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Stones Into Dollars: Why Greg Mortenson's Math Doesn't Add Up

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By now, the entire publishing world, as well as millions of people, know that the veracity of the stories included in Greg Mortenson's two bestselling books Three Cups of Tea and Stones Into Schools have been called into question by 60 Minutes. For those unfamiliar, you can read the story at CBS's website or watch the 60 Minutes video.

Besides the story itself, one other piece of information troubled me. In an interview with the Bozeman Daily Chronicle, the following information was presented:

Mortenson responded that he gets a royalty of about 40 or 50 cents per book, and that he has contributed more than $100,000 of his own money to CAI, which has more than offset the book royalties. The $30,000 fee for speaking is average, he said, adding he does some events for free.

Now here are the standard royalty rates given to authors based on cover price:

For hardcover books:
10% for first 5,000 copies sold
12.5% on next 5,000 copies sold
15% thereafter

For trade paperback books:
7.5% straight

For audio sales:
25% of cover price

(Note: royalty rates can lessen depending on discounts to certain chains and box stores such as Wal-Mart, Costo, etc... most of which do not report to Bookscan)

Based on those standard royalty rates, Mortenson would be earning the following for each book sold:

On the hardcover edition of Three Cups of Tea: $3.89
On the hardcover edition of Stones Into Schools: $4.04
On the trade paperback editions of both books: $1.20

Right off the bat, Mortenson's claim that he receives merely 40 or 50 cents per book in royalties is simply untrue, unless he has a unique arrangement with his publisher, is taking into account agent commissions and/or taxes, or if his co-author takes a percentage of royalties rather than a fee. And again, he would be totally discounting any hardcover royalties right off the bat.

According to Bookscan (to whom I submitted a request for this information), which tracks approximately 70% of the marketplace, Mortenson's books have sold the following amounts:

Three Cups of Tea (hardcover): 91,000
Three Cups of Tea (trade paperback): 2,953,000
Three Cups of Tea (audio CD): 35,000
Stones Into Schools (hardcover): 356,000
Stones Into Schools (trade paperback): 108,000
Stones Into Schools (audio CD): 8,000

Now, what isn't taken into account are the large number of copies Mortenson sells at his speaking engagements, copies which are generally purchased directly from the publisher at a steep discount and then sold at full price (i.e. the CAI or Mortenson might buy 10,000 copies of a $16 book at a 50% discount -- or $8 a copy -- then sell the books at full price for a profit of $80,000). Nor does it take into account the up to $30,000 per speaking engagement that Mortenson earns (though he says he does some for free), or any of the other 46 languages his works have been translated into.

Based on those standard royalty rates, it can be calculated that Mortenson has earned the following in royalties:

Three Cups of Tea (hardcover): $344,485
Three Cups of Tea (trade paperback): $3,543,600
Three Cups of Tea (audio CD): $349,562
Stones Into Schools (hardcover): $1,429,023
Stones Into Schools (trade paperback): $129,600
Stones Into Schools (audio CD): $79,900

Total earned: $5,876,170

Again, Bookscan only tallies approximately 70% of the market and does not take into account books sold at Mortenson's events. Based on the amount he has earned from Bookscan alone, it can be extrapolated that between book sales, speaking engagements, ebook sales, downloadable audio sales and foreign sales -- and taking into account lower royalty rates based on deep discounting -- Mortenson has likely earned between $7-9 million (and perhaps more) off of his books and fees related to his books.

Mortenson claims that his donations of over $100,000 to the Central Asia Institute have more than offset his royalties, but barring creative accounting he is still well over $5.5 million in the black. Perhaps there is a way to account for the massive discrepancy between what Mortenson claims he is making, and what the facts show he is 'actually' making, but again, like the 60 Minutes piece, it certainly casts major doubt as to how truthful his statements have been.

Jason Pinter is the bestselling author of five thriller novels (the most recent of which are The Fury and The Darkness), as well as the ebook exclusive thriller FAKING LIFE, which have nearly 1.5 million copies in print in over a dozen languages. His first novel for young readers, Zeke Bartholomew: Superspy!, will be released in November 2011. Visit him at www.jasonpinter.com or follow him on Twitter.