The Business Rusch: Writers, Venture Capitalists, & Barnum. Oh, My.

Business Rusch free nonfiction On Writing

The Business Rusch: Writers, Venture Capitalists, & Barnum. Oh, My.

Kristine Kathryn Rusch

I have a magpie brain. I pluck information from various sources, store it in some nest in a back corner of my mind, and pull out the necessary pieces when the time comes. Last December, I did a lot of driving for the estate stuff, which meant I did a lot of listening to radio news, because I never plan to drive, so I never have an audio book handy.

I heard an interview on All Things Considered with Nick Hanauer, one of the venture capitalists who was one of the first big investors in Amazon. The interview, like so many recently with extremely wealthy individuals, was political—talking about taxes, tax cuts, job creation, and the politics of all that.

Note: This blog is not political, and if you try to have a political discussion here based on the following links, your comment won’t get through. Got that? We’re talking writing here.

But in that morass of political opinion, something Hanauer said struck me so hard that it went deep into the magpie brain and I remembered it for nearly two months damn near verbatim.

So I’ll excerpt the NPR transcript. If you want to read the whole thing, click the link.

Hanauer “says business people spend their time fundamentally on two things: creating sales and cost containment. Or, as he puts it, ‘how to not create jobs.’

“‘The fewer jobs you can create, for the revenue you create, the more profit you make,’ Hanauer says. ‘The only time that businesses create jobs is when middle-class consumers essentially put a gun to our heads, in the form of orders for products that we can’t make ourselves, and then we hire people and create jobs.’”

Hanauer isn’t the only venture capitalist to say such things on NPR. As I searched for Hanauer’s quote, I also found this one from the much more conservative Bill Frezza, another venture capitalist and a fellow at the Competitive Enterprise institute (which I have never heard of and therefore do not endorse).

He said, “People run businesses because they want to satisfy their customers, they want to grow, and they want to make money. Jobs are an input. Rent is an input. The raw materials are an input. Those are the things you put into your products and services, and your goal is to have the highest quality at the lowest cost.”

He added, “Even though we are in the business of creating new companies, as venture capitalist, you know, the first question we ask in every board meeting is, what’s your head count? And we watch it like a hawk because head count is an expense that will eat you alive if the business isn’t large enough to support it.”

Got that? And you’re thinking, Why is she telling me that? Dammit, Jim, I’m a writer, not a venture capitalist.

Ah, yes, but if you’ve been reading this blog, then you realize that writers aren’t just artists. They are also small business owners.

They are small business owners who, for the most part, never learn how to run a business. Once they finish a manuscript, they ask someone what to do next, and rarely is the advice they’re given good advice.

Get an agent to market your work. How many times have you heard that myth? Well, here’s what it means, in business terms.

Hire someone.  Notice that the writer hasn’t even made a dime yet, and they already have someone on the payroll.

But, you writers sputter, I don’t have to pay them up front. Only if they sell something.

Yep, and then you pay them even after you fire them, often for the life of the book’s copyright, especially if you’ve been signing some of the agency agreements I’ve seen. So not only are you hiring someone, but you’re hiring them for your life plus 70 years at 15% of all the profit.

Wow. That’s some gig. No wonder agents tell writers the first one is free.

But let’s not pick on traditional writers with agents here. I went the agent route in the beginning—although not before I’d sold anything. I’d made my living at writing for nearly a decade, and I still swallowed that myth. (Plus I hired “one of the best agents in the business” who also happened to be one of the best embezzlers in the business. Good job, Kris.)

Let’s talk about writers who want to go the indie publishing route. The first thing I hear from most writers is that they’re too busy to learn this stuff, so who can they hire to do it for them?

Again, hiring someone before the first check gets cashed.

Now let’s look at our venture capitalists. Both talk about expenses and inputs and cost containment. They talk about keeping a business in the black, about making sure the expenses don’t overwhelm the income. They do cost analysis, then they redo it, and then, each time the price of a good or a service goes up, they do it again.

Frezza said, “Your goal is to have the highest quality at the lowest cost.”

Hanauer said, “The fewer jobs you can create, for the revenue you create, the more profit you make.”

And here come writers—too artistic, too creative, to get their hands (or their brains) dirty with this new technology—hiring someone to design a cover for a percentage of the profits, hiring someone to format and upload the book for a percentage of the profits, hiring someone to design the materials for the percentage of the profits.

All of those percentages are upfront, by the way, so by the time the remainder of the profits get to the writer, there are no profits. And gosh, the writers wonder, how do other writers make money?

