Business Musings: The Year in Review Part 3: Bestsellers
In my Pocket Reader app, I stored a September article from BBC News as much for the article’s title as its content. That title? “When Is A Bestseller Not Necessarily A Bestseller?”
I think that’s been the burning question in publishing for the past ten years. Bestsellers haven’t entirely lost their meaning, but they’re not relevant the way that they were twenty years ago. Back in the day when traditional publishing controlled 99% of the books that we saw on shelves (before ebooks), a bestseller was the book that sold the best out of the myriad of bookstores.
Even then, those bestseller lists were rigged. I can’t tell you how many times I had colleagues who gamed The New York Times list (the easiest one to buy your way onto, if you had the list of “acceptable” bookstores). It was a relief to have USA Today base its list on actual reported sales across all stores, including the chains. Even those numbers were flawed, though, because they were self-reported by most of the publishers.
Data has never been traditional publishing’s strong suit.
Last week, I examined traditional publishing and the mess that it has become, a mess that has led at least one industry expert to conclude that the services traditional publishers provide are essentially meaningless.
The anecdotal evidence has existed for years. I know several Big Name romance writers who can no longer live off their royalties like they did twenty years ago. Fortunately, a lot of them were good at money management, so they have cash stashed away and their homes are paid for.
Last year, Kat Martin, at 20Booksto50K here in Las Vegas, stated,
I think [the backlist is] a real negative for traditional publishing. Once you sell them your book, they have your book and they own it for years. And they do pay you a nice fat fee up front, so it’s kind of a trade off, but it’s not a long-term, it’s not a retirement thing, because they’re making money off the backlist. You don’t. They give you a percentage, but…the big money, I think, for long term is probably in self-publishing.
(If you want to see this yourself, go to the video. It’s about 38 minutes in.)
Because everyone comes to Vegas at one point or another, Dean and I had a lot of opportunities to talk with writer friends who are (or were) traditionally published bestsellers. Dean had lunch with a person whose work would be considered a major (mega) bestseller. That person expressed shock that the backlist, which once earned a tidy income, earned little more than a trickle now.
That person could no longer sell their books to the Big Five, despite the continuing good numbers on the backlist. The small publisher the person went with is going belly-up, and the author was looking at other ways to publish.
I can’t tell you how many conversations we have with writers in a similar position.
Not to mention the writers we’ve lost over the years. After their deaths, some of the writers’ finances get revealed, particularly when there is no money left and the families have to hold Go-Fund-Me campaigns or seek out help from writerly friends to manage the estates. Now, granted, some of the issues here come from the United States’ ridiculous health care system that requires people with long-term illnesses to go into serious debt, even if they have “good” insurance, but a lot of the problem with writers’ earnings come from the way that traditional publishing is managed these days.
The Big 5, for example, are maximizing their profits at the expense of writers. The Big 5 are colluding, according to the Department of Justice’s case which fought the merger of Penguin Random House and Simon & Schuster (and won). The judge, in her opinion, points out several cases of collusion, especially on rights and contract terms, and in one case says that the behavior would be considered illegal in most industries.
I will deal with a few of these issues in upcoming posts, as I look at growing subsections of the indie publishing industry.
The DOJ defined what a bestseller is for its case. The case the DOJ ultimately proved was that the Big 5 had created a monopsony, which the opinion describes as “a market condition where a buyer with too much market power can lower prices or otherwise harm sellers.”
The DOJ narrowly defined the sellers as the authors of “top-selling” books (aka bestsellers). The DOJ called this a submarket inside of publishing. Page 24 of the decision included this definition of the submarket:
Anticipated top-selling books are those that are expected to yield significant sales, and for which authors therefore receive higher advances….The government contends that such books have distinctive characteristics, including the need for extra marketing, publicity, and sales support to allow them to reach broader audiences.
That part of the definition both parties could more or less agree upon. Heck, all of us who “grew up” in traditional publishing understand that.
The part that became controversial, at least for the duration of the trial, was the “distinct pricing,” which the government used to identify the potential top-selling books. Without going into all the arguments (which the traditional publishers eventually lost), what the government chose as its price point for its monopsony argument was a $250,000 advance and above. From pages 27 and 28 of the opinion:
…the government’s use of high advances as a proxy for anticipated book sales is logical and supported by market realities. In publishing, advances are correlated with expected sales because books that are expected to sell well receive higher advances….In fact, advance levels are set by using P&L’s, and the defining feature of a P&L is the sales estimate….Moreover, industry practices indicate that $250,000 is a reasonable place to draw the line: S&S and two of the three PRH adult divisions require approval from senior publishers or executives for advance offers of $250,000 or more; and Publishers Marketplace, a major industry publication, categorizes deals for $250,000 or more as “significant.”
