STATUS: Heading out into a glorious day.
What’s playing on the XM or iPod right now? THE OTHERSIDE by Breaks Co-op
I’m pretty sure I’ve blogged about this sometime before but it could have been years since my last entry on it for all I know. One of the perils of a multi-book contract is a little detail called joint accounting or cross-collateralizing the titles.
For the record, our agency won’t do joint accounting. All the publishers know that and if they want to insist on it, then we can only talk about selling one book and any multi-book contract is nixed. I see absolutely zero benefit in joint accounting for the author. However, some well-respected publishers do like to push for it—especially for debut authors. Tor being one example. Some houses never practice joint accounting. Harlequin being one example
First off, what is it? Basically, it means that the multiple titles sold are linked in the accounting. Let’s say an author does a 2-book deal. It’s not a series so each title stands on its own. Let’s say the advance was $30,000 (15k per title). In joint accounting, the author would not see any monies beyond the advance until both titles earned out the 15k because of the linked accounting (even if book one has already earned out).
With no joint accounting, each title has its own separate accounting so once the 15k earns out for book one, the author doesn’t have to wait for the other title to earn out to earn royalties on that first title. Or vice versa. Each title is separately accounted.
That’s it in a nutshell. If you are only selling one book, this is never an issue. It’s only a point of discussion if an editor is offering for several books.
As a matter of practice, when an editor calls to offer for 2 books (or 3 or whatever), I always begin the convo with “our agency will not do joint accounting. Given that, are we talking about one book or more than one?” This establishes it before anything else so it’s not even a factor as the negotiation unfolds.
Once again, I can only speak for myself. Other agents might differ on their opinion of this. You might be wondering why any author would agree to it.
Well, if you are getting 7-figure advance for two books and the publisher insists on joint? Do you care? Interesting question, no?
If the publisher is offering seven figures, I’m guessing I’m writing something that would earn it out. But I’d still want to be careful.
If I can earn that seven figures out, why do I need joint accounting?
My question: What’s the benefit of joint accounting? Why is it pushed?
If you do joint accounting and book one earns out, but book two is struggling, and book one continues to earn, do the sales for book one help go towards paying out the advance for book two, or does book two still have to make it all on its own??
I can understand from a business perspective why a publisher would want to do joint accounting, but from an authors perspective it kind of sucks.
For a moment, given the seven figure advance, I might say yes. In the long run though, I should say that one should not look at instant gratification and give in. Well, I am glad there are agents.
I don’t think I’m entirely following this accounting trick. What happens if the second book never earns out its advance? Does the author never earn royalties on the first book even if it’s wildly successful? Where does the money go?
In the film industry cross-collateralizing
has been done to use the profits from one film to offset the losses of one or more others, which is why no film in Hollywood has ever made a profit. Actors who are told they’ll get a cut of the profits, (e.g., the stars of “Alien” (1979) never see a dime beyond what they were initially paid.
Wow. Joint-accounting most be horrible for authors who might have one book be successful, but never sell again.
Quick question: where would the money go exactly? I mean, if they aren’t receiving royalties…would the publisher just greedily keep it, or hold it?
Personally, I’d never offer or accept a multi-book contract. I’m not that prolific a writer, and deadlines kill my Muses. So, in the case of the seven-figure offer, I’d tell them to cut the thing in two and give me the half that belongs to the first book, because that’s the only book they’ll be seeing for a while.
I can see why a publisher would want joing accounting, but I also wonder what happens if book 1 is wildly popular but book 2 isn’t. I would not want to risk losing all of book 1’s profit just because my second book sucked.
One of my former illustration teachers had a 7 book deal to do covers and chapter head interiors for a YA series. The prices were agreed on up front.
The series of course, ended up being Harry Potter (Mary Grand Pre was the illustrator). I’m pretty sure they ended up renegotiating a bit on the later books, but yeah, she said those books didn’t make her filthy wealthy or anything, just comfortable. Pretty classic cautionary tale.
This is why it is so important to have an agent. Most writers, myself included, would jump at the offer.
But, now that you have explained it, no- I wouldn’t want it.
Thanks so much for explaining this!
This was very helpful information. Thank you for sharing with us!!
Lisa
7-figure advance = swoon. As a debut author, I’d take it if my agent would agree, but I suppose that household-authors might pause to think (J.K. Rowling, for example).
Joint accounting sounds like it involves a lot of strings and hassles. While I’d heard of it, I didn’t realize it was so complicated. Thanks for clearing this up.
Awesome post. Thank you.
Wow… this is one of those areas where I’d need an agent to do all the pro/con figuring out for me. I’d rather have an agent who understands it all work out the details than try to tackle it on my own!
Agents definitely have their work cut out for them 🙂
I’ve heard of this concept before, and I’m a little torn on it. Basically you’re asking the publisher to take the hit on a poor selling book instead of the writer. And I’m all for big companies absorbing the difference, but in practice joint accounting makes sense from a business perspective. Mind you, as a writer, I’m all for the no joint accounting :).
Thanks for the advice.
Nicely and simply put.
Great post.
That’s good to know. I have a friend who just signed a two book deal with Tor. I wonder if she knew about this deal. I hope her agent didn’t go for it. It’s not fair to the author.
Dawn
I would not be completely against joint accounting for the simple reason that win-win relationships last. I would rather never lose a publisher money than make a bit more of it myself. Maybe my view is a bit to simplistic and rose tinted.
Thank you for the insight about joint accounting. Your blog is a treasure trove of useful information for those of us working on our first novel. Thank you for sharing your expertise!