Tuesday, April 8, 2008

Advance and be recognized

Sharon Wildwind

Let’s take a look at both ends of the book-publishing pipeline. At the entrance end, an author is paid an advance as soon as she sells a book.

“First-book advances and rates-per-word for short-stories have not changed significantly in 30-40 years. A minimum wage job in Massachusetts [in 2007] pays a touch under $15,500/year. Average advances for fiction are still below $10,000. Average first advance is more like $5,000, even from a major publisher.”
~Dr. Steve Kelner, writer and motivational speaker

Actually, in many parts of genre publishing, the advance is more like $1,000 to $2,000 per book; in some cases as low as $500.

Whatever the advance, the author is expected to earn out the advance money before she gets any royalties.

At the pipeline exit, not all books sold count toward earning back the advance and/or royalties. You’re probably familiar with the idea of holding royalty money against returns. Here’s how it works.

Bookstores order books on consignment for a specified period of time, often 30 days. Let’s simplify the numbers. Suppose a buyer for a chain bookstore orders 100 copies of a new book, to arrive for April 1. That bookstore doesn’t have to pay for the books for 30 days. So, on about April 25, the employees go through the stores and collect up the books that haven’t sold. It was a good month. Forty out of the 100 books sold.

The employees take those remaining 60 copies back to the work room and tear off the front covers. It’s called stripping a book. If you look on the back cover of a book—usually a paperback—you’ll see the letter “S” in a small triangle. That indicates a book can be stripped. The employee shoves those 60 covers in an envelope and mails them back to the distributor.

The actual books themselves, now shivering in a corner without their covers, go to the landfill, or paper recycling, or enter a black market system they are sold as used books at a greatly reduced price.

While one set of employees is stripping book covers to return them, another set of employees is ordering books for May. Since April was a good sales month for our title, they order another 100 copies.

Come April 30, the book store has none of the April consignment left and owes the distributor for the 40 books that were sold, but not a thing for the 60 books that were stripped.

May, unfortunately, is not such a good month. Toward the end of May, only 15 copies of the second 100 consigned books have sold. Eighty-five copies are stripped and the person ordering books for June doesn’t order any more of that title. The book is essentially dead as far as that chain of bookstores goes.

Two-month total:
200 books shipped on consignment.
40+15 = 55 books sold. The author is due royalties on these books.
200 - 55 = 145 books destroyed.

Even for those 55 books sold, the author may not see the money for 1 to 2 years because many publishers hold back any money due until they are sure that there won’t be any more books stripped and destroyed.

The big buzz on the mystery lists in the past week was an announcement by HarperCollins that they are forming a new division where business practices will be different. First, the authors will get no advances. Second, this division will not allow any returns. If a bookstore orders 200 books on consignment; it pays for 200 books. Third, HarperCollins and the author split the profits 50/50 and the author doesn’t have to wait for returns to be charged against royalties.

At this stage the HC announcement is akin to coming home and finding something mysterious baking. It smells pretty good, but you can’t tell from peering in the oven if your partner has made a nice dessert or your child has a science fair project in production.

All we know so far is that HarperCollins will risk 25 titles a year on this new venture, that e-books and audio books have have been mentioned as formats along side the printed versions, and that Robert Miller, the man who will head the new venture, has been quoted in Publisher’s Lunch as saying, “We may evolve after we start.”

Eventually, something will break the traditional pipeline of advances at one end and returns at the other end. In fact, when the break comes, it will probably be more than one something, more likely a gusher of alternative business models, based on technology and a plurality of markets. It’s going to be interesting to see how the HC proposal plays out.

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Writing quote for the week:

It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.
~Henry Ford, auto manufacturer

5 comments:

Sheila Connolly said...

Thank you, Sharon, for your very clear explanation.

But I'm both mystified and horrified. Why is it that a bookstore would destroy (strip) the books they have in stock and then proceed to order more of the same title? In what universe is that logical?

You would think that in this age of linked computers, there would be some way to fix this.

Sandra Parshall said...

Paperback books are stripped. Hardcovers are returned. There's a fondly held belief among writers that signed hardcovers can't be returned, therefore we should sign as many leftovers as we can at bookstore appearances to ensure the store will keep them, but alas, there's no truth to this. Signed hardcovers can be, and are, returned. The writer is likely to come across some of them at later appearances, when a buyer presents a book for signing and the writer opens it to discover it's already signed.

Books are returned at the publisher's or wholesaler's expense, and it's more economical for them to let stores strip paperbacks rather than return them. This is not the store's decision. It's the way the bulk seller chooses to operate. I attended a book festival where I sat next to a writer who had dozens of her paperbacks (ordered by the festival organizers) stacked up on her table. Nobody was buying them. She was near tears as she looked at all those brand new copies of her books and lamented their fate: being ground back into pulp at the local recycling plant.

Darlene Ryan said...

I've always found the process of stripping books frustrating when I know there are so many literacy programs desperate for reading material. I know a literacy program director who approached several publishers and offered to buy the stripped books for a reduced price to use in her program and to pick them up at local bookstores but all the publishers refused explaining she had no way to guarantee the books wouldn't end up on Ebay.

Sharon Wildwind said...

It's a crazy system, isn't it? Imagine being able to return tomatoes or auto parts or DVDs because they didn't sell. It would throw stores into chaos.

It's going to be interesting to see what replaces the current system, because something certainly will.

Anonymous said...

Sharon, thanks for so clearly explaining all of this. I like your dessert vs. science project analogy. It will be interesting to see what comes out of the oven.

Keri Clark