"P & L"

One of the least pleasant duties that agents are obliged to perform is explaining to their clients why their books have flopped. And there is no dearth of reasons: the editor was fired, the company was taken over by a conglomerate, the salesmen didn't understand the book, someone stuck a lousy title on it, they didn't advertise it, they didn't advertise it enough, they underprinted it, they brought it out too soon, they brought it out too late, there was an Act of God, there was an Act of Satan - an agent's files are a veritable Grand Guignol of publishing horror stories.

But -- has it really failed? Maybe it didn't earn back the advance paid to the author. But does that mean the publisher lost money?

Most authors and not a few agents tend to equate the earning-out of an author's advance with the recoupment of a publisher's investment. It's an understandable misconception, for to authors, royalties are profits. If their books start earning profits, they assume the publisher has started making profits too; and conversely, they figure, if the advance doesn't earn out, the publisher must have lost money on the book. For an examination of this assumption, and some surprising answers, click here.