In audio book narration, there are two popular ways that a publisher pays a narrator for creating an audio book, royalty share and a flat rate. The royalty share is pretty self-explanatory: the publisher shares the royalties from any sales with the narrator according to a predetermined schedule defined in the production contract. The flat rate payment is also intuitive: the publisher pays the narrator for the work they do, and the publisher keeps all the royalties generated from the audio book’s sales.
Many new publishers and authors choose a royalty share contract because they can get their audio book produced at no cost and pay the audio book producer from their royalty stream. This can be very lucrative for the producer if the author’s name happens to be something like “King”, “Patterson”, or “Rowling”, but for most books, royalty share deals are often a big gamble with a small pay-off for an audio book producer. Additionally, the author seems uncertain of their book’s quality when they sell their audio book for a share of their royalty payments: if an author believes in their book, it should be in their interest to retain as much of their royalty stream as possible because they’ve written such an excellent book.
Royalty share contracts pose a problem for narrators who earn their living from voice over work because it’s a difficult way to make money on voice over work, but it is a popular choice for small authors and publishers. I believe there probably are profitable royalty share deals out there, but I don’t think that most royalty share deals are profitable.
Edit: I’ve recently heard of one audio book narrator who quit his job on royalty share books, so it appears there are profitable royalty share deals out there. Time to go hunting and find them!