The Royalty Advance
We call it the advance and it can range from $1 all the way into millions of dollars. Many are in the thousands of dollars range. With all the other changes that are taking place in the publishing industry, publishers are messing around with the advance as well. Not that long ago, Chip MacGregor was complaining about Random House wanting to pay the advance a year after the book releases
Previously, I have said I don’t like the concept of the advance because it puts the author in a position of owing the publisher. If the book doesn’t earn out, the author will be unable to repay the debt. That is if you view the advance as something the publisher pays the author in order for the author to live while completing the work. We could also look at the advance more like an earnest payment. By paying an advance, the publisher is promising to publish the book, but if they don’t the author walks away with the earnest money, much like when an offer is made on a house people put down earnest money as an assurance to the home owner that the buyer will complete the purchase.
The author with a contract is in a difficult position. Before signing, the author had the potential to sell his manuscript to another publisher, but now it is off the market with only the hope of royalties that may never come because the publisher can pull the plug at any moment, based on current market conditions or whatever. The advance, then, is the incentive the author has to place herself in this position.
Comments
Again, information is being provided here by someone without sufficient knowledge of how publishing works.
Perhaps, rather than owe, you would prefer that I had used the term indebted. You’re absolutely correct. The author is not contractually obligated to pay back any part of the advance, even if the publisher never sells any books. That aspect of it is what makes it more like an earnest payment, but there is another way to look at it.
Publishing is a partnership. The publisher provides several services and the author provides a well written manuscript. Going into this partnership, the publisher and the author reach some kind of consensus on how many books they think they will be able to sell and the publisher pays an advance that they believe is within the number of books they will sell. Let’s say they expect to sell 50,000 books and they pay the author $50,000. But something happens and they only sell 3,000 books. The publisher is now eating a huge loss and the author has $47,000 that he didn’t earn. Legally, he is not obligated to pay it back, but is that the right thing to do?
I think it was Michael Hyatt who mentioned the other day that publishers have a tendency to look at books that don’t earn out a large advance as failures, even though they have sold fairly well, say 10,000 books or whatever. So, even if you aren’t concerned about the ethical side of it, there is also a business side. If the publisher thinks your book is a failure because it hasn’t earned out the advance, it isn’t very likely that they will be anxious to publish your next book.
I hope that explains things a little better.
Timothy
I'll say it again: the author does NOT owe the publisher any part of the advance even if the book doesn't sell it out. The publisher has paid the author for the rights to the book--the advance forms the mininum of that payment. It's not a loan.
The one thing you got right is that the pub may not be so eager to publish a second book. In fact, the pub may even relinquish its option if the second book is an option book.
I strongly suggest you hang out more often at blogs of reputable agents, which you appear to be doing, and then you won't put out misinformation such as this.
If I understand you correctly, you are saying the author never has to return any money to the publisher. We are agreed on this.
This blog post deals with a different concept.
Timothy