Nathan Bransford, Author


Tuesday, November 24, 2009

The Economics of Publishing

I'm out of the office for the rest of the week for Thanksgiving, but wanted to dash off a quick napkin calculation related to a post I linked to on Friday.

Some people were shocked by Lynn Viehl's very revealing and incredibly generous post about how she only earned $24,517.36 after taxes and commission on her mass market NY Times Bestseller TWILIGHT FALL. In the post she also estimated the publisher's gross at $450,000 and guessed the net profit to be something around $250,000. This raised some eyebrows - how could publishers make so much and the author earn so little?

Well, my math is a little different. According to Amazon the list price of TWILIGHT FALL is $7.99. Discounts to booksellers vary and that's not information agents are always privy to, but since this is a rough sketch let's just say they're 50% across the board. For the purposes of this post that means that for every net copy sold (i.e. actually sold to consumers) the publisher receives around $4.00 and the bookseller receives $4.00.

Unit costs (i.e. producing the actual book) also varies anywhere from $0.75 to $3.00 depending on the format, quantity of the print run, etc. Since this is mass market let's say that unit cost including shipping and warehousing is around $1.50 per book. Again, just a very very rough guess.

So we're down to $2.50 per copy for the publisher. Lynn says net sales so far are 61,663, so according to the napkin the publisher is around $154,157.50

Lynn says she received a $50,000 advance, so the publisher stands at (approximately) $104,157.50 on the title.

Pretty good! This is a bestseller after all.

But you have to deduct all marketing costs (ads, sending out copies for review, bound galleys/ARCs if any, co-op), other production costs (cover, seasonal catalog, etc.), and overhead (salaries, health insurance, rent, etc.) before you get to the profit.

How much does all the rest of that cost? I don't know, I'm not a publisher. But my guess is that all adds up to a pretty good chunk. And let's not forget that historically most books don't earn a profit and those have to be paid for as well.

At the end of the day, on all books that turn out profitable the publisher is going to earn more of the profit than the author barring a revenue share type of model where the author isn't paid up front. After all, they put up the advance and the production costs, and the risk on any given book is exclusively theirs - while of course a book not selling can hurt an author's career, they don't have to pay back the advance or the amount the publisher lost.

But publishers aren't exactly raking it in either.






245 comments:

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DG said...

Nathan,

I guess I don't really understand what constitutes a bestseller. I would love to sell 61,000 + of anything I have written, but 61,000 doesn't seem like a lot of books when you consider the likes of Dan Brown, Meyer, and Grisham. What am I missing?

Tami Boehmer said...

This confirms my decision to self-publish. I am hoping I can show I can sell a book on my own then see if an agent and/or publisher will take a chance on me.

karen wester newton said...

Wow! Those numbers illustrate how small book publishing is as an industry when compared to movies, TV, and music. I guess that's why success at the level of J.K.. Rowling or Stephen King is so heartening.

Nathan Bransford said...

dg-

Those are on another order of magnitude.

Nathan Bransford said...

Also, it would be great if editors or publishers would chime in as they have better access to these kinds of numbers than I do. Please feel free to correct my math.

Thermocline said...

Napkins are the new vampires.

Jean said...

Thank you. That makes a lot of sense. It's easy to let the numbers blow one away without taking the time to think of all the costs behind making a book. We writers think, 'Heck, I poured my blood, sweat, and tears into that book. That's my baby and I should be rich if it's doing well.' It's easy to forget how much mula the publishers have to put into it just to get it out there.

Thanks again, and happy Thanksgiving.

Jean

Nathan Bransford said...

I should also point out that the margins all around are better for hardcovers, which is one reason why publishers are having heart attacks at facing the prospect of the $25 hardcover era coming to a close via e-books and future deep discounting.

Sophie Playle said...

Thanks for helping to put this into perspective.

"But you have to deduct all marketing costs (ads, sending out copies for review, bound galleys/ARCs if any), other production costs (cover, seasonal catalog, etc.), and overhead (salaries, health insurance, rent, etc.) before you get to the profit.

How much does all the rest of that cost? I don't know, I'm not a publisher."


I work for a publisher (thought it is an academic publisher, not a fiction one), and I can tell you, that stuff costs a lot. Some of the cost estimates I have seen for books range from £10,000-100,000.

You also have to take into account the salaries of the people working on the books. This includes the assistants, the publishers, the desk editors, the designers, the proof readers and copy editors... The list could go on.

I'm all for authors getting paid what they deserve, but sometimes I think it's easy to lose sight of all the costs that the publishers have. And the publishers are there to make the book the best it can be - they are not the enemy.

Kristi said...

It's sad that a best-selling author is not making much more than minimum wage on her book. I guess that's why they say not to give up your day job too soon.

Happy Thanksgiving!

Niki Papadopoulos said...

This looks about right. Try adding $1 average per book for marketing costs. That brings you to the mid five-figure range for publisher profit. Then you need to add distribution costs (oh yeah, we pay those) as well as paying a fraction of the salaries of the editor, publicist, project editor, copyeditor, proofer, interior designer, jacket designer, marketing staff, hundreds of sales reps, rights and licenses team, accountants and royalty specialists. At the end of the day we do it for love and free pretzels.

Nathan Bransford said...

Thanks, Niki!

Layne said...
This comment has been removed by a blog administrator.
Anonymous said...

Guh. That is just sad, sad, sad. I must be utterly INSANE to be pursuing publication.

Nathan, what about the days of the 100k print runs for a romance? And those going into second printings? What do you think the #s looked like then as opposed to now?

Nathan Bransford said...

anon-

You could use this basic formula for just about any mass market title.

Mandajuice said...

This merely fuels my conviction that the only good reason to write is because you can't NOT write. God help you if you're in it for the money.

Josin L. McQuein said...

Nathan,

Sort of still on what you blogged about yesterday, but --

Do you think that publishers might try the same strategy as Disney does now with its DVD's? They give away a free digital copy inside each hard copy sold - that would certainly make it easier for people to maintain their current reading lists if they buy an e-reader down the line and don't want to purchase another copy of the same book.

Mark Terry said...

Just a tiny footnote. My brother, a music professor, and I have this discussion all the time--our perceptions of scales. Although we're often hearing about pop and rock stars selling millions of copies of CDs/albums, with a few exceptions in the jazz market, 20,000 copies sold is outstanding, which is why they actually make their living performing, rather than through recordings (something that is coming back for many rock/pop musicians as well, apparently).

There's a tendency for all of us to look at bestsellers--and by this I don't necessarily mean Lynn Viehl, but the brand name authors like Grisham, King, Dan Brown, Mary Higgins Clark, et al., who ROUTINELY sell 500,000 or more books in hardcover (and that's a lower number). If you actually get a chance, however, to analyze bestseller hardcover sales, once you get away from the top 5 or so, the numbers sold drop significantly. So #1 (Mitch Albom, for instance), might sell 4 million in hardcover; #2, (Janet Evanovich?) might sell 1.4 million; Stephen King at #3 might (depending on his pub schedule and the book) might go for 1.0 million;, etc. But as you follow down the list you might find that #7 or #8 or #9--and this is in hardcover--are actually selling something like 250,000 or 350,000 in hardcover. Now, not peanuts, for sure, and the fact is, they often will sell millions in mass market paperback and foreign sales all over the world if they're the top sellers, but the numbers below, say, #5, are often very, very different from #s 4 through #1. And I say this based on reading Publishers Weekly and several other sources over the year, including USA Today's little pie and bar graphs.

Katy Cooper said...

Today I decided to calculate how much I made an hour, writing one of my books. I'm coming up with $0.07 an hour. Which was paid out over a few years.

So, seriously, don't do this for the money...

Bane of Anubis said...

Yeah, 'raking it in' and 'publishers' don't usually fall into the same sentence :)

The Daring Novelist said...

The margins may be lower on eBooks, but the unit costs are lower too. We are also entering an era where promotion and marketing are already shifting quite a lot from the expensive models of the past.

I think the web is already giving us a new pulp era - cheap and cheezy amateur reads. Maybe opportunities and audiences on both the web end and the traditional publishing end will finally converge in to a new model soon.

As a reader, I'm really looking forward to the return of a healthy midlist.

Rebecca Knight said...

This is very helpful, Nathan :). I felt those numbers were a tad off when I read that post earlier this week, so this helps shed some light.

Also, I hardly think $50,000 a year for a book is minimum wage, guys. That's a nice living above the average household income in the US. I'll take it :)!

Anonymous said...

One other factor that might be of interest. Viehl's royalty statement indicates 8%, or approximately 64¢ flat unit percentage for domestic sales. Okay. The publisher's not giving out any proprietary business information doing it that way, rather than, say, a 10% royalty on actual revenue.

