Tuesday, March 02, 2010

how are multiple book deal advances divided up? (Your Questions continued)

[Stephanie McGee asked: When a book deal is for multiple books, is the money paid in the deal divided into parts to create an advance for each book? I know that advances are generally divided into parts, with some given at signing and some at publication. I'm just wondering, I guess, if the money in a multi-book deal is divided and divided again per book?]

The boring answer here is "it depends" (which is, of course, true). But I'll tell you a couple of ways I've seen advances divided in the past.

Background info on single-book contracts: as you might know, most single-book advances are divided into two or three installments: for two installments, half on signing of contract, and half on either delivery and acceptance of the final manuscript ("d&a," we call these) or on publication. If it's three installments, it will be a third on signing, a third on d&a, and a third on pub. This is often depending on the total amount of the advance--if it's a small advance, publishers are less anxious about cash flow, and more willing to pay it in two lumps instead of three. Whatever your case may be, these payment schedules are laid down very explicitly in the contract.

Ok, so now, onto multi-book contracts. Generally, the advance will be divided up based on the same inspirations as the above (contract signing, d&a, publication). So here are some examples (that I've seen in my real life).

1/2 on execution on contract
1/4 on delivery & acceptance of Book 1
1/4 on delivery & acceptance of Book 2

1/3 on execution of contract
1/3 on delivery & acceptance of Book 1
1/3 on delivery & acceptance of Book 2

1/3 on execution of contract
1/6 on d&a of Book 1
1/6 on publication of Book 1
1/6 on d&a of Book 2
1/6 on publication of Book 2

1/2 on execution of contract
1/6 on d&a of Book 1
1/6 on d&a of Book 2
1/6 on d&a of Book 3

1/6 on signing
1/6 on d&a of Book 1
1/6 on d&a of Book 2
1/6 on d&a of Book 3
1/6 on d&a of Book 4
1/6 on d&a of Book 5

Sometimes, the books will have different "values." For example, maybe an author has written a new thriller, but the contract includes a previously published thriller that has gone out of print from another house, and the author's new house is planning on reissuing. Then, you might have something that looks like this:

1/2 on execution of contract
1/3 on d&a of New Book
1/6 on d&a of Old Book

Agent friends, if you have any other permutations you favor (or crazy ones you've seen), please chip in! I'd love to hear.


lynnrush said...

Great post. I just found your blog and it looks really nice! Love the picture of the monkey.

Nice explanation of advances. It's helpful to see it broken out like that.

Have a great day!

Charles Gramlich said...

I want one of those.

JES said...

When James Patterson recently got his, what was it, a twelve-book deal? something completely insane, anyhow -- I thought For cripe's sake, why the hell don't they just put him on retainer and call it an N-book contract? His agent and the publisher must have had fun figuring out THOSE percentages!

Good post, Moonie. Thanks!

Tawna Fenske said...

Wow, thank you for this explanation!

My agent just landed me a three-book deal last Thursday, and I confess, I totally forgot to ask about this in all my excitement. Must remember to call her to get the breakdown, but I really appreciate your examples of how this is sometimes handled.


Stephanie McGee said...

Thank you, Moonrat, for taking the time to answer my question. Your posts are alway entertaining and helpful. This is good knowledge to have, even if it never has to be used by an author. Thanks again.

Francis said...

What happens if the sales of the first book in a multi-book deal surpasses the original advance amount?

moonrat said...

Francis--excellent question. If the book earns out the advance paid, royalties are due, so royalties will start being paid the period the advance is earned out. However, the additional advances (eg on d&a of Book 3) is still due, and needs to be paid when the book is delivered.

Whether or not the royalties accruing on Books 1 and 2 contribute toward paying back the advance on Book 3 is determined by whether or not there's a joint accounting clause in the contract. The publisher will push for the books to be jointly accounted--meaning once that advance for Book 3 has been shelled out, royalties from Books 1 and 2 go toward reimbursing the publisher for the advance instead of into the author's pocket. Agents, on the other hand, will push for the books not to be jointly accounted, meaning the author will continue to earn royalties on Books 1 and 2 while Book 3 has to earn itself out over time.

This non-jointly accounted system favors the author if, say, Books 1 and 2 are hits, but Book 3 is a bit of a flop. If all three books earn out, it doesn't really matter in the long run.

As for who does all this math, the accounting department. God bless 'em. Cuz I'd screw everything up.

Leigh Russell said...

I was signed for a 3 book deal. I received 25% advance on signing the contract, and 25% on publication of each title. I recently signed an agent, just as my second book is about to be published. My agent has renegotiated my contract with my publisher so I now have an escalating royalty figure - my % increases after a certain number of sales is reached. My publisher has also agreed to pay royalties after the 25% advance payable per book has been worked off, instead of paying no royalties until the full advance for all 3 books has been worked off. My original contract with my publisher was standard (and approved by Society of Authors) but my agent has negotiated changes in my favour. My publisher seems perfectly happy with the changes. In fact, they have offered me a significantly bigger advance for a 4th book.
So even after you sign with a publisher, things can change!

Rebecca Knight said...

Congrats, Tawna!! :D

Thank you for all this info, Moonie. I'd wondered this very thing myself, because I've been hearing about all kinds of YA 3 book deals lately. Good stuff!

moonrat said...

Tawna--yeah, wait a minute!! When do we get the deets?!?!?!

moonrat said...

Leigh--that's so interesting to hear. I know UK publishing can be a little different, but I'm glad to hear your agent's getting you even bigger bucks! (Fits my argument about the value of agents :)

How is your book selling? What printing are you in?

Tawna Fenske said...

Thanks for the congrats, Rebecca and Moonie!

I don't want to hijack Moonrat's comment trail, but since she asked, details about my new three-book deal can be found on my blog.

Friday's announcement:

Follow-up pics to prove I fulfilled my end of a deal I made with author and "agency sistah" Kiersten White:

And details of my not-so-simple path to publication:

There, now are you sorry you asked? :)

Thanks again for all the great info about advances and royalties, Moonrat. I'm learning a lot!


Anonymous said...

Posting this anonymously, but Moonie knows who I am (I'll email her to confirm)...

My agent(s) just sorted out my deal for books 3 & 4 in my career (specific to a geographical market outside the US), and it was an interesting step up from books 1 & 2, of which book 1 seriously outperformed expectations. The straightforward advance for the deal is double the money for the first two books, plus there's now a bonus structure in place which says if I sell X copies of each edition I get X amount of extra money in my pocket. Which is nice.

More interestingly, book 3 is a continuation of the characters and setting of books 1 & 2, but book 4 is a stand-alone (albeit within the same genre). The publisher has offered an adavence that's around 60/40 split in favour of the series book, but my agent has pushed them to offer an extra bonus if the non-series book performs as well as the series book.

Anyway, my point is, there's a lot of in and outs to all this. This is why your agent is so important. Get a good one.

Perhaps Moonrat could elaborate on the if-and-but nature of bonus-dependent advances, and why a publisher might weight a multibook deal in favour of one book over the other.

Sara J. Henry said...

Here is my permutation on the two-book deal:

1/4 on signing
1/8 on acceptance Book 1
1/8 on publication hardback Book 1
1/8 on acceptance Book 2
1/8 on publication paperback Book 1
1/8 on publication hardback Book 2
1/8 on publication paperback Book 2