Tuesday, June 23, 2009

Advances And Royalties: The Business End Of Writing

I was wandering around the Yahoo listings for the dead and the gone, when I found its official Houghton Mifflin Harcourt paperback publication information. Publication is indeed Jan. 18, 2010, but what I didn't know was that its price is anticipated to be $7.99. That's a dollar more than the paperback of Life As We Knew It, which means that every paperback d&g sells will earn me 6 cents more than a LAWKI paperback.

I figured I'd be safe sharing this information with you, since you'd be unlikely to hit me up for a 6 cent loan.

It occurred to me after I decided to make the 6 cent announcement that there are people who read this blog who may not know how writers get paid (not enough and certainly not often enough, but that's a whole other entry). So for those of you who are interested, here are the basics of how it works, using LAWKI as the example.

When I wrote LAWKI, I gave my agent the manuscript to sell. That's called writing a book on spec (short for speculation). Neither my agent nor I knew if any publisher would be interested in buying it (when I wrote the dead and the gone, and This World We Live In, I got a contract before writing the books). My agent gets 15% of every penny I earn from these books, so it's in her best interest to sell them.

Harcourt agreed to buy LAWKI, and offered me a $20,000 advance. For that money, they were given the right to publish the book in hardcover and paperback, and to make some additional money by selling some of the subsidiary rights, which they did, selling to both the Junior Library Guild and Scholastic some reprint rights (HMH gets half that money; I get the other half, after my agent gets her 15%).

An advance is called an advance because it's an advance on future royalties. Once the publisher gives you the advance, they can't get the money back, no matter how hard they beg. So I got the $20,000 minus 15% (that's $17,000; I can multiply anything by 15%), gave Internal Revenue its share, and kept the rest to pay rent and gas and electricity and groceries, etc. Since the book was already written, Harcourt pretty much paid me the whole amount at once; with d&g and TW, I got half on signing the contract and the other half after Harcourt decided the manuscript was ready for publication (I'm currently waiting for the second half of the advance for TW).

I get a 10% royalty on the LAWKI hardcover. That means I get 10% of what the list price ($17) of the book is: $1.70 for every book sold, after I earned back the original $20,000. Because of the sale to the Junior Library Guild, I knew that meant as soon as the hardcover sold 10,000 copies, I would start earning royalties. That happened almost immediately, so I've been earning royalties on LAWKI since shortly after its publication. I have no idea why they're called royalties, since most writers earn less than the average medieval peasant.

Royalties get paid twice a year. The publisher keeps track of how many copies of the book are sold, multiplies the total by the percentage the writer gets (10% for hardcovers, 6% for paperbacks), sends the total amount to the agent, who takes her 15% and sends the rest to the writer, who's been going crazy waiting for the check to arrive. It used to be I never knew how much money (if any) to expect, but nowadays I can ask what the sales numbers are, so I have a far better sense of how big (or small) the check will be. This definitely cuts down on the stress.

Since LAWKI earned out its advance just on the hardcover sales, I started getting royalties on the paperback immediately (the same will be true when d&g comes out in paperback, since its advance has already been earned out). Since LAWKI sells for $6.95 a copy, and I get 6% for each copy sold, I get 42 cents for every copy sold (I get considerably less for each copy Scholastic with its very pink LAWKI cover sells). That, of course, is 42 cents minus 15% (hold on, while I get my calculator), about 36 cents a copy.

It's the agent's job to get as much money for her writers as possible, so when my agent sold the publishing rights to LAWKI to Harcourt, she got Harcourt to agree that some of the rights would be mine alone to sell. I get all the money for the audiobook advance (which has already earned out, so I get some royalties there as well, but audio royalties are so complicated, I just take whatever money I get and smile gratefully) and the foreign advances (United Kingdom, Denmark, Germany and France, so far, paid in pounds, dollars, and euros). If the movie rights are ever optioned (an option is kind of like an advance; they give you a little bit of money for the right to make the movie, and whether or not they make the movie, you get to keep the option money), I get 100% of that money as well, minus, of course, my agent's 15% (which is currently 15% of zero, since no one has optioned the movie rights).

So the basic rule is the more copies LAWKI sells, the more money I make. I would tell you just how much money I've made off of LAWKI so far, but I don't know. I'd have to pull out all the information and add it up and multiply it by .85, and it's not worth the bother (I do admit to being curious though). What I also don't know is how much money LAWKI will continue to earn me. I have a good idea of how much I'll be getting for my next royalty check, since it will reflect the sales from Jan. 1- June 30, 2009, but there's no way of predicting whether LAWKI will continue to sell any copies after July 1, or whether it'll go out of print and I'll never see another penny again.

