Trapdoor Books

Advances vs. Royalties – Balancing the Business

Posted on 02. Jul, 2009 by Chris Matney in Book Publishing, Front Page Posts

It’s been a fast week – funny how three-day weekends do that. I am wrapping up business this morning and taking a nice drive in the mountains to start the Independence Day holiday. Never fear, my trusty Kindle will be with me, and I’m hoping to finish reading those late manuscripts.

There was an interesting trail of posts on the business side of publishing today that I really enjoyed – as each author added a few more nuggets of interest. The journey started with Susan Beth Pfeffer’s blog - Advances and Royalties: The Business End of Writing. She talks about her own experiences, as a writer, working under contract with Harcourt. The blog discusses the standard advance/royalty arrangement used by most of the publishing world – using real-world numbers from her two books as examples.

John Green commented on the article in his June 24, 2009 column, The Economies of Publishing. The pivotal statement in his article is “I’ve seen the expectations of first-time authors grow even faster than the YA market has grown.” He goes on to state that big advances don’t necessarily help the author, the publisher or the book business. Mr. Green postulates that a bigger royalty share instead of an advance is the better way to go.

In a follow-up column, Mr. Green posted his Really Long & Boring Post about Book Advances and Publishing which is not really long nor boring. It highlights the fact that the book industry has fallen into the big pothole that has sucked up the movie industry – chasing the blockbuster. I don’t have to tell you, dear reader, what hyper-focusing on blockbusters has done to the artistic and literary content of the film medium.

But to the point, by taking the smaller royalty advance, the writer makes significantly more money long-term if the book is successful. And, more importantly, lowers the break-even point so that a more modest success is more profitable all around – thus increasing the chance of being invited back to the table. On the publisher’s side, smaller advances lowers risk which allows for a lower reliance on blockbusters and less of a need to “excessively correct” for flops. It would also allow for royalties to be paid more frequently – currently done twice a year – which would smooth cash flow on both sides of the fence.

I agree with Mr. Green that the amount of the advance does not change the marketing plan of the publisher. We want to sell books and the money will naturally gravitate towards those marketing plans that do just that – even if that means taking a loss on an advance. In poker terms, there is no value in throwing good money after bad.

In reading the comments on all of these blogs, this appears to be a passionate topic for both writers and publishers. I have talked to folks on both sides of the equation, and it seems that there is a desire to shift to a relationship where authors and publishers are working together to build the right, focused marketing plan and payment model to make their novels successful. I certainly hope this is the case, as it is a fundamental underpinning of the Trapdoor Books business plan. I’d love to hear what you think.