And then let’s talk about the successful indie writers who made tens of thousands if not millions e-publishing their books. But, those writers said, my books weren’t in real bookstores. My books can’t get to real readers on real bestseller lists. My books aren’t properly edited or properly marketed. (If you want to see what traditional publishing thinks proper marketing is, look at last week’s blog.)

These successful indie writers then hire an agent (cringe) at 15% of the potential profits, and then that agent “sells” the book to traditional publishing for six- or seven-figures up front. (Although “up front” means the payout comes in six payments over three years, decreasing the amount actually paid significantly.)

At a loss of 70-85-90% of the revenue from that book, the successful indie writer has just “hired” someone to take care of all the problems that she had with her self-published product.

That’s not how business people do it, folks. Business people always look for the best way to do something at the lowest cost.  (And no, we are not going to discuss the bad behavior of megacorporations in this area on this blog, just like we’re not going to discuss politics, because that way lies madness—and again, I will not post your comment at all if you even try.) Think only of small businesses.

People who own a small business, people who run successful small businesses, begin by doing everything themselves. This is what caught in my brain when I heard the Hanauer interview. This quote:

“The only time that businesses create jobs is when middle-class consumers essentially put a gun to our heads, in the form of orders for products that we can’t make ourselves, and then we hire people and create jobs.”

Now the “can’t make ourselves” here doesn’t mean that the business owner lacks the skill to do the job. Chances are, that small business owner knows how to do everything from putting up a picture on the wall to doing the bookkeeping. But eventually, “can’t” becomes “does not have time to” or “there are too many damn orders to fill and no way one person can do everything and still eat, sleep, and say hello to the spouse.”

Does this happen to writers? Sure. I know. You may not be visual, so you don’t trust yourself to design a cover. You are dyslexic like me, so spelling is challenging at best and copyediting damn near impossible. What to do?

Not hire someone for the life of the project. Hire someone on a flat-fee basis. A contained cost. A one-time expense. As a friend of mine said the other day, it’s nice to have a child who can draw. Or another friend said to me last week, it’s great to have an anal relative who always finds the mistakes in a book. Pay that person a bit—or take it in trade—to help with one book.

If you need to pay someone professional, use a flat fee service, like Lucky Bat Books and the other flat-fee providers that have come along. Or go to a trade-for-services site. Someone can design your cover for you while you copy edit for them.

The key here is learn this new business.

Or learn the old business.  Agents don’t market books. They never did. And they’ve become crappy at negotiating contracts or making deals. Hire an attorney for that. For an hourly fee on a one-time job. With an up-front estimate of how many hours it will take.

Agents are now in the business of growing their agencies. And that often means they have to do shady things like start an e-publishing arm.  Recently the Association of Authors Representatives called it a conflict of interest to have agents also e-publish their clients work. Duh. We’ve been discussing that on this blog for more than a year.

So what happens this week? A bunch of agencies—big ones—hire yet another e-publishing upstart filled with Big Names to do the e-publishing for them as a theoretical wall between the agency and the client. The agency will just “recommend” the client go to the e-publishing upstart. God knows how the profit sharing works between that e-publishing upstart and the agency that recommended it. That will be for courts to decide five to ten years from now.

Why are the agencies doing this? For the same reason that agents tell successful indie writers that they should stop worrying their pretty little heads about all of this publishing stuff and leave it to the grownups—er, the professionals. That reason is: 15% of the profits for the life of the copyright of that book.  Who does that benefit? Not the indie writer who had the smarts to figure out how to upload their book to Amazon, B&N, and all those other sites. That indie writer certainly has the same smarts to learn how to produce a paper book and market it herself. (See Dean Wesley Smith’s Think Like a Publisher series on his blog.)

But the indie writers get caught in the myth like we all do. And they believe that traditional publishing knows better. Traditional publishing doesn’t know better, but we writers all have to learn that the hard way.

If the indie writer goes into partnership with the traditional publisher, and stands on equal footing, well then, that’s something else. That’s expanding a business with your eyes open, taking on a partner, and sharing risk. I would hope that the contracts look different in this case.

But I can tell you this: anything negotiated by a traditional publishing agent won’t have a different contract, and the writer won’t end up as an equal partner.

The agent will, however. Agents and publishers often care more about each other than they care about writers these days.

How pervasive is this attitude in traditional publishing? Well, let me give you an example that had me rolling off my chair laughing last month. Digital Book World—designed to help traditional publishers into this new world of publishing—had a panel at its third annual convention called, “Changing Author-Publisher Relationships,” moderated by Simon Lipskar, an agent at Writers House. The write-up of the panel on Publishers Marketplace listed participants from Random House’s president of sales, operations, and digital Madeline McIntosh to Little Brown publisher Mitch Pietsch.

