Business Musings: The Midlist Rules!
I’ve had a long week. A lot of death, destruction, nastiness, and heartbreak in the news. We had a small personal tragedy as well, in the form of a tiny rescue cat, who has now crossed the rainbow bridge. In the midst of all that, I finished a major project, and embarked on a new one.
I’d like to say my brain is cheese and take the week off. But it’s not cheese. It’s fine.
I’m really tired of the negative at the moment. So I’m taking a one-week long hiatus from the contract posts to share something I found on the way to something else.
In May, Hugh Howey and Data Guy released their most recent Author Earnings report. If you haven’t read it, go read it now. Then read the follow-up on traditional publishing. See which of the two different kinds of publishing—traditional and indie—benefit their writers. Or don’t benefit the writers.
Particularly the debut writers.
Believe me, if you’re stuck in the pre-2005 ways of thinking, these reports will blow your mind.
Last week, I was searching through an online forum where I had previously seen complaints from writers who were following some of their contracts to the letter, and are getting screwed because of it. I was, in particular, looking at contracts between some indie authors and the people they hired to do work for them (covers, editing, and so on).
As I was doing that search, rereading things I had read for my blog on Booktrope and places of that ilk, I found something else entirely.
Inspired by the Author Earnings Report, someone asked people on that forum to report in, if they were in the top 1% of indie published writers. Meaning, according to this forum, that these writers earned at least $100,000 per year on their indie published books. Not on one book. On all of their titles combined.
That’s an important point.
I spent an hour reading the self-selected responses. Of course, folks who didn’t earn that much responded as well, and frankly, those posts were just as interesting as the others.
What I found fascinating wasn’t the number of writers who earned $100,000 on their Amazon sales alone. It was the other numbers in their reports.
My little brain was blown.
And it shouldn’t have been. It really shouldn’t have been.
I like to joke that I’m math challenged, but what that means is that I’m math lazy. Combine that with my dyslexia (yes, I’m a writer and I am dyslexic), and I try to avoid simple arithmetic as much as possible. I prefer concepts to pencil-and-paper calculations. And if someone else does the math for me, I actually have to read it out loud to understand it.
So it’s slow-going for me at times.
The fact that I read through these numbers meant I was quite interested. And I learned something—or rather, it sunk into my rather stubborn traditionally-trained head.
I have known for years now that all of us earn more money on a per sale basis when we self- or indie-publish a book than we do when we sell our traditionally published books.
That’s really simple math (which I’m going to make slightly simpler because I can):
Let’s pretend that all ebooks cost the consumer $5.00.
I know, I know, that’s not true. Most traditionally published ebooks costs much more than that. Many indie published ebooks cost much less than that. But humor me.
So…as a traditional writer, you get 25% of net (forget the damn agent).
Which means that for your $5.00 ebook, the publisher gets 70% (Amazon’s algorithm) and you get 25% of that 70% (it gets even more confusing than that and really isn’t that straightforward, but humor me again).
70% of $5.00 is $3.50.
25% of $3.50 is .875.
Let’s be generous and call that .875, .88. So less than one dollar.
To make $100,000 in a year, the traditional writer would need to sell 113,636 ebooks that year at 88 cents each.
For an indie writer to make the same money that year, the math is pretty simple.
The indie writer gets 70% of the $5.00, just like the traditional publisher does. So the indie writer gets $3.50.
To make $100,000 per year, the indie writer needs to sell 28,571 ebooks in a year.
But that’s not quite how it works.
Let’s look at it this way:
Most traditional writers’ ebooks cost $9.99 (and above). We’re only going to work with the 9.99 here and we’re calling it $10.00.
So, that means the traditional writer now makes $1.75 per book sold. The traditional writer has to sell 57,142 ebooks in a year to make $100,000 that year.
According to Author Earnings, most self-published writers price their books between $2.99 and $3.99. For the sake of argument, I’m going to call that $3.00.
That means, the self-published (indie) writer now makes $2.10 per book sold. The self-published (indie) writer must sell 47,619 ebooks to earn $100,000 that year.
Simple math. Because in each case, the traditionally published writer has to sell more copies of their books than a self-published writer to earn the same $100,000.
I knew that.
But I didn’t know it.
Because of the way I grew up. In publishing, that is.
You see, in traditional publishing, how much writers earn cumulatively doesn’t matter. Traditional publishing is all about The Book. One book. Not a series of books. Not all books by author. One book.
Royalty statements are based on the contract. If the contract is a one-book contract, then the only thing counted on those royalty statements is that one book.
That thinking is deeply, deeply engrained for me. And what’s worse, I have two sets of traditional calculations in my head.
