The Uneconomics of Book Publishing
Now that AdSense Resurrected has been delayed (see this post for an explanation — it’s mostly my fault, really) — let’s further explore something that frequent commenter Chuck Brown and I discussed extensively at the end of last week — the economics of book publishing. Or, rather, the uneconomics of book publishing. I may never publish another book through a conventional publisher again, because I can make more money as a writer doing other things. Let me explain…
Fiction vs. Non-Fiction
Let me preface my remarks by stating that I’m only talking about non-fiction, non-academic book publishing. Publishing fiction is very different from publishing non-fiction. As is academic publishing, which tends to serve very captive markets. I’ve only ever published non-fiction, so that’s all I can really comment on. But that’s probably what interests most of you, anyhow.
The Idealized Version
Here’s the idealized version of how book publishing works, what folks in the mainstream thinks happens:
- Author comes up with great idea, writes the book in a few weeks and fends off the many publishers who want to publish it.
- Publisher releases book at high cover price.
- Author becomes rich.
If only it were so easy. My 8-year old daughter must think so… she made her own board game over the weekend and one of the “lucky cards” (like a “chance card” in Monopoly) was “write a book and get $1,000,000″. But she’s 8 and has a child’s view of the world.
Book Proposal Reality
In the real world, of course, things are very different than the idealized view:
- Author comes up with an idea and pitches it to one or more book publishers. (Or, in some cases, publisher has the idea and contacts agents and previous authors to look for someone to do the book…)
- One publisher expresses interest but wants a formal proposal. Author works using publisher’s book proposal template to fill out all the details: proposed table of contents, competing books already in the market, what’s so unique about this book, target audience, etc. (This takes work to do properly and the author isn’t compensated for this, so the author tries not to spend too much time on fleshing out the proposal in case it doesn’t fly.)
- Publisher passes on book. Author pitches it to another publisher. This one expresses interest, too, but needs proposal in their own format. Author reworks the proposal.
- Acquiring editor at the publisher likes the book. Now he or she must present it to a committee and have the committee sign off on it, otherwise the book will be dead.
- Proposal makes it past the committee. Contract is sent to the author for signing.
So remember, up until now no money has changed hands. Smart authors don’t actually do any writing until a signed contract is in their hands. And this process usually takes several weeks, not counting any contract negotiations.
The Book Contract
A book contract sounds like a very glamorous thing. And to a first-time author it is very glamorous. It’s also full of pitfalls for the unwary. Book publishing contracts always favor the book publisher. They are the ones in the driver’s seat, they set the terms. Smart authors will use an agent or an attorney to negotiate away certain offensive clauses, such as the cross-accounting clause (the one that says that if the publisher publishes a book of yours that loses them money, they can make it up from your other books), but most of the terms are set in stone.
The most interesting part of the book contract is how much money the author will get. It’s not nearly as much as you think it is. First, some background:
- Authors get paid a royalty per book sold. (In some cases, the author is in fact paid a flat fee for the book, never seeing anything more, but that’s not the norm except in certain niches.)
- For non-fiction books, the royalty is usually calculated as a percentage of the wholesale price of the book, not the cover price. A book that retails for $30 is usually sold to the book distributor or seller at a 40-50% discount, so the net price of the book from the royalty viewpoint is more like $15 to $18.
- The author usually gets 10% of the net price per copy sold. So that $30 book earns the author less than $2 per copy. The royalty rates may increase on a sliding scale based on the number of copies sold, but it would rarely go above 15%.
- That 10% rate only applies to books sold at usual discounts. If the book is sold at a deeper discount — say a big chain purchases a whole pile of them for a promotion — then the royalty rate is often cut in half.
Let’s do an example and keep the numbers simple: cover price of $30, net price of $15, royalty of 10%. So if a book sells 1000 copies, the author makes 15 * 1000 * 0.10 = $1500. Not a lot of money… Obviously, if you sell a million copies you’ll make some serious change, but most non-fiction books published by the major book publishers only sell between 1000 and 5000 copies total.
The Advance
Book publishers pay on ridiculously long payment cycles. One of the publishers I deal with pays twice a year! That’s a long time to go without seeing any money for your hard work… (And you thought the AdSense payment schedule was long!) So most book publishing deals include a provision for an advance against royalties.
