Wednesday, October 11, 2006


A New York Times Bestselling author recently told me that you don't make any money until book #5. I'm paraphrasing:

"Don't quick your day job until you have five books in print, on the shelves. That's when you've earned out your advance and the royalties start. That's when your publisher will start pushing your books harder. Paperbacks are the important thing."

Since I knew he had a (reported) 120k print run in hardcover, I politely told him he was full of shit.

"I only sold through about 60k books in hardcover. That didn't make a dent in my advance. The paperbacks are the money makers."

The author went on to describe how small the advances were for his first few books. Years later, they have all been in multiple printings, and have long earned out their meager advances.

"Hardcovers are nothing but an advertisement for the paperbacks," he said.

I can understand his logic. A hardcover has a shelf life of less than a year--- and usually has only four months (average) to make a sales dent. But while this hardcover is taking up the coop space on the new release tables, it's signaling to people to check out this author's other books; books that have been selling for years.

While a hardcover can make money, the book usually doesn't get into a royalty situation until the paperback is released. Each year, the publisher's marketing dollars push the new hardcover, which reminds people about the backlist.

My royalty statements confirm this. As of my statement of June 2006, both Whiskey Sour and Bloody Mary have earned out their advances. They did this on the paperback releases.

Unfortunately, I won't see any royalties until next year, because of basketing. Basketing is a form of joint accounting. When books are basketed in a contract, the publisher doesn't pay out royalties until all of the books have earned out. So the earnings from Whiskey and Bloody are paying the advance for Rusty Nail. Which is fine. By next year, I should be in a royalty situation. This is a good thing.

Royalties are like found money. You're earning on work you did years ago. Your publisher also likes royalties. They no longer have to spend marketing dollars on your backlist, but it keeps generating income. Earning out an advance is a good indicator that the book made a profit, and the longer it stays in print, the more profitable it becomes.

But how does someone stay in print? What are the minimum sales that have to be reached each year to keep a book on the shelf?

I confess that I have no idea. I'm guessing it varies. But I can make an educated guess on why books stay in print.

First, there has to be a demand. This demand is fueled by old fans and new readers. Word of mouth is important.

Second, your publisher needs to be behind you. They are the ones with the deep pockets who can market you effectively, helping to establish your brand. They are also the ones who decide when to pull the plug.

Third, there should be growth. Steadily rising print runs, and corresponding sales, make everyone happy. As my friend said, hardcovers do sell the backlist. And the bigger the hardcover, the bigger the marketing campaign, the likelier backlist books will sell.

By book #6, I'm hoping to have a dump box (also called a cameo.) These are the stand alone cardboard displays featuring six different books all by the same author. These sell books like crazy. They also cost your publisher a mint, in both corrugation (the cost of the stands) and coop (the price of the real estate they occupy.)

We all hear the stories of the new authors who signed a huge deal and get a gigantic print run and marketing campaign. This is a great thing when it happens, but it's also a gamble.

Building up an author's fanbase with modest print runs and a solid backlist is a safer way to make money. Slow and steady wins the race. And it stands to reason that if your backlist is earning money, there will be more money available to promote your recently released title. Once you're in a royalty situation, you're no longer a gamble--you're a sure thing.

At least, until demand drops off.

That's where you come in.

I've heard a lot of authors talk about the insanity of doing an 8 hour store signing, handselling books to everyone who walks in the bookstore. "I could never do that," they say.

They also say that visiting 500 bookstores in a summer is even crazier. They talk about how their time is better spent writing. They talk about their shyness. They talk about how it's the publishers job to sell books. They say that if they just write a really good book, it will find an audience.

But they're overlooking a major plus of self-promotion; once you're in a royalty situation, every book you sell is making you money. The more you sell, the more you earn. And it's exponential--if you sell one book to a customer, that customer can buy your backlist, your future books, and tell everyone they know about you.

You're not working for free. You get a check. And the effort you put in will sell books above and beyond what would have normally sold.

Is it what you signed on for when you became a writer? No. But if you'd like to be doing this as a career, and someday hope to make a decent living (or a wealthy living) writing books, perhaps you should reconsider your priorities and what you're truly capable of doing.

I've said, from the very beginning of my career, that my goal is to make money for my publisher.

For my first two books, I'm doing just that. It will be interesting to see where it takes me.


