Table of Contents
What Are Royalties?
If you are wondering what are royalties, the simplest answer is this:
Royalties are payments made to the owner or creator of something whenever their work, product, or intellectual property is sold, used, licensed, or distributed.
For example, royalties can be paid to:
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authors
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musicians
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inventors
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artists
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photographers
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software creators
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franchise owners
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patent holders
In publishing, royalties are especially important because they are one of the main ways authors earn money from their books.
If someone buys your ebook, paperback, hardcover, or audiobook, you may earn a royalty from that sale.
For self-published authors, royalties are directly connected to pricing, platform choice, printing costs, audiobook production, Kindle Unlimited reads, and how well your book converts readers into buyers.
That is why understanding royalties is so important before publishing.
How Do Royalties Work?
Royalties usually work as a percentage of revenue.
A creator owns the rights to something. Another company sells, distributes, licenses, or uses that work. The creator then receives a percentage of the money generated.
A simple example:
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you publish a book
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someone buys it for $10
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your royalty rate is 60%
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your royalty before costs is $6
But in real publishing, it is not always that simple.
Depending on the platform and format, royalties may be affected by:
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printing costs
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delivery fees
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retailer cuts
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VAT/tax
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distributor fees
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audiobook production costs
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royalty plans
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marketplace location
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pricing rules
This is why a royalty percentage alone does not tell the full story.
A 70% royalty rate sounds great, but that does not always mean you keep 70% profit.
What Are Royalties in Publishing?
In publishing, royalties are the money an author earns when their book is sold or consumed.
This can apply to:
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ebooks
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paperbacks
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hardcovers
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audiobooks
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translations
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foreign rights
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film rights
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licensing deals
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library distribution
For most authors, the most common royalties come from book sales.
If your book sells, you receive a royalty based on the publishing agreement or platform rules.
In traditional publishing, royalties are usually paid by the publisher after the author’s advance has earned out.
In self-publishing, royalties are usually paid directly by platforms such as Amazon KDP, IngramSpark, Draft2Digital, ACX, Findaway Voices, or other publishing/distribution services.
For Amazon KDP authors, royalties are especially important because they affect how much you actually earn from each ebook or paperback sale.
What Are Book Royalties?
Book royalties are payments authors earn when their books are sold.
They are usually calculated as a percentage of the book’s sale price, list price, net receipts, or platform-specific royalty formula.
For example, book royalties may come from:
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a Kindle ebook sale
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a paperback sale
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a hardcover sale
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an audiobook sale
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a Kindle Unlimited page read
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a library borrow
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a translation rights deal
This is where new authors often get confused.
Not all book royalties are calculated the same way.
An ebook royalty is different from a paperback royalty.
A paperback royalty is different from a Kindle Unlimited payout.
An audiobook royalty may depend on whether you publish exclusively or distribute wide.
So when someone asks, “what are royalties?” the better author-specific question is:
What type of royalty are we talking about?
Because the answer changes depending on the format.
How Are Author Royalties Calculated?
Author royalties are usually calculated using a formula.
A basic version looks like this:
Book price × royalty rate = royalty payment
Example:
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ebook price: $4.99
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royalty rate: 70%
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estimated royalty: $3.49
But this is only a simplified example.
In reality, the final amount may be lower because platforms can subtract costs, taxes, or delivery fees depending on the format and marketplace.
For paperbacks, printing costs matter a lot.
Example:
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paperback list price: $12.99
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royalty rate: 60%
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60% of $12.99 = $7.79
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printing cost: $4.50
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estimated royalty: $3.29
This is why paperback royalties can look lower than expected.
The book may sell for $12.99, but the author does not keep $12.99.
The platform, printing, and distribution costs all affect the final amount.
Traditional Publishing Royalties vs Self-Publishing Royalties
Traditional publishing and self-publishing use very different royalty models.
|
Publishing Model |
Typical Royalty Structure |
Main Advantage |
Main Tradeoff |
|
Traditional publishing |
Lower royalty percentage, often with an advance |
Publisher handles many upfront costs |
Author earns a smaller percentage |
|
Self-publishing |
Higher royalty percentage |
Author keeps more per sale |
Author handles more costs and marketing |
|
Hybrid publishing |
Varies widely |
Some support with publishing process |
Terms can vary significantly |
In traditional publishing, authors often receive an advance.