But nowhere in the write-up, nor on any panel list that I could find, was there any evidence of a writer on that panel. Or a representative from a writer’s organization. So a traditional publishing conference had a panel on how to improve Author-Publisher relations without consulting a single writer.

Apparently, whoever put the panel together felt that Lipskar represented writers. But he didn’t. He represented agents, who have a different agenda these days—and that agenda is doing the best they can for their own business first, and their clients second. The bigger the agency, the more likely the attitude is doing the best for the clients who earn the most money, while throwing the smaller clients under the bus. (Since I’m doing Star Trek quotes tonight, think of Spock: The good of the many outweighs the good of the few. Or the one. )

Why am I bringing all this up now, when I’ve brought some of it up before? Because, in case you missed it in all the subtext here, the people you hire are hiring people to get the work done. Agents and those percentage book publishing services are making so much money off dumb writers that they can afford to hire other people to do the work.

Agencies know business. So do these book publishing services. When they’re making enough money to hire people, they’re making boatloads of profits.

Remember what those venture capitalists said: Good business owners don’t hire anyone until someone points a gun to their head and forces them through too much work for the current staff to do alone to hire another employee. Or a group of employees.

There’s even  more money than usual to be made by screwing lazy writers.  Someone has always made a profit off writers who refuse to learn their business or don’t think something through. That damn agent I hired way back when made a lot of money off dumb little old me.

And frankly, if I wanted to make a lot of money fast right now, I can see about a dozen ways to do it off the backs of writers who don’t know any better. I’m not jumping onto that gravy train, but every time you look, someone else is. Publishers Marketplace has announcements daily about people moving to this “author service” platform or that “media relations” company. Every single one of those people thinks they can make a profit off some writer who gives up most of the revenue on his books because the writer believes he’s an artist who shouldn’t dirty his fingers learning how to upload his own book or figure out how to use CreateSpace.

Learn your business, people. I say that almost every week. But if you learn nothing else, learn from the venture capitalists I mentioned at the top of the post. Don’t hire someone until you are forced—by being unable to fulfill the demand for your already existing products (um, you know, books)—to get help. And even then, try to avoid hiring permanent help. See what you can do with flat-fee services and friends before you ever hire someone on a salary. And never ever hire anyone for a percentage of the profits.

That’s the old method and honestly, it never worked very well. Writers steadily saw their own incomes decrease as agents became more important. Writers are really going to see their incomes decrease if they hire these new “author service” businesses starting up all over the country (particularly in New York). Writers won’t make much money at all.

And they won’t understand why it’s their fault, not the fault of these businesses. Do I blame these companies for deciding to make this huge profit off the backs of writers? No. That’s capitalism at work. Messy, normal capitalism.

Capitalism benefits the person who understands business, and damages those who do not. Or to paraphrase P.T. Barnum, there is a sucker born every minute—and a goodly percentage of those suckers are writers.


This former sucker learned a lot of the stuff she blogs about the hard way. Did I hire employees too early? Hell, yes. That’s why Pulphouse Publishing no longer exists. We hired people before we needed them. Did I hire agents? Yes, and am still learning about some of the things that I lost because of it.

So this is a do-as-I-do-now post, not a do-as-I-did post. I want you folks to benefit from my school of hard knocks. That’s one of the many reasons I blog about the publishing business every week. I want to open your eyes to the way things can go awry, to the way real business works, and to think for yourself—and make your own choices—about your own writing  business.

However, in order to do this blog, I must take time away from my fiction writing business. I was on a roll tonight before I had to turn away and compose this thing. I could easily have spent the 3,000 words on the novel I’m currently working on. So to keep me blogging, I rely on y’all to pay the rent through donations. I also appreciate the comments, the links, and the e-mails. The good words and great discussions get me through as well. So thanks, and see you next week.

Click Here to Go To PayPal.

“The Business Rusch: “Writers, Venture Capitalists, & Barnum. Oh, My.” copyright 2012 by Kristine Kathryn Rusch.






52 thoughts on “The Business Rusch: Writers, Venture Capitalists, & Barnum. Oh, My.

  1. Agents and those percentage book publishing services are making so much money […] they can afford to hire other people to do the work.

    …Yes. Yes, I had missed that subtext. I’d gotten the “they take a bite out of the author’s cash” part, and I feel that even the Ideal Wonderful Agent is currently a liability as a hostage when dealing with the publishers right now (that’s my own take), but it hadn’t quite hit me that the agencies hiring other people suddenly have that cash to throw around so that they feel this is a worthwhile activity.

    Thank you.

  2. Here’s the part that gets me. Michael Pietsch says publishers have moved past the “paternalistic era,” but he and others in his publishing house tell beginning writers they will only deal with them if they have an agent. An editor in the children’s division at a major publishing house recently tweeted, “Every time an author queries me directly, a butterfly loses its wings. Get an agent.” I’d call that worse than paternalistic. Not exactly the way to build strong relationships between writers and publishers.

