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 discretion...to 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."