Publishing Money Myths
Note: This article originally appeared on my blog in June 2008, and then was revised and expanded for the Feb. 2009 Romance Writers Report magazine. Since then, I’ve updated it to reflect industry changes.
Money is a touchy subject for many authors. If an author gives a public “whoo-hoo!” about the money he/she has gotten from writing, it can often be perceived as tasteless bragging. If an author gives a public lament about money he/she’s gotten from writing (as compared to their bills, perhaps) it can be perceived as ungrateful complaining. So, as an author, it’s sometimes best just not to talk about money.
Yet there are a lot of questions about money in publishing, so I’m going to broach the subject. I don’t claim to know everything, but I will share what I’ve found out based on my own experience and the experiences of other authors in the publishing industry. Please note that this information applies more to new authors versus seasoned veterans of the industry.
There are two myths that I frequently come across on blogs, at conferences, or in other places where writers chat and the subject of money is brought up.
Myth # 1: If you’re a writer published in print by a large NY-based house, then you’re making a lot of money. Or, at least, you’ve living off your writing income and you’ve quit your day job.
Very often, this is not true. Again, established authors with solid careers and several books in print often do support themselves writing, but for the new author, things are quite different.
Across the board for fiction in all genres, including both small and large publishing houses, the average advance for a new author for a first book is reportedly $5,000.00. Out of that, if the author has an agent, 15% commission is shaves right off the top. Then, as an author, you’re often encouraged to get a website. The average starting cost of a basic website, if you’re not technically-inclined yourself, is $1,000.00 (and can go way up from there). After that, you have the cost of self-promotion, which can include attending a conference, investing in promotional items, or doing a mailing.
So, what do you have left over? Not much (if anything), and then you have to factor in paying taxes on your writing advance, too. Plus, if you’re intending to write full time, and you don’t have a spouse with health care coverage, then you’re paying out of that advance for your own health care, too.
Still, once your book comes out, you’re getting the big bucks then, right?
Not so fast.
First, your publisher pays themselves back the advance they gave you. Let’s say you’re published in mass market paperback format at $6.99 per book, and your contract reads that you get an 8% royalty on the negotiated sale price of each book (note: book prices and royalty percentages vary within mass market format, plus hardcover or trade paperbacks have different prices/royalties as well). At the $6.99 sale price with an 8% royalty rate, that means an author gets around $.55 (yep, that’s 55 cents) for every book sold. To pay back an average new author advance of $5,000.00, that author would have to sell over nine thousand copies before he or she even begins to earn another dime in royalties on their book.
Now, that doesn’t sound too bad, though. Most new author print runs from large NY houses are at least ten thousand copies, so those houses expect to sell that many books. And some initial print runs are far larger, which means the publisher expects to sell many more books than would cover an initial advance of $5,000.00.
But there are catches.
Publishers tally author royalties twice a year. The first term typically runs from January 1st through June 30, and the second term runs from July 1st through December 31st. So, if your book comes out just a month or two before that term closes, then your first royalty statement will only account for the sales from your release date up to June 30th or December 31st, whichever date is first after your book’s release. Sales numbers won’t be tallied again on your books for another six months, and it takes publishers about three months from the cutoff dates of June 30th/December 31st to get those numbers to your agent or you, the author. The closer your book release falls to the publisher cut-off date, the less likelihood that you will have “earned out” your advance when you receive your first royalty statement.
Let’s say that you’re one of the authors whose book came out several months before the cut-off date, or came out really well and book stores were ordering your entire print run for their stock from your publisher. You’d think you’d be getting a check with that first royalty statement, wouldn’t you? Yet there are three words in publishing every mass-market author knows and loathes: “reserves against returns.”
What does “reserves against returns” mean?
It means that even if your entire print run has been shipped to book sellers, your publisher isn’t sure how many of your books will be returned to them unsold. So, they hold back a percentage of your royalties to cover their liability if a large number of your books come back unsold. What’s this percentage? For mass-market paperback romance, anywhere from 30% to 60%, depending on how close to the term’s end your book came out, what genre you’re in, whether this is your first book, how well similar books like yours have been selling or being returned, etc. There’s a formula – don’t ask me what it is – but there’s a formula publishers use to determine how high of a percentage they will hold back.