An advance is money paid upfront before the book earns royalties.
However, the author usually does not receive extra royalty payments until the book “earns out” the advance.
In self-publishing, there is usually no advance.
Instead, the author earns royalties directly from sales.
This can be more profitable per sale, but the author is responsible for things like:
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editing
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cover design
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formatting
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marketing
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reviews
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launch strategy
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advertising
That is why self-publishing can offer higher royalty potential, but also more responsibility.
Amazon KDP Royalties Explained
Amazon KDP royalties are the payments authors earn when their books sell through Kindle Direct Publishing.
For ebooks, KDP offers two main royalty options: 35% and 70%, depending on pricing, territory, and eligibility rules.
For paperbacks, KDP uses royalty rates such as 50% or 60%, depending on marketplace/list price, and then subtracts printing costs. Amazon states that paperback printing costs depend on things like trim size, page count, ink type, and marketplace.
That means KDP royalties are not just about choosing a price.
They depend on:
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format
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list price
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marketplace
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page count
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trim size
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colour vs black-and-white ink
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printing costs
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royalty option
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distribution route
For authors, this matters because the same book can earn different royalties depending on how it is formatted and priced.
A short black-and-white paperback may have better margins than a long full-colour paperback.
A 70% ebook royalty may look better than a paperback royalty, but the paperback may still be important because some readers prefer physical books.
The goal is not just chasing the highest percentage.
The goal is understanding what you actually keep.
Ebook Royalties vs Paperback Royalties
Ebook royalties are usually simpler than paperback royalties.
There are no printing costs.
That means ebook royalties are mainly affected by:
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list price
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royalty plan
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marketplace
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file delivery fees
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VAT/tax rules
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platform terms
Paperback royalties are more complicated because physical books cost money to print.
Paperback royalties are affected by:
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page count
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trim size
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ink type
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marketplace
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list price
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printing cost
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distribution channel
This is why two authors can sell books at the same price but earn different royalties.
For example:
Author A sells a 120-page black-and-white paperback.
Author B sells a 400-page colour paperback.
Even if both books are priced the same, Author B will likely earn much less because the printing cost is higher.
This is also why authors need to think carefully about book length, formatting, and pricing before publishing.
What Are Audiobook Royalties?
Audiobook royalties are payments authors earn when their audiobook is sold, streamed, borrowed, or distributed through audiobook platforms.
Audiobook royalties can come from platforms such as:
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Audible
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Amazon
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Apple Books
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Spotify
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Kobo
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Audiobooks.com
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Google Play Books
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library platforms
Audiobook royalty structures vary depending on the platform or distributor.
Some authors publish exclusively through one platform.
Others distribute wide across multiple audiobook marketplaces.
The royalty percentage may depend on:
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exclusivity
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distributor terms
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sale price
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subscription model
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library model
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narrator agreement
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production costs
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rights ownership
Audiobooks can be powerful, but they also cost more to create.
A high-quality audiobook may require:
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narration
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editing
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mastering
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proofing
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cover adjustments
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distribution setup
If you are publishing audio as well as ebooks or paperbacks, it is also worth understanding what an unabridged audiobook means, because audiobook format can affect production cost, listener expectations, and reviews.
For most authors, the safest option is usually a complete, professional audiobook that matches the original book and gives listeners the experience they expected.
Kindle Unlimited Royalties Explained
Kindle Unlimited works differently from normal ebook sales.
When a reader buys your ebook, you earn a royalty from that sale.
But when someone reads your book through Kindle Unlimited, payment is based on pages read through Amazon’s KDP Select system.
Amazon says Kindle Unlimited authors earn from the KDP Select Global Fund, and their share is based on pages read by Kindle Unlimited customers.
This means Kindle Unlimited income depends on:
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how many pages readers actually read
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your book’s KENP page count
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the monthly KDP Select Global Fund
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the payout rate for that month
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reader completion and engagement
So if a reader opens your book but barely reads it, you will not earn much from that borrow.
If readers finish the book, you earn more.
This is why Kindle Unlimited rewards books that keep readers engaged.
Kindle Unlimited works differently from a normal ebook sale, so authors should understand how Kindle Unlimited works before estimating income from page reads.
For self-published authors, this is important because KU can become a major income stream, but it is not the same as selling a book at a fixed royalty rate.