However, with what's given, there's a way to check-guesstimate actual unit revenue. Assuming an average revenue per unit of $5.45, 64¢ is roughly 11.75%, which is not out of proportion to average royalty earnings for an established author. At $4.00 unit revenue, though, 64¢ is 16% royalty.

Otherwise, the napkin numbers are as good as mine plus or minus a few percentage points here and there, good enough to make valid assumptions and conclusions.

Also, it's worth noting that Penguin Group represents 60 plus imprints.

Jacqueline said...

Nathan, I guess we are in the discount era, just recently I saw S.Meyer Saga at Ross (dress for less) and TJ Max, discounted 50% off their original price, next to a ton of other YA titles.
Now, didn't she get 50K advance? that adds up to almost 75K, and that's not so bad.
Happy turkey day everydoby!

Jean said...

Josin,

ThomasNelson does give away ebook versions of some of their paper versions. You buy the book and you get the ebook too.

:)

ajcastle said...

EEEP! Good thing I'm not doing this to make a fortune!

Robin Miura said...

Thanks for taking the time to further illustrate this, Nathan. Many publishers are struggling these days (especially those working on the author-advance model), and it's helpful for writers and readers to have some background knowledge of the costs involved in book production. Sophie said everything else I would have added, so thanks to Sophie as well.

Have a great Thanksgiving.

sex scenes at starbucks said...

I wonder how publishing is faring in England, where a certain friend who has a book selling pretty well over there claims hardcovers are all but dead in the UK.

Examining their methods and profit margins might make US publishers rest easier. Or go into convulsions. Not sure.

Sissy said...

Thanks for the explanation. I wasn't quite getting it either.

sex scenes at starbucks said...

And happy Thanksgiving, Nathan and everyone!! Gobble gobble.

Anonymous said...

I love napkin logic.

Robin Miura said...

Whew--I think 10 more posts came in in the time it took me to type and send mine. You're a popular guy as usual.

As an author said to me this weekend, "I've got to look at any money I make from this [first novel] as gravy. I'm doing this because I have to do it for me, not because I'm trying to get rich." Which doesn't mean that authors shouldn't get their fair share, but there's a lot to consider.

Anonymous said...

Well, it is the publishers taking most of the monetary risk. They buy the ms. and pay to have it produced into a book. yeah, the author risks all their time writing something which may or may not prove profitable in the end, but they're not spending actual $.

So, if you want complete control, self-publish. Otherwise, you give up most of your profits to a publisher. That's the game.

Derek said...

Her publisher is Onyx, which is a unit of Pearson (NYSE: PSO).

Pearson margins are around 7%, so out of a book with a wholesale price of $4 they would make 35 cents per book.

The author, by contrast, is making 64 cents per book.

Kristi said...

@ Jacqueline - I didn't see that the author got 75K unless I read it wrong. I thought she got the 50 and then after costs, she ended up with the 24K as take home. If she got 75K, that's a different story - and slightly less depressing.

Anonymous said...

What that says to an author is it pays to be--what's tht word that starts with a P that means lots of output--prodigious?

It pays to get as many advances as you can, cuz those might be the only $ you ever make.

Also, going forward one has to ask themselves, if you have the ability to move thousands of units on your own via Amazon, AND pay to have a mmpb produced that can retail for $7.99 and not $14.99 like a tradeppb, you may actually make more $ going self- rather than traditionalyl published, even though you'd be reaching a smaller audience.

So, business-wise, you have to ask yourself--is my goal to make money, or to "get published"?

Because the tradiotinal system isn't necessarily the best way to profit from books anymore.

Susan Quinn said...

It seems like nobody is making any money in this business (authors, publishers, agents).

It's discouraging, but reminds me of one of Nathan's posts about being thankful that you can write (i.e. if you're writing, it means you have a roof over your head, are generally healthy, if slightly demented for wanting to be in the business).

But the lack of monetization does bring home the question: How can the industry can survive?

Lots of writers feed the creative pipeline for free (or a pittance once published). Agents can only afford to take on writers that have a hope of making real money (right?). Ditto publishers.

Everyone in the business seems in it because they love the stories, the literature, but while this might be a hobby for many writers, it has to be a business to survive.

Where are the equivalent of Literary Think Tanks - not for the craft side, but for the business model side? Where are the economists when you need them?

Anonymous said...

Nathan,

How open are publishers to a shared revenue contract these days?

Is it only for established sellers? Seems like if an author has real confidence in what they're writing, that's what they'd suggest. And they'd make more $ in the long run.

But it's tough to pass up an advance, to be sure.

~The Anonymizer

reader said...

Did I miss something? I must have. I need to go back and re-read the article. It sounds like she's best seller for a paperback mass market original -- that sells for 7.99.

What publisher gives a 50k advance for a paperback? It must've come out in hardback first and then papberback and THEN mass-market papberback and she only made 2k in royalties?

I'll shut up and go re-read...

(Happy Thanksgiving, Nathan!)

Mira said...

Well......

Although it's interesting to see how much a publisher may or may not be making, there are a few points here I don't agree with.

I don't believe the publisher deserves such a huge margin of profit just because they take risk. That's the nature of their business: it doesn't entitle them to pay the author minimum wage.

Are other employees that work at the publisher paid minimum wage?

So, basically, this still doesn't change my mind that the writer is grossly underpaid.

I also want to reiterate my point that unless the publishing industry is willing to share their financials with me, and ask my advice on all business decisions, it is not my concern how much they are or are not making. It's their job to run their business - they haven't delegated that to me.

If they would like to, my e-mail is on my profile. I'll be happy to take over. I bet I could find a way to pay the author more, and still have a viable business.

If you want to make a living off of someone else's work, pay them what they are worth.

Nathan, I'm truly sorry if this drives a wedge between us. I hope it doesn't. But I'm not budging on this one.

Anonymous said...

"So, basically, this still doesn't change my mind that the writer is grossly underpaid."

But, Mira, the autor doesn't have to sign the pub's contract. No one holds a gun to their head and hits them with a monkey wrench so that they are bleeding all over the contract, fearing for their life when they sign, do they?

Self-publishing is an alternative if you want total control. And there are even small pubs who may be more flexible than a NY House in terms of contract terms. So in the end, it's up to the author.

Anonymous said...

I think also about industry comparisons.
Music studios used to be these very expensive operations. Now they are all done on a computer.
Hell, there doesn't even have to be a band.
I think publishing is going to have to get smarter or, as Nathan puts it, more efficient.
Maybe everyone in the biz will become a compartmentalist or freelace dog. (And someone has already named you Nate-dog. Always ahead of the game, Nathan.)
Books will bid on by the moneyman publisher. There will be a book manager. That person will take bids for editing, bids for cover art, layout design, marketing.It will be horrid because no one will make any money as they lose their salaried positions. Books will be printed POD and electronic. Wallymart and China will probably sign up to do the bankrolling. Happy mass market profits for BIG money, tiny margins of life sustenance for everyone else.
But if it sells a movie and you can dance to it, yahoo! Then we all get to go to the prom with Edward.
*(see word verification)

But, the idea of keeping a multi-million dollar building going will become obsolete for publishing.It will just be a control board in someone's spare room.

The FUN is going to be in the hands of the small publisher who rubs her hands together and conspires with an author over a 500 print run.

And, of course, I can't see any way around that we will be keeping the agent-publisher luncheons, writing conferences,and the cocktail hour (or day).

Sadly, in the art community, where one-of-a-kind is King, it is STILL considered the ONLY true King. Any production at all is still thought by way too many (art dealers anyway)of as: NOT ART, not REAL art. If artists could hope to make a nice cup of coffee off of a 500 print run, we would be dancing in the streets(if not at the prom with Edward).

The good news will be that we will see things like editing services, etc. become competitive. Someone who wants to roll up their sleeves and outbid someone else who gets a good reputation will make their own way, no doubt.

I gave away a few cover arts for projects I believed in that were too poor to pay a dime, but then they were fun projects, I was appreciated, and people remember me for other (hopefully paying) projects too.

*see word verification:
word verification: undgierm
(undergiethumb, the publisher who once had me down..)

Diana said...

Yes, Nathan. When I was researching the publishing industry before I started my micro-press the one thing that I read over and over again is that the publishing business doesn't make very much money. Someone went so far to say: "If you want to make a LITTLE money in publishing, start with a LOT of money."

Mira said...

Anon,

The only way to get your book in a bookstore is to go through traditional publishing.

This is called 'cornering the market' (I don't actually know if it's called that. Maybe there's another term), and it's what allows the current system to continue. Authors have no real choice if they want to reach the bulk of readership.

However.

E-books change this. The author can by-pass the publisher all together and go directly to the bookseller.

That's why the paradigm is shifing.

Kimberly Pauley said...

