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.

Cheers,

Mark Terry