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A peek inside the cashflow of writing books
I was poking around on Quora and came across an interesting juxtaposition of questions:
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.
- The traditional publishing model
- Work for hire
- Self-publishing
- Vanity presses
- 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 Tea. I 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.
Taking your self-published book into a bookstore
It happens all the time. An author comes into my bookstore and says, “would you carry my book here?” If they’re carrying a copy of the book, I ask to see it. If they’re not, I wonder what they were thinking. Who asks a store to sell their book without having one along to show the store owner? But I digress. When the author hands me the book, I take a quick look at it and then ask the author for the elevator speech. Authors, take note: If you don’t have an elevator speech for your book, come up with one. It’s a quick synopsis, typically 30 seconds or so, that sums up what your book is and why we should sell it. Here’s what I look for in an elevator speech and my first glance at the book:
- Is it relevant? Your typical indie bookstores is a lot smaller than a Powell’s, Tattered Cover, or Barnes & Noble. We can’t carry every book that comes out. Not even close. But if your book has a local focus or matches with our store’s specialty, we’re certainly going to consider it. Check out our store and work that relevance into the elevator speech. If you tell me, “Your store is known for its nature section, and my book about wolverines will be the perfect fit,” you probably just tripled your chances of a yes.
- Is the price realistic? The average trade paperback novel sells for $13 to $16 these days. If yours is $19.95, we can probably work something out. If it’s $30, we’re not going to be able to sell it. Some genres go for more than others. Science fiction and fantasy fans are used to paying $7 to $10 for a mass-market paperback. Twenty bucks is a hard sell to them. A well-researched 500-page nonfiction book may not sell as many copies, but people will pay $25 without blinking.
- Can you help us sell your book? If you offer to talk about our store on your blog or Facebook, that will help. If you offer a book signing, that helps, too. Signs, bookmarks, and other marketing materials are good, but with one caveat: If you give me a stack of bookmarks that say “available at Amazon,” I’ll toss them straight in the trash. I don’t advertise for competitors.
Assuming your book passed the first test, I’ll flip through the book itself and check on some details. Here’s what I’m looking for:
- Does it have a professional-looking cover? Cover designers aren’t that expensive. A good cover that doesn’t look like stock photography with text in Comic Sans will pay for itself a hundred times over.
- How’s the writing? I’ll flip through and read a few paragraphs from random pages. I’m not really critiquing your literary skills here. If I don’t see spelling errors, egregious grammatical flaws, bizarre punctuation, or horribly awkward dialog, I’m probably happy with it. If I see ten exclamation points on one page, on the other hand, that’s a no.
- Who’s the publisher? There are certain names that set off red flags because they’re horrible for bookstores to deal with. The Amazon imprints (especially CreateSpace) are a pain for us. They really don’t want to deal with indie stores because the whole imprint is set up just to sell on Amazon’s website. I won’t even call PublishAmerica anymore, because they’re so difficult to work with.
Finally, it’s time to check the terms. I’ll take the book over to the cash register and scan it into one of our wholesaler databases (Ingram or Baker & Taylor). There had better be an EAN barcode, or the book’s a no-go. There are certain things in the retail book business that are a given. One of those is that bookstores buy books at a 40% discount or better. Another is that books are returnable. If we try your books as an experiment and they don’t sell, we want to be able to send them back to the distributor. Here is something we don’t ever want to see (this is a screen capture from the Ingram iPage database: 
I circled the two issues with this listing. Here’s why they are important:
Discount
As I said, 40% is the standard discount, and it’s often better than that. Virtually every book by a major publishing company is available to bookstores at 40%. If we have a choice between stocking a $10 book that we can make $4 on, and your $10 book that we can make $2.50 on, which one do you think we’ll dedicate our shelf space to? There’s also the issue of sales. Some bookstores never do them, but others do regular promotions: all mysteries 20% off this weekend, for example. If we bought your book at a 25% discount, we’re going to end up losing money selling it during a sale. Is 40% an excessive profit? According to the latest data from the American Booksellers Association, a typical small American bookstore is operating right on the edge of profitability. Most actually lose a couple of percent per year. Believe me, we need that 40%.
Returnability
Clothing stores can’t return unsold clothes. Grocery stores can’t return unsold food. Why do bookstores expect to be able to return unsold books? Well, that issue is quite a hornet’s nest! Return policies began during the Depression in the U.S.
Businesses were going bankrupt all across the country, and bookstore owners became very conservative in their buying. They bought the stuff they knew would sell, but they didn’t take chances on new titles. Publishers can’t survive if they’re only selling their backlist. They need to have a constant stream of new titles; new authors; new enthusiasm. So they offered booksellers a deal: keep buying new books, and if they don’t sell, send them back. It’s not free, of course. The booksellers are responsible for shipping costs to send the books back, and the return credit isn’t always the full amount they paid for the book. Ingram, for example, gives booksellers a 40% discount, but only credits 50% of the list price of the book on a return. Buy a $30 hardback for $18, and get $15 back to return it. Add in a buck for shipping, and the store loses $4 on the return.
