Category Archives: Publishing

What is a book advance?

What is a book advance?

That’s a very loaded question! And it’s sort of what this post is about. This post is also a response to a common misconception about advances. How often have you heard something along the lines of “the author got an advance, but never saw any royalties”?

Here’s the thing: advances are royalties. It doesn’t matter when they’re paid.

Let’s back up a little. As I back up, remember that any information you can find out publishing tends to be general, and there can be special situations and circumstances–and things can change! There is also a lot of wrong or incomplete information around, as well as information that is skewed by perspective; that is, who’s telling the story defines the focus.

Typically, authors (and illustrators, though I’ll talk about that less in this post) who work with a traditional publisher are their very own business. They might technically be a sole proprietor; they might have established some other business structure under which to license their books. Regardless, they’re not an employee of any publishing company, but work for themselves, creating and selling–licensing–the rights to use their words to other businesses (usually, with the help of an agent, who works on a commission basis). Without getting too far into the weeds, this means that authors own the intellectual property they create, whereas if they were employed to write books by a publisher, the publisher would own it. Publishers are not in employer-employee relationships with authors. (There are times when a publisher or packager does own the copyright, such as when an author or illustrator is hired to work on a project, often called IP as shorthand for “someone else’s intellectual property,” and the author doesn’t own the idea and the deal is for the creative piece to be sold outright.)

So, then, authors don’t make money in wages or salary from a traditional publisher. Instead–again, usually, unless they’re working on an IP project for a flat rate as an independent contractor–they earn money from royalties.

You’ve probably seen an episode or two of Shark Tank, where entrepreneurs pitch their products to investors. A lot of the time, the investor offers some money for a share of the company. One of them, Kevin O’Leary, is especially fond of a royalty arrangement. In the link, he offers the company money up front, and will be paid back on each product sold, with some extra stipulations. If you understand what he’s doing with his offer, you’re ready to hear about book royalties!

A traditional publisher’s offer is a partnership to bring a book to market. That publisher takes on the financial risk and handles the editorial, production, sales, marketing, and publicity tasks, as well as myriad other costs, and pays the author a royalty per item sold, sometimes on the retail price, and sometimes on the net received, depending on the format (format dictates much of pricing, and then how much money the publisher receives in the end to pay off expenses, including the royalty; that’s another post all on its own).

So, then, what is a book advance? An advance is when the publisher fronts the author some royalty money before the books are sold, sort of like those options for your bank to put some money in your checking account on Thursday because you’re regularly paid on Friday, or, in a less favorable analogy, like a payday loan.

How the advance can be calculated is a post all its own, even if a company has guidelines around that. A smaller publisher might not offer, or be able to offer, an advance at all, because their longevity and size coupled with cash/cash flow concerns won’t allow them do that without being over-leveraged. Another might offer a very minimal advance, like a couple hundred dollars, as an acknowledgment that you’re going into business together, more or less, or have a small advance, let’s say in the low four- to low five-figure range, that is standard for them to offer. A larger publisher that has been in business for a long time will probably offer a larger advance, which is more likely to be based on their projections about what an author will earn during the first couple of years on sale (for most authors, this is about as long as their book will be regularly printed–again, another post!)–but also might take into account how much they want/need the book, including whether or not the book is sold in an auction, or how much the publisher has been paying for similar books.

Still, even though there might be some wiggle room in the size of the advance for a larger publisher, and it’s always worth asking for a little more in the advance, the publisher will also have its own limits, whether that’s a sense of how much they’re willing to pay up front that’s gut instinct or related to any comparable sales figures, along with any metrics for absolute caps on paying an advance that’s larger than what the publisher expects to pay the author over time.

Now, here’s what prompted this post in the first place: I often see it stated that “the publisher gets paid first.” That’s not true; if the author received an advance, the author got paid first, though if you want to get super pedantic, the publisher staff who worked on the acquisition probably got a paycheck in the interim. To be fair, too, for a book that is published without an advance, the publisher and author got paid around the same time, with a delay to the author to allow for accounting, auditing, receiving payments (sometimes delayed too), and sending on any payment owed. In an ideal world, this process would be faster; right now, it can be pretty time-consuming and unwieldy, it takes a long time to collect all the payments from multiple sellers, which is why many publishers pay out the royalties only twice a year, and I have been told that it can be only once a year for academic presses.

Okay, so how is an advance paid?

