I woke up at 3am thinking about royalties.
Royalties and advances and advances on royalties. They're one of those mysterious illustrator things, though I first encountered them back in my band days. You could sign up with a publishing company and somehow you'd get money a few times a year if a song got played on a college radio station.
Free money. With a side of ego-boost. Who doesn’t want that? Me apparently, because I never signed up. I could’ve done something with that $1.31. Le sigh.
For illustrators, royalties come from sales—greeting cards, fabric, books. Do enough things that sell well and you can build long-term income. But most things don't earn out. Getting a good advance is always better. With royalties, you're paid precisely based on how well the item sold. Advances are about hope and good faith—how well the distributor hopes it will sell. You and the publisher both take risks: you accept royalties in lieu of more money upfront, the publisher offers an advance on something that doesn't exist yet. As long as you complete the project, you don’t have to pay it back. So if it doesn't sell well, that’s still real money in your pocket. So get the best advance you can. If royalties come, that's icing on the cake.
My cake recently got a few more frosting flowers. After five years, Claude earned out. I thought it might—it's in its 5th or 6th printing now and has a board book edition—so I was feeling confident.
A few weeks ago Julia, the accountant at my old agency, emailed with the good news and sent my royalty statement. That's what woke me up at 3am: the idea that I could show you how to read the damn thing, for when you get one of your own.
I'm not sure it's kosher to share my actual statement. I think we should all talk about money more, but this isn't just my money—it's the publisher's too, and my agent's. So instead, here's a fictional one.
This is Mirabel's statement. She's a squirrel (not that it matters). She wrote and illustrated a book called Acorns & Elegance: A Guide to Seasonal Entertaining. Tiny Tail Press paid her an advance of 1000 leaves. The book was a hit—fourteen moons on the New Oak Times Bestseller list—and she just earned out.
The first page shows the reporting period and how often statements come. This period, Mirabel earned 22.2 leaves.
Here's where it breaks down by sale type. Mirabel gets 6% of hardcover books over 1000 units sold. She got 5% for books 1-1000, but that’s not listed here—a small bump in royalties is a fairly common bonus when a book sells well. She also gets 4% for paperbacks.
Each type is split between regular and discount sales. Different formats and retailers can have different rates. The list price for Acorns & Elegance is 10 leaves, so when a book sells at full price, Mirabel gets around half a leaf per book. For heavily discounted sales (which are common with wholesale pricing), she still gets 4-6%, but of net instead of the list price. Net can be, uh—squirrelly—so be sure to ask how the publisher or manufacturer calculates it before signing anything.
The summary shows what she earned this period, minus money the publisher is holding to cover books that might be returned, plus any money they released from last period’s reserves, and minus what remains on her advance. In other words, the publisher keeps some funds to protect against potential returns while returning any money they no longer need to hold.
If Mirabel still had a lot of her advance remaining, you’d see that under Advances and Expenses. But all that remains is 4.7 leaves. Since that’s less than what she earned this period, she’s finally earning out. Tiny Tail Press will pay her the balance of 22.2 leaves. Maybe that’s 22 big leaves and one really small one. I don’t know rodent economics.
Finally, we see how many total units Mirabel has sold. Not bad! Hopefully it will stay in print for many years to come!
Once you earn out, every statement after that is just money coming in. More icing on your cake, or in Mirabel's case, more maple on her pecans.
Mirabel's hard at work on her follow up, Chestnuts & Charm: A Guide to Gracious Living. Preorder at Tiny Tail Press.