PJ Parrish said...

"When books are basketed in a contract, the publisher doesn't pay out royalties until all of the books have earned out."

I'm no expert in the arcane language of book contracts, but I have to disagree with you on one major point here that "basket" accounting is okay. I haven't had a "basket" clause in my contracts since book no. 1. My agent, through five contracts now (with two publishers) has fought to get this deleted every time.

This cross-collateral accounting is, I am told, simply an easy way for a publisher to withhold money due to a writer while spreading its risk over several books.

For example, you might have two books with $10,000 advances, but if one does great and the second poorly, you still won't see any royalty money until the entire $20,000 advance earns out. Why shouldn't each book stand on its own merits? Why should an author be penalized for the success of one and not another when so many factors that go into that success are out of the author's hands? I'm sorry, but I don't buy it and I don't think any author should.

"Basket" or cross-collaterization is common in book publishing, the music business and now, in the computer game biz. (any biz with royalties). It shows up on every boilerplate contract and if you are an author just starting out, you might not have to clout to get it deleted. But on your second or third contract, you should be able to get it deleted or at least modified to your better advantage. (Like ask that co-accounting be limited to future editions of that book only.)

My advice: Read your contract for this clause under royalties. Research its ramifications. Consult with your agent. Get rid of it, if possible.

I agree with you that an author should approach this business with an eye toward making money for his or her publisher. But it has to be fair.

Anonymous said...

The evil that is basket accounting is one thing RWA has drilled into its published authors to fight to negotiate OUT of their contracts. Most I know succeed.

JA Konrath said...

Hi PJ--

Basketing was deleted in my second contract. :)

You bring up a great point, but I don't entirely agree.

Why shouldn't we make sure the publisher earns money? If I have a book that doesn't do well, how is it a bad thing that the money lost is made up with a stronger selling book?

Basketing benefits the publisher in all the ways you say, but when does some of the responsibility for sales fall on the author's shoulders?

I consider publishing a partnership.Is it fair that your partner loses money on one of your books? They are the ones risking the money. Why should you make money when they don't?

This isn't an 'us against them' situation. We all should be trying to earn money.

With basketing, if all of your books earn out, you'll make the exact same amount as if there was no joint accounting.

If one of your books loses money, it looks a lot better on your royalty statement, and the P and L statement, if your books were basketed. This can help you get a bigger contract next time out, because your last contract made money (even though all of the books in it didn't.)

What exactly is wrong with spreading out the risk?

JA Konrath said...


If your publisher loses money on a book, they're out a lot more than the cost of your advance. Set up costs, priting, and shipping costs a lot.

Check out and read about how much books cost and how they make money.

Publishers can, and do, lose a lot of money when a book flops. It's often many times the cost of the author's advance.

Since publishers take the financial risk, I don't see how spreading that risk out over a few books is 'evil.' Especially since a flop will basically kill an author's career. Basketing may not be as awful as you think.

Stacey Cochran said...

Thanks for another intelligent conversation regarding marketing and sales.

The only revision I'd make on your Rusty Nail 500 Tour is that I would ask at each store, if I could hand out postcards to customers in the store.

Joe, you know me. I love meeting everybody.

Whenever I do get my first distribution deal, I will probably model my first book tour after your tour this summer. But, after introducing yourself to the associates, signing stock, etc., I'd go one step further and ask if I could hand out postcards for my book to folks in the store.

Don't spend more than an hour per store, but try to reach the readers directly.

Some stores will probably say they'd rather you not introduce yourself to customers. Others won't.

Oh, and I'd think it'd be cool to have a small video camera crew following you around, uploading dailies to a blog or website. That might be difficult to achieve on a first go-round. But talk about something to shoot for.

Great stuff again, Joe and PJ.

Incidentally, PJ, there's a great photo of you and I over at from Lee Child's party at Bouchercon.


Mark Terry said...

Excellent post, as usual. I also think PJ's response is excellent. My only real addendum is that your agent may not be able to negotiate out basket accounting and that it may become a bargaining chip during contract negotiations.

If you can get rid of it, do get rid of it. Some things in contracts we have to live with, depending on where we are in our career.

Mark Terry

Allison Brennan said...