  3. Thanks for the excellent advice, Kris. You do get the conversation rolling, and this one — the business of running a writing business — is mission critical to writers. So much of what needs to be done to run a writing business professionally can be done by almost any writer. Not rocket science! And hiring out the things writers don’t want to do, can’t do, don’t have time to do, need professional help doing — that’s where the new breed of publishers comes in. Like Lucky Bat Books (Thank you for your kind mention!)
    We’re with you 100 percent: let’s put the control over our careers back where it oughta be: in our own hands. We truly are the professionals.

    1. Yes, I noticed that, Judith. A lot of people are suddenly discussing flat fee services. Good! I hope it gets some writers away from those horrible percentage people–and the agent-funded places in particular.

  4. I did formatt my first two eBooks and put them up for sale on Amazon. I published my hardcover through a joint venture where I still own all rights and it’s available everywhere. I have two more books written and in edits and I’m currently working on plotting and writing an additional three.
    I do hire out a cover artist. My next few books I will pay for cover and edits yet spend less than a hundred per book to some very talented people.
    I did receive option/purchase agreements from a movie production company for two of my books, plus first right of refusal on the third. I hired Elaine P. English out of Washington D. C. to negotiate the contracts and I’m very happy with the job she did. The movie producer will make a major announcement soon at the same time he announces the distribution deal for his current film. Mine are being fast-tracked into pre-production.

    Now the funny part. An assistant to an agent contacted me to set up a phone appointment. Naive me figured they read the eBooks, loved them, and want to represent the paperback, merchandising, and gaming rights, right?

    When I got off the phone I have to admit, I was slightly ticked.

    LOL, NO! They hadn’t even bothered to read the eBooks yet, want me to submit a full marketing proposal, and even though my genre isn’t something they normally represent, they’ll consider it.

    I think I’ll have my ET lawyer solicit and entertain offers directly from publishers, something she said she’d be happy to do.

    1. Oh, Lisa, that’s so much more common than you’d think. Agents often don’t even read what they market. And then they tell the author what to write next. [sigh] You should have been ticked. They insulted you. Good attitude all around, though. 🙂 And congrats on all the success!

  5. Another great post, Kris.

    I was never particularly comfortable with the idea that you needed an agent to publish who would then go on to take a cut of your earnings for all eternity (not quite, but lifetime plus seventy years is pretty long). So I decided I would only get an agent if it absolutely couldn’t be avoided. Luckily, it’s easy to avoid agents nowadays.

    For my indie publishing ventures, I do everything myself. I do the copyediting, the formatting, the covers. Much of the time, I don’t even buy stock photos, but take a photo myself. The only exception are taxes. I pay an accounting company for that, because I’m a freelancer in my day job and German tax law is just too complicated. But everything else I do myself. Of course, there was a learning curve in the beginning, but on the other hand I have learned several useful new skills.

    Eventually there may come a time when I come across something I can’t do myself and decide to hire a flat fee service

  6. Not to bog down in pesky details, but as long as we’re talking about learning curves, allow me to warn new indie publishers AGAINST using cut-and-paste too freely with Word. Yes, it sounds like a wonderful time-saver, but it’s not. Down the road, you will find yourself tearing your hair out because every time you import text or cut-and-paste carelessly, you run the risk of introducing new styles, formats, XML codes, or a dozen other hidden, behind-the-scenes bombshells just waiting to go off. Word is a minefield; it is NOT (let me repeat NOT) designed for long-form documents like novels. I’m an expert of two decades’ standing with this word processing program, and I still keep finding glitches in my e-books converted from Word. Part of that is the e-book conversion software (which is a long way from perfected), and some of it is the legacy of two decades of sloppy software development from Microsoft. Folks, there is a REASON the Smashwords Style Guide has to inclue a “nuclear option” for stripping out formatting codes you don’t want. You cannot prevent Word from sticking them in, and Word would rather create a new “style” than enforce the ones you designate. My only recommendation for newbies is that if you are using the latest version of Word, take advantage of the “Prepare” menu and strip ALL properties, formats, and unused styles from your file before you run it through your conversion software. One of the reasons “indie” publishing sometimes gets a bad rap is that users don’t like paying for and downloading files that are full of errors, skipped pages, overlapping text, odd boxes where em dashes should be, and so forth.

    This is just another, more complicated way of reinforcing what Kris is saying: learn your tools. Word is NOT as simple as it looks.

