From Joe Konrath:
Mike Shatzkin, sounding more and more like an apologist and less like the forward-thinker he’s been in years past,took a stab at poking holes in Hugh Howey’s new www.authorearnings.com endeavor.
In the comments, Hugh gracefully said he agreed with 86% of what Mike said.
I, however, found little to agree with. I’m also not much in the grace department.
I’ll take Mike point-by-point, which begins after a few paragraphs of introduction.
Mike: Hugh’s latest business inspiration — a call to arms suggesting to independent authors that they should just eschew traditional publishing or demand it pay them like indie publishing — is potentially much more toxic to consume. (The agenda here is unclear. Is Hugh most interested in getting more authors self-publishing or in organizing authors to demand better terms from publishers? It’s hard to tell, but there is an agenda, it would seem.)
Joe: Hugh’s agenda is transparent, both on his blog, and on www.authorearnings.com, and in the email exchanges and conversations I’ve had with him.
He wants authors to be informed so they can make correct decisions.That’s also my agenda.
Your agenda, Mike, is also transparent. As is the agenda of the Big 5, most literary agents, and the Authors Guild. You all earn your living from the legacy industry, and if there is a mass exodus of authors to self-publishing, you all are in deep doo-doo.
I’ll reiterate: Hugh is losing time and money on www.authorearnings.com. He won’t get his time or money back. I could have written a dozen novels instead of blogging these past years. Neither of us charge authors any consulting fees. We do what we do as a public service.
. . . .
Mike: 3. Unearned advances and their impact on author earnings. Unearned advances are a substantial part of author compensation. I know of one Big Five house that calculates that they pay more than 40% of their revenue to authors and another which says that number is in the high 30s. That’s not all digital, some of that is print with manufacturing and warehousing and shipping costs associated with the revenue. How can you compare how authors are compensated if you don’t calculate the benefits to authors, meaning the resulting higher percentage of the revenue they’ve taken, of unearned advances? That relevant data is also not available.
Joe: Mike, could it be the advances are unearned because legacy royalties suck?
If you were a genre author offered a $100k advance earning 12.5% royalties off of the digital list price (25% of net, and publishers sell to Amazon at roughly 50% off their digital list price), and your ebook is priced at $4.99, you earn $0.63 per ebook sold. You need to sell 159,000 ebooks to earn out your advance. And when you do, you’re stuck with 63 cents per sale, FOREVER.
The same ebook, self-published, earns the author $3.49 per copy sold. If they sell 28,653 copies, they made the $100,000. Every copy they sell after that, they make 5.6x more money than they do on a legacy ebook.
Which seems like a better deal for authors?
Also, unless the author is a mega bestseller commanding astronomical advances, guess what happens if the author doesn’t earn out? They don’t get any new deals from their publisher, even though the publisher STILL holds onto their backlist rights.
Publishers can afford advances because they make triple what authors do in royalties. It’s a high interest loan (ridiculously high interest), and even if it isn’t paid pack by earning out, the publisher can still do very well.
. . . .
Mike: 5. Current indie successes where the author name or even the book itself was “made” by traditional publishers. Another factor any author self-publishing has to consider is the likelihood of success, which is much greater if the books are backlist (have some fame in the marketplace) or even if just the author has been previously published. Successes like Howey’s, from a total standing start with no prior writing track record, are quite different from others who have reclaimed their backlists and used them as a platform to build a self-publishing career.
Joe: Mike, reread what you just said.
“others who have reclaimed their backlists and used them as a platform to build a self-publishing career. “
First of all, these backlist books obviously weren’t selling for the legacy publisher, or else the legacy publisher never would have returned the rights.
Second of all, if the authors who got their backlists returned were able to build a career, WHY THE HELL WOULD ANYONE SUBMIT TO LEGACY PUBLISHERS EVER AGAIN?!?
Pardon my yelling, but what you just said shows your absolute inability to understand what’s happening here.
To rephrase what you just said:
Legacy publishers couldn’t sell the same books that went on to make self-published authors successful.
. . . .
Mike: This bias of sample is compounded by the focus on genre fiction. No matter how big a percentage of those niches is served by Amazon, it is important to remember that it is where they are relatively strongest in relation to the big publishers. If we were comparing literary fiction or biographies — both of which have lots of worthy authors too — the chances are the cost of an Amazon-only distribution strategy, or an ebook-only distribution strategy, would be far higher. And the chances of success would be far lower.
Joe: Then publishers should have nothing to worry about. They’ll still get lit fic and biography submissions. Problem solved.
That is, until ebook sales climb in those categories as well.
Hmm, how much lit fic and biographies to publishers actually sell? How big are those pie slices?
I wonder, when the data come in, if those authors also do better self-pubbing. I guess we’ll have to wait and see what Hugh digs up.
Link to the rest at A Newbie’s Guide to Publishing and thanks to David for the tip.
PG would add a quick thought on unearned advances.
Typically, they fall into two categories:
1. Advances paid to big-name authors that neither the author nor the publisher ever anticipate will earn out. The advance is the only payment the author expects.
One of the reasons for these is that many publishers have most-favored-nation provisions in some of their contracts that will escalate the royalty rates of those contracts to match the highest royalty rates the publisher pays to any author.
So rather than directly pay the big-name author a higher royalty rate, the publisher pays an advance that will never be earned out at the lower royalty rate. This effectively pays the big-name author a higher actual royalty per book sold without triggering any most-favored nation clauses in other contracts.
2. The second unearned advance category is for books that didn’t sell nearly as well as the publisher thought they would – business mistakes. As is mentioned in another post today, publishers seldom make a second such business mistake on the same author.