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Royalty Statements

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What my quarterly royalty statement tells me.

I make my living as a writer. Sure, I do other stuff and bring in money doing it, but when it all gets down to dollars and cents, the money I receive from writing is what pays the mortgage and puts food on the table.

With a new royalty statement in my hands, I thought I’d take a few moments to explain to folks interested in writing how the royalty part of writing works and what can be learned from a royalty statement.

How a Typical Writer Receives Income

Money from my writing work comes in three ways:

  • Payments for articles. When I write an article for publication, I normally get a check within 2 to 4 weeks of publication. The amount is agreed upon in advance, so I know what to expect but not exactly when to expect it.
  • Advances for work in progress on books. When I sign a book contract, it includes a payment schedule for advances. I like my advance paid in three or four installments that are due when certain parts of the book are submitted to my editor(s) — in other words, when I achieve completion milestones. A typical arrangement might be 1/3 on signing, 1/3 on 1/2 completion, and 1/3 on completion. Depending on the publisher, the checks usually arrive within 2 to 4 weeks of the milestone. Again, I know how much to expect but not exactly when to expect it.
  • Royalty payments. When I sign a book contract, it also includes a royalty percentage. The percentage is applied to the wholesale price of the book. So, for example, if the royalty is 12% and the book retails for $20 (about average for my books), the 12% is applied to the amount the publisher sold the book to retailers (or book clubs or direct order customers) for. A good rule of thumb is about 50% off the cover price. So I’d get 12% of about $10 or $1.20 per book. This royalty rate is applied to all sales of a title to come up with a royalty due. The amount of advance is then subtracted — remember, that was an advance on royalties — and if the result is a positive number, the book has “earned out” and I get a royalty check. My publishers pay royalties quarterly, although not on the same schedule. I know exactly when a royalty check will come — well, within 3 days of an exact date — but I never know how much I’ll get.

After doing this for 15 years, I’ve come to think of advances as my “bread and butter,” payment for articles as “fun money,” and royalties earned as “icing on the cake.” I won’t write a book unless the advance is enough to cover the amount of time and effort I put into writing the book. (I turned down two low-advance projects just last year.) This way, if the book doesn’t earn out, I’ll still make enough to keep paying the bills. If it does earn out, great. And since I don’t do a lot of work on articles — it’s just too much effort to get the work lined up — I don’t rely on that income for anything. That’s kind of unfortunate, because I can usually bang out one or two articles in day, so the income would really be great if I’d get get more of that kind of work.

As you can imagine, royalty statement time is a big event at my house — especially when Peachpit royalties are due. The statement comes in a big fat envelope. The reason: there are lots of pages. But one of the first pages of the package is the royalty check. And a quick peek tells me just how much icing I’ll have to spread around for the next three months.

How Many Books are on the Books?

The reason my Peachpit royalty statement comes in a big fat envelope is because there are lots of pages. The statement sitting in front of me right now is 61 pages long. I can’t even get a staple through it for filing.

The first few pages — 4, this time around — is a summary of the ISBNs covered by the statement. This list of ISBNs — 34 of them this quarter — are the books the publisher still has in its accounting system.

I need to make a distinction here between titles and ISBNs. A good example is right on the first page. My 2004 title, Creating Spreadsheets and Charts in Excel: Visual QuickProject Guide, is listed three times: the original title, the German translation, and the French translation. Sometimes translations get their own ISBN and sometimes revenue for a translation is listed for the main title. It depends on how the translation rights were sold. Also, since Peachpit is now selling PDF versions of some of my books, those versions appear on a separate line.

Still, a quick count of titles on this quarter’s statement shows 28 titles listed. Whew! Even I think that’s a lot.

In my case, the vast majority of my work these days is in revisions. So each statement might show multiple versions of the same book. This is especially true for titles that are still “alive.” For example, my America Online: Visual QuickStart Guides (a 2-part — Macintosh and Windows — nightmare completed for version 3.0 years ago) are “dead” titles. They came out, sold poorly, and were not revised. These book are dead and buried and the only reminder that I ever did them are the author copies of each book on my author copy shelf. But my Excel for Windows: Visual QuickStart Guide is alive and kicking — in fact, I just finished the revision for Excel 2007 this week. Three editions appear on my royalty statement: 2000, 2002, and 2003. (2007 will appear on the next statement.) And my Mac OS: Visual QuickStart Guide takes up the most lines: seven editions going back as far as the edition covering Mac OS 9.

For a title to appear on the royalty statement, it must be either earning money or losing money (by returns) with a more recent edition to suck up the losses. This is an important clause in book contracts — one that’s important enough to discuss in a little more detail here. Commonly known as cross-accounting or cross-deductions, it means that returns on one title can be applied to net revenue on another. So, for example, if my share of returns on an old edition of my Excel book was $43.54, that amount could be deducted from or charged to royalties on a more recent edition. That’s normally why books stay on royalty statements for so long — there’s still accounting for them.

