The role of the advance in publishing

The authors of the Definitive Guide to Drupal 7 never received an advance. The potential advance was $6,000, an utterly insignificant sum for the size of the endeavor. I knew we were well on our way to breaking the model!

Here is Seth Godin, writing a newsletter from The Domino Project, a partnership at Amazon aimed at radically changing the way books are promoted and sold. The newsletter is titled "Dr. Seuss never took an advance."

Virtually all books aimed a mass audience earn precisely the same royalty per book. Stephen King, the unknown first time author and I get paid exactly the same royalty per book by Penguin.

What changes is the advance. This is a non-refundable earnest payment the publisher puts up to entice the author (and her agent) to sign on, to choose them. When everything else is equal (and it often is), the advance is the thing that gets looked for and reported on.

As you can imagine, this affects the rest of the process. The royalties earn out against the advance and in fact are rarely paid at all (if the advance is bigger than the royalties, the author gets no new money). Most publishers don’t associate an advance paid four years ago with a royalty statement that comes in today. (And if they do pay attention, they’re likely to make a non-economic decision– “let’s promote this book even though it’s not selling, because we have a big advance at stake.”)

If there are two publishers, one with a great marketing and publishing program, and the other with an advance that’s three times as big, guess who wins the author? A publisher with a big checkbook is able to land famous authors, which excites the salesforce, which gets more shelf space in the store which, perhaps, leads to a self-fulfilling prophecy.

Of course, for the last half century, in a static publishing environment, all of this was very good news for authors. Not only did it remove risk for a profession that could ill afford to take risk, but big advances focused the attention of the publisher. You were getting paid a lot and it bought you a better publishing experience at the same time…

(Dr. Seuss rejected this and refused to take an advance from his publisher. He wanted his publisher to have the same incentives he did.)

The advance makes it very clear who’s in charge. The publisher pays, so the publisher calls the shots. The author has a scarce asset, and sells it to the publisher, who exploits it.