From Nick Kokonas:
One of the most opaque industries around is publishing, not here online, but good old-fashioned print-books and their digital and audio spin-offs. Poke around and try to find some hard sales numbers and you’ll quickly find that it’s near impossible to do so. You can find bestseller lists from reputable sources like the NYTimes, Amazon and others but tying those rankings to an actual number of books sold at retail is simply not doable. Publishing costs, deals, and profit lines are even harder to shake loose.
About a decade ago, in 2007, book agents and publishers began approaching chef Achatz and me to gauge our interest in creating an Alinea cookbook. Ever since that process started I have wanted to write this post. Having never published a book before I was fairly mind-blown by the terms of the offering and my inability to properly and easily research the process, costs and revenue potential of a cookbook. In the intervening decade I’ve ranted privately to dozens of chefs, restaurant owners, writers of fiction and non-fiction alike, and even a few screenwriters that they should avoid traditional publishing deals if at all possible. I’ve pushed the case in private, but have always been afraid to fully burn my bridges.
Until now.
Back in March of 2007 we received this exact offer from a major cookbook publisher in the US, the first of several such offers that were remarkably similar. I’ve redacted only the publisher’s identity, the rest is verbatim:
Advance against royalties: $125,000
Royalties: hardcover: 8% of cover price on first 15,000 copies; 10% of cover price on next 15,000 copies; 12% on all copies thereafter; trade paperback: 7.5% of cover price on all copies (note that we are not envisioning this as a paperback but nevertheless want to secure the rights)
Territory: world
Subsidiary rights secured by publisher: first serial (90% author/10% publisher); second serial (50%/50%), book club (50%/50%), permissions (50%/50%), other book publication (50%/50%), British (80%/20%), translation (75%/25%), electronic (50%/50%), audio (50%/50%), paper products (50%/50%)
Subsidiary rights retained by author: video, commercial and merchandising, performance
Deliverables: 100 recipes and supporting text by 8/31/07; 150 color photographs delivered as high-resolution digital files with match prints by 8/31/07; recipes must be fully tested and photographs are subject to [redacted’s] approval.
Option: on next cookbook; proposal may be submitted 90 days after publication of the contract work
Buyback: Author will purchase 5,000 copies for resale within 12 months of publication subject to the following terms: non-returnable; orders of a minimum of 500 copies; in carton quantities only; subject to [redacted’s] inventory requirements; at a discount of 50% off the retail price; royalties payable; delivered to a single US destination; to be sold through the author’s own restaurants, businesses, and website only.
For a first book this is considered a great offer. It’s super rare for any chef or restaurant to receive a solid book deal, let alone a restaurant that was less than 2 years old. $125,000 and the guarantee of editing support, printing supervision, and distribution would have ensured that the book would reach a wide audience and be of relatively high quality.
But then I started doing the math. And negotiating. The offer was soon doubled to $250,000 (perhaps too quickly). But it still didn’t add up to me. At a $60 cover price we would net $4.80 per book sold of the first 15,000 units and have recouped only a $72,000 credit of the advance. On the next 15,000 copies, $90,000. For every book sold after 30,000 — and let’s be clear *very* few cookbooks sell more than 30,000 copies — we would recoup at a rate of $7.20 per book and need to sell another 12,222 books before we saw another dime. The advance is just that — an advance against royalties — and just like a record deal the publisher keeps all of the revenue until the advance is fully recouped, if ever.
Out of that $250,000 we would be required to spend the money on all photography, graphic design, pre-press, editing, recipe testing, writing and proofs. With a team of 4–6 professionals contracted for the book this would typically use 70% to 85% of the advance. It could easily end up being more than that for us as we intended to shoot every recipe, its steps and the final dish… something that the vast majority of cookbooks do not do for several reasons.
The photography, color correction, layout and proofs are exacting and time consuming. As important, pages that are full-bleed, 6-color printed drive up the printing costs. That is why most cookbooks — even the best — do not include photographs of every recipe. The pages that are only text, be they recipes or essays, are far cheaper to print and work to save money on the overall production costs. If you unbind a typical cookbook (we dissected a dozen or so with an X-acto knife), you’ll find that pages 20 / 200 (for example) are printed on the same sheet… and don’t include pictures. Multiply that by 40% or more of the book and you’ve saved a great deal of money. Next time you pick up a cookbook try to estimate how many pages are all or mostly words, then page through the book. You’ll be surprised. And now you’ll know why there isn’t a picture of every recipe and dish, even though the ones with pictures tend to be the only recipes readers actually cook.
