Mega Advances are Harmful for Authors by Beth Kuchar

November 14, 2012

Every year I find myself reading about the latest batch of huge book advances handed over to up-and-coming authors. The latest to join the 7-figure club was Lena Dunham, who dominated the news last month with her $3.7 million advance from Random House. And each time another author joins the mega-advance club, I see the commentaries spring up – from Slate, The Atlantic, The New Yorker, Salon… take your pick – bemoaning how these shot-in-the-dark huge advances are going to be the downfall of the traditional publisher because they put the focus on finding the next blockbuster instead of promoting books that enhance our culture, or because 7 out of 10 of these books never even make back the advance. The peanut gallery seems to agree: big advances are not a good way to run a business.

I have to say, I could really care less if the big publishers shoot themselves in the foot by betting big to find the next blockbuster. I’m more concerned about what I don’t hear each time another author gets a big payday: mega advances are harmful for authors.

OK, before you burn me in effigy, let me explain! For starters, these mega advances reek of a last-gasp PR ploy. It illustrates that the big publishers have lost touch with how to market books in the digital age; they give big advances to the authors that they think can market the books to their already large and established platforms. The job you might think the big publishers are taking that fat percentage to do – market the book – is really being placed back onto every author. That’s why the authors who seem to exhibit the biggest platforms are like gold to those publishers; even for the big-hit authors, the large publishers expect the author to do most of the marketing for the book on their own (but that’s another blog post for another day). It seems like an awfully risky plan to me: get your book in the news because the author was paid a large advance, and hope that the author’s followers buy into the idea that this book will be the next big thing when it’s published in 2 years.

Now we’ve created an atmosphere of extremely high expectations on the author. With a 7-figure advance, they almost have to be the next big thing! If the author doesn’t earn back the advance, no big “traditional” publisher will want to touch them in the future. Why? That advance has placed certain sales expectations on the author. While an average first-time novelist might be considered successful if they sell 10,000 or 15,000 copies of their book, our mega-advance author needs to sell 10 or 20 times that for the publisher to break even. Rough estimates show that Lena Dunham will need to sell at least 500,000 copies to break even on her advance. And if you think that sounds easy, think again: the average U.S. nonfiction book sells less than 3,000 copies over its lifetime. In 2009, only a little over 6% of all business books sold a minimum of 5,000 copies, according to Codex Group.

Think those odds are scary? I came across something even more frightening: there is now court precedent that says publishers can sue their authors to get back an advance. This is possible because most book contracts actually include a clause that says if the manuscript is not delivered, or if it is delivered late, or if the publisher doesn’t want the book anymore, the author is required to repay the advance. In the past, publishers generally didn’t enforce this clause. But with big bucks on the line, publishers like Penguin Group are getting serious. Among those recently named in a lawsuit filed by Penguin are Prozac Nation writer Elizabeth Wurtzel (for a $100,000 deal) and blogger Ana Marie Cox (a $325,000 deal). It seems the heat is turned up these days for any recipient of a big advance.

Crazy PR tactics, high expectations, and an atmosphere of distrust all seem like pretty good reasons why big advances might not be the thing to aspire to. But I think that the most powerful argument of all is the money… and I don’t mean that fat $3.7 million dollar check in Lena Dunham’s hand. If a book is that good and finds its way into the hands of a million readers, and resonates with readers for years after it is released, then the author of such a book could earn more with a small (or no) advance and a larger percentage of royalties.

You see, most authors who are signed by a big publisher get about 7.5%, sometimes even up to 15%, of the cover price (after the advance is earned out, of course). Their advance is “earned out” after their royalties reach the amount of the advance. So if our next-big-thing author is handed an advance for a cool $1 million and gets 10% of royalties, he needs to sell a million copies (I’m making things easy here for myself and pricing our imaginary book at $9.99) before he sees a single royalty check. And don’t forget that he’s got to pay taxes on that big lump sum of money (we’ll say about 32% on the low side for ordinary income), and chances are he had a literary agent negotiate that deal for him, so that’s 10% off the top. Yikes! Our million dollar advance just turned into $580,000. Don’t get me wrong; that’s nothing to sneeze at, but it’s almost half of our original figure. And even if our superstar author here sells a million copies of his book over the next 3 years, he will not see any royalty checks in the mail during that time.

Now let’s imagine that our author didn’t negotiate a large advance at a big publishing house but instead found a small publisher where he was able to keep 50% of the royalties and got no advance. Over the next 3 years, he sells a million copies of his book, earns his 50% royalty checks and pays his taxes like a good citizen. His take for those 3 years combined, after taxes: $3,400,000! Some may fault me on my numbers or argue with the amount and cost of resources put in by publishers, large and small – that’s OK. I know I’m oversimplifying to make the math easier to understand.

In the end, each author should be thinking about what’s best for him and for his career as a writer. And sure, I have my own selfish motivations… as a reader, I want to see more great, diverse books out in the world instead of a handful of hits-motivated books that shut out potentially great writers. If the great authors out there have access to the right tools and knowledge to get their books into the hands of readers instead of getting caught up on how to be the next big thing, as a reader, I win right along with the authors.

• publishing business model
• traditional publishing
• future of publishing

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