Thursday, June 24, 2010

Advance! (Retreat?)

Yesterday (à la Twitter), the topic of advances came up; specifically, how authors and publishers would be affected by a switch to a no-advance model. The question intrigues me, so I think a little exploration is in order.

The advance is, theoretically, payment for services rendered; after all, you've already written the book*, so you're essentially being paid for the legwork you've done so far. Oftentimes the advance will be paid in installments, with the last installment being paid out when the final manuscript is received and deemed ready for publication (or, occasionally, on or shortly after the date of publication).

In my estimation, you're unlikely to get much more than $10,000 for a first novel (though some genres and writers average slightly higher, perhaps $20,000 or even $30,000) and the royalty rate will probably work out to somewhere between $1.00 and $3.00 per book. If we assume a $10,000 advance on a $20.00 book for which, when all's said and done, the house earns a $2.00-per-copy profit, that house will need to move 5,000 units to break even, which is about right for your average début. Many books, however (up to 75% by some estimations) do not move sufficiently well through the register, and therefore do not earn out the advance paid to the author. Good (in the short term) for the author, bad for the house; in the long term, a string of unearned advances can have a negative impact on an author's career and is also pretty bad for the house.

There are many arguments for and against the no-advance model, but I think it's best summed up as follows: publishers will be much more willing to take risks on new authors if they don't need to pay an advance, but since this removes the "we paid for this and we have to make it work" pressure, many a publisher may reduce the amount of time, money, and effort spent on marketing these books. While a no-advance model would likely result in a higher royalty rate for the author, it won't do much good if net sales are damaged by a reduction in in-house support.

This may be an overly pessimistic view of things, so I'm curious to know what you think. What say ye, readeurs and readeuses?


*This isn't necessarily the case for non-fiction, in which case the advance also theoretically covers research costs.

34 comments:

  1. I haven't reached the "advance" stage yet. But I do have questions. Does an agent get part of the advance? Is it taxable? At the same time, is the advance negotiated by the agent for the author?

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  2. In my capitalist pig heart, I embrace the "pay me when the book starts making money" idea. In reality, I don't believe a house will back a book they haven't invested much money in. The big names would get the big dollars, everything else gets thrown to the wall to see what sticks.

    I would like to see option c: no advance=a higher royalty structure but part and parcel is a marketing budget and plan for the title. I'd look at the monies earmarked for advertising the book as an acceptable compromise/investment on the part of the house.

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  3. I'm torn on this. My gut reaction is to say that it doesn't matter whether the house has put money into it. No one wants to do a bad job. But then I think of some of the editors I've worked with, and I think that may be naive. That's hard to say. Editors are very romanticized on industry blogs. There are some astounding truly amazing editors out there that love your books and suffer when they don't get the recognition they think they deserve.

    Then there are the other kind. They're there for a paycheck. They have no idea what they're doing. And they rely on the work of others to make them look competent. How they advance as high as they do is a mystery of the industry, but these people do exist.

    So saying that I trust that the house wants my book to succeed as much as I do is wholly on the caveat that I get an editor that actually knows how to do his/her job.

    For me personally, I would be willing to forgo an advance for a higher royalty. I don't believe what I consider higher and what the house would consider higher would match, in which case I would stick to the current advance model.

    And of course, if you go to a no-advance model, agents get paid only out of royalties. That could suck for a lot of them, especially new to the industry agents.

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  4. Wouldn't it be advantage for a publishing house to continue its marking support? After all, they are in it to make money. No books sold still = no books sold = less $$, right?

    On the other hand, if they don't pay out advances, they're retain the money from the 75% of authors who don't earn out the advances. If they continued the same effort, this would mean a greater profit margin for the publishers. I wonder if publishers would pocket the money in its entirety or would they reallocate some of the funds toward more effective ways of making money.

    Of course this means authors would have less money towards promoting their work. However, I wonder how effective authors are in the big picture when it comes to gaining readership through self-promotion (Specifically, I mean spending their advances to promote, not free methods of promotion).

    Yesterday, someone mentioned withholding advances to debut authors. Instead, reserve them for established authors. Makes sense to me. At least it'd give publishers research data so they can make a more informed decision on the $$ amount.