  7. When it comes to NASA images, I’ve been getting them either from wikimedia commons or from APOD (Astronomy Picture of the Day–and don’t worry, I know how to tell when the stuff on that site is private and under copyright, and when it’s a NASA image that’s in the public domain). I always check the copyright information and read the license carefully, and of course I’ll give credit for the image in the books themselves. Am I missing anything?

  8. Kris,
    How dare you refuse to publish my political views about the Federation or my outrage at the industrial-military complex in the Klingon Empire? What are you, some unfeeling Vulcan?
    Actually, thanks for the common sense advice on the business of writing, sans politics and myths.

  9. Another great post, Kris.

    As soon as I started thinking of myself as a small business owner rather than an artist, my whole outlook, output, and work ethic changed, and I like it a lot better now.

    I’m much more in control of my life and career than I was when I was trying to be enough of a smarty pants to catch the eye of some literary publisher. Before, I was like a Jane Austen-era woman, trying to be pretty and “accomplished” enough to attract a rich man.

    Now, I own a business. I see those “accomplishments” like Mary Wollstonecraft did. Now, I invest and work. I *love* it.

    TK Kenyon

  10. For Vera Soroka, check out the free Smashwords formatting guide. It’s gives a step by step how to format for ebooks in Word. Once you’ve completed one ebook, uploaded it and had it go through the Premium Distribution, copy that same file and use it as a template. Just gut out the story inside and paste in a new story. Then select that story again & remove the formatting, choose the font Times New Roman, size 12, and then move the little tab triangle on top over for the paragraph indent. Then you’re pretty much done. Check it by selecting the reveal codes and look for any ….section breaks… or any strange code, just delete them. If you have marks or chapter headings that you want centred, you’ll have to re-centre them. Otherwise, this should work fine.

    I do this all the time, reuse old stories as templates. Makes formatting go much faster! Good luck!

  11. “And then let’s talk about the successful indie writers who made tens of thousands if not millions e-publishing their books. But, those writers said, my books weren’t in real bookstores. My books can’t get to real readers on real bestseller lists.”

    To which I would add, “You can get over this. All you really need is experience with it and in most cases, you’ll discover the downsides like a ball-peen hammer to the forehead.”

    As for hiring employees: ack! Every now and then I think I want to expand my business and hire people as employees, but the thought goes away. I am SO not suited for that. But hiring people to do a specific job? You bet. I’ve hired cover artists and I hire layout. It’s a freelance world.

    1. Oh, Mark. That ballpeen hammer is such a soft metaphor for what actually happens. 🙂 And as for employees, yep. Only hire when necessary has turned to emergency. 🙂

  12. “Most of the time spent has been learning rather than doing, and I know I will get faster as my skills improve, but I still find the process frustratingly slow.”

    I spent about two days formatting the first short story I uploaded to Smashwords and Amazon. I spent about two hours formatting the most recent as I just cut and paste the text into a template and verify that it comes through OK. If you stick to basic formatting then after you’ve done it once you only need to adjust the template to fit future changes to the e-book conversion process.

    The most time consuming part for me is cover images, and I’ve been thinking of picking cover images I like and writing stories around them rather than writing stories and then picking the images :). There’s one cover image I really want to use because it’s perfect for one of my SF characters but I haven’t quite worked out the story that fits it yet.

  13. The biggest obstacle for me as a self-publisher (and I post this reply mainly in the hopes of letting others in a similar situation know they are not alone) is the huge investment of time required initially. Not all at once, mind you, since a few hours here and there add up eventually. But I have spent at least a hundred hours reading, editing, formatting, designing covers, re-editing, re-designing covers, and so on. All in addition to time spent actually writing. So far, I have three self-published stories (shorts and novelettes) available electronically. And all of those represent “the best I can do right now”, rather than “the best that I think can be done.” Lots of room left for improvement 🙂 Most of the time spent has been learning rather than doing, and I know I will get faster as my skills improve, but I still find the process frustratingly slow. I think it will pay off in the long run, or I wouldn’t be doing it, but getting started has been and is quite the slog (for me.)

    1. Perfect, Silver. If you look at some of the early WMG stuff, it’s the same. The best we could do now, as opposed to the best that can be done. And yes, there is a lot of learning involved and a bit of a time sink, so time management becomes important. Writing first, always. Everything else in the writing business second. But you can schedule that into your day–2 hours of writing, one hour of indie publishing, etc. Hmmm…methinks a new time management post might be in order…Thanks!

  14. “there’s a whole lot of public domain images out there that are really quite good for cover art–for example, just about everything released by NASA.”

    Check out the cover of my book, “FARSIDE”, which is a young adult science fiction novel set on the Moon. The story involves the Apollo 17 Moon Rover, so NASA was pretty much the only source for images. Fantastic high-resolution images, all of them in the public domain! I’ll be using NASA for the sequels as well.