Make that another 42 pennies!


Melody Marie Murray said...

Thank you for this cogent explanation of something I've long wondered about. I appreciate your willingness to share.

Susan Beth Pfeffer said...

Hi Melody Marie Murray-

One big difference between how writers make money and how artists make money is writers at least have the possibility of royalties, and artists, alas, sell their work once and never get any more money from it.

I couldn't tell you how many of my books have earned out their advances; even glancing at the bookcase where I have them displayed, I couldn't remember which had and which hadn't.

I've been incredibly fortunate with LAWKI/d&g. We'll see if my luck still holds when TW comes out.

Susan Beth Pfeffer said...

ETA: Incredibly fortunate is not, sadly, the same as incredibly rich. Not at 42 cents a copy!

Paige Y. said...

I honestly don't see how most writers can survive without having another job and I would suppose that many authors have to have a "day job." It would take a lot of books to pay the rent each month.

Here's to all of your books earning out their advances!

Anonymous said...

Fascinating stuff, Sue, but now I know I can't retire after selling my book. (Selling, ha! I haven't even finished writing it yet.)


Susan Beth Pfeffer said...

Good morning to Paige Y. and Glen-

I was very lucky in that I sold my first novel so soon after graduating college and I had parents who were willing to support me until I began earning genuine (if erratic) money.

My first advance was $750.00, $500 on signing and $250 on publication date (and I had to remind them they owed me that money).

For a couple of years, my Portraits Of Little Women books were earning me outrageous amounts of royalties, but for the most part, the years I've done well are years with good sized advances.

It's a strange way to make a living, but it's the only one I know!

Kats said...

Thanks for sharing this. It's really interesting to see how much authors actually get paid, there doesn't seem to be much information out there as it varies so much!

Susan Beth Pfeffer said...

Hi Kats-

It does vary, and it varies from book to book as well. I've gotten some deals that are better than others, and even the incredibly long blog entry I posted doesn't cover all the variables just in my LAWKI contract.

Since my father wrote books, I grew up in a household where advances and royalties were discussed. But I realized yesterday that a lot of people haven't had that advantage, and it might be helpful if I explained at least part of the system in my blog.

Kirsten Hubbard said...

Hi Susan,

Thanks for all this info. I'll definitely forward it to all my non-industry companions who understand the process even less than I do :)One question: Do you usually sign multi-book contracts, or do you prefer to sign one book at a time?

Susan Beth Pfeffer said...

Hello to Kirsten Hubbard-

On occasion (mostly when I've been writing a series), I've signed multi-book contracts, but mostly I've done a contract at a time.

The advantage of a multi-book contract is you get more money up front, since the advance is for more than a single book.

The disadvantages are more complicated, mostly having to do with accounting (if one book does well and the other doesn't and the publishing house doesn't differentiate in its royalties, the writer could lose royalties on the successful book), and partly to do with the size of the advances. I got a bigger advance for d&g than I did for LAWKI, because of LAWKI's success, and I got a bigger advance for TW because of d&g's success (not vastly bigger in either case, but bigger nonetheless).

Basically the publishing house has just about all the control. The writer can yearn for a multi-book contract, but if the publisher doesn't choose to offer one, the writer's wishes will remain just that.

Lorelai said...

This is probably a silly question, but if you know all the ins and outs of the contract, what benefits is your agent providing that are worth your 15%?

Susan Beth Pfeffer said...

Hi Lorelai-

That isn't a silly question at all, but it's a complicated one to answer.

My agent (and pretty much all agents) earn their 15% many different ways.

For starters, they're matchmakers. The story goes my agent ran into the woman who became LAWKI's editor on the street and said,"I have a manuscript you might like." Or maybe she worded it more positively. I wasn't there. One of the jobs of agents is to know which editors are at which houses and which houses are looking for what. My agent also lets me know if a publishing house is looking for something in particular, to see if I might be interested in writing it.

The second, and most obvious, job of the agent is to negotiate the contract terms. Contracts are long and boring, but when I get mine, I see lots of things crossed out and some things added in. I wrote a book once called The Year Without Michael. It was optioned for an afterschool special (never happened, but that's another long story), and I saw I had the calendar rights. That cracked me up (January Without Michael/March Without Michael), but I certainly never would have thought about calendar rights, let alone retaining them. That's the agent's job.

