Three Looks at the Publishing Business

A few weeks ago I had the pleasure of speaking at Bowdoin College to a group of teenagers who are participating in the Upward Bound program this summer. I have to say I these young people really impressed me—they were so much more savvy than I ever was at their age. Most seemed interested in the writing aspect of the publishing business, but I gave them a very quick overview of different career options within the industry. And then I thought, “Gee this might make a good post.” So if you know you’d like to be involved in publishing but you don’t know exactly what you’d like to do, this post is for you.

Even if you do know what you want to do, read it anway. Nothing wrong with a little refresher.

This is a very simplistic breakdown of the three major career options available to you in book publishing. It by no means encompasses all the options, but it gives you a good breakdown of the general categories and what they entail.

Writer/Author

Pros: You are the reason this industry exists. As a writer, you have the freedom to create a story or a work of nonfiction on any topic you choose, in any style you choose. The work is deeply satisfying and can give you the freedom to live the kind of lifestyle you want. You are self-employed and can live anywhere. There are no start-up costs for your business, only a pen and paper. There is no limit to the amount of money you can make. You can be famous, yet move about with anonymity. A good portion of your job involves travel and meeting interesting people. You get to experience the great thrill of seeing your words in print or your story come alive on the big screen.

Cons: Your success is not solely dependent on how hard you work—a lot of it has to do with luck and timing. Writing is hard, lonely work without any guarantees. Publishing is a slow business and it can take a long time to be paid and to see your book in print. While some writers make enough to sustain themselves, most do not make enough to live solely on their writing income, which makes another job necessary. Those who do support themselves have to grapple with the high cost of health insurance. Most writers do not become famous or receive much recognition. A good portion of your job involves travel, but usually not to glamorous destinations.

Agent

Pros: If you want to get rich, an agent is what you want to be. You have the satisfaction of discovering new talent and managing your clients throughout their careers. You work with authors and editors. Socializing is a big part of your job—you’re on the phone most of the day and have lots of lunch meetings. Invitations to all kinds of parties and events allow you to rub elbows with famous people. You will most likely have to travel a few times a year to the big book fairs, like Frankfurt, and to some writers’ conferences, like Maui, if you so choose.

Cons: Odds are, if you really want to be successful, you’ll have to live in New York (or at least live within commutable distance in Connecticut or New Jersey). Agents work long hours and have a never-ending flood of manuscripts to look at. Their clients can be eccentric and demanding, and often require a lot of hand-holding and ego-stroking. You have to have a fair grasp of legal matters and accounting, and should a disagreement happen between the author and the editor, you will have to play mediator. It can take a long time to build the necessary contacts and client list needed to be a successful agent. If you work for an agency, the company takes a portion of all your commissions.

Editor

(There are many kinds of editors—this is your run-of-the-mill book editor.)

Pros: As an editor, you get to play literary Indiana Jones, looking for The Holy Grail of books. You meet with agents regularly and sift through piles and piles (and piles) of ho-hum manuscripts until you find that one jewel that excites you so much, you just know it’s going to be The Next Big Thing. You find great satisfaction in discovering new talent and using your creativity to bring out the best in an author. As an editor, your work has a nice mix of quiet time and socializing. There are many opportunities for parties and lunches, and travel is a big component of your job. A good editor will travel often and have many opportunities to meet famous people. If you do your job well, the climb up the corporate ladder can be relatively quick.

Cons: Deadlines, deadlines, deadlines. Your life is one big deadline. You work long hours and rarely take vacations. The pay can be low, at least to start. It can take a long time to prove your worth as an editor, i.e. bring in a bestselling or well-respected book. The job requires you to be exceedingly well-rounded; social yet disciplined, literary yet extroverted, creative yet practical. You must learn how to get your points across to sensitive authors without stepping on their toes. In addition to working with authors, you have to coordinate deadlines across many departments in-house (sales, marketing, design, etc), which means that many variables are out of your control, yet still your responsibility. If anything goes wrong, you will bear the brunt of the author’s anger. Nearly all the big houses are located in New York.

Other Options

If you decide to explore the editorial side of publishing, you’ll quickly discover that there are many opportunities: sales, publicity, book design, copy writing and fact checking, just to name a few.

The Multi-Book Deal: Is It Worth It?

Just imagine: an editor is so in love with your work that he wants to not only buy your manuscript, but he wants your next book, too. And it hasn’t even been written yet. Ahhhh….this is the stuff that aspiring writers dream of –the multi-book deal. But are these deals all they’re cracked up to be? I’m not sure first-time authors understand all that they’re getting into with these deals, for better or worse. Here are some things to consider before you sign on the dotted line.

