Sunday, October 26, 2008

Victoria Strauss -- Writers' Myths: Giving Back Your Advance

Like any alternate universe, the writing community has spawned its own mythology. Ann and I have covered a few of these myths in this blog and on the Writer Beware website: the notion that you have to know someone in order to get published, the fear that agents and editors can blacklist writers, the conviction that "just getting it out there" (via self-publishing, for instance) is enough to jump-start a career, the idea that getting published is some kind of crapshoot, the many fallacies about copyright.

Such myths are not only incredibly persistent, resisting both logic and rebuttal, they can also be pernicious, causing writers to behave in ways contrary to their own best interest. For instance, the myth that "any agent is better than no agent" throws thousands of writers into the arms of amateur literary agents, who can damage careers as much as or even more than scam agents can.

The myth that's the subject of this post is extremely common, and it goes like this: Writers who receive advances from their publishers are required to pay them back if their books don't generate enough sales to earn out.* In some versions of this myth, the author only has to pay back the difference between the advance and actual royalties earned; in others, the entire advance is forfeit, no matter how much has been recouped. Either way, this is completely false.

An advance is a good-faith payment from a publisher to an author. Not only does it express the publisher's sales expectations for the book (since advances are often based on what the publisher projects the book will earn over the first year of publication, when most books make the bulk of their sales), it's a signal that the publisher is willing to put its money where its mouth is--to assume the financial risk of publication, and put cash and effort behind the production, distribution, and marketing of the book. This is why so many writers consider an advance to be a minimum standard of publisher professionalism.

Of course, an advance is also a gamble by the publisher that the book will sell to expectations. If the gamble doesn't pay off, the author won’t receive any additional royalty payments--but he or she will not have to return any portion of the advance. (The publisher won’t necessarily lose any money, either; it’s possible for a book to make a profit even if it doesn't earn out). In other words, no matter how poorly your book sells, you will not have to give back your advance.

Are there any circumstances in which a writer does have to return an advance? Yes. But these are very specific, and they don't occur very often.

Circumstance #1: If the publisher decides a manuscript is unacceptable or unpublishable after it has been turned in. Usually the author is given a chance to revise the manuscript. If the author can't or won't, or if s/he does revise and the publisher still feels the manuscript is unacceptable, the author will be liable for any advance amounts that have been received (usually not the entire advance, since advances are paid in installments). Sometimes the money will be due immediately. But often it will be due only if the author sells the manuscript to another publisher.

Here's sample language, from one of my publishing contracts:

If the Author has made delivery of a complete manuscript on the subject matter and within the word length as agreed and within the time limits defined above, but the Publisher determines that the manuscript is unsatisfactory as submitted or as revised pursuant to the Publisher's request for changes...the Publisher may terminate this Agreement and the Author shall thereafter be free to arrange for publication by another publisher. In such event, the Author or the Author's duly authorized representative agrees to make every effort to sell the Work elsewhere and to pay the Publisher any sums advanced or earned...The Author's obligation to make payment under this paragraph shall be limited to the amounts paid to the Author under this Agreement.

In another of my contracts, there's similar wording, qualified by the following:

If within five years from the date of the Publisher's notice [that the manuscript is unacceptable] the Author has not made arrangements for the publication of such Work by another publisher...the Author shall have no further obligation to the Publisher with respect to such Work.

So if I don't re-sell within five years, I don't have to pay anything back at all.

Circumstance #2: If the author fails to deliver the manuscript. There is often quite a bit of wiggle room here. If you can't make your deadline, it's possible to get an extension(s), and there are plenty of examples of late author deliveries where the publisher chose to wait for an extremely overdue book rather than cut the author loose and demand reimbursement. Of course, sometimes the publisher loses patience, and a lawsuit may ensue--though unless you're a celebrity, you probably don't have to worry about this.

Sample language, from one of my contracts:

If the author fails to deliver a complete and final manuscript...on or before the date and within the word length as agreed, the Publisher...will have the option, exercisable at its sole demand delivery...If by the end of ninety (90) days of the Publisher's written demand for delivery the Author has failed to deliver a complete manuscript...the Publisher will thenceforth, despite any subsequent delivery, have the right to recover from the Author any amounts which the Publisher may have advanced.

