Pontificating About How Writers Get Paid

John Green’s been posting about what he sees as the broken way in which most writers of books get paid in the publishing industry. He’s proposing smaller advances and higher royalties.

Go over there and read what he has to say. Otherwise nothing I say in this post will make any sense.

Finished? Okay then.

First up, I agree with John that his model could be better for the industry. I would love to have higher royalties.

However, the only agents I’ve known who’ve asked for them have not had much success. I don’t have as much faith as John does that it’s a possibility for writers like me i.e. for solidly successful mid-list writers who have never had a six-figure advance. I’d love if he was right and that was about to change.

I have much less faith than John does in the rationality of publishers. (I’m not saying writers are particularly rational either. I happen to think that most people aren’t rational and that’s what’s wrong with most economic models.)

Here’s the only way I would agree to be paid under John’s proposal:

  1. There would have to be a minimum of four royalty payments per year. Though I’d prefer six. Under the current model authors get their royalties twice a year. That’s a very long waiting time. Hard to pay your bills without a decent advance when money’s only coming in twice a year.
  2. Publishers would have to guarantee up front that they’d put money into sales & marketing as well as publicity for my books. My getting a higher percentage of royalties means the publisher has given up some of its cut and thus has less invested in my books selling.

The problem with no. 1 is that royalties paid twice a year is a very convenient arrangement for the publisher. Pay outs to gazillions of authors twice a year is way less of a headache. I can hear the accountants screaming at the very idea of having to do that four or six times a year. Two payments also means they get to hang onto the money for much longer, accruing interest. I can’t imagine publishers being in a hurry to change that arrangement.

The problem with no. 2 is that publishers frequently make promises about publicity and sales and marketing when they’re bidding on a book but sometimes they do not do what they said they’d do. I’ve been extremely lucky on that front. Bloomsbury and Allen & Unwin have done every single thing they promised they’d do for my books. I trust them to do well by my books. But there are publishers who don’t stand by their promises. Sometimes that’s because the person who made those promises is gone. Sometimes it’s because there was a misunderstanding about what they were promising. And sometimes, well, sometimes it’s hard to come up with a charitable explanation for the behaviour. (Just as it can often be hard to come up with charitable explanations for some writers’ behaviours. People aren’t rational.)

I have seen many writers get huge advances and in almost all cases the publishing house put a lot of muscle behind those books to promote them. I have also seen publishing houses put a big push behind a low advance book but no where near as often. And usually the publisher doesn’t do that until they see external signs of enthusiasm for the book, such as a strong reaction from big accounts and big sell-in, great word of mouth and reviews etc. I have also seen publishers see all those strong signs of enthusiasm for a low-advance book and STILL not get behind it. Whatever John may say, big advances do concentrate the minds of publishers most powerfully.

Also many of the big advances I’ve seen have not been irrational. Paying a six-figure advance to a proven bestseller is not a huge risk. I’ve seen many six-figure advance earning out. I think publishers are being totally rational paying a known earner a big lump sum to write books. It works for the author; it works for them. And that big lump sum gives the author breathing space by taking financial stresses away thus allowing them to write more.

Where I think publishers are nuts is when they pay crazy money to unknowns or non-writers (think all those failed books “by” Hollywood stars). That so rarely works out that it bewilders me that they haven’t learnt their lesson.

But, hey, I keep sticking my fingers in electrical sockets. We’re not all rational.


  1. Glenn Yeffeth on #

    The big houses usually won’t do it, but independent presses (including substantial ones with major distribution, like us) will do low/zero advance above normal royalties in some situations. I’ve done a few of these deals, always when it’s clear to both the author and us that they will sell a lot of books. The author wants a bigger piece of the pie, and I want a book I couldn’t otherwise attract. I have one book I’ve paid well over half a million on in royalties (zero advance) at above normal rates. I’d have done better to pay a six figure advance up front, but I wouldn’t have won it that way.

    Paying six times a year isn’t a problem (the accounting isn’t all that complicated) because cash flow is great with a zero advance project.

    But if an author can get a very large advance, it usually makes sense to take it. Book sales have a huge element of unpredictability, no matter how hard everyone works at it, so why not get the guarantee (a first book that doesn’t earn out can be overcome, if the book is good.)

