Money Matters - so let's discuss it.

All about advances - in particular, MY advances...

Hello, all.

Welcome to the first post in my Money Matters series, in which I’ll discuss:

• advances – more specifically, my advances

• royalties & ‘earning out’ – what I’ve earned in royalties thus far in my career; the number of my books that have earned out their advances; and (very) approximate sales figures to get to that point

• my Public Lending Right income

• and my year-by-year earnings from writing, with a breakdown of the sources of income

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But…why? Why would I want to share any of this?!

Because the topic of money is perhaps the least transparent area of publishing.

Yet money matters. It does.

Those of us who create books do so because we have a passion for them, and a desire – a need – to do so.

But we also have a desire to be fairly renumerated for our work – which wouldn’t exist without us, and, on the grandest scale, can comfort, teach, inspire, enthuse, elate, and even change lives – and a need to support ourselves and our families, to pay our bills, rent and mortgages.

That doesn’t seem too much to ask for in the face of publishers announcing record profits (which, by the way, usually leaves authors wondering, ‘So where does all the money go?!).

Thanks to the mega-deals that make the news – which are newsworthy because they’re exceptional, not the norm – those not in the know often assume that publishing a book is a path to quick and easy riches (which, very, very, VERY occasionally can be true, of course – if you remove the quick and easy bit).

Futhermore, I’m frequently asked during school visits, ‘Are you rich?’. When I explain what an author typically earns from the sale of a book, the adults in the room often gasp, before, invariably, proceeding to confess that they had ‘no idea it was that amount…’

So, I believe that greater transparency around author earnings and the finances of publishing can only be a good thing for fellow and aspiring creators of books. It has the potential to be not only helpful, but also, in the best-case scenario, transformative.

• It could help remove the common assumption/misconception that book creators are happy to accept exposure as payment for work or appearances (because we already make loads of wonga from book sales, duh).

• It could prevent the exploitation (through offering minute advances or royalty-only deals) of inexperienced creators desperate to be published.

• It could help reduce the ‘financial terrorism’ (an extreme term, granted) that exists within publishing, through such means as delayed payments, the staggering of advances, and a lack of clarity and accountability – all of which contribute towards creators’ financial instability and stress.

And it’s that financial instability that, sadly, makes creating books a sustainable career for very few. If things stay as they are, many creators will be forced to leave the industry in order to support themselves through other means. I know some very talented and successful authors and illustrators who are considering doing exactly that.

And I don’t want that to happen.

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Sorry. Rant over.

Let’s move on to the main topic of this post:

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ADVANCES

What are advances, and how do they work?

An advance is a sum of money paid by a publisher to an author upfront in advance of the publication of their book.

Typically, advances are split into three equal payments upon:

1. signing the contract

2. delivery of the completed manuscript (as approved by the editor)

3. publication

This varies, though. Four equal payments is also common, for instance when a publisher has separate hardback and paperback releases of a book:

1. signing the contract

2. delivery of the completed manuscript (as approved by the editor)

3. hardback publication

4. paperback publication

And for illustrators’ advances, which are often split into payments upon:

1. signing the contract

2. delivery of rough illustrations

3. delivery of final illustrations

4. publication

Also, agents will sometimes be able to negotiate changes, such as splitting the advance into fewer payments or front-loading the earlier ones, so that their clients receive more of the money sooner – which is handy, given that the period between signing a contract and publication is often years.

For one of my books, that period was five-and-a-half years. I know other authors who’ve waited longer.

Advances are guaranteed (providing the author delivers what their contract states they must), meaning that they keep the amount they get paid, irrespective of future sales i.e., if their book sells zero copies, the author does not have to return their advance.

But they are paid against future royalty earnings, hence the full term ‘advance on royalties’. Each sale of a book earns a royalty, at a particular rate specified in the publishing contract.

For instance, the typical royalty rate for a paperback picture book is 7.5% of the R.R.P., which would be split into two equal shares of 3.75% when the words and the pictures are created by two different people (an author-illustrator would get the 7.5% to themselves).

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A brief aside: most books are sold at discount. And the bigger the discount, the lower the royalty rate – meaning less of less for the creator, effectively.

And let’s quickly do some numbers on a sale at full R.R.P., currently £7.99 for most paperback picture books.

3.75% of 799 = 29.96

So, rounded up, that’s 30p to the creator for a book sold at full-price.

But that’s not accounting for an agents’ typical commission of 15% + VAT, so let’s deduct that:

30 x 0.82 = 24.6

So, rounded up, that’s now 25p to the author. In the case of very high discounts, it’s going to be more like 2 or 3p per sale.

