The Writing Game: Part One, Rich Authors

[rolanni]

Pursuant to yesterday's post pointing to this article and to those folks who have been weighing in on various discussions of the Amazon and Macmillan kerfuffle with the opinion that all writers are rich (and are trying to keep ebook prices high to protect their 500-acre estates).

We're going to have to do math, here. Sorry; I'll try to keep it simple and straightforward.

When an author goes to contract for a book, they receive what is known as an advance against royalties. The shorthand for this is "advance," and some people therefore forget that it's a loan against future earnings. Authors by contract receive a certain percentage of cover price on each sale as a "royalty." Before any royalties are paid to the author, the book must first pay back the money given in advance of its publication (aka "earn out").

So, using Carousel Tides -- because that novel is mine, all mine, and I didn't tell Steve I was going to do this, much less get his agreement -- as an example, this is what the math looks like:

Advance against royalties: $12,000
Pretty good, huh? Actually, it is. Most new writers can expect a much lower advance -- around $7500 for a first fantasy. Expect, wait! You don't think you're going to get that whole big lump of cash all at once, do you? No, no. We're going to break it into pieces. Happily, Baen only breaks their advance payments in half (I've heard of advances being broken down into as many as four pieces. Take into account that publishers as a race pay late, and this becomes...challenging... to any writer trying to live within budget).

Back to particulars: Sometime relatively soon after signing the contract, a check arrives:

on-signing: $6,000
less agent commission 15%: ($ 900)
less taxes 33%: ($1,683)
grocery, rent, and cat food: $3,417

Carousel Tides was submitted, and accepted, as a complete manuscript. However, there were editorial changes required. When the changes were complete, I sent in the corrected manuscript, a necessary step in triggering the second advance payment, called "delivery-and-acceptance" or, in shorthand, D&A money.

Some while after the revised manuscript is turned in, the editor accepts it (note: delivery alone does not trigger the second payment; delivery and acceptance are the trigger, and acceptance, depending on your editor's workload...could take a while.)

So, eventually, your script is accepted, your editor orders the check, and we do the same math:

D&A $6,000
less agent commission 15%: ($ 900)
less taxes 33%: ($1,683)
grocery, rent, and cat food: $3,417

Now, because Carousel Tides was an on-spec book, I didn't have to write it between signing and D&A; I only had to revise it -- with the happy outcome that I got paid both halves of my advance in the same year.

Which is to say that I saw an influx of $6,834 in the ol' house general account.

Not exactly going to Vegas on that.

But wait, you say -- you're not fooling me -- you got royalty payments during that year, too!

Oh, did I?

Now, in point of fact, I did in mid-2009-- as one-half of Lee-and-Miller -- receive royalties on books sold through June '08. Ebook royalties, exclusively. Duainfey, our first dead tree book with Baen, was published in September '08; the second half of the 2009 royalty statements were delayed, and only reached us after the first of 2010. For the curious, Duainfey has not yet earned out

So, here we have my half of the Lee-and-Miller royalties:

sales through June 2008: $4800
less agent commission 15%: ($ 720)
less taxes 33%: ($1346) [rounding down the forty cents]
grocery, rent, cat food: $2733 [ditto sixty cents]

If all I had done in 2009 was sold and delivered my novel, and collected royalties on past sales, I would have achieved for my own use a grand total of $9,567.

Geez, even the day-job pays better than that.

Also, regarding Carousel Tides -- it was, as I said, an on-spec book. That means I wrote it believing that, Once It Was Written, They Would Come (aka, "because I wanted to"). And that means that it was on submission to various publishers for 18 months before it was placed with Baen.

That math being: It took a year to write the book, 1.5 years before a sale. Two-and-a-half years before it began earning.


OK. That's probably confusing enough for one post. In a while, I'll try to break down the various author-tasks associated with getting a novel published.

Comments

[mizkit.livejournal.com]

I will gleefully link to this later, when I post on my blog again. I post things like this periodically too, but man, it cannot be explained to people often enough!

Geez, even the day-job pays better than that.

[elgordo303.livejournal.com]

Actually ... based on the Federal minimum wage, and a 2000 hr work year ... you'd be financially better off flipping burgers somewhere.

[keristor.livejournal.com]

I love these posts. Not because I'm ever going to be a professional writer (no chance) but because I have known anecdotaly for years that writing fiction isn't going to make anyone rich unless they are very lucky (odds probably similar to hitting the jackpot in the lottery) but not had hard figures to back it up (I believe, many others don't). And because I'm a geek and interested in How Stuff Works, and that includes publishing and the music business and all sorts of other stuff...

[adina-atl.livejournal.com]

What I don't understand is why authors are willing to accept the same royalty percentage for an ebook as for a print book. Yes, the author should get just as much from the sale of an ebook as from the sale of a print book, because their work is the same for either. But, why should the publisher get as much for producing pixels as for paper?

I've been told for decades that one reason book prices are going up is because the price of paper and printing is going up, so obviously the paper/printing plays some role in the price. My brother and father work in publishing, so I know the mechanics of storing books, managing inventory, shipping from printer to distributor, distributor to bookseller, etc. are not free either. All of those publisher costs are eliminated in ebooks, yet the publisher takes the same percentage of the final cost of the book, while doing substantially less work. I think authors are being robbed by the publishers on ebooks, not by the readers.

[jhetley.livejournal.com]

Or, condensed: "Don't give up the day job."

I looked the other day (tax time) at the total income in my Quicken category for "royalties and advances" -- this for about ten years in the published ranks and four novels. Works out to under $4000 per year . . .

