How Textbook Royalties and Author Agreements Work

Most instructors sign their first textbook contract having never read one. The document is not long, but it uses a vocabulary of its own, and the few numbers in it are easy to misread. This guide explains how textbook royalties and author agreements generally work across the industry, so that when your agreement arrives you can read it, ask the right questions and negotiate the parts that matter. It is not legal advice, and it does not describe any one publisher's terms; every publisher, including Linus Learning, sets those out in the agreement itself and will walk you through them before you sign.

The basic arrangement

A textbook author is normally paid a royalty: a percentage of the money the book earns, paid at regular intervals with a statement showing what sold. The author is not usually asked to pay for publication; the publisher invests in editing, design, production, distribution and marketing and recovers that investment from sales. In exchange, the author grants the publisher the right to publish the book — the extent of that grant is what most of the agreement is about.

Royalties: the words that matter

List price versus net receipts

The single most important thing to understand is what the percentage is a percentage of.

• A royalty on list price (also "cover price" or "retail price") is calculated on the price printed on the book, regardless of the discount at which the publisher sold it to a bookstore or distributor.
• A royalty on net receipts (also "net revenue", "amount received") is calculated on the money the publisher actually receives after trade discounts. Because bookstores and distributors buy at a discount, net receipts are lower than list price — often substantially.

The consequence: a lower percentage of list can be worth more than a higher percentage of net. When comparing offers, or judging an offer, always ask which base is used and, if it is net, what typical discounts look like.

Different rates for different formats

Agreements commonly specify separate rates for print, eBook, and other digital or interactive editions, and sometimes for different sales channels (direct sales, bookstores, international, bulk or institutional sales). Read each one. Digital editions have different costs and different pricing, so their rates and bases often differ from print.

Escalators

Some agreements raise the royalty rate after the book sells a certain number of copies ("escalators" or "stepped royalties"). If the book is expected to be adopted widely, this is a reasonable thing to ask about.

Advances

An advance is a payment made before publication that is later deducted from royalties — it is an advance on royalties, not a payment on top of them. Advances are less common for textbooks than for trade books, and many academic publishers do not pay them at all. An offer without an advance is not unusual.

Deductions and reserves

Look for clauses that let the publisher deduct costs from royalties (for example, for permissions the author was responsible for, or for excessive corrections at proof stage) and for a "reserve against returns" — money held back because bookstores may return unsold copies. Both are standard; both should be clearly defined.

Statements and payment

The agreement should say how often royalties are calculated and paid (commonly once or twice a year), and that you receive a statement. It is reasonable to ask what the statement shows and whether you can query it.

Copyright and the grant of rights

Two different arrangements exist, and the difference matters.

• Under a licence, the author keeps the copyright and grants the publisher the exclusive right to publish the work in specified forms, territories and languages, for a specified period or for the life of copyright.
• Under an assignment, the copyright itself is transferred to the publisher.

Either can be a fair arrangement depending on the rest of the agreement, but you should know which one you are signing. Related clauses to read:

• Subsidiary rights — translations, adaptations, audio, excerpts, inclusion in course packs and databases. The agreement says who controls these and how income from them is shared.
• Territory and languages — "world, all languages" is common for textbooks; narrower grants exist.
• Reversion — the conditions under which rights return to the author, typically when the book goes out of print or sales fall below a threshold for a period. With digital editions a book need never be technically "out of print", so a sales-based threshold is worth having.
• Future editions — most agreements cover revised editions and say what happens if the author cannot or will not revise (often the publisher may engage someone else, with adjusted royalties).

Delivery, acceptance and the author's obligations

The agreement will specify a delivery date, a length, and what "acceptable" means. Read the acceptance clause: it usually gives the publisher the right to request revisions and, ultimately, to decline a manuscript that is not acceptable in form and content. It will also list what the author must deliver besides the text — figures, permissions, an index or index terms, ancillaries — and who pays for each. Permissions are the item most often underestimated; ask who clears them and who pays before you sign.

Two further clauses appear in almost every agreement: a warranty that the work is your own and does not infringe anyone else's rights or contain anything defamatory, and a non-compete restricting you from publishing a directly competing work with someone else. Both are standard; the non-compete should be narrow enough that it does not restrict your ordinary academic writing.

Reading an offer: questions to ask

1. Is the royalty on list price or net receipts? What do typical discounts look like?
2. Are there different rates for print, eBook and interactive editions, and for different channels?
3. Is there an escalator? An advance? A reserve against returns?
4. Is copyright licensed or assigned? What are the reversion conditions?
5. Who clears and pays for permissions? Who produces ancillaries?
6. What exactly must be delivered, and by when? What happens if the date slips?
7. How often are royalties paid, and what does the statement show?
8. What does the publisher commit to on marketing and on keeping the book in print or updated?

None of these questions is adversarial. Editors expect them, and a publisher that answers them plainly is telling you something about how the relationship will go.

Negotiating

Author agreements are negotiable, within limits. Publishers rarely move far on headline royalty rates for a first book, but they often can on delivery dates, the scope of the non-compete, permissions costs, reversion thresholds and the treatment of subsidiary rights. Ask for what matters to you, in writing, and expect a reasoned reply. If you belong to an authors' association or your institution offers contract review, use it.

A note on your own students

If you plan to assign your own textbook in the courses you teach, check your institution's policy first. Many require disclosure or departmental approval, and some ask instructors to forgo or donate royalties on their own students' purchases. It is easier to arrange this before publication than after; see our guide on assigning your own textbook.

What we tell our own authors

At Linus Learning, royalty terms, copyright and everything else in the agreement are discussed with you by your editor before anything is signed, in terms of your specific book rather than a generic schedule. If you have a project in mind, the quickest way to get real answers is to describe it in a sentence or two and ask.