A Worthy Guide to the Publishing Industry

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From Nathan Bransford:

Mike Shatzkin is one of the most knowledgeable people in the entire publishing industry, and when I saw that he had written a book on the book biz with the late Robert Riger, this was an insta-buy.

The Book Business: What Everyone Needs to Know did not disappoint my expectations. Everyone has something to learn from this helpful guide, whether you’re a publishing newbie or a seasoned veteran. It’s organized in a very readable Q&A format and has everything from an overview of the major players to a history of the industry to the latest trends shaping the business.

I especially learned a ton about the ways in which the current e-book era resembles past publishing industry disruptions, especially the advent of mass market paperback books, which were initially very popular among readers of pulp/genre fiction and were disdained by the publishing establishment of the time. Sound familiar?

Link to the rest at Nathan Bransford

PG thinks a good question to ask in 2019 is why traditional publishing is entitled to such a large share of the revenue a book generates when, for most traditionally-published books, Amazon is the largest seller of those books.

He suggests that if you look at the legacy publishing chain of organizations and individuals who are taking a piece of the revenue the book generates either directly or indirectly, it doesn’t seem like a terribly efficient system of marketing and distribution for the book as a product, especially a printed book.

Here’s an overview:

ᶑ Author creates a manuscript

ᶑ Agent pitches manuscript and finds a publisher

ᶑ Publisher edits the manuscript (or perhaps hires a freelance editor to do that job)

ᶑ Publisher arranges for formatting of the manuscript and hires a cover designer to create the cover

ᶑ Publisher sends files of the manuscript to a book manufacturer (formerly called a printer), perhaps through a middleman.

ᶑ The book manufacturer may print the book itself or have the book printed offshore, often in China

ᶑ Finished hardcovers arrive on a container ship from China and are shipped to a wholesaler/distributor – usually Ingram

ᶑ The Publisher’s sales reps are pitching the book to bookstores in advance of its release. They’re usually paid a salary plus commission. Generally, a bachelor’s degree is required. Most don’t make a lot of money.

ᶑ The physical bookstore generally buys its books from Ingram or a smaller wholesaler at a discount from list price – 50% is the most common discount, although that may vary. To clarify, the bookstore usually pays $10 for a book that has a list price of $20.

ᶑ Ingram sends a portion of the money it receives to the Publisher.

ᶑ The Publisher then sends a royalty check to the Author twice a year. The Author’s check may be reduced by a reserve for returns, part of the royalties due to the Author, ostensibly designed to cover the Author’s royalties which will not be payable because of books sold to bookstores during one royalty period that the bookstore returns unsold for a credit during a following royalty period.

Each of these steps has a cost. Somebody is being paid to execute each of these steps. Ultimately, directly or indirectly the Author pays all or most of that cost as deductions against the Author’s royalty payment. The Author receives what’s left over after everyone else takes his/her/its slice of the pie.

If the supply chain costs were lower, traditional publishers might feel more inclined to compete for Authors by offering higher royalties. (Or not, but we’re talking the potential for economically rational decisions here.)

On the other hand, here’s the distribution system of an indie Author selling through Amazon:

ø Author creates a manuscript

ø Author formats manuscript or hires a formatter to do the job

ø Author uploads manuscript to Amazon and selects ebook only or ebook plus POD

ø Amazon stores the manuscript in digital form, offers the book for sale on a world-wide basis if the Author selects that option, processes credit card payments from readers and sends monthly a monthly payment directly to the Author’s bank account. For books priced within Amazon’s preferred pricing stratum, Author receives 70% of the price paid by the reader.

Amazon is the only intermediary between the Author and the reader. Once the Author uploads a manuscript, all steps necessary to place a book into a reader’s hands are performed by Amazon, utilizing the world’s most sophisticated and efficient selling platform.

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19 thoughts on “A Worthy Guide to the Publishing Industry”

  2. I’d rather just retain ownership of my copyright than bow to the “forever” terms of today’s traditional publishing contract. Hard stop.

    IF a traditional publisher offered me a life-changing high-six-figure non-refundable (in the contract) advance for all rights to one book, I’d probably jump at it, but otherwise no.

  3. 30% of revenue, plus, your book’s and your fate in the hands of people who often don’t care, sorry to say, and your work is seen simply as ‘product’ by the ‘house.’ Granted, not in every case, but in way too many. Yes, the stallions in the house’s stable that earn the big bucks get treated well, but the rest, not so much.

    • and your work is seen simply as ‘product’ by the ‘house.’

      Of course the book is a product. How else should it be seen?

      That’s why authors go to publishers. Publishers make it a product. Products enter distribution and retail channels and eventually become available to consumers. Paper, print, covers, boxed up and sent through retail channels just like zillions of other products.

      Novels sit in an author’s desk drawer. Products sit on retail shelves.

      • That is true…
        …but only at the retail level.
        Downstream of the publisher.

        It is not true, though, in the upstream interface between publisher and author because when a publisher acquires a title they are only acquiring a limited license not actual ownership of the title.

        Remember reversion clauses? They specify minimum performance standards the publisher must meet to retain the license. Few if any tradpub authors dare exercise their contractual rights to pull back a title for non-performance but the right is still there in most legacy contracts. Even without triggering a reversion clause, the licensing contract carries the obligation to actually publish and distribute the title. Some of the more egregious publisher practices would be instant violations of the contract… if the author dared stand up to the Manhattan Mafia.

