A World Where All Escalators Go Up - Part 1

By Richard Curtis

A term commonly heard in discussions of book deals is "escalator." For instance, "Her book was bought for an advance that, with escalators, could exceed $1 million." Escalators are additional advance payments made by publishers to authors if and when certain contingencies occur. What are those contingencies? How much are they worth? And what, if anything, is their real value?

Escalators were created, among other reasons, to bridge the gap between author and publisher when negotiations reach an impasse. You strongly believe your book will be a bestseller or will be bought by a major book club or made into a motion picture, and you feel that your advance should reflect the same optimism on your publisher's part. Your publishers, on the other hand, hope and pray you're right, but they've seen many a slip 'twixt the cup and the lip. They cannot afford to overpay authors on the strength of hope alone. Of course, if your track record justifies it - if your last five books have soared to the top of the bestseller list; been main selections of major book clubs, and been made into hit movies - they will be greatly disposed to pay you a lot of money up front. But let us say, for the sake of argument, that this is not the case.

The answer is for your publishers to offer you escalators. These bind them to pay you scheduled sums of money if, and only if, your optimism turns out to be justified; if it doesn't, they owe you nothing beyond whatever royalties your book may earn over its original advance.

Although the terms "bonus" and "escalator" are used interchangeably in Publishingese, and I'll use them that way here as well, these extra payments are not really bonuses in the usual sense. They are always recoverable from royalties and subsidiary income generated by a book; they are, in other words, additional advances. If your original advance was $50,000, say, and your contract calls for a $10,000 escalator to be triggered by the release of a movie adaptation of your book, then your advance becomes $60,000. The $10,000 escalator is, in effect, a prepayment of royalties that your publishers hope your book will earn as a result of the movie.

It would seem, then, that you are being paid with your own money, and in certain cases that is true. Suppose you sold your book to a publisher for a $25,000 advance, and your contract calls for a $10,000 escalator to be paid if your book is sold to a paperback reprint house for $100,000 or more. Further suppose that the book is auctioned off and sold to a reprinter for $150,000. If the traditional fifty-fifty split on reprint money applies, your share of the reprint money will come to $75,000.

Okay, the reprint deal triggers your $10,000 escalator. Now you've received a total of $35,000: your advance plus your escalator. But it is no hardship for your publishers to pay that escalator to you, because you are guaranteed $75,000 as your share of the reprint deal!

Other escalators are riskier for publishers and can end up losing money for them. Take another hypothetical case where you sell your book for a $100,000 advance, and the contract calls for a $25,000 bonus if a movie is made from your book. Let's say that both book and movie flop, and your book doesn't even earn back its original advance, let alone the advance plus the escalator. This is a case where the publisher was not paying you out of guaranteed monies, but is genuinely out of pocket.

Escalators fall into a number of categories. The most common is the bestseller bonus. The best-seller list usually used to determine escalators is the one in the book review section of the Sunday edition of the New York Times, though sometimes the one in Publishers Weekly is also used. There are several ways to structure bestseller bonuses. One is the length of time that a book is on the list, another is a book's position on the list. It is desirable for a book to be on the bestseller list for a long time, of course; it is also desirable for a book to be high on the best-seller list. Bonuses can be structured to reward length or position or both. A long run on the list, even at the bottom, can be significant, both because it means the book is selling strongly over a long period of time, and because it enables the publisher to boast, " _____Weeks on the Bestseller List!"

Just as important is position on the list. The higher your book rises, the better it is, naturally. But the book that reaches the number one position causes a quantum leap in promotional value, even if it drops down or off the list the very next week. Therefore, many escalator schedules in book contracts are heavily weighted in favor of the number one slot. A typical arrangement might be $2500 per week for New York Times bestseller list positions 11-15, $3500 per week week for positions 6-10, $5000 per week for positions 2-5, and $10,000 per week for the #1 slot.

The actual sums paid at the various stations of the list can vary widely. I have negotiated bestseller escalators for as little as a few thousand dollars and as much as high six figures.
There are a couple of other features of escalators I should mention. Almost all such provisions place a limit (called a "ceiling" or "cap") on the total bestseller bonuses payable to the author, so that no matter which position your book is on and how long it stays there, the most you can earn is, X thousand dollars in escalators.

The other aspect is that escalators, or escalator installments, are payable within a short period of time after the event that triggers them. Thirty days is as long as it should take for most bonuses to be paid, otherwise your publishers will be taking back in interest what they owe you in bonus money. If a publisher waits until royalty time to pay you your escalators, that's not much of a bargain.

In the second part of this article we'll focus on award, book club, movie and other types of escalators.

- Richard Curtis

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.

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