"Against Returns"

So there's this deadly little phrase in the publishing contract that says the publisher can hold half of the proceeds of a book "against returns" in perpetuity. When you sign the contract, which is standard anyway so there's no negotiation there, you think, "But how many returns will there seriously be anyway?" and that it's not a big deal, but it turns out it's a HUGE deal and it never stops being frustrating. A lot of people have switched to Amazon publishing because Amazon has promised not to do that, and just pays people every 2 months whatever they're owed. On the other hand, Amazon makes most of its money on high-end electronics and doesn't need to hold on to that money for as long as possible, which is why it can sell books at a loss, which it often does.

For example: I got my royalty statement and check from one of my two publishers last week. It listed how many books I'd sold, at what royalty rates, etc etc, because it varies based on whether the book is sold online or not online or overseas or is an e-Edition and makes for complicated reading, but the end the publisher says, "And this is how much money we owe you ... here's half of it. You might need it all now, but here's half."

The principle is actually sound. A bookstore will order a certain number of copies of the book for its stock based on it's guess as to how many it will sell. If the copies don't sell, it will send them back at the publisher's expense (the publisher pays for shipping) because otherwise the bookstore wouldn't be willing to order anything. The books that are returned are usually junked because they have stickers on them or damage to the cover or whatever, so that's a loss. The publisher is allowed to take from the author's earnings a percentage to pay for those returned books. It's a very low price, but it's got to be paid, so money is held back from the author instead of charging the author when this happens (money always flows TO the author).

Reality is different. In fact, these days publishers hold "against returns" money that's owed for eBooks, which are NEVER returned, because there is no physical book to ship back. Even if the author returns the book to the online store or whatever, there is still no book to ship back to the warehouse and no publisher has to shell out money for a returned eBook. This started slipping into contracts about 2 years ago. Agents fought it, and the publishers basically said, "The economy sucks. Do you want us to buy the book or not?" So the agents lost.

Most of the money I made since April (the last time the publisher was obligated to report) was in eBooks, but I only got to see half of that money. I did feel a bit better when I realized how much money I had ACTUALLY generated, and that people were reading my books (book 1 still sells regularly) and even reading them abroad (where my royalty rate drops from 7.5% to 1.85% of cover price), but my bank account is still very sad.

Long story short: If you get money for your Bat Mitzvah, put it in a fund that generates money and hope for the best, because you may decide to become a writer.