[Elizabeth Barone]

Incoming: distressed author who needs (alcohol? chocolate? a nap?) help!

On April 29th, my small press publisher announced they were closing on May 31st and authors' rights would revert June 1st. The catch: because their model was team publishing with royalty split, the contracts we'd signed mandated that authors need to continue sharing royalties for the duration of the term. Each book's agreement was for five years.

Cue the panic attack. I'm broke. Being with small press publisher actually resulted in a hit to my income. (They didn't distribute to Kobo, and previously, Kobo was paying my bills because of their majestic indie promo list.) Re-publishing would cost me more (I had to update four books' ebook files (fees to Vellum), paperback files (free; DIY), and covers (fees to designers) to remove all instances of the publisher). I knew I couldn't afford to LLC and hire an accountant. There was no way. (Side note: some authors' team members started demanding payouts rather than royalties, which they weren't entitled to. This was another panic attack. Other authors' team members absolved authors from any further payment.)

Someone suggested I use Lulu to self-publish, because they distribute everywhere and also have a nifty feature that allows you to share royalties. But of course, there's a catch.

I'd settled up with my team -- who were all wonderful about the whole thing -- and was ready to go at midnight. I'd gone direct with Kobo (to take advantage of those promos), and logged into my Lulu dashboard just to check everything over and uncheck Kobo from the distribution list. Unchecking Kobo resulted in Amazon automatically being unchecked, too.

Apparently Lulu doesn't allow you to distribute to Amazon if you deselect "Kobo and others." This is not the first oddity I've run into with them, but I digress.

I'm not missing out on Amazon and I'm not missing out on my Kobo promos, so obviously I need to just go direct everywhere. That's fine; I was indie before the small press and I don't plan on going with another publisher ever again. This has been such a mess. But how in the world am I going to accurately calculate royalties to be paid out to several other people?

I can't afford an accountant. I seriously can't even afford a dollar pack of gum right now. Times are tough. I have autoimmune arthritis and can't work a "normal" job. My husband works full-time and it just supports our rent and bills.

I stayed calm all throughout May minus that initial crying fit, and now this. I'm on the verge of another panic attack.

I know a lot of you do box sets and share royalties. How do you do it?

Please help. Thanks in advance.

Update #1: Thank you so much to everyone who weighed in! I've contacted my team members with a more suitable arrangement for everyone.

 

[NoCat]

What do you mean, sharing royalties? With whom? Can't you track what comes in and pay those people their % somehow after the money arrives?

You should publish direct with Amazon and Kobo and perhaps use Draft2Digital for the rest. Not Lulu...

 

[celadon]

What do you mean, sharing royalties? With whom? Can't you track what comes in and pay those people their % somehow after the money arrives?

You should publish direct with Amazon and Kobo and perhaps use Draft2Digital for the rest. Not Lulu...

That's what I'm thinking. I've used Lulu and I like some aspects of it, but publishing direct, and using Createspace for print will be better and you get to keep more of your money.

 

[Guest]

*yikes* what a mess. I've never heard of an author having to split royalties with a "team" before.

How many people are involved?
What are the terms of their split, net or gross?
When does the 5 years run, from when the book was first published or from when your rigths revert?
What sort of accounting to them do you have to comply with? Eg: do you need to provide them with sales data on a monthly basis to show their cut?
What happens if you set your book to free, do they still get paid?
Do you need to deduct tax from their royalties and remit to the IRS?

So many questions...

 

[AuthorX]

Create a 1 page report that details the royalties earned per book and provide that report to the other authors each month.

Create a spreadsheet that lists each payout and the date that you paid the other author royalties. This should match up exactly with the statement of your method of payment (credit card, bank statement). These will go on your Schedule C as an expense.

This is very simple and doesn't require an accountant. If you're not comfortable working with spreadsheets, you are either going to have to get a friend to help you or hire an accountant though. If you're operating as a sole proprietor you must report this stuff on your taxes.

Overall, it shouldn't take you anymore than 5-10 minutes per month to do this if you're organized. And as the others said, you should be publishing everything direct that you can. You probably want to invest in Vellum Unlimited rather than paying for file updates each time, and I personally would not work with a designer who did not provide me the PSD files for my book cover so you do not have to worry about paying for a text change.

 

[Matt.Banks]

I was wondering about this also with regards to multi-author box sets. I assume the person who organizes the box set is the one who administrates the sharing of royalties, but how does that work? Or what if someone wants their book removed from the set? Couldn't borrows with the book includied still be earning page reads?

