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Philosophy of Advances

We pay advances, generally $5000 to $10,000, but occasionally much higher, with the highest we’ve ever paid being $100,000. When the advance exceeds $10,000, there is always some aspect of the deal that reduces or eliminates the risk of the higher advance (i.e. a guaranteed buy).

We often do deals with no advance, and higher (sometimes much higher) than standard royalties. The higher royalties are not justified by the absence of an advance (this actually doesn’t change the economics that much) but by the fact that the author is bringing to the table substantial marketing resources.

The point of all of the above is that advances are not an important element of the economics of our books. All things being equal I’d rather pay less than more, but few of our books earn a lot less in royalties than the advance. So, economically, advances are significant, but not a huge economic factor for us.

So this post isn’t about the economics of advances, exactly, but rather some thinking about when and how advances make sense.

Like most of what I post about, my thinking here starts from thinking about marketing, and, specifically, the role of the author in the marketing process.

Every book launch is an entrepreneurial venture. There is product development, packaging, distribution, marketing, finance, etc. Some books thrive and grow, and, sadly, many go out of business quickly. But each book is a little (occasionally big) business. This is undeniable. (You can argue that a series, or the book plus peripheral products, or the author’s entire output, is the business. But let’s not quibble.)

Here’s the question. If the book is a business, whose business is it? Is it the publisher’s business and the author is an “employee”? Are they partners? Or is it the author’s business and the author has outsourced aspects of the business to his publisher?

In practice I’ve seen all of the above. Most interesting, maybe, is the entrepreneurial author who drives her book to success, with the publisher kicking and screaming the whole way (I love authors like this, of course, but they sometimes can drive big publishers crazy because they don’t play by the normal rules).

The typical model is that the publisher drives marketing (also typical is the author feeling, perhaps legitimately, that the publisher didn’t do enough to promote his book).

I think the best model is partnership, in which the author and publisher genuinely combine resources and creativity to maximize the possibility of success (sometimes part of this partnership is the publisher helping the author understand how much she can really do to promote her book). This can be challenging to pull off but is also very rewarding, creatively and financially. It’s also the most fun.

Of course, a book launch is a risky venture, with a high likelihood of failure. There’s no getting around this.

This brings me back to advances. In the face of a risky venture and the standard view that the publisher is in charge of marketing, advances make sense. At least the author will make some money. And it’s not like the author can really make the book successful, right? This is the publisher’s job.

The problem for me is that this moves us right into the “employee” model.

There is an arguement that advances demonstrate publisher commitment to marketing the book. Maybe there is some truth to this, but I hear the reverse all the time (i.e. I can’t believe they paid this big advance and then just plopped the book out there with no promotion). In any case, marketing commitment can be directly demonstrated through a contractual obligation.

A more convincing argument is that sometimes authors just need advances. They live on them, and couldn’t write without them. I get this, and advances are good and necessary in these cases. (And some agents need them as well. This is important, as publishing needs agents almost as much as it needs authors. I would hate to have to acquire without them.)

But lots of our authors are scientists, doctors, and businesspeople. For them, the advance is insurance. Insurance against the book doing badly, against the publisher doing nothing to promote it, etc.

I understand the desire to have insurance. But I’m not a big publisher, and I don’t have insurance against book failure. When I publish, I put my money up to see if we can make a book successful. So when my author wants to go all in (i.e. invest their advance – and sometimes more – into marketing the book) I know I have a much better chance of achieving the marketing partnership I’m looking for. (In some of our deals the author agrees to invest his advance in the marketing pool, and we contractually agree to match it.)

It’s like the old joke about the ham and cheese sandwich. The cow and the pig contribute, but the pig demonstrates more commitment. (Please note – I am not calling my authors pigs).

There’s another side of it as well. Once the publisher pays a substantial advance, they feel they “bought” the book. So the key decisions (except for whatever rights the author was able to reserve) belong to them. They make the decisions and the author needs to let them get on with it. Again, this works against the partnership model.

For us, since we don’t pay Sullenberger-esque advances, the issue isn’t unearned advances, but rather, what’s the financial arrangement that motivates the behavior we want from our authors, and motivates us to behave in the way our authors want us to behave?

For the big publishers, who often do wind up with large unearned advances, there is another factor. If advances were eliminated (as a thought experiment) royalty rates could be substantially higher. Would this be good? Successful (relative to their advances) authors would make more; unsuccessful authors would make less. In the ruthless world of book success, with so many random elements, maybe an element of “advance socialism” is a good thing, keeping more good writers in the game (although the really big advances don’t seem to go to these folks). Or maybe it rewards the employee model over the partnership model. Hard to say.

In any case, advances aren’t going anywhere, and to some extent this is a good thing. But we are redoubling our efforts to ensure that they don’t get in the way of the partnership model we are trying to establish with authors.

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