Now that e-books appear here to stay, the idea of publishing e-book originals, or digital-only editions of out-of-print books, no longer seems so strange. In fact, lots of publishers are trying it, from high-profile operations like Open Road Integrated Media to lesser-known enterprises like agent Scott Waxman's Diversion Books. More and more, publishers, authors, and agents are coming to think of e-book as just another format, and an e-book original, like a trade paper original, as another way to deliver content. But while the companies publishing e-book originals are in some ways in the vanguard of publishing, they also have to wrestle with the business models they inherited from old-fashioned publishing, such as the author advance.

Most e-book original publishers interviewed by PW do not offer advances, explaining that the rules in the e-books world are different from traditional print publishing. Waxman said that while he won't rule out offering an advance to the right author, currently Diversion is not giving advances. Angela James, executive editor of Harlequin's e-book original imprint, Carina Books, said something similar: "Carina Press does not offer advances, because the digital-first business model works differently."

The new business model is different largely because it works more like a partnership: the author supplies the text, the publisher pays for production, and they split the return down the middle (after the publisher recoups production costs). That's exactly how Diversion works. "We put up money for the production costs and we recoup those costs as first revenues. That seems to be the model that makes sense in the nascent business at this time," said Waxman. Open Road, the most visible publisher of e-book originals, also works on a 50/50 profit share, offering no advances. James said that in exchange for sacrificing the advance, Carina authors get "increased marketing support, higher digital royalties on cover price, and more frequent royalty payments."

Only Richard Curtis, the agent and E-Reads head, appears to be doing anything different. The backbone of E-Reads is its catalogue of backlist titles from many well-known authors, especially of genre fiction, though E-Reads publishes some originals as well. For the most part, Curtis uses the above profit-sharing model for his e-books, but he has begun to offer advances in some cases.

Curtis frequently shops for rights to out-of-print books, buys them, and brings them back into print as e-books through E-Reads. In trying to build the E-Reads catalogue, Curtis found that agents were reluctant to part with rights to books without money up front. According to Curtis, "I'd contact agents and ask them if they had any backlist titles that they'd recovered from publishers, and they were reluctant to offer them. Since I'm a literary agent, I realized that model was unfamiliar to them. The thing that they would understand most easily was advances." Right now, Curtis offers small advances that are, according to Curtis, "still in hundreds of dollars but flexible, and for the right author we've been known to pay a good deal more than that."

Curtis said that he sees advances as incentives in what is becoming an increasingly competitive marketplace, where authors and agents may withhold e-book rights when they sell print rights in order to get a better deal for the e-book. "The e-book industry has been moving toward an independent marketplace for e-book rights separated from print rights, the way authors and agents reserve audio rights and movie rights," said Curtis.

At this point, e-book deals are necessarily experimental—no one in the business can say how things will shake out. For now, though, partnership agreements are the way to go, though we'll have to see if Curtis's advances lead him anywhere others want to follow.