For instance, if your standard contract with a standard publisher says your royalty rate is 2% of the publisher's net on special bulk sales, understanding it isn't all that difficult. But how much you wanta bet that when you tell the acquiring editor you don't like those terms and you don't want any of those special sales made of your book, the acquiring editor is gonna tell you, "Honey, sign it, 'cause if you don't, I got twenty more who will."
As I've documented previously, publishers routinely tell the authors that whatever format pays the low royalty rate, whether it's mail-order subscription sales or digital backlist, the reason is the higher cost and lower profit. I've already shown that as recently as 2004, Pocket Books was able to print, bind, and ship 27,780 copies of Touchstone for ~47 cents each. I mean, that's not difficult to figure out, because they put it right on the royalty statement.
The problem is that authors aren't cost accountants, and it's easy for the publishers to pull out the numbers and convince the authors that money is lost on bulk sales that cost more but sell for less and therefore authors don't get as big a cut.
Imagine my shock this evening then, reading through more of those old PANdora's Box newsletters, to come across an article from September 1993 titled "Question: Do book clubs screw authors?" written by/attributed to A Romantic Bean Counter. A quick skim of the page told me it was a cost analysis of a hypothetical mass market paperback print run, and I thought, "See, someone in RWA knew about this way back when. . . ." and then of course I realized I was that Romantic Bean Counter.
I actually do have a degree in accounting and cost accounting was my specialty.
The figures I used for the Box article were nothing new or surprising, and in a day or two I'll transcribe the whole article for everyone's benefit. Even though today's trend into digital publishing can make these numbers for ink and paper somewhat irrelevant, I believe skewing the numbers in favor of the publishers is par for the course.
Ah, but there was one other little gem tucked into this article which has helped me on part of my other quest.
The cost analysis is based on a print run of 50,000 copies and a 50% sell-thru that leaves the publisher with 25,000 unsold copies in a warehouse somewhere. All of the publisher's costs were completely recouped from the sale of 25,000 copies with a profit of ~$10,000. However. . . .
The publisher can sell those leftover 25,000 copies at $1 each to some discount broker -- like Book Margins, Inc, if BMI were legitimate -- and make another $25,000 profit. [emphasis in the original]This was published in PANdora's Box in September 1993. I'm sure I wrote it at least a month earlier. BMI -- the phantom distributor for Dorchester/Leisure -- was known about in RWA circles at least as early as summer 1993, which would have been the St. Louis conference Jaye Manus referenced here.