Advances, Royalties, and You

Originally sent to the Listener Insider Mailing List on August 4, 2016.
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I’ve interviewed over 70 authors for the WROTE podcast.  I’ve self-published. AND… I’m a production editor for a small, non-fiction press… plus I’m connected to a larger publisher.  This places me in a unique position to answer any questions you may have about the business of being an author. I reached out to a group of professional writers, asking what areas confused them at the start of their careers, and received some GREAT starting questions.  Here’s the next:

Answers for Authors

Vance, how is author payment structured? Are there advances? What do they depend on? What should my royalty be? Does it differ for ebooks?

Excellent Questions! Pardon me for merging them, but they all come together nicely.

Answer from A Small Press Acquisitions Editor:
“As a small press, we cannot usually pay an advance unless there is grant money to fund the book. Royalties can be paid on list price, unit price, net sales, etc. Same for ebooks. Ultimately, the particulars of payment will be spelled out in the details of the contract.”

Answer from Vance:
Remember not too long ago I was in your inbox with information to help you approach contract negotiation?  This topic is a drilling-down of that one:

The numbers are determined at contract time.

But what are the different parts of the author pay structure?

Advance
The advance is paid to you once the book’s accepted. It is designed to be your income while the publisher takes over the next phases of publication. Not every publisher offers an advance, but the ones that can’t tend to offer better royalties.

Caution: The advance is NOT “on top of” royalties. You pay the advance back out of the royalties of the initial sales.  You actually will not receive a royalty check until the entire advance is paid back.

In fiction, an advance is most common for known authors with established audiences.  It’s also more common in larger  publishing houses because they can, in theory, absorb the financial risk in case a book doesn’t sell enough to pay back the full advance.

In non-fiction, it’s more common because of the fees involved in researching. If your book fills a need, it’s easier for a non-fiction publisher to pay advances through grants and donations.

Note: if non-fiction is your genre – I highly encourage you to bring possible funding ideas to the negotiation table.  It kind of makes you look like a rock star.

Royalty
This is your share of the money brought in from the sale of a book you wrote.  It’s most often listed as a percentage of revenue for a couple reasons. First, your book’s price will change over time due to sales, stock liquidation, and so on. Second, everyone wants a share of that sale. Everyone. The retailer, the distributor, the warehouse, and the publisher each have a stake in the sale. Sometimes even the editor gets a small percentage from the first one or two years of sales.  There are an awful lot of hands that worked to get your book to a buyer.

I personally don’t always feel that the split is fair. But I don’t always blame publishers for that. Even the largest publishing houses have a hard time arguing dollars with multinational distributors who’ve decided to own the global retail space. It’s fair for you to ask to see the split from the sale of a book. Just expect that some publishers won’t want to share that information. Try approaching it from the angle that shows you’re interested that the publisher is getting their fair share and that you’re worried the sale is not all being eaten by distribution.

Also, remember that if you were paid an advance, royalty payments will kick in afteryour percentage of the sales has paid that advance back to the publisher.

What should your royalty be? That will depend on a lot of factors. What is the genre standard? How many active followers do you bring to the table? Does the publisher control other titles of yours they can use to cross-promote? Are you willing to accept a lower print royalty for a higher digital royalty? Are you willing to take on more of the promotion duties for a higher royalty? All of the options are legally negotiable until you’ve signed.  Again, expect some publishers to have their house standard and not want to deviate too far from it.

Caution: I cannot stress how important it is for you to be on top of your contract. In addition to dollar amount, the other thing you really need to pay attention to is Frequency of Payment.  Monthly? Quarterly? Yearly?  (Yes, I’ve seen yearly. It makes me cringe.)

Quarterly is typical – but did you know it’s often a quarter behind? Or more?  Here’s why…

Let’s say a bookstore sells a copy of your book in January.  YAY!  The distributor holds that money for a fiscal quarter in case it’s returned (boo!). Assuming it’s not returned, the funds are released to the publisher at the end of the next quarter (i.e. the end of June). Whether your publisher processes the funds quickly and sends your check in 30 days (end of July) or end of the next quarter (end of September) depends completely on their internal accounting.

Okay, that’s one of the more dramatic examples I’ve seen, but you really could be waiting that long to get paid for a sale.  And if your publisher only writes royalty checks yearly? It’ll be even longer.

eBenefit: Many publishers offer a significantly better royalty for ebook sales. Trends at the small publishers indicate that as conversion technology keeps improving, ebooks cost less to produce allowing publishers to offer their authors a better royalty for ebook sales.

Best Bang for Your Royal Buck:  Again, review your contract. Does your publisher offer you the highest royalty from sales through their site’s eStore? As the gorilla in the distribution room gets larger, more and more publishers are offering noticeably better royalty rates to authors for sales that go direct from publisher’s website to customer. Check your contract. If you’ve got this hidden benefit, the first hyperlink you offer fans should be the link to the publisher’s eStore. It’ll put more dollars in your pocket, it’ll show the publisher you’re a team player, and it’ll still load to the reader’s device. Win-win-win.

(Sure… the gorilla may not get it’s bazillionth banana… but it’s kind of bloated right now anyway.)

Okay, Vance, who in the bloody heck would sign on for lower rates and slower payouts?

Well… you might want to consider traditional publishing even with its apparent flaws. Whether you seek out a small press, a hybrid press, or a large traditional press, here are some reasons this would work in your favor:

  1. You’re playing a long-tail game with your career. You see it as a business and not a paycheck-to-paycheck j-o-b. Success in this industry grows in slow and steady steps no matter how you publish.
  2. You want to keep writing and promoting yourself. So having someone else deal with the logistics of typography, printing, distribution, sales, and accounting is WORTH it to you.
  3. You realize that once your checks start arriving, there will be a rhythm based on the buying market. And as long as your book is available for purchase, you have the opportunity to make sure it sells steadily.

Believe it or not, I’m neither for nor against traditional publishing. Sure, there may be some down sides, but publishers offer a lot of benefits.

However, because I DO believe in making educated decisions, I will devote next week’s column to self-publishing.

Until then… WRITE ON!


If YOU have a question you want answered from inside the biz, send it my way and I’ll pose it to the professionals!