Business Realities for the Beginning Writer

DavidBCoeDavidBCoe
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Last week we posted about creating first impressions and doing what we could to interest editors and agents in our work.  I’m not sure where Faith, Misty, and Catie were planning to take this discussion this week, but I thought I’d jump ahead to an assumption of “success” and give you some sense of the economic realities of being a beginning writer.  (I should add here that Catie posted about royalties back in May — yes, I checked — but what I have in mind to do is more geared toward beginners.)  So brace yourselves for a dose of reality.  It’s not going to be pretty.

Let’s start with a little quiz:  What do you think is (approximately) the average advance given to a first-time writer of genre fiction?  a) $5,000; b) $7,500; c) $10,000; d) $12,500; e) $15,000.  Think about it for a while.  The answer is coming later.

So, you’ve won over an agent and together you and she have managed to interest an editor in your book (and we’ll assume that this book is completed).  Good for you.  Let’s say you get a call from your agent today, December 1, 2008, and she says, “Congrats!  Editor X from Fantasy-Books-R-Us has agreed to publish your book!  We’ll have a contract for you soon.  Editor X has some changes he wants you to make, but your book is going to be published!”

You pop open the bubbly, you take your spouse or whoever out to dinner.   And you wait.  And wait.  And wait.  Let’s be generous and say that the contracts finally arrive in March, and let’s use the middle figure in our quiz and say that the publisher is offering you a $10,000 advance.  You eagerly sign the contract, send it back, and wait for your advance check.  Which comes in May (again, we may be a bit generous with this).  But your advance check isn’t for $10,000.  No, chances are that your advance has been divided into three parts:  you get part one upon signing the contract, part two upon delivery and acceptance (D&A) of the manuscript, and part three when the book is finally published.  Sometimes advances are divided in half (part on signing, part on D&A), but division into thirds is more typical.  So your check is for $3,333.33, right?  Well, no.  Your agent gets her 15%, so your check is actually for $2,833.33.

But wait, you say.  My book was finished when I sold it, so don’t I also get my D&A advance?  And when my laughter subsides, I gently tell you that, no, the key words are “and Acceptance,” and as your agent mentioned Editor X has some changes he wants made to the manuscript.  It takes a couple of months, but you eventually get X’s comments and spend several weeks on rewrites.  You hand in your manuscript and a month later you get your second check.  It’s now September 2009, and believe it or not you’re doing really, really well.  You’ve made $5,666.66 this year.  Before taxes.  (And again, my timeline has been pretty generous.)

So you’ve handed in your completed manuscript.  Congratulations!  The book now has to go through copyedits, proofs, and various production processes.  And as a beginning writer, you have to expect that you’ll be placed pretty far down the line in the publishing schedule.  My first book came out two years after it was first turned in (before I did revisions with my editor), but we’ll continue with the generous timeline and say that your book is published in August 2010, a bit less than a year after you receive your D&A check.  And so in 2010 you get your last advance check of $2,833.34.

Okay, so it’s been about a year and eight months since your agent gave you the good news about your book sale, and you have been paid a total of $8,500.00.  But wait! you say again.  Now I’ll start earning royalties, right?

Excuse me.  I was laughing again.  A few things about royalties.  First, that advance you got is more properly referred to as an “advance against royalties”, which means that the $10,000 you were paid (of which you received 85%) is money you now need to earn through book sales.  How long will it take to earn back $10,000?  Well, it certainly won’t happen over night.  Let’s say your book first comes out in hardcover (which is a very good thing to have happen) and its cover price is $25.00.  For every copy that sells, you get a royalty of $2.50.  So if they print 4,000 hardcovers (that could be a bit high) and you sell every one of them (highly unlikely) your book will earn out before it even goes to paperback.  Let’s say you sell 3,000 copies.  That would be a good sell through (the ratio of books sold to books printed) of 75% and would leave you only $2,500 short of earning out your advance.  Now the book goes to paperback.  It sells for $8.00 and you get $0.64 per copy (that’s 8% — pretty standard, although 6% also is common).  So when you sell your 3,907th copy of the paperback, you’ll finally have earned out.

