Many think publishing works like this: Author writes book. Publisher gives author money. Book sells and publisher makes back its money (hopefully more). Author gets more money and another book deal. But this tidy trajectory is in fact not that common. Most books do not “earn out”—meaning they do not earn in book sales as much as the publisher’s initial investment—and yet authors keep getting book deals. How can this be?
First, let’s define the essential terms. When an author gets a book, a payment against future earnings. Authors then earn —a percentage of the sale of each format (print, e-book, audio, and so on)—and that accrues against the advance. (Other things, like foreign sales, go into the royalty account, too, but that’s for another column.) When sales surpass the amount of the advance, the author has and will get royalty checks as sales continue. Earning out is a goal for many authors, but the vast majority do not reach this. And that’s okay.