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‘Advance on royalties’ means that for every pound an author receives in their advance, they must earn the equivalent amount from book sales – at their royalty rate – before they receive any additional royalty payments. If they manage to do that, the author has ‘earned out’ their advance.

For example, if I received an advance of £10,000 with a royalty rate that works out to £1 per book sold (ha! I wish!), I’d have to sell 10,000 books to earn out. Remember, that’s VERY different to the publisher selling £10,000-worth of books. It’s many more books, and much more difficult.

In other words, once a creator’s pot of royalties exceeds the amount they were paid for their advance, they earn out, and start to receive royalties direct (thanks to Ruth Ware for this simple explanation). These are typically paid twice a year, in September (for books sold Jan-June of that year), and April (for books sold July-Dec the previous year).

It’s also possible to earn out an advance more quickly through the sale to third parties of ‘sub rights’ – that is, subsidiary rights, which include translation rights, audio rights, film, TV and stage adaptation rights etc etc.

On signing a contract, an author typically transfers some or all of their sub rights to the publisher, and the successful exploitation of subsidiary rights can prove lucrative. The sale of the rights to my books to foreign publishers is the chief reason I’ve managed to earn out some of my advances.

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The bigger the advance, the better, right?

That’s probably the standard viewpoint, yes. But, actually, things aren’t quite as simple as that.

From a take-the-money-and-run perspective, a big advance is good for an author because it means that that money (minus their agent’s commission) is banked, irrespective of how many copies their book goes on to sell.

And given the unpredictable nature of author income, more money up-front is understandably appealing.

Whilst this is a bit of a generalisation – and less relevant to picture books, which, unlike MG, YA or adult books, rarely command newsworthy advances – it’s probably fair to say that a larger advance tends to signal a greater intent on the behalf of the publisher to support the book with a marketing and publicity push; after all, in order to make a return on their investment, they’ll need it to sell well.

Of course, the flip-side of a big advance is that it is harder (or takes longer) to earn out. The reality is that the majority of books do not earn out their advances – i.e., the advance will be the only money an author gets from their book.

And not earning out an advance has consequences for an author:

1. It makes them feel pretty rubbish about themselves and their book.

2. It may make their publisher reluctant to contract them again. And if they are offered another contract, it’ll probably be with a smaller advance.

3. Those twice-yearly royalty statements will NOT be accompanied by any payments – and that’s pretty demoralising.

4. All of which may make an author slightly nervous of large advances.

Conversely, earning out an advance:

1. feels great!

2. makes an author look good, and publishers more likely to offer further contracts

3. means further income, beyond the advance, twice-a-year.

   The amount obviously depends on sales, but if the publisher continues to sell co-edition/subsidiary rights after the advance has been earned out, and shares the details of the deal at the time, the author can expect to receive some guaranteed – and predictable – income with their royalty statements.

One further benefit of accepting a smaller advance concerns tax: it’s much more comfortable to pay taxes on a little income at a time (the initial smaller advance, plus ongoing royalties) than coughing up the cash due on a sudden and sizeable windfall that a much bigger advance represents.

On balance, then, being offered a lower advance isn’t always a bad thing, and I’m never too disappointed if a publisher can’t match the rate of my largest advances (providing the offer isn’t miles off what I’d expect), despite the appeal of receiving more money up front.

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So how much is a typical advance?

Well, all I can say is…I wish I knew!

I’ve no idea what my peers’ advances are; as such, it’s hard to say whether my own advances – which I’ll share with you shortly – are typical or not.

The reality is that advances vary wildly in size, but, generally, they reflect the publisher’s estimated level of sales and profit: typically, a well-established author with a good sales record is likely to be offered a larger advance than a debut author without one.

(There are always exceptions though, such as when a publisher feels a book will fill a gap in the market, or will be so popular that it creates a new market of its own).

Precise numbers are very rarely in the public domain. Descriptions of those headline-worthy mega-advances that make us all jealous only ever reveal the number of figures involved – ‘debut author signs record seven-figure book contract’ – and not the actual figure (and as I’ve said before, they’re newsworthy because they’re the exception, not the rule).

To my knowledge, the only time precise(ish) figures have been made public was when authors revealed their advances during the #PublishingPaidMe campaign of 2020 in order to expose racial disparities in pay in the publishing industry.

Most of those were for adult books. And most of the newsworthy advances in children’s publishing tend to be for Middle Grade or Young Adult books.

Finding out the size of advance for the average picture book author (if there is such a person) is very difficult indeed.

But that’s where I come in.

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Let’s talk specific figures – more specifically, my specific figures…