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.
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From the way you broke it down, it almost sounds like you’d need several books a year just to pull in a decent yearly wage.
I’ve read articles about author’s decrying this (http://dir.salon.com/story/books/feature/2004/03/22/midlist/index.html), but then I’ve heard of other authors supplementing their income with freelance writing.
What’s your take on this? Can straight novel writing still provide a living wage (when the output is great enough) or should aspiring writers modify their goals to include other writing income streams?
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Gabriel,
Well, that depends. (As is the case with so much in publishing)
I write several books a year, which certainly helps me earn a living. Not everyone can do that – some folks only have one book in them at a time. (I’m currently writing three at once, if that gives you any idea of how crazy I am.)
I also fiercely defend control of my subsidiary rights and make a point of actively trying to sell those on every book as well. In that regard, I’ve been very lucky. Not only have I had books earn out before publication by selling foreign language rights in other territories, but my royalty checks for some of those foreign editions have been quite sizable. Putting all those income streams together has made it easier for me to continue earning a living doing what I love.
I think aspiring writers need to decide just what they are capable of and then focus on their strengths.
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Thanks for the fantastic post and reply. I have to commend you folks here at Genreality. The way you continue to pull back the curtain and give us the truth, like in this post or in http://www.genreality.net/the-reality-of-a-times-bestseller, has been eye opening.
Instead of making me run for the hills, it has helped set my expectations at a realistic level, showing me the actual rewards behind the effort necessary to become prolific author. It’s a labor of love, but it’s still a job and in removing the smoke and mirrors usually associated with it, you’ve made it more accessible. Thank you for that.
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I think you just hit the nail on the head, Gabriel. It is a matter of managing expectations. Several of us on this blog have talked at one point or another about treating writing as a business and managing expectations is all a part of that. If you know what you need to do in order to make the money you need to make, you can not only plan accordingly, but you can work on ways to make that process more efficient and more beneficial.
And thanks for the kudos. I know I speak for all of us in saying that we’re glad that our posts are not only enjoyable, but useful to so many of you as well.
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After reading this it almost makes me not to want to aspire to be an author haha (just kidding). Thanks for the reality check!
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Yep, the stats are certainly eye-opening but it is just like anything else – knowing what you are getting into is certainly better than wading in blind.
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Great breakdown Joe and so very true. Writing one book a year, unless you hit it big with your first book which is rare, isn’t going to earn you a liveable income.
Most of the writers I know, write two, three or more books a year and still make a very modest income. People that get into writing to make a forture are in the wrong industry. I would say that most writers dont’ make enough to live comfortably on. And I’d say it takes at least five to six years to carve out a career where a writer is making some money. It’s not an overnight process that is for sure.
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Vivi – you are so right! I’m just thankful that I’ve been at it long enough that the odds are starting to turn in my favor.
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And yet another reason why I sometimes question my sanity for doing what I do…
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I make a living writing novels on a two book a year schedule. But I didn’t quit my day job until my first royalty check came in, two years in. I make a living wage because I have a 6-book backlist that’s making money. And like Joe said, foreign sales have made up a big chunk of my income the last couple of years.
The real bitch of it is budgeting when you have no idea when paychecks are coming in or how much they’ll be. It’s like quantum mechanics — I either know how much a check will be (advance checks), but not when it’s going to arrive. Or I know when it’s going to arrive (royalty checks), but not how much it’ll be.
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One of the many reasons I self publish. Thanks for reminding me how great it is on the indie side of the pond.
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How many people do you know who make money self-publishing fiction?
I know it works for non-fiction, niche market, but fiction?
I just got my twice yearly royalty check, and someone at Kensington publishing company is doing a fine job. My book, BROKEN DOLL, kicked cosmic royalty ass! In these economic time, I wasn’t expecting sales of a re-release to be so damn good. My books earn back their advances within 12 months, then it is a question of how well they sell after that. The nice thing about true crime is that they are continually being re-released, giving them a new life, new readers, and new royalties.
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The landscape has changed quite a bit. The diff with niche nonfiction and fiction used to be that there was an easy way you could reach your audience with niche nonfiction but not with fiction. But there are increasingly more and more places and ways to connect with readers online for fiction.
Folks like J.C. Hutchins and Scott Sigler built their entire author platforms online. And initially with a free podcast. Those podcasts reached hundreds of thousands of listeners.
Jeremy Robinson self published his first novel The Didymous Contingency, got James Rollins to blurb it for him (a guy he’d never met before btw), and landed a publishing deal with St. Martin’s.
Pamela Aidan self published several novels based on the world of Mr. Darcy of Pride and Prejudice. She made the choice to self publish because she considered it a better business decision for her. She turned down Simon and Schuster three times before finally accepting an offer from them, so she was obviously making money self publishing fiction or she would have jumped at the first offer from a major publisher.
Connie Shelton is another fiction author who started out self publishing her own work. She’s published a mystery series for years under her own imprint. Later she went on to publish other authors in addition to herself.
There are more opportunities out there now for authors who know how to utilize them. Money isn’t my primary motive (don’t really think it should be the primary motive of anyone writing fiction considering the odds for anyone to make any money at this)
In addition there are distribution options available to indie authors that didn’t always exist. While I may not have a shot of getting my books stocked in brick and mortar stores, the options on the internet for selling my books are almost limitless. And more and more people are willing to buy books online at places like Amazon.com. I could market forever online and never run out of new potential readers.
I’m not sure how many people “can” make money self publishing fiction. I’m not really concerned with how many can do it. I only have to worry about if I can do it. And I really believe that I can.
But even if I couldn’t, I know I’ve made the right choice for me. Because honestly, if I can’t build any kind of platform for my work online even with some free content, then even if I got a trad publishing contract, I’d be a one book author, because an author who can’t market and build a platform doesn’t have a future in the new publishing arena.
To keep things in perspective, the average small press book sells between 500 and 3,000 copies. I can totally do that. No doubt.
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This is one of the clearest explanations of how authors are paid I’ve seen–thanks. It’s definitely a reality check and counterbalance to the “author and grow rich” scams out there. There are ways to make a decent living, as you mention in your comments, but the traditional publishing route you outline is not an easy one.
And it’s getting increasingly difficult for a publisher to take a chance on any author. You almost have to prove yourself first by self-publishing. Then, will you really need a publisher? (I just wrote about this here.)