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I received a nice little check from the agent today, which included the signing advance for the reprints of DARK WATER'S EMBRACE and SPEAKING STONES, as well as royalties from HOLDER OF LIGHTNING (which earned out some time ago) and also, happily, for MAGE OF CLOUDS, which has also now earned out. Yay! HEIR OF STONE is getting closer, too...
For those not familiar with the way traditional publishing works, the author is paid an advance -- a flat amount which is an "advance against royalties" (and can vary quite a lot in how small or large a payment it is). The author earns royalties on every copy sold, a percentage of the cover price of the book (typically 8% - 10%), but won't receive any of that money until the advance is paid back to the publisher (which is when the book is said to have "earned out"). Once the book has earned out, the author starts receiving the additional royalties, typically at six month intervals.
To use a simple example, let's say an author received a $5,000 advance against an $8.00 mass market paperback, at an 8% royalty rate. 8% of $8.00 is $.64. So the author will need to sell 7,813 copies of his/her book ($5,000 divided by $.64) before she/he sees any more money. If the book sells 10,000 copies, the author will eventually receive an additional $1,400 for the book: (10,000 x .64) - 5,000. More copies = more money, obviously.
And no, if the book never earns out and fails to sell enough copies to cover the advance, the author does not have to pay back the advance to the publisher. That's their risk (which is why they try, as best as they can, to keep the advance 'reasonable' for their expectations for the book.)
Interestingly, Isaac Asimov reputedly never took an advance for his books, so that he would start receiving royalties immediately. Of course, that requires total trust in the honesty of the figures your publisher is handing you...
For those not familiar with the way traditional publishing works, the author is paid an advance -- a flat amount which is an "advance against royalties" (and can vary quite a lot in how small or large a payment it is). The author earns royalties on every copy sold, a percentage of the cover price of the book (typically 8% - 10%), but won't receive any of that money until the advance is paid back to the publisher (which is when the book is said to have "earned out"). Once the book has earned out, the author starts receiving the additional royalties, typically at six month intervals.
To use a simple example, let's say an author received a $5,000 advance against an $8.00 mass market paperback, at an 8% royalty rate. 8% of $8.00 is $.64. So the author will need to sell 7,813 copies of his/her book ($5,000 divided by $.64) before she/he sees any more money. If the book sells 10,000 copies, the author will eventually receive an additional $1,400 for the book: (10,000 x .64) - 5,000. More copies = more money, obviously.
And no, if the book never earns out and fails to sell enough copies to cover the advance, the author does not have to pay back the advance to the publisher. That's their risk (which is why they try, as best as they can, to keep the advance 'reasonable' for their expectations for the book.)
Interestingly, Isaac Asimov reputedly never took an advance for his books, so that he would start receiving royalties immediately. Of course, that requires total trust in the honesty of the figures your publisher is handing you...
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But, for the non-initiated (which you are not, Kij!): a publisher might ship out, let's say, 30,000 copies of your book. However, in the traditional publishing model, the bookstores are permitted to return unsold books (in hardcover) or strip off the covers and return them (for mass market paperbacks) for credit. In other words, some unknown percentage of those 30,000 books are going to come back to the publisher, and so they are not "sold" yet -- just shipped.
"Shipped" does not equal "Sold."
Therefore, to protect themselves against paying for "sales" that will actually be returned, the publisher has a "reserve against returns" built into the royalty statement. That can be pretty high on the first royalty statement, but should drop with each succeeding statement, since the chance that the book will be returned drops the longer the books are out there. So a royalty statement might say that 10,000 units went out the warehouse door, but if there's a reserve of 8,000 units, then your net sales for that period will only be 3,000 units (10,000 minus the reserve).
Eventually the publisher will "release the reserve" -- at which point the copies held in reserve are attributed to your sales. For authors, that never comes soon enough... :-)
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(Please tell me that your net sales for that period would be 2,000 units rather than 3,000.)
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Yeah, I changed the reserve number as I was typing and then forgot to change the total correspondingly. *sigh*
I teach Creative Writing, not arithmetic. Consider this Creative Math. :-)
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Also, he was Isaac Asimov... When I suggested a no advance route to my agent, he informed me that I am not. *g*
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Congratulations.
B
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The publisher wants payment delayed until publication; the writer wants it in one lump sum on signing the contract. Neither usually gets their way.
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K.