The Business Rusch: Sea Changes

 

The Business Rusch: Sea Changes

Kristine Kathryn Rusch

A lot of readers have commented on my blog posts of the past two weeks. For those of you who missed this while on spring break or family holiday, I wrote about some discrepancies I found in royalty statements.  I checked with other writers and publishing professionals and discovered that these discrepancies weren’t unusual.  I wrote about that the first week. The second week, I updated everyone on the progress made on the royalty statement front.

My blog design tracks the most-read posts.  If you look at the first page of my website, you’ll see that last week’s post is number one, with the previous week’s as number two.  Thousands of people have read these two posts.  Most have not contacted me directly, although some commented here.  A few e-mailed.  And many blogged about the issue.

Like I expected, however, I’m no longer in the loop.  Because I asked people to move their information-gathering to their writers organizations and their agents/advocates.  I don’t expect to have any news for you on the royalty front for some time.  That might be weeks or months.  In fact, now that the ball is rolling, I might be among the last to learn what the upshot is, because I am not directly involved in any writers organizations, large agencies, or traditional publishing houses.

I do know that there’s a lot of misinformation flying around the blogosphere, and some of it was headshaking to me.  Until I figured out what was going on.

I started this blog feature on my website two years ago to help freelancers survive the economic downturn.  Eventually that project became a book, The Freelancer’s Survival Guide. When I finished that book, 18 months in, readers asked me to continue writing a business blog, and even contributed a new name to the blog.  I wrote about various business topics, until I could no longer avoid the elephant in the room: all the changes that are going on in the publishing industry.

In October, I started a long series of blog posts about the changes. I finished that miniseries about a month ago, and promised to continue discussing the changes individually instead of in a series.

While I knew that I was regularly getting new readers, I have continued to write for my established readers, the folks who have followed me either from the days of The Freelancer’s Survival Guide or from the beginning of the publishing series.  I expected that everyone who read the blog had the same bits of knowledge, since we had discussed them previously in many posts.

I did not expect to have my blog readership triple with the royalty posts.  I did know that it would go up, but not quite that dramatically.  Even if I had known, I doubt I would have written the posts any differently.

But the truth is that long-time readers of this blog brought more to the reading experience than first-timers.  And one of the things that long-time readers brought was a knowledge of the way that electronic and indie publishing work, even if those readers had never tried their hand at publishing themselves.

Many of the newer readers didn’t have that reading experience, and didn’t go back to any of the previous blog posts.  (That’s okay.  I don’t always have time to do that either with a new blogger.)  A few people, when they were confused, either commented here  or e-mailed me personally.  (By the way, if you haven’t already done so, go back and read the comments sections from both weeks. There’s a lot of good information there [mixed in with the occasional just plain weird comment].)

However, quite a few traditionally published writers blogged about my post, pointing other writers to it (thank you!) and then, in a paragraph or two, “corrected” me about the way that e-book sales are reported.  These traditionally published writers said repeatedly that there is no way any writer could ever get e-book numbers.

Once I factored out the folks who don’t understand how audits work (and for an explanation of that from people much more savvy than me, look at last week’s comments, starting with the one from Christina F. York), I still found people who firmly believed there was no way for writers to get numbers on e-books.

A dear friend of mine e-mailed me personally about that this week, succinctly saying that there is no Bookscan for e-books, so any writer who says she has numbers on her e-book sales is obviously guessing.

Um. No.  Let me be clear on this point, because it needs saying.  Writers who self-publish an e-book get the sales information for that book directly from the vendor.  In other words, if you put an e-book up on Kindle, Amazon will let you check the sales numbers hourly—not the rankings, but the actual numbers.  If you sell one copy of the book today, and you check your Amazon sales figures page, you’ll see that sale on the total number of sales this month.  If that book sells another copy tomorrow, you’ll see the total sales for that title jump by one.

And so on.

This is different, traditionally published folks, than getting a royalty statement from your publisher, and not just in the time factor.  Let me show you using some information from one of my earlier publishing posts. (If you haven’t read these earlier posts on publishing, then check them out.)

This is how traditional publishing works:

Writers provide content (product) to Publishers.

Publishers distribute that content to Distributors.

Distributors distribute books to Bookstores.

Bookstores distribute that content to Readers.

 

When a writer self-publishes through Amazon.com or through Barnes and Noble.com, this equation changes dramatically:

Writers provide content (product) to Bookstores.

Bookstores distribute that content to Readers.

Both Amazon’s Kindle store and B&N’s Nook store are bookstores.  Some other e-bookstores allow writers to publish direct as well.

When a writer uses a service, like Smashwords, to access harder-to-reach stores, like the iBookstore, then the equation looks like this:

Writers provide content (product) to Distributors.

Distributors distribute books to Bookstores.

Bookstores distribute that content to Readers.

Distributors, just like bookstores, deal with sales, not production.  Publishers produce the books, then distribute them.  Writers who self-publish their own books are acting both as writer and as publisher.

