Advances are, in theory, a prepayment against expected royalties. Authors are often concerned about whether their books “earn out” their advances — that is, whether royalties from actual book sales are equal to or greater than their advance against royalties. The advance represents a kind of benchmark for expectations of a title, and when actual royalties fall short of that number authors feel their titles have underperformed. There is a degree of truth to this, but it’s not the whole story. There are many factors behind the size of advances, and a book that doesn’t earn out can still be a success — the advance excess is in effect the equivalent of a slightly higher royalty percentage.

Still, authors have to do their best with the information they have, so we will assume the advance is logical relative to expected royalties. This being the case, the best way to judge the advance is to get a sense of the publisher’s sales expectations. To do this, try to find out about how many copies will be printed and about what the retail price is likely to be. Those figures will give you a sense of how the publisher is thinking about the title in terms of sales.

As an example let’s use nice round numbers for ease of calculation. Say the publisher plans to print 10,000 copies and sell them at $20 each and is offering the author a royalty of 10 percent off the full retail price. Now, many of the copies that are being printed will not be sold: copies are needed for reviewers and other purposes (among them the inefficiencies of book distribution), but we are only trying to get a ballpark figure, so we’ll ignore that level of refinement.

With that caveat, sales of 10,000 books would equal a total retail value of $200,000, of which 10 percent would be $20,000. Consequently, a logical advance for this title would be somewhere around $20,000.  Woohoo, you’re rich!

Post from Right Reading, Tom Christensen's guide to print and electronic book publishing.
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How to figure an advance against book royalties

Rightreading hereby initiates a new feature (no doubt destined to be as fitful as all our others) in which we answer e-mails from readers.

I know very little about book contracts.

Can you please elaborate on this subject?

Specifically, what percentage of each book sold should I receive as the author?

Dear reader

The most general answer is “whatever the market will bear.” If you are writing great poetry that will someday be taught in university classes, the answer is no one is likely to pay you any royalty at all. On the other hand, if you are a famous and controversial public figure — Sarah Palin say — you can pretty near name your price.

But the general answer isn’t much help to the vast majority of writers who fall somewhere between those extremes.

Royalties constitute a system whereby an author is rewarded for good sales by receiving a percentage of the income those sales generate. Commonly an author is paid an advance against future royalties on signing of a publishing agreement. The advance may be paid up front or in portions — half on signing and half on publication; or a third on signing, a third on delivery of a suitable manuscript, and a third on publication of the book (“publication,” by the way is an artificial date around which publicity is centered and is not the same as completion of production); or according to some other schedule. Authors should make sure advances are “guaranteed” and are not liable to be returned if the book doesn’t “earn out” — if royalties don’t equal or exceed the amount of the advance.

Royalties may be paid against the retail price on books sold, or against some other figure, such as net income after certain costs of sales are deducted. More often than not, royalty rates “escalate,” that is they increase by steps as different stages of sales are reached.

Basing royalties on retail price is the more traditional method. Typical royalty rates might look something like the following (although there is a great deal of variation, and I suspect the trend is downward).

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As I mentioned, some publishers base royalties on net sales. The definition of net sales can vary, and it is important to specify what costs are used in the calculation. In general these should be direct costs of sales and not various sorts of publisher overhead. As a rule of thumb, sums eligible for royalties on a net basis might be about half what they would be on a retail basis largely because of trade discounts. So a 12% royalty on net might be roughly the same as a 6% royalty on retail.

Several factors can reduce royalties or delay their payment. These include freight allowances, deep discount sales, and reserves against returns.

Of course there are many more issues involved in book contracts than just royalties and advances against them. I will try to touch on some of the other factors in upcoming posts.

Post from Right Reading, Tom Christensen's guide to print and electronic book publishing.
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Mailbag: What should my royalty rate be?

If you will glance down at the footer on this page (or follow the “about” or “policies” links) you will see that I have replaced my copyright notices with creative commons ones. I’m hardly a leader in this — as a guy who has worked in book publishing for many years I have had the notion of copyright deeply ingrained. And there remain a few pieces, like my article on Gutenberg and the Koreans for example, that need to remain under copyright because of publishing arrangements.

But as a blogger I know that people want and need materials they can use readily and with a minimum of fuss. If I want this for myself, why should I deny it to others? Information, it is said, wants to be free, and I don’t want to be the one to enslave it.

Creative Commons is especially helpful when you need an image to accompany something you’re writing about. Flickr makes this wonderfully easy. By going to http://www.flickr.com/creativecommons/ you can search for photos that have been uploaded with a CC license. As a photo user I would always start there and only go through the hassle of contacting owners of copywrited photos if really necessary. As you can see from the Flickr CC search page, CC licenses have several flavors:

• Attribution License
• Attribution-NoDerivs License
• Attribution-NonCommercial-NoDerivs License
• Attribution-NonCommercial License
• Attribution-NonCommercial-ShareAlike License
• Attribution-ShareAlike License

I’m not sure which is best — there are arguments for each, I suppose — but I chose Attribution-NonCommercial-NoDerivs, in part because this was the most popular among Flickr users, so it’s probably where the majority of the searches will occur. (Is this the best choice? Let me know your thoughts.)

There are a few websites that automate Flickr CC searches, including:

• Behold
• Flickr CC

Behold seems to apply some kind of quality filter to search results. FlickCC lets you browse through thumbnails, at 36 to the page. A screenshot from this site is shown above.

There is also a WordPress plugin called PhotoDropper that lets you search for Flickr CC photos from within the WordPress dashboard. Once a photo is selected it will automatically insert the photo along with any required credit. Cool, but I have not installed it because it sounds like your ability to format the results is limited.

Finally, I would like to see the CC logo — which looks like a copyright symbol but with two cees rather than one — become a standard glyph in fontsets.

Links

• Creative Commons homepage
• Creative Commons at Wikipedia
• Flickr Create Commons search page
• FlickrCC search
• Behold search
• PhotoDropper WordPress plugin
• All Hail Creative Commons (2002 news article)
• Lawrence Lessig blog
• Is copyright corroding our society? (Lessig video)
• Lawrence Lessig for Congress buzz
• FreeCulture.org
• Sullivan on Lessig

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Post from Right Reading, Tom Christensen's guide to print and electronic book publishing.
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Creative Commons

• Real publishers don’t make offers overnight. A publisher who offers an agreement a couple days after the ms. arrives is pulling a scam.
• A scam publisher may be especially persistent in pushing its contract
• Check out the publisher on the web and in bookstores
• Vanity publishers ask for money; real publishers don’t
• Token advances, such as $1, should be viewed with suspicion
• A publisher that grossly overprices books may be hoping to make money off sales to authors — in such cases the contract will likely show a below normal number of free copies (normal tends to be around 10-20 copies)
• A highly restrictive option clause is a common feature of scam contracts
• Rights not specifically assigned by the agreement should be reserved by the author, not the publisher

In my experience — having negotiated many book contracts — agents generally represent authors better than lawyers, because lawyers know contracts but agents know the book industry. The author of this article, however, is an exception. She appears to know the law and publishing.

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via Adventures in Writing

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Post from Right Reading, Tom Christensen's guide to print and electronic book publishing.
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Recognizing scam publishing offers

Post from Right Reading, Tom Christensen's guide to print and electronic book publishing.
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Read the contract