Sarah Palin Book Income Update

Why is Sarah Smiling?

Publishers Weekly just came out with its list of the best selling books of 2009.

For all of you readers out there who thought that Going Rogue by Sarah Palin was a joke, the joke is on you.  Sarah’s publisher, HarperCollins is laughing all the way to the bank. And so is Sarah.  Yes. Going Rogue was the #1 non-fiction best-seller of the year. It sold 2,674,684 copies. Nobody else came close.

Ask The Agent made an educated guess that Palin received a $6,000,000 advance for the book.  Truthfully, we were blowing smoke. We have no idea what that advance really was. But for comparison, it was reported that Senator Edward Kennedy’s received  an $8,000,000 advance for his autobiography, True Compass. It was  #5 on the non-fiction best seller list selling 855,843, about a third of Palin’s sales.

Now that the sales are in, it is a lot easier to calculate how much Palin actually made on the book and how well her publisher did.

Whatever Palin’s advance was, it was an “advance” against royalties. Royalties are based on actual sales of a book. An author doesn’t receive royalties until the advance is “earned out”, i.e. royalties exceed the advance that was paid. Typically the royalty rate is 15% of the list price, which, in the case of Going Rogue, was $28.99. So Palin made $4.34 on each book or a total of $11,608,128.56. Not bad for a book she didn’t even write.   She may have paid some of this out to her hack ghost writer. We don’t know how much, but $1,000,000 would be a lot for this kind of work. And shabby work it was!

But  wait! It gets even better. The numbers we are talking about are for US sales of the hardback version only. It doesn’t include the following: world English sales, translations, e-book sales, electronic apps, movie options, audio books, condensations, serializations, and merchandise (calendars, t-shirts, mugs, video games, and posters). And let’s not forget book club sales. And the Conservative Book Club is a huge driver of sales, frequently in the seven figures. We don’t know these numbers and probably never will.

But wait! It gets even better. Those numbers are only for sales in 2009.  Going Rogue is still a best seller juggernaut. Her Amazon ranking is (as of today) #266 and her Kindle ranking is #573. Trade and Mass Market paperbacks will be rolling out sometime this year. By comparison, the best-selling non-fiction trade paperback in 2009 was Glen Beck’s Common Sense selling over a million copies.  Assume 8% royalty on a $16.00 paperback (that is conservative), Palin stands to reap another  $1,250,000 plus change on these sales.

Feel sorry for the publisher, HarperCollins, for shelling out all that dough for royalties? It’s ok. Don’t worry. Let’s look at publisher costs. Typically a publisher will receive about half of the retail price of a book which would be for this book $14.47. HarperCollins out of pocket costs would be approximately $3.00 for preproduction (editing and the like), $2.50 for manufacturing, and $2.00 for marketing. Add to this Palin’s $4.34 royalty. The publisher’s profit  should net out at $12,383,786. (This does not account for publishers fixed overhead costs). And they also stand to make lots of money on continuing sales, paperback sales and other subsidiary sales.

I wish I was Palin’s agent. Let’s see….15% of author’s net income. That’s $1,741,219 and counting.  Sweeet!

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What Was Sarah Palin’s Advance?

Everyone in America is asking today what was Sarah Palin’s advance for her book, Going Rogue. We can’t say for sure, but we can calculate a range by applying some reasonable assumptions. Alaska reported that during the final six months of Palin’s governorship she received a “retainer” of $1,250,000 for her book from Harper Collins, her publisher. Let us assume that this was simply the first payment of an advance to be paid in several parts. Typically an advance is determined by the projected royalties on the first printing of a book. In the case of Palin’s, the print run was 1,500,000. Royalties on hardback books vary from 10-15% of list price. They can be even higher for some blockbusters. Let’s assume that her per book royalty is 15% or $4.35 per book. This would give us an expected advance of $6,525,000.

Another metric that we could use is the estimated number of equal payments that are made for any advance. Typically an advance is divided into a number of equal payments which are made at certain benchmark times. Smaller advances are usually in two parts. Larger ones can be in three. Very large advances can  be made in four parts. Since Palin’s advance is clearly very large, we assume that the reported advance was the first of four payments. This would give us an estimated advance of $5,000,000, similar to the previous estimate.

Of course, the normal economics of publishing don’t really apply to deals of this size. So my calculations would have considerable uncertainty.  The rumored amount on the street when the deal came down was $7,000,000.