Episode 146 – Startups, Branding, & Author Income

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Question of the Week: What would you do with your $400,000 advance?

Once you get Jim and Bryan started, they’ll never stop, and here comes episode 146 (with special guest star, Riley Grace Cohen)! Inside, they discuss tips on brand building, mini goals, and a new affiliate plugin for Amazon. After thanking their patrons Cubicle Jail to Laptop Lifestyle, 31 Days of Wisdom, and Witch’s Sacrifice, they took on the news, which included stories on ebooks in libraries, writing income, ebook subscription models, indie startups, and whether or not recent news stories spell doom for indies. This week’s Question of the Week: What would you do with your $400,000 advance?
What You’ll Learn:
  • How you can see Bryan live in Chicago next month
  • Why authors need patience while building their brand
  • How authors can form positive habits by making mini goals
  • How Amazon’s new plugin can simplify the affiliate link process
  • How library patrons’ interests in digital books have changed
  • What authors are saying about their writing income in a new anthology
  • Why mainstream, all-inclusive ebook subscription models are implausible
  • What is the current state of the indie market’s publishing startups
  • How a gold rush, investment bubble, and business cycle will impact indie publishing

 

Links:
Question of the Week: What would you do with your $400,000 advance?

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  • Jennifer Evans

    First I’d pay the taxes both state and federal. Next, create a balanced investment portfolio including stocks, corporate and municipal bonds and a portion in a real estate and investment trust. Then I’d work my regular job and live off my salary leaving the investment money for growth. Then I’d donate the proceeds from the investments to the SMBS.

    • Laura Martone

      Wow! You’ve really thought this through… and I’m sure the boys would appreciate the donation! (Of course, as a CPA’s daughter, I should’ve included “paying taxes” in my answer – he’d be so miffed at me for forgetting that part.)

      • Jennifer Evans

        I live with a bean counter. 🙂

    • Bryan

      I can’t argue with your plan :).

  • CE Martin

    If I had a $400,000 advance, the first thing I’d do is give notice at my job, so I could have the time to start prolifically writing other materials to sell. Next, I’d invest a good $20,000 on advertising and promotional art for said advertising and my previously self-published works. My goal would be to generate as much money as I could, and would treat the $400K as a loan I might have to pay back. Until I started making money on my other writing projects, I’d squirrel what was left away for a rainy day and put my nose to the grindstone to try and make that much myself. No splurges, no vacations. Anything I spent would be an investment in my writing, and I’d pay myself just what I make at my day job now. Except maybe a new truck… I need to be comfortable when I drive, so as not to interfere with the creative process…

    • Bryan

      I like the idea of treating it like a loan :).

  • Connie B. Dowell

    First thing my and my husband’s student loans, car debt, etc. would be gone! Then, I’d set aside some for a down payment on a house, some savings, and college funds for each kid. We’d fix/replace all the things that need fixing or replacing but we’ve just made do with, and no longer have to worry about costs of prenatal care and delivery of baby #2. The rest would be career investments for both of us, plus one fun splurge. Probably a vacation. 🙂

    • Bryan

      I think you’ve earned a vacation, Connie :).

  • Laura Martone

    Y’all have had some awesome QOTW’s over the past couple months, and I’m sorry that I’ve been so remiss in responding… but rest assured, Dan and I have been listening! Anyway, I just couldn’t pass up a chance to answer this week’s question.

    But first… I have to confess that Dan and I have, until recently, been guilty of having unrealistic expectations and less-than-satisfactory outcomes, so we’ve shrunk our goals, too, and we’re much happier and more productive because of it.

    As for the $400K advance, I have to admit to having the same WTF reaction that Jim had during the show. Although I enjoyed Strayed’s book and Witherspoon’s performance in the movie (and gained some inspiration from both), I think it’s a bit irresponsible for a traditionally published author to make it seem as though that’s a paltry sum (her debts, after all, reflect her own choices) – but then again, having received my own share of teeny advances for my traditionally published travel guides, I understand how they’re parceled out over time, which can make it hard for a writer to live while trying to finish the manuscript.

    Still, Dan and I (and, I’m sure, many other indies) would LOVE to net $400K from a single book. All that said, I do believe in the overall endeavor: for published authors to be more honest about their income. And that should include non-bestselling trad-pubbed writers as well.

    Anyway, forgive my blathering; I know this wasn’t the answer (or droids) you’re looking for. So, what would I do with a $400K advance? Well, beyond paying off loans and investing wisely, Dan and I would probably use it to make improvements to our mobile writing studio (Serenity) and invest it in our books (covers, editing, marketing, etc.). And yes, we might finally be able to justify that trip to Florence, Italy, to renew our vows!

    • Jennifer Evans

      Name the day and I’ll bake the cake for that trip to Florence.

      • Laura Martone

        Mmm… cake. That alone might be worth green-lighting our grand Italian adventure. Well, the cake, and, you know, Italy itself. 😉 Anyway, thanks, Jennifer – I appreciate the support!

      • Bryan

        Cake!

    • Connie B. Dowell

      Laura, I agree that her debts probably do reflect her choices, but now that I’ve thought about it a little bit, I don’t want to assume when I don’t know much about her life. She or someone in her family might have had extraordinary medical bills during that period. From the way it was phrased, it sounded like the $400K was her ordinary living expenses, but you never know. A terrible accident or illness could have eaten up that much or more.

      • Laura Martone

        Oh, I fully agree, Connie. You’re right that we never really know the true financial situation of, well, anybody. And perhaps she did have some outstanding debts that couldn’t be helped. All I know is… I would’ve LOVED to receive a $400K advance instead of the comparatively paltry sum of $8K for each of my travel guides – and, in my case, I rarely saw any royalties or movie deals. 😉 I guess it just feels strange to say that $400K, even parceled out over several payments and partially used to pay for a literary agent and the IRS, is somehow not enough when so many traditionally published writers settle for far less. Perhaps the real moral of the story is that they should all become indies!