Therefore, the writer/publisher becomes privy to the same information that a Big Six Publisher has concerning sales.  The difference is that the distributors and bookstores report directly to the writer, using the same forms that they would use for a Big Six Publisher.

There is no royalty statement, and no need for Bookscan, not for self-published e-books.

So when I say that the numbers on my self-published books are much higher than the numbers reported to me from my publisher, I am looking at actual sales figures for my self-published books, the same kind of sales figures that the traditional publisher has. The traditional publisher is supposed to record those numbers and put them into my royalty statement accurately.

And accuracy is the only thing I’ve been discussing these past few weeks.  Or to be more specific: inaccuracy.  I do not know the reason for the apparent inaccuracy.  Until I have more information, I can only guess.

As for print books, several writers organizations and Amazon itself will provide Bookscan sales figures directly to the writers of those books.  Sometimes the writer must pay a fee.  Amazon provides this service for free for six months.

This too is a change from the past.  Until a year or so ago, writers had no access to Bookscan numbers without paying an exorbitant price for the service.

These changes are Sea Changes.  Never before in the history of traditional publishing have writers had access to actual sales figures for each individual book.  The writers had to either trust their publisher to report accurately or the writers had to audit the publisher to get that information.

Most writers’ contracts have a clause in them that allows for an audit of a particular book’s sales and all the material pertaining to those sales, provided the writer gives the publisher proper notice of the audit, and provided (usually) that the writer pays for the audit herself.  In the not-too-distant past, writers who audited their publishers were labeled “trouble” and often found themselves unofficially blacklisted.

Therefore, when you combine the expense and the fear of an unofficial blacklist, writers often opted to avoid an audit, even when the writer suspected something was wrong with the numbers being reported from the publisher.

(Let me add here that in the past two weeks, I’ve been subject to some pretty nasty comments from some folks in traditional publishing.  On a few blogs run by folks in publishing, I’ve seen myself referred to as a woman who has always made trouble.  So the bad-mouthing and minimizing still happen.)

Let me clear up one other misconception that I saw on various blogs: Just because I can see the e-book sales figures for my self published books doesn’t mean I can see the e-book sales figures for my traditionally published books. That information does not go to me.  It goes directly to my traditional publisher who has a legal, contractual obligation to present it to me accurately within six months of receipt of that information.  (Publishers violate that part of the contract all the time.  By contract, the information should have reached me in December.  It arrived in April. Such delays are common.)

This sea-change is hugely important.  Because for the first time, writers have access to actual sales information.  Not all writers have that access, however.  Writers who aren’t self-published don’t have that information.  Writers who haven’t signed up for Bookscan don’t have access to the sales numbers either.  (And remember, Bookscan only accounts for 50-75% of all books sold, maybe less.)

Still, enough writers have this information to realize that their royalty statements are incomplete, murky, or just plain wrong.  This realization—and the availability of real hard sales data that did not exist for writers three years ago—is what’s causing this consternation over royalty statements right now.

It was astonishing to me how many traditionally published writers only understood part of what I was talking about.  Several didn’t understand at all.  They have no idea that they can now monitor their own sales through Bookscan.  Many traditionally published writers told me flat out that they never check their royalty statements if the statements are unearned.  (Meaning the books haven’t yet earned out their advance.)  These writers tell their agents not to send the unearned royalty statements.

I want to know how a writer knows the royalty statements are unearned if she hasn’t seen the statements.  For all the writer knows, the publisher is reporting earnings, and those earnings are going into someone else’s pocket.  I know of at least one agent who used that scam repeatedly.

Several months ago, my husband Dean Wesley Smith said to me that this sea change in publishing would cause a huge division between writers.  He foresaw the writers who were capable of handling not just the writing but the business of writing separating from the writers who want someone else to take care of book sales and production.

Over the past few months, it’s become very clear to me that he’s right.  Some writers are unable to make their extensive backlists available to readers, not because of a lack of desire or an unwillingness to work, but because of other obligations.  One writer wrote me a rather plaintive letter.  Her backlist makes mine look small (I have 29 books and 300 short stories that need to return to print), but she’s in her seventies, with multiple book deadlines for traditional publishers.  She doesn’t have the time or the energy to learn new skills.

So many writers are in that position. They often default to agents who have set up an e-publishing wing or to e-pub services that charge a percentage of future sales in perpetuity to format, publish, and “promote” these books.

These writers are falling back on the traditional publishing model because that’s what they’re familiar with, and so many new services are rising up to take advantage of those writers.

Here’s the problem: It only takes about 8 to 12 hours total to create a cover, format, and upload an e-book to the various e-bookstores.  And for that, these new companies that work on a percentage will get paid for decades.

There are companies that will do the same work for a flat fee. The problem is that the fee must be paid when the work is finished.  Writers, chronically broke and mathematically challenged, don’t seem to understand the value of paying $200 now instead of 25% for the lifetime of the work.  But the math is this: on a successful established writer’s novel, one of these percentage companies will earn upwards of ten to twenty thousand dollars over ten years for the same 12 hours work that the writer could have paid $200 for.

