A Bit of Priming on Publishing, Part 2

Sorry to have such a gap in time there. Here’s the second part of my ramblings about fiction authors dealing with publishing options and factors from the SFFWorld thread conversation, this one dealing with partner publishing:

License or partner publishing gets called traditional publishing, which is silly as it is no more traditional than self-publishing and self-publishing was first. If an author decides to try and license publish, the author creates a different second business, a marketing business, in which the author markets the creative property to potential licensing partners. The author owns the text of the creative property and all rights to exploit it into products (copyright.) As the owner, the author can grant a license to a business to exclusively exploit/use the property to make certain kinds of products (authorize the business to use the licensed material as the rights holder.) In a licensing agreement, the business does not buy the rights in the property or the creative property itself, just the production license. The author remains the owner of the creative property and its rights of licensing and controls it, but the business is the owner of the product that is created involving the property under its authorized license and controls everything involved with that.

So if an author licenses a creative property to a film studio for dramatic rights, the author retains ownership of the creative property text, but the film studio owns the film made from it and controls every element of production, distribution, marketing, pricing etc. Likewise, if the author grants the license for book production to a publisher, the author retains ownership and control of the text and its subsidiary rights to license or exploit, but the publisher owns the book products made from the text and thus controls every element of production, distribution, most marketing, and pricing, etc. of those products. The author grants the publisher the exploitation right and in return, the publisher handles all the costs and labor of their product, and sometimes the marketing costs of the author working with them (book tour,) and of distributing including shipping and cloud storage, marketing, accounting, etc.

At no time does this licensing agreement make the author an employee or independent contractor of the publisher (or film studio, etc.) The author does not work for the licensee. The author licenses to the licensee, creating a limited business partnership. (Book packagers being involved in the equation creates a different set up of partnership relationships, which we don’t have to go into unless people want to.) The rights of exploitation licensed to the licensee are limited to what is stated in the contract, under the terms of the contract. Specifically, the particular products allowed to be made or further licensed by the licensee to other licensees (subsidiary rights,) are listed, and the geographical/economic territory in which the products can be sold under the license are negotiated and agreed upon in the contract. There is also the term of license — the agreed upon authorization. For books this is copyright which is pretty long, for film it’s forever and for certain products such as sometimes audio books it may be a set number of years.

The author has the contractual responsibility to deliver to the publisher the creative property (text) in a form editorially satisfactory to the publisher so that the publisher can produce it into a product the publisher thinks it can sell. The author also has the responsibility to review the publishers’ page proofs for errors to make sure the text property is correct, to cooperate with the publisher in the production process, and to assist in promotion of the products the publisher produces and sells, sometimes at the publisher’s expense or at the author’s as part of the author’s creative property business. The author also has the requirement of not undercutting the potential financial worth of the license granted. The publisher has the responsibility to produce the products licensed within a contractually specified time period after delivery of the creative property, to not alter the creative property (text) beyond their authorization, and to pay the author their licensing fees from the sales of the product (royalties specified in the contract.) The author gets paid first, before the publisher deducts its costs and taxes, but after vendors have deducted their fees and cuts, (which is something that greatly affects how publishers price books, which people seem to forget.) The publisher is obligated to properly account for the author’s licensing fees from the sales of the products (which are sold via different accounting systems,) and provide statements thereof and pay the author the licensing fees on a regular schedule.

If the publisher mis-estimates how well the product will sell and/or cost to produce and distribute, and loses money on the products, that’s the publisher’s problem. Likewise, if a film fails, that’s the film studio’s problem, not the author’s. The investment gamble is the licensee’s risk; the author gets paid what was agreed upon for the license authorization, including the proportion of what sales there are (the royalties.) Larger publishers may provide an author with an advance against estimated royalties from the product sales. Essentially, they pay a portion of the author’s agreed upon licensing fees up front, as an investment, before there are any sales. They do so in order to get the author to be willing to grant them the license over other publishers and to fund the author while the author is completing the final creative property for them, so that they are more likely to get the final creative property. This advance usually gets confused in the media as a sales price, instead of what it is, a licensing fee.

