A basic question which I don't understand: advance payment.

Yukinara · Aug 19, 2012

Ok, I'm a newbie to traditional publishing industry, and I can't seem to find the answer to this question anywhere, so I guess maybe I can find it here.

Let's say if my book got accepted and the publisher absolutely love it, and they decided to sign a contract and give me advance payment for like 1 million. So, I can't earn royalty until they make that 1 million back, right? An author once confessed to me (well, in her book) that sometimes, when the book didn't perform as good as they want, that kinda leave a bad mark in the publisher. Obviously, it's business, they want to make more than the amount they spent. And if they can't make back that 1 million, it's bad business. I can totally understand the decision not to continue publish that book or series or that author's other work.

So, what IF I don't want to get that 1 million? I know it sounds funny, no one can say no to money, right? But personally, if I can just get, say, 100k and the book earn 900k. So, I continue to keep the good relationship with the publisher, as a result, I have better chance to push other books out there. It's a win-win situation. I make money (albeit less, and that 100k is just advance, not royalty), they make money, everyone's happy. So why should I sacrifice that relationship for a hefty check upfront?

Or is there something wrong with the way I'm thinking?

Captcha · Aug 19, 2012

Yukinara said:
Ok, I'm a newbie to traditional publishing industry, and I can't seem to find the answer to this question anywhere, so I guess maybe I can find it here.

Let's say if my book got accepted and the publisher absolutely love it, and they decided to sign a contract and give me advance payment for like 1 million. So, I can't earn royalty until they make that 1 million back, right? An author once confessed to me (well, in her book) that sometimes, when the book didn't perform as good as they want, that kinda leave a bad mark in the publisher. Obviously, it's business, they want to make more than the amount they spent. And if they can't make back that 1 million, it's bad business. I can totally understand the decision not to continue publish that book or series or that author's other work.

So, what IF I don't want to get that 1 million? I know it sounds funny, no one can say no to money, right? But personally, if I can just get, say, 100k and the book earn 900k. So, I continue to keep the good relationship with the publisher, as a result, I have better chance to push other books out there. It's a win-win situation. I make money (albeit less, and that 100k is just advance, not royalty), they make money, everyone's happy. So why should I sacrifice that relationship for a hefty check upfront?

Or is there something wrong with the way I'm thinking?

You get to keep the advance even if the books don't sell, so it's a bird in hand vs. two in the bush. And if the books DO sell, everything's fine.

Also, if you're selling a book to most trade publishers, you have an agent, and the agent isn't going to be happy getting a chunk of a smaller advance.

Becca C. · Aug 19, 2012

Advances are something an agent could negotiate for you, but usually they would be trying to get you a higher one. Publishers don't offer lofty, risky advances (often); they offer advances they know they can make back. If they offered a million dollar advance, they're damn certain the book will make that much and they're probably right. They wouldn't make a risk like that if it weren't pretty much a sure thing, right?

If you're worried about paying the advance back if the publisher doesn't make it back, don't worry, that's a myth. Even if the book tanks, you keep your advance. But yes, it may affect your business dealings with that publisher.

veinglory · Aug 19, 2012

Some major authors are on record as asking for lower royalties than they could have demanded, so it does happen.

Cyia · Aug 19, 2012

If a publisher is paying top dollar for your novel, then they're also investing a huge sum into making sure that novel earns out. They're putting money toward publicity and marketing, etc. This can lead to higher sales.

Cut the advance, and you cut the publisher's investment. Cut the publisher's investment, and you lose some of your publicity steam. Lose your publicity steam, and your sales can suffer.

Unimportant · Aug 19, 2012

Yukinara said:
Or is there something wrong with the way I'm thinking?

The advance is calculated by the publisher based on the number of copies they expect the book to sell. So there are several possible scenarios:

1. They offer and you accept a million dollars. The book sells as well as expected. You don't get any more royalties because they 'guessed' right. Everyone's got what was anticipated, and all is well.

2. They offer and you accept a million dollars. The book sells even better than expected. You get royalty payments on top of that advence. Everyone's got even more than what was anticipated, and all is well. For your next book they offer you a $1.5M advance.

3. They offer and you accept a million dollars. The book sells less well than expected; about 80% of what they'd anticipated. You don't get any more royalties because they 'guessed' wrong. They make less profit than expected; you make more than you would have if you had received no advance and only royalties. You've got the money in hand, though. For your next book they offer you a $500K advance.

