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Part Two--Xposted from my personal journal....

So your book is on the shelves.  Let's talk about promotion and sales!  Advances and royalties!  Only not in that order.  Once I got into advances and royalties, it threatened to turn into a runaway freight train, so there will be a Part 3 to this blog tomorrow to finish up with promo and sales, along with questions I've been asked over the past couple of days.

First, I'm going to talk about how an advance works (and remember, each traditional print publishing house will be slightly different, but this is the general model that most of them work off of):

Your agent calls you and tells you that you're going to be getting an offer for a book/multiple books—she's negotiating with them now.  Let's call the imaginary publisher Books Books Books, Inc.  This is your first contract, and let's imagine it's a mystery series.  Big bucks swim in your eyes, making you salivate.  The next day (or two days later) your agent calls you and says, "Congratulations—I got you a three-book contract!"  You're ecstatic, screaming in her ear. 

And then she says, "You're getting fifteen thousand dollars!"

You scream again and say, "Per book?"  And then the bomb drops.  Your agent says, "No, for all three."  But you're thrilled, even if you have sticker shock.  You're going to be published—and that's what counts.  And fifteen thousand dollars, well, it's coming at the right time—you need the money!  Over the next couple of months you can pay off a few bills, buy that new mattress you need.  Right?

Think again.

Here I present the way advances and royalties work--in general.  Books, Books, Books offers you fifteen thousand dollars for three books.  But you won't see 15K up front.  You'll be lucky to see 7500K up front.  In fact, the way the industry's headed now, chances are good you'll only receive one third on signing the contract, and then the rest of the advance will be split in one of several ways.

Advances:

Two scenarios, both industry models: 

1) On signing (and that means 1-2 months AFTER you send back the signed contract, which may take 1-3 months to even SEE after it's been agreed on): you'll receive a check from your agent for 5,000, minus her standard 15%.  Which means you'll get a check for $4,250 because your agent will take out her commission before she sends you the money.  Remember—there's been no income tax taken out of here, no social security payments, nothing.  This is gross, not net profit.  Come April 15th, you're going to have to ante up for the IRS so save all those receipts and some cash back.  You'll want every deduction you can legally claim.
 
During the time the publisher draws up the contract, your editor will most likely schedule delivery dates on the books with you.  Let's say the actual book they bought was Murder Murder Me-MMM.  You've already written it, so (as I said in Part 1) next step is that you'll go into revisions for that book with your editor.  You still have two books on your contract to write (Murder Murder You-MMY, and Murder Murder Mugsy-MMM).  So your editor schedules delivery and release dates:

MMM—you've delivered the manuscript already as of 3/1/08.  Release date 8/1/09
MMY—outline due on 5/1/08, manuscript due on 2/1/09, release date: 5/2/10
MMM—outline due on 3/1/09, manuscript due on 9/2/09, release date: 2/2/11

So your agent sends you the payout schedule.   The publisher is divides up the remaining 10K advance this way:
$1000 on acceptance of outline of MMY  (5/1/08)
$2000 on acceptance of the manuscript of MMY  (2/1/09)
$2000 on publication of MMY (5/2/10)
$1000 on acceptance of the outline of MMM (3/1/09)
$2000 on acceptance of the manuscript of MMM (9/2/09)
$2000 on publication of MMM  (2/2/11)

Remember, you'll be receiving those amounts less your agent's 15%. 

And: no, I'm not joking.  I've had contracts divided out this way.  And often, it takes a month or so when your editor gets the manuscript for them to read it and approve/accept it. 

Still with me?

A second industry standard is for the advance to be divided up this way:
Same one-third up front.
Then:
$2500 on acceptance of manuscript of MMY
$2500 on publication of MMY
$2500 on acceptance of manuscript of MMM
$2500 on publication of MMM

Again, you're not exactly rolling-in-the-green.  For a single title, it will be divided into halves or thirds as well.

As your career grows, IF you sell enough for the publisher to want to keep you on (and trust me, people—I know writers who've written 30-50 books and they're still worried about getting new contracts—there's NO guarantee), your advances should increase.  Some writers will never see more than 10K a book.  Others will see extremely large advances due to their writing/books/series becoming extremely popular.  Promotion is your best buddy to reach that stage, but as always—if you don't write a book that grabs the reader and keeps them coming back, all the money in the world that you pour into publicity won't help you.

Royalties:

Take a deep breath, I know you're crouching under the table, begging me to shut up by now.  I know you'd rather ignore all this and just write and get handed a paycheck.  I know it sounds dismal and yes, it can be, at least for the first few years.  I know this, it's true, but this is the reality of the business and if you want to make a career out of writing, get used to dealing with it and learn, because otherwise you can end up either very disillusioned or potentially screwed over if you don't plan out your budgets.  It really helps to have a working spouse who supports your writing habit, folks.  If you don't, then you'd better write a lot of books—and a lot of writers I know, do.  Including me.  I have a working spouse but I have no intention of just making a marginal living off 55-70 hours of work a week.

