Let’s face it. When you started out with self-publishing, you needed to do some research on terms like KDP Select and ePub. Now that you’ve mastered that terminology, it’s time to learn some of the ACX basics. When you understand the basics of Amazon’s Audiobook Creation Exchange, you’ll be able to make better and more informed decisions about the direction of your first audiobook project.

Here are five terms you should know before posting your first project:

1. Royalty Share

Unless you collaborate with other authors, it’s likely that you’ve never split your royalties with anybody other than Amazon and the other e-retailers. The Exchange part of ACX refers to the bazaar-like atmosphere where you post book projects and narrators can snatch them up. There are two options for compensating these narrators: Paid for Production (which we’ll get to in a moment) and Royalty Share. Royalty share means no money up front, but you’ll have to do a 50/50 split of royalties for every sale the audiobook makes in perpetuity.

Royalty Share deals place all the risk on the narrators. If the book does poorly sales-wise, it’s no big deal for the author, but the narrator put in a lot of effort for nothing. While it limits author risk, it also reduces the chance for a reward. When a book is a bestseller in audio format, a narrator can end up with far more than his typical hourly rate. Most authors who know their books will sell a lot of copies in audio should consider paying up front with a Paid for Production deal.

It’s important to note that neither you nor your narrator will get 50 percent of a full audiobook sale. Audible takes 60 percent off the top, and you and your narrator split the remaining 40 percent. The only exception to this is if you decide to go non-exclusive, which we’ll discuss in another section.

2. Stipend

There is a way to reward narrators for taking on the risk of your Royalty Share project, and the answer is ACX’s stipend program. Audible wants to encourage the creation of projects that will be profitable for the company. To achieve this end, ACX will reward certain Royalty Share projects with a bonus of $100 per finished hour to the narrator. While ACX picks most of these projects on its own, you can actually ask ACX to attach the stipend to your project as well. You’ll need to send ACX a structured pitch that shows how well your book is doing on other formats. A simple request with no reasoning behind it is unlikely to succeed.

This Royalty Share-only bonus makes projects more appealing for narrators. With the stipend in place, they know that even if a book fails, they’ll still get several hundred to a thousand dollars for their efforts. If ACX declines your project for the stipend, you can work out a deal with the narrator to pay him or her a certain dollar amount per fixed hour on the side of your existing Royalty Share deal.

3. Paid For Production

Paid for Production is the opposite of Royalty Share. You don’t have to pay a dime of your sales to your narrator if you choose this payment method, but you will have to pay up front. Since many narrators won’t do Royalty Share projects, choosing Paid for Production opens you up to more choices. On the other hand, many of these high-quality narrators with a built-in fanbase are pretty expensive. You could pay over $500 per finished hour, which can really add up for a 10 to 15 hour audiobook.

It’s a good idea to do a cost-benefit analysis to weigh the pros and cons of Paid for Production versus Royalty Share. Paying a lot of money likely ensures you’ll have a quality product, but it in no way guarantees book sales. Whichever you choose, you’ll still need to market the heck out of your audiobook.

4. Exclusive

Authors have the option to choose an exclusive or non-exclusive seven-year contract when they create an audiobook project. While the seven-year part of the deal is non-negotiable, the exclusive vs. non-exclusive decision is an interesting one. Audible is the top dog in the audiobook industry by a wide margin. Your chances of selling a significant number of books on another platform are slim to none, so the exclusive deal with a 40 percent royalty may seem like a no brainer. There are two main caveats to consider.

The first is that when you choose non-exclusive, you can sell the book on your own site and give it away as a promotional tool whenever you feel like it. Using a full audiobook as a lead magnet for your mailing list may be worth the 15 percent you sacrifice with a non-exclusive deal. The other thing to consider is that seven years is a long time. Will Audible still be at the top of the heap in 7 years? Maybe, but maybe not.

If a competitor comes around between now and then, your books could be stuck in a contract that could cause you to miss out on big opportunities from 2015 to 2022.

Many authors choose the exclusive option without giving it a second thought. Just make sure you consider all the options when you sign your contract.

5. Whispersync

Most audiobooks over six hours in length retail for around $20 or more. Audible members can get them for even less with their membership, working out to around $15 per sale. Books that have Whispersync can cost as little as $1.99 to purchase.

Whispersync is a program that allows readers who enjoy both ebooks and audiobooks to sync up their reading experience when they purchase both versions. These readers get a significant discount on the audiobook when they buy the Kindle edition first or they already own it. The discount can be over 80 percent when they want to buy both.

The jury is out over whether Whispersync is a positive or negative feature for authors. On the positive side, you’ll likely sell more copies of your audiobooks and fans can get immersed deeper into your world. On the negative side, 40 percent (or 20 percent on a Royalty Share deal) of $1.99, isn’t all that exciting to see on your monthly royalty statement.

Whispersync is automatically set up on Amazon if the words in your ebook match up closely with the words spoken in your audiobook. You can’t opt out, but you can switch up a chapter or add a section to keep Whispersync from being enabled.

The More You Know

You’ll make better decisions when you have more information about the ACX process. In addition to new terminology, it’s smart to talk with someone who’s been there and has gone through the process. Do your research and learn all your options before you sign on the ACX dotted line.