So, your publisher holds 30-60% of your shipped/sold books as reserve against returns, then deducts your advance from the remainder of the money. Those reserves against returns don’t get released until at least the next royalty period, either, which, as you know now, is six months away (plus two months processing time). Some publishers hold it longer than one royalty period, so it could be over a year before you see any of the money that your book made before the closing of the first royalty period.
Now, if you’ve gotten a multi-book deal, you could get more money in the interim when your publisher accepts the second or third book in your contract. Usually, contracts are set up where X-amount of money is paid on signing, and the remainder on acceptance of any subsequent books (this can vary, so I’m speaking only in general terms). Therefore, as you wait for that first royalty statement to actually have some dollars attached to it, you can still receive money on the remaining books in your contract once your publisher has deemed them acceptable. If your publisher has decided to put out one book a year with you, for example, then that extra remaining advance money will probably just get sent to you once a year as you fulfill the terms of your contract.
It’s true, some new authors are very fortunate by receiving large advances on their first book(s) to be able to quit their day job and take that advance to cover their bills for about the next two years (before you scream, “Two years?!”, remember, it takes an average of a year from getting a contract signed to having a book on the shelves. Sometimes up to two years. Then, an author will probably have wait another year – until their second royalty statement – before they get any money from sales of that first book. Maybe more, if the advance was big, because the more a publisher pays you up front, the more you have to pay them back before you earn any royalties).
So, even with a contract from a large NY house, and even if it’s a multi-book contract, most authors still can’t afford to quit their day jobs right away.
Therefore, to any people thinking, “I’m going to hold off getting a job until I see whether or not an agent signs me,” I say to them, get the job. It takes time to find an agent. Then, the average length of time to sell a book by a new author is a year. Then, it takes a couple more months from the time a deal is agreed on until the time an author gets their first advance check (are you noticing a trend?? Publishing is slow).
If you’re one of the extremely lucky few who get an agent right away, get a sale right away, and get a huge advance, then by all means, quit the day job and many congrats to you. Most of the time, though, authors need another source of income to support themselves while they wait for their books to earn out their advance, get past their “reserves against returns”, and have that royalty statement with a check attached to it finally hit their mailboxes. Then, authors repeat the same waiting process for the next book. This is why a lot of authors don’t quit their day jobs until they’ve had a couple books sell well enough to receive royalty payments on them, and with more contracted books in the works, too.
What about e-books?
It’s normal in e-publishing for the author not to get an advance. Some e-publishers do pay an advance, but it’s usually far smaller than the standard 5K advance print publishers pay. As compensation for the small or no advance, most e-publishers give the author a higher royalty percentage, however. For example, the average royalty percentage for a single title e-book can be 30-50%, versus the 25%-of-the-net royalty an author will receive from their single title e-book through a traditional publishing house. So over time, if a book sells well, an e-author could make the same money, or more, as a print author. Also, in e-publishing, royalties are calculated quarterly or even monthly, whereas the standard in print publishing is for royalties to be calculated only twice a year. Furthermore, since their start-up costs are smaller than traditional print publishers, e-publishers have been known to take more risks with new or unknown authors.
As with any form of publishing, there are drawbacks to e-publishing as well. Many e-publishers do not invest as heavily in publicity for their titles as compared to traditional print publishers. The market for e-books has grown tremendously in recent years, but print isn’t dead yet, and it helps to have a foothold in each market versus only one. Plus, writer beware on choosing an digital-only publishing house. There are many horror stories about e-publishing houses starting up, signing a slew of authors, and then folding with royalties unpaid and extended legal wrangling on the behalf of authors to get their rights back. E-piracy can also hit e-only authors particularly hard, since those authors are competing within an all-electronic market versus an electronic market and a print market. Authors also want to pay careful attention to their contracts in e-publishing, since many e-publishing contracts include print rights to a book, even if the e-publisher isn’t offering printed formats at that time.
Even with its drawbacks, there are authors making a good and steady living in e-publishing. Furthermore, many bestselling print authors first started out as e-authors, such as Cheyenne McCray, Lora Leigh, and Mary Janice Davidson.
What about self-publishing? I hear you don’t even need traditional publishers anymore.