The first is how many books per year I needed to sell to a traditional publisher to earn $100,000 by advance only. Because the advance is the only thing a traditionally published writer can guarantee.
Since advances are never paid as one lump sum amount, a writer would have to do one of two things—sell a book to a traditional publisher for at least $300,000 or sell a lot of books to traditional publishers that same year so that the total paid out would equal $100,000.
First, the $300,000—divided into signing, acceptance, publication. $100,000 for each third. Book contracts are still structured like this, although often, these days, it’s divided by four or more.
Second, let’s say the author sold five books for $50,000. The five signing payments would total $100,000. (5 x $20,000.) Usually though, the calculations were more baroque than that—a combination of a few signing advances, some acceptance advances, and some publication advances. Never ever, ever did we count royalties, even after books had earned out. Because the books would be off the shelf, even if they were selling well.
Let me give you an actual example. Entertainment Weekly noted that Emma Cline got a three-book $2 million deal on the strength of her novel The Girls. I don’t know how Cline’s deal was structured, but here’s how such deals usually get structured. Ready?
In a standard three-book, two-million-dollar deal structure, the lucky author will make $666,667 per book, divided into four parts. The contract will take about six years to pay out. The money will look like this:
Year One: $500,000. (All the signing payments)
Year Two: $166,667. (Acceptance book one)
Year Three: $333,333. (Hardcover publication book one, acceptance book two)
Year Four: $500,000. (Hardcover book two, acceptance book three, paperback book one)
Year Five: $333,333. (Paperback book two, hardcover book three)
Year Six: $166,667 (Paperback book three)
Every payment after year three is contingent on the publisher accepting books two and three. Because book one might tank. The contract might get canceled. Or publishers will play with the payout, refusing, for example to do paperbacks of books two and three. If, if, if. The author will earn no royalties, because these books will be basket accounted, and guaranteed, these books will not earn out. Ever.
The second calculation I still have in my head is how many copies of a book I needed to sell to hit a bestseller list. That number has changed over the years as well. It has gone down dramatically.
Back in the day, 100,000 copies sold barely got a hardcover book on a bestseller list (kissing the bottom of the list). 100,000 copies of a mass market paperback was at the upper end of the midlist. Most bestseller lists for mass market paperbacks started at 250,000 copies and above.
There were no ebooks. Mass market paperbacks were the cheaper alternative to the hardcover. Trade paperbacks rarely sold much at all.
Yes, times have changed.
And film of my childhood is usually shown in black-and-white. So, yeah. I’m old. You deal with it. (I’m not dealing as well as I should.)
Here’s the other thing. My very first novel, The White Mists of Power, came out in 1991 as a mass market paperback with a cover price of $4.99. I was a baby writer, with my first novel. So my royalty rate was 6% on that book. Which meant that for each copy sold, I made 30 cents.
To earn $100,000 on that one book, I would have had to sell 333,334 copies of that title at full price. (Getting the full price royalty was easier to do in those days, by the way.)
Those numbers are stuck in my head. I mean, stuck hard and firm.
For me—and people like me, people who “grew up” in traditional publishing—earning $100,000 on one book in one year meant you either had a great agent who managed to bump the advance on that book or your book sold at bestseller numbers. Pre-2010 bestseller numbers.
So…when I hear that a writer makes $100,000 per year, and is only doing so on a handful of books, I default to my training. Oh, I think, they’re selling hundreds of thousands of copies.
Nope. They’re selling tens of thousands of copies.
Most of my traditionally published novels—including the absolute failures, the ones that never earned back their advances—sold more copies in their first year of publication than the books that are making their indie writers $100,000 per year.
I am not saying this about my traditional books to say that traditional is better. It no longer is. In fact, if you look at the Author Earnings numbers, you’ll see that a traditionally published debut author will actually sell fewer copies than an indie published debut author. And not by a few hundred copies, but by thousands of copies.
I’m making this point because so many long-time traditionally published writers get stuck in the wrong number.
We look at copies sold rather than income earned.
It’s somewhat disheartening when you’ve put your latest novel out into the world and it only sells a few hundred or a few thousand copies in its first month. Back in the 1980s and 1990s when a lot of us started, we sold at least 30,000 copies of a single title in the first month of release.
Book sales figures went down rapidly in the years 2007-2010, yet most midlist books in the first month of release sold at least 10,000 copies . The sales would fall rapidly after that because the book would disappear from store shelves, but the initial sales were high.
Now, sales build. They start small and grow.
That’s a whole different way of thinking and it’s hard for those of us who started in the previous century.
I’ve blogged about that before.
