Authors have many options to turn their ebook into an audiobook. Let’s take a closer look at ACX royalty share!
Navigating the world of audiobook production can be both exciting and overwhelming, especially when it comes to choosing the right compensation model. If you’re an author or narrator using ACX, you can consider a royalty share agreement that splits royalties between both parties.
On the surface, sharing royalties may seem like a win-win, but like any business deal, it comes with its own set of advantages and drawbacks. Let’s dive into the pros and cons of ACX royalty share agreements, helping you determine if it’s the right path for your next audiobook project.
What is ACX Royalty Share?
ACX, or Audiobook Creation Exchange, is an Amazon Audible platform that connects authors/publishers with narrators/producers to create audiobooks.
One of the key features of ACX is its flexible compensation models, with royalty share being a particularly attractive option for many users. But what exactly is a royalty share agreement?
In a royalty share on ACX, the rights holder – typically the author or publisher – and the narrator agree to share the royalties earned from the sales of the audiobook. Rather than paying the narrator a fixed rate upfront (known as per-finished-hour or PFH payment), the author and narrator each receive a percentage of the royalties every time the audiobook is sold.
The benefit of royalty share for authors is that you don’t need to have the budget to pay a narrator upfront, instead, you can produce a high-quality audiobook without initial costs.
For narrators, it’s a solid way to break into the audiobook market and make a name for themself. It also offers the potential for long-term earnings if the audiobook becomes popular and continues to sell well over time.
ACX also offers an option called Royalty Share Plus, which is a hybrid model that combines a lower upfront payment with ongoing royalty shares. This option can be appealing for narrators who have already made a name for themself and want some immediate compensation while still sharing in the audiobook’s future success.
Overall, the ACX royalty share model is designed to make audiobook production accessible to a wider range of authors and narrators by sharing both the risks and rewards of the audiobook’s success.
How ACX Royalty Share Works
Production Process
The process begins when an author or rights holder posts a project on ACX. This includes details about the book, the desired style of narration, and whether the project will be offered as a royalty share, a per-finished-hour (PFH) payment, or a combination of both (Royalty Share Plus).
Narrators can then browse these listings and audition for projects that interest them.
The author can then choose the perfect voice among all auditions.
Once a narrator is selected, the author and narrator negotiate the terms of the agreement. In a royalty share deal, both parties agree to split the royalties generated from audiobook sales. Typically, this split is 50/50, with each party receiving an equal share of the revenue after the audiobook is published.
If Royalty Share Plus is chosen, the narrator also receives a reduced upfront payment in addition to the royalty split.
After the agreement is in place, production begins. The narrator records the audiobook according to the agreed-upon timeline, and the rights holder is asked to provide feedback and approvals during the earlier stages of the process. ACX facilitates this collaboration, ensuring that both parties can communicate effectively and track progress.
Distribution
Once the audiobook is completed and approved, ACX handles the distribution. The audiobook is made available on Audible, Amazon, and iTunes exclusively. As sales occur, ACX splits the royalties and pays the author and narrator accordingly.
Royalty share agreements on ACX are long-term commitments. Typically, they last for seven years, meaning both the author and narrator will share royalties for this period.
After seven years, the rights holder may choose to extend the agreement, renegotiate terms, or have the rights reverted to them, so they can, for example, choose a wide distribution for the audiobook.
Pros and Cons of ACX Royalty Share for Narrators
Pros
- Long-Term Earning Potential
With a royalty share agreement, narrators can earn income over time as the audiobook sells. This means that if the audiobook becomes popular, a narrator could potentially earn more than they would have with a one-time per-finished-hour (PFH) payment. For projects that perform well, this can result in a steady stream of income for years. - Opportunities for Building a Portfolio
For newer narrators, royalty share projects can be a great way to build a portfolio without needing to negotiate high upfront fees. It allows narrators to work on multiple projects, gain experience, and establish a reputation in the industry. - Collaboration and Relationship Building
Royalty share agreements often foster a closer working relationship between the narrator and the author, as both parties have a vested interest in the project’s success. This can lead to future collaborations and referrals, which are valuable in the audiobook industry.
Cons
- Uncertain Income
One of the biggest downsides for narrators is the uncertainty of income. Unlike a PFH payment, which provides guaranteed income, royalty share payments depend entirely on the audiobook’s sales performance. If the audiobook doesn’t sell well, the narrator might end up earning far less than expected. - Delayed Earnings
Royalties are typically paid monthly and can take time to accumulate, meaning narrators may not see significant earnings for months or even years. This can be a drawback for those who rely on more immediate income to support their work. - Risk of Low Sales
Even with a high-quality product, there’s always the risk that the audiobook won’t sell well, whether due to poor marketing, niche subject matter, or competition in the market. In such cases, narrators may end up earning very little for their time and effort. - Promotional Work
In order to turn the audiobook into a success, narrators will try their utmost to promote it. This can be a huge additional work load with yet again an uncertain outcome. - Long-Term Commitment
A seven-year commitment to share royalties means that narrators are tied to the success (or failure) of the audiobook for a long time. This can be limiting, especially if the audiobook doesn’t perform well, or if the narrator would prefer to move on from the project.
