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Why Advances Matter

With 11 days to go, the First (Pro) Novel Survey is up to more than 200 responses, which is wonderful!  But it’s also generated some interesting feedback in comments and e-mails.  Some people are upset that small press, self-published, and e-book authors can’t participate.  Others say advances are part of a dying publishing model.  There’s been worry that advances can actually harm an author who doesn’t earn out.  To top things off, I’m told I’m completely out of touch with the current state of publishing.

Let’s start with the basics.  An advance is an advance against your royalties.  When I sold Goblin Quest to DAW, they paid me $4000, half on signing and half on publication.  (Slightly lower than the average, because Goblin Quest was a reprint of a small press title.)  For the sake of easy math, let’s say I got 50 cents in royalties for every copy that sold.  So for the first 8000 books, I got nothing — I had already received that money up front.  But once we sold book 8001, I officially earned out the advance and began receiving royalties.

Even if I never sold those 8000 copies, I keep the advance. Nor would I be blacklisted for failing to earn out.  A lot of books never earn out their advance.  Understand that the publisher doesn’t necessarily lose money on those books.  The math is a little messy, but publishers can and do still make a profit on books that don’t earn out.

Will publishers get a little cranky if they pay you a six-figure advance and you only sell 10,000 books?  Well, sure.  It might mean smaller advances in the future.  You might need to adopt a pseudonym (as many others have done), or change to a different publisher.  But it doesn’t mean the end of your career.

Remember the advance represents an investment on the part of the publisher, and I want my publisher as invested as possible in my book. There are never any guarantees, but which do you think will get more of a sales push, the book where they paid the author $5000 up front, or the one where they paid $50,000?

Finally, there’s the fact that royalties take a long time to show up.  Let’s assume your book is going to earn out, which means you’re eventually going to get the same amount of money either way.  Would you rather get that money today, or wait and get it in a year or two or more?

Writing is not a hobby to me.  It’s a career, one that helps me pay the mortgage and feed my family.  My advances mean I know I’m going to receive a certain minimum amount on each book.  I can start to plan and budget, meaning I’m better able to make a living with this.  (Now if only my publisher would offer a health plan for its authors…)

As for the frustration and anger that I’m shutting out small-press and self-published authors with this survey?  Yes.  Yes I am.  I’ve got nothing against small press and self publishing.  (Please see above, where I first sold Goblin Quest to a small press.)  But that’s not what I was interested in for this survey.  I wanted to learn more about how authors break in with bigger, advance-paying publishers.  If you have a problem with that … well, it’s your problem.  Deal with it.

Mirrored from Jim C. Hines.

Comments

( 79 comments — Leave a comment )
sartorias
Mar. 4th, 2010 02:45 pm (UTC)
At some other point, it might be useful to do another poll, to see how small press of various kinds are shaping up their new models for business. (That doesn't mean you have to do it, this is just a general observation.)
jimhines
Mar. 4th, 2010 02:49 pm (UTC)
No argument here -- I'd be curious how things are evolving in the small press as well.

I think there's a fair amount of hype and exaggeration over Big Publishing being the dinosaur, the enemy, or on its last leg, and the small press (or self-publishing) is the future of literature. But I've also seen some very cool projects coming out of some smaller publishers, not to mention the success of e-books in certain situations/markets.
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sandy_williams
Mar. 4th, 2010 03:07 pm (UTC)
It's good to hear that not earning out your advance doesn't blacklist an author. That's been one of my fears, and one of the reasons why I wasn't completely against a no-advance model of publishing. I didn't realize a publisher could still make a profit off of you, even if you didn't earn out.

Very interesting.
jimhines
Mar. 4th, 2010 03:28 pm (UTC)
Every book gets a profit and loss statement when the publisher is deciding whether to buy it, how many copies to print, etc. I have only a vague understanding of this piece, but it basically looks at all of the costs and the guestimated sales.

The author's advance is just one cost of many, including artwork, advertising, editing, typesetting, printing, and so on. There are a lot of people who could probably go into detail better than I can, but the bottom line is that the publisher's break-even point is not the same as my earn-out point.

If your books don't sell, eventually the publisher's going to be reluctant to keep buying them, but I think that holds true regardless of advances. And I've never heard of anyone, anywhere getting blacklisted for failing to earn out.
(no subject) - swords_and_pens - Mar. 4th, 2010 03:36 pm (UTC) - Expand
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sarah_prineas
Mar. 4th, 2010 03:52 pm (UTC)
Yup to all of this.

