Greenleaf Book Group pays authors no royalty advances, and compensates for this with a slightly higher royalty rate.
A March 3, 2008 article in Publishers Weekly; Against All Odds, Small Presses Prosper, highlighted some of the strategies that Greenleaf Book Group has used to remain profitable and grow from sales of $4.54M in 2006 to $8.12 in 2008.
- They pay no royalty advances, and compensate authors with higher royalty rates
- They save money in reserve accounts during good times
- They are careful with their money. The publisher said ““I’m a miserly CEO.”
- A focus on publicity
- Their staff is based in Austin, a less expensive city than New York
Read the complete article at Publishers Weekly
Building up a reserve account is a strategy that many publishers don’t follow. They spend the money as fast as it comes in, and when their bank balance grows they tend to spend it. This is especially true if they rely on estimates of their royalty payable because they don’t have royalty software.
When I was CFO at Brunner/Mazel, Inc. I built up a reserve account that ultimately grew to about 10% of sales and earned about 3% to 5% in interest. Thanks to the reserve account we did not have to worry about paying author royalties on time or surviving temporary dips in sales. It also gave us the flexibility to acquire really good books as the opportunity arose.