I agree with Mark and PJ. Basket accounting is generally a bad thing. Sometimes it can be a deal breaker for the publisher though, so you need to know what ALL terms in your contract mean. And sometimes it's a moot point. When you're releasing books close together, basket accounting is less important than when you have books coming out 9-12 months apart that are "basketed" together.

Maria said...

Joe, just throwing in my opinion--you're right selling books is a partnership--however, you aren't getting a 50/50 split. Thus, not basketing is just one little benefit you fight for. They fight to give you a smaller percentage. They take on the financial risk...give and take.

JA Konrath said...

Basket clause for two book deal. Both books do well. Publisher mankes money. Author makes money.

No basket clause for two book deal. Both books do well. Publisher makes money. Author makes money.

Basket clause for two book deal. One book does well. One flops. Author breaks even. Publisher breaks even.

No basket clause for two book deal. One book does well. One flops. Author makes money. Publisher loses money.

Which scenarios will get you another contract?

Jason Pinter said...

Joe, you're assuming the publisher in that last scenario looks at the cumulative effect of both books. What publishers like to see, just as much as steady sales, is an increase in sales from book to book.

Publishers would not say "Book 1 scored a two, Book 2 scored a 6, the combined tally is 8, with an average of four. No new contract."

Even if book 1 doesn't earn out, if book 2 shows marked improvement it shows the publisher people are responding to the books. No publisher in the world would want to lose an author in the upswing of his/her career, and I guarantee you that, come contract time, if book 1 does not earn out and book 2 does and begins earning royalties, the author can look forward to another contract.

Plus it's imperative to keep in mind that authors DO NOT have to earn out in order to make their publishers a profit, and a nice one at that. Earning out will get you a good raise on your next deal, but it's not the be all end all.

Spy Scribbler said...

You're so right. It's not just the writing. I was wandering through Borders yesterday, and was appalled at how many authors no longer have books on the shelves. Names that were big only five or so years ago. All gone.

Man, it's a hard business.

Anonymous said...

People talk the hard facts of making money or not in getting a book published. First, there is the extreme rarity that one will get published, then there is the rarity that one's book will sell, now, with what you posted above, suppose it sells, but is it going to sell enough?

How does book selling differ so much from any other industry?

My day job is at a biopharm start-up and the amount of hours worked and efforts made at having supportive clinical trial data is staggering! We've been at this, as a forty person company, for six years now and even if the data proves we have a great product, there will still be lots more hours to be worked.

Compare this to an author spending two to four to eight years on writing a book that may or may not get published, may or may not sell, may or may not obtain royalties. Lots of hours worked by one person on their product.

It's not so different right? Then why do so many people in publishing constantly repeat warnings about the industry, when it seems that every industry has its risk?

Are the warnings being said because the book industry seems to attract more head-in-the-clouds type of people with big stardom expectations?

JA Konrath said...

Jason, I've been told by several sources that a book doesn't need to earn out its advance to be profitable, but earning out is a good indicator a book is profitable.

When you play blackjack, and the dealer has an ace showing, the house offers you insurance--a side bet on the chance that the dealer has 21.

Basketing can help prevent a publisher from losing more money than necessary. And when the accounting deptartment does the P and L, royalties from one book that help defer the loss of another book may not average out the numbers of each book, but those numbers do count.

If book #1 does well, and book #2 flops, I contend that an author might have a better shot at getting book #3 published at the house if the monetary loss for book #2 is offset by royalties from book #1.

Basketed royalty statements are cumulative, and the advance still owed or the royalties paid out is a single figure, not broken up book to book.

Isn't having a contract earn out as important as having each individual book earn out? And doesn't basketing allow contracts to earn out that might not have if it hadn't been for the joint accounting?

Couldn't basketing be the difference between a profitable contract and a loss for the publisher?

Keep in mind that my new contract isn't basketed--we made sure of that. I know it isn't the best deal from the author's standpoint.

But I don't think it's the evil that many authors believe it is. I see no problem with the author sharing some of the risk. And I believe (perhaps naively) that a publisher who makes more money will be more succeptible to a new contract than one who makes less money.

Anneliese--you're correct. Right brained artists don't really understand publishing is a business. Anyone in any profession has to work hard. For some reason, some authors feel that the hard work ends once they sell a book. In reality, that's where hard work begins.

Allison Brennan said...