There is, baked into the structure of the publishing agreement, a mutual incentive to reduce costs. For the authors it is to cut corners on photography and design production to retain more of the advance money. This helps the publisher to keep the printing cost as low as possible. But what were those costs exactly?
I still had no idea what it actually cost to print a major cookbook. That was as hard to figure out as sales numbers. So our team started calling printers in China and Korea, print brokers in the US, and any publishing contact I could find to ask a very specific question: “How much does it cost to print 30,000 copies of a [Very Famous and Successful] Cookbook, do you think?” I was met with responses that were akin to me asking for state secrets that were highly classified. No one would talk.
Until one-day I got lucky. Just by chance I spoke to the print broker who actually worked on the exact bid for that famous book. And he told me precisely: that super amazing cookbook that I truly loved, which at the time retailed for $50 and had won every award imaginable, cost $3.83 per book to print, shrink wrap, and ship to the US. I thought he must be mistaken and I said so. “No way.” He replied, “well that was the first edition, I’m sure the cost has gone down since then.” He thought I was implying that $3.83 per book was too high!
Link to the rest at Nick Kokonas
I compare the intelligent business analysis he did here to the shivery, credulous excitement poor first-time novelists have when they get an agent and a $2500 advance offer (which will be paid out to them over the course of two years), and I think about their lack of context/training to do this, and I just feel sad. Good for him for posting this.
There are so many lessons in there it should be required reading for dreamers.
He’s talking about the most complex, niche, and premium of books. And yet they brought it to market successfully on their own by doing their homework and hiring true business professionals. And made good coin, too.
If that kind of project was doable in 2009, simpler projects are assuredly viable today.
It really comes down to understanding the math and doing the homework.
It really comes down to understanding the math and doing the homework.
Agree. But there is an odd phenomenon in some circles. People brag about their lack of math skills, and tell us they are literarily oriented.
I’m waiting for a business guy or engineer to brag about his illiteracy.
“I’m waiting for a business guy or engineer to brag about his illiteracy.”
LOL. Don’t hold your breath! 🙂
If you can’t write a good memo or progress report you won’t be working in business or engineering for long. Communication is part of the job.
I’ve written many for people who were very good at their jobs, but didn’t have good writing skills. But, they never bragged about it.
Many times I had a mess of a report in front of me, and then asked the guy what he was trying to say. They were usually very articulate and would easily explain what they were trying to say. I told them to pay attention to their own spoken words, then write them down.
“You can find bestseller lists from reputable sources like the NYTimes…”
Huh???
I think this fellow’s books are not the point, they are part of a humongous strategy. His restaurant in chi-town is booked months in advance, you have to buy tickets ahead a month at least when they open their lottery-like mini ticketmaster, from $300-425+ for each diner. My grandson did a quick google and saw that there are many seatings each day, and when tickets go on sale, like for a rock star, they are sold out in minutes.
Still appreciate the candid parts of his post
Beg to differ.
The books *are* the point.
Yes, the books and the article are a brand building exercise. But all those things you mention are things that should have gotten him a fair deal even as a newcomer. And he got a lot of offers. All roughly equally as bad.
I don’t know if he has or hasn’t but what if he wanted to market a sauce under his brand. Or a set of metric measuring cups. Would he get such a predatory deal? Doubtful.
He turned down the deals because he correctly felt his brand and professional knowledge were being disrespected. Even the ones that went to him were looking to fleece him.
This wasn’t Joe Tailgater trying to get grandma’s cookbook out the door. Some respect was due.
He turned down the deals because he correctly felt his brand and professional knowledge were being disrespected.
I suspect he turned them down because they were financially unfavorable to him.
They thought he was naive/stupid enough to buy that deal.
That was pretty disrepectful. So was dismissing the whole project as a “pretty good appendix” or saying “nobody uses grams”.