Royalties vs Advances
Royalties and advances are related, but they are not the same thing.
A royalty is money earned from sales or usage.
An advance is money paid upfront before royalties are earned.
In traditional publishing, an author may receive an advance when signing a book deal.
Example:
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publisher pays a $10,000 advance
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book starts selling
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author’s royalties accumulate
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once royalties exceed $10,000, the book has “earned out”
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after that, the author may receive additional royalty payments
If the book does not earn out, the author usually does not receive more royalty payments beyond the advance.
In self-publishing, there is usually no advance.
Instead, the author earns royalties directly from each sale or borrow.
This is one reason some authors prefer self-publishing.
They do not get upfront money from a publisher, but they may keep a much higher percentage per sale.
Why Royalties Are Not Always the Same as Profit
This is one of the most important things new authors need to understand.
Royalties are not always profit.
A royalty is what you earn from a sale after the platform calculation.
Profit is what remains after all your costs are considered.
Costs may include:
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editing
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cover design
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formatting
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audiobook narration
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advertising
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software
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ISBNs
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printing costs
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review copies
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marketing tools
Example:
If you earn $3 royalty per book and spend $300 preparing the book, you need 100 sales just to recover that cost.
If you run ads, the calculation becomes even more important.
A book may technically earn royalties while still being unprofitable if advertising costs are too high.
That is why authors should track both:
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royalty income
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total publishing/marketing costs
The royalty percentage is only one part of the business.
How Reviews and Sales Affect Royalty Income
Reviews do not directly change your royalty rate.
Amazon does not say:
“This book has more reviews, so the author gets a higher royalty percentage.”
But reviews can still affect royalty income indirectly.
Why?
Because reviews can improve trust.
And trust can improve conversion rates.
If two books are similar, but one has:
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more reviews
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stronger ratings
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better social proof
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more reader confidence
readers may be more likely to buy that book.
More sales can mean more royalty income.
This is especially important for self-published authors because they usually do not have a major publisher’s brand behind them.
Readers often judge unknown authors quickly based on:
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cover
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description
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reviews
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ratings
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sample quality
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perceived professionalism
That means reviews can play a real role in helping a book convert better.
If you want to build more trust around your book or audiobook, you can start your 14-day free trial with Bookblaze and begin collecting book and audiobook reviews across multiple platforms.
Common Mistakes Authors Make with Royalties
Assuming Higher Royalties Always Mean More Money
A higher royalty percentage does not automatically mean higher profit.
A 70% ebook royalty may be strong, but only if the book sells.
A paperback with lower margin may still be valuable if readers prefer physical copies.
Ignoring Printing Costs
Paperback authors often forget that printing costs reduce royalties.
Longer books, colour interiors, and certain trim sizes can lower profit margins.
Forgetting About Audiobook Costs
Audiobooks can be expensive to produce.
Even if audiobook royalties are attractive, authors need to consider the cost of narration and production.
Misunderstanding Kindle Unlimited
Kindle Unlimited is based on pages read, not normal purchases.
That means authors need to think about reader engagement, not just downloads.
Pricing Only for Royalty Percentage
Some authors price too high because they want more royalty per sale.
But if the price hurts conversion rates, total income may fall.
Sometimes a lower price with more sales can outperform a higher price with fewer sales.
Ignoring Reviews and Conversion
Royalties depend on sales.
Sales depend partly on trust.
If your book listing looks weak, has few reviews, or does not convert readers well, royalty income may stay low even if your royalty percentage looks good.
Final Thoughts
So, what are royalties?
Royalties are payments creators earn when their work is sold, used, licensed, or distributed.
For authors, royalties are one of the main ways books generate income.
But not all royalties work the same way.
Ebook royalties, paperback royalties, audiobook royalties, Kindle Unlimited page-read income, and traditional publishing royalties all have different rules.
That is why authors need to understand the full picture.
A good royalty strategy is not just about getting the highest percentage.
It is about understanding:
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your publishing model
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your platform
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your format
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your pricing
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your costs
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your readers
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your reviews
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your long-term sales strategy
For self-published authors, royalties can be powerful because you control more of the publishing process.
But with that control comes responsibility.
The authors who usually do best are the ones who understand both sides:
the creative side of publishing and the business side of earning from their work.