Finally, an agent works as an intermediary between the writer and the editor or publishing house. I was eager for This World We Live In to be a spring 2010 publication. The publishing house gave the book to a very busy editor to work on, and when that editor informed me she wouldn't be able to get the manuscript ready in time, I went ballistic. It was not a pretty sight. But instead of screaming at the publisher, I screameed (via emails) at my agent. She then contacted the publisher and a different editor was found.

It's well worth 15% just to have someone else do the screaming for you!

There are other ways agents earn their 15%. The agency that represents me also handles foreign sales and film rights, neither one of which I'd have any idea how to handle.

Some writers go without an agent, and I didn't have one at the very beginning of my career. But at this point, I'll willingly hand over the 15% and know there are many aspects of the business end of my career I simply don't have to worry about.

heather t said...

Wow, thanks for the explanation.

I love my library, but this makes me want to go out and buy some books!

Susan Beth Pfeffer said...

Hi Heather T (I capitalize names)-

I think there may be some countries where authors earn royalties every time one of their books is taken out of the library, but that doesn't happen in the US.

One enormous difference in the market that I have benefitted from is that YAs are now sold in bookstores. For most of my career, the only kids books you could find in a store were picture books, and some of the classic titles for older kids.

LAWKI has had a strong independent bookstore sale (and thank you all independent bookstore owners and employees), and that has had a very positive impact on my royalties.

Donura said...

Thanks so much for sharing in such detail the money side of writing. I think it is extremely helpful for young people to see that writing a book is "REAL" work and that it is money well earned. BTW, can't wait for the new book to be released. My girls and I loved LAWKI.

Susan Beth Pfeffer said...

Hi Donura-

A lot of times when I've done a school visit, one of the kids will ask, "Besides writing, what are your other hobbies?"

I have to explain that writing isn't a hobby, it's a job. Then if another asks how writers earn their money, I tell them just what I blogged. It's fun to watch their eyes glaze over!

Kristina Springer said...

Thanks for sharing! And I'm reading LAWKI right now and WOW-- I love it! Each time I have to put it down I'm antsy to get back to it.

Paula said...

Add 42 cents to your bank account - I just bought the paperback! LOL!

I am 40 yrs old and thoroughly enjoyed this book, even though it's considered YA. I really enjoy the 'end of the world' type stories and I thought this one provided a fresh perspective. It wasn't as dark as a couple of my favorites (like Lucifer's Hammer, by Jerry Pournelle & Larry Niven and The Road, by Cormack McCarthy), but thought that was a refreshing perspective. It's easy to assume that chaos, violence and cannibalism would ensue when the world is coming to an end, but it's quite possible that a small community could retain their morals in the face of starvation.

I truly hope that your book is optioned to a movie. I think it would make a great movie - the characters are so well-done. Good luck!

Susan Beth Pfeffer said...

Hi Paula and thank you for your kind words and forty-two cents-

Every now and again someone expresses interest in LAWKI as a possible movie, but nothing has come of it yet. Of course it would be great if it did, but with forty-two cents here and forty-two cents there, well before you know it, I have eighty-four cents (minus 15% and before taxes that is!).

Susan Beth Pfeffer said...

A belated hello to Kristina Springer-

I apologize for not having thanked you for your comment earlier. It was a hectic weekend, and I guess I just missed it.

I hope you continued to like LAWKI and that you won't think me a tactless cur for not having responded to you earlier!

Library.Lil said...

Thank you for explaining how all of this works! It is something I admit to having very little understanding of. I found this post via John Green's blog. I am a children's and teen librarian who grew up reading your books--The Friendship Pact was one of my favorites!

Susan Beth Pfeffer said...

Hello Library.Lil-

It was so nice of John Green to post a link to my blog. What a good person he is.

I got a fan letter once from a kid who said she'd read the last chapter of The Friendship Pact 8 times. I promptly reread the last chapter, and was forced to agree with her.

That's the best last chapter I ever wrote, at least until the last chapter of This World We Live In, which is pretty darn fabulous.

But it's not as much fun as the last chapter of The Friendship Pact!

Debra Moffitt said...

That was very kind of you to share all that. I work for a nonprofit that just self-published a book. May your royalty checks keep rolling in!

Susan Beth Pfeffer said...

Happy July 1 Debra Moffitt-

Let's hope your non-profit's book makes heaps and tons of profit!