It looks like they gave him a bad deal just like they give lots of people. They are looking out for themselves. They don’t give no stinkin’ repect. They just go to the next guy in line.
Expecting respect in markets is a big mistake.
If I bought a cookbook and found that I had to measure everything out in grams I would send the stupid thing back in a heartbeat.
This wasn’t just any old cookbook.
It was/is a cookbook for professional chefs and dedicated foodies. A very niche product for those involved in precision cooking. Kitchen chemistry.
It’s sold a 100,000 copies. $2.5M at wholesale.
The guy knows his market.
One of the most opaque industries around is publishing, not here online, but good old-fashioned print-books and their digital and audio spin-offs.
Compared to what? How many hand tools are sold annually in the US? Sweaters? Lug nut wrenches? Window screens?
Well, now.
The auto industry is pretty transparent in both dollars and units. And the margins are known in general terms. Ditto for consumer electronics, going back decades. You can find public cost estimate breakdowns for many products, even Kindles and iPads. (One 1984 IEEE study broke down an original Macintosh and found the $2500 Mac, discounted to $1000 for college students) had a manufacturing cost of $300 and was cheaper to build than comparably spec’ed Ataris and Amigas that sold for $600-800. Branding power at work: 400% margins.)
Lots of businesses are covered by analysis firms employing veterans quite willing to provide insight into both process and costs. (Obviously, actual trade secrets aren’t divulged.) There is an entire subset of industrial engineering dedicated to cost estimation of existing, planned, and proposed products. Patents are very useful for the latter purposes.
He is correct that the NYC publishing industry is exceptional in its opacity to outsiders. It’s a product of its culture and the source of its margins. If more authors truly understood the payday loan economics behind advances self-publishing would’ve been more common before Kindle.
The Manhattan Mafia’s “omerta” is legendary. Surely you’ve heard some of the horror stories of authors pissing off one editor and getting blacklisted everywhere. “You’ll never work in this town again!” isn’t just a movie/TV cliche threat. Don’t need to go much further than George R.R. Martin who spent a couple decades working in Hollywood because nobody in Manhattan would work with him.
Note that even after his 2009 success, he still kept what he knew quiet so as to not “burn bridges”. NYC publishing omerta at work.
That last bit refers to Mr Kokonas, not Mr Martin.
There’s also many embarrassing stories of corporate pricing mistakes in the electronics business. Like the billions “the father of playstation” cost Sony with the PS3 launch. No secrets saved him. He got fired. It was that big a mess.
You can find public cost estimate breakdowns for many products, even Kindles and iPads.
Sure you can. But there are lots of others where you can’t because they are rolled up in larger categories.
Neither books nor publishers are special. Revenues for public companies are reported, but the breakdown by individual products is often not.
Trying to find exact sales numbers on one single book on a best seller list is asking for data on one of a zillion books produced in a year. No company reports at that level of detail.
But it is distressing. I can’t even find out how many units of Levi’s 569 jeans in size 32×32 were sold last year.
But jeans are “self-published”. Levis owns the IP. They control their own distribution. And you can bet their raw material suppliers know what their margins are like. And Levis doesn’t have to deal with truckers that demand control of the jeans’ appearance, marketing, and distribution and revenue. Not the same situation at all.)
The opacity issue is that tradpub is a bottleneck middleman. And a collusive one. Omerta is all about keeping the suppliers in the dark about the real value of their material. Note that the first offer at $125k was supposed to be a good offer according to industry lore yet it was quickly doubled…with poisonous strings. And all the offers were in the same vein.
(I used the auto industry as an example of relative transparency because they are *forced* by law to use bottleneck middlemen. And, while they can’t keep the middlemen from occasionally gauging the customer and tarnishing their brand, they do have some control over the bad actors. Look up the story of the launch of the Miata.)
The issue here isn’t so much what we as consumers know or don’t know but what suppliers know and can use in their negotiations. In most industries suppliers and partners have a good idea of the value add of each part in the chain. Consumers may or not end up with a 400% markup but rarely do middlemen get to exploit their suppliers the way big publishing does. Maybe DeBeers…
The restaurant guy tells us, “Poke around and try to find some hard sales numbers and you’ll quickly find that it’s near impossible to do so.”
