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Originally Posted by pwalker8
Who do you think eats the difference when a book doesn't pay out (i.e. make enough to cover the advance)?
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Minor point of fact: just because a book doesn't earn out doesn't mean the publisher loses money on it. In fact, with the big name authors they purposefully write contracts that never earn out at the nominal royalty rate but rake in millions in net profits. Earning out is not the breakeven point for the publisher; that is generally way lower. Earning out is simply the point at which a book contract effectively becomes a license instead of a lump sum sale.
If the BPHs were losing money on all the titles that don't earn out they would've stopped publishing midlisters. Midlist authors themselves may not make much money individually but the publishers make at least some money on each book and since they put them out by the thousands (12-14000 in 2014 for the randy penguin) it quickly adds up.
Here:
http://www.stevenpressfield.com/2014...-a-good-thing/
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So the bottom line for the publisher is gross revenue of $16,550,000 minus the $5,000,000 guarantee to Ms. Bestselling Writer, minus the $2,800,000 to print and ship the physical books. Or a total of $8,750,000 ($16,550,000 – $5,000,000 – $2,800,000) to their bottom line.
Even though the book never “earned out.”
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