Will you ever have to return the advance on your royalties? Sometimes yes, sometimes no. There is no standard one size fits all answer to this question, because every publisher has their own rules and by-lines governing what they do and how they do it.
For most publishers, no, you would not have to return the advance. But than again, most publishers aren't going to give you an advance to begin with. Authors getting advances as a standard practice is one of those great big urban myths drummed up by Hollywood movies. In real life it rarely happens, unless you've already sold 3 or more best sellers. First time authors are rarely going to see an advance, and only authors with a reputation for consistently producing bestsellers get large advances.
When you see news reports talking about giant advances being given to new authors - remember that the REASON these reports became news, was because it is such a rare event that news reporters jump on the story. For every $10,000 advance there are 3million authors who did not receive a penny of advance. Never forget that. It's important to remember, because if you get hung up on making money, you'll never succeed as an author.
I remember reading an author interview once. It was with Dr. Tim LaHaye the author of Left Behind. The interviewer asked him what it felt like to become an overnight success with his first book. The author asked "What do you mean, my first book? I don't think anyone even knows my first book." The interviewer became puzzled and asked "Isn't Left Behind your first book?" The author said, "No, I have 26 other books already. This one only became famous because it was picked up for a movie." He was a minister and had written tons of books that were only being circulated through small Christian book distributors. It was a fluke that his Left Behind book got picked up by a larger book store and ended up in the hands of a movie producer. Suddenly he was getting requests from publishers to turn the book into a series, with those requests were offers of advances against royalties. Publishers began bidding against each other. He had choice which offer was best for him. He was only offered an advance because publishers wanted to jump in and get the rights to the series before the movie hit the theaters.
That's the way advances work in the real world. Don't believe the mumbu-jumbo you see on TVShows like Murder She Wrote. You as a first time author are not likely to get any advance at all, so don't plan on it, or you'll be crushed when the reality of this fact hits you.
But let's say you are one of the flukes and yes, you do get an advance. Okay. Great! Good for you! You are doing something right, because you have got the support of a publisher who thinks you are the next J.K.Rowlings.
Well, before we even look at whether or not you'll need to return the advance, let's take a look at the advance. In your example you toss out a number of $20,000.
Let's take a gander at the #s you quoted: S20,000 advance on royalties? Uhm, yeah, no. You will not be seeing that from any publisher, not even the biggest ones, not unless you are Steven King, and even than maybe not. (Remember that most of Stephen King's money comes from movie royalties not book royalties!)
Standard advance for the average first time author with the average well known large-press is $1,000 to $5,000. Most publishers figure the advance out low, estimating it so that you'll end up receiving about $1,000 to $2,000 extra via royalties, approximately 6 months to a year after the book is published.
Now that you understand the logic behind how much a publisher decides to offer you as an advance, let's now give you a swift kick in the pants to knock you off your fantasy cloud of author income delusions.
Yes, you read that correctly.
The average large-press traditionally published fiction author makes $2,000 to $7,000 in the lifetime of their book. This is why the average "full time author" writes 4 books a year in order to earn the below poverty level income of $24,000 a year. This is also why the average full-time author also works a "regular" part time job in order to earn enough income to support their family.
Has it sunk in yet?
Let's get the dancing bananas to shout it out one more time to make sure you hear it:
It all depends on what it says in the contract you signed. This is why you need to read every line of your contract very carefully, than have several of your friends read it, and than have your lawyer read it. All 30 or 40 or so pages of it. You want to have a great big heart to heart with everybody who read it to find out what they think it means, (they will bring up issues you had not thought of) and than have a great big heart to heart with your lawyer to find out what it actually means, and ask all your questions, and ask all the questions your friends brought up. Finally you want your lawyer and the publisher's lawyers to get together and have themselves a great big pow-wow to make sure your lawyer interpreted everything the way their lawyers did. And last of all you want to come right out and ask your editor (with the publishing house) what the publisher's policy on returning advances is. This is the only way you'll know for sure.
Keep in mind you'll have to repeat this for every single contract even if you use the same publisher multiple times.
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