There you have it: the only two circumstances you are likely to encounter in which you will ever have to return an advance. Assuming, of course, that you sign up with a reputable publisher.

So why is the advance giveback such a widespread writers' myth? One reason, of course, is ignorance--many writers don't take time to learn about the publishing industry before starting to submit, so they don't recognize the myth's falsity when they encounter it, and perpetuate it by passing it on. Ditto for a pair of closely-related falsehoods: that advances are uncommon, and that new authors don’t typically get advances.

But a larger reason, I think, is that the myth is so often embraced by companies or individuals seeking to further an agenda: vanity publishers attempting to justify their fees by portraying commercial publishing in a negative light, or less-than-professional small presses trying to put a positive spin on their no-advance policies. Ignorantly perpetuated writer-to-writer, the myth is merely harmful; cynically put forward in order to mislead or deceive, it is downright immoral.


* I probably don't need to explain this, but just in case: A publisher's advance is an advance on the royalties a book is projected to earn. No additional royalty payments are due until book sales have generated enough royalties to recoup the advance. This is known as "earning out."


BuffySquirrel said...

I vaguely remember a publishing company taking Joan Collins to court to recover the advance they'd paid her; the court decided that she'd produced a novel, as required by her contract, and could keep the money.

Jane Smith said...

I used to know an author who was always late delivering his books, once by around seven years, and even he was never asked to pay back his advances.

Not that I'm advising such behaviour but really: if he wasn't expected to pay anything back, then it's clear that a writer has to do something pretty bad for it to be expected.

Brandi Ballard said...

I heard this mentioned on a t.v. show the other day. I hate to say it, but I thought it was true. Thanks for this post.

Captain Black said...

Thanks for dispelling this myth, Victoria. I would still recommend reading and double-checking the contract small print though.

Brian Clegg said...

This is very true, but I have had personal experience of one dirty trick from a publisher on advances.

In this case they paid the advance on signing, and accepted the manuscript, paying the advance on acceptance.

However, somewhat later in the production process, another publisher produced a book out of the blue that was on a similar subject.

The publisher decided not to publish my book, and my agent rightly said 'okay, but as you've accepted the manuscript, you still need to pay the advance on publication, it's in the contract.'

The publisher said 'We know we should, but we aren't going to. Sue us.'

As it was only a small amount it wasn't worth going legal - but it does demonstrate that publishers can play some dirty games with advances.

Bianca Raven said...

Thank you for this. It explains so much I wasn't aware of til now. Thanks

C.E. Petit said...


The notorious Joan Collins case was about the publisher's failure to provide feedback more than anything else. Collins turned in a manuscript (very late, but not untraditionally so — given the lateness of royalty statements, publishers really don't have a lot of room to complain!) that, in the judgment of the Publisher (but not the actual editor), was not publishable. The publisher then immediately rejected the manuscript and claimed that Collins had breached the contract by not providing a publishable manuscript — in legal terms, delivered nonconforming goods.

Collins's defense was that the publisher never provided any guidance for turning her draft into a publishable book. The court eventually agreed with Collins, because the commercial standards of the industry at that time envisioned that editors would, well, edit, not just attend marketing meetings and help manage the production process. Thus, the publisher's rejection was not in good faith, and the publisher's claim to the advance was rejected.

The interesting thing about the Joan Collins case is that it really reflects the problem with marketing considerations triumphing over the editorial process. Joan Collins had never written a book. She hadn't even written much more than a long letter. However, the publisher expected that her first novel would be "enough like" the work of her sister Jackie that it would immediately attain the same sort of trashy-bestseller status, based on Joan's status as a notorious TV bitch. Conversely, Joan expected the same sort of editorial process that Jackie had described to her from Jackie's first few books; that is, she expected a chance to grow into authorship. The contract, of course, was silent on all of these considerations... which is what put it into the judge's lap. (Although there was a jury finding in the case, due to the variety of claims and counterclaims and defenses, this particular finding is one for the judge alone.)

