GENREALITY

Let’s say you’re a stock boy at the local supermarket.  You put in twenty hours of work during the week.  You are paid at a rate of $10 per hour.  At the end of the week, you’d expect to walk away with a check for $200 (minus a bit for taxes and such.)

Now, for the sake of argument, let’s say that your boss decides not to pay you that way this week.  “I’m going to pay you a third of the money I owe you at the start of the week,” he tells you, “and a third roughly eight months from now, and then the final third somewhere in the next two years.”  As you begin to protest, he remarks, “and by the way, if you want to keep working here, you’ll be happy to get that.”

Welcome to the wonderful world of publishing economics.

Alright, maybe it’s not as bad as all that, but it’s close.  You see, a writer is paid for their work in an often varying scale of increments and understanding the hows and why of it all can be confusing to the newcomer trying to figure it all out.  I know it was for me.  So for the next few minutes, let’s take a stroll down the road of economics publishing style.

Let’s start with two very key terms – advance and royalties.

An advance is the money a writer is paid up front for the time, energy, and effort that goes into writing a book.  Just in case you were wondering, the typical advance for a first time fiction writer is usually in the neighborhood of $5,000 to $15,000, give or take a few thousand.  (In other words, a single book a year will earn you somewhere in the neighborhood of poverty wages.)

Now that advance is just that – and advance against future royalties.  A royalty is the percentage of the cover price that you get for every copy of your book that gets sold.  Again, things vary, but this is usually in the neighborhood of 5%-10%, depending on number of copies sold.  The advance is money given upfront against money you are expected to earn by selling copies once the book is published.  Now a writer doesn’t get the advance money all at once – oh no, that would be too easy.  More often than not it is broken down into three, sometimes four, payments.  This usually means you get 1/3 of the advance when you sign the contract, a 1/3 when you turn in the completed manuscript, and a 1/3 when the book is published.  Given that the time frame from sale to publication date can often be anywhere from one to two years, you can wait a long time for that money to come in.

But Joe, I’m going to sell a ton of copies – won’t I make royalties from all of those?

Sure.  But remember, the royalty income first goes to pay back the money given to you as part of the advance.  You don’t receive a single cent of that royalty money until you have paid back that advance money.  If you received an advance of $10K, you have to earn $10,000.01 before you see any cash in the form of a royalty check.  (For the sake of simplicity, I’m not even going to touch on the concept of reserves against returns in this essay – I’ll leave that for part two on another day.)

When you have earned enough royalties to pay back the money paid to you as your advance, your book is considered to have “earned out.”  Meaning, you made the publisher more than they paid you to produce the book.  The thing to bear in mind is that more than 80% of fiction published does not earn back its advance.  (Which is why most authors try to get as much money as possible in the advance, knowing they might never see a royalty check at all.)

Which is all well and good until a  few months down the road.  Let’s say you are paid an advance of 100K for your latest masterpiece.  You’re excited, the publisher is excited, everyone thinks it will be the next best thing to sliced bread.  Publication day comes and goes.  Six weeks later it is very clear to everyone…

…your masterpiece has bombed.  You’ve earned 30K in royalties, which your publisher deducts from your balance.  Bookstores have stopped ordering copies and have gone on to something else, so your book is pretty much dead.   Except you are still 70K in the hole to the publisher.

The good news is that you don’t have to pay that deficit back.  The publisher took a chance that you would earn that much and more, so the onus is on them not you.  You are free and clear.

Until it comes time to sell your next book.  Then they look at what you were paid, what you earned, and turn you down faster than you can blink.  While they don’t come right out and say it, the story is clear – no one wants a repeat of the last financial mess.  Your career might actually be over (at least under that name.)

Such is the fun state of finances in the publishing industry.  The best bet for a new author is a modest advance coupled with a strong royalty rate, matched to a briskly selling book.  You get a fair pay for your effort, your book earns out and then some, which means you will be getting at least one royalty check.

Oh wait – did I mention that royalties are only paid twice a year, starting one year after publication….

Sigh.