Mark Terry

Monday, March 02, 2009

Publishing Basics, Part I: Book Advances

March 2, 2009
I'm going to write a series of hopefully short posts about various components of the book publishing business as I have experienced them. Readers with different experiences, please jump in here.

Book advances.

It stands for "advance against royalties." This basically means a publisher gives you money when you sign the contract. You have to earn that money back before you start earning royalties.

Let's say your book will be published in hardcover and will sell--just to make this math easier--for $20. If your royalty is 10% you will get $2 per copy sold. If you get a $10,000 advance, you need to sell 5000 copies before you get any royalties.

The advance is based on how many books your publisher thinks it can reasonably sell.

Okay, that's the basics as it exists in a textbook format. Here's where things get a bit more nuanced.

First, working backwards.
The advance is not necessarily based on what your publisher thinks it will sell. It is based on what your publisher thinks it can get away with. If you're a bestselling author, they're trying to keep you happy, so they'll put money in big bags and catapult them at your agent in hopes you don't go somewhere else. It has little or nothing to do with sales. It's a bribe, a sweetener, an incentive, whatever you want to call it, the publisher wants to make you happy and they'll pay for the privilege, within reason. Publishers often lose money on celebrity books because they had to pay a bunch just to get the movie star to sign the deal. It didn't have much to do with the number of books sold.

A small press may offer nothing as an advance. Or very little. Because they don't have very much to spend. They offer an advance not because they want to, but because it's industry standard and they want to be considered to be part of the industry standard. So their advance might be $1000 or $3000. What they're doing basically is minimizing their risk. It's okay for the writer to work on spec and gamble with their time, but the publisher has no desire to do so with their money, so, when possible, they don't.

Your royalty is based on the price of the book ... sort of. This depends a lot on the language of your contract, and it gets into words like "net" and "gross" and "retail sales" and it all gets confusing. Is your book discounted? Do you still get 10% of the price of the book if it's sold 30% off? Is the 10% actually on the price of the book or the price of the book as purchased by the bookseller from the distributor?

That last sentence is key, because that's often the case. In other words, your book is priced at $20, but the bookseller gets it from the distributor for, maybe, $10. Sometimes that's what your royalty is based on. Not 10% of list price, but 10% of retail price. This is why agents earn their money. They look out for these sorts of things.

You get your advance in one big chunk. Sometimes. If you've written your entire manuscript--first novel--and they offer it that way, yes. On multi-book contracts it's often a third on signing, a third on turning in a portion of the novel (or turning in all of the novel), and the final third on either turning in the completed manuscript or in some cases when the book is actually published. As Robert Benchley once said, "Writers are paid per word, per hour or perhaps."

I would also add that, publishers being publishers, accountants being accountants, and agents being agents, that you can turn in your completed manuscript, your editor can get around to reading it at his or her leisure before approving the remainder of the advance, which will then wend its slow-ass way through the publisher's accounting system, then a check will be cut, mailed to your agent, who will cash it, and send your portion on to you. Which can take some time, believe me.

So much for a short post. Tomorrow: royalties.

Mark Terry


Blogger Stephen Parrish said...

Thanks. I like how advances are reported logarithmically like the Richter Scale: a seven figure advance is ten times a six figure advance.

Logarithms are good. Logarithms are our friends.

7:43 AM  
Blogger Joe Moore said...

Good overview, Mark. Couple of additional comments. You don't have to return any of the advance even if you never earn it back. Of course, if you don't earn out, your chances of getting your next one published are not as good. Sometimes big advances are a curse, not a blessing. But a big advance may be a reflection of the publisher's intentions to market it heavily. And then there's the matter of sell-through which I'm sure you'll cover in your next installment.

9:31 AM  
Blogger Mark Terry said...

Nice way of putting it. All part of the Tao of Publishing, I guess, or at least The Mystic Teachings of Publishing.

9:36 AM  
Blogger Mark Terry said...

Wasn't it long enough as it was?

No, excellent point. I know sometimes if publishers decide to cancel contracts prior to publication they'll try to get the advance back, but I've never heard of it happening successfully since it's the publishers who are in breach of contract.

Yes, sometimes publishers seem to make big advances because 1. they want to be known as players and players make big advances, and 2. it's a way of committing to the success of a book.

Yes, a lot of writers have gotten thrilled by a big advance for a first novel only to find it impossible to meet those expectations. It can be a curse for sure (although I'm sure they found a way to spend the money).

Thanks for the reminder about sell-through. I'll touch base on that tomorrow.

9:38 AM  
Blogger Jude Hardin said...

I know at least one of the big imprints (can't remember which one) is offering higher royalty rates in lieu of advances. Perhaps that will be the business model of the future.

9:52 AM  
Blogger Mark Terry said...

That models been tried and maybe it will. Publishers would probably love to get away from advances. The problem with it from the point of view of a writer is you spend maybe a year writing a book, several months at least trying to sell it, you get a contract, then it's at least another year until the book gets published, then royalties might--MIGHT--start coming 6 months to a year after that, depending on the publisher's royalty schedule and what time of year your book comes out. Publishers often distribute royalties twice a year, let's just for instance, say March and September. They, in theory, cover a 6 month period. But if your book comes out in February, you get zip in March and might get something in September, although that will depend a lot on accounting rather than sales. So it's possible you might not see any money until the following March. That's a long time to go without a paycheck.

10:37 AM  
Blogger spyscribbler said...

I think the publishing model needs to be changed. The current model only supports a small percentage of authors full-time. The fact that I can have only a percentage of your readership and make more money is just criminal, in my mind. (Did that come across weird? I totally just meant that I wish you could be making more money!)

12:37 PM  
Blogger Mark Terry said...

Thanks Spy. The publishing business is weird.

1:02 PM  

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