Pros and Cons of ACX Royalty Share for Authors
Pros
- No Upfront Costs
What makes this agreement so attractive is that you won’t have to come up with high upfront production costs. Instead of paying a narrator a substantial fee per finished hour, authors can produce an audiobook with no initial financial outlay, meaning you can break into the audiobook market right now without having to save up for a considerable amount of time. - Risk Sharing
Authors share the financial risk of the project with the narrator. If the audiobook doesn’t sell well, the author hasn’t lost money on upfront costs. Conversely, if the audiobook does perform well, both parties benefit from the shared success. - Shared Promotional Efforts
Narrators have a big incentive to support the author in promoting the audiobook to boost sales and royalties, not just with a release day post, but with a long-term strategy to consistently find new listeners.
Cons
- Long-Term Commitment
A seven-year commitment means that authors are locked into the agreement for a significant period. If, for whatever reason, you become unhappy with the audiobook – be it with being Audible-exclusive or with the narrator choice – it will be a long wait until the right revert to you and you can re-record the audiobook with a different voice or make a new agreement with the narrator, e.g. to publish wide. - Limited Control Over Narrator Selection
Since many experienced narrators prefer guaranteed payment, the pool of narrators willing to work on a royalty-share basis might be more limited. This can make it challenging for authors to find a narrator who perfectly matches their vision for the audiobook. - Dependence on Sales for Compensation
Just like narrators, authors are dependent on the audiobook’s sales for their compensation. If the audiobook doesn’t perform as expected, the author’s earnings will be lower, potentially resulting in a less profitable project overall. - Potential for Reduced Profits
If the audiobook is highly successful, sharing royalties with the narrator could result in the author earning less over time compared to a scenario where they paid the narrator upfront and retained all future royalties. This can be a significant consideration for authors confident in their book’s sales potential.
When to Consider or Avoid ACX Royalty Share
The decision to enter into an ACX royalty share agreement is a significant one, both for authors and narrators. The choice hinges on a variety of factors, including financial circumstances, project goals, and risk tolerance.
When Authors Should Consider ACX Royalty Share
If you’re an author with a tight budget, a royalty share agreement is an excellent way to produce an audiobook without upfront costs. This allows you to bring your book to a broader audience and tap into the growing audiobook market without significant financial risk.
For debut authors or those working on niche projects, the sales potential might be uncertain. A royalty share agreement can be a smart way to mitigate risk, as you won’t be out-of-pocket if sales are lower than expected. It also offers the chance to collaborate with a narrator who is equally invested in the project’s success.
If you are an author who has no interest in audiobooks yourself and have considered choosing AI narration, royalty-share is much preferable as it is still a mostly hands-off approach without initial investment from you, but you can give an up-and-coming narrator an opportunity to grow while showing your support for human art.
When Authors Should Avoid ACX Royalty Share
If your book has already been successful in print or e-book formats, or if you have a strong marketing strategy that suggests high sales potential, you might prefer to pay a narrator upfront and retain all future royalties. This could maximize your earnings over time, particularly if you expect the audiobook to be a bestseller.
If you have a specific narrator in mind who charges a high per-finished-hour rate, you might want to make the investment to create the audiobook exactly as you envisioned it.
When Narrators Should Consider ACX Royalty Share
If you’re a newer narrator looking to build a portfolio, royalty share agreements can be a great opportunity. They allow you to work on multiple projects without negotiating high upfront fees, gain experience, and establish a presence in the industry.
If you believe in the potential success of a particular project, a royalty share agreement could lead to substantial long-term earnings. This is particularly true if you’re confident in the author’s ability to market the audiobook effectively and if the book has already shown strong sales in other formats.
If you’re open to taking risks and are comfortable with the possibility of uncertain earnings, a royalty share agreement might suit you. This option is ideal for narrators who prefer a potential ongoing income stream rather than an immediate payout, or whose priority is to get their name out there and build a portfolio.
When Narrators Should Avoid ACX Royalty Share
If you rely on narration as your primary source of income and need immediate financial stability, this sort of agreement might not be the best choice. The uncertainty of sales and delayed earnings can be challenging if you need consistent, reliable payments.
If you prefer to avoid financial risk and want guaranteed compensation for your work, sticking to per-finished-hour payments is likely a better route. This ensures you’re paid for your time and effort regardless of how the audiobook performs in the market.
For experienced narrators with a solid reputation and a steady stream of projects, it may make more sense to prioritize guaranteed income over speculative earnings. With a well-established career, you might find that your time is better spent on projects that offer immediate and predictable financial returns.
ACX royalty share agreements offer unique opportunities for both authors and narrators, but they also come with inherent risks and disadvantages.
Authors should carefully consider their financial situation, sales expectations, and creative goals before deciding on a royalty share agreement. Similarly, narrators need to weigh the potential for long-term income against the uncertainties of sales performance and the need for immediate earnings.
If you are an author new to the audiobook market, make sure you take a look at my 10 Audiobook Creation Essentials!
Eline Blackman (pronouns: she/they) fell in love with books as a child – with being read to and reading herself. 10 years ago, she bought her first Audible book. It was love at first listen! An average of 250 audiobooks per year has become the new normal and you will rarely see Eline without a wireless earbud. Romance and Fantasy are the go-to genres for this audiobook fan.
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