That makes no business sense to me.  If I lacked the $200, I would save up until I had it, and then hire a flat-fee company.  But I would never pay a percentage on this new way of publishing.  Not ever.

It seems like a no-brainer to me. But I spent weeks arguing with some pretty savvy writers over it.  I wrote the trust-me post in an attempt to understand their thinking.

But I knew I was missing something.

I finally got a glimpse of what I was missing this past week.

If you have an active and busy traditional publishing career, with multiple deadlines and no time to read, let alone follow industry changes, you might not know how massive these changes hitting publishing are.  If the evidence turns out to be correct, then your royalty statements do not accurately reflect how high your e-book sales are.  As a result, those sales (as reported on your royalty statements) look insignificant.

Even if your e-book sales are accurate and rather large, the dollar amount might look insignificant to you.  Most writers are only getting 25% of net on their e-book sales, minus another 15% for their agent. (For that math, see last week’s post).  The amount of money you will receive for your e-book sales is quite small in comparison to the money you would get for your print sales. You have no idea what all the fuss is about.  It looks like a bunch of writers whining about a tiny amount of money.

Last week, a well-published writer said exactly that to me and implied that since I’m a short story writer, small amounts of money matter to me when they don’t matter to other writers.  (Apparently this well-published writer is unaware of the fact that I’ve published more novels than that writer has (and in more genres too).)  The comment perplexed me (and not just because of the short story barb).  The writer who made the comment used to know a lot about business but, as Dean said to me later, that writer is stuck in the 1980s.

Dean’s assessment wouldn’t leave my mind.  And as I read blog after blog, and fielded comment after comment from traditionally published writers who didn’t understand what all of the fuss was about, I realized that a lot of them are still stuck in the 1980s or the 1990s.  They have no idea that a revolution has hit their business because that revolution has not had a visible impact on them.

That there could be a hidden impact in their royalty statements does not compute for them because they know that writers can’t get sales figures and writers who self-publish by definition know nothing about publishing—both valid points of view for the 20th century.

I fully admit that some of the problems I’ve had in getting writers to understand what’s going on came from the way I wrote the last two posts.  I assumed knowledge on the part of writers.  I figured they understood how their industry is changing.

But many, many writers have no idea how drastically this industry is changing.  Oh, they’ve heard of e-books and they might even own an e-reader, but they’re under the impression that e-books are a minor, minor part of the industry, and e-books sales will have no real impact on them.

And nothing could be farther from the truth.

I have no idea how to bring these writers up to speed and get them to look at the 21st century.

I do know how hard this change has been for me.

You can see the evolution of my own thinking on this blog. I went from thinking that some writers were giving up on themselves by e-publishing books that hadn’t had a real chance in traditional publishing to telling writers they need to assess whether traditional publishing is even right for them.  I’m giving advice now that would have appalled me two years ago.

And my thinking is still evolving.  I know that I made decisions three years ago that I would not make now.  But I have also come to realize that my history makes this new world of publishing perfect for me.

Dean is writing a series called “Think Like A Publisher,” in which he explains how publishers approach publishing and distributing books.  Dean and I owned a publishing company twenty years ago.  Dean edited for several other companies, including Pocket Books, and I have edited for companies as well.  I’ve also been a business writer for more than thirty years.  I like business and understand it.

When Dean writes his “Think Like A Publisher” blogs, they seem quite obvious to me.  But the more he writes, the more I realize how rare our knowledge is.  I’m very aware of the fact that to his blog’s readers the information he is presenting is new and somewhat frightening.

Also, the more he writes, the more I realize how few writers have the skill sets that Dean and I have.  And some of the writers who have those skills don’t have the time or are too old or too ill or too overwhelmed to take advantage of what’s going on here.

A lot of writers are going to be left behind by these changes in publishing.  Even more are going to go from making a reasonable living to making pocket change.  Some writers will wake up one morning and realize that their once-thriving careers are now over, and they won’t understand why.

Even if we settle the royalty statement controversy, and e-book sales get reported accurately, those writers listed above probably won’t make a good living any longer. Because the contract terms currently offered by traditional publishing make it nearly impossible for writers to earn a good living off their e-book sales.  That’s the next fight for traditionally published writers, and it’s an important one.

The issues are different for writers willing to self-publish their work. Those writers will need a lot of patience. They’ll need to learn a whole new set of skills in addition to the writing. They’ll need to figure out how to publish while maintaining their writing output.

If they do, then they’ll make a great deal of money over time.  Not everyone will become a bestseller.  But for the first time, established writers can earn good, consistent money on their work.  Monthly incomes, which is a strange thought all by itself for writers.  Steady monthly incomes.

Dean’s right: writers are already splitting into two groups— the traditionally published professionals and the self-published professionals — with a handful of us straddling both camps.  The problem is that we already speak different languages, and these camps have only existed for a few years.

Imagine what a decade will bring.