Depends. Depends on a bunch of factors, from whether the book is fiction or nonfiction, how big it is, and even how other publishers are paying out advances. The advance payments can be tied to just about anything you can dream up. For a memoir, portions might be paid for things like providing photographs; for nonfiction, for turning in a bibliography; for a picture book, completing sketches. If you’re thinking that one of many reasons to pay an advance is to encourage timely submission of materials, you’re right! A very small advance for fiction might be paid on signing or when the manuscript is formally accepted (typically, when the developmental editorial process is over and the book is sent to copyediting); a more established publisher offering a bigger advance is probably–these days–splitting the advance payment into amounts paid on signing, on acceptance of the complete and edited manuscript, and on publication. A bigger advance might also split so that some money is paid on paperback publication, if the first format will be hardcover and a paperback is firmly expected.

You might be hearing about publishers splitting almost all advances into at least four parts lately. True, at least for medium to large advances. One particular publisher did this early in the pandemic and other large publishers followed suit. My analysis: they panicked. Publishers hadn’t had a “good” year in a while; profit margins are tiny and corporate owners are always pushing for more; there was the expectation that the economy would sour and affect optional purchases like books; printers overseas had already been on lockdown, so there were hints back in 2019 that something was about to be really bad. In the end, a lot of the profits happened in non-trade spaces, like educational books, a lot will go to rises in materials and manufacturing costs and inflation, some went to fixing problems that happened in the supply chain, which has been an absolute mess and wreaked havoc on schedules.

Anyway, publishing pays advances sometimes years before the accompanying books are published, and pays all the production/printing/shipping/marketing costs (which for a “small” book can easily be a couple hundred thousand dollars), and then waits for payments to come in after publication, while allowing for books to be returned to them at any time (unlike any other industry that I’m personally conversant with). This puts a lot of financial risk on the publisher, so it’s not illogical to me that they want to minimize that; it’s also rare to be a business owner providing a product or service and get paid for all of that product or service before that thing is fully delivered. The other thing that’s not illogical is to want to exploit a system that offers payment in advance of delivery, so it’s not wrong of authors to want more payment sooner.

Then, what’s this yelling about not receiving any royalties? Let’s take a hypothetical situation where Big-Chonkin’ Publisher makes a deal with you. They think they can sell 1,000 copies of your book at $10 a pop, and they’re going to pay you 10% of that retail price per copy. They offer you an advance of one thousand dollars–$1,000. You agree to this deal. Handshake, signature, payment. Boom!

Next, the publisher goes out and sells 800 copies over the life of the book.

You earned $1 each time. That’s the royalty of 10% times the $10 on each book. You have earned $800 dollars from royalties! However, the publisher sent over $1,000 already. They don’t owe you more 10% payments on books yet. You’ll have to sell one thousand copies before that happens. If you do, great! The next time the publisher pays out royalties, you’ll get some sweet change. If you don’t, great! You got paid for more books than you sold; from another angle, you got a higher effective royalty rate. And you don’t have to pay the extra back–the publisher will eat the loss. There are situations where you might be responsible for paying back the advance, but this isn’t one of them.

Over the years, I’ve seen a lot of people say things about how the publisher is getting rich and not paying you anything more. The publisher might not be paying you more, and they might be getting payments in from the sale of books; that’s their portion of the profits, which is probably going toward backfilling what they paid out to make the book. If you do well beyond their initial predictions, you’ll get more money as those sales come in and are paid. If you have a publisher saying “we don’t have the money to pay royalties we owe,” you should blast them into the sun, because that percentage was always yours and should never have been spent on anything else.

Did your book that didn’t earn out make a profit for the publisher, and are they sneakily hiding their piles of money?

Probably not. Most books don’t earn out their advances, so the publisher estimated more success for you and paid you on expectations instead of reality.

If the publisher is making bank, you’re making bank too. If you came close to earning out in the overall scheme of things, the publisher maybe came out about even (read: lost a little or profited a little, some of which depends on costs that have been variable through the whole process), and if you didn’t, you’re in the big group of authors whose books weren’t profitable for the publisher. That might mean that a publisher offers a smaller advance next time around, or that they decide they shouldn’t be the publishing partner on your next project, which frees you both up for something new. But it can be a matter of degree–how much profitable or unprofitable? Is there something on the horizon that means the next project might still be successful for both of you? And how does that imprint or company figure their overhead costs? That is, did they make back the direct costs, but not as much as they were expecting in profit to put toward the cost of running the business? And how should publishers account for overhead….