In short, the Joan Collins case is not about "giving back advances"; it is about what a publisher is, and is not, obligated to do before declaring that a manuscript is not acceptable. Since the publisher didn't fulfill that duty, the judge never got into the question of whether Joan Collins was obligated to return her advance — since she hadn't breached the contract, it wasn't necessary for him to make that decision.

Anonymous said...

I once had a publisher reject my completed, delivered manuscript (offering no feedback as to why it was rejected, nor did they offer me an opportunity to revise) and "killed" my book. I only got half of my advance (what I got upon signing), which my publisher said they would be "generous" enough to let me keep. I tried to get my agent to press them for the second half of the advance, since I delivered a completed manuscript in good faith, but my agent refused. (I later fired him). The supposedly unpublishable book now has resold, which makes me think the statement by the previous publisher that it was unpublishable was total bunk.

Publishers do indeed play dirty tricks on good, professional authors. But it's not necessarily the norm, and something best defended against with good agent representation. (and sometimes it can be a window into discovering when to fire an agent).

Lili said...

Here's one reason why I think publishers are more likely to go after a problem celebrity author than a non-celebrity one: with a non-celebrity author, it's much less likely to be the first book that's undelivered or not up to scratch.

If you're not a celebrity, chances are very high that the publishers read your first book and decided it would work before they gave you any money. So by the time you get to the second book, or the eighth one, or whichever one isn't coming through, they already have a relationship built up with you - they've invested in your career, not just in this one book, and they've seen evidence that you can in fact make this work. So they're much more likely to give you more time, or more editing, or whatever this particular book needs. Trying to get the advance back makes very little sense.

With a celebrity, on the other hand, the process seems to be 'We don't know you at all, we don't know if you can come up with anything at all, you're famous, here's a truckload of money, bring us a book.' If that book doesn't appear, the publishers have had absolutely no return from this author. Plus, they didn't go into this with a long relationship in mind. They assumed there would be one big blockbuster, or maybe two, and then bye-bye. If that blockbuster isn't going to materialise, then it makes sense to get the advance back.

In other words, the fact that the publishers sued Sean 'Whatever My Name Is This Week' Combs for his advance has no implications for us normal mortals.

lili said...

P.S. I was several months late with my second book (I was sick for a while in there), and while I did get the Evil Phone Calls of Doom from people wanting to know what exactly I was doing over here and when the heck I would be handing this thing in, nobody ever for a second even hinted that I might have to give back the advance if I didn't hurry up.

Jill Elaine Hughes said...

lili is right---most cases where authors have been asked to return advances are for celebrities who signed big-money deals for memoirs that were then never written.

An exception: Allison Pearson (New Yorker writer and author of the blockbuster novel I DON"T KNOW HOW SHE DOES IT) got a $750K advance for her second novel about five years ago, and she has never delivered that second novel, not even written anything yet. Apparently Knopf is getting pretty antsy about it, and may (if they haven't already) be asking for that advance back.

JS said...
This comment has been removed by the author.
JS said...

Miramax Films has already sued Pearson for nonperformance for the film rights to the yet-unpublished book. Will Knopf be far behind? Or will Pearson just write the thing instead of insulting teenagers in print?

BuffySquirrel said...

Thanks for the info, ce :). Much more interesting than I thought the case actually was!

(and that'll teach me to rely on tv news reports...I SHOULD know better)

Lee Masterson said...

Thanks for posting this. I'll have to put a link on my site for our readers - I receive emails asking this question regularly!

Cheyenne said...

Even Publish Anything uh, America doesn't demand their dollar back.

Khazar-khum said...

I believe that, with the uproar over plagiarism, that publishers can demand the advance back if there's sufficient proof you pilfered another MSs.

Anonymous said...

According to NY Times Best Selling Author Rebecca Brandewyne, this post is actually the myth. While the publishing houses traditionally don't ask for the advance back in a good economy, the contract states they can.

Victoria Strauss said...

With all due respect to Ms. Brandewyne, I've never seen a publishing contract that empowered the publisher to demand repayment of an unearned advance (in bad times or good). Ditto for my friends who are writers. If such contracts do exist, they are not the norm.