And yes, there are exceptions to the rule, where you blow away everybody with your first or second book and hit very high on the lists.  The exceptions do happen, but believe me, they're rare, and it doesn't always happen a second time.  I know a lot of writers.  I know a lot of writers who've been writing for years but they don't make a good living off of it.  And I know a number of writers who make a great living off their work, but it took them a few years to build a loyal audience.  I also know a very few exceptions who made big bucks off their first or second book.  You can't predict what's going to hit and what isn't.

Okay, so how do royalties work?

In your contract, there will be a stipulation as to how much you'll make in royalties.  Now bear in mind, the average book sells less than five thousand copies, especially in hardback.  Paperback mass market really is a good way to start off because you are likely to sell a lot more books that way.  Trade paperback, well—it's somewhere in the middle.

Say your mysteries are coming out in mass market paperback, for which the stores will charge $7.99 a book.  If you have a standard royalty agreement you'll receive anywhere between 6-8% for the first 150K copies sold.  Let's say you average out at 50 cents a book—common enough.  To make back your advance—because until your work pays off it's advance you won't see another cent on the book—your book has to sell approximately 10,000 copies to make back the $5000 advance per book. 

Now, here's where it's a good thing to have a smart agent!  They'll do their best to keep you from being slapped with a joint accounting clause in your contract.  Joint accounting clauses suck.  If there's one in your multiple book contract, it means the publisher can withhold royalties on all books until ALL the advances of the books under that contract are paid off.  Get it?  If your first book sells 15,000 copies, 10,000 go to paying off the advance for that book.  But, with joint accounting, instead of making $2500 royalties after the book's advance is paid off, that 2500 would go toward paying off the advance on the second book, which may not even be out yet.

Still with me?  I know, I know, it's confusing.  So, let's say you've got a good agent, you have no joint accounting, and your first book has a first print run of 20,000 and sells 15,000—which is good.  That's a 75% sell-through rate (very important to keep the sell-through rate high, meaning at least around 60-70%).  That means that your book paid off its advance and there are 2500 lovely dollars in royalties there.  Does that mean you'll see that much at your first royalty check?  Um…no.  Not necessarily.

Royalty Periods:

Most publishers pay royalties twice a year—usually in April and September or May and October.  The royalty periods run from Jan-Jun, and July-Dec.  Meaning all books sold during Jan-June count toward your September royalties.  And all books sold from July-December count toward next April's royalties.

But, the publisher has a way of providing themselves a cushion against 'returns'…this is called 'reserves against returns'…and what it means is that—through some complicated equation that nobody in the industry seems to understand and that never seems fair—they withhold a percentage of your royalties in case the bookstores return books.  And bookstores can return books at any time.  Seven months down the line the bookstore can strip your covers and return them, and bingo, those are returns. 

Now, I believe there is some law (don't quote me on this) which states that they have to turn over the reserves after a two year period of holding them.  Maybe it's just in my contract.  Whatever the case, there should be a timeframe that limits the amount of royalty periods the publisher can withhold those funds.  And most publishers don't hold them that long.  However, I can tell you that I've seen over half my royalties held in reserves before.  It kind of sucks.  Eventually I'll get the money, unless returns are huge and they haven't been huge on this new series, however—meanwhile  the money sits in the bank making interest for the publisher.  And no, you don't get the interest.

So you'll receive a royalty statement twice a year, and, if your books sell enough to pay off their advance—a check (minus your agent's 15%).  Here's where the backlist is golden—as long as your books stay in print and sell, if they've paid off their advance, you'll be getting royalties on them.  I still get royalties off my second book, over ten years down the line from when it was published.  Not a lot, but enough to make me smile. 

Now, I'm sure you know this but to reiterate: you will NOT make any money off used books sales from used book stores. 

And your royalty rates will differ for library sales, large-print sales, foreign rights sales, hardcover sales, e-format sales, audio-format sales, and so forth.  Which is why, again, you are best served by having a knowledgeable agent who understands this stuff.

To give you an idea of the legalese, my contracts run about 12-14 single spaced, tiny print, legal sized pages.  Yes, I read through them before I sign them and it's nice because I can see the parts where my agent negotiated changes on—they do strikethroughs.  And trust me, I'd never even THINK to try to argue those points myself because bluntly put, if I hadn't asked her about them, I wouldn't have understood what they meant.

