Thursday, June 23, 2005

Advances -- part 3

If you have been paying really close attention to our discussion of advances (parts 1 and 2, not unnaturally, preceded this one), then you will know that the analysis is largely based on UK data which were published in 1995 and 1999. And, you may reasonably be asking yourself, is the situation in UK publishing still the same today as it was then? In other words, are publishers still paying advances at the same kind of level as they were in the 1990s?

The answer is that we don't know. Well I don't, anyway. And I take leave to doubt that anyone else does.

Within a given firm I would expect there to be a handful of people who know how the average advance, in their company, compares with the figure that would be due if the advance were calculated on the basis of 100% of the royalty income from a sellout of the first print run. I would expect this group of people to include the chief executive/managing director and the finance director. But how much lower the knowledge goes I have no idea.

As for what the picture is in the industry overall -- well, to find that out you would have to do an up-to-date analysis based on data assembled for that purpose. And no one, to my knowledge, has done that research. There is gossip, and rumour, but facts, as usual in the publishing industry, are in short supply.

If you have been keeping your eyes open, you will know that the Bookseller is shortly to publish a report entitled The Consumer Book Report UK -- UK publisher trends, growth and analysis. This is due out in October this year, and it will cost you £249. So far the advance publicity for the book makes absolutely no mention of authors or writers, so an analysis of payments by way of royalties and/or advances may or may not figure very highly in it.

For what it is worth, one well-connected consultant who spoke to me five years ago suggested that 1995 was perhaps the peak date for payments to authors. Since then, he said, advances had fallen somewhat. This was due to a number of factors.

Chief among these was a reduction in the amount of competition for good stuff. As the years go by, more and more publishing companies seem to merge into the big ones. The result is that, depending on how you count them, there are really no more than half a dozen or so really big players in UK publishing.

In the past it was not unknown, I understand, for imprints within the same big company to compete against each other in the market place, but it's hard to believe that they are still allowed to do so.

So that's one factor. Another big influence is the fact that the actual sales levels of books of any consequence is now tracked very closely by Bookscan. This is a service which actually counts the number of books for which money is received, from the customer, in the bookseller's (electronic) till. It does not depend on a publisher telling us that they have sold 50,000 copies when all that means is that there are 50,000 copies on booksellers' shelves, and that half or more of them may bounce back in due course.

Those who subscribe to Bookscan, which includes everyone of any note in publishing, can see at a glance how the latest book by Miss Smith or Miss Jones has done. As a result it is no longer possible for an agent to exaggerate, or be vague, about how wonderfully well her client has done for Clapham & Irons, and thus obtain a massive advance for Miss Jones's move to a new firm. A new firm may well be interested in Miss Jones, but they will know fairly accurately what she is worth to them.

My informant was of the view that unearned advances are now found chiefly in relation to new names who have been thought to be worth a major punt (as we say in the UK; it means a gamble or bet). And, as we all know, these hot new names who are going to set the world on fire sometimes turn out to be damp squibs. So it may be the case that a writer gets one big advance, which is not earned out, and then -- turn out the light.

Having said that, it is certainly true that really big names can pull down enormous sums by way of advances. If you have been following publishing for even six months, you will already have come across stories about X or Y being offered contracts worth millions (of dollars, usually). Even if you divide these hyperbolic figures by 2, 3, or even 10, they amount to a lot of money.

At the top end, in other words, the standard industry royalty levels are almost irrelevant. When you know, in advance, that the mass-market paperback of a particular writer is going to sell a million copies plus, the cost savings in ordering huge numbers of books from the printer are so enormous that all normal calculations cease to apply.

Which brings me back to the 'special deals' done on behalf of writers who are not household names.

It is standard practice for a contract with a publisher to include provision for the publisher to make 'special deals'. These often involve printing a substantial number of copies, say 20,000, for an entrepreneur who will then sell them in various cut-price arenas. The author's share of such deals is often 10% of the sum received by the publisher.

The 'sum received', by the way, is usually described as 'net receipts'. This is a wonderfully vague term, seldom defined, and capable of providing infinite hours of harmless amusement. In an ideal contract the term 'net receipts' would be very tightly defined. I gather that it is so defined in film contracts.

Amanda Mann, whom we have mentioned before, describes on her blog how her publisher sold a special print run of 20,000 copies, which yielded, for Amanda, the magnificent sum of £440. This works out at roughly 2p a copy, as opposed to the 45p or so that a writer would be entitled to as a royalty on a full-price copy sold in the home market.

It is interesting to speculate as to how such a deal might work out. I emphasise speculate because I have never personally commissioned a print run of 20,000 from a printer, so I am groping in the dark a bit.

If the writer is entitled to 10% of the publisher's income, then the publisher would have been paid £4,400 by the entrepreneur. So the entrepreneur is getting the books at, say, 22p each. He will sell them for, say, £1 each; and the market stalls and 'remainder dealers' will sell them for, say £2. Everyone gets a bargain. Except, of course, the writer. But hey -- she only does it for fun, right? The other guys have to earn a living.

