take the money. or maybe not.

I’ve been thinking about doing this for a couple years, and today I was looking at a royalty statement and I thought, what the hell. I think people will find it interesting and maybe even helpful.

ITW Royalty Statement NA 2007This is the summary page of the Into the Wilderness royalty statement for 2007.

Let me point some things out. Under Current you’ll see that no hardcover copies were sold in 2007 — because, of course, the hardcover edition is out of print. This statement only represents new sales of new books. However, in 2007 the mass market edition of ITW sold 7,634 copies, or about 614 copies every month. Considering the fact that the mass market edition was first released in August of 1999, that is a pretty healthy number.

Since it was first released, ITW has sold 241,813 mass market copies and 25,246 hardcover copies in the U.S. and Canada. This statement doesn’t cover sales overseas. If I had those numbers someplace where I could find them, I’d give those to you as well. But I don’t. The number is pretty high, though, given the loyal readers I’ve got in Australia and New Zealand. Somewhere around 100,000 copies. There are also editions in Germany, Spain, Sweden, Great Britain and a couple other places that aren’t coming to mind right now, but none of those sales figures are represented here.

You’ll see that the original “guarantee” ( advance) was $150,000 (a very good advance today, and even better in 1998). Translation? The royalties on ITW exceed the advance, which is what is called “earning out” — the publisher calculated the number of copies they thought they could sell, and paid an advance based on those calculations. In this case things worked out well. Not all my novels have earned out. Yet. She said hopefully.

This is the problem: if you have five novels in print, or two, or thirty, the publisher won’t offer another contract without looking at these sales figures. If they have miscalculated badly, it hurts them first but it also hurts the author. Say for example that the publisher offers Author J. Jones oh, three million for a two book deal. J. Jones leaps into the air with excitement. Oh boy oh boy. His career is made.

But the publisher got it wrong. The J. Jones novel doesn’t tank, but it never surges. It just bobs along mid-list. Three years down the line it’s only generated $25,000 in royalties — which means a lot more books have to sell before Jones has earned the 1.5 million he’s already got in his pocket for that first novel for the two book deal. You might think that J. Jones won’t care — he gets to keep the whole three millions (as long as he delivers the second book as well) regardless of how many copies sell. If these two books never earn out, so what?

Here’s the so what: J. Jones still has lots of books he wants to write. Some really great ideas, one of which (looking into my crystal ball) is destined to hit number one and stay there for months.

Except it doesn’t get written, because J. Jones is a bad bet, according to the numbers. The publisher is not going to throw good money after bad. Now, if Jones had got an advance of $100,000 and the book earned out in two years, his agent can go to the publisher with some real leverage and negotiate a much better deal for that second contract. If things continue along that trajectory, Jones will build a career, and a lucrative one at that.

Or he could invest his three million and live off the interest, never putting words to paper ever again. If inflation doesn’t eat it all up, of course. Now, a good agent will be able to weigh the pros and cons of the publisher’s offer and make some suggestions based on long-term goals. A good agent is there for the duration, and has more invested in you that the one book in hand. A bad agent will push you to grab what you can and run so that s/he can do the same thing. Which is a disserve to you in about a dozen different ways.

This is a pretty complex topic and I’ve glossed over a lot of details. Please feel free to ask questions, and I’ll try to answer them.

EDITED TO ADD: If you find this kind of thing interesting or useful, I’ll do it more often. But you have to let me know if you’d like to hear more. If you don’t comment I figure I’ve bored everybody to death.

13 Replies to “take the money. or maybe not.”

  1. Hmmmm…  This is very interesting, especially when you’re able to put it into perspective.  “Oh, he’s published, that means he’s got some serious coin…” tends to be a popular sentiment that I gather from things, but I know that there are always 3 sides to every story.
    So from a strictly economic perspective, one should try to make enough on the pre-payment to live well, but at the same time keep the number low enough that you’ll earn out quickly and thereby become a better commodity on the exchange.  I suppose the razor’s edge is actually figuring out the number that will maximize the initial guarantee while at the same time making the reaching of that number in earning out almost a certainty.
    Sounds like an actuaries dream…
     

  2. It’s interesting that hard copy earnings are approximately $3/copy while mass market earnings are only about $0.50/copy.

    I think I remember that mass market printings follow hard copy printings no sooner than a couple of years later. That makes sense, since it takes 6 mms to equal 1 hc in earnings.

    This brings some questions to my mind. Do the publishers consider both types of sales in their decisions to continue offering contracts to writers? Are there any demographics about who buys hc vs mm?

  3.  
     
    I can’t tell you very much about how the publisher thinks, but I can say this: hardcover sales do matter, and a lot. There’s a domino effect. If the hardcover sales are poor, bookstore buyers will take that as an indication of how the softcover will sell. So they’ll be very conservative in ordering softcover stock (both mm and trade). And of course, if the softcover stock isn’t in the stores, it can’t sell and thus a downward spiral.
    As far as I know there aren’t any stats on who buys hard or soft, with one exception: libraries buy hardcover, and library sales are very important.
    Finally, the usual pattern is that a softcover edition will follow a hardcover one just a year later. Unless the hardcover ed is riding in the top few spots, then of course they put it off.
     
     
     

  4. Thank you for “opening up your kimono” and sharing these figures. I’d say congratulations are definitely in order, based on the original release date of the book. This is really valuable insight into the financial part of publishing that those of us who are unpublished never see.

  5. Lisa — oh, good. I was hoping it would be useful. And to be honest, I was a little concerned that people might accuse me of … I dunno. Showing off? But it’s not like I’ve made millions on the book, after all.

  6. Yes, not boring.  Instructive to would-be authors, but also, sound business advice.  And makes me want to buy some books, specific authors, specific books. Very Interesting.

  7. Love this information!  I find it fascinating, but couldn’t tell you why! LOL  Seriously, letting me peek into the financial side of writing and publishing is truly eye opening and real.  Thanks!

  8. I think it’s pretty neat, and very thoughtful of you to share something this personal. I love how your site is like a peak behind “the curtain”!

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