Joe, I'm with Jason on this one. While I don't think basket accounting is "evil", I don't think it matters whether or not an author gets another contract whether the first contract is basketed or not.

Authors take a lot of risk. We risk our day jobs because we don't take work home with us (because we're writing); we risk our dream job (writing) because we need to work during the day to pay the bills. It's a risky business. I'm not adverse to publishers making a profit--I WANT them to make a profit on my books because they're more likely to keep signing me to contracts with better terms. But at the same time, basket accounting is like smoke and mirrors in government budgets. It's deferring until later payments that are due now. And all it really hurts is the author.

But, again, there are some situations where it's not as bad as others.

Anonymous said...

"For some reason, some authors feel that the hard work ends once they sell a book. In reality, that's where hard work begins."

I'm sorry but I don't really completely believe in this. Althought I believe that it's good practice and sage advice to cover as much of the variables as possible, I still believe that the success of the book depends on a lot of other factors that are out of the author's hands.

I'm a first time unknown author myself and my first book came out a couple of years ago.

The interesting thing is that I didn't attend my own booklaunching. I never promoted the book myself nor did any tour. In fact, I didn't even attend the awarding ceremony when my book won an award.

And yet my book has earned out its advance already and I'm now reaping royalties from it. My publisher has also started reprinting my book.

I suppose I'm just an isolated case or maybe just a fluke of nature but my case sorta validates the possibility that you can do nothing and still make it happen. (I don't recommend it though)

Anyway, as far as basketing payments, I believe that royalties should be forwarded to the author as soon as possible. Hey, I don't know about you guys but I have bills to pay and my bank won't wait until my other book has earned its advance.

JA Konrath said...

One of the things I like about this blog is the differences of opinion. Everybody wins when alternate sides are respresented.

Mrs. Bonkler, you bring up an interesting point, not just concerning publishing but concerning life.

People tend to believe what works for them will work for someone else.

Sometimes it will. Sometimes it won't. That's why it is important to learn as much as possible, try different things, and come to your own conclusions.

Do books become hits without the author doing any promotion? Of course.

Conversely, authors who do a lot of promotion may never have a hit.

But the fact is, the more promotion you do, the more books you'll sell. Period. I'm happy you've had some success. I wonder how much more success you might have had if you'd done more self-promotional.

You can walk through a minefield and live, but that should not be an endorsement that it's okay to walk through minefields.

And if you look at NYT bestselling authors, most of them tour. The do media interviews. They have big websites.They run their careers like a CEO runs a business, and very few have a hands-off policy.

Sure you can get lucky. The odds say you won't. And relying on luck is a poor way to run a career.

Luck does play a factor, but the harder you work, the luckier you get, whatever your job.

Mark Terry said...

Interesting all around. Ms. Bonkler, I'm with Joe here. I wondered how much more you would have sold if you had done some promotion. But we'll never know, right?

And Joe, I think your comment on the casino hedging is a bit of a double-edged sword when talking about joint accounting.

I understand why publishers want it and I understand why writers don't. And it does remind me of the movie industry's accounting practices. When I recently sold French language rights, my wife was asking about the check, and I had to explain all the possible variations on that bit of business, that we had a 50/50 split, that it's not clear if my publisher's foreign rights person was going through another agent who would get a cut of that, and how much, and how it would go toward paying back the advance..

And anybody out there, don't tell me we should have held those rights. Like I mentioned earlier, contracts are fluid and everything's negotiable, and publishers and agents dig in on different things for different reasons. I'm aware of this.

My point is that basketing protects the publisher, which is fine, but somewhat at the expense of the writer. Writers (at least I do) have bills to pay and overhead as well, and although you can certainly say the publisher is taking the financial risk of paying to have the book published, my risk is also financial as well, although I didn't pony up money, I ponied up time and expertise, both of which have a price tag.

Mark Terry

Lee Goldberg said...

My DIAGNOSIS MURDER books are cross-collateralized and so are my MONKS. It's standard in multiple book tie-in deals and not something I had the leverage to exclude from my contract. I wish I could. It benefits the publisher and screws the writer. Which brings me to nit-picking one of your comments:

"I've said, from the very beginning of my career, that my goal is to make money for my publisher.

For my first two books, I'm doing just that. It will be interesting to see where it takes me."