We've been discussing the other end of this (the author end) and I and two other YA authors have posted some royalty figures in the spirit of being open and sharing information. Take a look at: http://kimberlypauley.com/2009/11/21/a-challenge-for-my-fellow-authors/

Ellen Hopkins numbers, in particular, I find very encouraging.

And I do agree with Nathan -- the publishers aren't raking in the money. But NO ONE is in this business just for the money (or rather, they shouldn't be). You write because you're a writer. And all the people I know in publishing are in it for the love of books -- they work incredibly long hours for little accolade.

Nathan Bransford said...

mira-

As anon said, if an author wants to assume the risk and cost of producing books themselves they're welcome to do so.

I'm not sure what kind of a model it is you're proposing. Publishers are already essentially subsidizing the majority of authors and paying them more in advances than what their book earns them back. For the minority that earn back their advance publishers still give them what amounts to 20-30% of the profits, in addition to the advance they've already been paid.

I wish there were more no-advance/50% profit sharing options out there, but then, lots of authors would rather take the up front cash.

Nathan Bransford said...

Thanks for sharing, Kimberly!

Donna Hole said...

Call me cheap - er affordable - but if I netted $24,000 off the sales of one book I'd be pretty excited. Then the IRS would come knocking at the door and I'd be like, wow, I didn't make THAT much!

The napkin breakdown was close enough to convince me I'll quit my day job when all 15 (you know, dream big) of my bestsellers are producing income.

Thanks Nathan.

Vegas Linda Lou said...

This only reinforces how happy I am with my decision to self-publish. Thrilled. At some point, yes, I'd like to get the attention of a big publisher. But in the meantime, I'll take the $7-10 profit per book and enjoy the retention of my rights.

Anonymous said...

"The only way to get your book in a bookstore is to go through traditional publishing."

Mira, that is patently false. Amazon is a bookstore. If you mean ",,,the only way to get your book in a PHYSICAL bookstore..."OK,
but how important is that? Is your goal to make $ selling books or to get books into physcial stores?

Many writers have lost sight of the business purpose of writing books--to sell them. who cares how it's done, as long as you move units?

Anonymous said...

Hi Mira,
I think e-books are the new Vampire.
All for them. Can't wait for picture e-books.

I think the marketingdog is going to be (continue to be) essential, bookstore or internet or whatever, u-tube, etc.

Sadly, I still think way too many self-pub books are way too expensive for writers and way way too amateurish.
I got handed one today.The first thing my husband noticed was that the page numbers were all screwy. I hadn't heard of the publisher, so I googled them, and guess what, it was a made up name and its supposed to disguise that it's self pub.But googling it took me to the author's webpage and here I found a writer who is really,very interesting. But, wow, he could have should have used an editor, a professional layout, and a marketing firm. I doubt his friends and family are keeping him fed with their purchases (his friend gave it to me).
But he DID make a killing when someone knocked off his character for a Hollywood thingy thinking an unknown writer wouldn't sue.
And there again, you need your Nathan.
-Anon 12:16

Donna Hole said...

Mira: in order for an Author to get paid what they're worth for the time and sweat put into a novel, the public has to be willing to "pay" a lot more for a book.

From the comments in here alone, especially for e-books, I think that publishers are selling at what the average consumer is willing to pay. Just my 2pennies on the subject.

......dhole

Anonymous said...

"Authors have no real choice if they want to reach the bulk of readership."

where do these misconceptions come from?

It's almost the other way around these days--you're at a disadvantage with a traditional pub. Are there still any brick & mortar stores left?!

Not for long. Pretty soon people won't even be able to afford the gas to drive to 'em, amd cities won't be able to afford to maintain roads anymore. get ready.

Marsha Sigman said...

Well there goes my rowdy drunken trip around the world on the proceeds from my first novel.

Not to mention my mansion...my new Lexus...and a certain pool boy named Juan.

Thanks a lot.

Mira said...

Nathan,

Well, self-publishing means no access to bookstores.

I'm confused though. How are the successful authors getting 20-30 back? I thought it was a 10 percent deal...? Is there something I'm not seeing.....?

My proposal?

What I would like to see is the author given a number of options from which to choose. Which would the author prefer:

20% of profit with full advance,

35% of profit with half advance,

50% no advance

Frankly, I don't get the advance thing. How does it benefit the publisher?

also, I know this is a different topic, but I still believe that if the majority of books don't sell out, that's a real problem that needs to be addressed.

Anonymous said...

"But he DID make a killing when someone knocked off his character for a Hollywood thingy thinking an unknown writer wouldn't sue.
And there again, you need your Nathan."

Literary agents do not have the ability to sue. Attorneys handle lawsuits.

Mira said...

To all the people who are saying that e-book self-publishing gets you access to Amazon, I know. And I'm very happy about that.

I'm talking about brick and mortar, and the paradigm in the past.

Anonymous said...

"20% of profit with full advance"

LOLOLOl

And I want people to give me free money!

Anonymous said...

"To all the people who are saying that e-book self-publishing gets you access to Amazon, I know. And I'm very happy about that."

Mira,

You can sell any kind of book on Amazon, not just ebooks.

Nathan Bransford said...

mira-

Because the publisher only gets 50% of the list price. Let's take a $10.00 hypothetical book where the author has a 10% list royalty. Publisher gets $5.00. Author gets 10% of $10.00, or $1.00, out of the publisher's share. So, $1.00 represents 20% of the publisher's cut.

I definitely agree that there should be more options along the lines of what you outline there. But it's not so far off from the current landscape, except that there are only a couple of publishers offering the no advance model. I'd like to see some more, particularly for authors without a substantial platform or existing audience.

Anonymous said...

Hi Anon 12:37

No you still need lawyerdogs too.
But your Nathan will probably be holding your hand and telling the lawyer what to do and many agents are lawyers. Cool: Multi-tasking dogs.

Anon12:16 and now 12:33
(not the other anons)

Nathan Bransford said...

anon@12:37 is correct. While I wish I could sue lots of people sadly I don't have the necessary degree.

anon@12:39-

You laugh, but that's basically what exists right now (see my last comment).

Nathan Bransford said...

anon@12:41 is also correct, in that I would be there every step of the way and connect my client with the right publishing attorney and facilitate the whole thing.

Anonymous said...

Well there goes my rowdy drunken trip around the world on the proceeds from my first novel.

Not to mention my mansion...my new Lexus...and a certain pool boy named Juan.


I'm going to get a beer and join Marsha Sigman at the bar. (I was looking forward to having a poolboy too.)

Anonymous said...

Sounds like someone's been drinking the "most books aren't sold through bookstores" punch.

Most books aren't sold through bookstores because most books are academic texts and manuals. Most NOVELS are still sold through brick and mortar buildings. (Wal-Mart being a BIG part of that, so also not a bookstore.)

Even the big names only average 5-10% e-sales compared to their physical sales (to the embarrassment of a few blogs and predictions that jumped the gun when Dan Brown was racking up e-sales on day 1 of The Lost Symbol. At the end of the day, and week, and month, the averages held, even for the big boys.

It's usually vanity presses that spread the "bookstores are worthless" manure, but they don't give the whole picture. A front table display in Barnes & Noble is a lot more eye-catching than an icon on Amazon, and most of the sales on Amazon are for books readers have seen displayed in real stores, but want a discount on. They go to Amazon, type in the specific title and buy only that one book.

In a bookstore, people browse.

Anonymous said...

(this is more fun right now than writing about that angsty vampire over on nanowrimo)

Marilyn Peake said...

A couple of nights ago, I watched a fascinating interview with Nomi Prins, a former Wall Street manager, in which she talked about her book, It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street. She made some really interesting comments about how large financial institutions operate today. She compared it to a shell game – while large financial institutions tell us: look over here, this company’s in trouble ... look over there, that company’s in trouble ... the large financial institutions themselves are making extraordinary profits.

I think the publishing industry is similar. As of 2004, only 5 corporations (as opposed to 50 corporations in 1983) began controlling most of the U.S. media. Every quarter, an INCREASE in profit must be achieved in order to realize an increase in stock price. In order for that to happen, profit either has to increase or costs have to be cut. People at the bottom of the corporate hierarchy – including writers, literary agents, and individual publishing companies owned by the larger corporations – will be placed under enormous pressure to increase profits or run the risk of having their company closed. Making billions of dollars (over $100 billion for one of the large companies) was and continues to be the goal. Here’s an interesting Media Ownership Chart.

Nathan, you said, "... publishers aren’t exactly raking it in either." Using Penguin as only one example, Penguin is owned by Pearson PLC. According to the Pearson PLC Profile, Pearson PLC’s overall sales for 2008 amounted to $6,963,000,000.00 with a net income of $467,500,000.00. And here’s information on the annual earnings of their top executives. People are definitely raking it in.

