What’s more desired and feared than the book contract? Don’t Write Alone and my newsletter Agents & Books aims to demystify as much of book publishing as possible, and to that end, I’m excited to start to demystify book contracts in a three-part column.
Book contracts generally cover all the same things, but how they do that is different for every book. It’s difficult if not impossible to say “all book contracts should have these exact terms” and then produce a list. This is why you likely want a literary agent (full disclosure: I am one) to help you in this process. They know things like what “non-exclusively in the Open Market” means and when that’s important. (If that makes sense to you, then you might not need an agent.)
But if you know what your contract covers, it’s easier to know what’s important for your particular book. We’ll start by looking at contracts in three parts: Money , Rights, and What Happens If Something Goes Wrong. Money is usually the first thing people want to know about—how much and when do you get it. Rights are actually the most important things about a contract—who can do what, when, and where. And What Happens If Something Goes Wrong is the unsung hero of the book contract. You won’t likely need those clauses, but when you do, you’ll be glad to have them.
First, let’s talk money.
Advance
When you hear that someone got a six-figure book deal, what you’re hearing is the amount of their advance. An advance is the money the publisher gives you in advance against your future royalties, in exchange for the right to publish your book. When it starts selling, they collect all the royalties until you earn out the advance. At that point, if you’re lucky, you start earning royalties on top of your advance. The good news is that if you do not earn out your advance, you do not owe the money back. Writers often think that if you don’t earn out, you’ll never get a book deal in this town again. But that is not true. Most authors do not earn out. (One of my clients didn’t earn out for ten years !) While a track record of huge advances and low sales is not great for any author (at least you got the huge advance to start), it is not as cut-and-dried as that. You are not judged on your advance or earnings alone.
So, what’s a “normal” advance? That’s . . . tricky. Advances are not in direct proportion to the value of a book, however you measure that. Better books do not always get higher advances. Very questionable books get very high advances. The thing to remember, always, is that publishing is not a meritocracy and your advance is yours, not anyone else’s. And every book is different. Your friend might have gotten ten thousand dollars more than you. That doesn’t mean their book is ten thousand dollars better or that you are getting shafted. An agent can better help you contextualize your advance. And always ask for more money if you’re not working with an agent. Always .
What if you are not offered an advance? You can absolutely take a no-advance offer. Most traditional publishers offer an advance. If you take no advance, make sure you get a large portion of the royalties, which we’ll talk about below.
Payout
The payout part of your contract tells you how much and when you’ll be paid. Advances are commonly paid out in halves, thirds, or quarters, but there can be many iterations of this. If you’re writing a book with lots of different parts—text, photographs, illustrations, recipes, etc.—you might get a little bit when you deliver each part.
Because of the pandemic (even though book sales have been robust! ¯\_(ツ)_/¯) publishers have been spreading out payments more and more, citing cash flow issues. It’s more common now than ever for your last payments to be when the book is published and then another six months or even a year later. The author and agent’s goal is to have the fewest number of payments come the soonest, though the larger the advance, the more payments there typically are.
But what does this mean in real time? Let’s say you got a $30,000 advance for your novel. (Woooo! This is great!) The publisher offers you a payout in thirds. That means you get ten thousand dollars after the contract is signed, ten thousand dollars after the delivery and acceptance of the book, and another ten thousand dollars when the book comes out. This is a pretty standard payout, and it’s one that doesn’t make me want to flip over a table or anything. I would try to get it in halves, on contract signature and delivery, but if the publisher said no to that, it would still be a pretty normal deal.
If you haven’t heard this already, publishing is pretty slow. It will take two to three months from the time you get an offer for the contract to come, and then another few weeks or more for your agent to negotiate the nitty-gritty of it. (The finer points like advance, rights, and payout will be done at that point, but there’s always something to change. This is for your benefit.) Once you sign it, the publisher has to sign it, and then accounts payable has to cut your agent the check, and the agency has to pay you. (That’s how it works when you have an agent. Otherwise the publisher pays you directly.) You might not get your first check for five months after you say yes to the deal. I know. Be prepared.
Next, you’ll get a slice after you turn in the book, and after the whole editing process . If your book needs three rounds of edits, you don’t get paid until it’s done. That’s what the acceptance part means. Your editor has to say Yep! It’s great! We’re ready to go! before they release your next check. Sometimes there’s wiggle room there, but it varies from book to book. For illustrated books, you very often have to wait until all the files are ready for the printer. And that can be a long time after you write just the text.