We’re going to have to figure out how to keep each other in the loop, and how to respect each other’s choices. Because it’s becoming clearer and clearer to me that only by sharing information will we be able to help each other in our traditional—and untraditional—careers.


“The Business Rusch: Sea Changes” copyright 2011 by Kristine Kathryn Rusch.

 

 

39 responses to “The Business Rusch: Sea Changes”

  1. A.K. Smith says:

    Hi Kris-

    I’ve been following this story closely, and just shaking my head at how little people know about how their industry is run.

    I don’t see that anyone else has mentioned this, but at http://www.novelrank.com you can track your Amazon sales with reasonable accuracy. It works for both paper and electronic books, even if you are traditionally published. This website works by tracking the changes in your book’s Amazon sales rank every hour. Amazon’s ranking algorithm is reasonably predictable insofar as it relates to individual sales, especially lower sales figures (when you’re outside the top 100 and not getting multiple sales per hour).

    I’m not in any way affiliated with the site, but I have found it useful.

  2. Hey Kristine –

    We have a lot of mutual friends (and Robin Brande is a close pal), so you’re spoken of – fondly and respectfully – a lot around here. I’ve got a question that I can’t seem to get answered from any reputable source – so I hope it’s okay that I’m asking you, here.

    What’s your take on a publisher working with Google Books so as to allow indebound booksellers to sell – and profit by – our ebooks?

    I looked into it after one of the bigger genre booksellers asked me about the book I just released (I should have Robin tell you about it!) and told me that the Google Books setup is how they sell my books released by S&S.

    After several clashes with Google Books, I may have achieved liftoff – but I also feel like I’ve been flossing with barbed wire. Terrible experience for this publisher – and I STILL don’t have everything right. And that’s just LISTING the book.

    There are a dozen other things there I don’t like – but I’d really love your opinion on there service.

    Thanks –

    James

    • Kris says:

      Honestly, James, I’m not familiar enough with Google Books’ service to give you an opinion. The information you’ve given me here is a bit sketchy. If you would like, please e-mail me through the contact link here, and tell me exactly what happened. I have a few folks who are more familiar with Google Books than I am, and they might have an opinion and be able to help. If nothing else, I can point you their way.

  3. Passive Guy says:

    As a veteran of the tech industry, I’ve had a lot of experience with disruptive change.

    Ebooks + the ease of self-pubbing on Amazon and others + Amazon’s ebook royalty structure + the low cost of self-promotion = disruptive change.

    One of the characteristics of disruptive change is that it begins more slowly than the big proponents expect it to, but, once it gets a little momentum, it progresses more rapidly than almost anyone anticipates.

    The established players in the business being disrupted almost never survive as the leaders in the new world. Many disappear.

    Established publishers are optimized to sell paper books through physical bookstores and are very good at doing so. The ground is disappearing under their business model in two ways – 1. Physical bookstores are disappearing and space in bookstores devoted to books is diminishing and 2. Physical bookstores are a terrible way to sell ebooks.

    In Amazon’s bookstore, Jane Nobody’s book page looks just as big as Stephanie Meyer’s. Amazon doesn’t really offer anything like the tables at the front of a bookstore that publishers can buy to promote books. Random House carries a lot of swat with the Barnes & Noble book buyer, but no consumer goes to Amazon thinking, “I need to see the latest offerings from Random House.”

    For online sales, the author’s name is the key brand and the publisher adds nothing of value, particularly when it’s clueless about online promotion.

    For ebooks, the only important competitive advantage big publishers have is their big-name authors. Given the narrow margins most publishers operate under, if they lose a few of their big-name authors to self-pubbing, they’re on their way down the slippery slope.

    I’ve read your excellent series on publishing and understand the financial resources available to big publishers through their corporate parents, but in the tech world, much bigger players than the Big Six with much larger profit margins were destroyed within a couple of years when disruptive change entered their world.

    Thanks for your excellent posts and please keep creating them.

    • Kris says:

      Great points all, Passive Guy. I love what you’re saying about disruptive change. Important stuff for all writers to consider because that’s my sense of it as well. And if established businesses do survive disruptive change, they do so in an altered form themselves. All of the businesses I’m familiar with that are old established companies that survived a disruptive change are not the same business they were in say, 1950. And they shouldn’t be.

      The only thing I would quibble with is that in bookstores, the author’s name is also the brand. It’s just that the business model between bookstore/publisher/distributor allowed the publisher to forget that and make demands based on the publishing house name. To the consumer, it was still about the writer. How many readers ever walked into a bookstore and said, “Gimme the latest St. Martins book now!” But publishers used clout and money to move their books to the front of the line. And you’re right: the new world of publishing in e-form will change that part.

      Although, it seems to me, that the front of the bookstore and the endcaps now are all those floating ads on B&N or the mailers (which I ignore) from Amazon. Not as effective, but they still exist.

      Thanks for the kind words.

  4. Dave Freer says:

    Another good post Kris. I’m less generous than you are towards the publishing industry, and suspect the words ‘one born every minute’ are mumbled when signing ‘net’ contracts.

