1. Drmoses
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    Drmoses Member

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    What happens if you don't make back your advance?

    Discussion in 'Publishing' started by Drmoses, Jan 5, 2015.

    So I'm no doubt putting the cart before the horse, or whatever the saying is here. Its just that this question has constantly occurred to me as I've reviewed these forums and, while I think I know the answer; I figure someone else here probably knows for sure.

    So, I get the process... I secure an agent, negotiations occur and ultimately let's say all goes well. Publisher X strikes a deal with my camp and an advance of $5,000.00 is agreed upon, which I then receive.

    Continuing with the hypothetical situations, let's say my book sells enough copies to make $4,900.00 by the deadline. Does this mean I now owe Publisher X $100.00?
     
  2. BayView
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    BayView Contributing Member Contributor

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    Nope. You keep the advance. There is no deadline. That's the joy of advance-paying publishers - it doesn't just mean you get the money sooner, it means you get the money for sure. The publisher has enough faith in your book to pay out money they may not earn back. (Of course, this is also why advances are lower than they used to be - publishers got tired of taking so much risk!)

    You'd only have to pay back the advance if you breached the contract somehow, like if you didn't deliver the MS as agreed.
     
  3. chicagoliz
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    chicagoliz Contributing Member Contributor

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    Usually nothing -- you keep the advance. But many authors these days don't get an advance, especially new authors.
     
  4. BayView
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    BayView Contributing Member Contributor

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    That depends on the size of the publisher, I think. Smaller publishers aren't as likely to offer advances, but I think they're still pretty standard in the NY publishing world. (Which covers a LOT of publishers!)
     
  5. shadowwalker
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    shadowwalker Contributing Member Contributor

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    Yes, the advance is yours to keep as long as you've fulfilled your part of the contract. Publishers are quite good at figuring out how well a book will sell, so advances are pretty close to what the author would have earned in royalties anyway - they just get it upfront instead having to wait for the actual sales.
     
  6. A.M.P.
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    A.M.P. People Buy My Books for the Bio Photo Supporter Contributor

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    I have read contracts that do have a payback clause if the sales in royalties do not match the advance. Always read the fine print :3
     
  7. BayView
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    BayView Contributing Member Contributor

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    Seriously?!? From what publishers? No one reputable, I bet.

    (I mean, yes, of course, always read the fine print. But if you see a contract that specifies that royalties should be paid back? Stop reading and start running.)
     
  8. Fitzroy Zeph
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    Fitzroy Zeph Contributing Member Contributor

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    I talked with a published author a while ago about this and it was of her opinion that you should always try and get the largest advance you can because statistically, most books never sell out past the advance, assuming you don't get a contract like AMP pointed out.
     
  9. BayView
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    BayView Contributing Member Contributor

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    Did she have a source for that "most books never sell out past the advance" idea? I've heard it before, but I've also heard it disputed, and nobody ever seems to have an actual source for it... frustrating.

    That said, sure, why not go for the biggest possible advance? I guess there are some people who trade in a higher advance for a better share of royalties (this is the e-first model, in my experience), but it's a pretty big gamble.
     
  10. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    I wanted to quibble that while it is, as far as I know, standard practice for the author to keep the advance even if it isn't earned out, that's presumably something that's determined by contract--it's not required by law.
     
  11. BayView
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    BayView Contributing Member Contributor

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    I just checked my contracts with two different publishers and there's actually no mention one way or another. The advances are mentioned, and the payout schedule, but nothing about paying it back (or NOT paying it back). In the absence of specific contract language, I think the courts would assume that industry standards prevail?
     
  12. shadowwalker
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    shadowwalker Contributing Member Contributor

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    I don't think standard contracts mention paying it back specifically - but if the author fails to uphold their part of the contract, then any money paid would, by any contract law, have to be returned. And no, no reputable publisher will include paying back anything simply because the book doesn't sell well enough. If you see that in a contract, you're dealing with a shyster.

    As to books not earning out, it's kind of a 'known fact' that most books do not. That doesn't mean anything other than, as I mentioned above, the publisher was pretty much spot on as to what the sales would be. They basically paid no more and no less than what they figured the author would earn in royalties.
     
  13. Steerpike
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    Steerpike Felis amatus Supporter Contributor

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    Keep in mind that requesting a return of the advance is only one remedy for breach of a publishing contract - not the only one. Whether the publisher asks for it, and gets it, will depend on what the breach is (in other words, on the fact of the case).

    One area you see a suit for return of the advance is when the publisher pays the author an advance to write the book (for example, in the case of a non-fiction work), and the author fails to deliver the book. There was also a case where the author was under contract to write two books, and failed to produce the second work. In that case, the publisher was able to get the advance awarded to them when they came after the author (presumably minus any royalties accrued by the first book up to that point).
     
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  14. BayView
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    BayView Contributing Member Contributor

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    Oh, yeah, if the contract was breached, absolutely. I was just referring to poor sales, not author misconduct.

    And I know it's sort of a "known fact" about books not earning out, but I'm not sure it's an accurate known fact, you know?

    I mean, I think it may have been more true in the past, for sure, but there are a lot of publishers offering pretty low advances these days (which, I guess, is just another "known fact", because I can't actually cite a study that proves that!). Well, I guess I can refer to my experiences, which are limited because I don't have any books actually in the sales stage with a big publisher, but I know that one of my e-first publishers offers advances that are essentially a token ($1K per book) and those advances are obviously earned out almost immediately.