The advance is essentially an interest-free loan to the author from the book publisher, a loan that is repaid from royalty earnings once the book is published. Most authors will get no more than $10,000 as an advance, usually in parts based on how much of the book has been completed. It’s not usual, for example, to get 1/3 of the payment on signing of the book contract, another third when half the book has been completed, and the final third when the entire book is done and accepted by the publisher.
Once the advance has been paid, the author won’t see any more money from the publisher until the book has “earned out” its advance.
Just for the record, only 2 out of the 5 books I’ve written or co-written have earned out their advances, although it’s still too early for Programming Interviews Exposed to tell with it — I haven’t received the first royalty report yet since it was only published in April. (I told you it was a long cycle…)
The Writing
So, the proposal’s been accepted, a contract’s been negotiated and signed by both parties. Now the author gets to work and writes the book. The time and effort varies considerably, of course, but it’s probably more work than you think, trust me.
The book contract requires the author to submit a completed manuscript by a certain date. If he or she doesn’t, the publisher can cancel the contract or else give the book to someone else to finish. Or the contract gets extended, which is usually what happens, but then that puts other things into jeopardy in the publisher’s carefully-constructed publishing cycle.
The Packaging
After the book’s been submitted, the book publisher kicks into high gear. The book is farmed out to a variety of subcontractors for processing: copyeditors to check and correct grammar and spelling, technical editors to check concepts and test things, designers to come up with a cover and a layout. Meanwhile, the publisher’s marketing department puts a marketing plan in place to promote the book. (Note that they normally get involved earlier in the process… they choose the book’s title, they tell the sales force what to expect from the book, etc.)
At some point the author gets a corrected version of the book to look at and to correct any incorrect corrections (which happens a lot with technical material). The final version is then sent to the printer for layout and printing. The author may get to see a “galley proof” of the book for a last look before the printing, but that’s not always the case.
Printing and Distribution
Now the book gets printed, bound and stored in the publisher’s warehouse. The publisher will print thousands of copies of the book in a single go to get the per-copy costs down, so there’s a significant investment on their part in getting the book printed and out the door.
Once the book’s been printed, it’s sent to the various distributors and retailers who’ve ordered it. The remaining books are left in the warehouse to fulfill later orders. Hopefully.
Book publishing is a funny business. Most booksellers can return unsold, undamaged books to the book publisher within a certain time period for a full refund. So just because a publishers ships 10,000 copies of a book doesn’t mean that they can book the revenue. 8,000 of those books could come back within 3 to 6 months. That’s why payment cycles for the authors tends to be so long, and also why the book publishers hold back a portion of the royalties earned (the reserve) from the authors for a set period of time — to cover unexpected book returns.
Marketing
Like anything else, most books succeed or fail based on marketing, not on the worthiness of the material inside the book. Publishers have a budget for marketing their books, of course, but the lion’s share of that budget is devoted to a small set of books that the publisher hopes will sell really well. All the other books receive pretty much the same treatment: a press release or two, review copies, some promotional emails to booksellers and others, listings on Amazon and other places. Not much, in other words. The publishers just can’t afford to devote resources to each and every book they publish. Book signings, tours and other expensive things just don’t happen except to a few lucky authors.
Most books, then, depend on their authors to do some marketing. There are two problems with this approach, though:
- The publication lag. By the time a book makes it onto the shelves, many authors have moved onto something else. If they’re trying to make a living writing books (good luck!) then they need to crank the books out like an assembly line. They don’t have the time to do much marketing. Or the interest, in many cases.
- No expertise. Most authors have no marketing expertise. They won’t even have credibility if they’re first-time authors. They don’t have a clue how to begin marketing their books.
Actually, there’s a third problem: the piddly royalties they get per book make it hard to justify devoting a lot of time and effort to marketing efforts. It’s uneconomical.
So Why Publish A Book?
So why do people bother writing non-fiction books. There are actually other quite valid reasons to publish a book:
- Credibility. If you’re a consultant or expert, a book gives you instant credibility. After all, a book publisher was willing to spend the money to print and distribute it.