    As far as authors refusing to even consider querying their royalties or looking at the math… well I suspect ‘Stockholm Syndrome’ would not be inappropiate for quite a lot. Rather like women defending genital mutilation IMO.

    On tax: (and speaking from a large degree of ignorance of the US) surely as corporate tax is much lower (or lost entirely by being absorbed by the mysterious ‘net’) cheating authors out of their taxable income amounts to defrauding the taxman too? (If the individual tax rates and corporate taxes were the same, this would merely be theft from the author.)

    • Kris says:

      I don’t know enough about tax law to even come close to answering your question, Dave, or even having a guess. Not a clue. And you made me laugh with Stockholm Syndrome. Good post. 🙂

  5. All too true, Kris.

    And Cindie I know your services are absolutely worth the price compared with the true costs of the traditional model. I’d much rather pay up front then keep all the money at the back end. Imagine if a lawyer decided to offer his/her services for “free” to do a will and take a percentage of the estate at the end. Wouldn’t the Rockafellers and the Kennedy’s love that one?

  6. Diane says:

    Kris, again, thank you for education the rest of us.
    Now that one aspect of creative accounting has been explained so well by J. Daniel Sawyer, I wish to add another point. Using a formula to calculate sales of ebooks is creative accounting, and will only help the publishers who calculate the formula. It will never help the people on the accounts payable list (authors).
    My next question is: does your taxation department (IRS) question the sales formula calculations when the publishers submit thier tax forms? Or do the forms clearly show the actual sales figures that are unavailable for the authors?

    • Kris says:

      Diane, the tax forms we receive from the publishers only list the amount that they paid us. The tax forms the publishers submit to the IRS lists the same amount. Nothing gets detailed unless there’s a tax audit. Technically, the publishers should have the paperwork to show all of this stuff. Since they’re corporations, they’re subject to some different tax/legal rules depending on where they incorporated (which state) and how much detail they need to provide. (Or if they’re even incorporated in the US, which some of the Big Six are not).

  7. Cindie says:

    I think we need a sea change in thinking. Every day — every single day — I have people contact me about publishing their books and then balk at paying what I think is a pretty small amount. Faced with a few hundred or so up front (or in payments), most say they’d rather go with traditional publishing because then they don’t have to pay anything. They don’t see the publisher taking a huge chunk of their sales forever; they only see not having to write a check right now. It makes me sad because 1) I get how the business works, but also 2) I see the potential in these works I’m reading. I can see what they’re giving up — and how eagerly they are doing so. It makes me want to work for free just so they can see it for themselves. Instead, I just keep sending people to you and Dean.

  8. Kris, as always these posts are filled with education. Thanks.

    I’m straddling both worlds as you are, and I find if you want to really make e-self publishing a goal then we all have to learn. It takes time and money to become educated in publishing just as it does if you want to become an accountant, a lawyer, or a baker. Why would anyone think learning how to be a publisher is simple and shouldn’t take any time at all?

    And guess what? I’m going to make some mistakes. Boo hoo, woe is me, the sky is falling…

    Personally I’d rather risk a few mistakes than signing a bad contract with a traditional publisher.

    • Kris says:

      If you make the mistakes, Russ, you can fix them. If you sign a bad contract, you’re locked in for the duration of the contract. Tougher to fix easily.

      Cindie, I’m as astonished as you are by people who won’t invest in themselves. Makes good old Ben Franklin seem even wiser than he probably was. You know that phrase of his: Pennywise and pound-foolish. (sigh) (Don’t work for free.)

  9. Amber Argyle says:

    Self Publishing is opening up avenues that were dead. Novellas, short stories, etc have a market now (or at least a steadier one).

    Who knows, maybe I’ll self-pub my own titles at one point.

    • Kris says:

      I think steadier one is the phrase, Amber. You now know if you write a short story and the major markets turn it down, you can still publish it. (Novels too for that matter.)

  10. Mark Terry says:

    One thing I’d like to throw out here that you didn’t touch on (at least here). I wrote about this on my own blog yesterday. An aspect to this that is of huge benefit to writers is that we’re basically operating our own focus groups. What do I mean?

    In my e-books, the best sellers are THE DEVIL’S PITCHFORK and THE SERPENT’S KISS. That makes sense. They’re the first 2 books in my “franchise” featuring Homeland Security troubleshooter Derek Stillwater. THey were traditionally published and went out of print. The series got picked up by another publisher, I wrestled back the e-rights and put them up as e-books. So the series is continuing – the 4th book comes out in June titled THE VALLEY OF SHADOWS and the third came out last year, THE FALLEN. So their being my better sellers is a sort of straightforward synergy going on.

    I’ve also put up other books, some that nearly made a sale or ones that I’ve decided to go straight to e-books with. One of those was a book for middle grades called THE BATTLE FOR ATLANTIS. It was originally intended as the first in a five-book series and it came very, very close to getting picked up by one of the Big 6. When we ran out of markets and the e-book thing came along, I decided to put it up as an e-book along with several of my other near-misses, some thrillers, some aimed at middle grades.

