Thursday, October 08, 2009

Nuts & Bolts: Royalty Statements: Accounting Periods

STATUS: Cross-eyed from reviewing statements all day.

What’s playing on the iPod right now? OUT OF AFRICA by John Barry

So I have to admit that it’s been a while since I did some nuts and bolts type blog entries. Personally, I find them a little tedious as I LIVE the nuts and bolts of publishing every day. But I don’t want to forget that a good majority of my blog readers have not been published yet and may actually be endlessly fascinated by some nuts and bolts blog entries.

Either that or I’ll bore y’all to tears. Both are equally possible.

Since I’ve been yammering away about royalty statements all week, let’s dig in to this topic. I’ll have to start off a little light because it’s just now occurring to me that this might make a couple of interesting posts and I’m typing this from home (rather than from work where I would actually be looking at a royalty statement).

Obviously I can’t share specifics about any given statement (as that is client confidential) but I can certainly tell you about what is generally on royalty statements (or is missing) and what information agents end up digging for.

So flex your fingers and kick off your shoes; we are diving back into some Agenting 101 entries that I’ll need to bookmark on the sidebar.

Because it’s a little late in the day (and I really need to finish up a client manuscript read), let’s start with something simple.

The accounting period.

This is a lovely and archaic system that publishing houses have in place despite all our digital technology. I imagine that at one time, this sort of accounting period made sense. In today’s world, it’s a relic and I wish it was like a dinosaur and would become extinct.

The traditional NYC Publishing houses do reporting in 6-month increments. For ease of explaining, imagine a royalty period that begins January 1, 2009 and ends on June 30, 2009.

Six months.

Then the publishing houses, and this cracks me up, get four months (oh you read that right—4 months) to generate and mail that royalty statement (with a check if monies are owed). Why four months is necessary in this day and age is rather a mystery. Or maybe not a mystery. Publishing houses want to hold on to your money for as long as possible. (As an aside, I love Holt Uncensored and Pat Holt’s idea of revolutionizing the royalty system by making online royalty accounting available for authors). Brilliant—but then there would be no reason for taking four months to mail you the statements.

But I digress. So if you have a royalty accounting period that ends on June 30, 2009, the author is going to have a royalty reporting period of April/October (October for the June-ending statement and April for the December-ending statement).

All information on the statement will be for sales (in all formats) from that six-month period. So when you get the statement, you're already months behind in knowing current numbers.

Got that?