Advances

popmuze · Jul 3, 2007

Some of the ideas about advances posted recently have gotten me confused.
I'm of the opinion that if your book sells 5,000 copies, your publisher isn't going to be too interested in your next one, whether they gave you a $50,000 advance or a $2,000 advance. So why wouldn't anyone prefer the $50,000?

In fact, I'm pretty sure the amount of the advance has something to do with how much of a priority your book will be. Thus, I would expect 25 times the effort from the company if they gave you a bigger advance.

Correct me if I'm wrong.

jhtatroe · Jul 3, 2007

For easy math, let's say your book has a cover price of $10 and your royalty agreement is 10% of cover.

If you sell 5000 copies, you earn out your $2000 advance and the publisher sends you $3000 more over the lifetime of your book. Since they probably only expected you to sell 2000 copies, they planned to make a profit on that amount, you performed better than expected, and everyone's happy. They're ready to take on your next project.

Same scenario except you earned a $50,000 advance. You sell 5000 copies and, because your advance was so high, the publisher is in the hole $45,000 in royalties you didn't earn out. Sorry bubs, no new contract for you.

It's all about managing budget and expectations.

popmuze · Jul 3, 2007

It's gotta be a pretty small publisher who signs on a book only expecting it to sell 2000 copies. Although, probably more than half the books published anywhere only sell about 2,000 copies.

I'd still prefer to take the money. I've had ten books published and only once made more than the advance.

Will Lavender · Jul 3, 2007

I think your logic is sound, popmuze.

If an author doesn't sell books, they're done anyway -- large advance or not.

IMO, the thing about a large advance is...it's money. And that's as far as I've analyzed it.

maestrowork · Jul 3, 2007

It's money, so the more the merrier. However, the bigger your advance, the more risk you have with "earning out." If your advance is $5000 and you sell 10,000 copies and earn out, you're a "success." If your advance is $20,000 and you sell 10,000 copies, you're a failure. In both cases, you sell 10,000 copies (nothing to sneeze at), but it's going to be more difficult for you to sell the next book in the latter.

If your advance is $100,000 and you sell only 10,000 copies -- good luck. No one will want to touch you.

Toothpaste · Jul 3, 2007

I think you are also right in that if the publisher is giving you a big advance then they will probably give your book an extra push in order to make back the money.

popmuze · Jul 3, 2007

maestrowork said:
If your advance is $100,000 and you sell only 10,000 copies -- good luck. No one will want to touch you.

I wonder about that. I think it's like the big executives who keep getting fired from one top job after another and landing with golden parachutes.

My feeling is if one publisher paid an author $100,000 for a book, then that author winds up being pretty well respected by the entire publishing community who read about the deal in the press. The fact that the book sold 10,000 copies might be written off to a poor publicity campaign, bad timing, or some other failure by the publisher rather than the writer. I bet someone else will pay this guy another 100,000 for some book down the road.

Meanwhile, the $10,000 advance guy also gets a reputation as a minimum wage slave buried near the bottom of the barrel who will never have the clout of the big advance guy, even though he occasionally gets a royalty check.

Not that I think most of us have a choice in the matter. But I just wouldn't go around turning down big advances out of any strategic purpose.

maestrowork · Jul 3, 2007

popmuze said:
My feeling is if one publisher paid an author $100,000 for a book, then that author winds up being pretty well respected by the entire publishing community...Meanwhile, the $10,000 advance guy also gets a reputation as a minimum wage slave buried near the bottom of the barrel...

I think it depends on if it's a first-time author or if it's an established writer. It's common knowledge that first-time author usually don't get six-figure deals, or if that happens, people do take notice. And I do think that if the first-time author cannot earn out a six-figure advance, he's going to have a problem convincing the next editor to (at least) make the same offer.

rugcat · Jul 3, 2007

Ray, I agree completely with everything you've posted. But I still wouldn't ever turn down a six figure advance--would you?

Crinklish · Jul 3, 2007

popmuze said:
My feeling is if one publisher paid an author $100,000 for a book, then that author winds up being pretty well respected by the entire publishing community who read about the deal in the press. The fact that the book sold 10,000 copies might be written off to a poor publicity campaign, bad timing, or some other failure by the publisher rather than the writer. I bet someone else will pay this guy another 100,000 for some book down the road.

Meanwhile, the $10,000 advance guy also gets a reputation as a minimum wage slave buried near the bottom of the barrel who will never have the clout of the big advance guy, even though he occasionally gets a royalty check.

The publishing community reads about the deal in the press, true, but the author gets a reputation as "that six-figure author who never came close to earning out." Sure, it's possible that another house will take a flyer at that price, but it's more likely that if anyone offers for the next book, they'll come in at a significantly lower level. We're all looking at the same Bookscan numbers.

And believe me, the $10K guy who builds his readership with every book (if he has a decent agent) soon becomes the $25K guy and the $50K guy and then the "consistent deliverer of sales" guy that every editor longs to have on her list. I'm not saying never take the big advance, but I've seen more careers ruined by a mid-six-figure advance that never earned out, then by a $10,000 advance that did.

