The holiday season is ending soon and we’ll be fifteen years into the millennium. Here’s a story for all you authors to think about as you weigh traditional publishing vs. self-publishing. From Publisher’s Weekly: (bold emphasis mine- edited for length)
Seven-figure book deals are nothing new in corporate publishing. But lately, these deals seem to be happening more frequently. During the run-up to this year’s Frankfurt Book Fair in early October, three seven-figure deals for debut works were closed by Big Five houses. Shortly after the fair, the New York Times ran an article about a waitress who landed a high six-figure advance. The streak continued with news that St. Martin’s Press had paid seven figures for a debut novel by New York Times reporter Stephanie Clifford. And, two weeks ago, word broke that indie author Blake Crouch landed seven figures at Crown for Dark Matter, his science fiction novel. For some in the industry, the flurry of big advances is simply business as usual. Others, however, attribute the run to a dearth of great material, along with the ever-pressing need on the part of the big houses to publish major bestsellers.
George Gibson, an industry veteran who is now publishing director at Bloomsbury USA, warned against reading too much into the latest round of big deals, noting that they happen “fairly regularly during the year.” Nonetheless, Gibson acknowledged that the business has changed. For the Big Five, especially, the highly sought-after projects have become essential. “The game plan to make your budget, or exceed it, relies on having bestsellers. That’s always been the case, but it’s the case now more so than ever.” Because both midlist and backlist titles aren’t selling as well as they once did, Gibson explained, the big books, “are more important.”
That a number of the major deals of late have been for debut works—five of the six aforementioned acquisitions were for books by first-time authors—is also not surprising. One editor, who spoke on the condition of anonymity, said that since the advent of BookScan (which gives editors, sales reps, and retailers approximate print sales for any given title), having no track record is usually a plus.
Other insiders, who also spoke off the record, theorized that there is less of everything, which drives up the price for the most coveted projects. “The whole pool of talent is shrinking,” explained one source. “There are fewer publishers, fewer slots, and fewer submissions so… the higher the quality of the project, the more you’re likely to get.”
Agents, of course, see the trend of bigger advances as mostly positive. “It’s great for the industry,” said Stacey Glick, a v-p at Dystel & Goderich.
Glick felt the influx of big-money-deals might owe something to the fact that publishers feel a need to “prove themselves,” with more and more authors finding success self-publishing.
Regardless of why the big deals are happening, Glick did address one downside to this way of doing business. “The bigger issue is setting up an expectation level for an author that often can’t be met,” she said. While it’s wonderful when a writer lands a huge sum of money for their first book, it puts the author under more pressure to achieve commercial success. If the book doesn’t sell to expectations—which will be high—the author’s career, in the long-term, may be hurt. As Glick explained, the situation “can make it challenging for the author’s future books.”
Alison Callahan, an editor at Simon & Schuster, described what’s going on now as “the new normal.” She said that competition for the perceived best projects has been stiffer for the last four years, and that the biggest shift is how quickly sought-after titles will sell to editors. In the not-so-distant past, when there were multiple bids on a book, an author would often talk to competing editors—or meet them—as part of what’s known in the industry as a beauty contest. Those meetings, or exchanges, took time. “These days,” Callahan explained, “[a big book] is either preempted in 24 hours for an exorbitant sum of money, or you get a best-bid situation.”
The best-bid scenario Callahan referred to, in which editors must submit their best offer without knowing what their competition is putting up, is another element that can drive up prices.
Best-bid auctions can sometimes mimic high-stakes real-estate deals, in which bidders come forward with previously unheard of offers—huge sums of cash or other enticements—to beat out their competition. In publishing, the best-bid auctions are inspiring some jaw-dropping behavior. Supposedly, one editor at a Big Five house offered $500,000 sight unseen for the debut novelThe Girls—one of the most buzzed-about acquisitions of the season, and one of the pre-Frankfurt sales mentioned earlier.
Judging which books merit big advances is still as much art as science. Editors insist that there are specific factors (beyond taste) that go into paying large advances. Although many sources acknowledged there are aspects of luck involved—having an agent who is skilled at setting up auctions, for example—almost all those who spoke to PW said it’s a mistake to think money is being spent haphazardly. “We don’t throw caution to the wind,” Callahan said. “We really sit down and think about it. We have meaningful conversations when it comes to a seven-figure offer.” And what strikes some as excessive is, in actuality, the cost of doing business these days. As Callahan put it: “For a lot of books, it’s justifiable.”
An advance for those of you who don’t know is a book publishing industry term for a one-time payment made in exchange for a lower royalty (percentage paid for copies sold). So it’s reasonable to assume all the seven-figure authors, especially the debut novelists, earn somewhere between 5-15% royalty, industry standard. BUT paying $1 million or more means the publishing company must earn over $1 million in sales just to cover the advance- remember, the author does get a royalty, even if it’s small! So say an author gets 10% (just to be even). If the average book sold goes for $15 (let’s say $10 for traditional e-book and $20 for print/hardcover copies, just for mathematical ease), that means the publisher must sell about 66,700 copies to cover the advance, minus expenses for editing, illustration, printing and materials, paying distributors, and taxes. Plus, 10% of that million goes to the author, meaning the book company has made $900,000 in gross revenue. What if the publisher gives $2 million? $3 million? You could argue that one would expect the publisher to need to sell at least 90,000 copies (includes e-books) to break even on a $1 million. Even if most copies sold are e-books anything less than 80,000 copies sold for $1 million-plus has to be considered a flop, regardless of whether it’s fiction or non-fiction.
Agree? Disagree? What do you think?