Authors may wonder what happens to their royalties when Paperight outlets sell their books. The short answer is that authors earn royalties from their publishers on Paperight sales just like any other. And this way they can reach a whole new market that conventional bookstores aren’t able to reach – which of course in developing countries is potentially a much bigger market. Note: we’re talking here about authors whose rights are managed by the publishing company that publishes their book. If you are an author who manages your own rights or self-publishes, this doesn’t apply to you. Though you may find it interesting anyway. The author’s royalty calculation will depend on their agreement with the publisher. Most agreements include a primary royalty (often about 12% paid on sales of the editions produced by the publisher’s distribution chain) and a subsidiary royalty (often 50 to 75% of income from rights sales to third parties who produce other editions, e.g. movie rights or newspaper serialisations). The publisher (not Paperight) decides whether sales through Paperight outlets fall under primary or subsidiary rights. There are good arguments for both. If Paperight outlets are considered just another print-on-demand printer, then sales qualify as primary rights sales, and the author will earn their usual 12% or so of what the publisher receives. If the publisher considers Paperight a third party producing entirely different editions under licence, then sales would be considered subsidiary rights sales, and the author would earn their contractual 50 to 75% of the publisher’s licence fee from Paperight. It’s important that authors understand how Paperight licence fees are set. The publisher sets
the licence fee, usually at 10 to 30% of the retail price of the book. (When the book sells in a Paperight outlet, the outlet charges their customer enough to cover the licence fee and their usual cost of printing and binding.) This is a common licence fee for all reprint or distribution agreements in the publishing industry. Also, when a publisher sells a book through a traditional distribution chain, they usually earn about 25 to 30% of the retail price after the bookseller’s cut (often around 45%) and the costs of printing, shipping, warehousing and wastage (often around 25%). So with Paperight, a licence fee of around 30% of the retail price of the book earns the publisher about the same amount as they would earn from a traditional edition. Also, remember that under retail agreements with large retailers like Amazon, or bulk sellers like Leisure Books, publishers often earn only 30% of their recommended retail price, and that’s before they’ve incurred ebook-management costs for ebooks or printing and shipping costs for print books. When setting Paperight licence fees, it’s important that publishers strike a
balance between rights fees low enough to make books affordable to large, low-income markets (the low-margin, high-volume approach) and high enough to earn a sensible return. Over time, that will be a process of trial and error.