    Best use of my tax dollars EVER.

  15. “…try to avoid hiring permanent help. See what you can do with flat-fee services and friends before you ever hire someone on a salary. And never ever hire anyone for a percentage of the profits.”

    Oh, hell, NOW you tell me.

    The lengths some people will go to, to avoid that flat-fee for services. I needed a tax specialist; I married him. Now he’s a 50% partner in the business. 😀

    Seriously, though, this is all excellent advice. Being naturally tight-fisted, I’ve usually refused to pay other people to copy-edit my work. The one time I paid for that service, I was grossly disappointed in the quality of the result. Since then, I find that just about the only remaining justification (for me) for being in a writer’s group is free copy editing.

    Awhile back, either you or Dean had an analogy for agents I thought was particularly apt, and I’ve kept it in mind: an agent is like the guy you hire to mow your lawn. Why would you give him 15% of your income for the rest of the time you own that property, just for trimming the lawn? Still a good analogy.


    1. LOL, exactly, Sarah. Dean was an Art & Architecture major. He has an eye for detail, and that really, really, really comes in handy. 🙂 And yes, thanks for reminding me about the agent quote. Not only is he mowing your lawn these days, but he’s hiring out hedge-trimming and making you pay that guy a percentage too. 🙂

  16. I’ve worked for a few small businesses and friends and relatives have started others; I’ve always been bemused by companies that start up and rush to hire lots of people when they don’t have any cash coming in or only have a lump sum investment that is supposed to sustain them until they’re stable. More typically with only handful of employees we’ve been expected to do at least three different jobs in the same company as far as our time allowed.

    I’ve also noticed a similar problem when a small business becomes a medium-sized business; when they move into a fancy new office and replace the rickety old tables and chairs with designer models, it’s normally time to start looking for a new job because the company is on the way down.

    1. Good points all, Edward. People have asked me over the years how I can so accurately predict when a small publisher will fail, and you just pointed out some of the signs. Other signs? Increasingly late payments. Increasing “mistakes.” (Ooops, we forgot to send copy edits, ARCs, etc) And on and on and on. Business is something learned and practiced, not something you pay and pay and pay for. Eventually the money runs out. No matter how much you have. If you don’t believe me, as yourself how MC Hammer went bankrupt while earning more than $100 million per year.

  17. <sarcasm> Surely everyone has heard of PT Barnum’s aphorism that “There’s an author a sucker born every minute.” </sarcasm>

    The key thing to remember is that the venture capitalists in question are, emphatically, not businessmen, nor representative of businessmen. They are, instead, investment managers… whose only concern is constant growth of a preexisting stock of liquid excess financial capital. Anyone with any knowledge of classical or neoclassical economics at all should note the three aspects of business that are outside that scope:
    (1) illiquid and/or nonexcess capital source — consider, for example, the myth of home ownership as an investment (which, under the modern portfolio theory worshipped by venture capitalists, is a bad investment by its very nature)
    (2) nonfinancial capital asset exploitation — such as intellectual property, precisely what authors produce; or, in more traditional terms, turning blocks of metal into cars
    (3) the value (not cost) of labor transformation of capital inputs — again, this is what authors do (turn nonreplicable/noncommunicable ideas into replicable/communicable expression), and for that matter what production-line workers do… but it is not what sales-and-marketing dorks do

    This limited-perspective issue is the same one Our Gracious Hostess points out concerning the “panel presentation” at Digital Publishing World. I’d also like to point out that that panel presentation was legally wrong, because it treated all of the digital works as if they’re the property of the publisher… when, under the Copyright Act of 1976, almost all of them are merely licenses from the author, and the author continues to own them.

    As I remarked under the influence of cold medication and a late-night movie channel over on DWS’s blog some time back:


    It’s important to remember that, in the eyes of a venture capitalist (and
    this is descriptive, not a value judgment), not all capital is equal.
    Venture capital operations, by their nature, focus on getting constant,
    predictable, liquid-financial-capital returns from whatever they’re
    investing in; they simply aren’t interested in long-term, or uncertain, or
    nonliquid, returns. In publishing terms, the structure of venture capital
    operations makes them want Danielle Steele and not L. Frank Baum. Again,
    this isn’t a value judgment; it’s like saying that chemists concentrate on
    individual reactions and cell biologists concentrate on differential
    membrane permeability, because both perspectives are necessary for the whole
    system to operate.

