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…”

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.

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.)

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.)

Anyway, great points, and all v. interesting.

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.

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.

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.

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

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.

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.

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.