Money, Money, Money

One of the best things about multi-book deals is that you get a higher advance than if you sold just one book, right? Well, sort of. Publishers sometimes use the multi-book deal to buy two books at a discount. For example, if you sold only one book, they might pay $10,000, but instead they offer $15,000 for two. That’s only $7,500 each.

One way to look at this is to say that if you take the multi-book contract you are guaranteed $15,000—which is $5,000 above the hypothetical single book offer. If your first book ends up tanking, this might not be a bad deal. It might be hard finding a publisher who will pay you $5,000 the second time around.

On the other hand, what happens if your first book becomes a runaway bestseller? In the case of the multi-book contract, you’d be on the losing end of the deal to some extent. If you had signed a one-book contract and the book made millions, you’d be virtually guaranteed a huge advance for your second book. Alas, if you signed the two-book deal, your advance would remain the previously agreed-upon $7,500 and the terms would remain at the newbie author level, instead of reflecting your status as a bestseller. You can take some comfort, however, in knowing that you’ll be rolling in royalties.

Creative Accounting

Multi-book contracts are accounted for a little differently than one-book contracts. This can occasionally work to your advantage, though often it doesn’t. The first way it works against you is in the payout. For those of you who are new to the world of advances, it’s important to know that publishers do not pay your advance in one lump sum. Instead, it is divided into installments. Here’s a typical payment schedule for a $10,000 advance:

      $3,333 on signing of the contract (which is paid immediately)

      $3,333 on delivery & acceptance of the complete manuscript (several months down    the road)

      $3,334 on publication of the book (maybe a year or two later)

Now here’s the payment schedule for the two-book contract described above, with an advance of $15,000:

      $5,000 on signing of the contract

      $2,500 on delivery & acceptance of the complete manuscript of book #1

      $2,500 on publication of book #1

      $2,500 on the delivery & acceptance of the complete manuscript of book #2

      $2,500 on the publication of book #2

In this scenario, you’re getting slightly more on signing, but your payouts are smaller. Considering how long it takes to write and publish a book (let alone two), it could be several years before you see the final two payments.

Basketing

Another form of creative accounting in multi-book contracts has to do with royalties. Since the books were sold together they are accounted for together, which is called basketing. This means that all earnings are bundled together and treated as one unit.

For example, let’s say that your first book does well and you earn $8,500 in sales on your statement. If this was a single-book contract with an advance of $7,500, you would earn out your advance and be paid the excess $1,000 in royalties. In a multi-book deal, however, that extra $1,000 gets applied to the $7,500 advance for book two, instead. You will have to earn out the remaining $6,500 on that advance before you see a dime in royalties. As you can see, if you have a contract for many books it will take you damn near forever before you start to see some royalties.

You’re On the Clock

Before entering into a multi-book deal, it’s important to carefully and realistically examine the delivery schedule of your manuscripts. The publisher will want a deadline commitment and you’ll want to be sure you’re not getting in over your head. Committing to a schedule is a great motivator for many of us creative types and can work very well if you already have a completed outline or first draft of your next book. But if you don’t know what your next book is going to be, proceed with caution. Negotiate for as much time as possible. Beware that if you are unable to deliver your manuscript as promised, you may be asked to return that portion of the advance. Usually, by the time this happens, the money is long gone.

Job Security: The Good News and the Bad News

One of the best aspects of a multi-book deal is that you have the security of knowing when your publishing home is for the next several books. You’ll develop solid relationships within the company and you’ll have a chance to prove yourself if your first book isn’t a hit right out of the starting gate.

That’s the good news.

The bad news is you might hate your publisher. You might discover early on that you don’t click with your editor, there is too much politics, promises aren’t kept, your promotion is nil. In this case, you’re stuck through the next several books.

So Is a Multi-Book Deal Worth It?

That depends on you. If you’re a first-time author it’s hard to say no to any offer that comes your way. If you’re dealing with a good, solid publisher, then by all means take the deal—being aware of the pitfalls. Well-seasoned authors have greater options and the benefits are more likely to outweigh the risks. Either way, it’s important to thoroughly understand any contract before you sign.

Understanding Your Royalty Statement—Part II

As I mentioned before, royalty statements can be confusing to read, but it’s in your best interest to become familiar with them. In general, the larger the publishing house, the more confusing the statement. On the other hand, big publishing houses also give more information, which can be helpful. Because statements vary so much, you may or may not find some of the elements I’m about to discuss. Know that if you ever have any questions about your statement, your agent or editor will be happy to help you make sense of it.

Know Your Editions

Most books are published in several different forms, so you will often find separate listings for each edition of the book. For example, we’re all familiar with the hardcover and paperback editions. Did you know, however, that paperbacks are divided into two categories? There are the fancy, larger-sized, more literary-looking trade paperbacks and then there are the cheaper, drugstore variety mass market paperbacks. Most hardcover books become one or the other, unless you’re a mega-bestseller, in which case you might become both.