    As I said, the 2 Derek Stillwaters are the best selling ones. Except … in the last 2 or 3 months the sales for THE BATTLE FOR ATLANTIS have really picked up. And by really picked up, I mean they’re rivaling THE SERPENT’S KISS and they’re also being bought occasionally on the Amazon UK site.

    So, being attentive to trends, I’ve decided that it’s high time to write the 2nd in that series, because apparently there is a real readership for it. Which is useful information. I can look at the actual sales numbers as they progress and make creative AND business decisions that are influenced by them. Awesome.

    • Kris says:

      I agree, Mark. I’m very surprised at which of my short stories sell. And short stories in a series are selling well also. Which means I should probably dust off the books I’d planned to write in those series…:-) I love how you mention it’s our own focus group. Yep.

      Although we have to be careful to keep following our own muse and branch out and try new things. (She writes as she heads downstairs to her office to write a new series under a new name [which is scaring her to death]).

  11. Kevin —

    As Kris says, the definition of net is *everything.* And some presses are already getting very creative with it. I did a post on this last year explaining how slippery definitions of net can get, how important in-contract definitions are, and detailing a couple common Hollywood bookkeeping scams that are starting to show up in publishing contracts I’ve seen over the last year-and-a-bit here http://jdsawyer.net/2010/07/28/principles-of-contracts-nothing-but-net/

    -Dan

  12. John B. says:

    If established writers need the money to self published, why not borrow the
    money using a business type approach to borrowing?

    They could agree to repay the money using the income stream from that e-book’s
    sales. They should be able to use a UCC filing (article 9) to secure it for
    the lender. It would cost more than paying out of pocket but it would be
    cheaper than a paying a % on all sales.

    • Kris says:

      John, good point. Writers could also use the websites that allow them to solicit donations from fans for particular projects. The project gets off the ground when the target amount is met. (I know there are names for these various sites, but I haven’t had caffeine yet.)

  13. Superb post, as always. 😉 Found little to debate or discuss there, really – this stuff just sounds clear as can be, to me. But then, I’m one of those writers who’s also run a few small businesses, so to me, the stuff Dean is posting in his Think Like A Publisher (for instance) mostly sounds like the raw, elementary basics (although don’t get me wrong – I learn some new tips from each of his articles – but the overall theme feels *familiar* and *comfortable*, not alien).

    Two quick comments on specific points.
    #1 You talked about ebook format, cover, and upload taking about 8-12 hours, which feels pretty right (maybe a bit high, depending on the quality of art being done). Then you talked about that costing $200, which seems a bit low for 8-12 hours of work. Am I misreading this? I mean, I would think 8-12 hours of pro quality work would be worth $400-1200, about $50-100 an hour.

    #2 “Even if we settle the royalty statement controversy, and e-book sales get reported accurately, those writers listed above probably won’t make a good living any longer. Because the contract terms currently offered by traditional publishing make it nearly impossible for writers to earn a good living off their e-book sales.”

    First off, don’t get me wrong – I think 25% net is grossly too low, based on costs and risk sharing for the writer. I think good numbers are much more in line with the AG’s suggested 50% net (about 35% of cover). That’s a lot less than 70%, but the publisher is still carrying the risk on the initial investment – so that makes a certain degree of sense.

    But even at 25% net, is it really impossible to make a living? Suppose every book suddenly went digital tomorrow – ALL sales digital, no print. Writers would be making about 14.9% of cover (after agent fees). That’s almost twice the base rate for paperbacks. So instead of making 48-80 cents on an $8 paperback, the writer would make $1.19 on an $8 ebook. OK, the loss of hardcover sales hurts – but the overall higher royalty per book on ebooks, even at the 25% net rate, should make up some of the difference. I’m not convinced it’s impossible to make a living at that rate.

    What I do think is going to be rough is writers adapting to a world where stuff sells forever, but new work still gets most of the attention, and “new” is defined by “published in the last 30 days”, not published in the last 6-12 months. People want new books to read, and want them right away. They want to invest their time in writers who have enough work up (or who are writing fast enough) that they know there will be plenty more to read by that writer.

    Writing a book a year is not going to be enough to keep a writer in the public eye soon, I think. Writers are going to be “allowed” to self publish as many books as they want, which means folks who can write more books are simply going to be seen more. Each new book is an ad for all the older books, so a productive writer is leveraging sales of all her past books with each new one, and that pool is growing faster than a less productive writer. This is going to be the brain breaker for a lot more writers, I think. And many writers who cannot adapt to this, and stay in one book a year mode, are going to get left behind.

    • Kris says:

      The key word, Kevin, is “net” and a lot of publishers don’t define it in the contract. (One actually refused.) So you’re thinking that a net price is firm, when it isn’t. The publisher can change the price all over the place, plus can charge all kinds of things against net, especially if net is not defined.