I plan to continue to write and hope to be successful, but I have no illusions regarding the new financial playing field in which I’m working as a writer. The goal of parent companies is to shuffle around money to protect their own profit, and to make sure that profit increases each and every quarter so that their stock prices will go up.

Mira said...

Nathan,

Um, okay. Thanks for the math lesson. :)

Well, I'm glad we agree about the options, and the assumption of risk by the author. It's nice to agree again.

A side benefit might be the author's motivation to market could go through the roof - as might the agent's contribution - if profit margins were higher.

Although.....I'm a bit concerned about the 50% the bookstores are making. Not sure why bookstores are making so much of the profit either.

I'd like to see a 30/30/30 split.

Anonymous said...

I've self-published and flogged the books to retailers. Local or regional nonfiction topics do comparatvely well at boutique bookstores, bait stores, tackle shops, notions and novelty stores, convenience stores, coffee shops. Sure there's a lot of flogging going on, but then the purpose of flogging is to broaden access and generate buzz to increase sales.

One thing, some of the bookstores required an ISBN and insisted on a return/remainder policy. Wasn't a problem for me. I also did point of sale displays that were potent attention grabbers. I netted a 50% profit return from one title distributed county-wide.

Mira said...

Marilyn,

I continue to be impressed by your research.

Anonymous said...

Gee Anon, 12:54, maybe I should get my beer and go sit with you.

(this no getting to have a poolboy someday is getting rather depressing)

Mira said...

Oh, I was serious about the math lesson. I had to read it 10 times before it sunk in and I figured out what you meant.

Anonymous said...

But Mira, take heart.
We are all on this learning curving corner together.
And you have the nicest changing pictures.

Anonymous said...

Yup, what it come down to is that most writers are lazy when it comes to business and they want some magic "publisher" to make a living for them out of what the write. But that means your terms are up to someone else.

Writers will need to be more enterprising going forward, depending on themselves more than a publisher.

Soon the only B&M store left will be B&N. But books are sold in more places than just bookstores, as the above poster pointed out: coffee shops, Big Boxers, specialty shops by subject matter. But overall, I think in 10 years the lion's share of books will be purchased online.

Ink said...

Marilyn,

Yeah, but the big media companies aren't raking it in because of books. Books are the poor cousins. The poor poor poor poor cousins. The big media companies frown at the publishers and wonder why the can't produce better results.

The basic fact is that publishing was never very profitable. But the people who owned the publishing companies had money and believed in the task itself - producing books. If they made some money, great, that's a nice bonus.

But the Media Corporations' acquisition of publishing does put a strain on the industry - Increase! When maintaining modest gains is likely more appropriate.

Anonymous said...

I still see the agent-NY House -B&M system system as being important, esp. for established authors and bestsellers. The change I do foresee will be with new writers, where increasingly Amazon will be the new filter. In the past the publishers had the "slush pile" as a filter, then came the lit agent qury process. Now that that's about saturated and on the verge of inefficiency, I see Amazon as the new filtering process, whereby new writers will need to prove their worth by selling a few thousand copies online. Those who can do this will be recruited by the agent-NY House system.

Anonymous said...

At the first "big boy professional writers critique group" I ever attended, a LOT of folks were getting up and saying that their aspiration as writers was to be RICH and FAMOUS writers.
I stood up and said:
I would like to be reasonably well known and reasonably paid.

(with a poolboy if possible, of course)

I am still trying to find a model for this writing life, but reasonable works nicely in my opinion. I could never write 4 books a year. Never. Maybe one every two years. That would keep it fun and interesting.

Ink said...

Mira, you're killing me. Bookstores can't survive at 50% and you want them to only have 30%? Ouch.

I mean, there simply isn't that much money in books. It would be great if writers made more. But producing and selling books costs a lot of money. You really seem to underestimate the value of what everyone else does in the process. I know, I know, without the writer there's nothing to sell. But without the publisher and bookseller no one reads the book. And the writer gets nothing.

I mean, every industry is this way. You have to meet costs first before taking in profit. Production, distribution. And after that, profit. I can't help but feel that you think there's lots of extra money floating around, and it should be the writer's. But there simply is no extra money floating around. Books are pretty unprofitable.

Nick said...

Not like I didn't already know writing wouldn't bring in the most money in the world *shrug* I fail to see how people were shocked by it, though. I mean, Twilight Fall can't have been /that/ popular, considering I nor seven people I asked about it had heard of it. Not to say it didn't sell. It was a bestseller after all. But I thought it was fairly common knowledge the likes of Meyer, Rowling, King, etc. are the exceptions, not the rule. Even though writing is the one thing I want to do with my life and would love it if I could do nothing but write, my rule of thumb for everything I do is: Always have an exit plan.

Nathan Bransford said...

What Bryan said.

Anonymous said...

yes, sadly creatives don't function (well) (typically) without their people.

Susan Quinn said...

Ink - I agree that there isn't much money in this business as a whole. I think that underpins the entire problem here, exacerbated by an outdated industry model, which is almost like a charity, with lots of people working for/chasing very little money.

The question is how to get more money into the system. I think e-books may actually help with this, inadvertently. At lower price points, I think more units will move, resulting in more total sales.

I also am intrigued by the idea of Amazon as the new filter.

Alas, this does nothing to save our Indie bookstores. Although we have one in our area who has niched into an author wayfarer spot and general cultural meeting place for all things literary.

Anonymous said...

I can't sell art out of my studio (often enough).
If I have talent and/or training,in order to sell it, I still need:

-art materials
-time
-frames (a lot of artists don't get past that one - it makes hiring an editor look like chump change)
-an art dealer with a main street location x as many as I can get to rep me
-advertising
-show up at openings all spit polished and ready to dance the hula
-on line dealers and presence

(wow, I'm already exhausted)

oh and luck:a lucky three-leaf clover
and a beer at the bar with that other person who understands

Ink said...

How can Amazon be a filter if it simply sells everything? By itself, it would just be a giant slushpile. No? I don't see how that serves the customer. Or the writer.

Monica said...

It'll be interesting to see how the move toward ebooks and away from paper will impact the bottom line. When you take out the cost of printing, shipping, warehousing, etc. seems like that should free up more money for marketing, at least.

What do you think, Nathan? Are ebooks going to save the industry and the authors?

Anonymous said...

I, too, am both intrigued by and somewhat saddened by Anon 1:04's Amazon filter. Alas, I fear s/he is right.

Amazon is now established enough amd big enough and customer-friendly enough (with their Reccomendations and reader lists and reviews and hyper-efficient ordering/shipping system) such that a new author *should* be able to sell several thousand copies if their book has commercial appeal. it's not like the old days of "self-publishing" when you had to have a garage full of books to hawk door-to-door.

But still, not every writer is a gifted salesperson. Sill again, the phrase, as Mr. King put it, isn't "best-writing author," it's "best-selling author."

So theis Amazon filter seems a natural extension of that. The farm team to the majors, if you will. If you're good enough, you'll shine through.

Nathan Bransford said...

I think overall e-books are going to put still more pressure on publishers because they're going to drag down prices - people simply won't pay a whole lot for an expensive e-book, and if you try to charge a price that customers think is unfair you're going to lose to piracy. The savings in distribution is going to end up being passed along to the consumer, and the remaining pie will be smaller.

The only hope is that with the ease of access to books and the ability to get them instantaneously people will buy more. That's a pretty thin branch to be hanging from though.

Anonymous said...

Yes, anon 1:31, but what worries me is that Amazon's system can be gamed, too. I've already seen authors encouraging everyone to buy at the same time , kinda thing, so that they temprary spike in sales gets them an artifically high rank, and then in all future promoitions they can say "Amazon bestselling novel"...so, non-web savvy writers are at a disadvantage here.

Marilyn Peake said...

Hi, Ink,

Interesting discussion! You said, "... but the big media companies aren't raking it in because of books. Books are the poor cousins. The poor poor poor poor cousins." Well, maybe poor cousins aren’t as poor as they used to be. Here are some examples. Last year, Random House brought in $1.7 billion. In his Publishers Weekly article on 3/2/09, Penguin Posts Solid Gains Worldwide, Jim Milliot wrote:
----
Penguin Group USA posted a record 2008, with sales and earnings coming in above targets, CEO David Shanks said this morning as results for last year were released by parent company Pearson. The U.S. subsidiary was the company’s strongest performer in a year where all of Penguin Group’s territories had solid gains, said chairman John Makinson. Total sales at Penguin rose 7% to 903 million pounds ($1.67 billion) and operating profit increased 26%, to 93 million pounds, giving the company a 10.3% operating margin. A double-digit margin has been one of Penguin’s long-term goals and Makinson said it was "very pleasing" to hit the target given the difficult conditions "on both sides of the Atlantic, which only got worse as the year went on." He acknowledged that results benefited from a strong dollar, but noted that even without the currency gain revenue was up 3% and earnings 4%.
----

Ironically, Penguin published a book in 1996 entitled The Winner-Take-All Society in which the first paragraph of its summary reads as follows:
---
Disney chairman Michael Eisner topped the 1993 Business Week chart of America's highest-paid executives, his $203 million in earnings roughly 10,000 times that of the lowest paid Disney employee.

