How an Author Gets Paid: The Big Picture
This is the fifth of my essays about being an author, brought to you by my Patreon page.
Last month I wrote an essay about how much money (depending on the format) a traditionally-published author makes off individual sales of their books, which you can check out here. I had several people ask me about the how and when of the money actually reaching the author and that, my friends, is a whole other thing.
When an author gets into a contract with a publisher, they are usually signing away the rights of publication in return for a set amount of the profits, or royalties, from the sales of the books. These royalties are the numbers I covered in that last essay but it's important to note that while yes, this is the amount of money the author makes off of those individual sales, it's not going to them directly. It has a bit of a path to take.
First off, authors don't just sell the publication rights for the royalties alone, otherwise I suspect royalties would be a bit higher than they are. They also sell them for something called an advance. The advance is a chunk of money, payable upon certain parameters, that the author gets for their rights. It basically constitutes a promise from the publisher that they're investing in you, the author, and they won't walk away from the contract they signed with you. The author will never have to repay this money regardless of how well the book does.
The size of an advance can vary wildly from a few hundred dollars for a tiny publisher or the sale of a foreign set of rights, to several million dollars for a book from an established mega-bestseller like Stephen King or J.K. Rowling. A ton of effort goes into determining the size of an advance—marketability of the book, current reading trends, the author's fan base, the publisher's own agreements with distributors, etc—and it's a decision that involves input from the whole publishing team.
According to Tobias Buckell's survey of over a hundred SFF authors back in 2005, the median advance for a new author was $6000. I'd be interested in getting my hands on more recent data. In the meantime, it gives you an idea of what to expect. As an aside—no doubt I'll get a few people asking how much I was paid for the Powder Mage Trilogy. I'm not a fan of letting people know how much money I make but it is public knowledge that it was a six-figure deal for the three books. I was very fortunate for a first-time author.
Okay, so you or your agent has negotiated an advance and you're signed up with a new publisher. What next, you ask? The fun part; they send you a check.
Advances are usually broken down into smaller payments, depending on the publisher. The Powder Mage Trilogy was paid in seven installments: 33% upon signing and then 11% upon delivery and upon publication of each of the three books. Foreign rights may be a bit different—some may pay you everything up front and some may have a structure with several payments like the one I had with Orbit.
So what does all this junk about an advance have to do with royalties? Everything. Do you know why it's called an advance? Because it's an advance against future royalties. They've paid you up front for money that they expect to make back. Every time someone buys one of my books the money does not go to me directly, rather it goes toward paying out my advance in the publisher's ledgers. If someone has an advance of $10,000, and their hardback is sold at $24 with a 10% royalty, they'll have to sell 4167 hardcovers (or a larger mix of formats that don't pay quite as big of a royalty) in order to earn out.
Which brings us the finale of getting paid for your books. Earning out. You may have heard the term from your favorite author through social media. "I got my royalty statement today and earned out. Cheesecake for everyone!" Or something like that. Earning out means that an author has accrued enough royalties that they've paid for their advance in its entirely and that, from now on, they'll be receiving royalty payments from their publisher. Their books are now paying them passive income—a dream for any sane person and the golden goose of authordom. This is an extra big deal because only a small percentage of books earn out their advances (I've heard 20%). It also means that your publisher is likely to pay you more for your next book because you've proven you can sell.
A quick word about royalty statements (the spreadsheet from your publisher telling you how many books you've sold)—statements are put out at least once a year, commonly twice a year, and are notoriously difficult to read. They're one of the many reasons a good agent is worth every penny. If you're owed royalties, this is when you'll get paid. Yes, getting paid only twice a year sucks. But as you've no doubt figured out by now, budgeting is an important part of being an author.
The whole royalty statement system is outdated in and in dire need of an overhaul. Hopefully we'll see that happen over the next few years but in the meantime, this is what we have. I could go on about the cost-benefits of the payment structures of a traditional publisher versus self-publishing, which is a whole different can of worms. I do both and I like different things about them. I encourage all authors to diversify to their ability.
As far as traditional publishing goes advances can be a huge boon for a new author. For me, an advance meant that I could quit my soul-crushing day job and focus on books two and three of the trilogy I had just sold (a reason you got Promise of Blood, Crimson Campaign, and Autumn Republic all in a two-year period instead of several years between each). I haven't yet earned out on the trilogy, though I suspect that I will in the very near future. I plan on doing a little jig when I do.