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  5. I'm assuming marketing/advertising costs for products (books) are tax-deductible expenses in the publishing world just as they are in other industries, so would it not be to both the publisher and the writer's advantage to negotiate for more marketing effort in lieu of part of the advance or in lieu of the advance at all?

    It may mean ramping up the marketing department by an extra couple of people, but their salaries + benefits wouldn't likely be more than the current costs lost to advances paid that didn't earn out, would they? Contracts would necessarily want to spell out that dollar amount commitment to marketing.

    But because the publisher can claim back some of that money on the backside at tax time no matter if the book moves or not, then the publisher should be willing to gamble a bit more on a newbie.

    Or are the tax implications not as rosy in the publishing world and the trade-off would somehow not be a beneficial one?

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  6. Hi Kate,

    Yes, the agent gets a cut of the advance (typically 15%). The advance is considered taxable income. And yes, one of the many things an agent will do for you is negotiate your advance.

    All best & thanks for reading,

    E

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  7. If a publisher doesn't pay an advance, and has less financial motive to market a book toward success, publishing through a publisher slips another step closer to self publishing through Smashwords or Lulu or Amazon, no? Not entirely: there's still the gatekeeper effect. But I'd say it would further blur the lines.

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  8. Retreat is the right word, Eric. :-)

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  9. The sad truth is that a vast majority of authors get no real promotion from the publisher. If the author doesn't do the promotion, none gets done.

    The advice most established authors give is that the author should spend at least 10% of the advance on promotion. That includes the professionally done website, the advanced review copies the publisher probably won't send out, the ads, etc.

    With no advance, the author must pay these costs out of pocket and will probably not see any money from the publisher for a year or more, if that.

    The writing profession is already rough enough with a small advance.

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  10. @Phoenix -- I love the idea of negotiating for more marketing in lieu of advances.

    @Eric -- Do publishing contracts include that clause?

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  11. I'm just thrilled to know that an average advance could be more than $2-5000. Which is what one NYT author said was common during her Get On The Bestseller List workshop.

    I think the advance model works so long as the publisher really DOES try to help promote the book. I could be the next JK Rowling (in my dreams) but if they don't help me promote, it's not going to sell well. There's only so much a lowly writer can do on her own ;)

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  12. If we all came up with our own ideas, developed them entirely without input, and then hired our own editors until we felt we'd reached perfection, then the advance model might make less sense. We would bear the entire responsibility for our product.

    However, especially in my world of non-fiction, we accept a lot of direction from the publishing house. We cut to suit the editor and refocus to suit the marketing team. The cover, the catalogue copy, the interior design -- all out of our hands.

    So, shouldn't the publishing house be partly accountable if the book's a flop?

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  13. "While a no-advance model would likely result in a higher royalty rate for the author,"

    wouldn't this be considered e-publishing?

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  14. I may be talking out of my ignorant hat, here, but that's never really stopped me.

    It seems to me that writers have both eat and pay bills and find the time and energy to write.

    Some writers may have a full-time, well-paid day job, and need less than six hours of sleep a night--an advance is 'extra money'. But what about the writers who work reduced hours or lower-end jobs in order to dedicate most of their time and inner resources to writing?

    Advances (however small) on one book help the writer survive while writing the next one.

    Residuals do, too, of course, but with the reduced assistance from the publisher, how big is that quarterly(is that right?) check going to be?

    And if the writer spends the majority of his or her time flogging the first book, when is the next one going to be written?

    I know this is simplistic, but it's been bugging me . . .

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  15. Hi Piedmont Writer,

    Not if the house is publishing the books as physical books as part of a traditional print run, no.


    E

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  16. When I first read about the idea of no advances but higher royalites, I thought this would be good for first time authors. Maybe make them more likely to get published.

    But after reading your post and the comments, the idea is losing its luster at the speed of light.

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  17. Going to a no-advance model is another way of supporting the publishing industry at the writer's expense.

    My advance for my first novel was well above the numbers shown above, and it was a three-book deal. I received a big push from my publisher and I've done my best to get the word out, too.

    That said, my debut hit the stores in Sept '09. I didn't receive a royalty statement in April, but I didn't expect to. I expect to get one next September, a year after the pub date, covering the first royalty period.

