A peek inside the cashflow of writing books


I was poking around on Quora and came across an interesting juxtaposition of questions:

Quora questions screen capture

Neither of these is an unusual question. Quora is filled with people asking how to make money as an author, and other people asking how to download books without paying for them. Seeing those two questions together, though, made me realize that the two questions only need one answer:

If you want to make money writing books, then people have to pay you for them; if you want to get books for free, you have to find some non-monetary motivation for the author to create those books.

There are certainly authors who write just for the sheer pleasure of writing, and others who write for the pleasure of being published. Money is not their primary motivation. But let’s look at the rest of the authors for a moment. Where do we get our money? There are five answers to that question.

  1. The traditional publishing model
  2. Work for hire
  3. Self-publishing
  4. Vanity presses
  5. E-book only

Traditional Publishing

All cash flows to the author (although the agent takes a cut). The publisher pays the author an advance prior to publication and a royalty on each book sold. Think of the advance as a loan against future royalties. The royalty can be calculated a number of different ways: a flat amount, a percentage of the cover price, a percentage of the wholesale price, or a sliding scale. Under this model, the publisher pays for cover design, layout, editing, proofreading, copyediting, printing, marketing, and all of those other expenses required to put out a book. The e-book and print book are handled exactly the same. Most of my books were published traditionally.

Traditional publishing is hard to break into. The ease of self-publishing and its relatively low cost means a lot of authors don’t even try the traditional approach. The ones that do need a breakout success on their first book, or there will never be a second one. Low initial sales are a career-killer.

This is the pay model that non-writers find hardest to understand. I’ve had people tell me, “gee, it must be nice getting paid over and over again with royalties, even years after you wrote the book.” They don’t understand that in traditional publishing royalties are the only money the author will get. Even the advance is just royalty money that’s paid early. If someone hires a carpenter to build a shed, the carpenter gets paid when the shed is built. If an author’s book flops, the author doesn’t get paid.

An author shares risk with a publisher. A carpenter doesn’t. If an author and a carpenter put in six months of work on a project, the author may get ten times what the carpenter gets, or may get a tenth.

Work for Hire

The author is paid an hourly wage (or annual salary) to write the book. There are no royalties. This is common in business writing and textbooks, among other markets. As with traditional publishing, all money flows to the author and the author takes no risk. This model is identical for print books and e-books.

Work for hire is as hard (or as easy) as finding any other job. The author puts in the hours, delivers the product, and collects the checks.

The flip side of this is that there’s no reward for a breakout bestseller. A work-for-hire author gets paid the same whether the book sells ten copies or ten million copies.

Self-Publishing

The author is the publisher. The author pays for everything, and keeps all of the profit. It’s a lot of work, but it can pay off well with a successful book. I did this with my first two books. I had to pay up front for the whole print run, store all of the books, and handle all of the marketing and fulfillment. With Inside Captioning, I spent well over $10,000 before I made back my first penny, but my profit per book was an order of magnitude higher than my traditionally-published books. These days, with PoD (print on demand) presses, you don’t have to order thousands of copies up front, but your cost per book is significantly higher.

Self-publishing is easy to get into. The author just needs some cash (a couple of grand should do it). Unlike traditional publishing, the risk isn’t shared: the author takes all risk.

If that person who asked the first Quora question gets his or her way, that risk won’t pay off. Most authors will never recover the money they spent on self-publishing the book, and illegal e-book downloads may make the difference between making a few bucks and losing money.

Vanity Presses

Kind of like traditional publishing, except the royalty is bigger, there’s no advance, and the author pays for things up front. Depending on the vanity press you deal with, they may charge you anywhere from a couple of hundred to a couple of thousand dollars, and then present you with extra charges for “set up,” cover design, layout, format conversions, ISBN/EAN assignment, proofreading, copyediting, and more. As with self-publishing, the author takes all risk.

Vanity presses are ideal for the author who just wants to write up the family history and print a few dozen to give out to the grandkids and cousins.

E-book only

There is no print edition, so nobody has to pay for things like printing, shipping, and storage. The amount of work you are willing to do yourself determines how much it costs up front, because there’s no advance. I did this with the first volume of Myths and Legends of TeaI handled the book design, cover design, format conversions, uploading, and account setup myself, and arranged for my own proofreading and editing. This meant no up-front fees to Amazon and Apple. The royalties are substantially higher than any of the other options. There are also services that will do many of those things for you, either for a fee up front or a percentage of your royalties.

The author bears all of the risk, but with such low up-front costs, there isn’t all that much risk to bear. The upside isn’t as big as with the combo print/e-book approaches, but it’s incredibly easy to do.

In this pay model, bootleg downloads really impact the author. There are no hard-copy sales, so royalties on the e-books are the only way the author can make money.

 

We’re living in an interesting world. There are authors and artists using websites like Patreon to earn a pretty decent living. People are willing to make donations to their favorite author just to keep getting new books. At the same time, sites like Quora are full of people trying to figure out how to stiff authors out of a six buck e-book sale.

As authors, we’re not fooling ourselves. No matter what DRM (digital rights management, a.k.a. copyright protection) those Kindle, Nook, iPad, and Kobo files have, it will be broken in no time flat. If our books aren’t available on some pirate website, it’s not because Amazon prevented it from happening, it’s because nobody cared enough to bootleg our books.

It’s no longer enough for an author to write a book, send it to the publisher, and get started writing the next one. We have to be actively involved in marketing, and we have to figure out alternate ways to make money from the book if sales aren’t high enough. It can be frustrating, but it’s today’s reality. There are over 50,000 new books published every month, and that doesn’t even count the e-books with no print edition. It’s tough to break out from the pack, but it can be done, and new authors do it every month.

This whole blog post really boils down to one thing:

If you want your favorite authors to write more books, buy copies of their other books.

Lest you think these feelings are self-serving, most of my books aren’t even available in e-book form, and I doubt that I’ve lost much income due to theft or bootlegging. But I believe that people deserve to be paid for their work. I confess: I played with someone else’s copy of Minecraft for a while. Then I realized I enjoyed it and wanted to see it improved and maintained, so I bought my own copy — and then bought a copy for my grandson.

Please, go to a library and read books for free. That’s what libraries are for. If you prefer, borrow books from friends. And when you find authors you like, buy copies of their books. New copies, since they don’t get paid for used copies. When it comes right down to it, the best way to support the arts is with your wallet.

About Gary D. Robson

Gary Robson: Author, tea guy, and general manager of the Billings Bookstore Cooperative. I've written books and articles on a zillion different subjects, but everyone knows me for my "Who Pooped in the Park?" books.

Posted on 7 July 2015, in Blog and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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