Nathan Bransford said...

marilyn-

Bertelsman brought in $1.7 billion Euros, but that wasn't $1.7 billion in profit. Their operating profit was $137 million Euros, or roughly 8% of sales. PW

I'm not touching executive pay here. If it's any comfort the highest paid authors make way more than the highest paid publishing executives.

Mira said...

Anon 12:59. Thanks! :) Yes, we're all figuring this thing out together. :)

Bryan,

I know, I'm sorry. I know bookstores are struggling. But so are writers. Writers are struggling too.

Do I think there is extra money floating around? Yes. Not in the pockets of the everyman, but yes, I think there are wasteful expenditures and high salaries and expense accounts. I'd like to see the financials. I think Marilyn makes excellent points about who runs the publishing industry. Do I think there is hidden money, not seen by writers or lower people who work in the industry. Yes. At the top.

I've seen alot of belt tightening in this economy that was due more to cost-cutting than a real need to reduce expenses. Not all, of course, but many companies can take advantage of the times.

Can't prove it, though, unless I see those financials.

Like I said, I'm willing to take over any of the big publishers I'll pay writers a larger salary and raise income at the same time. Give me a year, and I could do it. I'll just need Nathan to help me with the math.

Because, Bryan, I think the industry in general is not run well. I think the publishing industry could make ALOT more money than it's currently making now, if it would wake up, speed up and come into the 21st century.

Nathan Bransford said...

Whoops, remove those dollar signs from my comment. It's Euros.

Anonymous said...

Revenue (how much is brought in) is not the same as profit (the net gain after all expenses are subtracted from rev).

Voidwalker said...

Forget being an agent, you should have been a mathematics teacher at a college :P. J/K.

Thanks for that information. Very helpful!

Anonymous said...

In this environment, is it better for a grnre fiction author to put out 2 books a year or 1 book a year, assuming all books will be of equal quality. Is 2 books/year too much?

I just envision being able to crank out a steady stream of genre novels--not literary masterpieces, but dependable escapist entertainment.

2 per year? or is that saturating the market. Or would it be better to start out at 2 per year and then mellow out to 1 per year?

Anonymous said...

Once I sell through the 1500 copy print run of my independently published novel, I'll basically be doing as well as a NY Times bestseller. Better, in fact, when you consider that I earn $11 on every book sold.

I'm halfway there and that's based solely on pre-sales.

The current business model of the publishing industry is beyond broken. I'm glad I'm not a part of it.

Anonymous said...

Can the market bear 2 per year? that's the question. I think it's a bit much. 1 per year seems to be the accepted norm.

Susan Quinn said...

Saying Amazon is the filter is perhaps not the right way to say it. Amazon, especially if anyone can upload, then becomes essentially a free-market. Authors who hustle, or social-network in today's parlance, and move units, will rise in the rankings and get more publicity (and no I don't think this can be successfully gamed by one-day-spikes). So the true filter is word-of-mouth sales - can you generate it? Yes = notice by publishing houses; No = lingering in the Amazon slush pile, anonymous and sales-poor

I can't find the blog posting about the experiment of price vs. units, but the demand curve would give hope to lower price = more sales = more revenue overall

But are books a commodity? Perhaps not.

With margins so thin, I can see why lower prices seem like the apocalypse. Because the system will have to change as a whole for it to work.

Moira Young said...

Thank you for writing this. As Jean said, it's so easy to jump to the conclusion that publishers are raking in ridiculous profits, and authors aren't. I would rather take information like this into consideration than adopt a negative, us-versus-them mentality.

Anonymous said...

As Anon 1:51 shows, as a writer you have to ask yourself what your goal is: is it to "be published" or to make money by writing?

I'm lloking to make the most $ possible by selling what I write. I don't care who or what buys it, as long as they do. Big house, little house, direct to consumer, online, on consignment at coffee shops--anyhting and everything. whatever moves units.

This is the mercenary economy. No room for prestige. Only $.

Pump out the product, get it into the hands of cash-paying readers as fast as possible. No years-long acquisiton process, no cutting out pieces of the pie to "agent."

do you want to make a living welling your books or are you looking for some vanity feel-good accolade in the form of a NY house contract which means you'll have to keep your dayjob?

Think about it, The old system is OVER. The Amazon filter thing is an understatement if you ask me. I think soon even the bestselling authors are going to start breaking from their publishers.

Anonymous said...

"Yes = notice by publishing houses; No = lingering in the Amazon slush pile, anonymous and sales-poor"

I'm the original Amazon filter poster. this is exactly what I meant by Amazon as filter. Most books put on AMZN will languish in the effective anonymity of the >1,000,000 sales rank (some much higher than that). But for the few who can generate word of mouth from there, they will end up in the agent-NY system.

Ink said...

Lol, Mira. You do make me laugh.

But, seriously, you're gonna take an industry that has been low profit since it's very inception centuries ago and suddenly, wham!, make it extra profitable? More money for writers and stories and publishers? When every single person who has ever passed through the industry has failed to make that most drastic and profitable change work? I give you kudos for courage and optimism!

If I was a publisher I'd totally let you run it. It would be fun, at least!

Anonymous said...

I agree that, hypothetically, if an unknown author sold enough units to maintain a <10,000 sales rank on amazon for a sustained period, like for a year, that that person would be making real money at that point and would aattract the attention of the major players.

It can't be easy to do, though, or everyone would be doing it. There's no free rides.

Jess Anastasi said...

Which just goes to show if you're writing to get rich, you're definitely in the wrong business.
It's also why some writers I know chose to write category. Category romances don't pay anywhere near as much as a bestseller, but they are shorter so if you can manage to write 3 or 4 in a year you might actually make a half decent wage. Of course, writing 3 or 4 books in a year, no matter how short they are, isn't exactly a cake walk.

Anonymous said...

Yep me too Mira.
Mira The Sweet with her sweetspot titles.

If you think you can build it,I'll lend you a hammer and a saw.

In the meantime, it is a
sweet dream.

Anonymous said...

One thing I would like to add to the discussion... you need to take Lynn's original post with a HUGE grain of salt. When you get a $50,000.00 advance from a publisher you do not get to keep less than half of that. The highest income tax bracket in the USA is only 33%. The minimum the author would keep from a $50,000.00 advance is $33,500.00 which isn't a bad living.

And if your SOLE income from that year was the $50,000.00, you wouldn't fall into the 33% tax bracket. You would fall closer to 20%.

Lynn claims the missing $8982.64 is 'expenses', yet she fails to disclose what those expenses are. What could they be? What 'expenses' does an author really have? Paper? Ink? Postage? There is no way your expenses add up to $9000.00.

If Lynn took some of her book money and (wisely) went to a seminar or convention she might try to claim those as expenses on her tax return, but they aren't REAL expenses and they were not 'required' for her to write the book.

You can write books (and sell them) without spending $9000.00 a year on travel.

So, the idea that she got paid 'minimum wage' for her novel is a bit of a falicy and I suspect that most people would be able to manage just fine with that kind of an advance.

After taxes, health insurance and gas most people whose income is in the $50k range probably bring home less than $24k.

She is making it sound like she isn't making a good living, when the truth lies somewhere on the other side of that line.

Terry said...

I need to buy more lottery tickets.

Blues Greene said...

There are some fascinating parallels between what happened in the music business to what's happening in publishing now. While I too am not inthralled with the prospect of losing books as they now exist, I know when a revolution is taking place. I see tremendous opportunity for talented writers, especially those with something to say, to reach people that want to hear what they have to say. The number crunching, the profit margin, the gate keeping that exists in the publishing industry needs to be threatened. Nothing lasts forever.

Mira said...

Ink

Yes. I would.

I'm ready.

Hand me the keys.

Of course, I'm not good at business, but I don't think that's required. I'll get Nathan to help me with the business stuff.

I'll bring the vision and the courage. And the action.

Well, Nathan could bring that too, or you for that matter, but I'm the one with the key.

Hmmmm, I just thought that maybe I'm talking too much on this thread.

Well, maybe just one or two more. Hope that's okay with Nathan....