  18. Having worked as a freelance scenic artist and always living on a shoe string, I try very hard never to front money. If I can avoid paying for something by doing it myself I will. Because I just don’t have the money! It’s been a struggle to learn all the manuscript formatting and graphics programs for covers, but so far it’s all free. It has only cost me time, which is all I can afford right now. It gives me a great sense of achievement to conquer those hurtles. And when I self-publish my first novel this month, we’ll see how well I did.

    Also – loved the quote. I think my favorite was “I’m a doctor not an escalator!”

    1. LOL, Alice. I’d forgotten that one. And yes, you’re exactly right: that sense of achievement on learning this stuff and actually doing it is just wonderful. Thanks for that.

  19. The agency will just “recommend” the client go to the e-publishing upstart.

    ::eyeroll:: Gee, how nice of the agency for that so-called recommendation. Like you said, Kris, this is going to be one for the courts to hack through in a few years.

    I don’t understand people hiring book cover artists or whatever for a percentage. After all, the writer is too poor to afford a cover artist, right? Well, I contracted a cover artist, she delivered 3 really nice covers that I liked…and I spread the payments out: An installment plan.

    It never hurts to ask. If the person says, no, they want it all up front and you can’t afford it, then say thanks, and move onto another artist. Simple as that. I don’t like contacting people about such things, but after I saw a pre-printed cover that fit the 3rd in my series, well, I decided I might as well go whole hog and have all 3 done by her. So I sucked it up and did it…and kept my wits about me (and I’m a weenie when I talk on the phone or otherwise contact people for something).

    I think a lot of cover artists are up for trade or installments or other ideas I haven’t thought up, so it’s worth looking around and asking if you either don’t have the skills or the patience to learn how to do decent covers. 🙂

    Love the Star Trek quotes (and hope most of the other people reading this blog get them, too). 🙂

    1. Great point, Nancy, on installment payments. Every place I know–from attorneys to these flat-fee services to artists–take payments on installment. It’s a beautiful and easy way to do business. Yes, it’s slower (again with the slow) but what the heck? And a point for those of you who don’t know, often artists will design the name and title into the cover art if you ask. Be sure to tell them to make it visible and keep it relatively simple. That’s always nice too, especially for those of us who are design-challenged.

  20. The part that scares me the most is the formatting to get it ready to upload to these sites. I’m not a tech girl by any means. I guess I would have to give it a try to find out.
    I am submitting to some houses that will take romance without an agent and I found some editors at Kensington that sound interesting. We’ll see where I end up.

    1. Vera, it’s not hard at all. I can do it, and I’m dyslexic and not at all detail-oriented or computer savvy. If you can post on this blog, you can format and upload to sites. Which means you can. 🙂 All of the sites give you instructions on how to do it. And so does Dean in Think Like a Publisher. I’m sure some folks here can recommend other–easy–instructions for uploading. (Remember, y’all, easy.)

      As for editors who take books without agents, all editors do. All of them. Just remember that the submission guidelines aren’t there to help you. They exist to keep out the loads of crap. Submit anyway. And believe me, someone will look at the manuscript. They don’t dare ignore you–you might be the next Nora Roberts. So what’s the worst thing they can do? Say no? They’ll do that even with an agent if they don’t want the work. So do it yourself. And good luck!

  21. Hi, Kris,

    Yeah, I do everything myself. Time is a problem, which is one reason why I don’t collaborate or swap for services. At first, I had a lot of insecurities as ‘an editor,’ (it’s a claim I have never made,) but as far as it being a business goes, I think I’ve learned a lot in a very short time. What you and Dean say about POD/Createspace is fine insofar as it goes, but I don’t like the 5 x 8 and 6 x 9 paper sizes, or I would have more paperbacks out there. Lulu has 4 x 7 but doesn’t seem to have a huge traffic flow. But ‘when I get around to it,’ I may very well release all titles as PODs. I do my own marketing images, which still lack something in terms of sophistication.

    1. Louis, Lightning Source does hardcovers. You’d be surprised. A lot of your readers want paper books. Remember, the form doesn’t have to be permanent–you can eventually do a different size or even go to a web press when you can afford to–but in the short term, you are denying yourself 80% of the potential readership by not having some paper form of the book. Just a thought. However, it is your career and your choice. Thanks for the comment.

      Some of this new world of publishing stuff is just learning curve. It does take time, and we writers have to realize that sometimes it’s better to be slow and steady than fast and a spendthrift. 😉

  22. This reminds me a lot of farming. I like in rural Pennsylvania, and we have a lot of small dairy farms. These are usually family owned and operated. For the farms to not lose money the farmer needs to be all of the following.

    heavy equipment operator
    veterinary dietician
    veterinary diagnostician
    and more and more and more

    Some of these can be hired out but it becomes very expensive, and while a farm can support a family it won’t make much beyond that.

