Why Paying Authors Across Borders Is Operationally Harder Than It Looks

The Unseen Complexity of Global Author Payments

Paying creative professionals for their work seems like it should be a straightforward transaction. In a globalized world, where content flows seamlessly across borders, it is easy to assume that money follows with equal ease. However, for authors, illustrators, and other creators receiving royalties from international sales, the reality is far more complex. The process of moving money from a publisher in one country to an author in another is fraught with operational hurdles, hidden costs, and frustrating delays that are often invisible to both the creator and the end consumer. As the creative economy becomes increasingly global, understanding these challenges is crucial for building a more equitable and efficient system for compensating talent.

The Myth of Instant Payments

Many authors, particularly those new to the industry, operate under a simple assumption: once a book is sold, the publisher calculates their share and sends the money directly to their bank account. They might envision a simple bank transfer, perhaps with a small currency conversion fee, arriving within a few days of the royalty statement. This perception is reinforced by the speed of consumer payment apps and digital wallets, which have made near-instantaneous global transfers a part of daily life. The common misconception is that business-to-business payments, especially in an industry as established as publishing, must be at least as efficient, if not more so.

The Operational Reality: A Journey Through the Financial Maze

The actual process of an international author payment is a multi-step journey through a legacy financial infrastructure that was not designed for the speed and transparency of the digital age. When a publisher in, for example, the United States needs to pay an author in the United Kingdom, the payment must navigate a chain of intermediary and correspondent banks. The publisher’s bank initiates the payment, typically via the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network. If the two banks do not have a direct relationship, which is often the case, the payment is routed through one or more correspondent banks. Each bank in this chain performs its own set of compliance checks, including anti-money laundering (AML) and counter-terrorism financing (CTF) screenings. This process involves multiple currency conversions, each with its own exchange rate and fees, and the use of nostro and vostro accounts to reconcile the funds between the different banking systems.

Where the System Breaks Down

The complexity of this system creates numerous points of friction and potential failure. Delays are common, as payments can be held up at any point in the chain for compliance reviews, data mismatches, or simply because of differing time zones and banking holidays. A simple typo in the author’s name or bank details can cause a payment to be rejected, sending it back through the chain and incurring additional fees. Transparency is another major issue. The author often has no visibility into where their payment is in the process or why it has been delayed. Fees are another significant problem. Each intermediary bank in the chain deducts its own fee, and these can quickly add up, eroding the author’s earnings. Furthermore, unfavorable exchange rates, often with hidden markups, can further reduce the final amount the author receives.

Why Quick Fixes Fall Short

In response to these challenges, a variety of fintech solutions have emerged, promising to simplify cross-border payments. While these tools can be helpful, they often address only a single part of the problem. A new payment app might offer a better exchange rate, but it still has to operate within the same underlying correspondent banking system, with all its inherent complexities and potential for delays. These “quick fixes” are often just a more user-friendly interface on top of the same old rails. They do not address the fundamental structural issues that create the friction in the first place. A tool is not a system, and without a holistic approach, these solutions can only provide marginal improvements.

Structural Thinking: Designing for a Global Creative Economy

A more effective approach requires a shift from simply trying to patch the existing system to designing a new one that is built for the needs of the global creative economy. This means thinking in terms of systems, not just tools. A systems-first approach would prioritize transparency, efficiency, and fairness. It would involve creating a more direct and streamlined payment flow, with fewer intermediaries and clearer, more predictable fees. This could involve leveraging new technologies like distributed ledger technology (DLT) or creating new payment networks specifically for the creative industries. It would also require greater standardization of data and processes across the publishing industry to reduce the errors and delays that plague the current system.

The Implications of Inaction

Failing to address these challenges has significant long-term consequences. For authors, the current system creates financial instability and frustration, making it harder to build a sustainable career. The lack of transparency erodes trust between authors and publishers, and the high fees and unfavorable exchange rates can feel like a hidden tax on their earnings. For the publishing industry as a whole, the inefficiency of the current system is a drag on growth and innovation. It makes it harder to work with international talent and creates a barrier to entry for smaller publishers who may not have the resources to navigate the complexities of cross-border payments. Ultimately, a system that does not fairly and efficiently compensate its creators is not a sustainable one.