It was kind of a good thing that my AOL books didn’t have more recent editions. Neither title earned out, so the money I was overpaid for those books could be deducted from future editions, had they existed. Instead, the publisher cut their losses by not doing new editions (a wise move) and simply stopped accounting for the existing books when the numbers stopped coming through. The books “fell off” my royalty statement.

(If you’re ever given the opportunity to negotiate a book contract, do not sign a contract with a clause that says all of your books can be pooled together for cross-accounting. (I don’t know the exact wording of a clause like that because I’ve had it removed from every single draft contract it appeared in.) Agreeing to this may prevent you from ever getting a royalty check if you write multiple titles for the same publisher and any or them are dogs. If you’re really lucky, you won’t even have cross-accounting for the same edition of a book — I was lucky to have that situation with one of my Quicken titles years ago. But I think it’s fair to do cross-accounting with different editions of the same book, so I don’t mind signing for it. I just brace myself for the returns every time a new edition comes out.

And returns, in case you’re wondering, are returns from retailers/wholesalers, not consumers. If Barnes & Nobel buys 1000 copies of a book and sells 200 of them in the time they allotted to give the title shelf space, 800 copies come back. That’s a bad thing for the author.

What the Summary Numbers Mean

Still with me? Here’s a bit more that the summary pages tell me.

For each ISBN, the summary page has 6 numbers:

  • Previous Balance is the amount owed to me (positive number) or the publisher (negative number) for the ISBN. There usually aren’t any positive numbers; if the publisher owned me money, they paid me last quarter. So books that are earned out show zero in this column. If I owe the publisher money — for example, the book hasn’t earned out or subsequent returns have put the ISBN in the red — that number appears as a negative value. Zero is good, negative is bad.
  • Earnings/Subsidiary Rights Earnings is what the book earned me during the quarter. That’s the royalty calculation applied to net sales. Positive numbers means they sold more books than they received in returns. Negative numbers mean they got more in returns than they sold. Positive is good, negative is bad.
  • Credits/(Deductions) is the amount paid out during the quarter for advances or, if the author is paying for indexing, the amount paid to the indexer. I’ve never seen a positive number in this column.
  • Cross Deductions is where they take returns from one title and apply them to royalties earned on another title. So, for example, if the net earnings on my Word X book were -$53.47, that amount would appear as a positive value in this column for that ISBN and a negative value in that column for a later edition — perhaps my Word 2004 book. If you add up the cross-deductions column, the net amount should be zero.
  • Payment Due is the net amount owed to me for the ISBN. This number is either zero or a positive number.
  • Balance Forward is the amount that needs to be earned out to get more royalties on the ISBN. It’ll be zero if there was a payment in the previous column or a negative number if zero was in the previous column. That value is carried forward to the Previous Balance column in the next statement.

Of course, this is the format Peachpit uses. Other publishers may use other formats.

So when I get a royalty statement, the second thing I look at is the summary. (The first is the amount of the check, of course.) The summary tells me which books are earning money for me. That’s usually current editions of books. This is where I can see at a glance whether a new title has earned out. I can also see which books are earning me the most money — the titles with bright and happy futures. The bigger the payment due on a title, the more likely that title will be revised in the future. (Unless the software publisher decides to kill the software, as Adobe did to PageMill years ago. That book was doing very well when it was killed.)

Sometimes I get pleasant surprises. For example, my Excel 2002 book is still selling. That book was published five years ago and it earned $262 for me this quarter. Okay, so that isn’t enough to host a big party, but it’s a nice thing, a good thing. After all, the average life of a computer book is 18 months. So to have one that’s still bringing in a few bucks for me after five years is great.

The summary statement also tells me which titles are dead. These are the titles with previous balances that are negative numbers and no revised editions to earn more revenue. Sometimes these titles have ugly negative numbers in the Earnings column, indicating returns. My QuickBooks Pro for Mac book is in this situation. Although it’s the only title covering that software, there simply aren’t enough users interested in buying a book to make the book earn out. So when my editor says the publisher is not going to revise the title, I can look at this royalty statement and understand why. The book is dead.

Want more detail? The summary pages are also a table of contents for the 57 pages that follow them. That’s where I can find information about units sold, subsidiary rights (like translation rights), and where the books were sold: U.S., Canada, Export, etc. To be honest, I don’t look at these pages for every title. Heck, I have enough to do in a day.

What I Learned this Quarter

Looking at the royalty statement is like peering into a crystal ball. I learned that there are certain topics I probably won’t be writing again and other topics I’ll be writing about for years to come. I learned which of my books is doing best for me (still Tiger, after two years!) and which ones I might want to promote a bit more to liven up.

