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February 09, 2005

The Money Involved

Someone asked in one of the comment threads: If the first printing of Old Man's War sells out, will I have earned out my advance? So I crunched the numbers and the answer is: Yeah, it looks like it -- the first print run was about 3,800 copies, and my math shows my break-even point at 2,700 or 3,400 copies, depending on what royalty rate you use (I could pin down the royalty rate by looking at the contract, but then I'd have to dig it out, and that would take too much effort) Even a worst case scenario (which has me signing a contract that offers a 6% royalty, because I was high on cough syrup or some such) would have me earning out after about 4,500 copies sold, and it seems reasonably likely at this point OMW will hit that target while still in hardback.

This is a good thing, obviously. One, it means paperback royalties go into my pocket, and that's likely where the majority of money is to be made; two, if I'm breaking even on the hardback that means Tor is almost certainly making money. And as a general rule, you want to make money for your publishers. It encourages them to publish you again, and I'm all for being published again.

Now, the fact that I will have earned out with such a relatively small number of books sold should indicate something to the more observant among you: either I have a truly extravagant royalty rate, or my advance was pretty small. Well, I don't have an extravagant royalty rate, I in fact have a rather pedestrian one, so that points to a small advance. And indeed, it's well within the "meh" range by this formulation. However, I should note I'm just fine with this, and I'll tell you why.

Meet Sam Lipsyte. Mr. Lipsyte is the star of the article I've just pointed to, in which we read about the Herculean struggle he had to get his second novel published here in the United States (he ended up having to get it published in the UK, to rave reviews, before someone would bite over here in the states). Why was it so difficult to sell his second novel? Well, it could be because, by all indications, Mr. Lipsyte is a writer whose prose one either loves or hates, which is a strike against him at least 50% of the time, and also his quirky style makes him difficult to quantify, which will drive the marketing people right up a wall. But more likely it was because the publisher of his first novel gave Lipsyte a $60,000 advance for his first novel, and the first novel stiffed. Big time.

Perspective: To earn out a $60,000 advance, Lipsyte would have had to sell 25,104 copies of his book at 10% royalty, or 31,413 copies at 8%. Any amount under that, he'd have to make up in the paperback sales, where the price (and thus the royalty) is lower. More perspective: for mainstream fiction, 25,000 copies is considered bestseller status (if what I read in the New York Times is correct).

While it is entirely possible for a first-time novelist to become a bestseller, the actual odds are pretty grim. It's even less likely if reviewers keep comparing you to somewhat inaccessible writers (Thomas Pynchon, for example) and warn readers that "the characters here don't so much converse as exchange obtuse epigrammatic non sequiturs and indulge in linguistic quips." Basically, Lipsyte probably got hosed because his publishers spent too much money for a book that was deeply unlikely to earn out its advance. And it didn't: It sold 5,000 copies.

And so his next book, Home Land, sold in the US -- when it sold -- for a quarter of what he got for the first one: $15,000. As it happens, the book came out the very same day as mine did, and by all indications is selling in numbers not dissimilar to my own: The article notes it's sold 2,000 copies to date, which is in the same ball park as mine. Here's the thing: If I sell 5,000 copies, I'm a success, at least as far as the rubric of earning out your advance is concerned. Lipsyte, on the other hand, is still underwater at 5,000 copies; he's underwater until he gets to 11,500 copies (presuming 10% royalty). If he doesn't get there, he's a two-time commercial loser, which would likely make it that much harder to get to book number three.

Bear in mind this has nothing to do with Lipsyte's talent as a writer. He may indeed be wonderful to read, and it's quite likely he should be read by a wider audience. What I'm saying is that if he and I -- both writers in our mid-thirties, both in relatively the same place in our writing careers -- both were to sell, say, 10,000 copies of our latest book, I'd be seen as a happy success to my publisher, and he'd be seen (whatever his talent) as a mild disappointment, and the only real difference between us -- commercially speaking, anyway -- is a few thousand dollars in advance money.

Which does bring up the question -- why did this guy get a $60,000 advance for his first novel, and I one a rather small fraction of that sum? Is he many multiples better than I as a writer? Alternately, is his fiction a multiple more salable than mine? As toward the latter, evidently not, and for the former, it's certainly possible, but probably irrelevant. I suspect a more likely answer is simply that Lipsyte writes literary fiction whereas I write genre fiction, and anecdotally speaking it appears that publishers are willing to pay more for literary fiction than for genre fiction.