Okay, here are some things I'd do.

a. Market, market, market, market
b. Then I'd market some more
c. Put some muscle behind the 'get caught reading' campaign.
d. Hire you, Nathan and Marilyn to help me, and some other people from this blog, too.
e. Move out of New York
f. Stop advances immediately. Offer shared risk. Why invest in authors who don't sell?
g. Develop an e-book branch. Start the transition now.
h. Stop the incestous referral system immediately. Search the slushpile for darn good writing. That's all I care about. The writing. Don't care if the author is hard to work with. Don't care if they've taken a bath in ten years. The writing. That's where it's at.
i. Compensate my writers higher than the industry standard to keep them loyal, and stop the move to self-publishing. Make them feel like part of the family, instead of step-children in the cellar. Nurture them.
j. Develop a company blog and build brand and consumer loyalty.
k. Market some more.
l. Nurture my writers some more.
m. Speed up production. Book to shelf, 6 months.
n. Set up a compensation system for agents who bring me books that sell. Make them want to bring books to me first.
o. As an experiment, I'd hire writers on a full-time basis to just sit and write. Give them salaries, benefits, and a share of the profits.
p. Market research.
q. More market research.
r. Then do some more market research.
s. Gather the best minds in the industry for a summit on how to save the industry. Don't let any of my competitors attend that summit.
t. Stop the interns going through the slush pile. My best minds go through the slush pile.
u. Stop the query system. Waste of time.


I don't work in publishing. I bet if I actually worked in publishing, I might have made it to z.

Thanks for the forum, Nathan. I don't want to abuse it, I'll stop soon.

Nathan Bransford said...
This comment has been removed by the author.
Karen Schwabach said...

Kinda makes you wonder why publishers publish.

But, now, I've seen the building in Manhattan where my publisher keeps house. Those Manhattan buildings don't come cheap. They must be doing all right somewhere along the line.

Nathan Bransford said...

(more napkin math)

$50,000 advance, per your numbers means approx $16,500 in taxes. Agency commission is $7,500. That leaves you at $26,000, which is basically what she was saying.

And that's before those expenses I mentioned.

Anonymous said...

" $8982.64 is 'expenses', yet she fails to disclose what those expenses are. What could they be? What 'expenses' does an author really have? Paper? Ink? Postage?"

I concur with anon 2:20. Lynn's doing pretty well for an author. I think her point, though, was that many people assume that if you hit the NYT list that yu're going to be rich, which she is trying to show isn't the case. But she is making a living. Agree that with any job, AFTER you take out taxes and expenses like a commuute (which she doesn't have), the end results aren't pretty for most people.

For the expenses, I guess 9K could be computer equipment, Internat bill, printer ink, office supplies, maybe some travel for 'research' purposes?

Anonymous said...

Also remember that the 50k advance isn't paid out all at once. It's doled out in thirds, right? Or at least halfs. On signing, on aceptance of edits, and on publicaiton, or just on signing and on publicaiton. So it's not like wow, here's 50 grand! However, that's just the print rights. She could still sell foreign rights, audio book, ebook, film, video game, whatever else...

Susan Quinn said...

Wait, what?

I have to pay taxes on my agent's commission, and they have to pay taxes on it too?

That stinks.

Anonymous said...

Don't forget office furniture. You know she's not slaving away on some ratty alley chair.

Marilyn Peake said...

Nathan,

I’m loving this discussion. It’s fascinating. An operating budget of 137 million Euros seems pretty good, especially considering executive earnings. When the head of Bertelsmann, Reinhard Mohn, died in May of this year, he was personally worth $2.5 billion. In the third quarter of 2009, Bertelsmann AG has already managed to increase its operating budget by 14% to 284 million euros. When a company has billions of dollars to work with, they can buy and sell and reorganize until they make a profit. When larger corporations say earnings are down, it may mean temporary bad news for stock prices. It doesn’t necessarily mean the company’s anywhere near financial failure. I think the tendency of most people is to misinterpret announcements that "earnings are down" as if the company’s in real trouble and then to support all cost-cutting measures.

Anonymous said...

Don't forget "product placement" rights.

I can have my protag drinking a Dr. Depper instead of a Coke, or {gasp} a generic "soda" for the right price.

My herione could be waching CNN instead of MSNBC, for the right price.

do agents negotiate those deals?

Terry said...

Mira - I want to work for you.

Marsha - It's the Alfa Romeo for me and, hey, there's always Vegas. As for Juan, use your feminine charms.

Anonymous said...

Nothing's changed much. Writers write books and publishers try to get people to buy 'em, and the author tries to get poele to buy 'em too. Internet, yea, yea. Same ole same ole.

write 'em, sell'em, repeat.

captacha: nutrap

Mira said...

Oh. Can I add one last thing?

I'd do whatever google is doing. 3,000 resumes a day. I want the best minds and the best writers in the industry wishing they were on my payroll.

Anonymous said...

Mira,

I want money, too! can I have some?

Mira said...

Terry,

You're hired.

Anonymous said...

The economics of publishing are thin margins and an excruciatingly slow product-to-market timeline. Peripherally, the business model is under threat from a chaanging retail landscape and increased competition for disposable income (i.e. video games, music and videos on the go, Web 2.0).

If a writer can make it to franchise level, they'll be set. But for the rest, it's a tough slog up a dirty bog.

Nathan Bransford said...

susan-

In retrospect I probably shouldn't be weighing in on tax matters since I'm not an accountant. Get a good one if you're making money writing!

Anonymous said...

An author reports royalties/advances from a 1099/Scedule C income form. The publisher sure ain't paying payroll taxes, thus a 1099 for income greater than $600 per author. Scedule C is a profit/loss statement of income. Agent fees are a loss or expense deduction from gross income. Taxes are assessed on net income. And an author is typically self-employed paying employer's share of Social Security, FICA, and Medicare taxes, which is about 7%.

Veihl reports 42 novels to her credit. How many of them are earning backlist royalties is a question, but novelist and other writing related activities probably put her in the $50,000 gross income area and therefore, with self-employment, payroll taxes in the neighborhood of 32%.

clindsay said...

Nathan -

Those numbers look about right. You haven't taken into account returns, however, which bring everyone's net down even more.

Returns usually runs about 30-40% of any given title. This is money the publisher needs to give BACK to the retailer/wholesaler. I think that most people don't realize that paperbacks, even if the retailer only returns the covers.

So yeah, the publisher isn't raking in a whole lot of dough, either.

Marsha Sigman said...

All this math is making my head swim and I'm an accountant by day! This is killing my creativity.

Don't do this for the money...it will only lead to disappointment.

Anon 12:54 and 12:57, we have firm plans to toss back a few.

Terry: My husband won't let me...I have to wait a few years until he is too senile to notice.

Nathan Bransford said...

Thanks, anon@2:59 and Colleen.

Chris Bates said...

You hit the nail on the head, Bransford.

'[The publisher] put up the advance and the production costs, and the risk on any given book is exclusively theirs...'

The person that takes the financial risk should always have a better ROI. Apparently publishing is still a business, although probably not a great one!

Of course, those figures Lynn Viehl provided will drive many authors to self-publish. My advice to those authors - for all it's worth - beware. Do your sums and stay on the low end of expectation. Best to print 100 copies with a POD printer than to blow thousands of bucks on a vanity publishing house. Or better yet, throw out an ebook and see if any interest comes from it.
That said, if your book is brilliant it's highly likely that you will make more cash going with a traditional publisher than doing it yourself. Simply because success in publishing is not just about the book's content. There's a logistical nightmare hidden between the lines of every bestseller.

Josin L. McQuein said...

Anon 2:44 --

Gotcha beat.

My MC drinks Dublin Dr. Pepper. ;-P Which any Dr.Pepper drinker (and good Texan) knows is the only real Dr. Pepper.

How's that for product placement?

Anonymous said...

"3,000 resumes a day. I want the best minds..."

Um, obviously with that many applying per day, it's safe to say that most of them (perhaps not even any of them) are the best minds! It's just everybody.

I doubt most companies could even handle the work of filtering out the best qualified candidates from that many applicaitons, let alone do the work necessary to generate that much public enthusiasm.

Anonymous said...

good ol 1099 C!

Anonymous said...

Any year I need to file a 1099C is a good year for me!

Susan Quinn said...

@Anon2:59 - That makes more sense! Thank you.

Author as Small Business Person is a good analogy in many ways.

Nathan - only in my dreams of the future am I making money as a writer! But we all have to start somewhere, right?

:)

Mira said...

Googled it. Ha.

2007, it was only 1300 resumes daily. If this article is accurate.

Sorry for the exaggeration. Those of us who live near Google talk about how hard it is to get a job there - unbelievable competition.

http://careersearch.contentquake.com/2007/07/29/1300-resumes%E2%80%A6-per-day/

Anyway, they are doing something right. When I get the keys to the publishing industry, I'd want to do that too.

Anonymous said...

Yup, and if yo're self-emplyed, some states will demand that you file for a business license, which also costs $.

Terry said...