Luckily, the publication payment, and any payments after, come pretty quickly after the book actually comes out. Not the day of, but usually only a few weeks after at the most. Your agent will be on top of this. That’s why you have them (if you do).
Royalties
Royalties are a percentage of the earnings from book sales that you split with the publisher, after you earn out your advance. When someone says they are getting 10 percent royalties, that means, broadly speaking, they are getting 10 percent of the retail cost of the book. (Some royalties are based on the net cost of the book, which is the retail price minus what it costs to make the book; that’s a whole other story.) If your book costs $24.95, then you get $2.49 every time your book is sold. Every book format—hardcover, paperback, ebook, audio—has a different royalty rate, which is why it’s hard to gauge how many books you need to sell to earn out. If you got a $30,000 advance for a $24.95 book that will be only sold in hardcover with 10 percent royalties, you have to sell about twelve thousand books to earn out your advance. (See, they were right when they said you’d need algebra in the real world.)
The kicker is that royalties are only paid out twice a year, about six months after those books are sold. Your contract will say what your royalty periods are, but they often run from January to June and July to December. The royalty statement you get in the spring will be for the books that sold from the previous July to December, and you get another one in the fall for the other half of the year. Your schedule may vary publisher to publisher, book to book. The reason for this is because books are a consignment industry, which means bookstores can return the books they don’t sell to the publisher and get their money back. The publisher has to wait for returns to come back before they pay you, so they don’t overpay for books that didn’t really sell. This is why it’s difficult to know how many books have been sold, and it’s why we don’t have up-to-the-minute sales stats for books.
Your contract will clearly spell out the different royalty rates for each type of book. Many are standard (but can still vary between different types of books, especially text-based ones versus illustrated ones) and include formats your book won’t even be published in. The goal is to cover all the bases.
Subrights Splits
Included in your contract, too, are the specific ways you will split income with the publisher for the different rights associated with your book. We’ll talk about the ins and outs of this in the next installment, but for now, all you need to know is that subsidiary rights (subrights) are the different formats of the book that can be made—like audio books, movies, T-shirts, theme parks (yup), but also translations, or selling your book in English in other countries. Every book is different when it comes to subrights, and you may decide to give more subrights to your publisher in exchange for a higher advance, instead of retaining them for your own exploitation.
The subrights section of your contract outlines specifically how you will share revenue if your publisher sells a subright of your book. It might be fifty-fifty or eighty-twenty, or ninety-ten (in your favor), depending on the specific thing sold. When your publisher receives the money from this sale, your portion of the earnings goes into your royalty account and you’re that much closer to earning out. For example, if your publisher sells the right to create an audiobook of your work to a third party (instead of producing it themselves) for ten thousand dollars, then you probably get about five thousand dollars in your royalty account. You do not get a check, but you’re that much closer to earning royalties (and if you’ve already earned out, you’ll get paid for this sale with your next royalty statement).
Miscellaneous Money Things
There are a few other clauses in your contract that deal with money. It will say if you have to pay for the permissions for your book or not (like if you want to put song lyrics in there, you have to pay for their use), or the index, photography, or illustrations, if any. There’s a clause that outlines the discount at which you can buy copies of your own book from the publisher. And there’s the Agency Clause that authorizes the publisher to send the money to your agent, who in turn promises to pay you. There are also provisions about what happens to the money if something really bad happens, like you just don’t turn in the book, or your recipes turn out to purposefully make everyone sick, or you get canceled so badly the publisher no longer wants to publish your book. In cases when it’s your fault, you have to give the money back, including any commissions paid to your agent. But if it’s the publisher’s fault, you usually get to keep the money. We’ll talk about that more in another installment too.
I know you’re thinking, I really wanted this to be a list of things I have to have in a contract in case I have to do this myself. I wish I could give that to you. There is no master list of things that you absolutely have to have in your contract, and if there is, it’s so general that it won’t really help you. Every book is different. That’s why it’s good to work with a literary agent or a lawyer with experience in book publishing (your aunt the divorce attorney cannot help you) because they know the ins and outs of almost all contracts and can help get the best one for your book. If you don’t have or don’t want or can’t get an agent but you have a book deal in hand, the Author’s Guild has great resources you may be able to tap. Read your contract carefully, and don’t assume the publisher has your best interests at heart. They have their best interests at heart. They aren’t (all) evil corporations trying to drain the lifeblood out of every writer they encounter, but their first offer is not going to be their best offer. You won’t make a publisher run screaming if you ask questions, ask for more money, or ask for better terms. If they do, they are not a good publisher. Contracts are important. They are legally binding . Protect your work the best you can. And get paid.