One does of course wonder, if this is true, why that might be -- I would love to have someone slap down the sales figures for genre writers and for lit fic writers and show me whether the average and median sales for each justify either the high advances for literary fiction, or the low advances for genre fiction. I rather strongly suspect that what we'd find is that literary fiction is overvalued as to its commercial prospects relative to genre fiction, for no better reason than snobbery toward little green men (I can possibly accept an argument that literary fiction is, on average, more literary than genre fiction, but being "literary" is just one portion of being "readable," and as we all know there's a lot of literary fiction that's well nigh unreadable. Also, I suspect that China Mieville and Neil Gaiman, to name just two, are as resolutely "lit'ry" as anyone, and yet still readable, so there's nothing to suggest genre work can't be eminently literary as well).

In any event, I'm not entirely sure I want to take a position that non-genre authors ought to be dragged down to genre authors' rather meager pay scales; I'm pretty sure that won't make me a lot of friends. And God knows I'm not criticizing Lipsyte for taking the $60k when it was offered to him, because, you know, I'd not be likely to turn it down, either. I do think, however, that publishers aren't doing first-time non-genre authors any favors by offering them advances they're not likely to recoup and then branding the poor bastards as uncommercial when they don't. That really is blaming the victim. Either literary fiction editors are absolutely clueless about money, or they simply don't care and are happy to spend stupidly. Either way, I would probably fire these editors and replace them with editors trained in genre fiction; I suspect that after the shock had worn off in the lit fic community, the corporate parents of book publishers would find a modest uptick in their bottom lines.

My advance for Old Man's War was small, but as it turns out it's pretty much what it should have been for me, both for the short-term happy accomplishment of earning out my advance and for the longer-term goal of beginning to establish myself as a commercially viable author. Do I want to get a bigger advance next time out? You bet -- and, as it happens, for The Ghost Brigades, I got one. That's the way it's supposed to work, and so far it's working for me.

Posted by john at February 9, 2005 10:44 PM

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Chris Byrne | February 10, 2005 02:56 AM

John, that's about what I was figuring when I asked. You've always struck me as a lot smarter about business than most authors (not that that's saying much unfrtunately).

Not only that, but as you have made eminently clear in the past, your agent(s) are great, which is definitely very helpful.

I figured you'd rather get a decent royalty rate and better terms than a larger advance; Thankfully through your hard work and life choices (and supporting family) you are in a position where you can do that.

At one point I was a freelance and commmercial writer (for the security and IT industries), which payed very well for a few years, but when the market collapsed so did the work rates (and half the magazines and companies I was writing for).

So far, I haven't managed to FINISH a worthwhile book (fiction or non), just a few short stories to novellas that have been published as role playing game source material, and a few chapters in text books.

If and when I do sit down and do it, I don't actually expect to make any money at it, at least at first, but it'd be great if I could get a "Meh" deal and then earn it out.

andrew | February 10, 2005 03:54 AM

I seemed to remember someone saying that an advance didn't have to earn out for a book to be profitable to the publisher. And he should know what he is talking about, the link http://nielsenhayden.com/makinglight/archives/004925.html#43123

John Scalzi | February 10, 2005 07:07 AM

Andrew -- exactly. Which is why I said if I'm breaking even, Tor is almost certainly making money.

Paul | February 10, 2005 08:30 AM

A question and a comment:

When you say 'genre' writers, are you referring just to the SF and Fantasy world, or are the advances offered first time novelists in the mystery or romance fiction world similar?

I suspect publishers are willing to give up higher advances for 'literary' awards because they are rolling the dice, looking for the next pulitzer winner. What is it worth to a publisher to be able to brag about having published a winner of some major literary award?

John Scalzi | February 10, 2005 08:40 AM

Paul: "Genre" applies to romance as well as SF/F (not to mention horror), and indeed the advances seem pretty consistent across genres.

I don't know how much a Pulitzer or a National Book Award impacts sales for an author -- I imagine it doesn't *hurt.* But of course the immense majority of books won't receive a Pulitzer, so giving more money up front for that potential seems like a bad bet to me. And of course, they'd still give out Pulitzers for fiction even if advances uniformly went down across literary fiction.