 

[Elizabeth Barone]

*yikes* what a mess. I've never heard of an author having to split royalties with a "team" before.

How many people are involved?
What are the terms of their split, net or gross?
When does the 5 years run, from when the book was first published or from when your rigths revert?
What sort of accounting to them do you have to comply with? Eg: do you need to provide them with sales data on a monthly basis to show their cut?
What happens if you set your book to free, do they still get paid?
Do you need to deduct tax from their royalties and remit to the IRS?

So many questions...

Yep, total mess.

Term starts from when the publisher published the book. One was published last year, the other three were publisher in Q1 and Q2.

I'm not deducting taxes, unless I absolutely have to. I'll send payments via PayPal and post reports; they'll have to manage their own taxes the way freelancers would. I could send 1099s at end of year, I guess. I'd think the royalties would be paid net, after Amazon, etc take their cut.

Ugh. Cue the headache.

 

[Guest]

I'm not deducting taxes, unless I absolutely have to. I'll send payments via PayPal and post reports; they'll have to manage their own taxes the way freelancers would. I could send 1099s at end of year, I guess. I'd think the royalties would be paid net, after Amazon, etc take their cut.

The tax situation will depend where the other team members are resident. If they are non-US then you will be responsible for deducting appropriate withholding taxes and remitting to the IRS. At a minimum you will need to do the annual 1099 and keep the appropriate records.

You really need to look at your contract to see your exact accounting and legal obligations toward these people so you can set up a system to see you through the next few years.

 

[Elizabeth Barone]

Create a 1 page report that details the royalties earned per book and provide that report to the other authors each month.

Create a spreadsheet that lists each payout and the date that you paid the other author royalties. This should match up exactly with the statement of your method of payment (credit card, bank statement). These will go on your Schedule C as an expense.

This is very simple and doesn't require an accountant. If you're not comfortable working with spreadsheets, you are either going to have to get a friend to help you or hire an accountant though. If you're operating as a sole proprietor you must report this stuff on your taxes.

Overall, it shouldn't take you anymore than 5-10 minutes per month to do this if you're organized. And as the others said, you should be publishing everything direct that you can. You probably want to invest in Vellum Unlimited rather than paying for file updates each time, and I personally would not work with a designer who did not provide me the PSD files for my book cover so you do not have to worry about paying for a text change.

Thank you.

I love spreadsheets, but I'm math-challenged. This is why I write books, haha. I have books that were not involved with the publisher. Feels like figuring out income by book -- there are different team members for each title -- is going to be such a nightmare. I record sales on a spreadsheet already as they hit my dashboard, estimating royalties.

It'll be okay. *breathes into paper bag*

 

[AuthorX]

I was wondering about this also with regards to multi-author box sets. I assume the person who organizes the box set is the one who administrates the sharing of royalties, but how does that work? Or what if someone wants their book removed from the set? Couldn't borrows with the book includied still be earning page reads?

Usually in a multi-author book set each author has committed to a contract for X amount of time before the book set is taken offline. So an author can't simply decide that they don't want to do be in the book set anymore.

The terms of the contract are usually pretty straightforward. When I've hosted paid booksets, I agreed to pay each author included in the bookset a certain amount for being included. I kept all the royalties for myself, and the other authors got their upfront payment and the exposure/free advertising for their book. Some other hosts split royalties and pay via paypal, but that's too much work. I wouldn't do that unless I was pushing a set for a bestseller list or something. If the bookset is a permafree, usually everyone will participate for free.

 

[Elizabeth Barone]

The tax situation will depend where the other team members are resident. If they are non-US then you will be responsible for deducting appropriate withholding taxes and remitting to the IRS. At a minimum you will need to do the annual 1099 and keep the appropriate records.

You really need to look at your contract to see your exact accounting and legal obligations toward these people so you can set up a system to see you through the next few years.

Eesh. More math.

That's the thing; there's nothing in the contract about the publisher dissolving. Nothing. It's insane. Their lawyers told us because we'd signed an agreement with the team, separate from the author/publisher agreement, that team contract still stands. Third party lawyers agreed or disagreed, depending on how they interpreted it. The publisher basically dropped the news on a Friday night and left us to fend for ourselves. I'm just grateful I know how to self-publish; so many authors are totally lost right now.