But with 61 pages to review, that’s about all.

Congressman says he doesn't believe in God

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Some thoughts about religion and government.

Earlier this month — much earlier; I’m just catching up with my reading now — Congressman Pete Stark of California became the first high-ranking politician to admit that he didn’t believe in God.

From “Congressman says he doesn’t believe in God” in the LA Times:

“When the Secular Coalition asked me to complete a survey on my religious beliefs, I indicated I am a Unitarian who does not believe in a supreme being,” Stark said. “Like our nation’s founders, I strongly support the separation of church and state. I look forward to working with the Secular Coalition to stop the promotion of narrow religious beliefs in science, marriage contracts, the military and the provision of social services.”

I have to commend Congressman Stark on his brave stance. In a day and age when an American’s value to his country seems linked with the depth of his religious beliefs, it’s refreshing to read about someone who isn’t a “me too” member of the Christian club.

I chose the quote above because it echoes my sentiments about religion:it has no place in our government. Early settlers came to the New World to escape religious persecution — this country was built, in part, on religious and cultural diversity. The founding fathers were careful not to promote one religion over another when drafting the documents that would structure the country’s government. The First Amendment of our Constitution guarantees religious freedom. I take that to mean the freedom to believe whatever you like.

There’s no place in public schools for prayer, there’s no place in the science classroom for creationism (no matter what it’s called), there’s no place in government buildings for the Ten Commandments. There’s no reason why our rights should be limited because certain members of the government believe that certain private behaviors — homosexuality, pre-marital sex, abortion — are “unacceptable to God.”

And look what happens in a country ruled by religion — a country like Iraq. Constant fighting among members of the different religious groups — groups with different versions of the same basic beliefs. As reported just yesterday in “Shiite police kill up to 60 in revenge spree” in USA Today:

Shiite militants and police enraged by massive truck bombings in the northwestern town of Tal Afar went on a revenge spree against Sunni residents there on Wednesday, killing as many as 60 people, officials said.

You might say that the U.S. could never get like that, but consider the bombings at abortion clinics and the hate crimes against gays. We’re only a step away.

So when I read that a Congressman has stepped forward to admit that he doesn’t believe in God and that he wants to stop the “promotion of narrow religious beliefs in science, marriage contracts, the military and the provision of social services,” I feel a certain amount of hope for the future of our country.

The phrase that comes to mind is one I heard many times as a child: “Truth, justice, and the American way.” I’m all for it here.

5 Ways to Make Your Blog Posts More Readable

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Learn five easy tricks to help pull readers into your blog posts.

Okay, so you’ve written an article for your blog and you’re all ready to publish it online. You’re confident that the article’s content is well-written. And you’re sure it will appeal to your blog’s regular readers.

But wait! Before you put it out to be read by the world, have you done what you can to make it more readable?

By readable, I mean formatted in such a way that visitors will be drawn into its content and want to read every word. Or have you simply composed 20 paragraphs of good, solid information, formatted as big solid blocks of text?

No matter what blogging tool you use to publish your blog, you should have access to the standard array of formatting features available in HTML. In this article, I’ll explain how and why you should use them.

Break Up Long Paragraphs

What’s less attractive on a Web page than solid blocks of text? Long paragraphs of unbroken text can intimidate readers. They look unapproachable, like a college textbook. (For me, they bring to mind the textbook in my college tax accounting course, which further reminds me of two semesters of boring hell on Mondays, Wednesdays, and Fridays.)

Break up long paragraphs at logical points. This will require some writing skill, since you can’t arbitrarily chop paragraphs up — each one must still communicate a complete thought. But shorter paragraphs are a lot less intimidating than long ones — a point that applies to sentences, too (although I can’t seem to get that one into my thick skull).

And one more thing about this: be sure to use a space between paragraphs (usually with the

tag rather than the
tag, if hand coding is required). On the Web, that’s the standard way to end one paragraph and begin another. Just starting a new line isn’t going to break the paragraph at all — at least not in the eyes of the reader.

Use Headings

Headings cue the reader about the content of paragraphs that follow them. For example, my Use Headings heading here tells you that I’m going to talk about headings in this paragraph and, likely the few that follow up until the next heading. Readers can scan your article’s headings to get a better idea of what the article covers.

Of course, there are two kinds of headings. There’s the kind that actually reflects what’s in the paragraphs they head — that’s what I’m using in this article. And then there’s the kind that doesn’t quite explain what the following paragraphs are about, but are humorous or witty. Both types can work, but for serious content, I recommend the first type.