      • Bryan

        Good point, Connie!

    • Bryan

      When will I find those droids?! Hooray Florence! 🙂

  • Lavie Margolin

    I would speak with an accountant to determine my obligations before spending a dime as there is a large bill coming down the pike. Once that is settled, I would put a significant amount away. Beyond that, I would try to fill in and support marketing efforts as I’d like to see my royalties exceed the advance so I could grow my earnings further.

    • Bryan

      Unsurprisingly smart, Lavie :).

  • What would I do if I had a $400,000 advance?
    Well, first off, I’m gonna assume that’s from an American publisher, so that’d actually be $531844.21 in Aussie dollars.

    1) I’d pay off my mortgage.
    2) I’d use some to make up the difference to buy a slightly larger house, so my kids have have separate bedrooms (becoming important as my daughter approaches teenhood)
    3) That would probably still leave me enough to quit my job and spend the next four years producing more works that I could self-publish.

    • Bryan

      Good list, Adam!

  • Craig Lea Gordon

    Well, my key objective for my writing career at the moment is to be able to quit work and write full-time. So I’d pay off the mortage, and the rest of it would be enough to jack in the job for nearly three years. That should hopefully be long enough to never go back.

    • Bryan

      Hopefully :).

      • Craig Lea Gordon

        So when are you sending me this money Bryan?

        😉

        • Bryan

          Ha. Ha. Ha.

  • Like a lot of others, I’d pay off the mortgage, and any other debts I had. The thing with getting a lot of money like that is some people figure they can buy some expensive things. But they don’t realize that those expensive things can be really expensive to maintain too. The more expensive a house is, for instance, the higher the property taxes and insurance will be. And if someone doesn’t make the kind of money to cover those expenses, they can go broke.

    • Bryan

      “The thing with getting a lot of money like that is some people figure they can buy some expensive things. But they don’t realize that those expensive things can be really expensive to maintain too.” Good point!

  • ‪Jim and Bryan – I found an article (see link below) with an excerpt from the anthology and although pre-books Cheryl Strayed was broke, she isn’t broke anymore. It looks like Ms. Cheryl is doing just fine and living nicely off her royalty checks. I thought you might want to clear up the misunderstanding. By the way, I would use my $400K advance to pay off my kids’ debts and then I would buy a beautiful lakeside retreat to write more books.

    Cheryl Strayed Was $85,000 in Debt When Her Memoir Wild Got Published http://www.vulture.com/2017/01/cheryl-strayed-debt-wild-scratch-interview.html?mid=twitter-share-vulture via @vulture‬

    • Bryan

      Thanks for the clarification, Jerri. She must’ve just been broke when she was doing that particular book signing. Maybe one of the royalty checks still needed to clear ;).

  • Rachel Morgan

    Little Riley Grace is so sweet!

    • Bryan

      Aw, thank you, Rachel :).

  • I read the comment about her living high off the hog on the $400,000 advance and not hurting? Could it be if you declare bankruptcy, maybe you don’t have to pay any creditors back and your contracts become null and void, so it is a great way to get out of a publishing contract you don’t want and not pay back any advsnce if your book does not meet expected sales. I am surprised more traditioanl authors don’t do this. LoL

    • Bryan

      Ha, great idea, JB :).

  • Juls

    Let me start by saying I’m loving the show and the baby pics. As to the $400k advance, I thought I should mention that when Rachael Herron was a guest on the Rocking Self Publishing podcast, she explained how fast a 6 figure advance vanishes. She landed $100k+ deal (on her first try) and said her agent gets a big cut (usually 15%) and then the publisher pays you over the course of 3 years. So it ended up being just over $1k per month (after taxes) and she wasn’t going to quit her dayjob for so little money. The difference with Cheryl Strayed is that she did not have a day job and she had massive credit card debt (after factoring in all the other things that Rachael mentioned). Anyway, I could also see how $400k doesn’t end up being much in the author’s pocket over a 3 year period if the author also isn’t doing anything else to earn a living.

    As for my $400k, I would just put money in the kids 529 college accounts and replace the roof and water heater. It just isn’t that much money when you realize that kid’s college tuitions are about $300k total by the time my kids get to college. Boring huh? Maybe I would use some of it to pay a web designer too!

    • Bryan

      Not boring at all, Juls :).

  • Alas, I’ve been around long enough to know it won’t be a single $400,000 cheque. So first off I need to chart out when the money should be coming in. Then comes the tax man who will take 40% or more of each amount (made more complicated as I am a Canadian and have to work through tax treaties). Assuming a three book deal that should give me enough money to switch from having a full time job to doing some side work while getting to the writing needed to fulfill my end of the bargain.

    • Bryan

      Good thinking ahead, Edwin. Thanks.

  • This week’s question reminds me of the lottery winning type question 🙂 I’m also a complete and utter nerd, so spreadsheet time! 😀

    Taxes – presuming max rate

    $158,400.00

    Mortgage Payoff
    $85,000.00

    Student Loan Payoff
    $28,000.00

    Roof Loan Payoff
    $25,000.00

    New Car
    $35,000.00

    New Teeth
    $15,000.00

    Emergency Fund
    $20,000.00

    To Business Fund (i.e. Writing
    Stuff)
    $28,600.00

    Fun Money
    $5,000.00

    • Bryan

      Nice spreadsheet!

  • Anmarie

    Sweet Baby!

    • Bryan

      Aw, thanks :).