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A literary agent discusses how and when fiction and nonfiction authors receive money from publishers.
Many writers do not understand how fiction and nonfiction book authors are paid. Here’s an overview of book advances and royalties and how publishing companies pay them.
When a publisher accepts your book project, whether it is fiction or nonfiction, you will generally receive money for it prior to publication. This upfront money is called the advance.
First advance payment
Previously, it was common to receive the full advance upon signing the publishing contract. Now, it is more common for the advance to be paid in two or more parts. A portion is paid on execution, which means after the author has signed the contract and sent it in to the publisher for co-signing. The publisher returns a copy of the executed contract with the first check to the author. Sometimes, the first check follows the contract four to six weeks later.
Other advance payments
A second portion of the advance is often paid upon delivery and acceptance of the complete manuscript.
Other portions may be paid at certain stages of delivery, for example, after half of the manuscript has been delivered to the publisher.
You can count on it
With only a few exceptions, the author keeps the full amount of their advance money, even if the publisher does not sell a single copy of the published book.
Beyond the advance
Usually, the advance must be earned back through book sales before the author receives more money. The advance is the author’s guaranteed payment for their time writing the book.
Without an advance, the author is taking a risk that his or her time could be for no payment. A high advance means that the publisher is taking more risk than the author1. Either the writer, the publisher, or both are betting that the book will go on to make a profit.
Book authors generally receive a percentage of sales, called royalties, according to the terms of their contract with the publisher. While formerly the royalty was based on a percentage of the book’s cover price, these days it is more commonly calculated as a percentage of the publisher’s net receipts.
Whichever way it is calculated, after enough copies have sold to pay back the author’s advance to the publisher from his or her percentage, the author then begins to receive additional money as royalties.
Statements and payments
Most publishers issue statements every six months along with a check for any amount owed to the author.
The publisher will probably hold back a portion of the author’s payment as a hedge against returns. The amount held should be specified on the statement, and it is usually released to the author within 1, 2, or 3 reporting periods.
So long as the publisher keeps your book in print, the author could continue to earn additional money in the form of royalties for years to come.