:

If you don’t want to sell directly into the channels above, you can use a distribution platform with broader reach. Each has its own way of handling royalties:

  1. What happens to subsidiary rights such as audio, translation, and movie/TV? Do the click agreements give control of those rights to the platform?

Subsidiary rights refer to all other forms of your book besides printed and digital. They enable your book to be recorded as an audiobook, translated into foreign languages, adapted for film or television, and more. “Subrights” represent additional revenue streams for indie authors, so it’s important to know who controls them.

When using self-publishing platforms, like those mentioned above, authors generally retain all rights, including subsidiary rights. One exception is platforms that allow authors to enroll in an exclusive distribution model in exchange for a higher royalty rate. For example, enrolling in ACX’s exclusive distribution model limits you to selling your audiobook through Audible, Amazon, or iTunes for an initial term of seven years.

It’s important to read all user agreements carefully so you fully understand the terms to which you’re agreeing. These are legally binding contracts that can impact how you publish your work, where you can sell it, and thus, how much money you can earn. If legalese reads like a foreign language, it may be worth paying an attorney to help you understand what is at stake.

  1. Indie boosters tell of great riches reaped by writers who snub “New York,” but is that common? What is a realistic expectation for self-publishing revenues?

My dad always warned me to be wary of people who peddle tales of great riches. If it were easy to amass a fortune with independent publishing, or anything else for that matter, everyone would do it.

As with most things in life, your publishing experience will be influenced by your expectations. Success in indie publishing requires the discipline to regularly produce new work, a strong focus on marketing and publicity to build your author brand and ensure your titles get discovered, and a working knowledge of the publishing business. And even then, there are no guarantees.

Independent publishing requires authors to wear many hats as they write, produce, and promote their work, and that can be exhausting. But it can reward you with an unparalleled sense of pride, accomplishment, and yes, money. How much money? It’s hard to say, namely because no two publishing journeys are the same. Though I can’t offer you a hard and fast figure, I can share a couple of formulas you can use to forecast your financial future in independent publishing:

  1. Calculate your break-even point. Your break-even point represents the number of books you need to sell to recoup your capital investment. Let’s say you spend $3,500 on production costs, such as editors, book formatting, cover design, etc. For the sake of simple math, let’s also assume you earn $3.50 in royalties for each book sold. Your break-even point equals your total costs divided by the royalty earned per book ($3,500/$3.50 = 1,000 books). This quick calculation indicates you’d need to sell 1,000 books to break even on your investment.
  2. Back into your income goal. Consider how much you want to earn from your publishing pursuits and use that figure to calculate how many books you must sell to achieve that goal. Let’s assume you want to earn $100,000/year before taxes and expenses. To continue with the example above, let’s assume you earn $3.50 in royalties for every book sold. The number of books you’d need to sell to achieve your goal equals your income goal divided by the royalty earned per book ($100,000/$3.50 = 28,571 books). This calculation reveals that you’d need to sell 28,571 books each year to earn $100,000/year before taxes and expenses.

Once you know the break-even point for your book and the sales volume needed to achieve your income goal, you can use those numbers to build a plan to achieve it. These figures may suggest that your income goal of $100,000/year will be challenging to attain with one standalone ebook. It may inspire a plan to create multiple works in a variety of formats and languages to reach more readers. Or perhaps it will reveal the need to hire a public relations firm to gain broader visibility, form strategic partnerships to exploit untapped subsidiary rights, or focus on making bulk sales to other large book buyers, like schools, corporations, gift shops, and other non-bookstore organizations.

Final Thoughts

Independent publishing can be a rewarding and lucrative experience for authors who invest in themselves and take a hands-on approach in bringing their work to life. If this is a path you’re considering, take time to learn about the publishing business and talk with indie authors about their experiences. Approaching indie publishing with a clear understanding of what it will take to achieve your vision will help ensure reality doesn’t disappoint you.

Many thanks to Donald Maass for sharing these questions from authors who are considering independent publishing. Do you have a question about this publishing path or life as an indie author? Leave a comment below or email me [29] (erika [at] erikaliodice.com], and I may answer it in a future post.

Are you an indie author? How has your publishing experience measured up to your expectations? What helpful advice can you offer to writers who might be considering this path?

About Erika Liodice [30]

Erika Liodice is an indie author and founder of Dreamspire Press, where she is dedicated to teaching curious minds about unknown worlds through story. She is the author of Empty Arms: A Novel [31] and the children’s chapter book series High Flyers [32]. She is also a contributor to Author In Progress [33], the Writer Unboxed team’s first anthology. To learn more about Erika and her work, visit erikaliodice.com [34].

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