Give Back The Money?

So - if James Frey's books are returned, does he owe the publisher his royalties back? And, if he has to pay back money would his agent bear the brunt also?

There's something I've been wondering about in regards to advances and royalties (apologies if the answer is already somewhere in the Snarchives). I know that a writer doesn't start receiving royalties until they 'earn out' their advance, but what if the book doesn't sell, and they never earn out the advance - does this happen? If so, and the book is remaindered, would the writer then have to repay the outstanding amount, or would the publisher simply cut their losses?

Thank you, Miss Snark - I can't say how much I appreciate your blog. (well, you just did, and you're welcome)

James Frey doesn't have to give back the money. Neither does his agent.

And if his book had tanked, he still wouldn't have to.

Advances against royalties are at the publisher's risk: you don't have to pay them back if the book doesn't earn out. You do if you fail to deliver the book.

More than half of all books fail to earn out their advances. This is not a happy thing.


Gabriele Campbell said...

Well, I'll leave that to the agent anyway, but I'd be interested to hear your take on the contradictory advice:

- Get as high an advance as you can wring out of the publisher because if they have money at stake, they'll invest more in the marketing and your book will sell better.

- Aim for a moderate or low advance because chances are you'll earn out that one, and the publisher will be happy and publish your second book.

I suppose, as often, the truth lies somewhere in between.

Anonymous said...

I guess for debut authors, the second one would be best. My critique partner just made her first two-book sale to a major publishing house, and her agent, a kick-ass NYC gal like Miss Snark, apologized for the low advance. She did manage to tweak it upwards somewhat, but still was apologetic.

But, what with second and third books being harder to sell than first books (that track record of sales does follow you), wouldn't it be better to settle for less up front and earn out? Miss Snark, what do you advise your clients? Money? Or Pragmatism?

Elektra said...

And while we're at it, what is the usual advance for a first-time author?

Anonymous said...

Sales rep's opinion from the trenches: high advances and the resulting greater pressure for the publisher to make the book profitable can add an air of desperation to the sell-in. We convince the bookstores to take more than they're comfortable with, and their investment becomes financial rather than emotional. The book is then treated more as a product, and the returns can be horrid when the book doesn't work. Better for a book to go out at the right number and build, than too many and appear to fail. The funny thing is that a book initialing 50,000 and netting 25,000 is a dismal failure, and one initialing 10,000 and netting 25,000 is a massive success. They both sold 25,000.

Anonymous said...

Miss Snark, I just learned that bad as it was on Oprah, it may be much worse.

Larry King, who never reads any books, kept saying, "But isn't it a great book anyway?" - well maybe it was when Little wrote it.


(oh, and he bought a 2.5 mil place in Tribeca with his wife and new baby filled it with Picassos etc. and also another lovely home elsewhere - sounds a lot like the ending of The Player)

Anonymous said...

Can the publisher get back the advance if they allege fraud? It's unclear what happened, but lets say that Frey told Nan it was all one hundred percent true, would that make a difference? Would it depend on whether this thing makes money enough to cover his advance (it did, it was only $50,000) or if it lost money???

Kim Smith said...

Snark said "More than half of all books fail to earn out their advances. This is not a happy thing."

Why is this? The authors could write well enough to garner attention from an agent (possibly) and a publishing co.-- which to me(still unpubbed) is a major milestone. So why do they fail to sell?

Is it marketing? Or just the whacked out tastes of readers?

LOL I know I know... it's a crapshoot. But still.. the wondering mind wonders.

Gabriele Campbell said...

Snarkfan, that's a point. I never thought about the bookseller side. The suggestion to aim for a reasonable advance rather than a skyrocketing one makes more sense to me, but it's interesting what stuff you come across on the net.

There was another argument for a higher advance: you won't want to sell yourself under worth because if you end up under par on the advance list, no one in the business will take you serious.

I'd rank that under the bullshit sector.

Small presses fe. can't plop out big advances, but I've never heard anyone published with Little House instead of Big House regarded less published.

Anonymous said...

I know authors don't have to return advances, even if the book doesn't sell enough to pay the advance, but once the author starts getting actual royalties (above and beyond the advance), don't the royalties have to be paid back if the books are returned?

Anonymous said...

...once the author starts getting actual royalties (above and beyond the advance), don't the royalties have to be paid back if the books are returned?

No, because the publisher holds on to those royalties until they are fairly certain there will be no more returns. This is called the "reserve against returns."

With most major NY publishers, you are only paid every 6 months anyway, and that's for the previous accounting period. For example, at the end of February 2006, I will receive a royalty check for all of the books that sold from February 2005-August 2005. In August 2006, I will receive a check for the royalties earn from August 2005-February 2006. They delay gives the publisher time to wait in case of returns. They also just like holding onto your money as long as they can.

AFAIK, the only time an author has to return an advance is if he/she fails to deliver a publishable manuscript as described in their contract.

Anonymous said...

So why do they fail to sell?

Is it marketing? Or just the whacked out tastes of readers?

Because publishing is a ponzi scheme run by closet gamblers? :-D

Bestselling Author, Pontif. said...

And what if they decide to ditch publishing the second work? If you've received portions of the advance for it, you'll have to give those portions back. That's what I've seen happen.

It really boils down to how good an agent you have, and what terms the contract speak to.

Anonymous said...

Looks like Frey has been dropped by his agent:

Brokthor Goreflinger said...

Now, as a Nolorc I am somewhat ignorant of the human publishing world, but I heard that novelists don't earn royalties until the "advance" is paid out in full.
Is this true?

Anonymous said...

Looks like a lot of us are wondreing the same thing.
Miss Snark, have you ever encouraged a client to take a somewhat smaller advance, on the theory that if you don't earn out your advance, it's really tough to sell again?
Or is that crazy talk?

Martha O'Connor said...

Well, I know that Nell Freudenberger's agent turned down a higher advance from another house so she could work with Daniel Halpern at Ecco.

Maya Reynolds said...

Snarkfan d. Salesrep: I'm under the impression that a 50% sell- through rate for a first time author was NOT a dismal failure, and that most publishers wouldn't expect a whole lot more.