The big answer is always maybe, maybe, maybe. While I made some generalizations, every book and its finances are a unique product and situation. As the author, you don’t necessarily have to care about the effect of your advance on the company; you got an offer and you took it. The situation where you got a HYUUUUUUGE advance and made few sales will indeed matter to your short-term career, but–let’s be real–if you got a HYUUUUUUUUGE advance you’ve made more money than a lot of writers make in their entire careers.

And that’s a whole other post.

None of these thoughts are to disparage authors or publishers. Everybody’s out there trying to make a buck or three, and should try to use any strategy available to stay in their preferred business–and I’m out here thinking that there are some confusing ways to put things that don’t do anybody any favors when it comes to understanding an industry that doesn’t operate like any other. Finally, remember what I said about taking things you read about publishing with a grain of salt? Every situation, every book, every budget looks different, and I’ve glossed over a lot here, so your mileage may vary.

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Comps and Comparisons

Hoo: No updates since November 2020, and here it is, almost two years later. I feel like I live out of time, these days. My July to September personal goals included posting three times, but once feels like an accomplishment.

Meanwhile, I took a dip into the bookish internet, and what did I see but fighting! Ah, it’s the way of things. Someone says something, perhaps makes a thread about it; most of the time, the thread is about 80% good information, 20% misinformation or misapprehension. On one of those items, good or bad, someone fails to use critical reading and reasoning, and is angered that a bit of advice doesn’t apply broadly, or apply to their situation, or just doesn’t come with that disclaimer that mileage may vary. Quickly, there are subtweets, quote tweets, new threads. There are patterns in whose anger is uplifted and whose is not. People start missing the point. Some people swoop in as the loudest in the room, the ones you ought to listen to, but aren’t necessarily the ones you want to work with. Rinse, repeat.

So I’m going to talk about comps, with no rancor. (I honestly have none for anyone anyway; I don’t remember who was in the comps conversation; nobody did anything wrong.) Instead, I’m going to talk info, all in one place. As I warned you, nobody is 100% right about everything. My only goal here is information, though, which I hope helps.

Comps in Book Publishing: What Are They?

A comp might mean a competitive, comparative, or comparison title, and different terms and meanings can be attached to different points in a book’s journey. In the most general terms, it means a book that is like another book in a useful way. Most often, in my experience, a comp is used to mean a comparative title, whether that end definition is “a book like this other book” or “a book like this other book and we published the book.” Sometimes, competitive can mean “a book like this other book and some other agency or publisher published it.” Still, there’s always the overall sense of there being a similarity that would help this new book find its readership.

What that similarity is, though, can vary. If you’re publishing a picture book, you probably–not necessarily always, but nearly always, probably–want to comp the book to other picture books. You probably want to comp middle grade fantasy to other middle grade fantasy. You might want to comp adult self-help about how to end a relationship to other self-help about marriage, divorce, couples counseling, maintaining friendships, co-parenting, and closely related topics.

The thing about comps is that while there are (variable!) best practices, and sometimes rules within an organization about how to comp, there are also times when you have to break the rules, or not use comps at all. My dirty secret: I hate comps as much as I hate blurbs. My confession: I know they’re one of many tools in the arsenal.

Here is a bit about when comps can be used, and how.

Querying

Do agents like comps? I have interned at agencies, but never worked in any. Let’s say that some will like them, some won’t. In your query letter, a comp might help you pitch your book. Working in that comp can be tricky–at least, it would be for me, because saying that my unproven book is like this other book would feel weird at best. If I have a good comp, though, including it might be a way to make my query stand out in a sea of queries. Maybe the agent really likes a particular property, or sees the mention of another book and understands better that you know where your book would live in the bookstore (and that you’re not trying to write a mashup of every existing genre in a way that appeals to toddlers, children, and adults equally). Here are a couple of ways to do that:

“I noticed that you’re looking for books with a Star Wars vibe, and my book, The Two Suns, begins with a reluctant hero desperate to escape a binary star-system…’ [Ed. note: comparing yourself to juggernauts isn’t the safest plan, but it makes an okay example here.]

“…, with a theme of finding and being your truest self, is a graphic novel for young readers of stories like The Prince and the Dressmaker and The Deep and Dark Blue.”

“I wrote this after asking the question: what if The Great Gatsby was set on a military base in the southern Pacific?”

“…in a story where Gearbreakers meets Paper Girls.”