Writers and non-writers alike recognize this definition. That’s what everyone thinks of when they think of bestselling books. The definition hasn’t changed much since the 1960s when a $250,000 advance would be the equivalent of a $2.4 million dollar advance today. Not many writers are receiving $2.4 million dollar advances now, but in the 1960s, a significant number of books hit that $250,000 threshold.
These days, according to page 26 of my favorite court case:
Books that meet the $250,000 advance threshold comprise only 2 percent of all book acquisitions, but they account for 70 percent of all advance spending, amounting to $1 billion annually.
Looking at it this way, the DOJ case makes sense. They’re defending a small subset of sellers in a small (and declining) subset of the publishing industry. I will deal with this part of the case in a future year-in-review post, because I ended up with a heck of a realization. (And yes, fiction writers, I’m now withholding information to create suspense. Bad me.)
I do need to note there that traditional publishers still try to sell books into the “trade channels” which means the brick and mortar bookstores. According to Mike Shatzkin,
Bookstores have shrunk in number and in size so that perhaps as little as 20-25 percent (or perhaps as much as 30-35 percent, but no more…) of print book sales are made at actual retail stores.
In other words, these bestsellers that the DOJ defended may have 70 percent of advance spending, but they’re competing for an increasingly small market—that of the physical bookstore, which no longer dominates the industry at all.
(This is why advances for “top-selling books” have gone down in the past fifteen years.)
But let’s go back to the BBC’s question: What is a bestseller? The poor author of that piece was disappointed to learn that the books that places like Waterstones in England place on their endcaps and in other prominent positions, books usually listed as “New/Bestselling” aren’t anything other than new, and certainly aren’t bestsellers.
Those slots are for sale, so that publishers, who have spent, say, $250,000 on an advance, can promote the book inside the bookstore ecosystem. It’s a practice that has gone on for decades, but was apparently new to the BBC writer. Ah, disillusionment. It comes in many forms.
So do bestsellers. How do we define them? It’s possible to hit the New York Times list in off periods these days with as few as 5,000 book sales. Yet the writers whose books hit the list can be considered bestsellers. Their books won’t earn out (if they received a $250,000 advance) and they certainly won’t get retirement money, but they will have bragging rights.
Are the Amazon lists bestseller lists? Because they too can be gamed. The original idea behind the group 20Booksto50K was to teach writers how to manipulate Amazon’s algorithms to create sales and eventually hit the Amazon lists.
(Amazon hates this, by the way, and now changes up its algorithm so often that it’s truly hard to game. That was a discussion repeatedly at this year’s 20Books, along with a recommendation that was once an anathema to the group: Go wide.)
Are the free bestseller lists on any of the ebook retailer sites an actually bestseller list? Because the books weren’t sold. Technically, they were given away at high discount. They were what’s called in any retail industry a “loss leader.” From Shopify’s blog:
Loss leader pricing is a marketing strategy that prices products lower than the cost to produce them in order to attract new customers or to sell additional products to customers. Companies typically use loss leader pricing when they are entering new markets or attempting to increase market share.
Doesn’t sound like that would count as bestselling to me, then. And how do we define bestselling? Do we use traditional publishing’s old definition, which was the number of books sold within the first week of publication? That always screwed successful writers like Andre Norton, whose books sold consistently and at higher numbers than the Writer Flavor of The Month, but Norton’s books never hit a “bestseller” threshold in the first week of release, so she couldn’t be considered a bestseller. (Seriously.)
Do we use the DOJ’s distinct pricing number of a $250,000 advance? If we look at the advance for what it is, a loan against royalties (that appear once a book goes on sale), we should probably ask how that differs from a successful Kickstarter campaign.
In theory, Kickstarters kick start projects. Most publishing Kickstarters work the way that traditional publishing works, in that the book is finished once it goes up for “sale.” In the court-case definition, that sale is from the writer to a traditional publisher. In the Kickstarter instance, that sale is from the writer to a select group of readers who back the Kickstarter.
If we use the $250,000 figure, then Brandon Sanderson’s mega Kickstarter from March, for which he received nearly $42 million, is clearly a bestseller. Even the numbers of backers, while low compared to what his traditional publisher reports as his sales (note my hedging here; I don’t trust their numbers any more than the United States District Court For The District of Columbia does) are in the modern bestseller range. That particular Kickstarter had 185,341 backers.
Let’s take Brandon out of the equation though, and consider his Kickstarter as the outlier it is. Let’s go with the $250,000 threshold.