Other editions you might find on your statement are library editions, large-print, electronic, and audio books. Your publisher may or may not control the rights to these editions (look at your contract to know) so you may or not find them on your statement. If, for instance, your agent sold the audio rights to another company, you can expect to receive a separate statement from that company.

Check the Contract

When you receive your first royalty statement, it’s important to have your contract open and to compare the details with those on the statement. Is the pub date correct? Is the advance correct? Do they list the correct royalty payout (very important)? Is the retail price correct? If any of these numbers are off, it will affect your bottom line.

Units Vs. Earnings

Your sales are represented in two ways: units and earnings. Units are the number of books sold and earnings are your monetary share of those sales. For example, if you sell 100 books at $20 each and your royalty is 10% of sales, your earnings are $200 (100 x 20 x .10 = 200). Therefore, under the heading “Units” you’ll see 100 and under “Earnings” you’ll see $200.

On your first few statements, the number of units sold will be a pretty decent number. DON’T GET EXCITED JUST YET. Now is not the time buy a boat or head to the nearest watering hole and buy everyone a round of drinks. The units sold on your statement is actually the number of books purchased BY BOOKSTORES and not by consumers. For example, a Barnes & Noble might say, “Sure this looks like a good book—we’ll put five copies in each store.” This purchase is what you see on your statement. The catch is that if Barnes & Noble doesn’t sell those copies, they have the option of returning them to the publisher for a refund. This is why your publisher will occasional hold back a percentage of sales, called a “Reserve for Returns” until a certain amount of time has passed (more on this here). For the first several royalty statements, you’ll see all kinds of sales, and then after a few accounting periods have gone by the returns will kick in and you’ll start to see negative units (unless, of course, you’re Stephenie Meyer). It’s a discouraging sight, but take heart—it happens to most authors.

As far as earnings go, it’s important to remember that just because there were sales, it doesn’t mean you’ll be seeing a fat check anytime soon, due to that pesky thing called an advance. Advance is short terminology for “Advance Payment Against Royalties,” meaning you won’t see a penny of your royalties until you “earn back” your advance. Any amount above the advance is your true royalty. The nice thing about an advance though, is that you get the money up front and if you fail to earn enough to equal your advance (also known as “earning out”) you still get to keep it.

Be Aware of Escalations

Many contracts contain different royalty percentages, depending on sales. For example, the publisher might agree to pay you 10% of sales for the first 10,000 copies sold, 12% for the next 10,000, and 15% thereafter. This is called an escalation. If your contract contains an escalation, it is very important you pay attention to the number of units sold, and that the royalty percentages escalate properly.

Cumulative Units and Earnings

The cumulative columns are the most important part of your statement. This is where you’re going to find mistakes, if there are any. The cumulative columns show the total units sold to date and the total earnings to date.

This is where you need to do a little math. When you receive your second royalty statement, add the units sold with the units from the first statement and make sure it agrees with the cumulative units on the second statement. Do the same with the earnings. If you have an unearned balance from your advance, you’ll also want to subtract cumulative earnings from the initial advance to make sure the balance is correct. It sometimes helps to keep a small ledger of just statement dates and unearned balance amounts, since this is the most important number to know.

Next Time--The Multi-Book Contract: Is It Worth It?

I've Changed My Mind--I'm Going With Harper Lee

Before I get to explaining how to read a royalty statement (which I keep putting off because, let's face it, it's not the most interesting topic to write about) I thought you might be interested in hearing this interview with James Patterson that I heard on NPR last night, where he describes his writing process. Since the process seems to involve more editing than actual writing, I'm changing my answer to Harper Lee.

That said, Patterson has a point. Artists have been taking their concepts and hiring them out to others to execute for years. Take Jeff Koons, for example. Patterson argues that people have a hard time accepting when a writer does this (though they shouldn't because it happens all the time, whether readers are aware of it or not).

We could argue all day whether Patterson and Koons are producing real art or pure product, whether there is a difference between hiring someone to craft a sculpture or a paperback, whether you can truly call yourself the creator of a piece of art if you have a hand only in the concept but not the execution. I will say, however, that when you choose to skip the actual process, something is lost in both the art and the artist.

Understanding Your Royalty Statment--Part I

This has been a long time coming. In fact, I’ve been wanting to cover this topic ever since I started this blog—over a year ago—but I kept putting it off. For those of you who don’t know, I spent many of my formative years in New York City, working in the accounting department of a literary agency. A big part of my job (aside from chasing down info from my famous co-workers, storing old documents in the rodent-filled basement, and eating copious amounts of take-out Indian food at lunch) was auditing unearned royalty statements. And yes, we found mistakes. Lots of them.