This has been long, so I'm going to stop here and in part 3, I'll tackle promo and sales, along with reader questions. 

I know I've probably left your head spinning.  Just remember: this is a business.  A competitive one.  Publishers aren't there to be your friends—they're there to make money off your work and unless your work sells, you're looking at a bleak future. 

You need a good agent or literary lawyer in your corner, looking out for your best interests, and friends who are authors, with whom you've created mutually supportive friendships and connections.  Friends who are in the business can help you when nobody else understands what a pain this industry can be, especially when--like me--you're in the "I write to stay sane" camp. 

Yasmine

 

Comments

( 23 comments — Leave a comment )
shay_writes
Feb. 16th, 2008 09:32 pm (UTC)
Thank you!
melissa_writing
Feb. 16th, 2008 10:45 pm (UTC)
Thank you, Yasmine.

ADD ON NOTES:
And sometimes advances are broken into fourths . . .

And subrights (what follows selling World Rights & the publisher selling trans rights overseas) adds a new & special layer of fun ;)

(Are you going into subrights, Yasmine? If not one of us could do so . . . b/c I must say that part was confusing to me upfront, & I've been glad to answer Qs on it for other writers since then).
yasminegalenorn
Feb. 17th, 2008 12:23 am (UTC)
Melissa, I hesitate to get into subrights because, while I've got foreign sales and large print sales and ebook sales, I'm still not terribly clear on them, at least not enough to feel comfortable trying to explain them to others. This was headache enough! LOL...Maybe you could do this, or another author?

I'll tackle some sales and promo advice tomorrow, and other authors who've dealt with marketing already can join in on the comments thread.
melissa_writing
Feb. 17th, 2008 05:31 pm (UTC)
I did so in my LJ & will x-post here.

MM
amon_raven
Feb. 16th, 2008 10:47 pm (UTC)
I agree it's great of you to take the time and spell this out for us who don't know it. You have made it quite clear and honest.
anywherebeyond
Feb. 16th, 2008 11:22 pm (UTC)
Thank you so much for this Yasmine, it's been so illuminating!!

-Saundra Mitchell
mdhenry
Feb. 16th, 2008 11:25 pm (UTC)
Good stuff and dead on the mark as far as I've seen.

Thanks!
yasminegalenorn
Feb. 17th, 2008 12:24 am (UTC)
LOL, oh Mark, after twelve years of dealing with contracts, I hope I've got it on the mark!

Yasmine
johnlevitt
Feb. 17th, 2008 12:26 am (UTC)
An excellent rundown. Two small points -- there are a few publishers, such as Tor, who insist on joint accounting (basket accounting) as a non negotiable contract point. It does't matter how good your agent is, unless you are a bestselling author with huge clout. Which sucks.

And contract language often provides for a reserve against returns for "a reasonable time." An agent should insist on a time frame, but again, the reality is if you're a debut author, what are you going to do? Turn down an offered contract from Tor or Del Rey or Harper Collins because you don't like their reserve policy or accounting practices?

Not gonna happen. I only hope that if you are one of the few who strike it rich, you remember your early terms and set some conditions yourself.

Great post, though, and a clear and accurate explanation.
yasminegalenorn
Feb. 17th, 2008 12:38 am (UTC)
Unfortunately, yes--a new author is likely to get the short end of the stick even with a decent agent, with some areas of the contract.

And yes, publishing houses, and even imprints within the same house, will vary in what you can negotiate and what you can't.

I'm lucky--I've got a great agent (I'll be doing an interview with her later this month) and I'm with Berkley and so far, have avoided the joint accounting crap. However, they've got me firmly tied into options clauses, especially the more popular my work has become. I get it--I do understand their outlook on that--but it's a double-edge sword.

Yasmine
atateatarin
Feb. 17th, 2008 01:55 am (UTC)
These posts are brilliant, Yasmine! Do you think it would be much different over here in the Land Down Under or relatively the same? I know the agent market over here is very different at least (I counted four agents/agencies, only four - nationwide - that are both accepting submissions this year and will take fantasy. Maybe I'll have to query on the other side of the pond XD).

Sorry, replying to comment, I wanted to ask - what's an 'options clause'?
yasminegalenorn
Feb. 17th, 2008 02:55 am (UTC)
I honestly have NO idea what it's like for other countries. Canada, I could find out--I have friends who are in Canada, but I'm not about to fathom a guess for other countries.

Options clause: the publisher has first option to read your next submission before you approach any other publishers (the contract should stipulate if it's only book length or if it includes other lengths like novellas). If they make an offer and you don't take it, you can't sell it for less than what they offer to anybody else. There's a definite time frame that should be put on options clauses--30 to 45 days usually. If they don't make an offer in that time, or say they don't want it, you're free to take the work somewhere else.

