Rick Horgan is Vice President and executive editor of Crown, an imprint of Random House. Crown's hardcover imprint publishes some of today's best original popular fiction and nonfiction. Recent bestsellers under the Crown imprint include The Audacity of Hope and Dreams from My Father by Barack Obama, World War Z by Max Brooks, and Thunderstruck by Erik Larson.

AR: Is there such thing as an average book advance? What are the qualities that influence this amount?

RH: A lot of it depends on format. Whether you’re being offered for hardcover versus trade paper or mass market, because there are distribution ranges for each of those formats. Whereas the typical mid-list hardcover is 20,000 copies, the typical mid-list trade paper is maybe 12,000, and the typical mass market distribution is probably 70,000. and each of those formats have different price points.

Basically the way advances are arrived at is a book comes in, you make a determination, first of all, what are we dealing with—animal, vegetable or mineral—what’s the category, what are the comparison books, and if it’s a hardcover, trade paper or mass market. If, for example, it’s a hard cover, if you believe people will pay $25 for it, if reviewers will pay attention to it, your mind drifts to what are the like books, what other books like this have been done, what are their price points, what were their typical sell-throughs. If I received a book that was a thriller submission and the quality of the writing was quite good and had a high concept and I believed I could make some hay with it. Say the writing really lifted above paperback format and if I launch this book in hardcover, no matter how good it is you’re not going to go out with 100,000 copies for a first time author. But if you go out with 10,000 copies there’s not enough distribution out there for any kind of reordering to take place, there’s not enough distribution to justify a marketing budget for a book to have visibility.

It would be just a little commercial fiction launch. Probably announcing 50,000 copies, which is a gross exaggeration because publishers always over-announce, you announce 50, but you’re trying to get out 25,000 copies. Now what is the typical sell-through for a book that’s distributed at 25,000 copies? Well, for a hardcover book it’s about 60%, that means if you distribute 25,000 copies and you sell 65% of those, then the remaining 35% is returns. I think it’s roughly about 15,000 copies. Let’s just make it simple: you price it at $25, you pay a flat royalty of 15%, and it works out to $3.50 or $3.70 per book. If you end up netting 15,000 copies and the author made $3.50, that equates to about $50,000 that the author’s earned on the hardcover.

Then it would have a paperback life. So you decide what form you want it in for paperback—trade paper or mass market—so you’d pick up some more revenue that way. The formula we use for paperback is half. If we netted 15,000 in hardcover, we would typically distribute 7,500 to 10,000 in trade paperbacks. Hopefully there would be a little re-ordering, etc. etc. If all you did was distribute those 10,000 trade papers and you sold through at the typical trade paper sell-through rate which is 70%, if you’re selling the trade paper at  $13.95 and the standard royalty rate is 7.5% you’re making about a buck a book. You sell through 70% of 10,000 that’s 7,000 copies in trade paper at a buck a book and you made 15,000 in hardcover. If it had some legs it would sell a little bit more in the next few years, but this tells you that for a hardcover fiction novel, publishers probably will be thinking $75,000 and the agent will probably try and pull them up to 6 figures. The problem is, that’s a specific situation, publishers don’t launch commercial novels in batches of 3,000 distribution, it’s pointless.

If you sent me a book that was a trade paper submission, it’s a TV companion guide to that Keifer Sutherland show, 24, an episode guide. You’d view it through a whole different lens. No one’s going to pay $25 for this book, every other TV companion guide in the universe, they’re trade papers, you’d price it at $13 or something at 7.5% royalty rate, you’ll try to get out 15,000 copies, you’d look at what previous TV companion guides ultimately net, you probably won’t project a net more than 20,000 copies. Therefore the rate that I’m probably going to pay is $15-20,000.

Obviously, when it comes to academic books and poetry and things like that, there are entities, university presses and places like that where it’s almost pro-bono, where it’s almost subsidized. They’re putting out 3,000 copies and hoping they sell 2,000. The economic model is completely suspect because if these entities can distribute 3,000 and make a profit, then why can’t Random House?

AR: So is genre the deciding factor?