So what kind of timetable are we talking about?  Well, generally the paperback comes out about a year after the hardcover, so that paperback comes out in August 2011, and if sales go well, you could sell that 3907th copy within a month.  Let’s say that by the end of September 2011, you’ve sold 5,000 copies.   The publisher now owes you $700 (minus your agent’s cut that comes to $595.00).  When do you get that?  Well assuming that the publisher is no longer holding back reserves against returns, you could see this money as early as April or May 2012.  Yes, that’s right.  Most publishers report royalties in 6 month periods:  Jan. 1-June30; July 1-Dec. 31.  For the first period you get a royalty report (and hopefully a check) in October or early November; for the second, you get your statement and check the following spring, April or May.  So now it’s been three years and five months since you sold your book, and you’ve finally earned additional royalties, pushing your total earnings on this book to $9,095, or an average of $3,031.66 per year.

A couple of notes:  Reserve against returns is an evil, evil phrase that I could spend several paragraphs trying to explain.  Basically, the publisher bases “sales” numbers on bookstore orders, rather than actual sales.  But since bookstores often return any books that don’t sell in a fairly narrow time window, they have to protect themselves against paying out royalties on unsold books.  And so they substract a reserve from the amount owed.  In the first royalty reporting period for any given book, that reserve can be as high as 2/3 of all moneys owed.  It decreases gradually with each subsequent six-month statement, but it can be hiked up again with each new edition that’s published (so if a paperback version of the book comes out, the reserve can be increased again).

Second, the answer to our quiz was b) $7,500.00.  That’s the average first advance for a new writer.  $7500.00.  Minus 15%, for a total of $6,375.00, divided into three payments of $2,125.00 each.  So all those earnings we just assumed were actually higher than they ought to have been, though the good news is that your book might earn out faster than we assumed.

And third, all my assumptions in this post have been fairly generous.  The sell-through, the timeline, even the contract terms (royalty percentages for example).  Very generous.  There’s a good chance that the average beginning writer won’t do as well.

I write because love it.  I write because I have characters and stories in my head that are constantly clamoring to be given voice.  I make a good deal more money now than I did as a beginner, but I still only barely make what any normal person would call “a living.”  If you are writing because you have to, because the very idea of NOT writing makes you want to cry, because you love it so much that it’s all you can imagine yourself doing, then by all means write.  But don’t give up your day job.  Not yet.  And if you aspire to be a writer because you think it might be an easy or quick way to make a buck…well, I feel another fit of laughter coming on….

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17 comments to Business Realities for the Beginning Writer

  • Well-said, David. I’m always fielding questions from people who can’t understand why I’m still working in the library. After all, my book’s on Amazon – surely I must be rich. *rolls eyes* I swear, I might just print this out and start handing it to people when they ask… *grin*

    You’ve given me an idea for my post this week, too. Thanks!

  • You mean you’re not rich yet? What’s up with that…?

    Thanks, Misty. Glad you liked the post. Always happy to spark an idea (or be so sparked).

  • Neat post, David! I’ve seen a lot of writers talk about the process before, but it was nice to see a step-by-step breakdown.

    Question: how much feedback do you tend to get from your editor on your manuscript? Line-edit level stuff, or does that solely come from the copyeditor? In the last year I’ve seen people at every step of the process — agents, publishers, and editors — saying that they don’t have time to edit anymore, and that it therefore falls to copyeditors more often than not these days to do the editing on a book. True? B.S.?

  • David, great post!
    I laughed all the way through! (Okay, maybe I cried a bit too…)
    This biz is awful! And I love it!
    Faith

  • Thanks, Faith!

    JT, thanks for the questions. My editor happens to be very responsive and more than willing to take time actually editing my manuscripts. He does big picture issues (flow, character, plot, continuity) and also gets into wording when he sees me falling prey to verbal tics of one sort or another, or when he feels that I’ve done something with my prose that is getting in the way of meaning. Are there editors out there who don’t do that sort of thing anymore? Probably. But in addition to my book editor, I’ve worked with several short fiction editors now, and all of them have been terrific on stuff like this. So I think what you’re hearing may be a bit of an exaggeration.

  • Hi, David –

    Great post. I think it’s always so helpful to get this information out there. I had one in a similar vein earlier this year: http://arcaedia.livejournal.com/139537.html

    And I often refer writers to Justine Larbalestier’s post at http://justinelarbalestier.com/blog/2004/12/24/average-first-novel-advances/

    – Jennifer

  • So would it be better to accept a smaller advance in order to begin royalty checks sooner, or should we take what is offered and run with it?

