The recession has served as a wake-up call, finally the time is here for the publishing industry to re-evaluate its business practices.

Plaguing the industry for years has been the habit of offering massive advances up-front for the next Harry Potter or Twiligh-esque blockbuster, advances that rarely pay out, hurting both author and publisher.

Writer John Green delivers the final blow to that house of cards by doing the math. Straight-up, larger royalties and smaller advances are a win-win situation for both sides:

Let’s say that The Unicornians [ed: sample fictional YA book] is not a tremendous success. The first book in the trilogy sells 8,000 copies in hardcover; the second two sell 6,000. With Editor 1, the author gets her $300,000, but The Unicornians comes up $240,000 short of earning out. With Editor 2, the author only makes $80,000 on the series, but $50,000 of that is royalty, and the publisher has also made a (modest) profit. The publisher will likely ask the author for another series, perhaps something focused in on the werewolf dude…

Okay, so now let’s say The Unicornians IS successful. Let’s say the first book sells 250,000 copies in hardcover, because they make a movie, and teens squeal about how hot the unicornian boy’s horn looks. The second and third books also sell 250,000. With Editor 1’s deal, the author earns back her advance and makes $1.2 million, for a total of 1.5 million dollars. With Editor 2’s deal, the author earns out and makes $2.7 million in royalties, for a total of $3 million.

Green also dispels the myth that big advances lead to big marketing budgets and thus obscene sales numbers.

So if an editor thinks highly enough of a book to pay $100,000 for it, she probably still likes it enough to give it a big marketing push when it comes time for publication.

Big advances do not cause big marketing budgets. Expectation of sales cause big marketing budgets (and often cause big advances). This is why turning down money will not hurt your marketing budget, if a publisher is behaving rationally.

Via BoingBoing