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Thread: [Publishing Myth] Returning an Advance if Book Doesn't Sell

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    Cultus Gopherus MacAllister Medievalist's Avatar
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    [Publishing Myth] Returning an Advance if Book Doesn't Sell

    There's an oft-cited myth that if a book doesn't earn out, that is, sell enough copies to compensate for the advance paid to the publisher, that the author will be required to return the advance or a portion of it.

    It is not true. It is a false and untrue thing, and in fact, a publishing myth.

    If a publisher offers a contract that stipulates this, talk to your agent. It's not standard, acceptable or even reasonable. As one editor noted "The advance is the publisher's bet on the book. The work to write it is the author's."

    If the author fulfills the contractual obligations to deliver a manuscript and the publisher accepts the manuscript, the author keeps the advance.

    But you don't have to take my word; here's an excellent refutation of the returning the advance myth by Victoria Strauss, writer extraordinaire, member of SFWA, and blogger for SFWA's Writer Beware. As she notes:
    Quote Originally Posted by Victoria Strauss
    In other words, no matter how poorly your book sells, you will not have to give back your advance.
    Cory Doctorow notes in a Publishers Weekly column on "Publishing's Virtue" that:

    Quote Originally Posted by Cory Doctorow
    Finally, authors’ advances are (usually) only charged to their current books, or sometimes across a single deal. Unlike musicians, who are often required to pay back shortfalls from their last project before they can start earning on their latest one, authors’ balance sheets are zeroed out with each new book. If your last book tanks, your next book usually doesn’t have to pay back its advance. Publishing doesn’t do debt slavery.
    Patrick Nielsen Hayden, senior editor at Tor books, answers the question "what happens when a book doesn't 'earn out' the advance?"

    Quote Originally Posted by Patrick Nielsen Hayden
    Often, nothing much. As has been pointed out, "didn't earn out" isn't necessarily synonymous with "not profitable."

    An "advance" is an advance against future expected royalties. Ideally, from the publishers' POV, an advance should be in the neighborhood of what the book earns in royalties in the first year of its first editions (say, its first year in hardcover and its first year in softcover).

    Some books fail to "earn out" in their first year but go on to sell steadily so they earn out eventually. This can be suboptimal for the publisher (since for cost-of-money reasons, money that's slower than expected to come back carries something of a surcharge), but sometimes it all works out in the end.

    Some books (many big-ticket bestsellers come to mind) fall far short of ever "earning out" their inflated advances, and yet author and publisher both make money, because the unit-cost savings at very high printruns offset the higher-than-otherwise-rational advance. In effect, an advance that's 100% "too high" is the same as paying a double royalty, which can work out if your unit costs are low enough. For advanced users only. Don't try this at home.

    But to answer Xopher's question: no, the author doesn't have to pay it back, merely because the book underperformed. That's why it's called an advance, rather than a loan. It's one of the points where the publisher assumes risk.
    See also Steve Laube on The Myth of the Unearned Advance
    Last edited by AW Admin; 02-11-2013 at 02:57 AM.

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