MobileRead Forums - View Single Post - Publishing Industry Myth (half-truth) #1

Daithi · 02-05-2010, 10:41 AM

Myth (half-truth) #1: Most authors don't even earn back their advance.

This isn't exactly a myth, but it is a half-truth. The implication when the publishing industry, or one of the fanboys, make this claim is that the publishing industry is either losing money on that underperforming author, or that the authors making their advances are carrying the underperforming authors that failed to make back their advances. None of that is true!

Let's look at an example to see how things really work.

Publisher A offers a $50,000 advance and 8% royalties.
Publisher B offers a $25,000 advance and 10% royalties.

If the cover price is $28 then the author receives
__$2.24 from publisher A per book so he must sell 22,322 to earn his advance.
__$2.80 from publisher B per book so he must sell 17,858 to earn his advance.

Let's say the author sells 20,000 books. Does that mean publisher A lost money?

Absoulutely not. In fact, if his offer of a $50,000 advance allowed him to sign the author, then publisher A made money. It was publisher B who lost the author and didn't make money. In publisher A's case, he would have received $14 per book (50% of cover is an industry average) so he would have made $230,000 ($14 x 20,000 - $50,000). Another way of looking at it is that 20,000 books with a cover price of $28 were sold for a total of $560,000, and the author received $50,000 or 8.9%. While it is true that the author didn't earn back his advance, it is patently false that the publisher lost money on this book. In fact, publisher A would have made MORE money than publisher B, as they both would have sold 20,000 books but publisher B had to give the author 10% while publisher A only had to give the author 8.9%. Since top authors can get 12% (or more) we can assume the publisher isn't losing money at a 12% royalty. That means publisher A could give an author a $50,000 advance at 8% royalties and if the author only sold 14,880 copies the publisher would still be profitable, even though the author only earned back less than $35,000 of his advance.

Publishers can, and do, make money on authors that don't earn back their advances. It is true that blockbuster authors generate the lions share of a publishers revenue, and that is where publisher focus efforts, but this in no way invalidates the profits generated by midlist authors.

So when the publishing industry says, "Most authors don't even earn back their advance." Well, it is true, but the implication that the publisher is losing money, or that only a few authors are earning their advances and are carrying the other authors, is complete BS.

02-05-2010, 10:41 AM	#1
Daithi Publishers are evil! Posts: 2,418 Karma: 36205264 Join Date: Mar 2008 Location: Rhode Island Device: Various Kindles	Publishing Industry Myth (half-truth) #1 Myth (half-truth) #1: Most authors don't even earn back their advance. This isn't exactly a myth, but it is a half-truth. The implication when the publishing industry, or one of the fanboys, make this claim is that the publishing industry is either losing money on that underperforming author, or that the authors making their advances are carrying the underperforming authors that failed to make back their advances. None of that is true! Let's look at an example to see how things really work. Publisher A offers a $50,000 advance and 8% royalties. Publisher B offers a $25,000 advance and 10% royalties. If the cover price is $28 then the author receives __$2.24 from publisher A per book so he must sell 22,322 to earn his advance. __$2.80 from publisher B per book so he must sell 17,858 to earn his advance. Let's say the author sells 20,000 books. Does that mean publisher A lost money? Absoulutely not. In fact, if his offer of a $50,000 advance allowed him to sign the author, then publisher A made money. It was publisher B who lost the author and didn't make money. In publisher A's case, he would have received $14 per book (50% of cover is an industry average) so he would have made $230,000 ($14 x 20,000 - $50,000). Another way of looking at it is that 20,000 books with a cover price of $28 were sold for a total of $560,000, and the author received $50,000 or 8.9%. While it is true that the author didn't earn back his advance, it is patently false that the publisher lost money on this book. In fact, publisher A would have made MORE money than publisher B, as they both would have sold 20,000 books but publisher B had to give the author 10% while publisher A only had to give the author 8.9%. Since top authors can get 12% (or more) we can assume the publisher isn't losing money at a 12% royalty. That means publisher A could give an author a $50,000 advance at 8% royalties and if the author only sold 14,880 copies the publisher would still be profitable, even though the author only earned back less than $35,000 of his advance. Publishers can, and do, make money on authors that don't earn back their advances. It is true that blockbuster authors generate the lions share of a publishers revenue, and that is where publisher focus efforts, but this in no way invalidates the profits generated by midlist authors. So when the publishing industry says, "Most authors don't even earn back their advance." Well, it is true, but the implication that the publisher is losing money, or that only a few authors are earning their advances and are carrying the other authors, is complete BS.