Royalty Structures 101: What Authors Really Earn

Introduction

You’ve probably bought a book thinking, “I’m supporting the author.” But how much of that purchase actually reaches them? The answer might surprise you.

Whether it’s a hardcover from your local bookstore, an eBook downloaded in seconds, or a second-hand copy passed from friend to friend, the way authors earn money from their work varies widely—and often, they earn far less than readers expect.

This post pulls back the curtain on royalty structures: the systems that determine how authors get paid. We’ll explore how earnings differ across formats, why some models leave authors out of the loop entirely, and how new approaches—like those from Author Advantage—are working to change that.

Section 1: Traditional Royalty Structures

When you buy a brand-new book—whether it’s a glossy hardcover or a paperback fresh off the shelf—you might assume most of that money goes to the author. In reality, authors typically earn only a small slice of the retail price.

For books published through major publishing houses, royalty rates usually fall between 8% and 15% of the book’s retail price. Hardcovers tend to offer higher royalties (around 10–15%), while paperbacks are often lower (closer to 6–10%). These percentages are negotiated in contracts and can vary depending on the author’s experience, sales history, and bargaining power.

Small presses, which operate with tighter margins, may offer slightly lower royalty rates—often in the 5–10% range—but they sometimes compensate with more personalized support or flexible terms.

It’s also worth noting that many traditionally published authors receive an advance—a lump sum paid upfront when the book is signed. This advance acts as a kind of guaranteed minimum payment, ensuring the author earns something even if the book doesn’t sell well. However, it also sets a ceiling: the author won’t receive any additional royalties until the book earns back that advance through sales. This process is called “earning out.”

For example, if an author receives a €10,000 advance and earns €2 per book sold, they won’t see any royalty payments until 5,000 copies are sold. Only after that threshold is crossed do additional royalties begin to flow. If the book never reaches that point, the author keeps the advance—but earns nothing more.

💸 Where Does Your €20 Go?

Let’s say you buy a brand-new hardcover book for €20. Here’s how that money is typically divided:

Recipient	Approximate Share	Amount
Retailer (Bookstore)	40–50%	€8–€10
Publisher	30–40%	€6–€8
Author	10–15%	€2–€3

Section 2: Digital Books

Digital formats—like eBooks and audiobooks—have transformed how we read, listen, and buy books. But how do they affect how authors get paid?

For eBooks, royalty rates are typically higher than print books. Authors working with traditional publishers often earn 25% of the publisher’s net revenue—not the retail price. That means if an eBook sells for €10, and the publisher receives €7 after retailer fees, the author earns €1.75. It’s better than print in terms of percentage, but here’s the catch: eBooks are usually priced lower than hardcovers, so the actual euro amount the author earns per sale is often similar.

In other words, even though the royalty rate is higher, the lower price point means authors might still earn around €2–€3 per unit, just like they do with hardcover books.

Audiobooks are a bit more complex. If the author licenses their audiobook rights to a publisher or production company, they might earn 10–20% of net revenue. If they self-produce or use platforms like ACX (Amazon’s Audiobook Creation Exchange), they can earn up to 40% of net revenue, depending on distribution choices.

Subscription services like Kindle Unlimited or Audible Plus add another layer. Authors are paid based on pages read or minutes listened, which can be unpredictable and often lower than traditional sales.

Section 3: Hybrid and Self-Publishing Models

Not every author works with a traditional publisher. Many choose hybrid or self-publishing routes—especially those looking for more control, faster timelines, or better financial returns. But how do these models affect what authors earn?

In self-publishing, authors often earn 60–70% of the book’s retail price on platforms like Amazon Kindle Direct Publishing (KDP). That’s a significant jump compared to the 10–15% they might earn through traditional publishing. For example, if an author sells an eBook for €10 on Amazon, they could earn €6–€7 per sale—triple what they’d make through a traditional deal.

Hybrid publishing sits somewhere in between. Authors typically pay upfront for services like editing, design, and distribution, but retain more rights and a larger share of royalties. Royalty rates in hybrid models vary widely, but authors often earn 30–50% of the retail price, depending on the agreement.

Of course, higher royalties come with trade-offs. Self-published authors handle their own marketing, distribution, and production costs. And without the backing of a major publisher, visibility can be a challenge.

Still, for many authors—especially those with niche audiences or entrepreneurial drive—these models offer a more direct path to income and ownership.

Section 4: Used Books

Used books are a beloved part of the reading ecosystem—affordable, sustainable, and often the gateway to discovering new voices. But behind the scenes, they represent a major blind spot in the publishing economy.

When a book is resold, the author does not earn a cent. That’s right: used book sales generate zero income for the people who created the book. This is an ethical blind spot in the industry. To a reader, a used book is still a new story—fresh, engaging, and valuable. Authors deserve compensation for their creation in the same way musicians, actors, and other creatives are paid on a per-use basis.

Books have long lives, and their impact doesn’t end after the first purchase. Author Advantage is designed to recognize that value by creating a system where authors can earn from second-hand sales. Through partnerships with retailers and technology that tracks resale activity, we’re building a more equitable future—one where every sale supports the creative and commercial forces behind the book.

For readers, this means that even when you buy used, you can still support the authors and bookstores you love. It’s a small shift with a big impact.

Section 5: Real-World Examples

To understand how royalty structures affect authors, let’s look at a few simplified examples. These aren’t tied to any one author, but they reflect the reality many face—especially those working outside the bestseller lists.

Format	Retail Price	Author Earnings	Notes
📘 Traditional Hardcover	€20	€2	10% royalty, paid only after advance is earned out
📱 eBook via Traditional Publisher	€10	€1.75	25% of net revenue, lower price offsets higher percentage
🛠️ Self-Published eBook (Amazon KDP)	€10	€7	70% royalty, author handles production and marketing
📚 Used Book (Traditional Model)	€6	€0	No income for author
🔄 Used Book via Author Advantage	€6.50	€0.50	Resale royalties support authors

Conclusion

Every book you read is the result of countless hours of creative labor, emotional investment, and professional craftsmanship. But for too long, the systems that govern how authors are paid have been opaque, outdated, and—especially in the case of used books—unfair.

Whether it’s a hardcover from a major publisher, a self-published eBook, or a second-hand paperback from a local shop, the way authors earn varies dramatically. And while some models offer better returns than others, the truth is that most authors earn far less than readers imagine.

At Author Advantage, we believe it’s time for a new standard—one that values authors not just at the point of publication, but throughout the entire life of their work. By creating a system where resale royalties are possible, we’re helping to build a more equitable, transparent, and sustainable future for the people who bring stories to life.

To a reader, a used book is still a new story. And the author who wrote it still deserves to be paid.