Monday, June 27, 2011

The Vanishing Advance

You may have been hearing about this from other publishing professionals or from fellow writers, mes auteurs, but in case you haven't heard, the average advance has declined a bit over the past couple of years. Much of my evidence for this is either proprietary or anecdotal, so hopefully there are a few literary agents or editors in the house to confirm the trend.

In case you're curious, though, there are a few reasons I think lower advances have been—and continue to be—the norm.

Belt-tightening. With forbidding economic indicators such as unemployment still high and talk of a double-dip recession floating around, editors and publishers have become much more frugal in terms of the advances they offer. Many have modified their P&Ls to reflect current sell-through and consumer habits, and decreased demand for physical books has resulted in decreased up-front cash for authors.

Publishing is a business, and we've got to try to make money on as many books as possible in order to stay in business. Speaking of physical media, another reason (à mon avis) for lower advances is:

The shift to electronic media. Because e-books don't face the same kind of supply chain/distribution challenges as physical books and are not returnable, it's easier for publishers to run P&Ls for e-books and to simply offer higher royalties than to stick with the advance model.

True, the vast majority of titles currently acquired are eventually released as concurrent physical and electronic books, but I don't think the day is long off in which a substantial section of the market will comprise e-only titles. Once that occurs, I think the idea of the advance will become even more antiquated; it's much easier to pay an author a fixed percentage of dollars earned in the more or less real-time environment of e-book sales than to bother with advances.

In fact, much (though certainly not all) of the work done by advances is obviated by the fact that:

Advertising and marketing budgets for e-books are often lower than for physical books. While a publishing house—particularly a large one—will pay the advertising and marketing costs for their lead titles, there are many midlist titles and titles published by smaller publishers for which the burden of lining up media and marketing falls squarely on the author. The advance is a way of mitigating this hardship; authors can use the money given to them by publishers to pay to promote their books (e.g. conduct book tours, create book trailers, and so on).

As advertising and marketing have become easier and cheaper—predominantly by way of social networking services like Facebook and Twitter—the cost of promoting books through these channels has necessarily also fallen. If publishers feel they can pay less money for the same commercial success from any given title, they absolutely will. Wouldn't you?

So that, dear readers, is my take on why average advances seem to be declining in this industry. It may be a relatively short-term reaction to the continuing economic uncertainty inherent in the recession, or (as I believe) a long-term reaction to the drastic changes that are occuring in the publishing industry as it transitions from physical to electronic media. Regardless of which, I think it signals an industry-wide recognition of the challenges the business is facing.

What do you think, gentle readers?

15 comments:

  1. Higher royalties are the way to go. Advances are a flawed crystal ball. The proof is in the numbers after publication.

    Two cents.

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  2. Interesting, interesting. I never really thought about all these things before, but it's definitely good to know them. If I do get published someday, I'd be happy to get any kind of advance, especially since I'm currently a broke grad student living off a monthly stipend and minimum-wage jobs.

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  3. I'm so glad you wrote this post today. I've blogged this week about how agents are retrenching and redefining their roles in this new paradigm, and had a commenter protest that advances are not going down. I'll add a link to this post to my blog.

    I love Suze's comment "Advances are a flawed crystal ball."

    So many aspects of the old system were flawed: huge advances for superstars, returns, short shelf-life. Lots of stuff that didn't make sense. Reason and logic instead of "that's the way we've always done it" thinking sound good to me.

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  4. Assuming I would be able to market my book successfully and get it off the ground, I'd prefer higher royalties over a huge advance any day. It just seems like it would be steadier (as opposed to having to wait to earn out an advance, and seeing how well the book continues to sell after that point), and might earn more in the long run.

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  5. I'm going to agree with Suze's take on this. And coincidentally enough, her last sentence probably foreshadows the amount of my advance, when I finally get there.

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  6. But the stuff I have been reading has been claiming that the royalties for e-books are running low instead of high. Is that incorrect? Also, unless they are buying only the e-book rights, it shouldn't affect the advance so completely.

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  7. I saw a comment on another blog that makes the most sense to me: It costs just as much to WRITE the paper version of a book as it does the e-version. I truly do not understand the variation in royalties based on the format the publisher chooses. And the advance (which is non-returnable even if the sales don't earn out) is at a guarantee that a writer gets at least SOME payment for the work, particularly since they are now so accountable for their own marketing, providing their own giveways (such as bookmarkers, shelf talkers, etc.) And too many publishers seem to be shifting to royalties based on a "percentage of NET" (rather than a percentage of cover price) without defining in the contract exactly what "net" is. So if they decide to use YOUR book as a loss leader at 99 cents, guess what kind of money you'll make.

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  8. It makes sense and, while many dream of a giant advance to say they've made it, I think I'd be more comfortable getting the royalties. Of course, one hopes that they'll sell enough to make the advance and then some, but the publishing industry is a little unbalanced right now and they're being cautious. It's a business like anything else.

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  9. So, do you think that, as publishers move to ebooks and realtime tracking, royalty statements and payments will improve or will they still be a mess?

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  10. @alexffayle - For those who choose to self-publish the royalties issue is straight-forward.

    On Amazon 35% or 70%. No waiting for the publisher or agent to cough up. No arguments about the share. Clear and simple royalty statements, every month, and actual payments every month.

    And because you can price the book competitively, without worrying about paying the Big 6 shareholders, you'll likely sell more self-published than your publisher would sell.

    The only real advantages a Big Six contract has nowadays is the advance and the bricks and mortar distribution.

    The advance is already close to extinction and the bricks and mortar stores won't be far behind.

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  11. Advances were already at absurdly low levels. Authors are getting paid less than they were in the 80's....

    With the way publisher's manage the 'reserve against returns' swindle and other accounting tricks, your novel will probably never earn out its advance, and never earn royalties. That advance is probably all the money you are going to see. Are you still okay with a small advance and larger royalty?

    The advance money paid to the author isn't supposed to be the book's promotional budget; it's supposed to be money the writer can use to live on while writing the next book. I guess even a lot of writers have forgotten that.

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  12. Advances are the money an author earns for doing a job. THey are not compensation for marketing. That's what publishers want authors to think, so that they can shift the work to the author. I would be fine with that thinking if royalties on books weren't so ridiculously low. But the fact that my publisher gets over 90% of the money made off my book says to me that they should be doing over 90% of the work in marketing.

    As for moving to a mostly royalty only system, I'd be great with that if publishers could be trusted to accurately reflect the actual numbers of e-books sold (which they can not now) and if they sent out royalty statements more often than twice per year! If you're going to offer an author nothing on contract but pay royalties, then the time from acquitision to shelf needs to be considerably shorter, payments need to be doled out at least quarterly, and the accounting of e-books needs a serious overhaul to make sure that authors are paid for every e-book sold.

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  13. I bet whoever gave Bristol Palin an advance is pissed off.

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  14. I was just offered a $1500 advance for my self-published memoir and honestly I had no idea advances were that low. I understand it's just an "advance" but the royalty rate isn't so great...25 percent of net (versus my current 70% with Amazon.) I've been told "net" works out to be 17%. I declined the offer.

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