Dump The Advance, Watch Authors Everywhere Go Catatonic

March 2nd, 2006 · 6 Comments
by Booksquare

We always appreciate it when someone comes out swinging, ready to fight the traditional publishing model. Lynne Scanlon, contrarian and cranky, has decided to enter the fray with a radical suggestion: dump the advance/royalty model in favor of cash-in-hand. As she rightly points out, contracts don’t favor the author (rule of thumb: the contract always favors the party who writes it):

What’s an advance against royalties, really? It’s a loan. Something you have to pay back before you see a dime more. Yes, there is the possibility that enough copies will be sold at high enough prices and you’ll receive the maximum royalty, and you may actually manage to “pay back” that loan, but the likelihood is slim, slim, slim. And that’s the way publishers like it. The contract is designed to fill the coffers of the publishing house, not the polka dotted, porcelain piggy bank of the author. (Emphasis Scanlon’s)

Scanlon suggests that a better model is a work-for-hire approach, where you essentially sell your work to the publisher. In theory, this sounds great. You get lots (defined as you will) of money; the publisher gets a completed product. Fine. Everyone’s happy. Except the publisher who is upside-down until the distributors start cutting checks. If it is indeed true that most books don’t earn out their advances — and one must consider that today’s royalty methodology isn’t exactly conducive to said earn-out — then publishers could argue the case for commensurate flat payments. Any and all analysis of true P&L is in the hands of the publishers. If you can show us an author who knows the true cost of his or her book versus the true earnings, wow, that’s someone we want to lunch with.

On the other hand, authors have negotiating power in that publishers need product. And today’s market includes more opportunities for authors. You don’t have to play within the traditional publishing structure. Given the extended lifecycle of the publishing process, having a decent amount of cash in hand (ING does offer some fine interest rates, you know) is certainly a comforting thought. Sure beats waiting for those royalties from Russia to dribble in — it is a well-known fact that royalties refuse to make the trek across Siberia in the dead of winter.

Still, Ron Hogan at GalleyCat isn’t so sure this is great advice:

It’s certainly an interesting theory, and I’m sure I’m not the only one who’s not 100% convinced. I’ve written several books for hire, as it happens, and while I’m proud of the competent work they contain, I’m still proudest of the book I published last year, because I “own” it in a way that doesn’t apply to the others.

We’re less convinced than Ron — maybe it’s the part where we have a hard time seeing that this would work, financially, for authors. At the risk of stating the obvious, until a book has completed its life-cycle, you don’t know how much it will ultimately make (you being the author who has to make a decision on what constitutes reasonable compensation). Thus any flat payments would be best guesses, and while we do not profess to possess the mind of an accountant, we do realize that businesses will always err on the conservative side. Celebrity biographies, notwithstanding.

Savvy agents won’t stand for this type of arrangement, especially if it leads to less money in the long run. It isn’t hard to imagine a scenario where the author gets a flat payment and then royalties after a certain threshold (like, oh, earning out said flat payment). Which, of course, would lead to various negotiations until the end result looks more like an advance against royalties than anything.

That being said, the flat payment approach certainly might be viable in certain circumstances. Publishers could realize some savings due to decreased overhead. Authors could realize additional income due to better timing of payments.

File Under: The Business of Publishing

6 responses so far ↓

  • Alex Hutchinson // Mar 2, 2006 at 1:26 pm

    The old publishing models are being overthrown bit by bit for new small business works that are run by and favor the author. I’ve had to do it myself, that’s why I started Suburban Fiction.com. I received an avalanche of requests for how new writers could get started and what they would say once they did. The thrust of this new economy is very strong.

  • Joan Kelly // Mar 2, 2006 at 3:30 pm

    Are there any business models out there that can help me calculate how much it’s going to cost/earn me in the long run, to be in as much denial as I am about the prospect of not earning out my advance $ with book sales?

  • Booksquare // Mar 2, 2006 at 8:31 pm

    Alex, I think authors are gaining negotiating power. It’s amazing how much opportunity there is if you’re willing to take a few risks.

    Joan, I am not aware of a model that is publicly available (though I haven’t actually looked that hard). That sort of thing, the projections, are generally Trade Secrets. Also generally a really complex spreadsheet done in really tiny fonts. Publishers don’t give out advances with the belief that they’re not going to earn out (see exception: celebrity bio). They do models and projections and Hold Meetings to come up with an advance that will at least approximate a breakeven. Historical precedents come into play, and I believe (don’t quote me on this), the weather matters.

    So you don’t have to worry too much. It’s way more fun to stress over writing the second book. I understand that it’s a great way to keep your nails short and ragged.

  • SusanGable // Mar 3, 2006 at 7:37 am

    I don’t know that I see authors as gaining negotiating power. At lot of recent discussion I’ve seen on a list of multi-published genre novelists seems to indicate that publishers are moving BACKWARD in the things “granted” to authors. For example, there’s been a new influx of basket-accounting (where an author with a 2 book contract sees those books tied together – receiving no money on the 2nd book until the first book has paid out the JOINT advance) and that publishers are also moving towards paying the final portion of the advance no longer on “receipt and approval of the ms” but paying the final portion (perhaps a third of the advance) upon publication. Which means that payment (I don’t look at it as a “loan” – it’s a payment. It’s hopefully a partial payment in that the author will earn out and make more.) stays in the publisher’s pocket even longer. (While more writers who had previous at least been eking out a survival living go back to working day jobs because they can’t afford not to anymore.)

  • Joan Kelly // Mar 3, 2006 at 2:07 pm

    That’s how my advance was split up – one third on signature of contract, one third on receipt (by publisher) of manuscript, one third upon publication. Strangely, the first two payments took a while coming through (not even close to being when I actually turned the manuscript in, for instance, which I know is normal), but the third one actually arrived in my mailbox on the very day, February 14th, that my book was officially “released.” (Even though it had actually been out in stores and for sale on Amazon for while before then.)

    I’m on board with anyone who wants to put an end to me having to worry about a day job. Viva Susan Gable.

    And also, thanks for your reply up there, Booksquare.

  • Booksquare // Mar 5, 2006 at 10:09 am

    Susan — I think the problem is that most authors look at the New York publishing model as the number one option. And, in their defense, it is the most money and exposure. So they’re less willing to take a stand (no, I demand a higher royalty for electronic rights or I’m taking my book elsewhere). But if you look at a publisher like Ellora’s Cave, there are authors who are, in romance terms, doing as well or much better than print-published authors. Authors who regain their rights also have greater leverage.

    You’re right than an advance isn’t technically a loan (though in rare cases publishers can and have demanded repayment), but rather good-faith prepayments of future royalties. I know it’s hard to defend major corporations, but from your perspective (because ultimately you only get paid based on your book), your publisher advances the royalties and all associated costs. It all works out because there’s a constant stream of revenues coming in-house, but I can see why a publisher wants to hold on to the money as long as possible (even while I believe authors should be fighting tooth and nail for more frequent accountings and more aggressive releasing of reserves — especially Harlequin authors who have shorter shelf lives).

    The publishing contracts are not designed to benefit authors — they are designed to benefit publishers. It’s the first thing I learned about contracts. The second thing I learned was they have a lot of words