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How Writers Earn Money

Researched and written by Annabel Smith. © Annabel Smith 2019
Published here by arrangement with Writing WA.

How writers earn money tends to be an area shrouded in mystery.  Writers benefit from honest conversations about the realities of the incomes most earn, as well as by being informed about  other avenues for earning income beyond advances and royalties. This package contains information about:

  • Advances
  • Royalties
  • Lending rights
  • Public speaking
    • Libraries
    • Festivals
    • Schools
  • Workshops
  • Freelance writing

Advances

Advances are a lump sum paid by a publisher upon signing a book contract, based on predictions made regarding the number of copies of the book expected to be sold. A publishers’ rule of thumb is that an advance is half the estimated royalties on 1st print run. If an author works with an illustrator the advance will be split between author and illustrator.

An advance is an advance payment on future royalties, not a payment in addition to royalties. Earning out an advance refers to receiving enough in royalties that the publisher breaks even on the advance they have paid.

Once upon a time advances used to function as living wage while an author wrote a book; nowadays, in Australia, they might support an author for a few weeks at most. Authors who change publishers, or write books for a different market (e.g. from YA to childrens’) can expect a reduction in their advance.

The media tends to report only on outliers; those rare books which receive 6 figure advances e.g. Graeme Simsion’s The Rosie Project or Hannah Kent’s Burial Rites.  While a few top names might get 5-figure advances each year, the majority of Australian writers  receive advances of less than $5000 especially literary fiction (including short stories) and/or authors published by independent publishers. It is not unusual for debut authors with small presses to receive no advance at all.

An author does not have to pay back any portion of an advance they have not ‘earned out’ on a published book. However, in a multi-book deal, if they fail to deliver a manuscript that satisfies the publisher (e.g. it does not adhere to the expected genre), they can be asked to pay back the advance. Even if they earn out the advance, if the publisher has invested heavily in marketing in anticipation of selling even more copies, their book’s ‘bottom line’ (profit and loss) may be low or even negative, which may impact on future advances and contracts.

Royalties

Royalties are sums paid to a writer for each copy of a book sold, as specified in the publishing contract. In Australia, royalties are usually 10% of a book’s recommended retail price (RRP), or 25% for e-books:

  • Large format paperback RRP $32.95 =  $3.30 per book
  • Small format paperback RRP $24.94 = $2.50 per book
  • E-book $7.50 = $1.63 per book
  • E-book $14.99 = $3.75

Sometimes, discount department stores buy in bulk from publishers, which results in lower royalty rates to authors. These can be as low as 5% although this is rare in Australia. Like advances, royalties are split evenly between author and illustrator.

Royalties payments don’t come in immediately.
Most Australian publishers pay their authors twice a year, a few only once a year. Some digital-only publishers pay quarterly, or even monthly.

  • Royalties for the period January-June are usually paid in September or October.
  • Royalties for the period July-December are usually paid in April.
  • e.g. if a book sold 1000 copies in January, payment would be in September/October.

Expected Sales

For small independent publishers in Australia, 1000 copies would be considered a respectable sales figure. Up to 1500 is good and beyond that is excellent and unexpected. For bigger publishers, and in certain genres, sales can be much higher, but not always as high as one might think.

Withholding royalties against returns
Booksellers can stock new titles for 90 days; then return unsold stock to the publisher for a refund.
e.g. bookstores order 2000 copies upon publication; 90 days later, 200 returned to publisher.

Most contracts allow a publisher to withhold a percentage of owed royalties in case of returns. According to the ASA website some publishers try to withhold 50%; however the industry standard is 15% to 20%. If returns from booksellers are lower than expected, the author will be paid what is owed to them in the next pay period. If a publisher withholds 20% royalties and more than 20% of an author’s books are returned the author does not have to pay the publisher back. The publisher will keep royalties from any books sold later until the author is in credit again, however this can result in the unfortunate and demoralising situation where an author receives a royalties statement that creates the impression that they owe their publisher money.

Royalties are only paid if and when you have earned out your advance
One benefit of a small advance is that an author will almost certainly receive some royalties, whereas with a large advance, no royalties may ever be paid. If an author has an agent, the publisher pays any royalties owed to the agent, who takes the percentage agreed in the author’s contract with them (usually 15-20%). Most authors make 90% of their sales in the first 90 days after publication. However, there are exceptional cases where sales remain steady to grow; this tends to be due to an unusually high level of publisher marketing or social media buzz. Generally speaking, e-books have a longer shelf-life than paperbacks.

Awards can extend a book’s shelf-life
While awards can extend a book’s shelf-life, there are so many variables it’s difficult to quantify. The impact will depend on the book itself, the profile of the prize (for example the Miles Franklin or Stella prize will affect sales considerably more than a Premier’s prize listing); the media response etc.

Royalties vary from territory to territory
In the US, the standard royalty for paperbacks is only 7.5%. Books also have a lower recommended retail price in the US.