And I should know it. My own numbers bear all this stuff out. I’m making a small fortune on my writing, even when the initial unit sales aren’t what they used to be.
I know this. But I don’t know it deep down.
But… here’s what the indie writers who’ve never been traditionally published know so much better than those of us who were.
That post-publication growth is phenomenal.
You can make what I call bestseller money—$100,000 per year or more—without selling more than 5,000 copies per year of a single title. Look at the numbers above.
To earn $100,000 per year, the indie writer has to sell fewer than 50,000 books per year. If the indie writer has one series of five books that sells better than her other series, she could sell 10,000 copies of each book in the high selling series over the entire year, and make that $100,000 (at the $3 price point). If the other non-series titles are trucking along at a much slower pace, the writer could be selling, say 8,000 copies of her books in her series, and 10,000 copies of all her other books combined, and make more than $100,000 per year.
Those book sales figures are small by old traditional publishing standards.
And achievable with the right kind of covers, visibility, promotion—and, oh yeah, the most important thing—excellent storytelling combined with very good writing.
People who work in traditional publishing have been making the same mistake I continue to make. They weren’t thinking about the real numbers. I know better. But they apparently do not.
They’re buying, say, paperback rights to ebook series and expecting to get bestseller numbers out of those books. Or even midlist numbers.
Even those indie authors are extremely successful, their single titles are often not selling at the kinds of numbers that make an international conglomerate happy.
Which is why so many formerly indie writers—and their traditional publishing editors—end up confused and disillusioned. The indie writers who’ve gone traditional expect their numbers to increase, which is a reasonable expectation, given all the hype that traditional publishing shells out about its ability to market books.
The traditional editors expect the formerly indie writer with the proven title to sell at old-fashioned traditional numbers—30-50,000 copies out of the gate. That usually doesn’t happen any more, and rarely happens with the paper-only deals.
Everyone gets disillusioned. Of course, the traditional editors aren’t doing their due diligence because hey! that’s numbers, and they do numbers much less often than I do. They go with their gut.
Or they do something else entirely. Like this absolutely terrifyingly accurate piece from the May 6, 2016 Entertainment Weekly, titled “The Million Dollar Book Club.”
The article purports to explain why publishers are “betting big” on some debut authors. The amount of “gut sense” and ignorance of actual numbers in that article is so staggering, the reporter noticed it, and asked one of the publishers interviewed about it.
That lead to the article’s final paragraph, and it’s a doozy:
Given the amount of books a publisher needs to sell in order to make a profit, it’s possible that none of these novels will actually make money. But Random House publisher Susan Kamil believes that the honor of having a sparkling literary talent on your list can offset any financial loss. “We want to have the best writers in the world at Random House,” Kamil says. “Sometimes those writers come at a premium—and we have paid it.”
Think about that for a moment. This is someone who is charged with running a for-profit business, trying to make sales, and boosting a bottom line, and she’s saying, “The honor of having a sparkling literary talent…offsets any financial loss.”
Um, no, honey. It doesn’t.
That’s how authors with big advances and sparkling debuts end up getting dumped by their publishers. Because mistakes like this aren’t the publisher’s fault, after all. Publishers are All-Knowing. Guaranteed if these authors in this article get dumped by their publisher, the blame will be on the writing quality in the book itself or the fact that the author didn’t spend enough time on Twitter, not because the traditional publisher overpaid for something it didn’t know how to market.
That world, though. The world of paying some debut author $2 million for 3 books is the world that’s stuck in my head when I relax and am not thinking about 2016.
So…let’s look at 2016.
Let’s look at the truly successful indie writers.
Remember, their book sales increase every year. If they do a few things.
First, their books don’t go out of print, the way that traditional books do. Traditional paper books still go out of print within a year or less. Traditional ebooks remain in print, but as Author Earnings showed, on debut authors in particular, backlist titles sell for more than front list titles (I know, makes no sense to me either).
So…indie books stay in print, and they have a long life.
Their sales get goosed slightly every single time an indie writer releases a book in the same genre. The sales get goosed big time if the books are in a series and the writer releases a new book in that series.
If the writer is good—and most of these indie writers are very good—the readers stick with the series or writer, so that these increases happen every year if the writer continues writing.
As I’ve always said, the best advertising is the release of the next book. Indie writers capitalize on this. Traditional publishers do not. Often the previous books are out of print and/or hard to find when the new book comes out.
Let me give you a few other startling takeaways for me from that self-selected survey on that writer forum.
First, there seemed to be no hot market.
