How literary agents actually get paid

What does the 15% commission cover? #

The 15% commission that literary agents earn is a standard industry practice for domestic deals. This commission is a percentage of the advances, royalties, and subsidiary rights sales that the agent negotiates on behalf of the author. The commission compensates the agent for their expertise in securing the best possible deal for the author, navigating the complexities of publishing contracts, and managing the business relationship with publishers.

For foreign and translation rights, agents often earn a 20% commission, which is sometimes split with a co-agent who has expertise in the specific foreign market. This higher percentage reflects the additional work and complexity involved in selling rights internationally.

What expenses should not be deducted from the author’s earnings? #

While agents are entitled to their commission, there are certain expenses that they should not deduct from an author’s earnings. These include:

• Editorial costs: According to the Editorial Freelancers Association, editing costs can range from 2.0–7.3¢ per word, depending on the type of edit. These costs are typically covered by the publisher, not the agent or the author.
• Cover design: The cost of cover design, which averages around $880 according to the Reedsy marketplace, is also usually covered by the publisher.
• Interior/print formatting: This cost, ranging from $200–$800, is another expense that publishers typically handle.
• ISBN costs: While ISBNs cost $125 for one or $295 for ten, publishers often provide ISBNs as part of their services.
• Audiobook production: The cost of producing an audiobook, about $300–$400 per finished hour, is generally covered by the publisher or a specialized audiobook producer.

Authors should be aware that agents are not responsible for covering these costs and should not deduct them from the author’s earnings. Any expenses related to the production and publication of the book are typically handled by the publisher.

How are advances and royalties handled? #

Advances and royalties are the primary sources of income for authors and are also the basis for an agent’s commission. Advances are upfront payments made by the publisher to the author, usually paid in installments. These advances are negotiated by the agent and are based on the publisher’s assessment of the book’s potential sales.

According to Publishers Marketplace deal bands, advances can range from “nice deals” under $49,000 to “major” deals over $500,000. However, reliable public data on per-genre advance averages is limited, and most deals are under non-disclosure agreements (NDAs). It’s important to note that most books do not earn out their advance, which is a normal occurrence in the industry.

Royalties are payments made to the author based on the sales of the book. The royalty rate depends on the format of the book:

• Hardcover: 10% of the list price to 5,000 copies, 12.5% to 10,000 copies, and 15% thereafter.
• Trade paperback: Approximately 7.5% of the list price.
• Mass-market: 8% of the list price to about 150,000 copies, then 10%.
• E-book: 25% of the publisher’s net receipts, although the Authors Guild argues that 50% is a fair rate.
• Audiobook: Commonly around 25% of net receipts.

Agents earn their commission on these royalties, as well as on any subsidiary rights sales, such as foreign rights, film rights, and audiobook rights.

What are the common misunderstandings about agent compensation? #

There are several misconceptions about how literary agents are compensated:

• Agents charge additional fees: Contrary to some beliefs, agents do not typically charge additional fees beyond their commission. They are not compensated for expenses such as editing, cover design, or formatting.
• Agents take a percentage of the author’s total income: Agents only earn a commission on the deals they negotiate, not on any other income the author may have, such as speaking fees or unrelated writing projects.
• Agents handle all expenses: Authors may mistakenly think that agents cover the costs of publishing, but these are usually borne by the publisher or the author themselves.

How can authors ensure fair treatment by their agents? #

To ensure fair treatment, authors should:

• Understand the contract: Authors should read and understand their contract, including the commission structure and what it covers.
• Ask questions: If anything is unclear, authors should not hesitate to ask their agent for clarification.
• Seek legal advice: Consulting a lawyer who specializes in publishing can help authors understand their rights and obligations.
• Maintain open communication: Regular communication with the agent can help prevent misunderstandings and ensure that both parties are on the same page.

Frequently asked questions #

How much do literary agents typically earn?

Literary agents typically earn a 15% commission on the deals they negotiate for authors. This includes advances, royalties, and subsidiary rights sales. For foreign and translation deals, the commission is often 20%, split with a co-agent.

Do agents charge fees for services like editing or cover design?

No, agents do not charge additional fees for services such as editing, cover design, or formatting. These costs are typically covered by the publisher or the author, not the agent.

What happens if a book doesn’t earn out its advance?

If a book does not earn out its advance, the author is not required to pay back the unearned portion. The agent’s commission is only earned on the advances and royalties actually paid to the author.

Can authors negotiate the agent’s commission?

While the standard commission is 15% for domestic deals, authors may be able to negotiate the commission rate depending on the agent and the specific circumstances. However, this is not common and should be discussed directly with the agent.