Patrick Nielsen Hayden | February 10, 2005 08:44 AM

Without checking your contract (which is in a drawer at work), I can say with great confidence that your hardcover royalty rate is exactly the same as 99% of all other hardcover fiction titles: 10% of cover price for the first 5000 copies sold, 12.5% for the next 5000, and 15% after that. There's a lot more variability in softcover royalty rates than in hardcover.

As for whether a book needs to earn out to to be profitable, what I said was that in certain very high print-run cases, books can fail to earn out and still make money. Down at the lower levels where most publishing takes place, a book that doesn't earn out probably isn't making enough of a contribution to overhead to justify its existence.

A great deal of publishing wisdom is encapsulated in the observation that the hardest thing to sell isn't a first novel, it's a third one.

John Scalzi | February 10, 2005 09:07 AM

"Without checking your contract (which is in a drawer at work), I can say with great confidence that your hardcover royalty rate is exactly the same as 99% of all other hardcover fiction titles: 10% of cover price for the first 5000 copies sold, 12.5% for the next 5000, and 15% after that. There's a lot more variability in softcover royalty rates than in hardcover."

Yep, that's what I remember as well (although I forgot about the escalation clauses). I would have asked Krissy where the contract was to pin it down last night, but she wouldn't have much appreciated being woken up for that particular question.

"A great deal of publishing wisdom is encapsulated in the observation that the hardest thing to sell isn't a first novel, it's a third one."

But -- I was planning to become opaque and inaccessible with that one! Rats.

dave munger | February 10, 2005 09:40 AM

Would some of the difference between lit fic and genre fiction have to do with the paperback markets? Theres that whole $15 "quality softcover" edition for lit fic that doesn't seem to exist for SF. Perhaps publishers/authors rake in quite a bit of extra dough with that model: first hard cover, then quality softcover, then mass market PB.

John Scalzi | February 10, 2005 09:59 AM

Dave Munger wrote:

"Theres that whole $15 'quality softcover' edition for lit fic that doesn't seem to exist for SF."

Hmmm... actually, that's not true -- Trade paperback is a big part of SF/F. So that's not a major difference.

Patrick Nielsen Hayden | February 10, 2005 10:13 AM

Moreover, the usual pattern in literary fiction isn't "first hard cover, then quality softcover, then mass market PB," it's "first hardcover, then trade paperback, then nothing."

How much literary fiction (I'm talking about "literary fiction" as a bookselling category, not as a value judgement) appears in mass-market paperback these days? Not very damn much. And yes, this is a big change from twenty or thirty years ago.

dave munger | February 10, 2005 11:03 AM

"How much literary fiction (I'm talking about "literary fiction" as a bookselling category, not as a value judgement) appears in mass-market paperback these days? Not very damn much. And yes, this is a big change from twenty or thirty years ago."

So could *that* explain the economic difference between literary fiction and genre fiction? Or is it indeed just prejudice against martians?

Randy | February 10, 2005 11:18 AM

So, is there a difference in how much an author makes off of a retail edition of their book vs a book club edition?

I notice that you're not discouraging people from ordering OMW from the SF Book Club, and I just wondered if you get the same cut from that or if you get less. Not that it matters to me, I just wondered it affects the royalties of the the author when book clubs sell their books at a lower rate, or for "free" for the introductory offer. I didn't think you were including book club editions in your "first run" numbers.

John Scalzi | February 10, 2005 11:30 AM

"So, is there a difference in how much an author makes off of a retail edition of their book vs a book club edition?"

Yeah. Typically authors make less of book club editions, and you hope you make up for getting less by creating volume.

And no, I'm indeed *not* discouraging people from getting the book club edition. Even if I were philosophically against the book club model -- which I'm not -- it would be penny wise and pound foolish, since I am a first time writer with no audience to speak of. The book club has many thousands of members who I might otherwise not reach and who otherwise not know I exist, and why wouldn't I want to get my book in front of them?

The goal of this book has to be to try to rope in as many readers as possible, and I'm pretty much willing to do that by any means necessary. My secret here is that I basically internalized the idea that the advance is the *only* money I'd see from this book -- and therefore, I'm free to do what it takes to get it front of readers, without regard to whether or not it makes a few cents difference in royalties. Long-term, this is a better plan for my fiction career, and in my day-to-day life, well, I'm not exactly poor, so I can afford to think beyond the profits of this book.

