Proposal to raise book royalties, lower advances
The agent is really high on The Unicornians. She thinks it's the next Twilight. So she submits it to several editors at once. Editor 1 comes back offering $300,000 for three books. Editor 2 offers $30,000 for three books but with a significantly better hardcover royalty. (Say, 20% instead of 10%.)Book Advances and Marketing and the Cart and the HorsePutting aside the (very important) questions of which editor would be a better fit and which publisher is doing a better job with Unicornian-esque books, I would argue that the author of The Unicornians is always better off signing with Editor 2.
Let's say that The Unicornians is not a tremendous success. The first book in the trilogy sells 8,000 copies in hardcover; the second two sell 6,000*. With Editor 1, the author gets her $300,000^^, but The Unicornians comes up $240,000 short^^^ of earning out. With Editor 2, the author only makes $80,000 on the series, but $50,000 of that is royalty, and the publisher has also made a (modest) profit. The publisher will likely ask the author for another series, perhaps something focused in on the werewolf dude...
Okay, so now let's say The Unicornians IS successful. Let's say the first book sells 250,000 copies in hardcover**, because they make a movie, and teens squeal about how hot the unicornian boy's horn looks. The second and third books also sell 250,000.*** With Editor 1's deal, the author earns back her advance and makes $1.2 million, for a total of 1.5 million dollars. With Editor 2's deal, the author earns out and makes $2.7 million in royalties, for a total of $3 million.****
Really Long & Boring Post about Book Advances and Publishing
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The point is that people don't behave rationally.
By having the publisher commit towards a huge upfront, it gives an indication that the publisher is willing to heavily promote the book. Sure, one could argue that sunk costs shouldn't matter (and they don't from a rational point of view), but people do care about sunk costs. Committing towards a big upfront indicates a corresponding large marketing budget (as they already spent a huge amount of money to pay the author).
I read through that thing about 10 times before I noticed there was a zero missing from the second advance. Damn order of 10 errors.
@1: This point is raised and countered in the article
Seems like this would be really good for readers, especially readers of already established authors.
If the author's profit correlated more strongly with the upcoming book's financial success (rather than an expectation based on the success of previous efforts), there would be a stronger incentive to tell a compelling story.
@4: I don't think writing works that way. I think writers write the best stories they can, period. Writers don't say, "Eh, I don't need to add more 'compelling' to this story 'cause the readers will buy it anyway." If a story isn't compelling, it's either because you're the wrong reader or the writer failed to attain what s/he was hoping for, or both.
@5: I'm sure you are right in almost all cases, and I didn't mean to be provoking.
I was thinking about the relatively rare case of an author who gets saddled writing endless sequels in a series that he or she has personally grown tired of writing. I suspect you can think of SF series authors or mystery series authors who will admit to this, at least privately. (Of course, the reason they keep writing them is because their readership will pay for them, which kind of makes my argument moot.)
I think that most people get paid for what they did before. The best cashier at McDonalds get paid the same as the others, until they get promoted to manager. That's based on what they did before.
I'm totally gonna write The Unicornians.
I'm a professional writer. When I was starting out, many years ago, I met an older writer and asked him for some advice, expecting him to say 'show not tell' or something like that, and he said 'take the higher advance over the better royalty rate'.
Publishers who pay based on royalties and other subsidiary income find all sorts of ways to delay, defer or underpay. Ask Alan Moore and Dave Gibbons, who were told that Watchmen badges and T Shirts sold weren't 'merchandise' (which they'd get a 10% royalty) but 'promotional items' (which they got nothing for). Ask the original Star Trek cast, who were told they get a bonus when the show went into profit ... and only got it in 1992.
It's easier than ever, now, because so many places sell so many books for less than cover price. There's no direct connection between unit sales and revenue - or at least nothing that can't be fiddled. 'I sold 100,000 copies on a 20% royalty woohoo!' ... 'yes, but 50,000 were to Walmart and they paid five cents a copy, you get 20% of that, here's your $500'. I sold one book to a British publisher where half its sales were in the US, something like 10,000 copies. I earned 17c for the US sales, on the basis that it was share of revenue. On the royalty system, revenue goes from the bookstore to the distributor to the publisher to the author. Authors get what, if anything, is left over.
The admin costs also have to be taken into account - paying an advance that's very slightly more than the book earns is probably cheaper for a publisher than drawing up small checks every six months for three or four years.
The whole system is arbitrary and archaic - based around a seventies model of one territory hardback, then paperback. The cut of the revenue is still calculated as though printing presses are places with massive unionized workforces with inhouse teams of proofreaders - not just printing the file on the email the writer sent them after some freelancer spellchecked it.