If you can’t come up with anything, I honestly don’t think it’s the end of the world. It’s all a gamble: does the agent hate, hate, hate the comp you listed? Is it a wonderful comp that hasn’t sold well, or one that agents (and the editors they submit to) have seen too many times lately? You can’t know! Whee! Use ’em if you’ve got ’em, skip ’em if you don’t. What you can do–and really the only thing you can do–is work on getting your best story down on the page.

Submissions

The next step: Hey, an agent likes your book and thinks they can sell your book! They write a pitch note and attach your manuscript to the email and send it off to editors. The agent might use some of the text of your query; they might not. And they might or might not use comps in the same way you as an author did, as in the examples above. They could also sorta-comp; that is, they might say “I’m sending this to you, editor, because you edited This Book and That Other Book.”

Does the agent have to include comps? It’s nice, I think, to have them, because it clues the editor in immediately to where the book might fit into the market and their list, and the imprint’s list (and, say, see if a particular theme is overrepresented or a priority for acquisition), and can help the editor get a head start on putting together acquisitions comps (more on that later). The comp can, of course, backfire if the editor doesn’t like the comped book, or if the comped book hasn’t sold well, or if the editor simply doesn’t know the comped book (or other media) well. HOWEVER: please let me reassure you that no editor is passing on a submission because they think the submission query’s comp stinks. Editors receive dozens, maybe a hundred, submissions for every new book they buy. By backfire, I mean that, at worst, the editor might think OMG I hate The Great Gatsby, let me tell the agent they can submit to someone else here, saving everyone a bit of heartache.

Dirty, dirty secret #1: I almost always read submissions more or less in the order received and did not prioritize “favorite” or “important” or “big” agents/agencies. I did this because I think moving people up and de-prioritizing others is un-egalitarian, because those practices seemed profoundly unfair toward newer and marginalized agents and authors, and I’m gonna be honest here, with a million things to track, prioritize, and organize, I didn’t have the bandwidth to be running an ever-shifting mental list of emails I hadn’t even opened yet. Working my way through and responding in order–and skipping the “got your email!” emails–was my best, fairest, and importantly, fastest process.

(I won’t lie: Obviously, if I was thinking positively about a manuscript, I might set it aside and move on to something else. At other times, grabbing all the picture books out of the queue was easier than switching reading modes on the fly. And like everybody else, I was sometimes very behind on responses. Etc.)

Dirty, dirty secret #2: I always looked at the submission attachment first, and looked at the pitch email afterward, in an attempt to see what it would be like to pick up the story in book form and to try to skip over any of my own preconceptions (that comp didn’t sell, I don’t like the idea, whatever). One of the books I was most excited about when I was acquiring had the second-worst query I have ever seen.* (The worst: “I don’t do pitches.) I can’t say that’s true for everyone; an editor with a very established list might always look at the pitch to see if the offering fits well with their limited openings (though, of course, I’ve found that editors tend to be very generous about passing books along when they know a book could work for the imprint if it was a fit for another editor).

*I didn’t get to buy it! Just letting you know in case you’re the sort of person who likes to go out sleuthing; there’s nothing more to the story.

Acquisitions

Comps are used in all kinds of ways at acquisitions…maybe. At some imprints, the acquisitions process is as simple as an editor going to their publisher and having a quick conversation. At others, there are multiple rounds of reads, in-house pitches to the team, analyses from finance, and more. If the process is more formal, it’s likely that the editor will have to come up with some comps, both published by their house and published elsewhere. You should insert the word “probably” into all the rest of the statements.

The editor, if internally pitching the book, wants–needs–others to sit up and take notice. While the read might be the most important (remember that I said all you should focus on is writing your best book?), sales matters too. So the editor wants to find three to five(ish) books targeted at the same audience, in the same genre, with sales (as available internally, or on Nielsen BookScan for titles published elsewhere) that paint a picture of how the book the editor wants to buy would do in the market.

They’re looking for books published in the last couple of years. They’re likely not allowed to use the biggest bestsellers, since the sales team is tired of every book being comped to those, as are the book buyers that they’ll be talking to down the line, but the editor hopes to find titles that are familiar to their colleagues; it’s impossible to read even a fraction of what’s sold in any category every year, but some books will ring a bell anyway. The editor wants to show that readers like the themes, setting, etc., and show how the book might appeal to a particular audience, but also be interesting widely. Most publishers, in one way or another, also want to have a varied portfolio of books so that there’s something for everyone and so they’re not pitting books against each other on their lists (two books with dead moms this season? we’ll take one of them, says the book buyer), so the editor is trying to balance alike with different, niche with broad, unique with “like these other recently published good books you know.”

