Tuesday, July 29, 2008

The Multiple Book Deal - It should Only Happen to You! (Or Should It?) - Part 2

By Richard Curtis

The big multiple-book deals that make front-page headlines incorporate all of the factors I described in Part 1 of this article, plus very big front-money. These deals are designed to nail down a bestselling author for as long as possible, and in many cases there is little or no description of the books because nobody including the author knows what they're going to be about. Indeed, the publisher may not even care what they're about as long as it's guaranteed he'll get his mitts on them.

The publicity value of a multiple-book deal may outweigh its actual monetary value. The pages of publishing trade publications and writers' newsletters are filled with references to deals that make author and publisher look good but do not necessarily stand up to intense scrutiny. A "five-figure deal" might be for $99,000 or it might only be for $10,000. Or you may read about deals that "could bring the author $850,000 per book." They could, yes, if they sell like hotcakes, get picked up by major book clubs, go on the best-seller list for two years, and are made into major motion pictures. The actual guaranteed money in such deals might be quite modest, but the built-in escalators, bonuses, and similar features enable the publishers to wring the most publicity out of them.

And of course, deals that may seem relatively small to the public at large can be most impressive in the author's "hometown" - that is, the genre in which he writes. A three-book deal for a $75,000 advance might be sneezed at by the New York Times, but if the books are science fiction, romance, westerns, or some other genre, the writers and editors who read about such exploits in the trade papers will sit up and take notice.

Big deals or little, the underlying accounting principles are the same. Let's examine them.
There are several ways in which the accounting may be set up in a multiple-book contract. The first is to fix the advance for each title in the contract and to keep the royalty accounting for each book separate from that for the other books in the package. Thus you might have a three-book, $30,000 advance contract, with the advance per book pegged at $10,000. When book number one is published and earns more than $10,000 in royalties, you will collect the overage in royalties even though the second book, say, has not yet earned back its $10,000 and the third book has not even been published.

The other way to structure a multiple-book deal is to "jointly account" the advances on each book. Joint accounting (also known as "basket accounting" and "cross-collateralization") creates a common royalty pool for the earnings of all books in the contract. This means that royalties earned over and above the advance on one book in the contract will not necessarily be paid to the author but will instead be applied to the unearned advances on other books in the contract. Until the total of advances in that contract has been earned out by royalties from any or all books in that contract, the author will not receive additional royalties. For instance, suppose we have that $30,000 advance deal for three books, but with joint accounting. Book number one is published and earns $15,000. Does the author receive royalties? No, because the three-book combination must earn a total of $30,000. Suppose, further, that the second book earns $14,000 too. Does the author now receive royalties? Again, no, because the two books have earned, together, no more than the $30,000 originally advanced to the author. Now book number three is published and earns $4,500 in royalties. Does the author now get anything? Yes, he gets $4,500, for the total royalties earned by the three books is $33,500, or $3,500 more than was originally advanced. Of course, it can work the other way around too. Suppose the first book in the package was a wild success and earned $35,000. The author would then collect $5,000 royalties on his three-book contract even though the second and third books weren't yet published or even written. And when those books were published, all royalties they earned from the very first dollar would go to the author, because his $30,000 advance was earned out on the first book.

There are pitfalls for both author and publisher in multiple-book deals, for such deals are like long-term commodity investments. If you bet that a commodity will be worth X dollars one year from now, and between now and then the value soars far beyond what you estimated it would be, you will be left holding a considerably undervalued contract. Apply this to the case of an author who grabs a three-book contract for a $30,000 advance. The advance is paid in four equal installments of $7,500 apiece, the first on signing and the next three on delivery of each book. The first book is published and becomes a wild success: book club, reprint, movie, the whole bit. Now he delivers the second book and what does he get? - a mere $7,500. He may be mad at himself (to say nothing of his agent) for tying himself up for so long for so little. Of course, the difference between an author and a pork belly (and perhaps the only difference) is that the author at least has the opportunity to make up in royalties for the inadequate advance he negotiated two or three books ago when he was just another lowly writer in the crowd. Thus he may only collect $7,500 when he delivers book number two, but a few months later he may collect $50,000 in royalties earned on book one.

Bear in mind that by the same token the publisher stands to lose if the commodity - the author, his books, and the market - go short, that is, drop below what the publisher projected when he tied the author up for all those books. If a publisher signs you up for that four-novel peanut-plantation saga, and just around the time you're delivering the first one the market for plantation sagas collapses and your publisher can't give them away - well, there's going to be much rending of garments (and maybe of jobs) at that publisher's office.

So, it's a bit of a crapshoot both ways, and if you feel your books are going to be worth far more than the per-book advance you've been offered in a multiple-book deal, then turn that deal down. If your publisher doesn't agree with your appraisal of your future value, then they'll turn the deal down. Sometimes you can forge a compromise. If your publisher feels that the individual value of the books in a three-book deal is $10,000, and you feel it's $15,000, you can split the difference by structuring advances of $10,000 on the first book, $12,500 on the second, and $15,000 on the third. If the deal is jointly accounted, you'd simply add these advances up for a total advance of $37,500, but when you negotiate the next contract your price per book starts at $15,000, the value of the third book in your previous contract.

Once a publisher has a good writer in his stable, it may be willing to pay high, even to overpay, to keep him or her there for a long, long time. I remember negotiating with a publisher for an author he coveted, and I fixed a price of $225,000 for a three book contract. He winced. "That's awfully high."

"What can I tell you?" I said with a shrug. "That's what I think he's worth, or will be by the time he writes his third book."

"Who knows how much he'll be worth two years from now?" the publisher sighed philosophically. "We could all be dead two years from now."

"That's true," I replied. "So why don't we just make a deal for one book and see how that one goes?"

The man sat bolt upright in his chair, a stricken look on his face. "Don't do me any favors." Alarmed at the prospect of having this rising young author for only one more book, the publisher quickly met my terms.

This article was originally written for Locus, The Newspaper of the Science Fiction Field. It's reprinted in Mastering the Business of Writing. Copyright © 1990 by Richard Curtis. All Rights Reserved.

- Richard Curtis

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