The Basic Math of Publishing

Here’s a second the first of two David Farland posts for today (PG switched the order) with Dave’s usual combination of deep knowledge of traditional publishing with a willingness to move toward new opportunities.

For those new to the blog, Passive Guy has mentioned before that Dave is not only a prolific and successful fantasy/scifi author (over 50 published novels), but he has also helped a great many successful authors get started.

For several years, Dave taught creative writing at Brigham Young University. His students there included Stephenie Meyer, Brandon Sanderson, Eric Flint, Jessica Day George, James Dashner and Dan Wells. Passive Guy knows of two other former Dave Farland students who have received multi-book contracts with impressive advances from Big Six publishers for books that haven’t been released yet. (Not everybody listens to what PG says about indie publishing).

This excerpt is from Dave’s excellent and free email newsletter:

 A reader of the Daily Kick asked me recently to help him try to figure out whether it was better to self-publish a book as an e-book, or to go with a traditional publisher.

That’s a hard thing to do. Right now, taking a shot in traditional publishing is like trying to hit a moving target. In the past month alone, the nation’s third largest chain, Borders, has filed for bankruptcy and is now liquidating 400 of its stores. Many other bookstores are in trouble.

Meanwhile, book sales on a month-by-month basis for hardcovers in the US are showing about a 40% loss, on a month-to-month comparison to one year ago, and paperback sales are also tanking.

At the same time, Amazon.com, the world’s largest retailer, is showing about a 300% rise in sales of e-books on their site from last year.

. . . .

As a result of this, an author can anticipate that paperback sales now are about 50% of what they were last year.

In other words, paper books are rapidly dying. Many of the retailers who were selling them only a year ago are gone, and many of the survivors were selling paper books are now pushing electronic books instead.

So what should an author do?

Right now, if you publish a book in a paper format, it will take about two years for the book to be printed and released. What will the markets look like in two years?

I don’t know. I strongly suspect that in early 2012, we will see that more than half of all book sales are made electronically. By mid-2013, that number might rise to 70% of all sales. In a market like that, what can a publisher really offer you?

. . . .

The major thing that [publishers] demand is electronic rights. Most publishers now are offering 25% of “net” to their authors on electronic sales. Once they hit the author up for operating expenses, that means that the author will get less than 15% of the money spent on the sale of a book.

Now, don’t be fooled. Your agent will get a portion of that (about 15%, normally). And of course the electronic distributor will normally get a healthy chunk, too (at least 30% of the sales price).

Then you have to worry that your publisher is paying an honest royalty to you. (If you listen to authors, you’ll find that it appears that many publishers are not paying honest royalties.)

The result is that over the life of a novel, the author will get very little of the money paid for his product, if he goes with an agent and a traditional publisher. Let’s say that you write a book that makes $100,000 in sales over the next ten years. How much of that will you get as an author?

Well, the electronic distributor (Amazon.com/Barnes and Noble), under current rates, would get $30,000. Your publisher will take in the other $70,000, and would then pay you 25% of net. What’s the net? That’s hard to determine. The publisher might well charge you for the operating expenses of its company as a part of that net, or subtract money spent for advertising, or editing.

Let’s be generous on our determination of net, and say that you get 20% of the total received–$14,000. Your agent will then get an additional $2010. This would leave you with a little under $12,000 over the next ten years.

. . . .

Given all of this, the answer to the question is, “When does it make sense to publish with a conventional paper publisher?” The answer is, Never. Those days are gone. It would appear, right now, that the potential profit lines on a graph will diverge dramatically, and the longer you publish your book, the more you’ll regret going with a traditional publisher.

Unless, that is, you look at publishing as a career. It may be that a publisher will bring out your book, create buzz, give you a tremendous advance, launch your career beautifully, push your books so that they sell far better than they would have on their own, and turn you into the next J.K. Rowling. It does happen. Getting the notoriety and the marketing push from a big publisher can be a huge boost to a budding career, and it may be worth your time to seek out a major publisher.

You publisher typically offers editorial skills, marketing muscle, credibility—a lot of things that any author needs.

However, as an author who has been in this business or 25 years, I have to warn you about how it really works. Anyone who has been in this business for very long will tell you horror stories about how the conventional publishers messed up their editing, their cover quotes, their cover art, missed their ship date, under-ordered on print runs, refused to send the author on a signing tour, and so on. In other words, for every fairytale come true, authors can tell you about a hundred nightmares. For every author who makes a living in this business, dozens attempt it and fail.

Link to the rest at David Farland. You can join Dave’s free email newsletter list here.

David Farland, Self-Publishing, Self-Publishing Startups