      The other thing here is that when I mean writers making a living, I mean mid-list writers. The bestsellers will overcome the low royalties with sheer numbers. But the days of midlisters selling a lot of books to big houses and then making a six-figure income plus might be headed out the window. A living, okay. Maybe so at 20K or 30K per year. But the days of midlisters writing and selling enough to traditional houses to make that 100K plus might be gone. That’s what I meant.

      The midlist writer won’t be able to rely on traditional publishing alone. They will have to learn self-publishing or they will have to supplement their income, imho.

  14. I have learned so much from your posts. Reading them is like watching the Super Bowl is for some people (I imagine). They keep me on the edge of my seat. I read them out loud to my husband and we discuss them. Invaluable. I’m so grateful that you have put the time and effort into sharing this information. It’s made a difference in my life and ability to make truly informed decisions as a writer. I do plan on sending a donation your way. Just wanted to take the time to say thank you.

  15. John Walters says:

    Thanks for this post Kris. It is wonderful and clear as a bell.

    I’m going to pull a reverse on Dickens here: It was the worst of times; then it was the best of times. For me, before I somehow discovered your and Dean’s blogs and learned about the wonders of self-publishing, it was a time of despair. I was writing and sending out material and occasionally publishing in magazines and anthologies, while all around markets were crashing, one after the other, unable to keep up in the economic times. I felt like a pugilist up against an opponent twice his size who was gradually getting battered to a pulp; there was no question of quitting, but neither was there too much hope of victory. Fewer and fewer traditional markets were harder and harder to get into. Then: it was like being in a dark damp dungeon and being suddenly let out into the light, a free man once again. I am still coming to grips with it. It’s a giddy, exuberant feeling. It’s a feeling of gratitude and relief along with a desire to work like hell because there is nobody in between anymore who is going to tell me that my work doesn’t fit their niche or their mold.

    One thing among many I have learned over the past year or so of following – no, not just following but studying – your posts, is that no writer is really in competition with another, especially in this wonderful new world of publishing. There is room for us all. Many of these traditionally-published writers who find it hard to make the change, or even see the change, have produced great work that many people love and admire. I hope we can all live and let live and allow each to find whatever place in writing and publishing is right for him or her.

    You are right in what you said above, that very few have the expertise and background that you and Dean have – but even more, the courage and magnanimity to be willing to share the knowledge. I know that many, myself among them, deeply appreciate what you are doing. Once again, thank you.

    • Kris says:

      John, great post. I think all writers had gotten worn down by the changes in the industry. I know I have. I’ve been meaning to do a post on that too, but other things keep getting in the way. I have a stack of articles and links I need to share, but haven’t had a chance yet on that either.

      Your point, though, is extremely good. So many of us who understand what the changes mean feel free. And that’s an amazing feeling. I love your use of the word “giddy” here. That’s correct. Thanks for the post.

  16. Maria Lima says:

    >I’m giving advice now that would have appalled me two years ago.<

    Yeah, this.

    I know that even a year ago, I would have been one of those saying, "OMG, self-epub, why?" But, times are indeed a'changing.

    Thanks again for all your amazing & insightful posts.

  17. *passes you a little money, appropriately earned from writing a column about 99 cent e-books*

    Thank you for writing these. And I’m sorry to say I think you’re right about the polarization of these camps.

  18. Carradee says:

    Many of my friends write, and I’m quite a chatterbox. I also look like a teenager, so my job and hobbies always get at least some inquiry, when people I speak with realize, no, I’m not still in high school or college.

    Out of everyone I talk to in person, I can remember encountering two people who actually knew (some) of how publishing or even freelancing online worked. Two. This is over the past decade.

    Just in the past year, two people have told me about relatives/friends who paid to be published and it didn’t work too well. With one of those companies whose name I recognized at the time as a bad idea. And the more I heard about what these folks had done, the more I became painfully aware that they had published without knowing what they were doing.

    Even online, I’ve recently found self-publishers who have no idea about even Amanda Hocking or JA Konrath.

    My own mother is convinced that a downside to self-publishing is that you have to do your own marketing. I’m still trying to figure out how to politely explain to her that you have to market yourself either way. She… doesn’t get technology’s implications all that well. She’s fantastic at finding information and item deals online. The entire e-book thing, not so much—and I know she read at least one, even though it was perhaps 7 years ago. (PDF form, sold by the author.)

    I’ve realized recently that my friends who write know pretty much nothing about publishing or how it works, even traditional publishing. One younger friend called me recently to ask how to find freelance clients online. I’m glad my friends think enough of my opinion to ask my advice, but it’s quite unnerving to realize they’re relying on my advice.

    It’s such a relief to be able to hand them a link to your blog or your husband’s blog when a post from one of you answers their questions. You two have a ton more experience than I do.

    Thank you so much for taking time out of your busy schedules to share your experience—even if you are a troublemaker. (Yes, my tongue’s in my cheek.)

