Money
I wrote this post about a month ago, but didn't put it up because I kept tinkering with it. What reminded me to finally post it is the email I just received asking, "How much does being an author pay, anyway?" While I'm not comfortable sharing specific details about my writing income (suffice it to say I still have a job outside writing to support my bills), I am fine with speaking in generalities.
Money is something a lot of authors don't talk about. There's a good reason for their silence - money is a touchy subject. If an author gives a public "whoo-hoo!" about the money he/she has gotten from writing, it can often be perceived as tasteless bragging. If an author gives a public lament about money he/she's gotten from writing (as compared to their bills, perhaps) it's often perceived as ungrateful complaining. So, as an author, it's sometimes best just not to talk about it.
But since there are a lot of questions about money in publishing, I'm going to broach the subject objectively, because money in publishing is a valid discussion topic. Note: I don't claim to know everything about the subject. Far from it. I'm only posting on what I've found out based on my own limited experience, and the experiences from friends or acquaintances in the publishing industry.
If you don't want to hear about the different breakdowns of money in publishing, then move along, nothing to see here :)
Caution, this is a LONG post.
There are two myths that I frequently come across on blogs, at conferences, or in other places where writers chat and the subject of money is brought up.
Myth # 1: If you're a writer published in print by a large NY-based house, then you're making a lot of money. Or, at least, you've living off your writing income and you've quit your day job.
Nine times out of ten, this is false. Now, I'm not talking about established authors with solid careers and several books out, because a lot of them can and do support themselves writing, but this is more geared toward the New Author. Got it? New author.
The average advance for a new author for a first book is $5,000.00. Out of that, most authors who sell to these larger NY publishers have an agent, so there goes 15% commission right off the top. Then, as an author, you're expected to get a website right away. Average cost of a website, if you're not technically-inclined yourself, is $1,000.00 (and can go way up from there). Then, you're encouraged to either attend a conference to spread your name/your book's title around, or do a mailing. Prices on those vary, but out of the conventions I've attended, between the convention fee, hotel fee, airfare, car rental, and food/drink/books I've bought while there, it's rarely been less than a thousand dollars each time (RT and RWA charge $500.00 just in convention fees, for exp).
So, what do you have left over? Not much (if anything), and then you have to factor in paying taxes on the gross of your writing advance, too. Plus, if you're intending to write full time, and you don't have a spouse with health care coverage, then you're paying out of that advance for your own health care, too, which I don't need to tell anyone, can be very expensive.
But once your book comes out and it starts selling, you're getting the big bucks then, right?
Not so fast.
First, your publisher pays themselves back all of the advance they gave you. Let's say you're published in mass market paperback format, and your contract reads that you get an 8% royalty on the negotiated sale price of each book (let's use what my mass market books go for at normal price, which is $6.99 per book, but book prices and royalty percentages vary, plus if you're published in hardcover or trade paperback, there's a lot more variance. So these examples are for mass-market novels only). At the $6.99 sale price with an 8% royalty rate, that means an author gets around $.55 (yep, that's 55 cents) for every book that is sold. To pay back an average new author advance of $5,000.00, that author would have to sell over nine thousand copies before he or she even begins to earn another dime in royalties on their book.
Now, that doesn't sound too bad, though. Most new author print runs from large NY houses are at least ten thousand copies, so those houses expect to sell that many books. And some initial print runs are far larger, which means the publisher expects to sell many more books than would cover an initial advance of $5,000.00.
But there are catches.
Publishers tally their book sales only twice a year. The first term runs from January 1st through June 30, and the second term runs from July 1st through December 31st. So, if your book comes out just a month or two before that term closes, then your first royalty statement will only account for the sales from your release date up to June 30th or December 31st, whichever date is first after your book's release. Sales numbers won't be tallied again on your books for another six months, and it takes publishers about two months from the cutoff dates of June 30th/December 31st to get those numbers to your agent or you, the author. The closer your book release falls to the publisher cut-off date, the less likelihood that you will have "earned out" your advance when you receive your first royalty statement.
Let's say that hallelujah, you're one of the authors whose book came out several months before the cut-off date, or came out really well and book stores were ordering your entire print run for their stock from your publisher. You'd think you'd be getting a check with that first royalty statement, wouldn't you? Yet there are three words in publishing every mass-market author knows and loathes: reserves against returns.
What does "reserves against returns" mean?
It means that even if your entire print run has been shipped to book sellers, and you've sold a good number of books, your publisher isn't sure how many of your books will be returned to them unsold. So, they hold back a percentage of your royalties to cover their liability if in a few months, or up to a year, usually, a large number of your books come back unsold. What's this percentage? Anywhere from 30% to 60% of your royalties, depending on how close to the term's end your book came out, what genre you're in, whether this is your first book, how well similar books like yours have been selling or being returned, etc. There's a formula - don't ask me what it is - but there's a formula publishers use to determine how high of a percentage they will hold back.
So, your publisher holds 30-60% of your shipped/sold books as reserve against returns, then deducts your advance from the remainder of the money. Those reserves against returns don't get released until at least the next royalty period, either, which, as you know now, is six months away (plus two months processing time). Some publishers hold it longer than one royalty period, so it could be over a year before you see any of the money that your book made before the closing of the first royalty period. Do publishers pay you interest on that money, if it turns out less of it was needed to be held? Nope. (Note: this is not a complaint against publishers. Publishers assume all the risk and all the costs when they put out a novel, and if an author doesn't sell through their advance, the publisher takes the loss. It's not like the author has to return any of their advance money to the publisher if a book doesn't sell as expected.)