My goal is to make money for *me.* Obviously, that means making money for my publisher, too. But enriching my publisher and enriching myself should go hand-in-hand. That doesn't happen in cross-collaterization deals or when you spend your advances...and then some...on promotion. It might pay-off in the long run, but if you want to make a living as a writer, it's a delicate balance.

If you're making a living as a writer, advances and royalties (or script fees and residuals in TV) are how you pay the bills. If you spend your advance on promotion, and your royalties are caught up in cross collaterization, you are succeeding in making money for the publisher...and screwing yourself.

I am not saying this is the case with you, and I certainly think self-promotion is important, but I think it's a mistake for newbie writers to necessarily follow your example (unless they have a lucrative day job).

Anonymous said...

Oh, I wholeheartedly agree on a lot of your arguments, Mr. Konrath. In fact, I applaud your 500-bookstore visits. Someone should've followed you around with a camera because I would've love to see it on Discovery channel. Maybe you can invite an indie documentary outfit to tag along next time?

And yes, I don't encourage anyone to wait for lightning out of the blue. The more bases you have covered, the higher your chances are of succeeding.

It also can't be denied that self-promotion does play an integral part in the success of the book, but that involves too much politics, too much beer and elbow rubbing for my taste.

I just feel that my time is better spent writing new books. For all I know, I might drop dead tomorrow and I'd totally hate it if I couldn't finish my next wonderful story because I was too busy promoting old stuff.

There are hundreds of publishers out there. People shouldn't be afraid of not getting another book contract. Authors should be obsessing about the quality of their books instead.

But that's just my opinion and two cents.

Unknown said...

And if you look at NYT bestselling authors, most of them tour. The do media interviews. They have big websites. They run their careers like a CEO runs a business, and very few have a hands-off policy.

Yes and no.

They do these things because they’re NYT BS Authors. I don’t think they became NYT BS Authors by doing these things. And as NYT BS Authors they’re not paying for their own tours, and someone else arranges all those interviews, etc. It’s like all those Hollywood stars who get the free designer downs, when in fact they’re among the few who could actually afford to pay for them.

Don’t get me wrong, I’m not saying that new authors shouldn’t do what they can to get their name out there, but as a debut author there’s no way I’m going to be able to compete with the machine that is Julia Quinn or Sabrina Jeffries.

Vincent Diamond said...

I dunno, Joe. I'm not entirely convinced that uber-promo is the key to winning the publishing game. Now, don't get me wrong; clearly it's working for you personally and seemingly, your publisher is happy with it.


I also see stories like Sara Gruen's where she did a very small tour this summer (like 20 cities) with independent bookstores and Water for Elephants is in its, I believe, 12th printing. In hardback.

Now that's some royalites and not royalties that she's had to immediately feed back into a promotions fund. I'm sure she spent *some* of her own money on that tour but I'm betting not as much as you and Barry spend on the mega-marathon tours you two undertake.

True, she had two paperback sales previously and did a small amount of touring with those so I could be talking out my ass. (Won't be the first time:).

I'm still thinking... it's the book, dudes. It's the book that sells, not just the authors.

Toni Lea Andrews said...

My secret weapon in the royalty wars...ebooks. 35% or more of cover, payed monthly. No advances, but shorter lenghts accepted and short turnaround time to production.

Anonymous said...

Gosh, I never knew ANY of this! It's fascinating to learn the ins and outs behind the scenes - so many things that a writer never considers when they first start penning their masterpiece.

I appreciate the diversity of opinion as well!

If you can get a camera crew to follow you around, we could put it on YouTube and add it to the Book Squid Lens! It's getting a lot of traffic - I hope that is helping sales! Someone even bought a Rusty Nail coffee mug!

Thank you for being so open and allowing this kind of discussion!

Happy Friday the 13th!

Patrice Michelle said...

What an interesting back and forth conversation. Thanks so much for bring it up. I think people have valid arguments on both sides, depending on their situations. Ah, the days when we naively thought all we had to do what write a good book! :)

Allison Brennan said...

Patrice, the single most important thing you need to do IS write the good book.