A Call for a More Modern Approach

The challenges of paying authors across borders are a stark reminder that the infrastructure of global commerce has not kept pace with the globalization of culture and creativity. While there are no easy solutions, it is clear that a more modern approach is needed. The publishing industry, in collaboration with financial institutions and technology providers, has an opportunity to build a new system that is more transparent, efficient, and fair. By embracing a systems-first approach and a commitment to innovation, we can create a future where authors are compensated for their work without the friction and frustration of the current system.

Key Takeaways

• Cross-border author payments are far more complex than they appear, involving a multi-step journey through a legacy financial infrastructure.
• The current system is plagued by delays, high fees, and a lack of transparency, which creates financial instability and frustration for authors.
• “Quick fix” fintech solutions often fail to address the underlying structural issues of the correspondent banking system.
• A more effective approach requires a shift to “systems thinking” to design a new payment infrastructure built for the needs of the global creative economy.
• Inaction has significant long-term consequences for both authors and the publishing industry, hindering growth and eroding trust.
• The industry has an opportunity to collaborate on building a more modern, transparent, and efficient system for compensating creative talent.

Deeper Dive into the Operational Quagmire

To truly appreciate the complexity, let's follow a hypothetical $1,000 royalty payment from a publisher in New York to an author in Lisbon. The publisher's bank (Bank A) in the US receives the payment instruction. Since Bank A doesn't have a direct relationship with the author's bank in Portugal (Bank D), it initiates a SWIFT transfer. The SWIFT network is essentially a secure messaging system, not a payment system; it sends payment orders, but the actual funds move through a chain of correspondent banks.

Bank A might first send the payment to a large international correspondent bank (Bank B) in London, with which it has a nostro account (an account holding its funds in a foreign currency, in this case, likely Euros). Bank B then needs to find a correspondent bank (Bank C) that has a relationship with the author's bank in Lisbon. Bank B will then transfer the funds to its nostro account at Bank C. Finally, Bank C will transfer the funds to the author's bank (Bank D), which will then credit the author's account. Each of these steps involves a fee, a currency conversion, and a compliance check. The author in Lisbon might end up receiving significantly less than the original $1,000, and the payment could take several days, or even weeks, to arrive.

This is a simplified example. In reality, the chain of banks can be even longer, and the process can be even more opaque. The author has no way of knowing which banks are involved, what fees are being charged, or where their money is at any given moment. This lack of transparency is a major source of frustration and mistrust.

The Human Cost of a Broken System

The operational challenges of cross-border payments are not just an abstract financial problem; they have a real human cost. The survey by The Bookseller revealed that over half of authors have experienced problems with receiving advances and royalties, with delays averaging over a year. Some authors reported having to take out loans, rely on hardship grants, or even use food banks to survive while waiting for payments. This financial precarity is not only stressful for authors but also stifles creativity and makes it harder for them to produce their best work.

The emotional toll is also significant. Authors described feeling degraded and as if they were begging for money that was rightfully theirs. The lack of transparency and accountability from publishers and agents creates a sense of powerlessness and frustration. When authors are forced to spend their time and energy chasing payments, it takes away from the time they could be spending on writing and creating.

Towards a More Equitable Future

Building a better system for cross-border author payments will require a collaborative effort from all stakeholders in the publishing ecosystem. Publishers need to be more transparent about their payment processes and work with their financial partners to find more efficient and cost-effective solutions. Banks and fintech companies need to develop new payment rails that are specifically designed for the needs of the creative economy, with a focus on transparency, speed, and low fees. And authors and their agents need to continue to advocate for fair and timely payment.

Some potential solutions are already on the horizon. Distributed ledger technology, for example, has the potential to create a more transparent and efficient system for tracking and processing payments. By creating a shared, immutable record of all transactions, DLT could eliminate the need for intermediaries and reduce the risk of errors and delays. Similarly, new payment platforms that are specifically designed for freelancers and creators are emerging, offering more transparent fee structures and faster settlement times.

Ultimately, the goal should be to create a system where authors are compensated for their work in a way that is as seamless and efficient as the distribution of their content. This will not only benefit authors but also the entire publishing industry, by fostering a more vibrant and sustainable creative economy.