The publisher will have had to pay the printer's bill. You can make your own guess as to what that is, but my guess is that the publisher took the printer's estimate and doubled it when he was asked for a price by the entrepreneur. Thus the publisher makes close to £2,000 for doing nothing very much.

Ah, but, you see, he took the risk on doing the book in the first place. And the £2,000 is his reward.

Bear in mind also that writers whose books are sold in supermarkets are never in a thousand years going to see a normal royalty for those sales. Supermarket sales are all going to be dealt with under some clause or other which provides the writer with a much reduced sum of money per book. (For my further thoughts on the joys of supermarkets see my post of 21 September last.)

My final conclusions from this consideration of royalties and authors' advances are as follows:

In many areas of publishing, the old-fashioned royalty scales, based on a percentage of the nominal retail price of the book, are looking increasingly under threat.

It is argued in some quarters that the price-royalty system only really made sense in the days of the Net Book Agreement, when all books had to be sold at the price determined by the publisher. Today, agents and authors are increasingly under pressure to do deals based on the author receiving stated percentages of the sums of money actually received by the publisher (net receipts).

If you seek an example, visit the Blackwell site, where you will find a statement that 'A royalty rate of 10% [of] net receipts (money received by the publisher) is standard.' Not, you will note, a royalty of 10% of the nominal retail price. There is a considerable difference, because the latter might be double the former.

Oxford University Press, which is a massive publisher of non-fiction, takes the same position. The OUP glossary defines net receipts as follows: 'The revenue that the publisher receives from the sale of the book, less any deductions for discounts offered to customers.' Which is a bloody awful definition in my opinion. The OUP goes on to say that 'Net receipts form the most common basis of royalty payments to authors.'

My own guess is that, as the years go by, the remuneration levels of authors will fall. There are more and more ways for the consumer to spend their money. The bookselling chains and the supermarkets are determined to buy product cheaply, and they have the muscle to bully and harass the publishers.

As a result, publishers will try to cut costs in order to maintain profit levels. They will try to find cheaper typesetters and cheaper printers -- in India and Thailand, if necessary. Just recently, for instance, Penguin laid off seven salespeople and HarperCollins are shedding the same number. Why? Because they figure that in today's market they can maintain profits without them, and they want to save money.

Of all the potential areas for cost-cutting, it seems to me that writers are the most attractive target. Even with an agent. Most writers are, after all, romantic fools who are desperate to get into print. Not only would many of them do it for nothing, but they would gladly pay. Furthermore, if they don't have an agent, they are blissfully ignorant of publishing economics and can easily be blinded with science.

Publishers will attack the remuneration levels of writers not because they are villains, but because they are businessmen. They are seldom good businessmen, and that's the problem. Consider the choice: either you can tell a writer, over lunch, that times are hard and she is going to have to take a little less; or you can go to war with that hard-nosed son of a bitch who buys paperbacks for Tescos. Which would you prefer?

So, if and when you finally hold a publisher's contract in your trembling little mitt, take a good look at what it says. You probably won't be able to change anything -- let's face it, most of us don't have four or five firms competing for our book -- but it would as well to understand what you are signing.

5 comments:

Michelle Styles said...

Can I point out in case no one else has done so that the Society of Authors do vet contracts for its members? If you do have a firm publication offer and are unpublished, you can join the SOA as a probationary member. Over the years, the SOA has done a wonderful job of trying to help authors.

It should also be noted (and forgive me if it has been) that the advance will also cover things like audio and large print book sales. Thus although Mr X's publisher may sell the book to Magna (for example) for large print, unless the advance has already been earnt out, said author will not receive a penny more.

Susan Abraham said...

I learn so much about the British book industry and even otherwise from you, Mr. Michael Allen. Thank you!

Anastasia said...

It's probably unethical for me to mention this, but I'm no longer part of the machine, but concerning Blackwell (here) I once had an author of one of their books (one book in a series about contemporary feminism) call up to order copies of her book (she lectured at a university here) and she was astounded that Blackwell hiked up the price of her book. She wanted the book to be accessible to her students and wasn't all too happy.

In regard to their shipments here in Australia, I'm amazed authors do make any returns because it's shocking. Because they deal with academic texts, they wait until the very last minute until they ship bulk copies through. Semesters commence and students are waiting for their books and university staff are never happy, but the representatives here see it the following way, that the lecturer is the top priority (for reading copies) even though they wouldn't be happy when their classes receive their books more than a fortnight after semester commences. Blackwell has interesting titles, but many a bookseller here has difficulty with the publishing end (in terms of shipments arriving on time) and if the primary wheels don't work, authors can be disadvantaged as well.

Patry Francis said...

Thanks for taking a dreamy fiction writer out of the imaginary world where she often resides and acquainting her with a few hard, cold business facts.

Your blog is invaluable.

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