Chip MacGregor

March 23, 2012

Once I sign a contract, when do I get paid?


Don wrote and said to me, “In light of your recent posts on contracts, I’m not clear as to when I should get paid. I’ve signed a contract with a medium-sized publishing house, but I don’t know when my advance and royalties are actually paid out. Can you help?”

This isn’t all that uncommon. One of the things I've noticed about many of the writers I've met with over the past twenty years at writer's conferences is that they often aren't clear WHEN they are paid. For the record, most contracts I negotiate are paid half-n-half – that is, half the advance is paid within 30 days of signing the contract, and the other half is paid upon completion of the writing assignment. However, many of the New York publishers now pay in thirds, with the last third being sent upon publication of the manuscript. (That's actually becoming more popular with publishers, since it spreads out the risk a bit.) And a couple years ago Random House started the truly awful practice of paying in quarters – a quarter on signing, a quarter on completion, a quarter on publication, and (my reason for saying it’s awful) the last quarter is due a year after the book releases. (Rumor has it they wanted to break it up into fifths, and pay the last portion to the author's estate, with the check to be delivered at the funeral.) Don't get me wrong — Random House is a good company. I just think this is a policy created by non-book people without enough appreciation for the authors involved who are trying to make a living. I'm waiting to hear about the two-million-dollar book that tanks at RH, and what the leadership will say when they have to cut a $500,000 check for a book that has already lost a ton of money. Oy.

Anyway, there are a number of variations to this picture. I once did a contract that was paid in sixths. (Signing, creation of an extended outline, the rough draft, the completed draft, publication, and…um…I forget the last one. The publisher's birthday or something. I don’t remember exactly, but it was pretty stupid). The POINT is that with all the time it takes to create a manuscript, a writer wants to get as much money as possible, as soon as possible. That's why agents fight having any monies paid after publication.

Think of it this way: If a publisher makes you an offer in June 2012, you may not see a contract until September 2012. It takes you six months writing the book, so you turn it in by December 2012. They take a year to produce it, and finally get copies on bookstore shelves in January 2014. You're now into it more than a year-and-a-half and the only money you've seen is the advance. If your settlement date (that is, the date on which the accountants tote up your sales) is June 30, you're waiting a long time to have them add up the figures. THEN they've got 90 days before they have to send a check, and you can bet the publisher is going to take every day allowed before they pay you (as would I, if it were me cutting the check — it's a business, and you use the system under which you're working). So if the contract says you'll get a check within 90 days, they won't be sending it until the 89th day. Which means your first royalty check will come in September or October of 2014… and that's only if the book earns out quickly. If not, it'll be six months after THAT until you see any additional income. Just so we're clear, that means that great book contract you signed in June of 2012, and completed later that year often won't actually put any more money into your pocket until spring of 2014. 

AND if the publisher tried to talk you into doing a cheap, no-advance deal because "you'll get the money on the back end," that means you have to wait until the book has been out there for months before you see ANY money at all. And no, your publisher, who has been selling your books and collecting your money, doesn't plan to pay you any interest on that amount.

NOW do you see why agents have a tendency to clamour for advance dollars?

Listen, I'm not complaining. It may sound like it, but I'm not — I've been agenting for years, I understand how the system works, and you won't find me whining at the door of a publisher because they're using the system that's in place. But this waiting on income? It's why agents are willing to fight for an advance. This is a business, I'm the guy looking out for my client's interests, and doing a lot of work for nothing is pretty hard to defend. Authors need to get paid. And Don (getting back to your question), you need to talk over the numbers in your contract with your agent, so you'll know exactly when you can expect to see the money. 


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