  • That’s an excellent question, Mark. There are tradeoffs. This is one of those things that you need to discuss with an agent. But generally speaking, you want to maximize your advance (to a point) because it takes so long for the royalties to come through no matter what you do. At the same time authors and agents who have pushed too hard for huge advances that their sales couldn’t fulfill have suffered because of it — too big an advance can give the appearance of underperformance if the book doesn’t earn out. And that’s not something for which an author wants to be known.

  • Missed Jennifer’s comment before. Hi, Jennifer. *waves hello* For those of you who don’t know, Jennifer is an agent (a terrific one from all accounts) working at the Donald Maass agency. Nice to see that our timelines and numbers are pretty similar. Your timeline moves a bit faster than mine, but not enough to make a huge difference, or to muddy the point.

    Thanks for the link to Justine’s post, too.

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  • Thanks for the answer, David.

    One more question: would you ever consider returning any of your advance to aid in promotion of the book? I’ve read that James Ellroy’s big break came when he offered to return half of the $30,000 advance he got for The Black Dahlia if the publisher would match him dollar-for-dollar in increased promotion. They would, he did, and the book was a smash hit. I know that’s a different genre, and Ellroy was not at the very start of his career when this happened, but I’m wondering about the general principle.

    I really appreciated your comments at RavenCon about promotion, signings, etc. I’ve read a variety of useful things about promotion since then, finding David Louis Edelman’s How I Promoted My Book particularly helpful. By the time I’ve gotten to the point that I’ve got a salable novel, I’d like to have a decent strategy in place to promote it. Cart before the horse, perhaps, but I’d hate to miss a bet and have the first novel sink without notice. Enough chance of that happening anyway.

  • Thanks for the comments, JT. I met David at WorldCon in Denver, and we hit it off — he’s a great guy. To answer your question, no I would never consider such a thing, for several reasons. First off, I do a great deal of self-promotion on my own dime, and part of a publisher’s responsibility is to do promotion on its end. There’s a reason why royalties only amount to a small percentage of each book’s sale price — that other money is supposed to pay for production, editing, and, yes, publicity. I shouldn’t have to pay more for something that the publisher is supposed to be doing and paying for anyway. No author should, in my opinion. Also, in a way the amount of an advance is a way the publisher indicates its commitment to the book in question. If I get a $5,000 advance on a book, the publisher is making a statement about how hard it intends to push the book, in order to make back that money. By the same token, a $30,000 advance also demonstrates a level of commitment. I would be undermining that by giving back some of that money. I’d be saying in essence, I don’t believe that the faith you’ve shown in me with this advance is justified. I just don’t think it’s a good idea.

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  • [...] Business Realities for the Beginning Writer * Annotated first novel contract (in parts; hit “Next” at the top) Negotiating novel contracts The Importance of Reversion Clauses in Publishing Contracts Anatomy of a three-book deal Money Royalty calculations explained Real World Book Deals (follow-up #1, follow-up #2) More on money and the writing life Survey of first novel advances and analysis of data (in short: get an agent) From the publisher’s point of view: P&Ls and how books make (or don’t) money: part the first: the mass market original complete failure and part the second: the hardcover to mass market profitable/neutral book Unasked-For Advice to New Writers About Money What a royalty statement looks like Laura Anne Gilman’s Basic [and Updated] Rules for Going Freelance, specific to novelists [...]

  • So has anyone posted the differences between getting published traditionally and self-publishing? Other than a friend of mine thinking that self-publishing is a cop-out and doesn’t make you an author, just a hack, which I don’t agree with.

  • Thanks for the question, Daniel. As with so many things in publishing, the answer to your question depends largely on what you want to get out of writing. If you’re a hobbyist and would love to see your book in print and don’t really envision writing as a career choice, self-publishing can be a great way to go. On the other hand, if you want to be a professional writer and hope someday to be published by one of the big NY publishing houses, self-publishing can actually hurt you more than it helps. Fair or not, there is still a stigma attached to self-pub, and many houses won’t touch a book that has previously been self-pubbed. Some won’t even touch an author who’s gone that route with a previous book. There are a few authors who have self-pubbed and gone on to have successful careers with big publishers, but they are few in number and very much the exceptions to the rule. Hope that’s helpful.

  • I am a member of Rocky Mountain Outdoor Writers and Photographers, Inc. See our
    website at rmowp.org. We publish a regular newsletter, and I would like your
    permission to reprint this article (Business Realities for the Beginning Writer) in it. May we?