Advance against royalties

An advance against royalties is "a payment made by the licensee to the licensor at the start of the period of licensing," to be "offset against future royalty payments," also called a guaranteed minimum royalty. The article's book example: an author licenses a book "in return for 5% royalties on sales of the book and a $5,000 advance," receives the $5,000 at once, and "royalty payments would be withheld until $5000 in royalties" have been earned; "after that point the 5% royalty would be paid on any additional sales." The clause worth knowing: while some industries demand "repayment of any advance that is not covered by royalties," "in others (e.g. book publication) this practice is unusual."

For the novelist the advance is the traditional publisher's opening bet, negotiated by the literary agent a query letter wins; self-publishing trades it away for per-sale royalties, the choice mapped in publishing paths.