It’s tricky. Especially tricky when a topic or theme is making a comeback. When there haven’t been successes yet, but you know readers are waiting for something new. When readers are very exciting about something new, but similar books haven’t been in the market long enough to garner many sales, and your team is trying to figure out how many yours might sell in the 2-3 years that they’re using for a financial model.

Trickier: I’ve heard that at some imprints, if you can’t pitch a book to the team as “X meets Y,” you’re not getting the go-ahead. I hate this idea; not all books lend themselves to that kind of framing.

In summary: This is a point where comps matter, up to a point. They’re rarely the thing that makes or breaks a book’s acquisition; the editor’s passion, a unique selling angle, the strength of the manuscript, and more will come into play. The editor will, however, need something.

Marketing and Publicity

Your quick primer: Publicity is the free stuff (getting a book reviews, getting the author an interview), and marketing is the paid stuff (advertising, particularly including behind-the-scenes industry stuff that most authors never see, promotions, the the like). That’s oversimplifying, but you get the gist. These hardworking folks are reaching out to other hardworking folks who may or may not have time to read an advance copy of your book, so they may have to shorthand your story as “the next Big Book You Have Sold a Lot Of!” or “X meets Y!” or “For fans of This Other Title You Know People Bought and Liked!” They’re trying to maximize opportunities, so comps are in use here.

You might see these comps on marketing copy, and marketing copy includes the description of your book online; on your book cover or advance copies; in press releases; and more.

Sales

Comps have been flowing up the chain throughout the pre-publication life of the book. Perhaps some comp titles have been swapped in or out of the list that the team looks at in-house. Maybe the strategy has changed from “X meets Y” to “for fans of” or maybe even “this other author who has written a comp title loved it,” if you got that kind of a blurb. (I hate blurbs with the intensity of the core of the sun. That’s a different post.) But here is where comps are necessary: Book buyers, meaning in particular big chains and stores that sell things other than books, will look at the sales of the comp titles and use that to guide their ordering for the on-sale date, which flows back through the chain of information to finance, production, and so on. Some of these buyers will not look at anything published more than two years ago! And, like the marketing and publicity folks did, the sales team is trying to shorthand their enthusiasm so that stores will stock your book, meaning readers will happen upon it and buy it because they see it on the shelf.

Even with great comps, things can go wrong. The buyer/buyer team isn’t super interested in the comps. They think that a particular comp isn’t doing well for them, and they had to return a bunch of copies, and don’t want your similar book to be in the same situation. Maybe they’re not seeing a lot of pre-orders. Maybe they don’t perceive enthusiasm among their customers. And then they might pass on carrying the book in their stores or even online. Or they might under-order, and your book might be out of stock for a bit (not as awful as you might think–there isn’t usually a big gap between out of stock and in stock, no matter how evil the out of stock message about how we’re out of stock and aaaah we don’t know if there will ever be stock again and yes there are boxes at the loading dock now but woe woe how will we know when we can ship–but it’s a scramble for the publisher, scary for the author, and sucks all around). (Another part of the suckage is that some of the big book sellers are moving toward a “just in time” inventory model, so they order juuuuuuust enough, planning to reorder later. Books can be printed fairly quickly, but ordering in small batches still takes time, doesn’t allow for planning, and costs more because of the smaller batch size, which means it’s harder to get to profitability, which means publishers get more conservative in their estimates and acquisitions, and on and on.)

The point is, this is a point where comp titles are truly necessary.

And Beyond

From here, some buyers will or might look at trade reviews, advance copies, catalogs, and other sources to decide what to stock in their stores or acquire for their libraries. Some really want a verbal pitch from their sales rep; others might put a finger on the scale for a local author. The comps might matter less.

And then we can’t forget the readers! Some will see a comp and think “hey, that’s for me.” Some will see a comp and think “aw, I don’t think I’ll like it (but maybe my friend will.” Some won’t notice the comp at all. So we can argue, here, that comps are nice to have, but like they are at many points in the life of the book, not a make or break thing.

In Summary

If you take one thing away from this post, take away that comps are interesting and maybe useful, and only occasionally necessary. Every single book has a different path, and there are a zillion factors that affect each one–maybe in a different way from which they affected other books. Can you control it? Can anybody? Nope. Write your stories. Read good books. Carry on.

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