    (I know a guy who waited 18 months for his first royalty statement, but his book was non-fiction.)

    Of course, considering the return policy in modern bookselling, I don't expect to get full credit for all of my sales.

    Not that this matters to me right now, because my advance is done as a basket, and the initial sales (during a recession) are not going pay off that entire bill. But if we move to a no-advance system, how long am I supposed to wait before I start earning money from my work? And with long accounting periods and reserves against returns, my money will be sitting in Random House's bank accounts for quite a while.

    I think I deserve better.

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  18. Well, because I'm an outstanding pessimist, if I ever get published I would want some kind of advance, because in my mind there's no way I'd make that money on royalties alone. :P

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  19. I write for 3 "small" publishers. 2 are primarily e-book publishers, although they produce print books as well. Neither pays an advance, but the royalty rate is significantly higher than for print. One pays monthly, the other quarterly. All would be peachy if sales were high enough to buy more than a happy meal with the royalty checks. Distribution is key, and in the e-market, if you're not writing erotica, it's unlikely you'll have many sales.

    My other publisher pays an advance, albeit a very small one, and I'm expected to do a lot of my own promotion, which eats it up immediately.

    I can see the double-edged sword: if the advance is too high, the author might not sell through, and then be dropped by the publisher.

    It's also my understanding that once you're into the multi-book deal, you're selling and getting advances based on synopses, and haven't actually written the book yet.

    Somewhere, there's probably a happy medium. But the e-publishers and the NY print publishers are two entirely different critters.

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  20. Interesting point. If the money sits in the publisher's bank account will you get a percentage of the interest that the money accumulates?

    Too bad we all can't be Stephen King; he asks for a $1 advance and immediately starts collecting royalties.

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  21. Is there any other industry that has a model even remotely like publishing?

    I understand that the "product" may be considered a joint venture and joint risk, but without authors there would be no books.

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  22. I work for a living forty hours minimum a week at a real job. Sometimes, I'm up as early as 2:30am to write before I have to get my ass out the door by eight. Normally, I get up to write two and a half hours early to write four to five times a week. For all this trouble I receive nothing but the satisfaction in a job well done. Advance? Keep it for now. When I prove myself as a dependable writer is when I deserve money for work sight un-seen. As for now, I would be quite satisfied not having to pay for copies of my own damn book.

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  23. Considering how little "time, money, and effort spent on marketing" publishers invest on midlist and low-list (and IS there anything below midlist? And if not, what are we the "mid" of?), I don't see that foregoing the advance is going to accomplish anything but drive a lot of good writers to flipping burgers. I don't see any recognition in this column of the fact that quite a lot of writers LIVE OFF THE ADVANCE, which comes piecemeal, erratically, unpredictably, and rarely in time to meet major expenses. If the publisher thinks they can live forever off the Dan Browns without trying to develop the NEXT Dan Brown, or at least the next George R. R. Martin, then they should go ahead and let all those writers get lost in the universal slushpile known as web self-publishing. If the publisher wants to stay in business, perhaps it should consider paying those advances promptly, allowing reasonable times to write a book, and putting a whole lot more into "time, money, and effort [...] on marketing." I can't tell you how many times I've finished writing a book before receiving the on-signing portion of an advance, amounting to less than $4,000, on which I was supposed to support myself for the next four to six months. Is it any wonder so many writers have day jobs?

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  24. Like Terry, I'm with small publishers & I've never gotten an advance. Two of my 3 publishers promote my books and help me however they can with my promotions. I have friends with conventional print houses (Harlequin, etc.) and they get about as much support as I do with the exception of bookstores: my books don't hit the bookstores unless it's requested by customers while my friends have books that are stocked on the shelf, albeit for a short time. I do a bit of promotion every day (online) and attend conferences, etc., where I'm on panels. I've been published for 3 years and have seen a steady increase in sales with each book. I don't promote a lot (I don't have time), but I'm pleased with the return on my promotion. It's what I expect given what I do.

    My books release in digital and print on the same day. I get royalties paid every month with 2 publishers, quarterly with another. I have contracts through 2012 and am currently writing for the 2013 publishing season. I'm very pleased with my editors, mostly pleased with my cover art, and generally have had a good experience (there were some rocky times at first with a publisher that went out of business, but I emerged unscathed). I average 2-3 books released a year.