[nicoli-dominn.livejournal.com]

It's funny/frustrating how people often have the misconception that royalties equal riches. As someone who studied music business, I can tell you how surprised I was when I first read about artists and songwriters and their respective recording and publishing agreements. On one hand, there was the huge recording industry up through 1995 or so, before the advent of Napster and home recording and "indie" musicians, and the wild successes of people like Motley Crue, Britney Spears, and Madonna; on the other hand, you had the "lesser" recording artists, and now, you have the post-Napster digital music world in which most publishing agreements do not include any advance on royalties whatsoever, and in which record deals are for the overnight hitmakers and often provide no more than a $25,000 recording advance, as opposed to some of the million-dollar advances the superstars used to see. From what you've detailed, it seems that the (book) publishing industry has undergone much the same transformation, but was probably more competitive for authors than the music industry ever was for artists.

I very much appreciate this breakdown, if only for the sake of enlightening others. Kudos on a very clear explanation. :-)

[gingerwood.livejournal.com]

It will be interesting to see how the long tail generated by the e-publishing industry changes the game.

[(Anonymous)]

I've been following this discussion with interest. I understand the argument for pricing books by demand (more expensive when new) rather than format (HC, PB, ebook). But if I'm going to pay top price for a newly published, long awaited book (which I am willing and happy to do), I darn well would like to get it in the format of my choice! I just so happen to like mass market PB format. I have many books and not much space. Hard covers are big and heavy! I don't see why I'm forced to buy a HC copy first, then swap it for a PB a year later, at additional cost, just so it fits on my keeper shelf. If the production cost for the various formats really differs by so little, why not offer all formats at the same time, for the same cost?
Maike

[yammermoon.livejournal.com]

A group of editors forming a company with a focus on e-publishing could clean up by just re-aligning the royalty rates for authors. Sounds like a great business opportunity!

[wordweaverlynn.livejournal.com]

The only thing about this that surprises me is that your agent is still taking only 15%. Last time I had an agent peddling a book manuscript for me, she was going to take 20%. That was a dozen years ago.

Other kinds of freelance writing used to be reasonably profitable (you could survive, maybe have a family), but not now. (http://ow.ly/14zpm)

Thank you

[(Anonymous)]

That was a very clearly stated example. I knew in my gut that authors don't make much but it's great to see something in real numbers I can point others to.

Re: eBooks - I think we are still a long ways away from a stable pricing protocol. We don't have a stable eReader device yet - Kindle's close but it's too expensive for many. Once the devices and formats have settled out (anyone remember Betamax?), there'll still be pricing volatility as the publishers figure out What The Market Will Bear. This is going to be a bumpy ride for the next decade. ish. The current eReader-user is angry but they are a small minority compared to those buying the dead-tree editions - the publishers should remember that eventually the eReader-users will be in the majority and should avoid annoying them. I saw Macmillan as attempting to do that --- they never said the eBooks
would STAY at 14.99. They said the eBooks should start there and go down in price as the paperback editions get released.

But this is my own opinion as a bookseller (who gets the maximum price of her books DICTATED to her by the publishers),
Lauretta@ConstellationBooks

PS One of my successful thriller authors once quoted 0.25 royalty on each Mass Market paperback book (7.99) he sells. And that was with a big publishing house. That's not even a postage stamp anymore!

An Excellent Reality Check

[(Anonymous)]

Thanks for spelling out a real-world example of what authors really make from publishing novels. You inspired me to write a related post on my blog, including a link back to your site (see http://timeguardiansaga.com/blog/?p=434).

Don't forget the editors

[rcartwr.livejournal.com]

This has been alluded to earlier, but the two biggest expenses any publisher has is editors and marketing. A really good editor does far more than spelling and grammar. They read outside the universe created by the author and provide a sanity check for what is written. Can Joe Reader pick up the book and make sense of it? Marketers ditto. Alas, those people expect to be paid and considering where most of them are "forced" to live (NYC, Boston, LA, etc.) they have to be paid a bit.

Perhaps however the biggest thing publishers did, before they outsourced to agents, is act as gatekeepers. In the past, you might not like a particular writer (I am not all that fond of Stephen King, some disagree with my position) but you could usually rely on certain publishers to print writers who could tell a tale. All this infrastructure costs money, and whether you are printing with ink or electrons, you are going to have the overhead.

How do I give you more money?

[(Anonymous)]

Well, of course I could just write you a check, but what I really mean is this - when I buy your work, is there a particular vendor or purchase option that gives you more of a cut? Cuz even though I have most of what's available already, I still buy more - give to friends, etc..... I'd like to be able to support you more fully so you can keep writing more crack, I mean, "books".

[seabat4.livejournal.com]

How does this work for an anthology, such as Low Port? Does everyone in the book get $0.63?

Cathy

[gilraen2.livejournal.com]

so what you are trying to tell us is that your 500 acre estate is in the middle of the gobi desert with no water, no roads, no internet, and the taxes are higher than the rent you charge the nomads to put up their yurts.

[orlacarey.livejournal.com]

But but but...Richard Castle (from the TV show Castle lives in a penthouse in New York and has so much money he can't spend it all...and he only writes one book a year. Obviously all writers make crazy amounts of money that I can only dream of

(sarcasm off)

Seriously, thanks for writing this. I keep telling people that authors don't make as much as you would think.

I remember back when I was in High School I worked in the library that an author used occasionally. When I found out who she was I mentioned how much I was looking forward to reading her next book but that I had to wait for the paperback. Her response was something like "that's okay I don't need the $0.25 I'd get if you bought the hardback." That has always stuck with me as an idea of what how much money authors are NOT making