Hey all, Jess here.

Sarina and I both love these episodes where we, two certified nerds, get to hang out with likeminded individuals and dish. This week, we are going to talk about one of Jess’ most niggling worries: what does it mean to a publisher and an author to “earn out” a book advance and what does it mean to both if that never happens?

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KJ Dell’Antonia

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Multiple Speakers

Is it recording? Now it’s recording—yay. Go ahead. This is the part where I stare blankly at the microphone. I don’t remember what I’m supposed to be doing. All right, let’s start over. Awkward pause. I’m going to rustle some papers. Okay, now—one, two, three.

Jess Lahey

Hey—welcome to the Hashtag AmWriting Podcast! This is a podcast about writing all the things—this is the podcast about writing short things, long things, you know. And specifically, where we’re going to focus these days is on a little episode we’re calling The Publishing Nerd Corner with Jess and Sarina. I’m Jess Lahey. I’m the author of The Gift of Failure and The Addiction Inoculation, and you can find my work at The Atlantic, at The New York Times, at The Washington Post, and at jesslahey.substack.com.

Sarina Bowen

And I’m Sarina Bowen, the author of many contemporary novels. My new one is called Thrown for a Loop, and it drops on November 4th , and I am so excited. And today’s topic actually pertains to what happens when you have a book that’s publishing and everybody has all these big expectations. We’re going to cover one of them, which is earning out your advance—or not—and how to frame your thinking around this.

Jess Lahey

Yeah, first. I mean, the way this Nerd Corner works is because Sarina tends to have more of the business acumen and the nerd acumen. I let her do a lot of teaching me. But one thing I would like to state at the very beginning of this—and apologies, I didn’t look up the stats; Sarina might know them—the number of books that actually earn out their advance if it’s nonfiction. For example, my book that we’re going to talk about today is nonfiction, and so I got a big advance based on a—and we’re going to talk about that. We’re going to talk numbers. It makes authors really nervous, but I think it’s important. The number of authors that actually earn out is really, really low—like, much lower than you expect. . So “earning out” can mean a couple of different things, and we’re going to talk about that today. But to set the scene, we’re going to use my book The Gift of Failure as the example for earning out. as the example for earning out. So I’ve sold a lot of books—like, this book was a success by any measure. It was on The New York Times bestseller list. I had Kristen Bell go on Instagram and say, “Buy this book, it’s so great,” and it sold out across the country. I am not complaining here; I am just saying that it makes me extremely nervous that technically I have not earned out my advance on The Gift of Failure. Again, to set the scene, The Gift of Failure was based originally—it came out of an article that went viral at The Atlantic on why parents need to let their children fail. There was a big auction for this book that lasted three whole days. It was very exciting, and the number kept going up and up and up. And I was freaking out, because now you’ve got huge expectations. I mean, I’m thrilled, but the expectations keep getting bigger and bigger. So where we ended up was Harper Books came back with the highest bid, and it was also for the editor that I was most excited to work with, Gail Winston, and it came in at $400,000, so that was wonderful. That was great. It was based on—I got five payments over five, essentially, five years, and I have not earned back that advance for my publisher. So, Sarina, what would you say to me—a writer who is stressed out because that means, you know, when they’re looking at purchasing other books like The Addiction Inoculation, I was able to sell to them, even though it’s a tough niche, that little—it’s a tough corner, that addiction corner—and they knew that this book was not going to sell as well. But on the strength of my sales of the addiction…excuse me, of The Gift of Failure, I was able to sell that book, but I hadn’t earned out. So why are they going to pay me to write another book if I hadn’t earned out?

Sarina Bowen

It’s such a great question. So the thing—the punch line of this episode—is we just want you to know that if you don’t earn out, you’re not a failure. And we don’t mean it in a nice way, like everybody gets a ribbon. We mean, like, you might not be a financial failure for the publisher, even though on your statement it says you still haven’t earned back your advance. And that’s because the advance that you’re paid is part of a profit-and-loss estimate that the publisher makes before they offer on a book. And just in case anybody is squishy about this—like, an advance means those royalty amounts in your contract, you’re getting paid an upfront amount, and then you have to, like, earn it back with those royalty amounts in your contract.

Jess Lahey

And for those who actually are not familiar with this at all, I don’t have to pay back the money if I don’t earn out. That’s not a thing.

Sarina Bowen

Right. So the publisher said, “We like this book so much we are going to pay you $400,000, and we think that you will sell enough copies that we will be in the black on our P&L statement.” But they never show us the P&L statement. So let’s just say that they had a P&L statement that shows that they’re profitable on this book even if you only sell 70,000 copies—but you’ve sold over twice that amount. So when I worked on Wall Street, I was given a bonus every year, and the bonus made everybody feel like, “This is the amount of money that you’re worth.” But what it really was is “This is the amount of money we have to pay you so you won’t quit and go work for somebody else.” And an advance is exactly the same thing—it’s how much do we have to pay you to win, but also in a way that looks okay on our profit-and-loss estimate of what this book can do. And of course, you mentioned that we don’t have good data about how many books earn back their advances. And the truth is, even if you and I had done a deep dive prior to sitting down here today, we still wouldn’t know, because nobody publishes these numbers. And the only time that you get a glimpse of them is when some publishing executive is on the stand in a court case about, say, whether two Big Five publishers can merge.

Jess Lahey

Gotcha.

Sarina Bowen

And then, yeah. And then they tend to say various things—like, they’ll give a statistic, and then everybody in publishing will be, like, nailed to the transcript of this court case to see, like, how is everybody doing in there? Because, you know, nobody—nobody tells you. Nob