The publisher estimates what the advance should be on the basis of what they think the book product is likely to make the author in licensing fees from sales, of what they can afford to pay up front from the funding they get from the sales of other books, and of what they decide they are going to risk to get the license over other publishers who might want it. (In a book auction for the licensing rights with several publishers competing in rounds, a publisher may end up offering a bigger advance than originally planned.) The advance is paid in stages, usually with a first payment on the signing of the contract. Authors may get portions of the advance after the book is published and out for sale, but they usually get a portion before that.

If the book product doesn’t sell a single copy, the author is still contractually entitled to receive the full advance contracted from the publisher as the license fee. The publisher eats the loss if they guessed wrong or mess up sales. If the book sells, the publisher is not obligated to pay the author any more licensing fees (royalties) until the amount of the royalties equals the full advance being paid out to the author. If a book product generates more royalties, including subsidiary rights licensing fees, than the advance, the author has “earned out” the advance and subsequent royalty monies are paid out to the author on the regular schedule.

Because of the financial capital involved in floating the advance to the author, with the potential of additional loss, most smaller publishers do not pay advances. Instead, they just account the royalties from sales and pay the authors the royalties on the regular schedule. Pyr, however, is not a small press. It’s a medium sized press and pays advances. Obviously, the bigger a press, the bigger an advance they can venture. In a book auction for a hot title, Pyr likely won’t be able to beat Tor or Harper Voyager. But Pyr might find a title that blows up, which Pyr then can also sub-license as paperback to a larger house and to other country territories if they have those territories as part of their license. A lot of medium and small press publishers get a good chunk of their income from this sort of sub-license, which allows them to then take on new authors.

This is again why you should not be contemptuous of any best-selling author, especially one on your publisher’s list, because they provide the capital by which publishers can gamble on unknown and lesser known authors. This is also why the mid-list tends to get squeezed — they’re in that middlish advance range where if they don’t earn out, it’s a problematic loss for the publisher and unlike newbies can’t be paid a small advance. Because they aren’t new, it’s hard to get them media coverage and bookseller interest in stocking (both welcome debuts as new product.) But because they aren’t bestsellers or only just category bestsellers, advertising won’t be as effective as it is for bestsellers to make up the lack. So whenever a publisher has its own financial squeeze or there’s an economic downturn like a recession, the mid-listers get dropped from the lists. The booksellers aren’t as friendly to them, and they have to show growth in their sales; the worse the economy, the more growth they have to show. Which is why even if you self-pub a book or get a license deal, it’s just the start of things.

The answer to your advance question, Alchemist, is that it depends. The average range of SFF advances, when there is an advance is still $2,000-$7,000 and has been for a very long time. That’s because fiction doesn’t sell as well as non-fiction and is much more unpredictable on sales estimates. Category publishers do most of their publishing in mass market paperback, the margins are very slim, and so the advances for books sold in the category markets are less, usually, than SFF titles sold in the general fiction market. The bigger publishers do have a basic line that they don’t go below, because they can float the money. If a book is well-received by a publisher or publishers, then it may get considerably more than that basic range. But those are few, obviously, and usually involve agents and book auctions and a whole lot of luck. Foot in the door deals are usually what first timers get, and then they try to build an audience from there.

So in a license publishing situation, the author has their first business (writing creative property,) and a second business (marketing that property for license to licensees.) That second business has a fair amount of cost and time to it too, although less cost than it used to have because of electric online submissions. But if an author gets a license deal, the licensee takes on all the costs and labor of making the product and launching it into the market, with the author then incurring some promotional costs in addition to production costs for creating the property. It’s wider distribution in more channels, and if the author gets an advance, it’s money up front that can’t be taken away, which funds the first writing business. It’s not necessarily less work, depending on the circumstances, but it means that if an author doesn’t have the time and skill sets to be their own publisher effectively, they get a company to do it in return for giving up specific controls through the terms of the license, which can give them more time to devote to the writing business. But there are downsides, there can be problems, no guarantees, etc.

So it’s important when you are talking to authors who are licensing, self-pressing or both, that you ask concrete questions about actual financial costs and time spent in labor and what kind, to find what is going to work for you or not. And hopefully the authors are honest about it, because sometimes they aren’t. But no author is obligated, obviously, to discuss their personal financial factors with you or provide you with assistance in getting published.

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