Yasmine
jer_bear711
Feb. 17th, 2008 03:14 am (UTC)
What a great rundown, Yasmine. Thanks for taking the time to do this series.

One small note about taxes: don't wait until April 15 to pay them. Pay quarterly estimated taxes, or the IRS will hit you with a penalty, plus interest on the money you owe.

Paying quarterly also helps with budgeting--the money comes in, and then it goes out within a few months, rather than a year or more later. Cuts down on the temptation to spend Uncle Sam's money.

--Jeri Smith-Ready
yasminegalenorn
Feb. 17th, 2008 04:03 am (UTC)
Actually, that depends--I never wait till then to turn them in, but until last year, my accountant has been having us pay annually. Of course, my husband and I file jointly and he's not self-employed, and we have other income/deductions, so I just pile it in his lap and let him figure out the best route for us. However, this year, I plan on switching over to estimated taxes quarterly because, well, my income went up and it will just be so much easier to see it go out every quarter than one big jump.

Yasmine
yasminegalenorn
Feb. 17th, 2008 04:13 am (UTC)
...so I just pile it in his lap and let him figure out the best route for us

My accountant's lap, that is. I figure up all the receipts, etc, gather all the info, and send everything to him.

Yasmine
jer_bear711
Feb. 17th, 2008 05:47 pm (UTC)
I'm still my own accountant, with the help of TurboTax. I don't think hiring a professional would save me much time, because in the time it took me to get everything organized for the accountant, I could've just done it myself.

Then again, I'm the kind of person who, if she ever hired a cleaning service, would clean before they came over. ;-)

However, if I thought an accountant would save me money (even after their fee), I'd hire one. Are they very expensive?

Jeri
yasminegalenorn
Feb. 17th, 2008 06:12 pm (UTC)
Honestly, I pay about $200 every year for him to pull everything together--and his fee is deductable the next year. There are forms I never heard of that he fills out (which would probably get me into trouble if I tried to do it myself). And one plus: since I deduct for home office, etc., if the IRS ever gets snippy, I've got "people" as the commercial says who will help me field the problems. I do spend a full day tallying up receipts, but I've developed a system to help. I took a binder, got a bunch of those zip-envelopes (the plastic see-through ones), put them in and labeled each one for what kind of deduction (postage, supplies, computer hardware--my husband's a software dev/tester so his computer equipment can be deducted too and I get a new computer every couple of years, travel, professional fees and conference fees, etc....then about eight times a year, I take what receipts I've gathered till then, and file them in the envelopes. Takes just a few minutes and by the end of the year, everything is already sorted and I just have to get busy with my ten-key).

I just don't trust the tax programs to figure out all the different things we have--and now that I have a small side-business open, there's another set of taxes I'll be doing.

Yasmine
jeanne_stein
Feb. 17th, 2008 01:52 pm (UTC)
Great column-- I think your last paragraph sums it up-- you really do need a good agent or lawyer.

Thanks for taking the time to post this.

Jeanne
silent_sybil
Feb. 17th, 2008 01:55 pm (UTC)
Thank you for doing this! It's really good to have these things explained (best to go into it with eyes open :)). Looking forward to the next installment!
(Anonymous)
Feb. 17th, 2008 04:02 pm (UTC)
This was awesome reporting, Yasmine. Thank you!
I'm looking forward to part 3.

Maria
www.mariazannini.blogspot.com
jackiekessler
Feb. 17th, 2008 04:16 pm (UTC)
WOW.

This is terrific stuff, Yasmine. The money part is utterly terrifying to me. Then again, I can't even balance my checkbook. This is why (A) I have an excellent agent and (B) I have an excellent husband. :)

Everything you said is important. But I think this part is crucial:

"Come April 15th, you're going to have to ante up for the IRS so save all those receipts and some cash back. You'll want every deduction you can legally claim."

*** YOU SHOULD DO ESTIMATED TAXES, FOLKS. Seriously. Yes, it's (a lot) of money up front. But it's going to save you even more money come April. Make sure you SAVE FOR TAXES. And doubly make sure you SAVE YOUR RECEIPTS AND MAKE YOUR DEDUCTIONS.

If an agent is the most important business parter a writer could have, an accountant is a close runner up.
seaheidi
Feb. 17th, 2008 06:09 pm (UTC)
Thank you!
The royalties part still has my head spinning a bit, but you explained it very well.

Really appreciate the info. =)
seaheidi
Feb. 17th, 2008 06:09 pm (UTC)
Thank you!
The royalties part still has my head spinning a bit, but you explained it very well.

Really appreciate the info. =)
( 23 comments — Leave a comment )

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