If you have an agent, the accounting department of your agency will likely be scanning your statements for errors (reason #812 to have an agent). If you don’t have an agent, you’ll need to be looking for errors yourself. Either way, it behooves every author to know how to read a statement and check for errors. Far too many of us right-brained authors are at a total loss when it comes to the business side of things and it’s crucial that we keep ourselves informed. Sure, reading royalty statements is about as much fun as filing taxes, but it doesn’t have to be painful. So open that desk drawer, dig out those unread statements, and let’s have a look, shall we?

The first thing you need to know is that most royalties are reported twice a year. It used to be that all the major publishers reported at the same time, but now the dates are spread out and every house has its own timetable. To find out when your statement is reported, look at the top of the statement. It should say “For Period Ending __________”.

Let’s say your statement says, “For Period Ending June 30, 2009”. Just because the accounting is finished on this date, it doesn’t mean the statement will make its way to you anytime soon. It can take as long as three months for the publisher to compile, print, and send out the report. So that statement for the period ending June 30^th won’t make it to you or your agent until the end of September. If you have an agent, you can add at least another month for processing, meaning you might see it in October or November. It might feel like everyone’s sitting on your statement, trying to make the wait as long as possible, but I can assure you that a lot of work goes into getting the statements out to every author. I’m not exaggerating when I tell you that at royalty time, my colleagues and I in the accounting office were surrounded by foot-high stacks of statements, covering every available surface. Be patient; you will get your statement.

There is one quirky instance, however, when you can wait up to a year for your first royalty statement. This happens when the release date of your book falls close to the end of an accounting period. Let’s say then that your book comes out in mid-June and the publisher’s accounting period ends June 30^th. The publisher will, most likely, not issue a royalty statement because there isn’t any data to go on. In that case, your first statement will be for the period ending December 31^st. Add in the usual four-month wait time for processing and you’re already at the end of April—nearly a year since the release of your book.

So you finally have your statement—now what? We’ll delve into the meaning of those numbers on the next post.

Oprah Vs. James Frey

In old news...

According to this article in TIME magazine, Oprah has apologized for ripping James Frey up one side and down the other on national TV. Unfortunately, the damage has been done. Too bad she chastised him in public and apologized in private--it should have been the other way around.

Breaking the Rules

One of the things I love about starting a new creative pursuit is that it has a way of informing all your other endeavors. For example, I was recently thumbing through my brand-new copy of BEND THE RULES SEWING by Amy Karol, when I came across this little nugget of advice in chapter one:

“You have to be good enough to know when you can bend the rules.”

This reminded me of something I’d read in Molly Wizenberg’s cookbook/memoir A HOMEMADE LIFE a few weeks ago. When trying a new recipe, her mother urges her to follow the instructions to the letter the first time through. After she has prepared the dish the intended way, she is free to improvise the next time. This way, she can have a better understanding of how all the components work together if she should choose to improvise the second time around.

These two anecdotes, of course, made me think of fiction writing. I’m all for breaking the rules, but you need to know what you’re doing in order to break them. I’m sure most people would agree with this statement. But let’s take this thought a bit further…is there a limit to how rules you can break at once?

A few weeks ago, I probably would have said no. It’s kind of silly to have a rule about breaking the rules, right? But then I saw Woody Allen’s VICKY CRISTINA BARCELONA and I started to have a change of heart.

(Forgive me on commenting on such an old movie. Long gone are the days when I used to see one or two movies a week. Sadly, the last movie I saw in a theatre was WALL-E. )

The movie, which received excellent reviews and earned Penelope Cruz an Academy Award, starts breaking rules right from the first scene and continues throughout the movie. All along the way, broken rules start to pile-up like roadkill on the highway: the story is propelled by an omniscient voice-over narration rather than by the characters themselves; major events happen off-screen; there is little conflict, and the conflict that exists is short-lived and easily resolved; a major character is introduced late in the story; clichés abound in both story and stereotypes; in the end, the major characters return to their normal lives unchanged…just to name a few.

There were so many broken rules, I started to wonder if Woody Allen had written the movie as an intentional exercise in rule-breaking rather than focusing on making a good story. I mean, the guy knows what he’s doing and he’s broken rules forever, but this time the result felt overwhelmingly shallow. The movie received such glowing praise that I’m in the minority here, but it left me thinking that rules are best broken in moderation. There’s something admirable in going for broke, but sticking to a few rules while breaking others might be necessary to give your experimentation some legitimacy.

Perhaps I’m just generalizing based on a mediocre movie—but I’d love to hear your thoughts. Is there a limit to how many rules you should break at the same time?