No royalties on remaindered books.
When a publisher has excess stock of a title they believe they are unlikely to sell, they don’t want to pay the costs of warehousing the books indefinitely, the title will be remaindered. The author is offered the opportunity to buy the books at a heavily discounted rate, or the publisher may sell the stock to distributors for pop-up discounted book shops however the author will receive no royalties for these sales.

Lending Rights

Lending Rights is a government scheme, administered by the Ministry for the Arts, which compensates authors and illustrators for the loss of royalties when their titles are borrowed from libraries.

  • Public lending rights (PLR) = books held in public libraries
  • Educational lending rights (ELR) = books held in libraries at schools, universities and other educational institutions

Payment is based on the estimated number of books held, NOT the number of times book is loaned. ELR and PLR are calculated separately; and the calculation for each must reach $100 for the author to receive a payment. Lending rights only apply to hard-copy books. Currently e-books and audiobooks are not eligible for ELR and PLR.

Authors have to register their books to receive payments; the deadline closes 31 March each year. Many publishers register books on behalf of authors. There is a delay of 12-18 months before authors receive their first payment and there are no back payments so if an author misses the deadline, they miss out on all the potential ELR/PLR payments for that year.

PLR often significantly outweighs ELR; some authors do not earn ELR especially commercial fiction authors. Children’s authors tend to earn more ELR than adult authors. ELR and PLR payments can grow into a significant amount over time. ELR and PLR tend to decline for each title over time as copies go missing or are retired from circulation due to lack of interest.

Public Speaking

Public speaking can be a way to earn extra money as a writer as well as an opportunity to promote (and even sell) books. The most common avenues are:

  • Public libraries
  • Writers’ festivals
  • Schools

Libraries
Many public libraries have a budget for events, and author talks are generally considered a good match for library clients. Talks generally last for an hour and ASA-recommended rates are $350/hour). If payment is not discussed the library will assume the author is speaking for free. There is unlikely to be any audience crossover so an author can present the same talk at different venues. They are not generally well-attended and not many people buy the book though some will reserve it at the library. Setting up library talks can be time-consuming. Librarians are busy and setting up an event requires persistence.

Writers Festivals
If a book is a bestseller or a publisher has invested a huge amount in marketing and publicity, an author can be expected to be invited to all the major (capital city) festivals as well as some regional festivals. However, for most it is notoriously difficult to get onto festival programs, especially for early career/mid-list authors with small independent publishers.  Festivals have limited travel budgets and tend to spend it on big-name authors who will help them sell tickets; flying little-known writers from ‘the regions’ is a low priority.

If an author is invited to a festival, the organisers will usually schedule them for 2-3 events over the course of 2-3 days. ASA rates are $200 for panel, and $1000+ for a keynote address (however few early-career writers would be asked to deliver a keynote). Many festivals will pay their writers’ travel costs (airfares, accomodation and sometimes also a meal allowance). If an organiser does not discuss payment, they may assume the author is willing so speak for free and cover the costs of their own expenses; unfortunately in this situation it is up to the author to ask what fee they are paying and which expenses will be covered. Festival appearances do not generally lead to a lot of sales, except for a few authors with a lot of buzz. However, there are many benefits to being involved that have nothing to do with money.

Schools
Children’s writers (and illustrators) have many more opportunities to speak in schools because of the education sector’s hunger for support in teaching creativity and literacy. Some events are organised direct with schools; others by The Literature Centre. School events usually involve 2 to 3 one-hour talks in a day at 1 school, or 1 or 2 long workshops for a full day’s pay. ASA rates  are $650+/day or $3500 for a week-long residency. If an author is travelling outside Perth metropolitan area it is reasonable to ask to be compensated for travel.

School events tend to involve larger audiences than most adult events: usually a minimum of 25 but occasionally groups of 200+ resulting in a flow-on effect for building audience and growing sales. Most children’s authors do the bulk of their work in Book Week. However, ’Book Week’ is a misnomer as events can stretch for several weeks. Some regional centres run their official Book Week the week after metro Book Week in order to have better access to presenters.

School events help to promote books and the growing popularity of the books helps authors get more work in schools.

Workshops

ASA-recommended rates are $550 for half a day or $880 for a full day. There are opportunities for writers to deliver workshops at libraries, writers centres, festivals and sometimes for writers groups. Often these workshops cover topics such as aspects of craft (character, plotting); social media for writers, or self-publishing.

Freelance Writing

There are numerous markets for writers to have non-fiction (opinion pieces, articles, essays etc) in both print media and online. Generally speaking, the writer will pitch to these publications until a relationship is established, at which point they might be commissioned to write on a particular subject. The ASA recommended rate is 93 cents/word however many writers write regularly for substantially less than that. Sometimes it is easier to calculate the rate by working out how many hours are involved in creating the piece. Sometimes a low rate per word (e.g 37.5c) can still equate to a reasonable hourly rate if the piece can be put together quickly, with little research.

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