RH: There are so many factors. The biggest deciding factor is the comparison book. That’s the way you sell in books these days. A book comes in, if I don’t have a like book to compare it to, then I’m lame, I’m crippled when I try to sell it internally. What’s going to happen ultimately is people are going to go to the Barnes and Noble buyer for that category and say “I’ve got this and we want an order of X of these.” If a buyer can look on the computer and see there are three other books like these, here’s what we took, here’s what we netted, then the process works. If we don’t have a comparison book then it’s just like throwing darts blindfolded and there the only thing you can do is run off 5,000 galleys and get everyone to read it and say “I know it’s not comparable to anything that’s been done in the universe but just read it and agree with me that you love it.” The biggest thing whether there's a successful comparison book, because that comparison book has a track record and there’s something that can be looked at, effectively it’s a dry run for the book you’re considering, to key off how you’re book will perform.

AR: Will a lack of comparable sales prevent you from picking up a book?

RH: Totally. I would have to feel the book was one the whole house could get behind, agree to do, run off some galleys, and agree to push those galleys into the hands of people so they could read it. In any given list, there’s only one or two books that the house will agree to do this for, to push into the hands of every bookseller in America. You have to believe in that book. That’s a pretty high bar to leap.

AR: How important is the writing in comparison to your knowledge of trends, genre, past sales, etc?.

RH: If it had nothing, if all it had was nothing, could it work? There you arrive naked at the party and you’re basically saying, “I’m arriving naked, I have nothing with me to offer, no platform, no fascinating story that could be spun by a publicist, I don’t have a cult or fan base, I just have my writing. If all you have is your writing then it had best be damn good. It has to be sold through this rather labor-intensive and expensive process of getting all the buyers and media people to read it.

AR: How have book advance amounts changed? Getting larger/smaller/etc.

RH: I’ve been in this business 27 years. Things have changed significantly. I don’t want to make generalizations—my experience is not everyone else’s experience—but most everyone will agree that advances for books these days are higher than they were, and that it’s typical for a hardcover house to pay $200-250,000 per book for the hardcovers on their list. That’s for a major hardcover commercial house.

On the other hand the mass market business collapsed since I’ve been in business. In 1980, typically there were tons of paperback auctions where hardcover publishers would put their paperback rights on sale and fetch $1-$2 million dollar advances, and that doesn’t happen any more for several reasons. The first reason is that paperbacks are rarely auctioned because every hardcover publisher went and created their own paperback mass market operation because they wanted to dine out on both ends of the process. The other thing happened on the mass market side, it collapsed because it was buoyed up by things called independent news tailors, who sell into drug stores and supermarkets. There used to be newsstands in America that used to sell paperbacks. The reason there were all these little mom and pop dispensers selling mass market paperbacks was because there weren’t a lot of bookstores around.

I know I sound like I'm a thousand years old, but when I got in the business in 1980, no one knew what a computer was, there was no such thing as online, you couldn’t order from Amazon or B&N, there was no such thing as a superstore. If you were lucky, you’d have a little store in your hometown or the next town over and you’d have to schlep over there to see what they had and they often didn’t have that much inventory so you’d often be disappointed. That’s why the book clubs flourished. If you read Bennett Cerf’s memoir—the guy who basically created Random House—in the first half of the century, every book in the Book of the Month Club he stops to tell you about with delirious delight. In those days it was like Oprah, you’d get like $300,000 for a book and it was because they could unload millions of books. It was because there were these people on farms that didn’t have any access to books so they’d sign up for Book of the Month Club.

The whole business has changed because of all these alternative ways to get at books. These little mom and pop stores and drugstores that sell books have gone by the wayside. What you have now is you go into a superstore and the mass markets are not really merchandized that prominently, it tends to be a little more about hardcovers. Mass markets tend to be a bit forgotten, and they tend to be forgotten because these online places like Amazon move a lot more hardcover and trade paper than they do mass market. It’s because you’re paying $7 for mass market and you’re paying $3 to ship it and it cuts against the grain, whereas if there’s some exotic business book that you can’t get anywhere that costs $35, so what, there’s a little shipping involved too.

AR: Anything else you want to add regarding debut authors and what they can expect, if they're going to make a living as an author?

RH: It’s really important to have an idea that can be easily summed up. It just makes everybody’s task of pitching something easier. That’s very helpful. Know your genre, too. There are so many people working in genres that have read only sporadically in their genres and they make the mistake of using devices that have been used way too much already. The job of a writer is to assess and build on what has been done, so they have to know what has been done already.