    • Kris says:

      Thanks, Carradee, MCA, Maria, and Janice, for the kind comments and for the donations. So glad this is helping and that you’re passing the information on to others. I think the more of us who know what to do, the better off the industry is. So thanks!

  19. I’m a self-published author. What I don’t understand is, if publishers have access to the information from Amazon that I do, how can they possibly justify estimating authors’ ebook royalties instead of working it out accurately?

    Isn’t it theft?

    It’s like a shop assistant grabbing a handful of coins, saying “That looks about right,” and giving it to you instead of the correct change. You would protest, and insist he counted out the money, wouldn’t you?

  20. Patrick Alan says:

    “the more he writes, the more I realize how rare our knowledge is. ”

    Dean is giving a master class on how to start a small press. I know he’s doing it for self-publishers, but it really is a business course on small press. All made easier by current technology.

    Yeah, your knowledge is rare. From both sides. It becomes obvious when other professionals start talking only from their side. You both speak from experience on all sides, but as an advocate of writers. It shows.

    I love it because I like to look at it from all sides. You’re defensive of the writer position, but I’m curious how you two would write this if you were still editors/publishers or had become agents(which I know would never happen and don’t hit me.). I’m reading “think like a publisher” and wondering what an agent or editor would do with that knowledge.

    I’m so glad both of you are sharing like this, because I can’t make it out to Oregon that many times per year or convince that many writing groups to lure you to Florida.

    • Kris says:

      Patrick, if I was still an editor, I wouldn’t be writing this blog. Seriously. Not only is it a potential conflict for the editor to do so (trade secrets, etc), I wouldn’t have time! And if I was an agent, well, I’d be a different person. And a very worried person at the moment because my business would be evolving too fast to keep up with and might even be becoming irrelevant. But this is just me, musing. Thanks so much for the comment.

  21. Ferran says:

    Kris,

    I have a friend –a technical writer in a very specific field– who likes to say something on the lines of “the sheer ignorance out there is scary”[*]. He comes from a CA ghetto, so his definition of “ignorance” is slightly different. As it happens, I’m sort of reaching ProAm in that field, and it’s absolutely terrifying when I have to guide professionals through some of the most basic ideas. It’s a field where lives are often at stake. If such urgency fails to motivate professionals in that field, I can easily see how the more “artsy” of writers would fail to even see some things.

    On a more specific subject: since the introduction of JiT inventories [and ISBN and such] and email, any delay in information beyond a couple of seconds is either a system trouble or a systemic trouble. The first is the kind that has SysAdmins sweating cold, the second the kind everyone takes for granted (for example, that small stores don’t have barcode readers; that’s an easy one to understand but… Borders / WHSmith / fnac… should be able to email the publisher, immediately, of *every single sale* and the publisher should be able to forward this as appropiate).

    Take care.

    Ferran, BCN, Spain.

    [*] Marc MacYoung, http://nnsd.com

  22. Great points in this post. I encountered a similar situation in a more limited way a couple weeks ago when I offered some advice to some writer friends who are trying to dip a toe into indie publishing. I think some of us (well, me at least) are spending so much time trying to educate ourselves and learn the skills that are essential in this new world of publishing that we — I mean me, at least :)– that we tend to forget not everyone has that same knowledge. I dumped a whole bunch of info on my friends along the lines you are talking about here: self publishing success will come *over time*, don’t give percentages away for editorial work etc, all stuff we’ve talked through and have a grasp on because of your blog, and Dean’s and some others. But I forget that I have hours of reading and hours of practice behind me on this subject at this point. Ironically, though I am very optimistic about self-publishing (rationally optimistic) I feel I probably came off as very pessimistic to them, like I was shooting them down. I’ll have to be more careful in future, and remember not everyone is coming from the same perspective. But my fear for my colleagues is still this: that they will attempt self-publishing in a cautious way (which is a good idea) put something up, and then see a dozen or so sales in the first week (the friends and family buys) followed by zero sales or two or three, say, for the next week or even the next couple months, and panic or become depressed. That they won’t go to smashwords because the formatting requires reading over a 45 page book, and that they will spend a lot of money up front on a cover, on formatting, without taking the time (or having the time) to learn what work is involved in those tasks, without learning the principles of a GOOD thumbnail cover so they know what they are paying for (a lot of good cover designer out there for hire, but also frankly some very bad ones charging just a much who will make you a cover with tiny unreadable heavily distressed type, that will look like a inkblotch at the only size (and in black and white possibly) prospective buyers will see it. That they will pay for, or spend hours and hours preparing fancy formatting that will a best disapear, and at worst make their book unreadable on a reader’s smartphone. That they will drop their price to 99cents, after having heard about someone getting in the “top one hundred” that way. That they will hear and believe all the noise out there from the top one hundred obsession crowd at all in fact. And then they will give up. Because I’ve already see people do all these things.

    • Kris says:

      Great post, Michael. And yeah, I’ve seen it too. People don’t understand that they need to spend some time learning this: it’s not a magic bullet. I have yet to find that dang magic bullet anywhere, btw. (sigh)

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