PW: Rise of the 7-figure advance

[pwalker8]

Originally Posted by DuckieTigger

No, I meant the opposite. Back then the advance system was not broke. Not sure how long it actually took to earn out for her. But if she didn't earn out, then the risk was not painfully high. The gap is widening a lot between the rich and the poor. Imagine for a second that instead of 12K they would have shelled out a 120k advance for her - more in line with the difference between todays below 20k typical, 7 figure high advance. Go even crazier and imagine that book didn't come close to earning out, not even breaking even. In that case it would have taken ten times as many smaller books to make up for it.

No, Anne Rice was an example of how the system wasn't broken, and now it is.

ok. I really haven't seen any evidence that the advance system is currently broken. Advances are based on what the publisher thinks they will make. If the book earns out the advance, then everything is good, even if it's a 7 figure advance. There has always been a big gap between the best sellers and the average author. This is nothing new.

I've read that the average mid list author sells around 15K copies of a particular book. If you sell 15K copies, then yea, there is going to be a pretty big difference between what you pull in and what some author who sells a million copies pulls in. I'm not sure why anyone who consider that either surprising or an issue.

If a publisher gives out a $100,000 advance and the author sells 5K copies, then the publisher takes a big loss, likely someone gets fired and everyone learns a good lesson in economics. If you can't correctly gauge the market, then you probably aren't going to last long as a publisher.

[rixte]

Heh, I don't know if broken is the right term, but I've seen the 7 figure advance actually used as a marketing ploy ... given out so that there would then be a huge fuss about the author made and they get mentioned everywhere and the book becomes a best seller because everybody wants to see what is so amazing about a book that it's worth 1M dollars. And what's worth it is the fact that ... by giving the author that much, they have pretty much locked in revenue. Publishers can't play this game too often, but I've seen it a few times over the years.

If it's a debut author, I would bet money on that every time (for fiction, obviously celeb memoirs are their own category)

[murg]

Originally Posted by pwalker8

ok. I really haven't seen any evidence that the advance system is currently broken. Advances are based on what the publisher thinks they will make.

Advances are based on what the publisher thinks they can get the author to accept. As in how low can they go.

[pwalker8]

Originally Posted by murg

Advances are based on what the publisher thinks they can get the author to accept. As in how low can they go.

Well, kind of obviously, they aren't going to give an author an advance that they don't think will earn out, anything below that figure is simply a matter of negotiations. That's why authors hire agents.

[gweeks]

Originally Posted by pwalker8

Well, kind of obviously, they aren't going to give an author an advance that they don't think will earn out, anything below that figure is simply a matter of negotiations. That's why authors hire agents.

Publishers give advances that they KNOW will never earn out all of the time. That's how big name authors get effective royalty rates higher than everyone else. The publisher gives them an advance at twice what they KNOW it will earn at the royalty rate to effectively double the royalty rate while telling the poor no-name author that he's getting the same royalty rate.

Greg

[pwalker8]

Originally Posted by gweeks

Publishers give advances that they KNOW will never earn out all of the time. That's how big name authors get effective royalty rates higher than everyone else. The publisher gives them an advance at twice what they KNOW it will earn at the royalty rate to effectively double the royalty rate while telling the poor no-name author that he's getting the same royalty rate.

Greg

I would be surprised if such a thing happens on a regular basis. Authors negotiate different royalty rates all the time, especially big name authors. Published don't need to go to the effort of paying an advance they know isn't going to earn out.

[gweeks]

Originally Posted by pwalker8

I would be surprised if such a thing happens on a regular basis. Authors negotiate different royalty rates all the time, especially big name authors. Published don't need to go to the effort of paying an advance they know isn't going to earn out.

From what I read it happens pretty often at the high end of advances. A quick search didn't find anyone talking about it and I don't have time right now to dig deaper. That sort of activity is a lot of the reason there is talk about the "advance" processs being broken right now in publishing.

Greg

[fjtorres]

Originally Posted by gweeks

From what I read it happens pretty often at the high end of advances. A quick search didn't find anyone talking about it and I don't have time right now to dig deaper. That sort of activity is a lot of the reason there is talk about the "advance" processs being broken right now in publishing.

Greg

Shatzkin trots it out all the time.
Like here:

http://www.idealog.com/blog/publishe...them-that-way/

The savviest agents for the biggest authors don’t negotiate contracts in the same way the rest of the world does. They figure out in concert with the publisher how many copies they think the book should sell (big authors with long track records are somewhat more predictable than the rest of the universe, which is one more reason their books are so desirable to the publishers) and get an advance that is equal to a startlingly high percentage of the revenue that sales level would produce.

The advance is not expected to earn out (and, believe me, with advances calculated this way, they almost never do). That means the royalty rates are irrelevant. So they can have their star authors sign the boilerplate contract, permitting the publisher to say — almost truthfully — that they don’t pay more than 15% of cover price royalty on print or more than 25% of net royalty on ebooks (among other things).

The system is designed to favor established big name authors at the expense of newcomers. Not unlike professional baseball where major leaguers get paid a lifetime of income in one year and minor leaguer salaries often qualify them for welfare.

http://www.thestar.com/sports/baseba..._leaguers.html

Which explains both the lockstep support for the status quo by the big money types like Preston and Child and the declining submissions by newcomers in the ebook-heavy genres like romance and SF&F among others.

Shatzkin, being a tradpub advocate, has long been warning them that their toxic practices were driving authors to selfpub and Amazon and of the need to be more open about their actual costs instead of hiding them. He's worth reading if you can get past his readerless worldview.

[pwalker8]

I would be a bit more impressed if it was a bit more specific that the nebulous "savviest agents for the biggest authors". So is he claiming that JK Rowlings didn't earn out? Given that publishers can legally recoup an advance that doesn't earn out (though they rarely do), I find it unlikely that an agent would put their client in such a legally shaky ground.

[gweeks]

Originally Posted by pwalker8

I would be a bit more impressed if it was a bit more specific that the nebulous "savviest agents for the biggest authors". So is he claiming that JK Rowlings didn't earn out? Given that publishers can legally recoup an advance that doesn't earn out (though they rarely do), I find it unlikely that an agent would put their client in such a legally shaky ground.

No, publishing contracts very rarely allow the publisher to recoup advances as long as they print the book. If the author doesn't turn in a manuscript they can recoup. If the advance doesn't earn out I've never heard of a contract that allows the publisher to recoup it. Music contracts yes.

Greg

[fjtorres]

Originally Posted by gweeks

No, publishing contracts very rarely allow the publisher to recoup advances as long as they print the book. If the author doesn't turn in a manuscript they can recoup. If the advance doesn't earn out I've never heard of a contract that allows the publisher to recoup it. Music contracts yes.

Greg

Advances are payday loans secured by the book's copyright so they have life+70 to earn out. Not that it matters.

Not earning out doesn't mean they don't make money off the book, just that they never payout royalties.