How do authors and artists know whether or not they're being cheated by publishers and record companies?
February 8, 2010 11:33 AM   Subscribe

How do authors and artists know whether or not they're being cheated by publishers and record companies?

And to be more contemporary, how about creators vs. online on-demand manufacturers, e.g., cafepress, zazzle, printmojo, etc.
posted by coffeefilter to Media & Arts (11 answers total) 3 users marked this as a favorite
Cheated in what way? Often authors have lawyers or agents who will negotiate (or look over) their contracts.
posted by cider at 11:36 AM on February 8, 2010

You're going to have to be more specific here. Cheated because of unfair contracts? Cheated because of improper royalty payments? Cheated because of the publisher/record company charging authors/artists for services they shouldn't be charged for?

(N.B.: I work for a book publisher, so I'm looking at this from that perspective.)
posted by ocherdraco at 11:37 AM on February 8, 2010

They don't.

"Hollywood accounting" is a term used to describe the circumlocutions that movie companies go through to avoid paying royalties. Publishers and record labels are known for pulling similar stunts. Here's an actual artist discussing his royalty statement, showing some of the sheer nonsense that goes on there.

The safe bet is for artists to just assume that they're getting ripped off, because it's almost always true, but proving it can be really, really difficult.
posted by valkyryn at 11:39 AM on February 8, 2010

Assuming you mean "financial cheating in a profit-sharing arrangement"...

As a comic-book writer who works almost exclusively with independent publishers, there is always a nagging "but how will I know what the sales figures really are?" question in the back of my mind when I sign a contract -- in that industry, at least, any money the creators make is usually a percentage of sales, scaling up as sales increase (but I've never written a comic that's done well enough that this has been a concern).

In my case, I could ask the publisher for the sales numbers when I get the cheque representing my cut of sales -- and he usually gives me a number -- but honestly, I don't know if those numbers are audited, and I've never pushed the issue to the point where I've asked how these things are verified.

So in my situation, I don't. I take it on faith both that the comics company is honest, and that there are systems in place to verify figures if needed. To my figuring, the advantage they get from bilking me by juggling sales numbers would be minimal, and the disadvantage to them if they ever got caught out, in a creator-driven community like comics, would be immense. Scorched earth for the publishing company and career death for the principals involved.

If a book I was working on suddenly was generating tons of e-mails, I had a few bloggers that work at comic stores saying "we can't keep this thing in stock!" and Wizard magazine was after me for a front-page interview, and the publisher was saying "yeah, we moved 1300 copies," I'd raise an eyebrow. But when you're not working at a household-name level in an industry like this one, it's far better for your mental health to assume you're dealing with like-minded partners in storytelling rather than to worry that somebody might be nickel-and-diming you.
posted by Shepherd at 11:46 AM on February 8, 2010 [1 favorite]

For the music industry and royalties specifically, Tim Quirk posted a detailed explanation of how it works and the lack of transparency in how the record companies keep track of sales.
posted by burnmp3s at 11:48 AM on February 8, 2010

As an author, I'm entitled to an audit of my account with each contract, once a year. I pay for my auditor in the form of a percentage. However much of my money that they find and extract from my publisher, they get to keep a percentage. Consequently, auditors are highly motivated people, and publishers do a pretty good job of accounting.
posted by headspace at 11:53 AM on February 8, 2010 [1 favorite]

In my experience, when there have been issues with royalties for an author I work with, it is usually an honest to goodness error (thought occasionally an error with very large consequences for an author) and we're left with egg on our face and trying to correct it. Authors (and anyone else paid on a royalty system) should pay close attention to their royalty statements, especially the first one (since that way you can catch any errors that happened when your royalty account was set up), and make sure the rates on the statements reflect the rates they contracted for. My authors also often ask me to look up sales numbers for them, and I can go into our database and find out exactly how many copies they had sold at the time of the last royalty statement, so they can corroborate it with the statement and make sure they're getting paid for the full amount. Keeping good lines of communication open with your publisher (and not just assuming that the royalty department will get it right every time) can go a long way toward keeping yourself covered.

(Think of a royalty statement as you would a credit card statement: it's just as important to make sure that everything is as it should be.)
posted by ocherdraco at 11:53 AM on February 8, 2010 [2 favorites]

I know about traditional book publishing in the UK.

The author normally has within their contract the right to send representatives to audit the sales records and subsiduary rights (translations, serialisations, permission fees) of their titles. Often/normally within this clause they'll be a percentage quoted: the clause is something like this 'if the royalties/sub rights paid are incorrect by more than x%. The publisher has to pay for the cost of the audit on top of whatever is discovered to be underpaid.'

I've seen this done by large licensors: like Disney etc. They will send someone on a regular basis, I seem to remember every 3 years or so.

I've never heard of this done for an individual author that is much short of a bestseller. Most authors will never earn royalties above their advances, so it'd be pointless for them anyway and may put the publisher off a tiny (only a tiny) bit dealing with them again.

The publishers I worked for were honest about sales figures/royalties and did their own sales reconciliations. Any mistakes discovered inhouse were rectified in the next reporting cycle at the latest.

The publishers occasionally bent the line about when something was 'remaindered below cost': sometimes a special clause in the contract for that, zero royalties to the author.
posted by selton at 12:21 PM on February 8, 2010 [1 favorite]

I was going to come in and say more or less what headspace and selton said. Pretty much all traditional publishing contracts include a right-to-audit clause that allows the author to send someone independent to do an audit of the publisher's finances as related to the author's books. In fact, this is a good way to know that your publisher is on the level. If some day you're ever entering into a traditional publishing contract and there is no right-to-audit clause, there is something fishy about the people you're working with, and you should, at the very least, inquire as to why that clause isn't there, and if the answer isn't a good one you should seriously reconsider the entire deal.
posted by Caduceus at 1:10 PM on February 8, 2010

Uh huh -- ditto headspace, selton, etc -- I've written books for a number of large publishers and there is always a "you are allowed to have the books audited" clause in there. I'd be a bit put off and insist to have one inserted if there wasn't.

At least from the stories I've heard, book publishers are a LOT more on the level than record studios, but YMMV.
posted by at 1:34 PM on February 8, 2010

Ditto to the agent -- I'm an author, and my agent is my advocate in every respect. She makes sure no one pulls one over on my because she doesn't get paid unless I do.
posted by changeling at 4:25 PM on February 8, 2010

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