OK. Poke around and try to find how many units of Levi’s 569 32×32 sold last year.
Once he became a supplier, he had very good hard sales numbers for his product.
Books are just as opaque as many other products in the economy. They don’t enjoy some special status. They aren’t special.
On the other hand, finding out how many jeans overall sold is likely not nearly as difficult as finding out how well paperback books sell. As an industry, publishing is based on guesses and until AE came along, had woefully opaque and misleading reporting of even high-level, broad sales figures. Nielsen is pretty much a joke.
On the other hand, finding out how many jeans overall sold is likely not nearly as difficult as finding out how well paperback books sell.
But, we’re not looking for overall jeans. We’re looking for Levi’s 569 32×32.
The restaurant guy was complaining because he couldn’t find hard data on specific books on a best seller list. That’s hard data on one of hundreds of thousands of individual products.
Publishers don’t have to guess about what they sell. They know what they sell. so does Levis.
No, he was actually looking for how much comparable cookbooks make and due to the overwhelming lack of actual data even for categories had only the route of individual titles available to pursue.
It’s the equivalent of wanting sales numbers on women’s skinny jeans and having nothing, so asking around for one comparable product’s numbers so you have an example.
Examples aren’t the same as data but they have to do when data is opaque or absent.
You seem to have a habit of narrowing a list of complaints about a major theme to one tiny sticking point you can take issue with. No one with a brain can’t see that trad pub has a data issue.
The restaurant guy tells us, “You can find bestseller lists from reputable sources like the NYTimes, Amazon and others but tying those rankings to an actual number of books sold at retail is simply not doable.”
So, try to find the actual numbers for Levis 569 32×32.
The difficulty in finding hard data on books is similar to that of many other products. Books aren’t special.
I lack a brain. What’s the trad pub database issue? For whom is it an issue?
Does Levis have a jeans issue? For whom?
The publisher’s mistake? Anyone who works a successful restaurant is VERY good with numbers. They have to be – or the logistics will kill them.
Considering some similar news here, about professionals in other industries being contracted by publishers and given the noob writer treatment, I’d say it’s a standard.
I _think_ TradPub is getting a rather bad rep outside of its own circle, a circle that keeps getting stale.
We’ll see. Beyond a certain academic curiosity, I don’t really care.
Well…correction. I care in the sense that it reflects similars events in other groups. Politics, for instance.
Take care
Wait….Buyback: Author will purchase 5,000 copies for resale within 12 months of publication subject to the following terms:
What? Is that a normal contract term?
I’m hesitant to post this as I must be seeing that wrong. The author has to buy FIVE THOUSAND copies him/herself?????
Ok, I went to the article:
“Since I expected that we would be selling books through the restaurant I wouldn’t mind having an inventory and so I didn’t pay close attention to that section of the offer. But doing the math I realized that the publisher was essentially guaranteeing that they would recoup the entirety of the original advance offer! At $30 wholesale to us and a cost of $3.83 to them, a sale of 5,000 copies to us, the authors, would net them a $130,850 profit. It was at this point that I got actually angry. The publisher was taking no risk at all.”
OMG
That’s a completely non-standard requirement that should have been removed during negotiation.
THis was a point I made many, many times when some newbie authors lamented that their publisher may have lost money since teh advanced was never earned out. I said, “Nope. They made money. Much more than YOU did.”
Cause they don’t have to sell enough to “earn out” a 5K or 10K advance to make many times that given the low percentage authors get.
Definitely go to the source.
The extract here is barely prologue.
And follow through to the comments.
The guy can write as well as cook and publish.
Great philosophy for creativity.
In a nutshell: he boldly goes where conventional wisdom balks. And makes it work.
“I thought he must be mistaken and I said so. “No way.” He replied, “well that was the first edition, I’m sure the cost has gone down since then.” He thought I was implying that $3.83 per book was too high!”
And all the other costs are ‘one time’ costs only, once done the rest is ‘gravy’ as I think they call it.
And that was a full color cook book, any bets print only costs less? 😉
Between this and ‘Agent Sarah LaPolla’ below and you’d wonder how much longer that little guy hiding behind the curtain has before he’s tared, feathered and run out of town.