    The unmentioned piece here is that agents need advances. Even if writers could afford to forgo them, many agencies could not survive the cash flow implications of a zero advance world.

    The whole publishing world operates lean, with publishers providing cash for the whole system – authors, agents and booksellers all “borrow” from publishers. This is why publishes are always cash poor. We’d love to change that, but without killing the system.

  2. Mathew Ferguson on #

    I worked as an editor for a licensed publishing company in Australia and they were set up for frequent payments to licensors. From recollection, once the account reached $100, it was to be paid.

    Licensors like Disney, Warner Bros, Pixar, etc, don’t accept some company holding onto *their* money for long periods of time.

    The idea that it’s too hard for accounts to pay frequently is ridiculous. Companies all around the world have money flowing in and out of them all the time. It’s quirks of the publishing industry like firm sales vs sale or return that keep the payment delay going.

    Imagine if eBay said you could sell products but they’d keep hold of your money for six months just in case there was a return? Pfft.

    I think that every writer and every agent is right to seek the highest possible advance. High advances make publishers work hard to recoup them. Low advances mean less work, no matter how well the book may do. It’s sunken cost fallacy and it is absolutely true. I have personally seen books that were privished and it was because the advance had been small enough for the publisher to take a hit on. It was a vicious loop: small advance, sales doesn’t try hard, oh look we don’t have much interest, reduce print run, now have even less risk, sales reduce effort, oh look we don’t have much interest, reduce print run …

    Even factoring in holding back 20% of royalties for returns means authors could receive 80% of their earnings paid monthly. We have computers, we have programs, we have the technology.

    All publishers lack is the will.

  3. Nicholas Waller on #

    A large advance is also a part of, or partially offsets, the marketing budget – after all, these aren’t secret deals made unwillingly, with the publisher embarrassed by everyone knowing it was forced to pay so much: they’re proudly announced in press releases. The resulting column inches and news chatter is some kind of worthwhile PR in itself (as in, for instance, Alastair Reynolds’s recent £1 million ten-year deal, which presumably raised his profile no end).

    Publishers like to pay royalties twice rather than 6x-yearly for several reasons (such as avoiding the increased admin cost burden, as you say – mailing out hundreds or thousands of cheques for mid- or low-sales book royalties is expensive in itself, never mind the cash value). No doubt gaining a bit of interest on whatever cash they hold is also a part of it – but of course the publisher doesn’t get the money the moment some individual buys the book in a shop. There’s usually a credit period involved, say 30 days for small shops through various periods for big chains or Amazon or supermarkets up to 180 days for export sales, so they most likely would not even have the cash yet on bi-monthly royalties to gain any interest from (and would have to increase borrowings, raise prices etc).

    Plus bi-annual payment gives more time to account for returns, minimising clawback later and reflecting actual sales to end-users.

  4. Gillian on #

    Let me know if sticking your fingers in electrical sockets has interesting results. I’ve electrified myself twice and the only side effect is my right hand isn’t as strong as it used to be. But if you get super powers, I’d like to know.

    On the book front, it’s a lot easier to negotiate trade-offs (advances, royalties, payment conditions) with small publishers.

  5. Patrick on #

    I think one thing John is missing is print runs.

    In the case of a 100K vs. 10K advance – how many books are printed?

    E-books may change a lot of this and I believe it’s a current argument in RWA about the legitimacy of some publishers doing exactly what John is arguing for.

    E-books have a lot of ability to change the current model because of the lack of print runs.

    The problem with doing away with advances for higher royalties is that publishers have less of a stake in the game. Editors could be encouraged to throw more at the wall to see what sticks with less editing – pushing the cost of good editing back to writers.

    Which, you know, sort of sounds like self-publishing.

    And then the publishers pick up the established hot ‘self-published’ and turn them into print authors…

    It may go that way. Who knows at this point. There’s something to be said for taking the money and running, though.

  6. Justine on #

    Matthew: But that’s exactly the point: Disney has all the power and so gets paid on time and often. But in the case of authors not so much. We’re being paid by the Disneys of the world and they are reluctant to give us our money any more often than they have to.

