My book is being sold by an online bookstore, which also offers a publishing service. So, they are not only my online bookstore, but my publisher as well. There’s certainly more efficiency in having the online bookstore create the books it sells. However, there’s also the potential for fraud.
Of course, even when a traditional publishing house sells their own titles directly to the public, fraud can occur. Cooked books aren’t something that only self-published authors must worry about.
I don’t have a lot of sales. But, I receive far fewer royalties than the statistics – significant ranking changes – would indicate. Moreover, I once did not receive a royalty for a book that I purchased myself. Because royalties seem to go missing so often, I have imagined ways that an online bookstore, while also acting as publisher, could cook the books. These methods are given below.
First, you have to understand that there are two major distribution channels. One we’ll call direct, used when readers order directly from the publisher’s website. The second we’ll call general. General distribution is for pretty much everyone else – other bookstores, libraries, and so on. The direct royalty is much greater than the general, which makes sense because more parties share the profit with general distribution (the author, publisher, retailer or library, other distributor, etc.). To work through some examples, let’s assume that the direct royalty per book is $3.00, and the general royalty is $0.50.
(1) Fuzzy Math on Returns. Not all publishers accept returns but mine does. The publisher’s online bookstore does not pay royalties when they sell a book that has been previously returned. However, it seems more likely that more brick-and-mortar bookstores than individuals would return books. For an individual reader, returning a book is a nuisance, but bookstores return books in bulk as part of their standard operating procedure.
A book returned from a bookstore would be associated with a general distribution royalty. Using my example above, that would be $0.50. But, if that returned copy then gets purchased by an individual, the end royalty to the author should be $3.00. The online bookstore, by saying this is a return, skips the subsequent royalty altogether even though they should be paying the author and additional $2.50.
Why do I think this might be happening? Because I have never once seen any offsetting royalties. An offsetting royalty would be a royalty that would be a reduced royalty. If a general distribution book was returned, and then sold directly, then the author should receive an additional $2.50. Yet, I have never seen anything like this occur in my royalty reports. All my sales have been for either the direct royalty or the just the tiny general distribution royalty.
Perhaps it goes further. Perhaps books that are delivered to bookstores are only credited as sales when they are actually sold. If the bookstore then returns the books for which there have been no general distribution royalties, then the author might then get neither the larger direct royalty nor the smaller general royalty when the book sells. The online bookstore could even argue that this is necessary, to offset the cost of books going back and forth, even though the customer pays the shipping charges.
(2) Shell sellers. A whole bunch of “other” sellers appear online, on many sites, nearly as soon as one has a book out, without any corresponding royalties in either the direct or general category. Could these be associated with the online bookstore? Officially or unofficially?
I have to imagine that these two methods would be perfectly legal. Then there’s the possibility of simply not registering the sale at all, which would not be legal.
Let me emphasize that these are theories. I don’t have a smoking gun; all I have is smoke. However, I do have plenty of that. Usually several times per month, the ranking of one or another of my books improves significantly, but without a corresponding royalty. For one volume I expect this, because the text is used in high schools and so the used-book market is significant. But, it happens too often with the other volumes.
Online bookstores could point out – legitimately – that many authors expect far more sales than they receive. They could also point out – again legitimately – that these are often authors who, before the advent of POD, could have expected to have their great ideas remain unprinted. I could fall in that category. But all of that is irrelevant.
If I can think of ways to reduce authors’ royalties in order to benefit online bookstores, so can the people at the online bookstores. Furthermore, most corporations, including online bookstores, are fiercely geared towards profit. Readers of this article will surely remember that VW faked its emission tests because of the pressure on the engineers to meet the goals of management. They did this even though the scam could have readily been detected by those outside the company (it is another scandal that it went undetected so many years). The temptation to cheat must be even greater in companies where we have no ability to audit their actions.
I can’t suggest an audit method at this point because I don’t know enough about the processes, but online bookstores should work on this. Perhaps they could indicate when books have been resold. Perhaps they could indicate when books have been returned. Perhaps they could engage independent auditors. But, they have no financial incentive to do any of that.
An alternative is to not use the online bookstore to publish the books. Instead, use a different publisher that can list their books for sale at those online bookstores. Introducing a third party into the equation makes royalty cheating more difficult because separate reports can be obtained from each party. If they don’t add up, somebody is likely cheating.
3. Print books. If your publisher is also your retailer, they can print copies without your knowledge, and then simply claim that no copies were printed, nor sold.
4. Ebooks. Unfortunately, the book retail industry is ripe for potential fraud. Ebook retailers must have a copy of the ebook file in order to distribute it to their buyers. Unless an author has a copy of a receipt from a reader, and can prove that sale occurred, the ebook retailer could simply not record that sale. Of course, then the author gets nothing.
How can you protect yourself? After your book goes up for sale, ask friends and family who have purchased your book for copies of their email receipts. Compare those to your royalty reports. You can also buy copies yourself periodically to see if you’re getting credited for all your book sales – print and electronic.
Read more about how to test your publisher’s sales reports HERE.
There are plenty of authors online complaining about unpaid royalties with regards to a variety of publishers so you should also use creative search terms when researching a potential publisher, like:
haven’t been paid
Never assume that a firm, whether large or small, is obeying the law. Protect yourself by monitoring sales, and collecting documentation from your readers to prove those sales occurred. If you find missing sales, and if they don’t correct their error or, worse, if they simply stop responding to your correspondence (that’s common among scammers), you’ll haveto start playing hardball. For tips, read this:
How to Test Your POD Publisher’s Sales Reports
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Just Published? Great! Now, Get Ready for an Onslaught of Scammers!
Is This a Bookstore Scam? Maybe.
Authors Who Have Been Scammed by Publishers
Anonymous is the author of several self-published books.
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Acquisition Editor Tam Mossman shares seven essentials every book needs to stay in print, and sell!
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