- Satisfaction. I can’t tell you how satisfying it feels to pull your newly-printed book out of a carton and flip through it.
- Audience. Books are still a great way to reach people across a diverse set of demographics.
- Masochism.
Note, however, that money or getting rich aren’t on the list. Obviously there are authors who do strike it rich with their books. These are far and few between, however.
Books can be a step on the way to making serious money, of course. A good book on a hot topic can get you speaking engagements. You can give seminars and sell books (which you buy from the publisher at a discount, therefore making substantially more per copy) to the attendees. You can get work by virtue of the book. You can get invited to joint ventures and other opportunities. But again, there’s a lot of luck involved in these things and certainly not everyone who publishes a book is going to be able to leverage it into something extremely profitable.
Self-Publishing
There’s nothing saying you can’t write your own books, of course. Many people think it’s hard to do, but it’s not — apart from the actual writing, of course. Here’s what you do:
- Write your book. Use Microsoft Word or OpenOffice or whatever word processor you want and write your book. Don’t worry about layout at first, just write. Be sure to use style sheets to differentiate headings, body, lists, etc. Things are so much easier to change if you use styles.
- Edit your book. If you’re serious, you’ll hire someone to edit your book.
- Create a PDF of the book. If you’re using OpenOffice, this is trivial — just choose the “export to PDF” option from the menu. If you’re using Microsoft Word you need to install a PDF converter like the free PrimoPDF. Most of these applications work by installing a fake printer driver on your system: you “print” to the PDF converter and it takes the output and stores it into a PDF file for you.
- Sell it. Create a website and sell the book via your PayPal account. Or sell it via ClickBank.
Don’t get me wrong, finding buyers is hard. But the mechanics involved in selling on the Web aren’t difficult at all.
Notice that you don’t need to get an ISBN number for your book or anything like that. You only need an ISBN if you want to sell the book through sites like Amazon that require an ISBN.
And we’re only talking about PDFs here. You can certainly print a version of your book if you want and try to sell it. You can use print-on-demand shops like Lulu.com to do it, or else print copies in bulk and sell them the traditional way. I don’t really recommend the latter — lots of time, effort and money up front — but some people do it. (If you’re really interested in self-publishing, check out this great site.)
Will Book Publishers Lose Their Authors?
Book publishing is all about making money from content. But it’s a publisher-centric business model. With the Web it’s possible to move to a more author-centric model. Which is where AdSense and other content monetization programs come into play.
If a book publisher were to approach me today and ask me to write a book, I’m not sure I’d do it. The last one I published was done more as a favor to my editor than anything else — they needed someone to revise an already-successful book. It was a special case.
As an experienced author, though, I have to think carefully about any proposal that comes my way. For the amount of time and effort required to write a 300-page book I could probably create at least 10 quality sites. The book would net me $10,000 in advance money, which might be all I’d see, and only after about 6 months of contract negotiations and writing. Those ten sites would minimally make me $5 each per day on average, which would equal 50 * 30 = $1500/month at the end of six months. So I’d probably have $10,000 in earnings (mostly AdSense, but some affiliate stuff as well) by the 9th or 10th month. So in the short run (the first year) it looks like the book publishing wins.
But not in the long run. A steady income from those sites will easily surpass potential earnings from a book.
And here’s the kicker: you can take all that content you wrote for the sites and create ebooks from them, which you can then sell as well. It’s tedious work repackaging things, but it’s a lot less work than writing it in the first place. If your content is really good you may even have a conventional book publisher sniffing around your site looking for some kind of republication deal.
Don’t write a book if you want to make money. Write content, yes, but make it available electronically. Monetize it via AdSense and ebooks. Try to develop a following — blog subscribers, a mailing list — and leverage that following as part of your efforts. It will take time, but it will eventually pay off.
Notice that I didn’t say “Don’t write a book.” There are various reasons to write books, but money isn’t one of them. Do it if you want to do it, or have other substantial non-monetary reasons to do it.
Is this the death of the printed book? Probably not. But the uneconomics of book publishing are going to make it harder for publishers to find good authors. Expect more material to shift to electronic form as a result.
Eric Giguere is the author of several printed books and knows a thing or two about content monetization. Subscribe to his AdSense blog today and never miss any of his insightful comments. And the not-so-insightful ones, for that matter.
