After I posted a somewhat whiny blog last week about my inability to write best sellers, one of my readers asked, reasonably enough, "You make a decent living, don't you?"
The answer to that is "Yes and no." And you never know which it's going to be. Here's how it works: Once a manuscript, or a viable idea, is accepted by a traditional publisher, negotiations begin, sometimes through an agent (and I have a terrific one). The publisher makes an offer of an advance--money to be paid up front against future earnings, which are anybody's guess, based on a percentage of the cover price, known in the trade as a royalty. (There's nothing ROYAL about it, in my experience. How did they come up with that term?)
Typically, a book might be priced at $17 and the percentage might be 10%; the royalty on each book would be $1.70. The more copies sold, the higher the percentage; sell 10,000 copies and the royalty might go up to 15%, or $2.55 each. The publisher makes a guess on how many copies are likely to sell. Let's say they hope to sell 5000 copies in the first year after publication; in that case, they'll offer an advance of $8500. You (or your agent) try to bargain for more. Maybe somebody will want to make the book into a movie! (Fat chance, but it does occasionally happen.) Eventually the writer and the publisher arrive at a figure, and a contract is signed. Often half the advance arrives a few weeks or months after signing; the second half arrives after the manuscript has been accepted for publication, a process that can take months of revisions and rewrites. You've been working on this book for over a year. The agent, if you have one, takes a percentage--usually around 15%. You put your check in the bank but you can't run out and spend it all, because you'll eventually have to pay income tax on it.
At last the book is in print and in bookstores. Most publishers calculate royalties twice a year, Dec 31 and June 30, and make payment some four or five months later, sending a report to your agent, if you have one. If your book comes out in January, the report covers sales to the end of June, and you get that report sometime in October or November. But guess what! Records show that only 2000 copies have been sold; you've earned $3400, but since you've already collected an $8500, you get no money this time around. Six months later, you learn that another 2000 copies have been sold, but there have been some returns, and the agent had some expenses sending copies to foreign publishers, and your earnings are only around $3000. Still no money due.
Meanwhile, you're working on another book. You're convinced this one will do better. The publisher isn't sure. They hedge their bets. They offer only $7500 this time. They wonder if maybe you shouldn't try something different. (Vampires? Paranormal? Dystopia?)
The good news is that books often stay in print and sell for years. Only a few days ago I got a statement from a major publisher for a book published more than thirty years ago. The royalty statement says "no money due." In fact, it seems that I now owe the publisher 47 cents. But I'm not discouraged. I'll be getting a few more statements in the next month or so. Then I can answer the question, "You make a decent living, don't you?"