I had a conversation with my agent a few weeks ago. I told her I really didn't have time for a lot of promotion, so I was thinking about doing one high-dollar item where other people would be doing the work, because my time is better spent writing more books. For me, putting out three books a year IS promotion. The more books on the shelf the larger the backlist (and Joe is right--your current release sells your backlist). But I can't write three (or four) books a year and spend a lot of time doing book tours and speaking engagements and conferences. I'm doing what I can as long as it doesn't interfere too much with my writing schedule.

Write the good book. Then write a better book. And so on. That does matter. Yes, you need to be aware of promotion and what you can and can't do. But anytime promotion interferes with writing, you need to really think twice about doing it. I recently turned down a promotional opportunity because it was a time hog, even though it was practically free.

Patrice Michelle said...

Thanks for sharing your recent experience in this area, Allison. Three full length novels in a year would take up a lot of one's time, let alone leaving time for "life" stuff.

I wish there was a magic "success" formula, but the key does seem to be consistently producing good books. Now, if I only wrote faster! :)

JA Konrath said...

If you earn out your advance, it doesn't matter if the books were basketed or not.

If you don't earn out your advance, your advance was too big. Your publisher losing money on your book(s) isn't good for them, or for you.

The 'get as much money as you can and let the publisher shoulder the financial burden' mentality is just as responsible for the screwed up state of publishing as the points that have been mentioned in this thread.

It isn't the publisher's responsibilty to make sure you earn a decent living. It's the publisher's responsibilty to make a profit. Because if they don't, then they're no longer in business.

Jason Pinter said...

I understand what Joe is saying, but the simple fact is that publishers DO NOT need authors to earn out their advances to make a profit. All that happens when an author earns out is that the publisher makes MORE of a profit (it's not like some light comes on and a new contract pops out).

It's not a yes/no equation when it comes to earning out. Most major bestselling authors NEVER earn out their advances. Yet publishers are more than happy to pay the big bucks because they make so much money they don't need the authors to earn out.

When you're at a level, sales-wise, I can see why you want your publisher to be happy. But it's a lot more complicated than "Earning Out=Good, Not Earning Out=Bad."

JA Konrath said...

"Earning Out=Good, Not Earning Out=Bad."

I agree. So instead let's say:

"Making Profit=Good, Not Making Profit=Bad."

Or is it okay for a publisher to take a bath on your book?

It's one thing if you're Stephen King, and the backlist profits can support a huge advance that might never earn out.

It's another thing if you're midlist.

Jason, I'm sure you've had texperience with books that don't make a profit. How long to publishers support these authors before calling it quits?

Jason Pinter said...

I'd say it depends mainly on 2 factors:

1) The size of the publisher's investment

2) The relationship between the author and publisher

In regards to number one, a publisher is much more likely to pull the plug--or decline to offer future contracts--if they had a huge stake in the first one which didn't pan out. (i.e. if we spent all that money promoting the book and it STILL didn't work, it's hopeless). If the publisher has a modest advance at stake and truly believes the author can grow, they might offer another contract for that reason (though they might make an offer at the same--or even lower--level).

As for number two, an author whose career is on the edge has a MUCH better chance of getting another contract if he/she has a good relationship with the publisher. If the publisher isn't sure about offering another contract, a "prickly" author--one who is disrespectful, doesn't work hard, and constantly misses deadlines--will make the decision to decline easy.

If, in the same scenario, there's an author who's courteous, grateful, works hard (in both promotion and on the books), and gets good reviews, the publisher will be much more apt to try and give the author another shot.

Anonymous said...

What about Amazon? Are you getting royalities if I purchase your backlist [and I did all hardcover] via Amazon?

Glad I found your books btw :)

Anonymous said...

You all seem knowledgable in the Author business. I've been searching everywhere high and low and know next to nothing about being published. I hope you don't mind me asking you all a few questions.
1. Do you need a literary agent?
2 Best publishers for Sci-Fi Fantasy?
3. This basketing you speak of, is this something that is standard in a contract? My first book is that, a first book of a series I'm writing and would have no problem with that unless of course I felt that after book one was published book two might be better off going to a different publisher, depending on how the first does me?
4. I note that several of you are published. How many books must you sell to cover that advance? Are we talking thousands of books?

And I must say this is about the best page I have found that was mature about the author/publishing business. Many of the other pages I have read were nothing but publisher bashing and I was beginning to shy from it. I know there has to be a publisher out there worth an Author's time.