Tags
AdSense, AdSense Resurrected, Amazon, book publishing, books, ClickBank, content
Comments
6 Responses to “The Uneconomics of Book Publishing”
Very interesting, Eric. And very similar to the recording industry…which is probably in a lot more trouble than the book publishing industry.
The web is great for both. And as a sometime songwriter, solo pianist and recording artist…I’ve come to the same conclusion. I haven’t really dreamt of a recording contract since I was in my teens (back when I was dreaming of playing on stage at Carnegie Hall). But I learned at one point in my life that, while there are certainly perks to celebrity, you’re mostly a piece of meat…which is why so many of these folks crash and burn. Their relationships crumble, they anesthetize themselves and we get to watch them become train wrecks on TV. Yes, money will buy you some safety and a good PR spokesman. But, I’d rather have a life. The web is much better for connecting with large numbers of people…whether you’re selling music or giving it away (I do some of both).
Sadly, there’s a long way to go before the web is a great place to do any of those things because of a lack of support resources. The great value of the record labels and book publishers used to be that they were the filter. Most of the crap was weeded out before it got to market. I can’t speak to book publishers…but record publishers no longer seem to be able to distinguish decent music. I am as likely or more likely to lean toward indies these days…and especially with my taste for instrumental music (piano, guitar, etc).
But there’s still a crying need for support resources for indies. The great thing about the web is that anyone can put their stuff out there. The worst thing about the web is that anyone can put their stuff out there. But how do you find GOOD stuff? Even setting personal taste aside, there’s so much junk online that it’s really hard to wade through all the lameness to find the really well-done work. That was the advantage of the publishers. And now what the web needs is better resources for review, promotion and the like. It probably won’t be a great place for that until better monetization options become available. Otherwise, any lame artist can BUY a good review…and that helps no one. The independence of a review means everything.
It’s the same gripe I have in relation to the other stuff that we discussed (made for AdSense web sites). As you said, spammyness is not easily distinguished by machines. We need the human element. In book publishing, in music reviews and in helping to distinguish and promote great web resources. Which is why its such a tragedy that…blah, blah, blah…I know, I’ve said it all before.
That was a great post. I write a variety of content but know nothing about book publishing. The article is extremely helpful in narrowing down the publishing (in the most generic sense) options to those that provide the best reward for time and money.
Chuck, you’re quite right: there are a lot of parallels between the book publishing and music recording industries. As you point out, recording artists have been looking for different ways to make money while still being creative.
It’s also true that having a human element in the loop can filter the crap from the good stuff. Or not. The great hope with the Web is that over time communities of like-minded individuals will be able to filter things their way… and that the search engines will be able to incorporate those views.
Eric, this is a succinct and informative analysis of the book business. As a freelance book editor, I know that authors are truly at the mercy of traditional publishing houses. Even the “print on demand” places extract their pound of flesh. Luckily I earn a flat fee per manuscript based solely on word-count. Well-written material I can breeze through generally balances out the poorly composed stuff, yielding me perhaps $30-40 an hour on average. An author rarely has the opportunity to monetize his hours in this manner.
Hi Eric,
Great article! I would also recommend, for the self-publishers, considering the Amazon Advantage program. They take their large, unwieldy pound of flesh but I sell quite a few through them. I also sell the same exact book “used” on Amazon and surrender a much smaller pound of flesh (couple ounces) that way to Amazon.
Getting ISBNs, bar codes, and other stuff takes a little time but can be done through bowker.com and sites like barcode-us.com. (There are lots; that’s just the one I use.)
One of the simplest ways to print, and not too expensive at 15 copies or more, is Cafepress.com. Good quality, too.
Excellent OpenOffice.org plugs! I would also say that you can do a killer cover design in OpenOffice.org Draw.
Solveig
Good point about the using the draw program in OpenOffice, although if you’re selling ebooks only then a cover isn’t actually a necessity — you need a graphic for selling the book, but the actual cover can be pretty plain and simple.
Deciding to go the print route is a big decision that shouldn’t be taken lightly, just because it’s more work. As you say, it’s not that hard but there’s a definite time factor involved…
Eric