Advances and Royalties and Agents, oh my! A Primer on Traditional Publishing

(Bad Girl, who is being especially good today)

Many here know I teach Crafting a Novel at Sheridan College in Toronto.  In weeks 13 and 14 of the course, we talk about the business of publishing.  I’ve prepared the following primer on traditional publishing to bring new authors up to speed on the basics, and thought it might be of interest to readers here.  (Insert caveat here: this is a general primer. Your deal or experience may be different.)

Advance:

…is just that.  It is an advance against the royalties the publisher expects you to earn.

If your book cover price is $10, and your royalties are 10%, then you can expect to make $1 per book sold at that cover price.  (Often, your publisher may sell for less when in bulk. And when that happens, you make 10% of the amount the book sold for, so a lot less.)

So…if you receive an advance of $5000 (which would be considered a nice advance in Canada from a traditional publisher) then you would have to sell 5001 books before you would start seeing royalties.  (At least.  It may be more like 7500, if they’ve sold some of your books below cover.)
In Canada, royalties are supposed to be distributed quarterly, according to standards set by TWUC (The Writers’ Union of Canada).  But this standard is not law; often, publishers ignore these guidelines and pay royalties semi-annually. 

Royalty Example:  Melodie sells 1200 copies of Rowena Through the Wall from Oct. 2015 to Dec. 2015.  She has already ‘sold through’ her advance in previous quarters (see below for an explanation of sell through.) The royalties on these sales will appear on the March 15 royalty statement.  So in fact, for a book sold Oct. 1, she won’t see her $1.50 until March 15, nearly 6 months later.  And that’s with the best kind of publisher.

Sell Through:

This is the term to describe if you have ‘made up’ your advance.  If, in the top example (advance of $5000,) your book has sold 5001 copies, you have ‘sold through’ your advance.

This is a key event in the life of your book, and a critical thing for your book to achieve.  If your book doesn’t sell through, then you are unlikely to get a new book contract from that publisher.

You can see why a large advance comes with stress.  The smaller your advance, the easier it is to sell through. 

(Even if you don’t sell through, you keep the full amount of the advance.)

Agents:

An agent handles the business side of your writing (contracts, etc.)  Agents typically take 15% of your income. 

So, if you got an advance of $1000 (a not unusual advance for a first book in Canada) an agent would take $150 of your advance.  Now you can see why it is so hard to get an agent.  They don’t want $150 for all their work – they want $1500 or more!  So until you are getting advances of $10,000, it is hard to get an agent.

Why you would want an agent:

Agents get you in the door at the big 5 publishing houses.  Most of the big publishers will only take query letters from agents.  If you are a published author already with a house, the main reason you would want an agent is to ‘trade up.’  i.e. – move from a smaller publisher to Penguin. 

Time from sale to bookstore with a traditional publisher:   
Usually 12 months to 18 months.  15 months is typical.

Deadlines: 

Miss your deadline with a traditional publisher, and you are toast.  This means deadlines for getting back on publisher edits too.  Production time in factories is booked long in advance.  If your book isn’t ready to go on the line in its slotted time, then your publisher loses money.  Say goodbye to your next sale.

Print on demand publishers: 

Some smaller traditional publishers have let go of production runs and are now using print on demand technology via Createspace.  Usually this means shorter time from sale to bookstore.  (i.e. a book sold to a publisher in March might be for sale by June.)

How bookstores work:

Bookstores typically buy books from the publisher or distributor at 60% of cover.  So the bookstore makes 40% (less shipping costs).  Usually the shipping costs are born by the retailer, but sometimes publishers will have specials.

BUT – if a book doesn’t sell, the retailer can rip off the cover, send the cover back to the publisher and get a full refund for the book.  The coverless books are then destroyed.  (Yes, it’s appalling.  It all has to do with shipping costs.  Not worth it to ship books back.)

Problem – this doesn’t work with print on demand books.  You can’t return anything to Createspace.  So retailers are reluctant to stock books that are not from traditional publishers using the traditional print-run method, because they can't return books that don't sell.

How long is your book on a shelf:

In a store like Chapters (the Canadian big-box equivalent of Barnes & Noble), if your book doesn’t sell in 45 days, they usually remove it.  Gone forever from the shelves, unless you become a NYT bestseller in the future, and they bring back your backlist.  Yes, this is unbelievably short.  It used to be 6 months.  The book business is brutal. 

I think the third word in that last line is the key.  The book business is a business.  It’s there to make a profit for shareholders.  We are in love with our products, so we find that hard to face.  I saw a study that said approximately 40% of writers are manic-depressive.

The rest of us just drink.

Melodie Campbell does her drinking in the Toronto area, where she writes funny books about a crime family.  Is it any wonder?  www.melodiecampbell.com