The (Paltry) Economics of Being a Novelist
OK. Not really fair. It does. . .sometimes. But only for a fortunate few.
My first novel, Funerals For Horses -- published by the shortly-thereafter-defunct Russian Hill Press -- generated an advance of $2,000. That was almost enough to retroactively cover the postage and office supplies I'd sunk into building a list of publication credits. But not quite.
My "big break" novel, Pay It Forward, paid off 50 times as well, advance-wise. Yet beware the big advances. Every author wants them, but your book had better earn out (generate enough royalties to pay back the advance). If it doesn't, you run the risk of being dropped by your publisher, in which case you might find yourself unable to secure another. Sales records aren't a secret. Past sales figures can be -- and are -- accessed by a new publisher before it makes an offer.
But no pressure.
Keep the Advance. Return Your Career
Books aren't sold for a flat fee. We all hear a lot about big advances, and we tend to view them as a purchase price. In fact, the advance is nothing more than a loan against future royalties. If your advance is small, and your book does well, you'll earn back your advance quickly and go on to earn royalties. If your advance is big, and your book does poorly, you get to keep the big advance. It's only your career you might have to return.
An author's earnings, however, usually add up to more than just the number of books that move through U.S. bookstores. There's also the world of subsidiary rights. These include film rights (lucrative, but about as common as being eaten by a shark), audio and e-book rights, and the often vibrant world of "foreign."
Authors and their agents have options in the latter arena. They can assign foreign rights sales to the publisher for a hefty cut -- usually 20% in the U.K., 25% elsewhere, but I have seen this go as high as a horrifying 50%. And I should note that this is a percentage on net (sub-agent commissions and possibly other expenses are deducted before figuring the author's percentage).
Many authors/agents use their own sub-agent to market to foreign publishers on their behalf. The numbers here tend to be more financially advantageous. The qualifier is this: The publisher might make a big foreign-rights push and may invest more in a project if it holds these rights. Then again, it might not.
Crystal balls come in handy.
The top 15% of all royalties goes to the author's literary agent, but I have yet to feel that this percentage was not earned -- and then some.
Actual royalty percentages are smaller than one might think. For a hardcover, imagine 10% to begin the game, elevating to 12.5% if the book sells (fill in a number) copies, escalating again to 15% if it crosses another magic line. Magic lines are negotiated in advance, another way the agent earns his or her 15%.
Paperback royalties often begin as low as 6%.
Sounds unfair, but bear in mind that the author has no role in paying the many costs associated with getting a book to readers, including -- but not limited to -- editing, securing reviews, cover design, distribution, promotion and, of course, paying the printer.
Yes, e-books change everything, but that's another story for another piece, and I'm not the least bit convinced that physical books will ever disappear. Rumor has it that e-books will kill them, but I'm old enough to remember the same rumor when audio books came on the scene. I remain circumspect until time tells.
Another Year, Another Paycheck
One of the hardest aspects of author compensation is, in my opinion, the length of time a publisher gets to hold your monies before being required to pay them. Royalties are paid an astonishing two times a year. Hard to imagine, I know, when the average paycheck is weekly or bi-weekly.
Money paid to your publisher for subsidiary rights can conveniently miss a royalty period cutoff, so sub-rights money often arrives in the author's bank account a year or more after a sale is made.
Huge chunks of money can be held against the possibility of returns because books are fully refundable at the wholesale level. An optimistic chain of bookstores can order thousands, and if they aren't sold, it can promptly opt out of the plan to hold them in stock. Your publisher may buoy you with the news that advance orders of your book total in the tens of thousands, but only time will tell if those numbers stick.
The shelf life of an adult novel (as opposed to a juvenile or young adult novel, rather than as opposed to a G-rated one) is often just a little bit better than that of a carton of milk. The hardcover will classically stay in print for a year before paperback release, but don't imagine that bookstores will stock it for more than a couple of months, or that the publisher will send much, if any, promotion its way beyond its "season."
Young adult fiction is far better in this regard. My young adult novels spend 2.5 years in hardcover before their paperback releases.
Oh. And I forgot to mention that many modern small presses pay no advance at all.
Don't Do It for the Money
And yet authors keep flocking to the publishing industry, and (scarred) veterans like myself continue to play the game. The newbies might be chasing tinsel and glamour, but the old war horses, such as yours truly, know better.
And, by the way, it's almost always a mistake when authors research which genres are racking up the biggest sales and then try to write to that genre. Romance continues to earn big, but the wise know that successful romance authors rarely arrive at the genre via the money trail. Almost invariably they are authors who love romance novels. And it shows.
My favorite piece of advice on author compensation comes from fellow author Elmore Leonard. When asked what a person should write if he wants to make money, Leonard replied, "Ransom notes." While not clever enough to have thought of it myself, I reserve the right to second the motion.
Catherine Ryan Hyde is the author of 16 published and forthcoming books, including the novels Jumpstart the World, Love in the Present Tense, Becoming Cloe, and Pay It Forward, which was translated into 23 languages and chosen by the American Library Association for its Best Books for Young Adults list. Read her blog on Red Room.