Novelhistorian · Jul 3, 2007

I'd have a hard time turning down a large advance, having twice signed for much smaller figures than even my agent (a born pessimist) expected. Yet I understand the desire not to overplay your hand and take too much, just on the chance that the book flops and you've torpedoed your career.

On the other hand, I've concluded that unless the advance is minuscule, few authors will see more money than the advance from that one publisher (which is why it pays to sell foreign and subsidiary rights). I also suspect, if my own experience is at all common, that publishers have interesting ways of hiding sales behind steep discounts, so that you may think you've earned your advance back and should start getting more money, but somehow, you don't.

Jamesaritchie · Jul 4, 2007

Novelhistorian said:
I'd have a hard time turning down a large advance, having twice signed for much smaller figures than even my agent (a born pessimist) expected. Yet I understand the desire not to overplay your hand and take too much, just on the chance that the book flops and you've torpedoed your career.

On the other hand, I've concluded that unless the advance is minuscule, few authors will see more money than the advance from that one publisher (which is why it pays to sell foreign and subsidiary rights). I also suspect, if my own experience is at all common, that publishers have interesting ways of hiding sales behind steep discounts, so that you may think you've earned your advance back and should start getting more money, but somehow, you don't.

Discounts of any size shouldn't mask sales. I don't know how it's even possible to hide sales behind discounts. A sale is still a sale, and is still reported, despite the discount. And discounts shouldn't make the writer earn less. A legitimate deal with a legitimate publisher means I receive royalties based on retail, and even if the publisher puts the book on sale at ten percent of retail, I still receive my full royalty until and unless the book is actually remaindered. And at this point it isn't a matter of hiding sales. Sales are dead, and the publisher is just trying to avoid inventory taxes on a bunch of books that aren't selling.

Before remainder time rolls around, discounts are nearly always given by the bookstores, not the publishers, and these discounts come out of bookstore profits, not the publisher's or writer's profit.

But either way, discounts can't hide sales numbers.

Earning out is a bit of a myth, anyway. Publishers and writers have a fairly even split on profits, but the publisher's end is slightly higher for a number of reasons, so if a book comes anywhere near earning out it's advance, the publisher still makes a profit. It's usually only when a novel with a million dollar advance truly flops that the publisher loses any real money.

While advance and sell through are linked in a way, sell through is a heck of a lot more important than earning out.

Novelhistorian · Jul 4, 2007

I didn't mean that the sales were hidden. I meant that the discount was so steep, the publisher said that those sales didn't count toward my royalties, or counted for so little that I still "owed" them money, meaning there was still unearned advance outstanding. By contract, discounts above a certain figure--and I do NOT mean remainders--earn a reduced royalty rate, often so reduced that it's meaningless.

Knowing the purchase price of the book, and even allowing for a steep discount rate, I couldn't figure out how my advance wasn't covered, and a modest sum due me. But the publisher disagreed.

I've heard of this happening to others as well.

maestrowork · Jul 4, 2007

rugcat said:
Ray, I agree completely with everything you've posted. But I still wouldn't ever turn down a six figure advance--would you?

Of course not. But there's no free lunch in this world. If I get a six-figure advance, I will probably have many sleepless nights. Sometimes I don't handle pressure that way. Just sayin'.

But you know what? I used to have a job that paid me six figures, so it really isn't that important to me. My "career" is more important, in the grand scheme of things.

CheshireCat · Jul 4, 2007

By contract, discounts above a certain figure--and I do NOT mean remainders--earn a reduced royalty rate, often so reduced that it's meaningless

I'd get rid of that clause in the next contract if I were you. A good agent should be able to. Other than remainders or promotional giveaways (and numbers on that should not be high), your royalty should be on cover price -- not net received by the publisher.

How much they discount is their own business, and part of the business, and not something the author should have to pay for. (When they start paying for my health care benefits and pension plan, then we can talk. Maybe.)

Jamesaritchie · Jul 4, 2007

Novelhistorian said:
I didn't mean that the sales were hidden. I meant that the discount was so steep, the publisher said that those sales didn't count toward my royalties, or counted for so little that I still "owed" them money, meaning there was still unearned advance outstanding. By contract, discounts above a certain figure--and I do NOT mean remainders--earn a reduced royalty rate, often so reduced that it's meaningless.

Knowing the purchase price of the book, and even allowing for a steep discount rate, I couldn't figure out how my advance wasn't covered, and a modest sum due me. But the publisher disagreed.

I've heard of this happening to others as well.

Get rid of that clause. No writer should ever agree to this. It isn't legitimate, and no agent who's any good would ever let it go through. Writer's should be paid royalties on the cover price of the book, no matter what the book actually sells for.

All sales before remainder should count toward royalties, and the amount the writer is paid should remain the same, no matter how much the book is discounted, or who discounts it.

popmuze · Jul 4, 2007

maestrowork said:
If I get a six-figure advance, I will probably have many sleepless nights.

I seem to react the opposite way. On the book that I got my biggest advance, I was the most excited.

popmuze · Jul 4, 2007

Novelhistorian said:
I've heard of this happening to others as well.