    Nicholas: Yuppers.

    Gillian: Problem with small publishers is they have a lot less money and reach. I know very few writers with small presses who can make a living from their writing. And those that typically do well with a small press very often move on to a bigger one.

    Everything I’m talking about here is from the point of view of a full-time working writer. If I were part-time I think my outlook would be very different.

    Patrick: When ebooks are more than one per cent of the book marketing (are they even that much yet?) we’ll see.

  7. Patrick on #

    I don’t disagree. They are currently very small.

    My point being, you want the bigger advance because that forces the publisher to print more of your books and get them in stores.

    I don’t see that changing until E-books make up a much larger percentage of books.

  8. Gwenda on #

    I was intrigued by a couple of publishing types in one of John’s threads mention that discounting at entities like Amazon is one of the main reasons they couldn’t afford higher royalties. I know Gavin was one of them, and he’s said that having books on Amazon is basically a loss leader for their books in stores (http://lcrw.net/wordpress/?p=843). And, of course, the royalty system isn’t likely to see a whole bunch of change until publishing finally eliminates the return system–I just can’t believe we’re still operating on returns.

    Anyway, great points, and all v. interesting.

  9. Kevin on #

    I don’t know how it could be fixed, but there is no reason for any publisher to only pay 2x a year. Whether they are a big corp or a small corp, do they pay their other employees only 2x a year?

    I know one publisher, Apress, that pays quarterly. They are a tech publisher, though, not a fiction publisher.

    My opinion is that it’s a matter of power. The publishers (at least the big ones) have more power than any single author, so they get to dictate the terms, more or less. (More for first time authors, less for bestselling authors.)

  10. John Green on #

    I just want to say that in my hypothetical world that does not currently exist, royalties would absolutely have to be paid out four times a year. Or six. Or twelve.

    Publishers will say returns make this impossible, but of course that isn’t quite true. They already reserve against returns; they can just continue to do so. (Plus, they have a better sense of sell-throughs than they let on.)

  11. Mathew Ferguson on #

    I wonder if the really big name writers have more frequent royalty payments in addition to their higher royalty amounts? I can’t imagine Stephen King, Grisham, Courtenay, et al waiting six months for a few million.

    I forgot to add previously that while at the children’s publishers we tried to give an author monthly payments and the agent turned it down. She didn’t want to deal with the admin. Perhaps that also plays a factor.

  12. Nicholas Waller on #

    @ Kevin – Publishers have all sorts of regular things to pay for* all the time – salaried staff, electricity bills, printers’ bills, advertising and marketing, warehouse rent – out of their general cash flow. Payments to authors are about the only thing related to the specific revenue flow of the individual books involved (which, depending on size of publisher, could be a handful to many thousands of titles) so you can see why they like to hold off on paying as long as possible.

    Overall a move to many more frequent but smaller royalty payments would tend to add to costs throughout the system (even if computers make accounting and paying simple, the cash flow will mean a need for more borrowing), and a rise in prices.

    @ Gwenda – re returns. While there are still physical paper books rather than electrons sloshing about, I can’t see a way around returns. The publisher (and the bookseller) wants the maximum shelf exposure on publication to tie in with the marketing. If the publisher says “firm sale, no returns” the bookseller is going to counteract with “no bulk order, we’ll simply fulfill customer orders”.

    *When I worked for the UK division of a large US college publisher our office managed at one stage to be “on stop” (ie, refused deliveries) with our loo roll supplier! No doubt as a profitable unit of a profitable corporation we could afford it, it was some dispute over supply terms, but still…

    We sometimes had to put slow payers among our customers on stop as well. And also absorb occasional defaults, like a couple of Turkish importers who, after a period of inflation and currency exchange problems, had no way to pay the $100,000 each they owed. (We still had to pay the authors their royalties, of course). The Iraqi invasion of Kuwait in 1990 lost us, I think, $300,000 (not sure if we had any insurance for this sort of thing; possibly, but I doubt it – bad debt is a cost of business).

    Getting a little off the point, but I well remember our credit controller writing to a customer: “I understand your main shop in Beirut has been destroyed and you are now based in Cyprus. You owe us $136.11…”

Comments are closed.