Living, as I do, in Orange County, NY, I always thought an all orange cookbook would be a good money maker, not just for non-profits here, but non-profits in any Orange County, and any school that uses orange for its color. Every dish would either have something orange in its ingedients or an ingredient with the word orange in it, and at the end of the cookbook, there'd be some all orange food menus.

Oddly enough, no one else seemed to think this was a brilliant idea!

April Henry said...

This is probably a weird thing to say, but thank you for this post, not because it was stuff I didn't know, but because it distracted me. My mom is really sick and I'm spending a lot of time crying, and I've already looked at the NY Times online, and read all my friends post on LiveJournal, and then I thought, whose blog do I like to read? So thanks for distracting me.


Susan Beth Pfeffer said...

Hi April Henry-

I'm sorry to hear about your mother.

I'm glad I was able to provide a little bit of distraction.

You'll be in my thoughts.

Anonymous said...

I must have a baseball land in my lap soon. Clearly, it has a fabulous Fountain of Youth effect. You look mahvelously utefull (sic) -- I've always wanted to use that in a sentence.

W. Slezak

Kristi Nommensen Dorson said...

Thank you for this very enlightening post. I am currently trying to juggle my 'day job', young family, and dreams of being a writer (amongst many other dreams I have, but we won't get into those). I have a tendency to 'dream BIG', as it were, and this gives me a much more realistic idea of what to expect!

I was wondering if you'd share a bit more about having an agent. I see in the comments that you mentioned you didn't have one at first; at what point did you get one, and how did you go about finding yours? Have you gone through more than one agent over the years? Would you recommend that an aspiring author first find themselves an agent, or try to be published on their own?

Thanks in advance if you have time to answer!

Susan Beth Pfeffer said...

Hello Kristi Nommensen Dorson-

Agents are a topic worth a whole blog entry unto themselves, but I'll try to give the quick autobiographical version.

I got my first agent after my first three books had been published/accepted for publication, and I realized I couldn't handle the business end myself. I asked around, and the same name came coming up, so I wrote her a letter, met her, and made a handshake deal that lasted most of my career.

Eventually I decided to make a change, and this time I used the internet to look agents up. I had specific criteria and only contacted those agents that met my needs and desires. The field had certainly expanded over the years, but I was pretty definitive about what I wanted. I was fortunate that one such agent was willing to take my on as a client, and she has represented me for the Moon Crash books.

I know writers who don't have agents, so I can't say it's always better to have one. I do think if one is approaching an agent, it's better to have some kind of track record as a writer. That's why I encourage writers to get published in whatever ways are avaialble, magazines, newspapers, journals.

Not that I know that for a fact. It just makes sense to me that an agent, even one who is willing to take on a writer at the start of her career, would take more seriously a writer who has some professional credentials.

But again, the field has changed enormously since I began writing, and I'm not the best source of information about how to do things now.

Jenny said...

Thanks for the info. My husband illustrates children's books, and it's nice to have a point of comparison of the size of the advance/percentage of the gross he gets. His first deal was terrible - I think he got taken. They gave him 6% of the NET, which essentially meant he got pennies beyond his advance. Now, luckily, he's doing better!

People don't realize that authors and illustrators are unlikely to become incredibly wealthy because of all those self-employment taxes you have to pay. Even if you get a good advance AND your book does well, fully half of it (almost) goes to pay taxes! (at least for my husband it does, since he has to pay taxes plus social security from whatever he earns).

It's frustrating, but still very exciting when the published works come out. At least he gets minor celebrity status out of it! I guess you can't put a price tag on that.

Susan Beth Pfeffer said...

Hi Jenny-

It is so much harder to be an illustrator than a writer. In my opinion they work much harder for the money they earn (certainly much harder than I do).

Self-employment taxes are higher than social security taxes. The one good thing though is that us self-employed folk can take off a lot of business expense deductions (especially if one has an accountant who's as creative at his end as I am at mine!).

Anonymous said...

Not sure if you check this site any longer, but needed an explanation of advances and royalties and you answered my question, and wanted to thank you for sharing that with individuals like myself who are new to submitting manuscripts. As you mentioned, writing is not a way to become a miilionaire (but I find that writing unto itself is the fun part)! Thanks again, Frank

Unknown said...

As an author that just signed contracts on two books, I will agree that the blog is correct. Don't quit your day job if you sell a book...or two. Advances are getting harder to come by and ebooks are putting a damper on things, too. My opinion is, write for the love of it, and if you make some money along the way, fantastic, but don't quit your day job Mr. & Mrs. Twain.