    I'm not trying to make you responsible for proving the "known facts". I'm just wondering if anyone has any data to back them up.
     
  15. BayView
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    BayView Contributing Member Contributor

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    In my experience most advances are paid out in increments - I mean, the tiny $1K advances I get come in a lump sum, but the marginally more substantial ones are divided into thirds - 1/3 on contract, 1/3 on delivery and acceptance of the MS, and 1/3 on publication. They're also divided up between the different books in the contract...

    So, if you signed a two-book deal with a $9K advance for each book, you'd get $6K on signing (or maybe $9K, if the first book was deemed delivered and accepted at that time), and then the rest of it would come in $3K bits.

    There's also a clause in my multi-book contracts that ensures that accounting is done separately for each book. So I don't get an $18K advance, and have to wait until I've earned $18K total before I start getting more payments; I get royalties as soon as the first book has passed $9K.

    So, for the case you mentioned... maybe that contract was written differently than mine, for sure. But I think the terms I've got are pretty standard. So if I flaked and didn't deliver the second book in my contract, I'd still get the full $9K plus any royalties from the first book. The most I'd owe back would the $3k I got at signing the contract for the second book, since I wouldn't yet have received the other two sums.
     
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  16. shadowwalker
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    shadowwalker Contributing Member Contributor

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    E-publishers, as far as discussions I've seen, do tend to pay lower advances, but the royalties just come that much quicker. I believe that many times they do have a higher royalty rate, as well, but it's not an 'industry standard' at this point. And of course, the print market is not available if they handle only ebooks, so you'd have to find a print publisher to get into that area.

    Just personally, I see the 'small' advances people talk about and think, OMG! I could live on that for six months! :D
     
  17. BayView
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    BayView Contributing Member Contributor

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    Have you seen some of the breakdowns authors do? Like, they get a $100K advance, but it's doled out in three parts, spread over a year, probably, and the agent gets 15%, and the government takes a good chunk, and they pay for a website and promo and it took them two years to write the book and... yikes.

    I'm very glad I have a good day job, b/c I wouldn't want to be trying to make a living from writing! If I'm very, very lucky it will allow me to retire a little earlier, but I'm not counting on it!

    (That said, I make significantly more from writing that I would if I was working full time at a minimum wage job. To me, that says more about the inadequacy of minimum wage than about my writing income, though!)
     
  18. A.M.P.
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    A.M.P. People Buy My Books for the Bio Photo Supporter Contributor

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    Yeah, I always thought the ones that had a payback clause were iffy and odd.
     
  19. shadowwalker
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    shadowwalker Contributing Member Contributor

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    Journalism is about the only way a person can generally make a living of any sort with writing alone, and even that can be tough. The fiction writers who do have either been incredibly lucky or they're like those "overnight success" actors - that "night" took years!
     
  20. Steerpike
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    Steerpike Felis amatus Supporter Contributor

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    Fiction writing isn't a good way to try to make a living. Almost anything will provide you with better and more consistent money. But freelance writers can make a pretty decent living, doing things like writing copy for advertisements or web sites, preparing corporate reports, ghost-writing for executives, and other such projects. If you want to make living as a writer, that's easier to break into than journalism, but you can expect a year or two of hard work and little income to generate a client base that will sustain you going forward.
     
  21. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    I would assume--and I admit that I didn't think of this before my first post--that in any contract in any industry, if the contract says that Party A will pay Party B X dollars, then Party B gets to keep that X dollars unless the contract also states some situation where Party B has to give 'em back. So the industry standard happens to also be the situation where no more language is required.

    I'd guess that if the industry standard were the reverse, where the author does have to give back the money if the advance isn't earned out, then the contract would have to say so, even though it is the industry standard.

    I'm not sure if that made sense. I hope so.
     
  22. Selbbin
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    Selbbin I hate you Contributor

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    The advance is usually far less than they expect to make. Otherwise they won't be in business very long. Think of it like a deposit.
     
  23. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    ??? Far less than the publisher expects to make. I don't think it's necessarily less than they expect the author to make.
     
  24. Selbbin
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    Selbbin I hate you Contributor

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    Publisher, yeah. In film circles, the bigger your upfront payment, the smaller your back-end deal. You can really get screwed with an advance, if the contract stipulates a poor cut from the general sales. They'll make sure the advance is roughly what they expect you, or want you, to earn. So far as I can tell, anyway.
     
  25. TWErvin2
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    TWErvin2 Contributing Member Contributor

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    An author friend who was published by one of the big five's imprints had a contract offered that linked the first and the second book, such that if the first book did not earn out against the advance, then she would not start collecting royalties on the second book until the advance for the first was earned through (the 2nd book's earnings beyond the advance would cover that--it was a two book contract). It's not the exact language, but that was the intent. Her agent got that removed from the contract.

    This author also indicated that she is happy to get moderate advances (as she says) in the mid 5 figures to the very low 6 figures. Why? Because her books earn through and are profitable to the publisher. She's had some fellow authors score that huge advance, and not earn enough back on it, and then they find it harder to get the next book contract, and if they do, the terms are not nearly as favorable.

    The example above (clause) is about 9 years old, and does not illustrate having to pay back an advance, but it does illustrate that you should read your contracts very carefully and have someone knowledgeable negotiate. They'll probably earn their pay.
     

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