Authors Equity points toward the future of publishing

From Nathan Bransford:

Some pretty significant news arrived this week as some of the smartest and most experienced people in publishing are joining forces on a new imprint called Author Equity. Its business model says a lot about where we’re headed as an industry.

Essentially, Author Equity pledges to put authors first, and they won’t offer advances. They will instead offer the “lion’s share” (the former agent in me is shouting, “HOW MUCH IS THAT EXACTLY”) of the profits, and will maintain a lean staff that relies on freelancers for editing and production, with distribution by Simon & Schuster. Its author investors (including Atomic Habits author James Clear and The 4-Hour Workweek author Tim Ferriss) probably point the way toward the types of books they’re likely looking for. Namely, entrepreneurial bestsellers and bestsellers-in-the-making who are willing to forego the upfront investment of the advance in favor of making more on the backend.

Those of us who have been in this business for twenty odd years know that parts of this publishing model aren’t new. The no-advance-but-marketing-guarantees was adopted by the imprint Vanguard Press at the Perseus Books Group, which I profiled way back in 2008. (Vanguard was shuttered in 2012, and Perseus was acquired by Hachette in 2016). There have also been more behind-the-scenes deal structures like this that I’ve come across/heard about that I can’t really talk about specifically for confidentiality reasons, but trust me, they exist.

As Ron Charles notes, one thing imprints like this do is to shift more of the prospective investment of a new book onto the author. Which, again, has been around before, but I’ll be interested to see if it spreads more widely to the Big 5, where it’s never really caught on in a big way.

What feels new to me is the reliance on freelance labor. On the one hand, sure, I’m a freelance editor! I embraced the lifestyle even before the pandemic. If you offered me double what I make now, I’d still have a hard time imagining going back to a more traditional job.

Link to the rest at Nathan Bransford

PG notes that he hasn’t seen any Author Equity publishing contracts nor does PG know anything about the investors/managers the company has.

However, promising to give authors a percentage of the “profit” from the sales of her/his books is a system that’s perfectly set up to scam authors. Why might that be?

Gross revenue received by a business of any sort is not terribly easy to fiddle with. Basically, gross revenue is the money and other items with a monetary value the business receives. If a business receives payment in dollars, wheat, corn, gold, timber or diamonds, each of those has a market value that can be used as basis for calculating gross revenues.

Profits, on the other hand, are quite prone to fiddling. Salaries and benefits paid to staff are subtracted from the gross proceeds before profit is calculated. Business travel to exotic locations is a deductible expense that reduces profits.

Similarly, office rents, printing and shipping expenses reduce profits. Depreciation of equipment is another deduction that reduces profits. All sorts of things can be jammed into business expenses to effectively reduce profits.

Gross revenues from the sale of an author’s books are not susceptible to nearly as much “tweaking” as profits are. Auditing of royalties is also an easier process with gross revenues as the basis for royalties.