Although there can be varied financial arrangements between publishing houses and illustrators, there are some established norms which are generally followed by most publishers in business. This holds good for almost all publishers, regardless of their size and the type of genres that they specialize in.
Advance plus Royalties
This is probably the most common arrangement between the illustrators and the publishers. It is similar to the payment mode that publishers use for authors. The illustrator is paid an advance which is then balanced out against future royalties for the book. A percentage of this advance is paid to the illustrator when the contract is signed, a percentage is paid when the artwork is completed and delivered and the rest is paid when the book is published. The advance is calculated on the book’s saleability since that is how the publisher hopes to make a profit on the investment made on the project.
In addition to the advance, the illustrator is also paid a percentage from the online and bookshop sales of the book. As mentioned above, the calculation of the advance and the royalty depends on various factors linked to the saleability of the book. This in turn depends on the book genre, type of artwork, publishing costs (design, logistics, marketing, financial management etc.) and the experience of the illustrator. If the illustrator is backed by previous experience and is known to readers, he/she can definitely count on higher advance as well as higher royalties since she/he will be contributing to the sales of the book.
While most illustrators, especially for children’s picture books, are paid an advance and royalty, sometimes publishers also offer a “flat fee” arrangement for the illustrators. This generally happens for book projects where the illustrators are providing a very small amount of artwork. The unfortunate part of this agreement is that it prevents the illustrator from benefiting from the success of the books, should the book hit the bestseller lists. A better alternative is a flat fee and a share of the profits should the book sales exceed a certain number.
Some publishing houses are experimenting with various other financial arrangements with authors and illustrators. One way is paying higher royalties to illustrators in lieu of an advance, another way is a profit-sharing model; both these arrangements can only be profitable for the illustrators if the book sales are high. In both these cases, the payback for the illustrator kicks in only when the book does well in the market. If the book sales are not satisfactory, the illustrator is likely to end up with zero remuneration for the work done.
Revenue from the rights
Since the illustrator holds the rights of copyright for all the original illustrations done by him/her, selling the rights to their work is another way for illustrators to earn additional revenue. Sometimes the publishers buy the rights in all languages from the illustrators, in which case the illustrator gets the money upfront and the publisher is entitled to all the revenue generated by the use of the artwork in future. If the book is published in an overseas market or in another language, the illustrator is not entitled to a share of the profits from the sales. The alternative of course is for the illustrator to work out an arrangement of royalty sharing with the publisher rather than outright sale all the copyrighted artwork, a profitable proposition if the book ends up being a bestseller.
Whatever the arrangement, the publisher and the illustrator need to ensure that a thoroughly drafted legal agreement is in place to prevent any future claims in the court of law. A little planning and foresight can go a long way in working out a smooth long-term relationship between the parties in question.