Self-publishing has indeed boomed in recent years, with many self-pubbed authors hitting bestseller lists alongside traditionally-published authors. However, for every success story, there are tens of thousands of writers who rushed to self-publish thinking it was their Golden Ticket to Wonka-land, only to find out it was an arduous track to Obscurity-ville instead. Not that this doesn’t happen with traditional publishing, too – it does. That’s the whole point. There is no magic fast lane to success with publishing, whether self-pubbing or traditional. So if you’re interested in self-publishing because you have the time, savvy, and energy to devote to being your own marketing team, publicity team, art department, editorial staff, tech support and distributor, then yes, it’s a viable alternative to traditional publishing. But a word to the wise: Don’t fall for the fallacy that it’s “easier” to self-publish. It’s harder, and if you don’t take my word for it, perhaps you’ll listen to self-publishing superstar Amanda Hocking here and here. I’d also point you to author Chuck Wendig’s funny, informative post comparing the pros and cons of self-pubbing versus traditional publishing here so you can better decide if this is the best path for you. For some people, it will be.
If, however, you’re looking into self-publishing because those stoopid New York houses hate original material and wouldn’t know good writing if it bit them in the butt, plus no one’s going to make you revise your perfect, precious gem of a story…well. I’d say good luck, but I’m not optimistic for you.
Myth # 2: You’ll never make ANY money as an author.
Despite some emphatic statements by people saying that seeking a career as an author is akin to taking the fast lane to Broke-ville, or not to pursue a writing career because nothing but poverty and disappointment await, there IS still realistic hope for supporting yourself as an author. Getting a book published should never be someone’s idea of a get-rich-quick scenario – especially in this economy – but publishers are still buying books. They’re still willing to take chances on unknowns, too, and in rare but notable cases, they will shell out some pretty impressive bucks on a first book. For example, Stephenie Meyers (Twilight) and Melissa Marr (Wicked Lovely) both sold their YA romance debut novels in “major” deals. Even if a debut book isn’t sold for a huge advance, there are still pretty respectable advances given on a regular basis for well above the average new book advance of $5,000.00. Therefore, some authors will have significant amounts of time shaved off their wait to receive financial stability from writing.
Also, as an author, you can sell books in one genre, and then also sell books in another genre (contract restrictions may apply). There are quite a few authors with books/series’ being published in different genres at the same time. So, even though that makes an author twice as busy, that author is also getting twice the number of initial advances, twice the remaining advances on book acceptances, and in the future, royalties from two sets of book contracts versus one. Needless to say, this doubling-down with genres can have a big impact on the author’s ability to support themselves financially by writing.
Then, if your contract was for English-speaking rights only, some authors can also have foreign rights purchased on their novels. This is where other countries buy the right to translate and sell a novel in another language/country. Advances are paid to the author for these foreign rights, and if an author sells in multiple countries, at times, the foreign rights advances can equate to more than the initial publication contract. If an author sells through their foreign rights advance, a royalty percentage is then calculated as well.
Other sales after the initial sale of a book can include film rights and audio rights, if a publisher did not buy all-encompassing rights when they first acquired the novel. If a book becomes a huge hit and films are made from it, merchandising may earn money for the author as well.
Most of the time, authors have to work their way through a few books and a few years before they start to really see the fruits of their labors. Still, there are still plenty of authors who do reach the point where they can say buh-bye, Day Job and support themselves by writing. Plus, once a book earns out its initial advance, then every copy sold thereafter becomes residual income for the author (unless/until a book goes out of print). So, an initial sale for a book might not be the end of the advances for that book, in some cases. Again, contract clauses may vary.
Yes, there is still career potential in publishing. It’s slow, it’s hard, and it can be uncertain, but it exists. There are many authors supporting themselves by writing to prove it. Aspiring authors should have cautious optimism when it comes to the topic of money. Don’t expect a windfall of cash right away, because that’s not realistic, but with luck, work, and time, the dream of living off your writing income could become your reality.
For all those authors at that point, congratulations, whether you came by it from an unusually big initial advance, or from waiting until your career built to that level several books later, or some other writing-related circumstance. It’s worth a hat-toss in the air any way you slice it. And whichever stage of the publishing career you’re at, authors, keep those books coming! How boring would life be without good books to read, right?
Aspiring authors, keep trying! Every successful, full-time author first started out as an aspiring one.
Jeaniene Frost