A quick and not thorough glance at Kickstarter on December 6 brought up projects like Will Wight’s three-book fantasy series, which funded at $760,000, and a children’s adventure book earned $384,000. A book on Japanese folklore brought in $510,000 and another turning Dracula into an interactive experience finished at $378,000.
I doubt any of those books would have received similar advances from traditional publishing. Nor would the books on regenerative agriculture (about $400,000) and collecting the art of G.I. Joe ($393,000).
If you count each backer as one book sold, the number of backers hasn’t risen to the number of sales in the old-fashioned bestselling categories. (That might not be the case, but go with it.) For Will Wight, the three books had 6,021 backers. Augie and the Green Knight, the children’s adventure book, had 9,044 backers.
G.I. Joe had 2,797 backers (which is about what a coffee table book would sell for a small publisher). Regenerative Agriculture had 3,088 backers which, if I were doing a P&L for a traditional regional publisher, would have been right in the ballpark, spread out over a year. The Japanese folklore encyclopedia had 5,735 backers which, given the short time frame of a Kickstarter, might have gotten that book on the New York Times nonfiction bestseller list.
But here’s the thing about the Kickstarted books. With the exception of the limited editions (of which there are a few here), the other books are just at the beginning of their sales life. A number of them hadn’t even been posted on retailers’ sites when the Kickstarter ended.
These are just the opening sales, not the largest sales of the book’s life (as are early sales in traditional publishing). These books will go on to have a lot more sales and a long life. They will earn money for years, if the writers keep them up for sale, and the numbers of sales and readers will continue to grow.
How do we count that? We can’t.
Nor can we count auxiliary sales, like audio or foreign rights sales. Those are in flux in traditional right now, and they’re a bit dicey in indie, although getting easier. (Yes, I will discuss this in future posts.)
That $250,000 threshold is a low bar when it comes to indie. As I wrote to a lawyer friend when the court case came out, I know a lot of self-published/indie writers who make that amount in a year on their books. Sometimes that’s on one book and sometimes it’s on several. But unlike traditional publishing, which divides that $250,000 into at least four payments of $50,000 each spread over two years (minus an agent’s commission), that $250,000 comes in monthly installments.
Kickstarters and other rights sales are bonuses.
The question of what is a bestseller is impossible to answer in the modern publishing world. It’s also probably irrelevant. To use Mike Schatzki’s definition of traditional publishing from the 1990s as a moat that protected the castle (publishing) from the great unwashed with all of their (stupidly creative books on agriculture and Japanese folklore) from getting into the bookstores, the moat has dried up. The castle has been overrun. And no one—not the DOJ, not a judge, not traditional publishing, heck—not publishing itself (if it were a real entity) can define what “bestselling” means anymore.
It’s an old term from an out-of-date business model, and one we need to replace.
But that’s about book discoverability, and that’s a blog for another day.
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“Business Musings: The Year in Review Part 3: Bestsellers,” copyright © 2022 by Kristine Kathryn Rusch. Image at the top of the blog © Can Stock Photo / studiostoks.
Related to bestseller lists, USA Today just laid off the person who did theirs, and said they won’t be doing their lists until 2023. The expected list for last week never happened, either.
Wow. I did not see that. Do you have a link?
You described book advances as a “loan against royalties” and compared it against kickstarters.
There is another, more accurate methinks, way to describe book advances: Payday Loans.
And we know how predatory that business is.
And in comparing advances to kickstarters there is an enormous difference: an author that brings a book to market via kickstarter retains full control of copyright instead of surrendering it, be it for a limited time or, most commonly among tradpub newcomers, life of copyright.
Predatory exploitation of the hopeful, unwary, (insert less diplomatic adjective)…
A further point on kickstarters: they can serve as market research as well as marketing. This may not quite matter for “labor of love” projects but on more commercial products, knowing upfront the minimum market size is priceless. A lot of non-fiction writers claim tbey need the book advance to live on (really?) or to fund research. What they really need to research is crowd funding, n’est pas?
Carry on ma’am.
We did our very first Kickstarter 10 years ago as market research only. It really worked. I’m actually not sure of your comparison to payday loans. Payday loan people don’t end up owning part of your job…
(And I can’t believe I’m defending payday loan people)
I agree on Kickstarter/crowd-funding. It’s a great way to go.
I see your point–tradpub terms are worse than Payday loans–but the people relying on Payday loans end up using them pay period after pay period and rarely get off the serial loan treadmill so to a large extent the lenders effectively own a chunk of their clients’ job. 😉
What an eye-opener. If I’ve done the maths correctly, the remaining 98% of authors are getting an advance of about $2183. Each.
That, as my husband is fond of saying, is a spicy meatloaf.