Now, if you've gotten a multi-book deal, you could get more money in the interim when your publisher accepts the second or third book in your contract. Usually, contracts are set up where X-amount of money is paid on signing, and the remainder on acceptance of any subsequent books (this can vary, so I'm speaking only in general terms). Therefore, as you wait for that first royalty statement to actually have some dollars attached to it, you can still receive money on the remaining books in your contract once your publisher has deemed them acceptable (which means, you've gone through and made any revisions your editor required, and now your book is heading to the print-ready stage). But again, this takes time. If your publisher has decided to put out one book a year with you, for example, then that extra remaining advance money will probably just get sent to you once a year as you fulfil the terms of your contract.
It's true, some new authors are very fortunate by receiving large-enough advances on their first book(s) to be able to quit their day job and take that advance to cover their bills for about the next two years (before you scream, "Two years?!", remember, it takes an average of a year from getting a contract signed to having a book on the shelves. Sometimes up to two years. Then, an author will probably have wait another year - until their second royalty statement - before they get any money from sales of that first book. Maybe more, if the advance was big, because the more a publisher pays you up front, the more you have to pay them back before you earn any royalties).
So, even with a contract from a large NY house, and even if it's a multi-book contract, most authors still can't afford to quit their day jobs right away. Again, there are exceptions to that rule, but there's a reason why something is called a "rule" in the first place. It because that's what generally happens.
Therefore, to all the people I've seen on blogs or in other places saying things like, "I'm going to hold off getting a job until I see whether or not an agent signs me," I say to them, get the job. It takes time to find an agent. Then, the average length of time to sell a book by a new author is a year. Then, it takes a couple more months from the time a deal is agreed on until the time an author gets their first advance check (are you noticing a trend?? Publishing is SLOW).
But if that author is one of the extremely lucky ones who gets an agent right away, gets a sale right away, and gets a huge advance, then by all means, quit the day job and many congrats to him or her! Most of the time, though, authors need another source of income to support themselves while they wait for their books to earn out their advance, get past their "reserves against returns", and have that royalty statement with a check attached to it finally hit their mailboxes. Then, authors repeat the same waiting process for the next book. Which is why a lot of authors don't quit their day jobs until they've had a least a couple books sell well enough to receive regular royalty payments on them, and with more contracted books in the works, too.
Myth # 2: You'll never make ANY money as an author.
Despite those who may have thought this is what my first response was saying, there still IS realistic hope for supporting yourself as an author. I've heard some fairly emphatic statements by people saying that seeking a career as an author is akin to taking the fast lane to Broke-ville, so don't pursue a writing career, because nothing but poverty and disappointment await.
I disagree. While trying to get a book published should never be someone's idea of a get-rich-quick scenario, publishers are still looking for authors. They're still willing to take chances on unknowns, too, and in rare but notable cases, they will shell out some pretty impressive bucks on a first book. It does happen. If you don't believe me, check out Publishers Marketplace and look up the deals posted there. Even if a book isn't sold for a huge advance, there are still pretty respectable advances given on a regular basis for well above the average new book advance of $5,000.00. So some authors will have significant amounts of time shaved off their wait to receive financial stability from writing.
Also, as an author, you can sell books in one genre, and then also sell another books in another genre (contract restrictions may apply). There are quite a few authors with books/series' being published in different genres at the same time. So, even though that makes an author twice as busy, that author is also getting twice the number of initial advances, twice the remaining advances on book acceptances, and in the future, royalties from two sets of book contracts versus one. Needless to say, this doubling-down with genres can have a big impact on the author's ability to support themselves financially by writing.
Then, if your contract was for English-speaking rights only, some authors can also have foreign rights purchased on their novels. This is where other countries buy the right to translate and sell a novel in another language/country. Advances are paid to the author for these foreign rights, and if an author sells in multiple countries, at times, the foreign rights advances can equate to more than the initial publication contract. If an author sells through their foreign rights advance, a royalty percentage is then calculated as well.
Other sales after the initial sale of a book can include film rights and audio rights, if a publisher did not buy an all-encompassing rights when they first acquired the novel. If a book becomes a huge hit and films are made from it, merchandising may earn money for the author as well.
Most of the time, as I stated in long detail above, authors do have to work their way through a few books and a few years before they start to really see the fruits of their labors. Still, there are still plenty of authors who do reach the point where they can say buh-bye, Day Job, and support themselves by writing. Plus, once an author does have their book sell through their initial advance/reserves against returns, then every copy sold thereafter becomes residual income for the author (unless/until a book goes out of print). So, an initial sale for a book might not be the end of the advances for that book, in some cases (again, contract clauses vary).
Yes, there is still career potential in publishing. It's slow, it's hard, and it's uncertain, but it does exist. There are many authors supporting themselves by writing to prove it. I think aspiring authors should have cautious optimism when it comes to the topic of money. Don't expect a windfall of cash right away, because that's just not realistic, but with luck, hard work, and time, the dream of living off your writing income could become your reality.
For all those authors at that point, congratulations, whether you came by it from an unusually big initial advance, or from waiting until your career built to that level several books later, or some other writing-related circumstance. It's worth a hat-toss in the air any way you slice it, in my opinion. And whichever stage of the publishing career you're at, authors, keep those books coming! How boring would life be without good books to read, right?
Aspiring authors, keep trying! Every successful, full-time author first started out as an aspiring one :)