I want to compensate my team. I really do. But this is almost above and beyond my own abilities at the moment. I'll figure it out. I always do. But what a mess.

 

[Elizabeth Barone]

Basically, the creative team royalties break down like this:

Author (me) receives X% of royalties from books 1, 2, 3, 4;
Team member A (editor) receives X% of royalties from books 1, 2, 3, 4;
Team member B (cover designer 1) receives X% of royalties from books 1, 2;
Team member C (proofreader 1) receives X% of royalties from book 3;
etc.

 

[Guest]

If you haven't signed a contract with them, how on earth can they enforce anything against you?

Surely if the publisher dissolves and reverts all rights to you, all existing contracts are cancelled. Therefore any commitment to pay the team resides with the publisher NOT you. I'd be getting my own lawyer to look at the original contract and any specific clauses around the team. Do not believe their lawyer because this sounds dodgy as heck and unenforceable. Good on you for wanting to do the right thing, but that responsibility is on the publisher, not you.

What would happen if you simply wiped your hands of the mess and said "nope, not republishing. End of business."

 

[Patty Jansen]

Walk away. Publish your own stuff through Amazon. Ignore them. Never mind the lawyers. Just waste any more time and money on this. What are they, realistically, as a broke small press, going to do anyway? Threaten you with lawyers? Hahahahahaha. Tell them where to stick their lawyers. Seriously don't be intimidated by this sort of BS.

 

[TheLemontree]

This thread is ringing some memory bells for me. I'm sure there is a thread here talking about this exact situation - naming the publisher in the title of it iirc.

Google 'kboards [name of publisher]' and I'm sure you'll find it. (Don't bother with the kboards search function - it's crap)

Someone there was setting up a Facebook group for you guys to discuss where to from here, including how to manage the agreements with editors and artists etc.

Good luck!

 

[alawston]

Walk away. Publish your own stuff through Amazon. Ignore them. Never mind the lawyers. Just waste any more time and money on this. What are they, realistically, as a broke small press, going to do anyway? Threaten you with lawyers? Hahahahahaha. Tell them where to stick their lawyers. Seriously don't be intimidated by this sort of BS.

Yeah, this is pretty much the route I'm taking with a short story that's contractually stuck in a precarious small press's going-nowhere anthology for the next 15 months.

 

[NoCat]

You are paying the editor and cover designers a %? Meep. That's a huge red flag right there, though I guess too late for your to avoid it. I'd wait til the 5 years is up and leave the book unpublished while you write like crazy and publish new stuff. Nobody should pay a % of royalties for editing and cover art.  (I feel bad for the editor and artists, but... they shouldn't have gone for that deal either and you gotta take care of you)

 

[Kate.]

I'd get a lawyer to have a look through the contract. Usually first appointments are free, and you can use that to double-check what responsibilities lie on your shoulders and what's on the publisher's.

I agree that it sounds like the original contract should have died with the publisher. I'd be surprised if it included a clause where you had to continue paying editors and cover designers for five years after their business collapses.

And if it does... I'd shelve those books for the rest of the five years. Unfortunately it's not as simple as sending money to each person through Paypal. You would be taking on responsibilities (including tax responsibilities) and it could hurt badly if you make a mistake. =(

Sorry this has happened to you. It's a sucky situation and you don't deserve it.

 

[Guest]

Now is probably a good time to remind lurkers and others that:

REAL PUBLISHERS are responsible for 100% of the costs of production, distribution, and marketing. ANY publisher that relies on "royalty sharing" schemes or expects the author to foot even $1 of the bill is not a real publisher. It is a person with a website. The entire point of a publisher is that someone with competency is responsible for all of the nuts-and-bolts of the publication process so the author doesn't have to deal with it. THAT IS YOUR JOB as a publisher. It is your only job!

These idiots make the rest of us look bad.

The good news is, contracts can be renegotiated. You could just "buy out" the other parties. If they agree to the buy out, there isn't a darn thing the alleged "publisher" can do about it. Calculate what they have been paid so far then offer them a buy out based on normal work-for-hire rates. From your initial posts, I take it the book hasn't sold a lot of copies anyway. SOMETHING is always better than nothing.

 

[Cherise]

If you haven't signed a contract with them, how on earth can they enforce anything against you?

Surely if the publisher dissolves and reverts all rights to you, all existing contracts are cancelled. Therefore any commitment to pay the team resides with the publisher, NOT you.

This.