    I am one of those lucky people (as someone said in this thread) who has a great day job, needs 5 hours of sleep, and writes in her spare time. I'd love to just be a writer, but economics aren't in my favor (my day job pays very well) nor is the publishing industry. My books are somewhat unconventional (older heroes and heroines, mystery combined with romance) and I was told by agent and editors early on that although my writing was very good, I wouldn't fit in -- my books weren't mainstream enough for them to take a risk. That's why I turned my attention to smaller publishers.

    Every time a new book comes out I see a spike in my backlist sales. My sales are very strong in the e-book market, especially, and I'm watching what Joe Konrath, Rob Walker, and others are doing with great interest. I know what Joe means as he talks about a liberating feeling when he controls his release schedule and other aspects of the publishing experience. I feel I have the best of both worlds in many ways by being with a small publisher. I have no idea what the future will hold for me so I'm taking it a book at a time. I'm very curious to see what shakes out in the next few years. If the music industry is any indicator, it's going to be a bumpy ride.

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  25. No advances: sounds like another attempt to dip into the writer's income. In this case, it's 'withholding until proven worthy'.

    I disagree with the person stating that debut authors should be penalized but not established ones. Sounds like protectionism -- an us/them approach.

    Established writers don't always produce winners, either, or we wouldn't see so many books by well-known and prolific writers in the bargain bin.

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  26. "As for now, I would be quite satisfied not having to pay for copies of my own damn book."
    -Joebaby

    I don't know, anyone else think this was hilarious? Tone change that caught me off guard, loved it.

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  27. Well, no advance would depend on how often royalties are paid out? If you only get a check for royalties twice a year (every six months), it's a long time to wait before seeing the monies.

    Anyone know how often pub houses send royalty checks to their authors?

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  28. Six months is a pretty long time not to see ANY money... this means that if you've worked on a novel for say, a year all-in-all (for argument's sake), then wait a year before the book is published, then another 6 months before you see any royalties (if any), you won't see a dime for a project you started to work on 2.5 years ago if you don't get any advance.

    No advance should mean monthly royalty payments.

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  29. While I don't mind the no-advance concept in theory (one hopes as a writer anyway that it all comes out the same in the end, and most writers aren't making enough to be making a living from it, so whether it's now or later shouldn't make a lot of difference), I have to wonder how this effects agents. How does an agent start out if they can't expect money coming in up front? Not many people I know can afford to start a business and expect payment to be delayed a year or two. There's bills to pay. This no advance concept seems to be predicated on already established agents who have income coming in already. While some writers may say that maybe we don't need agents then, I'd have to say bs. Agents are invaluable to a writer and their career. Many writers would go nowhere without them. So, while I may be all for this sort of payment method, I'm not sure it will ever be practical because nobody will ever be able to start up an agenting career. It just won't work financially.

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  30. I've had four books published in Singapore/Malaysia, no advances, royalties in six months from two of the publishers, and well over a year for the other (nd still waiting for one for two books this year). Where is the silver lining in all of this? In a recent email interview (yesterday), I wrote:

    Years from now, long after I’m gone, someone may pick up my books, and in a way, will bring me back to life. As a reader, we often experience this ourselves, when in the midst of a good book (particularly a memoir)it feels as if the writer is with us, telling us their story. What an honor for both the reader and the writer!

    Obviously this is not enough to live on as we write, but if I make enough from each book to stir up the energy to write another, and then another, who knows. It's moral questions all writers right now need to ask themselves, if this is our future, no advances and tiny royalties, is it really worth it? In other words, why do we write, and are we willing to do what it takes even if the money never comes? Good luck answering this and good luck with your writing and getting some advances, too. I want mine, and I can sure use it to keep me writing...

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  31. Big agents depend on big advances to "advance" their careers and they can be pretty vicious when it comes to discuss money with publishers. I've seen a subagent loosing a client in New York because she didn't get a huge enough advance for The Da Vinci Code in another language, no matter that agent, subagent and author got very good royalties for 5 years.
    Many times I've heard very well-known agents saying: "if there are royalties, it's that you've done a bad job". So much for editors, marketing budgets and fair play.
    It's a tricky business this one of publishing.

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