Mira, Deal! I like the way you think.

Mary said...
This comment has been removed by the author.
Anonymous said...

Don't quit your dayjob, kids!

Publishing is like a hobby that could pay some money, but probably won't pay enough to ever live on.

I'd like to see that stats on how many non-bestseller auhtors are making a living off selling books--your backlisters and midlisters. Can one be an okay-selling novelist these days and still make a living? or is it pretty much if you don't hit the big lists at least once you don't have a chance?

june said...

It seems to me, you'd be better off writing because you want to give people a good read and if you can make some money doing it-cool, but unless you luck out like Stephanie Meyers and company, keep your day job and consider any money you get from writing your book a nice extra! You can't be too disappointed keeping that perspective!

Mira said...

Terry, thanks. :)

Maybe we should all form a partnership. Start a new publishing company. Nathan can be our leader.

Okay, I'm off.

Happy Thanksgiving to everyone. Much to be thankful for. :)

Anonymous said...

Maybe I'll switch to screenwriting.

Terry said...

Marsha, Then maybe the Alfa is for you, too. Listen to this review:

The Alfa is now stronger, its cars more stylish; it's now a brand that offers a genuine alternative to rival (read German) European premium automobiles. Plus it has an extraordinary and beguilingly beautiful new flagship, the 8C Competizione. It's this car, with both Ferrari and Maserati blood flowing in its veins, that leads Alfa Romeo's charge back to America.

All that Latin blood pulsing through its veins. It could be better than Juan!

OK, so it may not leave you kicking and screaming. Well, with me at the wheel, you might be screaming:)

Mary said...

“... I'm a bit concerned about the 50% the bookstores are making. Not sure why bookstores are making so much of the profit either.”

Mira,

You’re talking about takings, not profit. The overhead costs of running a retail operation are heavy. You might be surprised that retailers in some sectors, including those you might regularly shop, mark-up even higher. Making a bigger percentage on the products they sell than booksellers make from books.

Anonymous said...

It's called revenue. Profit = revenue - expenses.

Anonymous said...

My goal is the humble airport bookshop and supermarket checkout stand. that's where I wanna be.

Anonymous said...

Nathan,

I think you did the same napkin math I did in my post. It isn't taxes on $50k, it is taxes on $42,500 after your 15% agent fee.

You don't pay taxes for your agent. :)

At $42k you aren't falling anywhere near the top 33% tax bracket.

That said, once you subract out taxes there is in the $25k - $30k range, but like I said above -- that is the exact same amount of money that EVERYONE takes home who makes in the $40k range.

Lynn is making it sound like she isn't making a good living writing, when she probably is.

She might have a full time job on the side (she did say she only writes one book a year) and she has some money coming in from the first six books in her series and at some point she got an advance from the first book in the next series.

I respect and admire that she has the courage to post her financial information, but as I said you need to take it with a grain of salt since from the numbers she provied she is pretty successfull.

Anonymous said...

The Economics of Authorship

Some quick and uglies;

An author paying an agent fees should file a 1099 for that so that it's a nontaxed business expense. The agent earned it, should pay the taxes. However, not a few authors are unaware of this allowed expense deduction. Perhaps Ms. Viehl has so far missed it?

A sole proprietorship category author has a few advantages and disadvantages over a Chapter S corporation category, and vice versa. One, incorporation costs on average $500, but is a fully deductible business expense. Chapter S's big advantage is distancing from liablity.

Then there's an LLC, which has its own advantages and disadvantages. LLCs one big advantage is liberal promotional expense allowance.

My choice is a sole proprietorship because of fewer reporting requirements. LLCs and Chapter S's require quarterly reports and esitmated tax deposits to federal and state agencies. Plus, a sole proprietorship has looser expense reporting restrictions, i.e., a laptop purchase can be entirely written off in the year it's bought, but might be required to amortize and depreciate in a Chapter S or LLC.

wendy said...

I'm not surprised at these figures. When doing a writing course, I noticed that the tutor still needed to work full time as income from her writing career was so minimal although she had published, on average, two children's books per year. It seems writing is a labor of love. (As is art/illustration and music composition.)

Happy Thanksgiving, Nathan.

Nathan Bransford said...

anon and others-

Yeah, thanks for the clarification on the tax thing, my brain got mixed up in that you have to report gross income but of course the commission is an expense and you pay on the net. Reason #278,081 I'm not an accountant (again: authors, get an accountant).

I still don't think Lynn's essential point was that she had it so rough, just that when you add it all up it's not as rosy as people think, even for bestsellers. People tend to think that published authors have it made in the shade, and I think the essential point that it's more complicated than that stands.

Pam said...

Nathan,

I've really enjoyed the information you've provided as well as the discussions on your blog this last week. Yes, the times are changing, which is always an uncomfortable thing, but I'm hoping the changes will end up to be positive in ways none of us are anticipating. As you said, sites such as Amazon and B&N are taking a beating on eBooks right now. I think we can all assume that this loss leader status isn't permanent. Will the price of eBooks increase as the books in print decrease in availability? I don't know.

Take a look at the music industry and what's happened with downloads. CD sales decreased, and the price of concert tickets soared through the roof. Unfortunately, I don't think many authors will be able to compensate by charging exorbitant prices for readings.

Still, when I think about the fact that I have paid iTunes close to two grand to download each 99-cent song, I know that there's no way I would have ever gone out and purchased these 2,000 songs were it not for the availability, convenience, and let's face it, the fad of the iPod/mp3 movement. Maybe we'll see the same in publishing. In the future, people might buy an eReader whenever it becomes so-very-unfashionable not to have one. And as we know, we're a society of compulsive spenders. $9.99 for a book someone brings up in casual conversation? Oh, sure, let me whip out my handy-dandy e-reading device and purchase it right here on the spot.

Who knows, maybe people will actually start reading again, like in the old days. And maybe with the expenses of publishing cut to a minimum, authors (and agents!) will come out of this just fine.

Call me Pollyanna, but I do believe it will all work out... and not in ways we expect.

In the meantime, I just ordered my Nook today. I wish it was going to be here in time for Christmas, but I can wait until the first week in January.

Happy Thanksgiving to all!

Anonymous said...

Oh, and the breakdown of 32% tax, roughly 20% federal taxes including worker income (13%), FICA, SS, and Med taxes (7%), 7% self-employment share, and average 5% state payroll taxes for the 41 U.S. states that assess taxes on payroll income.

Marilyn Peake said...

Last week, Lynn Viehl’s story was mentioned on BoingBoing and Cory Doctorow chimed in, mentioning that successful authors can make money as speakers. Lynn Viehl has also published 44 books to date. Interesting stuff.

Anonymous said...

"It isn't taxes on $50k, it is taxes on $42,500 after your 15% agent fee."

that's not right, is it? The publisher is paying the author, not the agent, so the author has to pay taxes on the whole advance. The agent is paid by the author.

Nathan Bransford said...

Well, Cory Doctorow can earn speaker's fees, but that's out of reach for a lot of authors.

Anonymous said...

I wold say Lynn is EXTREMELY successful! She ain't sloggin outta bed to some dayjob every morning! She has no commute with the expenses that entails. Gimme a break! 1 book a year is like a part time job. The woman is rich!

Marilyn Peake said...

Nathan,

I think Cory Doctorow was referring to New York Times Best-Selling authors, saying that they could earn speaker fees. Even some small press authors earn speaker fees. Is it possible to be a New York Times Best-Selling author and not able to earn speaker fees?

Pam said...

Then again, how many fiction writers are good speakers?

I think that's why most of us write. :)

Anonymous said...

Marilyn,

The key with earning speaker fees, no matter who you are, is to get someone to pay you money in return for you speaking in person at their event.

Nathan Bransford said...

marilyn-

I think it's easier for nonfiction authors than for novelists. There are definitely some novelists that can command an audience, but, of course, the authors who most need to supplement their income via ancillary methods are the ones for whom this isn't really an option.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

LOL anon 3:57

It's not a scam. You can do it, too. All you need to do is write a novel and sell if for $50K. Easy as pie, right!

Anonymous said...

I do speaking gigs, totally unrelated to fiction, per se. I do realistic character and history interpretations of pirates in period costume. My best honorarium to date was $200 for two hours including commute, and a free gourmet lunch at the garden club luncheon. I average $100 per gig, though, when I can get 'em.

Anonymous said...

Arrrrrrr, me hearties, fine grog, fine wenches!

Anonymous said...

Okay Terry, I wanna get me some Alpha Romeo now. Forget Juan. I want a hottie Italian loaded automachine, kind of like an Expresso bookmaker, but something that works with a key, not a remote starter.

(Marsha, I'm a few ahead of you by now I think, but we're on for a few laps around the pool. Our husbands can serve time as the poolboys and serve us toddies when we come up for air.)