Headings can also help with search engine optimization (SEO), but not being an SEO expert, I can’t elaborate much about this. I seem to recall reading that h1 and h2 level headings are more effective for SEO than other lower levels. I use h3 because that’s how formatting is set up on my blog and I’m not terribly concerned with SEO. If SEO is very important to you, you might want to look into this claim. Of course, for headings to be effective at all in SEO, they must be coded as headings using

and tags (or other level tags as appropriate) around them. The appearance of text coded as headings will vary depending on settings in your style.css file or other style information for your blog. (And now we’re getting a little more technical than I wanted to get in this article.)

Format Lists as Lists

If any paragraph in your article includes a list of four or more items that are longer than four or more words each, for heaven’s sake, format them as a list!

There’s nothing so boring or potentially confusing as long lists within a paragraph, especially when those lists include explanations, commas, and semicolons. Why worry about proper in-paragraph list formatting when you can simply create a bulleted or numbered list that’s clear and easy to read?

Lists, like headings, are also extremely scannable, making it easy for readers to get an idea of the content they include. They draw the reader in by giving them information in bite-sized chunks. Bold formatting used at the beginning of a list item (see below) can act as a heading, letting the reader know that an explanation or more information about the item follows.

In summary, lists can do the following for you:

  • Break up long blocks of text. Long lists in a paragraph make big, fat, intimidating blocks of text. Isn’t this much nicer?
  • Make one point easy to distinguish from the next. Since you (and your readers) don’t have to worry about how list items are separated (comma or semi-colon?) you don’t have to worry about someone misunderstanding list items.
  • Take advantage of built-in formatting options. I’m not just talking about standard bullets and hanging indents here. As you can see in this list, a blog’s style.css file can include instructions for graphic bullets or other fancy formatting.
  • Give your readers important points quickly. By presenting information in an easily scannable format, your readers can see what a list is about without wasting time. If it’s what they want to learn more about, they’ll dive in and read it.

Apply Other Formatting…but Sparingly!

There are other, more basic formatting features you can apply to text. Want some basic information to stand out? Use bold formatting (as I did in the bulleted list above). Introducing a new word or phrase? Italicize it. Got a quote to share? Here’s what I say:

If it’s longer than a dozen or so words, consider putting quotations between

and

tags. This clearly identifies the text as a quote from another author. (Well, in this case, it’s still words of wisdom from me, but you can quote me if you like.)

Don’t use ALL CAPS. It’s childish and unprofessional and considered by many to be “shouting.” And don’t use underlines. On the Web, underlines indicate hyperlinks and you can confuse your readers.

And don’t use too much formatting. There comes a point when the repeated application of bold and/or italic formatting loses meaning and simply fails to do the intended job.

Insert Illustrations

I’m a firm believer in the old adage: “One picture is worth a thousand words.” Maybe that’s why I’ve been writing Visual QuickStart Guides for Peachpit Press since 1995. Those books are full of screenshots — mine average 3-4 per page — and are excellent tools for teaching readers how to perform tasks with various software.

In regular writing — such as the writing you might do for your blog — images can also help communicate information. Did you write a software how-to piece? Screenshots of the steps would be extremely helpful. Did you write about a recent vacation? Include a few photos to show the scenes you’ve written about. Does your article explain the organization of a company or one of its departments? Include an organizational chart to put things in perspective.

On the Web, images do more than just communicate information. They also add visual appeal. Think about it as you visit sites on the Web. Which pages or blog posts caught your attention more? The ones without images? Or the ones with photos or drawings?

If you don’t have illustrations for your article and you want to include some other kind of graphic element, try text in a box. This effect, which is often used in print publications, can add visual appeal almost as much as an image can.

Let’s face it: people like to look at pictures. By giving them pictures that relate to your article, you can capture their attention and reel them in to read more about what the picture shows.

A word of warning here: Don’t use photos that don’t belong to you — doing so is likely a violation of copyright law. You can probably use company logos — if your use is consistent with the company’s rules governing logo use (normally available on its Web site) and you’re writing about the company. But taking photos off another Web site or scanning them out of a print publication for use on your site could get you in a lot of trouble. It’s stealing, plain and simple, and you could get sued. Use photos, screenshots, and drawings that you’ve taken or that you’ve received permission to use. The rule of thumb here is, if you don’t know whether you have permission to use it, you probably don’t.

Conclusion

As you can see, each of these techniques is relatively easy to implement on your blog. While it isn’t necessary to use all of them in one article (as I’ve attempted to do here), you can mix and match them as you see fit to liven up the layout and appearance of your prose.

The main thing to remember is this: the more interesting you make your text appear at first glance, the more likely you are to get readers to stick around and read what you’ve written.

Oh, and by the way, just about everything in this article also applies to your non-Web writing efforts: reports, articles, white papers, and books. You just won’t need HTML code to get the job done.