I once sold 250,000 copies of a book through Scholastic and I thought I was on my way to riches. Turns out all the sales were through their book club and the royalty for book club sales was about one-tenth of the regular royalty.

CheshireCat · Jul 5, 2007

popmuze said:
I once sold 250,000 copies of a book through Scholastic and I thought I was on my way to riches. Turns out all the sales were through their book club and the royalty for book club sales was about one-tenth of the regular royalty.

Yeah, bookclub sales -- the publisher's own bookclub, as opposed to, say, the Doubleday Book Club or the Literary Guild -- might as well be giveaways for the paltry earnings they pay the author.

Pay close, close attention to all the royalty clauses in any contract (there can be two or three pages of those clauses alone), and make sure you understand them.

Your royalties should be determined by cover price.

popmuze · Jul 5, 2007

CheshireCat said:
Yeah, bookclub sales -- the publisher's own bookclub, as opposed to, say, the Doubleday Book Club or the Literary Guild -- might as well be giveaways for the paltry earnings they pay the author.Your royalties should be determined by cover price.

Anyway, I think the cover price was something like $1.25

Novelhistorian · Jul 5, 2007

The Authors Guild Model Trade Book Contract and Guide says that deep-discount royalty rates are very hard to get rid of or even modify, and that the best you can do, often, is to reduce the royalty only in proportion to the deep discount granted. With the bookstore chains demanding a high discount of 55% or 60% for some books, this can be a serious problem. But if the Authors Guild is correct--and I see no reason to doubt their warning--deep-discount clauses aren't simply the sort of thing that a good agent can delete on a client's behalf with a stroke of a pen.

I wasn't surprised by the clause, because I'd read the Authors Guild publication before the contract in question and had a dim idea, at least, of the risks. I don't fault my agent for being unable to change this clause. For reasons I don't want to go into on a public forum, I had (and still have) excellent grounds to believe that the vast majority of sales weren't at the chains, and that the deep discount didn't apply. My agent didn't pursue this very vigorously, and that's what I fault him for--one reason he's my ex-agent.

popmuze · Jul 6, 2007

Crinklish said:
I've seen more careers ruined by a mid-six-figure advance that never earned out, then by a $10,000 advance that did.

I really don't get this. In general, how would another publisher know how much of an advance the writer got on one of his previous books? Sales, yes, but the advance?

Plus, let's say it's non-fiction, in order to get a $100,000 advance, you'd have to have a pretty good platform and a great idea and really know how to present it. A couple of scratchy paragraphs isn't going to cut it. So the $100,000 guy already knows how to write a good proposal and how to come up with a very commercial idea. And, unless the problem was that he couldn't write the book, then he also knows how to write a publishable book.

The fact that it didn't sell, relative to what was paid for it, can be rationalized in any number of ways. But I still think the only one who probably won't want to pay big bucks for his next idea will be the publisher of the first book.

CheshireCat · Jul 6, 2007

popmuze said:
I really don't get this. In general, how would another publisher know how much of an advance the writer got on one of his previous books? Sales, yes, but the advance?

Plus, let's say it's non-fiction, in order to get a $100,000 advance, you'd have to have a pretty good platform and a great idea and really know how to present it. A couple of scratchy paragraphs isn't going to cut it. So the $100,000 guy already knows how to write a good proposal and how to come up with a very commercial idea. And, unless the problem was that he couldn't write the book, then he also knows how to write a publishable book.

The fact that it didn't sell, relative to what was paid for it, can be rationalized in any number of ways. But I still think the only one who probably won't want to pay big bucks for his next idea will be the publisher of the first book.

Editors and agents talk. I don't care how discreet you believe yours are, info on advances -- especially high ones -- can be obtained by most agents or editors with a single phone call. If a new pub is interested in you, they will find out what your sales record is.

That goes for other information as well. If you're a pain in the ass to work with, that rep gets known. If you're a dream to work with, that also gets known.

I don't know about non-fiction in terms of who gets the blame for something not selling up to expectations, but in fiction, no matter how many times the pub may have dropped the ball (bad package, poor marketing and advertising, whatever), there's still a black mark against the author for a poorly-selling book.

That doesn't mean he or she can't rebound, but you can bet the next publisher will try to use any negative info to negotiate less money up front and better terms for themselves -- even if they actually believe the next book will do well.

Toothpaste · Jul 6, 2007

Also if it's a really big advance, chances are the figure will be published somewhere: Publisher's Marketplace, heck even the agent's website.

popmuze · Jul 6, 2007

I still somehow feel that a guy who gets a big advance once is more likely to get another big advance, no matter what the sales figures. I just think they've moved to another level, especially with non-fiction (I think in fiction it's easier to blame the book). Especially if they also got some good reviews in high places, which is also much more likely if the publisher has invested so much money in them (the reviews that is, not necessarily that they'll be favorable).

I would like to say, however, that I myself have never been anywhere near that kind of advance).

How about we hear from some people who've been in that stratosphere?

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