Please, please, Mira, hire me!

All, Happy Thanksgiving.

I love writers and their people
(even if their clothes could use some Twilight.)

Vegas Linda Lou said...

Though Amazon is certainly the primary selling outlet and measure of success for most authors, let’s also consider the earning potential from back-of-room sales from giving lectures, seminars, or as in my case, stand-up comedy and a one-woman show. Those are book sales that aren’t reflected in the Amazon figures

Anonymous said...

Also brickm & mortal store sales. Those are good too if you can get 'em.

Marilyn Peake said...

Nathan,

I see what you mean. I guess writers usually need to reach a certain level of success and income before being able to command a speaking fee. Good thing most writers just concentrate on the writing itself rather than expecting money to flow their way when they start out.

Anonymous said...

Though Amazon is certainly the primary selling outlet and measure of success for most authors,

No it's not.

Brick and mortar sales are the primary selling outlet for commercially published authors. Royalty checks are the measure of success for those same authors.

Amazon collectively makes huge sales across all titles, but on a title by title basis, regular stores average better than 80% of novel sales.

Anonymous said...

"on a title by title basis, regular stores average better than 80% of novel sales."

Prove it! I falt out don't believe this one bit. On a "title by title" basis, most "titles" aren't even in physical stores! So this cannot be true.

Even among titles that are in the B&M stores, many of them still sell more online than in the physcial stores.

Marilyn Peake said...

Anon @ 4:05 PM –

Avast, that is AWESOME!! Arrrrrr... (Unfortunately, my pirate lingo is very limited.)

Anonymous said...

can we get an authoratative breakdown with reference link that states the releative source of book sale, please? Particularly Online sales vs. physical sales.

Not just for bestsellers which have the advantage besides bookstores of being in supermarkets, airports and big boxes, but of regular midlist novels, too.

WHERE are the sales being made if you're not a megalister with WalMart shelfage?

Does anyone in the industry even know?! Perhaps the real $ in publishing is establishing a system by which this data can be collected?!

Anonymous said...

This is just a guess, but I'd venture to guess that unless your name is Patterson or Rowling, King, Meyer, McCarthy, etc, the bulk of sales are coming from online, meaning Amazon + B&N.com + individual websites from authors, publishers and other retailers.

I, too, would like to see exact percentages.

Marilyn Peake said...

Thanks for such a fascinating discussion today. Happy Thanksgiving!!

Anonymous said...

What with the internet, bathrobes, and computers, why would writers need to leave our homes.

It's scccaaaaarrrrryyyyy out there.

Anonymous said...

Prove it! I falt out don't believe this one bit. On a "title by title" basis, most "titles" aren't even in physical stores! So this cannot be true.

No, most self-published titles aren't in stores. Commercial titles definitely are. The reason they are is because they're selling from those shelves with frequency to warrant a store ordering them.

Most people don't have the means to read digital copies yet, but they will snag a copy of a best seller or romance from a shelf at Wal-mart when they dash in to pick up the baby's diapers.

Average sales of books available in print and e-format simultaneously top out at 10% on the e-book side.

Anonymous said...

Look, without trying to be unPC, my mother and my hairdresser are probably never (ever) going to go e-book.
But a bazillion other adventurous folks will.

Anonymous said...

(which is not to say my mother is my hairdresser)

Anonymous said...

(okay, maybe...)
(did you know, bangs are back in fashion?)

Anonymous said...

"The reason they are is because they're selling from those shelves with frequency to warrant a store ordering them."

Um, that's like saying the ones in stock are selling!

Where'ss the proof! Where's the cold hard stats from a reputable source? Hm?

Terry said...

Anon 4:11 - I like the Alpha vs. Alfa. Hmmm. Good.

And then there's the Testarossa...

Anonymous said...

Don't tempt me.

Alpha was bad enough

Anonymous said...

Shelf space is premium property. If a book is on a store shelf, it's either selling or it's on its way back to the warehouse.

If the title has been in stock for weeks, it's because the books have sold out and been re-ordered. (With the exception of classics, which many stores keep behind the counter now when they're on the immediate reading list for schools. Again, because they need the display space for new books that are moving.)

There's also a hybrid of sorts. Many books are site to store purchases where people order online and then go to the store and pick them up.

Anonymous said...

Sales numbers for Barnes and Noble 2008: $4.52 billion

Sales numbers for Barnes and Noble.com 2008: $466 million

Roughly 90% sold in store, 10% online.

mirlacca said...

you have to deduct all marketing costs (ads, sending out copies for review, bound galleys/ARCs if any, co-op), other production costs (cover, seasonal catalog, etc.), and overhead (salaries, health insurance, rent, etc.) before you get to the profit.

But you can't attribute all those costs to the individual books. They're eaten up in overhead costs, spread out against all the books the publisher brings out (the bestsellers and all the rest!)and you have to offset them against the tax credits of the cost of doing business. For the marketing ads, for instance--Lynn's books may appear with five or six other books Penguin is promoting at the same time. So that cost is amortized against all of them, not just hers.

Anonymous said...

Why in the world was my comment deleted for providing a constructive, non-threatening perspective on a self-published profit breakdown?

Anonymous said...

Where are the supporting links to authoratative sources? I'm looking for the real facts, not opinions. We all have opinions on these blogs.

I want to see the numbers from Publisher's marketplace or somewhere like that.

Sales online vs. physical stores, 2008.

Anonymous said...

"Online" also inlcudes, besides physcial books, e-books of all formats including eReaders, pdfs, etc. Because you can't get those in a physical store. It also includes audio books, but you can get those in a real store, too.

Anonymous said...

I'm thinking that overall book sales are greater for online, but that's because it includes the entire back catalogs of books that the physical stores no longer carry except by special order, because they only have room for the current crop of bestsellers or hopefuls,rising stars, whatever.

So I think maybe for current books, more might be bought in physical stores (paper ones that is--although I'm not even certain about that), but that overall it would seem online sells more volume because they can sell every book in existence ever.

Anonymous said...

From Reuters: (I don't know how to make a link, but you can cut and paste.)

http://www.reuters.com/article/pressRelease/idUS123534+19-Mar-2009+BW20090319

Barnes & Noble store sales were $4,525 million for the full year.

Barnes & Noble.com sales were $466 million forthe full year.

So... rougly 90% in store, and 10% online.

Anonymous said...

Whoops! It wasn't deleted, I just missed it.

Anonymous said...

Whatever the sales are like now, I think it's clear that going forward, if you're an author you want to learn how to dominate online sales and maximize your online presence, because in the near future online sales will absolutely overshadow physical.

The convenience factor is just too high. Maybe bums and people with no mailing addreses will shop phnyscial, if they don't go to the library instead, that is, because they can pay cash since they have no credit card and get free samples at the coffee shop and get of the rain for a few hours, but most book buyers will be online, away from the crowds, driving, H1N1 book-sneezing browsers-who-don't-buy, long lines, limited selecitomn, etc. etc.

It's dead. It's like a species that is no longer reproductively viable--only one male individual left, no females. When that one dies, the species is gone. That's brick & mortar right now. It's just Barnes&Noble. And they're going, too. Guarantee. Solearn to master online.

Anonymous said...

So just B&N had 10% online!

Then you have the mighty AMZN which is 100% online.

So I think online is coming out ahead. But I need to see the full numbers, esp. Amazon.

Anonymous said...

Someone gets testy when he gets the proof he asks for.

Anonymous said...

"H1N1 book-sneezing browsers-who-don't-buy,"

LOL!

Anonymous said...

that's not the proof. that's only B&N. I need to see the entire industry's sales for 2008, broken down by online vs. physcial, all sectors, all sources. Without that, it's just guesswork.

Anonymous said...

Anon 5:25,

It's doubtful that kind of data even exists. If it does, it's probably highly confidential and would cost $ in the form of one of those proprietary "industry reports."

the fact that B&N does 10% of its total sales is interesting in and of itself. That's higher than I epxted, since B&N is the last major stalwart physical holdout.

Donna Hole said...

I think so too Nathan, about the easy access for e-books and the increase in overall book sales.

One of my cons against purchasing an e-reader (or like ap on a phone) is the instant gratification factor. I am on a budget. Not so strict I can't buy a book once in a while, but I have to be careful logging onto Amazon or entering an actual bookstore. Once I get there, I'm an impulse buyer - for the right price.

I've a feeling my penny pinching will be seriously taxed when I don't even have to wait the 24 hours for an on-line purchase to arrive in the mail.

Many of my friends at work are the same - they buy more online than the would if they had to go out to the store.

..............dhole

Anonymous said...

10% online for B&N is telling indeed. 1 out of every ten books bought at a B&N is online.

Next year, 1.5/10, then 3/10, 2020 9/10.

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