RooK | February 10, 2005 11:51 AM

John, I hope you don't mind that I'm furiously scribbling down notes. When I manage to get published, you're one of the people I'd like to buy a beverage for (with limitations based on how modest my finances may be).

John Scalzi | February 10, 2005 12:01 PM

Scribble away. And since I don't drink alcohol, I'm cheap to buy a drink.

Randy | February 10, 2005 12:09 PM

Thanks John. My comment wasn't meant to be rude, nosy or mean, and I hope it didn't come off as such. It was just something itchin' in my head.

Dawn B. | February 10, 2005 12:14 PM

Basically you're saying much same as what MSW did over in her LJ a while back. Nice to see it repeated and good to know the model works.

seratonin | February 10, 2005 12:14 PM

Related to the Pullitzer speculation, I suspect that moreso than any literary award, if a publisher thinks they can get Oprah to hawk it, it's golden. It's important to recall that "Pullitzer what?" is not an unthinkable ocurrence. If I ever wrote with the express puropse of trying to make money (which I won't, 'cause that's a pipe dream if ever there were one), I'd try to assimilate as much as I could from Oprah's book club selections.

That, and recall that you can never make the twist ending too obvious. People enjoy thinking they're smarter than the average bear cf. Dan Brown

Mark Siegal | February 10, 2005 01:08 PM

Another writer with a blog seems displeased at how much you've been talking about OMW:

I'm not trying to cause trouble by mentioning this. I enjoy both blogs.

I just don't think you're showing signs of propaganda or desperation. You're excited that your first novel was published (in print) and that it's doing well. I would be too.

John Scalzi | February 10, 2005 01:18 PM

Ooooh, I have to make that a front page post.

Jim | February 10, 2005 01:19 PM

About three or four (five?) years ago Donald Westlake wrote a novel called The Hook -- about writer's block and murder -- where one mid-list writer, complains to another (best-selling) writer than his writing career has been done in by publishing company computers and chain book store computers. The book store computers notice that for a given mid-list author four thousand books were ordered but only three thousand sold, so they only order three thousand of the next book... of which they only sell twenty-five hundred... so when the next book comes out, etc... until finally the publisher's computer says don't buy any more books from this guy. (So he finally had to sell his next book under a pen name... but then the same cycle took place.)

Of course this is only part of the plot-line setting up a murder, so I didn't know how much Westlake was trying to convey the publishing industry accurately and how much was just as a plot device. I questioned it at the time because the advances this mid-list writer was talking about were quite substantial, fifty or sixty thousand dollars. Your discussions of royalties and advances would seem to indicate that my doubts were justified. (On the other hand, Westlake probably does get advances in that area for everything he turns in.)

Kate Nepveu | February 10, 2005 03:33 PM

Jim, "ordering to net" is a known problem with the chains.

I believe that advances in that range are not out of the question for established midlist authors.

I have heard that _The Hook_ is a genuinely scary book. I like my Westlake light so I'm not reading it.

Jill Smith | February 10, 2005 04:13 PM

"Meet Sam Lipsyte"

...but now you can not only meet him, but discover what your chances of love with him would be!


(Random convergence of your post with Internet silliness is courtesy of Bookslut's Blog.)

John Scalzi | February 10, 2005 04:56 PM

I got 37%. I imagine our mutual spouses are relieved to hear that.

Paul | February 10, 2005 09:50 PM

My mention of The Pulitzer (in Canada we hear a lot more about The Booker, or The Giller, or The Governor General's Award) was not intended to suggest that winning a Pulitzer impacted directly on that author's sales of his current, or future novels, but that the "prestige" of the publisher would be raised within the industry thereby. Perhaps a publisher is prepared to take a bath on a "literary" writer as a roll of the dice that his novel might win a fancy-dancy literary award. Then, said publisher could attract other, high-profile authors but trumpeting that they publish Pulitzer winners.

Just trying to speculate on why any publisher would advance a first time novelist an amount of money that is virtually guaranteed not to be recouped.

Dieter | April 30, 2006 11:22 AM

how many books does a Canadian author need to sell to become a bestseller in Canada?

John Scalzi | April 30, 2006 12:27 PM

Don't know. Enough to get on the Canadian bestseller lists, I suppose.

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