But the system worked. Bookstores bought new books, publisher sales continued, and the book business survived. There are those who think this system should have gone away long ago — just see what Angela Hoy has to say about it. And I see her point; my store is switching to non-returnable with several publishers that offer us significantly better discounts. If we trust our instincts on ordering, that extra 5% discount pays off. But this plays hand-in-hand with discounts. If you’re offering me a 45% or 50% discount, I will take your book on a non-returnable basis. But when Ingram, Baker & Taylor, Partners/West, and all of my other distributors offer me 40% returnable and you offer me 25% non-returnable, I really don’t want to take a chance on your book. I’ll find something good from the millions of titles in their catalogs.
To sum up, I will buy self-published books and stock them in my store. If you have a professionally-edited book that’s well written and sold under the same terms as the rest of the books I buy, please come talk to me. But if this is your first book and you didn’t hire a proofreader, or you’re short-discounting a non-returnable title, or your cover looks like it came from a template, I’m probably not going to stock it.
Can’t writers all just get along?
Before addressing the main issue of this post, I’d like to provide a bit of background. When somebody hits that magic “follow” button on my blog, I get an email telling me about it. Here’s a sample email I received this evening:
Sometimes I scan down the short list of “great posts” and see things like “One strange tip for making money on eBay.” I delete the email and move on. Sometimes I see fascinating post titles like the second one in the image above. That made me want to follow the link to Shannon Thompson’s blog and read the article Why Are Authors “Hating” On One Another?
I ended up subscribing to Shannon’s blog post and deciding to write my own follow-up post on her topic. That, my friends, is known as a win-win situation. When she clicked the “follow” button, she didn’t just sign up to read my posts, she gained a reader for her own blog.
Why the hate doesn’t make sense
Shannon’s post ponders why traditionally-published authors, self-published authors, and small-press authors spend so much time and effort verbally assaulting each other. That’s a fine question, and one I’ve pondered myself.
You see, all three of those descriptions fit me. My first two books were self-published, one was large press, and the rest have been small press. Now I’m pondering what to do with my upcoming work. Let me provide my perspective on Shannon’s observations:
“I’ve seen hate from traditionally published authors, generally saying anyone else is not ‘good enough’ for bigger publishers. Ironically, a lot of these authors have admitted to previously knowing someone in the industry. Even worse, they don’t seem to consider many authors aren’t comfortable with traditional publishing houses monopolizing the market.”
Let’s get real here. It’s often not the author that determines whether a particular book is suitable for a big press, but the book. I decided to self-publish Inside Captioning because the market was too small to interest a big publisher. With a total potential market of only a few thousand people at the time, it also meant that I couldn’t make enough money to be worthwhile from a buck or two per book in royalties. I went ahead and printed 1,500 copies, which was quite an investment, and started speaking at conferences. I sold all 1,500 books — most of them through back-of-room sales and hallway book signing tables at conferences.
The best part is that when interest in closed captioning expanded and the government passed laws mandating television access for deaf and hard-of-hearing people, I made a proposal to a large publishing company and it was accepted largely because of the platform I’d built with the self-published book and the speaking engagements (among other things).
As a traditionally-published author, how could I possibly hate on self-published authors when that’s what got me started?
“I’ve seen hate from small press published authors, saying almost the exact same thing about self-published authors.”
The same argument applies here. Some books fit better with big presses, some with little presses, and some with self publishing.
“But I also see hate from self-published authors, saying they don’t like traditional publishing houses for the reasons above but also hating on small-press published authors, because they aren’t ‘capable’ at marketing themselves and, therefore, have to rely on someone else by means of payment.”
The latter part of this argument is really silly. I didn’t go from self-publishing to traditional because I couldn’t market myself. Traditionally-published authors have to market themselves, no matter how big the press. The thing is, even though I make the majority of my income through writing, I still do have a day job. I also really like the traditional publishing model for cash flow: all money flows toward the author. I don’t like paying for my own cover design, copyediting, proofreading, fact-checking, ebook conversion, layout, and printing. I also don’t have time to do many of those things myself — and I freely admit that I’m not the best cover designer in the world.
We are not in competition with each other
It’s easy to convince yourself that every other author in your genre is in competition with you. After all, there’s only so much publishing money to go around, right? And there are only so many readers in your genre, all of whom have fixed budgets for books.
No.
In fact, reality works exactly the other way around. Let’s say I write steampunk dragon mysteries. I’ve written two, with modest success. Now you come along with your own steampunk dragon mystery. Yours sells like hotcakes. What happens? More people get interested in steampunk dragon mysteries. After they read yours, they look for more in the genre, and they find mine. Realistically, nobody is going to say they can only afford one steampunk mystery novel this year.
A high tide floats all boats.
In fact, if we’re smart, we’ll do some cross-promotion. Maybe follow each other’s blogs. Perhaps blurb each other’s books. Does it matter if one of us is small press and one is Big Six? Not a bit.
We all have a common goal, which is to keep people interested in reading. Specifically, reading the kind of cool stuff that we like to write (although making the house payment is a pretty important goal, too). Let’s stop fighting with each other and focus on the important things in life, like em dashes. Don’t you just hate it when people confuse them with hyphens. Drives me nuts.