I did think of one reason why advances could be a little problematic. Sign a three-book deal where you get half the advance on signing, and it can throw off your taxes, from the amount you owe, to your tax bracket. You wouldn't believe my tax bill this year because of that. Yowch. I'd almost rather have it spread out over a bunch of years, as royalties instead of advance money.
jimhines
Mar. 4th, 2010 03:56 pm (UTC)
True, though royalties can do it too. My first royalties check from Germany was much more than expected, and messed me up for two years, taxwise. It's a nice problem to have, but definitely threw all of my tax budgeting out of whack, and since subsequent checks were significantly lower (though much appreciated), it still hit as a one-time bonus.
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sixteenbynine
Mar. 4th, 2010 04:15 pm (UTC)
One key difference between an advance to writers and, say, the advance that a record label gives its bands illustrates why the record industry may have dug a far deeper hole for itself than the publishing industry.

When you get an advance from the publisher, it's yours. It may only be $5,000 or $10,000, but it's your money. When a record label signs a band to a $500,000 contract, a) that money is a loan out of future royalties and b) they have to use that money for everything -- the recording of the album, the making of the promo video, the tour bus, etc. It's marginally better than it used to be, but it's still terribly one-sided, which is why you had all these news stories about rock stars with four or five hit records still going broke because they were each making less than what they would have made as a stockboy at Walgreen's.

At this point for me selling "only" 5,000 or 10,000 books would be such a dizzying stratosphere of fame that it's downright intimidating.

Side note: I've written non-fiction stuff (none of which was very good, either in terms of sales or its quality IMO) and have been paid advances for it. I've earned no royalties on the work because they didn't move nearly enough copies to warrant it, and I still get letters from the publisher every so often telling me that so many copies were remaindered. Sigh. Maybe next time I'll pick a better subject.
jimhines
Mar. 4th, 2010 06:17 pm (UTC)
Wow. I had no idea the music industry was set up that way. And I'm now very happy that publishing doesn't work the same way!

I'm not looking forward to the day my books start going out of print with DAW. It's painful enough seeing the returns on my royalty statments, knowing those books were stripped and thrown out....
(no subject) - sixteenbynine - Mar. 4th, 2010 06:48 pm (UTC) - Expand
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e_moon60
Mar. 4th, 2010 05:03 pm (UTC)
Another point about advances: it's not only that they're paid sooner, but you know how much they are, and how much the on-acceptance and on-publication payments will be. With royalties, you never know. You can have a whopper of a check one royalty payment, and a tiny bit the next. It is much, much harder to budget in anticipation of royalty payments (especially early on, when you've got only a few books out and no history to work from.)

I do think it's amusing that anyone would tell a pro writer making a living from writing that they're "out of touch with the current state of publishing." The person swimming in the big ocean knows more about the current state of the ocean then the person standing on the shore or wading in a freshwater pond some distance inland.
jimhines
Mar. 4th, 2010 06:09 pm (UTC)
Yes to both points. It's hard enough trying to make a living as a writer; I can't imagine doing it without at least knowing you can expect that bare minimum advance to show up at a certain time.

Even with only five books in print, I'm already learning that royalty payments can be all over the place.
jongibbs
Mar. 4th, 2010 05:31 pm (UTC)
I didn't mind you excluding small press and e-book authors, but when I learned drabble publications didn't qualify, I was most put out :P
jimhines
Mar. 4th, 2010 06:07 pm (UTC)
Were you surprised? It's not like I've kept my anti-drabble prejudice and hatred a secret!
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swan_tower
Mar. 4th, 2010 06:21 pm (UTC)
To top things off, I’m told I’m completely out of touch with the current state of publishing.

How anybody can say this to someone currently publishing, I don't know. You might not be familiar with all the twists and turns of its present state, but clearly you're in touch with it, because it's what you're doing. Right now. As we speak.
jimhines
Mar. 4th, 2010 06:25 pm (UTC)
I don't think I'm out of touch personally, but ... well, I can't completely dismiss the point. I talk to people who've been publishing for 20+ years, and sometimes the things they talk about don't mesh as much with what I'm seeing today, particularly when it comes to breaking in.
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An old publishing joke - nihilistic_kid - Mar. 5th, 2010 04:39 pm (UTC) - Expand
sarraceniaceae
Mar. 4th, 2010 08:06 pm (UTC)
Out of curiosity, I would have guessed that advances would be more important early on in the career, with royalties becoming a relatively steady subsidiary income as you accumulate a larger backlist of books (at least assuming they stay in print). Is this true, or is it all about the advances?
burger_eater
Mar. 4th, 2010 08:32 pm (UTC)
On his website, Lit agent Donald Maas has a free ebook about writing and becoming successful. (No link because I'm supposed to leave for lunch.) He surveyed his own clients who were making six-figures a year, and what he found was that they'd been writing for ten years or more, and most of their money came from their backlist.