    B. S. Simon

    1. Exactly, BS Simon. I used to live on a dairy farm and I watched the farmer and his sons do everything from pick rocks (every spring they had to clear rocks that had migrated into the corn field before plowing) to build sheds to–oh, yeah–milk the cows. It only got worse when the farm grew. They had more cows, more acreage, but no more workers. Those guys literally worked sun-up to sun-down (and partied hard on Saturday night). Excellent point.

  23. This is why, when I’m asked to copyedit for a % of the profit, I say no. Sure, it might earn me more money later, but as a writer, I think indefinite profit-sharing schemes are a bad idea most of the time. (I can think of a handful of situations that can make smart business sense, but they’re in relation to writing for hire.)

    Shoot, I’ve even been known to alert folks I hire that they’re charging too little.

  24. Hi Kris,

    I’d love to be able to say, “Well duh!”, but these things you’re talking about are, alas, not obvious to a lot of people. It’s not just writers, though. How many people learn about economics, finance, or basic business in school? From what I’ve seen it’s simply not taught unless you seek it out (in college), and most don’t. Ideally, parents would teach these things at home, but a significant number of them are financially illiterate as well. All you have to do is look at the level of credit card and other debt in this country to see that. Just imagine how much different (better) our society would be if everyone had just a basic understanding of money and economics. We sure wouldn’t get half of the stupidity out of DC that we do, because people wouldn’t stand for it. And we’d all be a hell of a lot wealthier and happier, I think (hope?).

    Oh well, might as well wish for wings, I suppose. Wow, now I went and made myself depressed. (sigh)

    Right. Back to it then. Thanks for the perspective, Kris.

    1. I know, Michael. Financial literacy is non-existent in this country. When we taught our Master class for established writers who were having trouble in their careers, we learned to give a 10-question financial literacy test to see if people understood the terms we were using. Things like “net income” and “gross income.” It wasn’t uncommon, in a room of 12 students, to have 10 students fail the test completely. These were adults ages 30-60 with kids and college educations and careers. I’m still shocked about stuff like this. So good point.

  25. Hi Kris, glad you mentioned those six literary agencies who have signed up with Argo Navis. For writers still querying agents, I would humbly suggest avoiding any that have links with Argo Navis (which aside from those six includes big boys Janklow & Nesbitt, and apparently Writers House and Curtis Brown are about to sign on, if they haven’t already).

    Argo Navis takes a 30% cut for uploading and formatting. For a few hours work they take a huge ongoing cut of your royalties! Shocking.

    I blogged about this when they launched last October (and got fawning coverage in the New York Times) here (scroll down a little):

    And Passive Guy was on the case around the same time (and in more detail on the nuts and bolts):

    1. Thanks for the links, David. I initially mentioned Argo Navis by name, then cut the mention since I mentioned lawsuits in the same paragraph. But I cannot see how this behavior in any way is legal, and it will take some enterprising author who was naive in the beginning but is no longer to sue to correct this kind of crap. I have no idea how much payoff these agencies are getting to partner with this firm, but it has to be there. And this is exactly what some Hollywood agents and managers are getting in legal hot water for doing since the 1990s. The suits are big and they’re nasty, and they’re coming to publishing in a few years.

  26. When I was a young boy, I occasionally saw The Benny Hill Show. In one of the segments, he played Big Daddy, a rich southern farmer. Big Daddy’s catchphrase was:
    “Cut out the middleman! That’s how I made my money – by cuttin’ out the middleman”

    After that, he was probably chased around by supporting characters and a number of Hill’s Angels, to the tune of Yakkety Sax. Nevertheless, young Frank found that phrase to be good advice. And that’s actually why I never considered getting an agent (and generally try to do most of the writing business stuff myself – one has to know his limits, though)

    Yes, that’s right: advice from a Benny Hill character made more sense to me than most what I’ve read elsewhere about businesses.

  27. Great post, as always. Doing taxes was a real wake-up call on the whole expenses vs. income thing. Next year, I’m going to publish shorter, more frequent releases and try to do as much as I can myself. If you know how to use Photoshop or The Gimp, there’s a whole lot of public domain images out there that are really quite good for cover art–for example, just about everything released by NASA.

    1. Thanks, Joe. Let me caution on the public domain images. NASA is great, but they do ask for a credit. A lot of POD image sites steal the images from elsewhere, so double-check to make certain that the image is truly free to use and not taken from a magazine cover or something. I find those sites rather scary, so I think you’re better off on Dreamstime or somewhere like that where you license for a few dollars. But make sure you read the license. Many of the royalty free are limited. You might never hit the limit, but you need to print out all the info about the image just in case you do.

Leave a Reply

Your email address will not be published. Required fields are marked *