        The publisher/author interface is not a simple retail transaction but closer to a partnership or a franchise agreement. Tradpub authors don’t have to be disposable paper cups to be used and abused. They just allow themselves to be so used.

        In the old days quite a few authors just quit the business in disgust. These days there are other alternatives than to, ahem, BOGU or quit.

        • Three hundred bound pages coming out of a printing press and headed for a retail shelf is a product. Just like a widget.

          The publisher finances and produces the product. The retailer sells the product. The consumer buys the product.

          The widget guy might indeed think he’s special, but widgets are products, just like books.

          • Three hundred blank pages?
            Consumers only rarely buy blank pages and publishers don’t actually create or own outright the content.
            There are two transactions involved in creating book widgets. Only focusing on the downstream is inadequate analysis.

            • Three hundred blank pages is a product.
              Three hundred printed pages is a product.

              The three hundred pages is a product regardless of 1) the existence of content, and 2) the ownership of the content.

              There is no content on the blank pages, and it is a product.

              There is content on the printed pages, and it is a product.

              At B&N, they call the three hundred blank pages a journal. They call the three hundred printed pages a book. Both are products sitting on shelves.

  4. The Author receives what’s left over after everyone else takes his/her/its slice of the pie.

    At a 15% royalty, a traditional author is getting 30% of the publisher’s revenue. How much should he get? I realize many authors have the odd notion that they should get a portion of the retail markup, but that’s not how the rest of the economy works. There is no business relationship between the traditional author and the retailer.

    I would agree the profit maximizing author does better with Amazon. So choosing the Amazon model is rational. But within the traditional model, is 30% of revenue unreasonable?

  5. Re: “…. the current e-book era resembles past publishing industry disruptions, especially the advent of mass market paperback books, which were initially very popular among readers of pulp/genre fiction and were disdained by the publishing establishment of the time. Sound familiar?” Not only does it sound familiar, I and every other ‘Indie’ author I knew, KNEW that back in 2008.

    How about this:

    ᶑ Author creates a manuscript (and sends it out to 125 agents.’ He hears back from only five, after waiting about three months. Four say, ‘Sorry, not my cup of tea. One says, send me the first three chapters and an essay, 750 words, on why I should facilitate you sharing your ‘wisdom’ with the world. This ‘agent’ is about to get back to you when he sees a post he doesn’t like on Facebook and throws your essay in the trash.)

    ᶑ Agent pitches manuscript and finds a publisher (after three years, and the publisher insists that the work must be re-done from the female POV, and the minority characters MUST be victims, and the White characters, victimizers of minorities.

    ᶑ Publisher edits the manuscript (or perhaps hires a freelance editor to do that job) (and they screw it up royally because the editor is still taking her ESL classes and doesn’t have a clue; but hey, they’re (the publisher) paying homage to the great goddess of diversity.

    ᶑ Publisher arranges for formatting of the manuscript and hires a cover designer to create the cover (which the author hates, but he, more likely, she, doesn’t have a say; everyone knows that.)

    ᶑ Publisher sends files of the manuscript to a book manufacturer (formerly called a printer), perhaps through a middleman. (Note: this is four years later, after a coup at the ‘House’ and a takeover by a Chinese or German publisher, requiring further changes to the book)

    I could go on, but why bother.

        • Yeah, awful! How about publisher requests author write a three-book ‘series.’ Then, after publishing the third, lets the second go ‘out of print?’ Or, editor at ‘house’ has a mid-life crisis and does ‘nothing for a year, while author’s manuscript lies in editor’s desk, untouched. When someone finally checks, another editor is assigned author’s work, but they don’t like it. Doesn’t matter because, there is a big change in management and ‘house’ decides that they are only going to publish Romance novels from here on. All of Author’s requests to get their book rights back go unanswered for 18 months and then ‘house’ goes bankrupt.

          Let’s have some more stories, folks.

        • I read the Vanity Fair article.

          I consider myself fairly well read but I must move in totally different circles.

          I haven’t heard of most of those books.

          I guess I’ll never be part of the NY smart set.

          (Also, I wonder how many of those books were actually read.)

  6. “Mike Shatzkin is one of the most knowledgeable people in the entire publishing industry, and when I saw that he had written a book on the book biz with the late Robert Riger, this was an insta-buy.”

    THE Mike Shatzkin? the one we poke holes in whenever one of his posts ends up being shown on TPV? (I’ll admit he’s good if you need to fill out a buzz-word bingo card but … 😉 )

    Yeah, ah, no …

  7. “But within the traditional model, is 30% of revenue unreasonable?”

    Hmm, ‘if’ they actually get 30% in the contract and aren’t cheated by ‘deep discount’ sales, then there’s the 15% of that taken by their ‘agent’ – if the publisher and/or agent don’t just lie and keep 100% for themselves.

    Lots of reasons writers are finding trad-pub to be an ‘unreasonable’ risk …

  8. The Author receives what’s left over after everyone else takes his/her/its slice of the pie.

    At a 15% royalty, a traditional author is getting 30% of the publisher’s revenue. How much should he get? I realize many authors have the odd notion that they should get a portion of the retail markup, but that’s not how the rest of the economy works. There is no business relationship between the traditional author and the retailer.

    I would agree the profit maximizing author does better with Amazon. So choosing the Amazon model is rational. But within the traditional model, is 30% of revenue unreasonable?

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