The writers who self-reported $100,000 per year in sales wrote everything from science fiction to erotica, fantasy to romance, thriller to nonfiction. There might be a pattern or better selling genre—according to Author Earnings, the bestselling genre by far is romance, followed by thriller/suspense, and then fantasy. So I expected all of the $100,000 folk to be romance writers. They’re not. And that was good news.
The other fascinating news to me was how many writers used multiple names. I thought they wrote under one name, and monetized that. Many of them did, but just as many wrote under many names. Why, I don’t know. And again, this is self-selected, so I’m not sure how to interpret that broadly.
The things that did not surprise me in the self-selected list was the most successful authors had a successful series or several successful series. Very few made their $100,000 on one or two standalone books.
Those who did do well with standalones generally wrote in the same genre.
But from that self-selected survey, it looked to me like the successful authors generally made money on five or more titles. So at $3, these writers were selling fewer than 10,000 per title per year.
Those…my friends…are midlist numbers. By all definitions.
Old-fashioned 20th century midlist numbers. The kind that traditional publishers used to be satisfied with, before the mergers and acquisitions, back when traditional publishers were in the business of selling books, not scrambling for the mythical latest bestseller.
One last thing on traditional publishers. Their margins are awful. While indie writers are make 70% of the cover price of their ebooks, traditional publishers aren’t. Sure, they’re getting 70% from Amazon and the other retailers. But then they need to give 25% of that money to the author.
The traditional publisher is only making 45% on each ebook—unless they do creative accounting. More and more traditional publishers are doing creative accounting so that they can keep the full 70%, especially of non-bestselling titles. Why? That’s the only way to increase or maintain their profit margins.
(Granted, I don’t exactly know what the traditional publishers’ agreements are with Amazon or the other eretailers. The terms might be better or worse than those I listed above. I have no idea. I’m sure they won’t tell me either.)
For me, for some reason, Author Earnings reports—all of them—combined with that self-selected survey on a writers forum finally made the numbers sink in. Why it took me this long, I have no idea. Or maybe I do.
It takes forever to change embedded thinking.
What I’ve been telling all of you for years is this: you can make more money indie-publishing than you can as a traditionally published writer. More money faster, and more money in the long term.
I’d been seeing it in my own income. However, I also saw the sales figures and good old-fashioned me felt odd about it. Because of those high velocity numbers my books used to have back in the day.
Right now, the new books in my various series (with all but one pen name) are selling annually at much higher numbers than they ever sold when published by New York. Not in that first month. But by the time the books would be off the shelf in the old model, the sales I have are greater than that first month of traditional publishing sales. And the numbers are cumulative, meaning next year and the year after those books will still have very good sales, growing sales.
I am still, by old-fashioned 20th century sales numbers, a midlist writer. However, by that same measure, I am earning bestseller money on a consistent basis. (Rather than that up-and-down basis that came from cobbling advances together.)
Yeah, yeah, I know. For many of you, this is not news.
For me, honestly, it’s not news either.
But for that little writer inside me, the one who was taught to look at all the wrong things back in the day, this is Huge News. Huge.
Because there’s one other piece that I’m not telling you. There are at least 200 authors earning half a million dollars per year on Amazon only, according to Author Earnings.
Say that those authors are only earning $500,000. (They’re not: this number also includes the folks earning millions.) And let’s say they’re selling all their ebooks at $3. (They’re not: this new survey includes audio books and print books as well, plus higher and lower priced ebooks.)
That means that these writers are selling 238,095 ebooks per year across all their titles. That’s barely kissing the low end of the 1990s mass market bestseller numbers.
If these writers start hitting (or are hitting) the millions of units sold each year, then they’re earning a fortune.
We haven’t yet seen the indie writers who are earning ten and twenty million per year on their books, like Nora Roberts or James Patterson.
But I think that’s just a matter of time.
Because, remember, this is all cumulative. Indie writers books stay in print in all formats. Sales are up and down, but they trend upward over time.
Indie publishing hasn’t been around long enough for the cumulative numbers to get to the tens of millions in earnings for a large number of authors. But I think it will get there.
And that’s great news.
I said this wasn’t a contracts post, but really, in a sideways way it is. Because why would you ever go to a traditional publisher for your full-length books knowing all of these numbers? Traditional book publishing contracts are awful, just plain awful. You lose so much more than you’d ever gain. Why do it?
There. I said it. And next week, I’ll be back on contracts and other things.
Thanks for indulging me on this break. And if you learned anything or had fun with this post, please leave a tip on the way out.
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“Business Musings: The Midlist Rules,” copyright © 2016 by Kristine Kathryn Rusch. Image at the top of the blog copyright © 2016 by Canstock Photo/ alinoubigh.
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