Managing the challenges of accurate, timely author royalty payments

Royalties really matter to authors, so it’s worth spending the time and money to get them right. After all, they are how content creators get rewarded for all their hard work – and with the UK Society of Authors reporting that Covid-19 has squeezed its members’ incomes even further, they may matter more now than ever.

All authors depend on their publishers to provide royalty statements and payments that are accurate and on time. They motivate creators to produce the best content they can, but it’s also about more than just cash. Good and open royalty practice establishes trust in authors’ relationship with publishers, makes them more likely to stay loyal, and leaves them more inclined to recommend that business to others in the writing community.

The dangers of poor practice

However, royalty management can easily go wrong. All publishers have to collate sales data from numerous sources and multiple formats, and complex contract clauses like escalators may complicate royalty rates. Calculating precisely what is owed can soon become very difficult.

It is also when errors start to creep in. Whether they lead to over-payment or under-payment of royalties, this is inevitably bad news for publishers. The first means that profit margins are eroded and cashflow compromised, but the second can lead to a publisher’s hard-earned reputation among authors being wrecked. Correcting errors of any kind creates further stress.

The MetaComet® Systemsteam have seen many royalty horror stories – of publishers wasting hundreds of staff hours on calculations, needlessly paying out thousands of pounds too much, or finding that they have been short-changing authors for years. They are invariably honest mistakes – the result of poor management rather than deliberate policy – but they are hugely damaging nonetheless.

Keeping authors happy

What authors want from their royalties is actually quite simple: accuracy and efficiency. They want to know that their statements are an honest reflection of their sales, and they want their payments to be delivered on time. Authors who rely on royalty payments to pay the bills will not readily forgive delays, and they don’t want to spend their time chasing up money they are entitled to.

Transparency is also crucial, and publishers need to make their calculations as straightforward as possible. Some publishers do this very well, but with a recent survey by the Independent Publishers Guild showing that more than one in four authors doesn’t think their royalty statements are clear and easy to understand, there is still a lot of work to be done.

Time to automate?

When mistakes are made in royalties, or payments are delayed, it is usually because publishers have been doing calculations by hand. That can work fine for new or very small publishers, but when a list of books reaches double figures, manual management starts to become cumbersome.

The solution is to automate calculations. By consolidating sales data into a single source, and then using it to automatically generate royalty statements, the effort and risk of error can both be dramatically reduced. It also gives publishers much better visibility of sales – of which authors and books are earning back advances, and which might need more promotion – and helps them make better decisions on acquisitions, marketing and other activities. It creates the strong foundations on which a business can grow.

Automation sometimes comes with negative connotations, and the fear that it might take humans’ jobs. But as Damian Gibbs of Typefi pointed out on the BookMachine blog earlier this year, it can drive major benefits for publishers, especially in production and back-office tasks. When it is applied to monotonous and repetitive tasks like royalty management, it is far more of an opportunity than a threat. By releasing teams from hours buried in spreadsheets and statements, it gives publishers more time to do what they do best: produce, promote and sell great books.

David Marlin is President and Co-Founder of MetaComet® Systems, a leading provider of royalty management and revenue sharing solutions for publishers worldwide.

David and the MetaComet® Systems team welcome your views on the challenges of royalties and what publishers might do to improve the management of them for authors. Share your thoughts in the comments below.

Please join us on Wednesday 19 May at 1:00 BST for a Wednesday Wisdom live interview with David – we look forward to seeing you there! Book your place at the following link: https://bookmachine.org/event/wednesday-wisdom-live-interview-with-david-marlin-metacomet/