4. They offer a million dollars but you accept a tenth of that. The book sells as expected. Everyone ends up earning as expected. Except you get your million dollars over five years instead of one, which means at 2.5% interest you've lost $118,000 in interest compared to scenario 1. For your next book, they offer you a $100K advance: why not keep your money as long as they can?

5. They offer a million dollars but you accept a tenth of that in lieu of a higher royalty rate. It's a gamble. If it sells as well as the publisher anticipates, you may earn a lot more than a million dollars. If it sells less well, you'll earn a lot less.

6. They offer a million dollars but you accept a tenth of that. The publisher figures you know something they don't. They accept your offer, but they reduce the print run by 90%. The book sells out but since there were only 1/10 as many books to sell, and the publisher decides they can't be arsed to do a reprint, you never earn any royalties and you only end up with $100K instead of $1M. And for your next book they only offer you a $100K advance. You and your agent are appreciably poorer than you would have been had you accepted the original offer.

It really depends on your short-term and long-term goals and needs and expectations, and your appetite for risk. But, me, I'd take the million and run. As Cyia said, the more they've invested in you up-front, the more effort they'll put into maximising sales.

Old Hack · Aug 21, 2012

This is really something a writer would discuss with her agent.

The amount of the advance isn't the only important thing detailed in the contract: a good agent will pin the publisher down to specific marketing activities, and so on.

Remember that an advance is yours to keep so long as you hand in a marketable and appropriate manuscript; and that very, very few advances are as big as you suggest. A few thousand pounds is more likely.

victoriastrauss · Aug 23, 2012

Also remember that the publisher can make a profit even if your book doesn't earn back its advance (it's a common myth that not earning out means the publisher loses money). So not earning out isn't necessarily a relationship-killer. Plus, if the book doesn't sell well, the publisher is going to be unhappy no matter what kind of advance it paid you.

- Victoria

aruna · Aug 23, 2012

ETA:

The following is just my personal experience, so take it all with a grain of salt.

Becca C. said:
If you're worried about paying the advance back if the publisher doesn't make it back, don't worry, that's a myth. Even if the book tanks, you keep your advance. But yes, it may affect your business dealings with that publisher.

And that's the part I would worry about. There are many, many stories of books with huge advances tanking because the publisher misjudged the potential. Yes, the author gets to keep the advance, but honestly, I'd feel terrible if it were me -- not about the publisher's loss, but about having failed that badly.

victoriastrauss said:
Also remember that the publisher can make a profit even if your book doesn't earn back its advance (it's a common myth that not earning out means the publisher loses money). So not earning out isn't necessarily a relationship-killer. Plus, if the book doesn't sell well, the publisher is going to be unhappy no matter what kind of advance it paid you.

- Victoria

My first novel not earning out was a relationship killer for me. I'll talk numbers just to make things clearer.

I had a £50k advance for my first novel, and a £90k advance for a two book deal. None of these books earned out, the result being I didn't have a big enough "name" for them to accept my fourth novel, unless I wrote it strictly to their suggestion, which I didn't want to do.

The first book got a Euros 5k advance in France. Everybody at the publishers was so behind the book (and it was one of France's best publishers) that the marketing and sales people themselves said they wanted to give it a Euro100k promotion -- which they did. (My editor said that had never, ever happened before -- usually he has to beg on his knees for a good promotional budget.)

That book went on to the top 5 of French bestseller lists and finally earned me far more than the British royalties. In fact, even this year I got a small royalty, which came as a surprise -- that's ten years after first publication.

I long ago made up my mind that if I were ever offered a huge advance I would suggest they exchange some of the advance for a great promotion. I don't know if I would ever actually do that if the opportunity came, but I'd be tempted!

The moral of this story is that I much prefer royalties to advances.

ETA: I got a relatively tiny advance this year from the Polish publisher. I have no idea what they are doing about promotion, but I have the feeling they WILL do a lot for the book - it's a major publisher, and they were keen enough to publish in that they went to the trouble to seek me out through my website. So they got a book they loved very cheap -- like France. So who knows!

A basic question which I don't understand: advance payment.

Yukinara

The Exile

Captcha

Becca C.

veinglory

volitare nequeo

Cyia

Rewriting My Destiny

Unimportant

No COVID yet. Still masking.

Old Hack

Such a nasty woman

victoriastrauss

Writer Beware Goddess

aruna

On a wing and a prayer