There were other interesting datapoints, but the book is over ten years old. It's worth a read.
(no subject) - sarraceniaceae - Mar. 5th, 2010 02:13 am (UTC) - Expand
marycatelli
Mar. 5th, 2010 04:49 pm (UTC)
Of course that's all predicated on staying in print, which you can not rely on.
burger_eater
Mar. 4th, 2010 08:27 pm (UTC)
Yay for advances! Also: OMG!

I did get a big advance for my novel (plus two more I hadn't written). Then the economy tanked. If I could line up every credit-default-swap Wall Streeter I bust each and every one of them in the nuts. Just give me a year's warning so I can take my kicking leg to the gym.

The only thing I would have added to your excellent post is a note about reserves against returns: The publisher sells ten books to Chain Bookstore, but the writer doesn't receive any royalties for them, because Chain Bookstore might return all ten for full credit if they don't sell. So publishers hold back a certain percentage of royalties as a reserve against books that have sold to book stores but possibly not to readers.

It's funny, but just last week I was back and forthing with a woman on Absolute Write who was convinced that poor sales figures could end your career. Never mind pen names or switching publishers: she was convince acquiring editors would demand past sales figures and would decline if they were bad.

According to the poster, she'd known writers in this situation. I couldn't figure a way to diplomatically suggest that maybe those writers needed to write better books, so I kept my mouth shut.
barbarienne
Mar. 4th, 2010 10:14 pm (UTC)
Need to write better books, or perhaps not be wftcrazy prima donnas.

You (generic-anyone you) can be a prima donna if you sell bazillions of books. If not, the pubs may drop you, and tell you it's because your sales aren't good enough. What they mean is, "not good enough to put up with your overwhelming sense of privilege."

An author can only be as crazy as their sales figures.
(no subject) - burger_eater - Mar. 4th, 2010 10:29 pm (UTC) - Expand
beth_bernobich
Mar. 5th, 2010 04:57 pm (UTC)
Ah, her. She's presently on my Ignore list.
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isleburroughs
Mar. 5th, 2010 12:04 am (UTC)
A 401k would be nice too. How writers make a living is very sobering. What would be nice is to either get the gov't to lower taxes on the self employed or find some way to incorporate it without the fiction becoming corporate.

It must be very hard to estimate a future income.

Thanks for the #s, Jim.
realmjit
Mar. 5th, 2010 04:14 am (UTC)
Would you rather get that money today, or wait and get it in a year or two or more?

I think the question is more like this: "would you rather have that 8000 in two big chunks, or as $300 bits and pieces over the next two years after the book release?"

I can see arguments for either model, depending on a writer's sense of fiscal responsibility and emergency debt levels. I know one writer friend who needed that advance for a surprise home repair cost. another friend was a personal assistant to a full-time writer who needed her to make sure his advance and royalty checks got spent on things like rent and groceries instead of a hot-tub and 54" HDTV.
nihilistic_kid
Mar. 5th, 2010 04:08 pm (UTC)
When I sold Goblin Quest to DAW, they paid me $4000, half on signing and half on publication. (Slightly lower than the average, because Goblin Quest was a reprint of a small press title.)

Is that what they told you? I ask because there's no actual reason to lower an advance on a reprint of a small press title—the usual inputs that go into the decision to offer $X remain the same, and there are plenty of examples of small press reprints getting market-rate advances and even giant ones.
jimhines
Mar. 5th, 2010 04:13 pm (UTC)
Huh. Okay, I'd have to check. Don't know if that's something I was told, or if it was an assumption on my part. It could also be that they just weren't overly confident as to how well a humorous fantasy about goblins and flaming spiders would do.
(no subject) - marycatelli - Mar. 5th, 2010 05:04 pm (UTC) - Expand
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dpeterfreund
Mar. 7th, 2010 04:42 am (UTC)
This "if you don't earn out your advance, you're blacklisted forever" meme is a really puzzling one. I know lots of authors who have failed to earn out advances and are still publishing just fine, thank you very much. And not necessarily under different names, either. Sometimes they just keep getting the same advances, sometimes they move to a different house, sometimes they take a pay cut. And yes, sometimes they don't get new deals.

If you get a six figure advance and sell $1000 worth, that's one thing, but if you get a six figure advance and sell 50k, you may not have earned out, but you're still doing well, and there's probably an assumption that your book will stay in print and you will eventually earn out. More problematic is if you're getting an advance on the very very low end of the scale (say, $2k) and not earning out. It just means there's not much of an audience for your book.

The other instance where you get in trouble is if you have a million dollar advance and tank. I think THAT'S who the editors are talking about when they go to cons and say "well, big advances can be dangerous." They are talking BIG advances. And even then, I know pubs who are still paying authors big advances who have tanked in the US, but do phenomenally well overseas and "earn out" through their publisher's foreign rights sales.
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