All I can use is my own experience, and it's a cast iron fact that most authors I know would take the security of a relatively large advance + lower royalty rate. It's actual money that exists, not the promise of money. The publishers I've dealt with who've paid me good advances have got good sales, the ones that have promised the earth in terms of royalties and rights and future work and stock options and offered a small advance ... well, most of that stuff never even got published, I never saw *any* money.
I'm just going to ask this:
Why should an author keep getting paid over and over for something they've already made? I mean a bricklayer doesn't get paid every time someone's house doesn't fall in? Why should the author?
That said, I've made a good amount off of royalties in a different sector over the years...and I likes it. However, these days, I pretty much do the work for hire thing...mostly because I don't have time to track everything, nor do I want to deal with creative accounting (which if one reads the contracts, are not that creative...everything is written out, but I don't like having to spend another 6 weeks have a lawyer hash out an agreement exactly like the last dozen I had)...and several other reasons.
This works well for the established creative, but I can say, it wouldn't have starting off. I'd guess the popular fiction market also depends on where you are starting off in you career as well.
@8: I'd say that the real answer to this, when flensed of high-minded property talk, unsupportable assertions about the shortage of art that would ensue without it, and other rambling justification is that as a regulatory framework for encouraging investment and production in creative arts, a royalty scheme has a pretty good track record of producing a pretty good variety of pretty good works.
That is, a couple centuries' worth of royalty schemes produced a pretty good creative outcome with a relatively small number of bad social outcomes (crummy lawsuits, rights deadlocks, etc).
Some things have changed in the last 50 years. Technology has raised the social cost of excluding unpaid audiences from creative works (you either have to regulate access to photocopiers or you have to accept a certain amount of violations of copyright with photocopiers). And copyright itself has become simultaneously more expansive and more concentrated: that is, copyright covers larger classes of works for longer and the gatekeepers over commercially successful copyrights have reduced in number to cartel-sized (these are related, as the increase of monopoly power in copyright makes those who hold copyrights more powerful themselves).
Finally, technology has changed the nature of production, by dramatically reducing many of the costs associated with production: pre-1980, giving away 1,000,000+ copies of Down and Out in the Magic Kingdom would have cost several million dollars. Post-2003, it cost nothing. This suggests that there may be less investment-intensive mechanisms for creating and disseminating creative works, which suggests less need for exclusive rights to get the same outcome: a pretty good variety of pretty good works.
Considered as a utilitarian question, copyright looks like this:
"What policy will allow the largest number of people to create the largest number of works that reaches the largest audience?"
Some works struggle to exist without powerful copyright ($300,000,000 movies seem dependent on powerful rights to exclude and prohibit as a means of raising capital). Some works struggle to exist because of powerful copyright (cost of producing an album made from samples: $0; cost of clearing those samples: $infinity, since some of them can only be cleared if you're the giant record label that made the original tracks available).
The place where this debate usually disintegrates into Godwin territory is when copyright maximalists declare the weak-copyright media to be merely derivative, unworthy, amateurish, and bad (lots of it is, but lots of it isn't); or when copyright liberalizers assert that all copyright-flourishing media is trivial, venal, banal and produced for commerce, rather than art (which lots of it is, but again, lots of it isn't).
A practical and realistic approach to copyright reform starts by saying, "Is there a way that will allow as much of both kinds of media to flourish as possible?"
I think there is: create a system of exclusive rights that is limited to "industrial transactions" (so a rival film company can't distribute your $300,000,000 movie; but I can loan it to a friend); shore it up with compulsory licenses (like the century-old mechanical license that allows anyone to record any song on payment of a set fee) where it seems like nothing else will work, and create some common-sense guidelines for what is and isn't fair in the cultural realm that acknowledges that culture and commerce have different norms and characteristics.
Of course, in order to do this, you first have to abandon "property talk," since this kind of lawmaking only makes sense where what you're talking about is a policy with a desired objective (like the policies governing, say, reducing food poisoning by dictating hygiene standards) and not an inherent property right that governments have any basis fooling with.
@#8, A bricklayer makes houses and buildings. How many times are houses and buildings sold within a month?
More importantly, how many buildings are sold based on a bricklayer's proficiency at laying bricks? I mean, A house built with a bad bricklayer wouldn't sell well since it would look like a late-stage Jenga game, but the greatest bricklayer in the world won't do a much better job than the average bricklayer.
Now?
With print media on the cusp of obsolescence?
Isn't that like adding lifeboats to the Titanic at sunrise?
Doesn't higher royalties reduce the publisher's incentive to market the books? Sadly, it seems a lot of people only ever read blockbusters so this is a pretty pertinent issue.
In scenario "Editor 2" the author is trusting that the royalties promised by the publisher actually arrive: many a publisher can, by various means (up to and including just _not paying_ your royalties), screw the author out of royalties.
I like the "editor 2" proposal very much, but one would have to be pretty vigilant as an author or agent to make sure your due royalties actually get to you. And be prepared to sue.
Another way to look at the upfront large advance is that you get this chunk of money and even if you don't earn out you still get the money--you don't pay the publisher back your advance.
From what I read, it's a typical bubble argument. My wife is a writer and deals like these rarely come about in such a bubble... The whole argument is based on not knowing how many copies the book will sell. But not living in a bubble -- if you got offered a $300,000 advance it's because you're a known name, and you've been selling books. Thus, if one pub offers a big advance at a lower royalty rate, then you negotiate somewhere in between -- A biggish advance with a biggish royalty rate. However, from what I've seen that rarely happens because except for tiny publishers (where you won't make that much money to begin with) you're not going to see them budge much on royalty rates.
And you'd have to be crazy (or rich) not to take the advance. Upfront money makes a HUGE difference, you have to wait YEARS to see a royalty (even with a small advance.) Figure at least a year and half (on a fast timeline) before the book even hits shelves and add another 6 months to a year before a royalty statement. Even with agreed upon deal, you have to wait months for an advance (there's still a ton of back and forth, then the check gets mailed to your agent whose bank is going to hold it for a few weeks, then when you finally get it, your bank will hold it for a few weeks... etc.)
A writer making a career doesn't even have to consider these arguments.
I think it'd be good for fans of an author since it would encourage the finishing of books in a series before they die *cough*Robert Jordan*cough*George R.R. Martin*cough* instead of kicking back and swimming in advance money.
Meh? They will still give giant advances as political favors for POS ghost written memoirs that no sane person will read. Screw publishers for perpetuating tyranny.
'A practical and realistic approach to copyright reform starts by saying, "Is there a way that will allow as much of both kinds of media to flourish as possible?"'
The basis has to be 'what's fair'? And that's the problem, particularly as it's easier to point to what's not fair.
The Superman case is an interesting one. Two guys create something that quickly became a success and has continued to build for seventy years. But they signed a contract and got paid. And their contribution for sixty of those years was 'we created the characters those other guys are working with'.
Meanwhile, Superman's owned by Time Warner, who've made hundreds of millions. But who have also invested hundreds of millions in editing and printing and distributing.
The standard contract has an author earning 7.5% of the revenue. JK Rowling made a lot of money from Harry Potter - other people got the other 92.5% of that.
In an environment where *some* people are making money, and in the long term, the author should be one of those people. The analogy isn't with a builder, it's with an architect - if I design a house and someone else builds a million of those houses, the success of the design ought to be rewarded.
To #8 Yeah but a bricklayer only sells a house once. An author can sell millions of books and won't know how many til it hits the market. A fundamentally different market.
Also, a bird in the hand (big advance) is always better then a bird in the bush. Unless you are really, really sure you can catch the bird in the bush.
There are also common circumstantial reasons that make large advances better for authors. For example, it has more power to wipe out debts (especially mortgages) that would otherwise continue to incur interest.
I think the financial situation of the author would have a huge amount to do with which option they would choose. Compare the following examples:
1. Comfortably employed
The author makes a reasonably good living in IT, has some money saved up, and despite some long-term debts (mortgage, etc), is in no danger of being homeless. This is his first novel, and he's willing to roll the dice on the financial side of things, having the luxury of a good job to fall back on in the worse case scenario. He goes with editor number 2 after reviewing the numbers.
2. The starving artist
The author is coming out of a bad divorce, and is working a dead end job, living in a rat-infested hovel with her three small children, all of which need braces. While the potential upside of Editor #2's offer isn't lost on her, she feels compelled to go with Editor #1 to guarantee a rat-less future for her children.
While these are extremes, they are exactly the kinds of situations that people find themselves in when confronted with major financial decisions.
BB forum posts often diss the working man. It's not so much a disdain for craftsmen, as a complete ignorance of everything to do with the blue-collar trades. FYI, it's harder to do a dovetailed sill corner in 6x8 lumber than write an enterprise backup system in perl. I've done both, I'm speaking from first-hand experience.
Take the upfront money. It's a given, sales aren't.
A little late to conversation, but a good existing model for what Cory is describing is San Francisco based Berrett-Koehler. No advances. The royalty rate is 10% on the first 10K and 20% on everything after that, on BOTH hardcover and paperback. In the contract, the author has the right to walk away at any point up to the publication of the book if they are disappointed in any way with how the process has gone. There are other author centric policies as well. Great model for the evolution of traditional publishing.