[Elfwreck]

Originally Posted by stonetools

Do you have any statistics to support the claim that BPHs do in fact make money in the long run on such books? In real life these books are seen as losses by publishers and investors alike and thats what counts.

The Myth of the Unearned Advance:

The implication then is that a book isn’t profitable if it doesn’t earn out its advance. The publisher overpaid and has lost money. The author is the happy camper who is counting their cash gleefully celebrating the failure of their publisher to project sales correctly.

Let me try to explain why that isn’t always true. And to do so means we have to do math together.
...(snip examples with numbers)
In this comparison it is the book that didn’t earn out the advance that actually makes more money for the publisher!

Why? Because scenario one pays a lower royalty per book sold.

Does the publisher lose money if my book doesn’t earn out?

Let's take some big book the publisher is doing with a celebrity. She's created a $25 hardcover book, and the publisher has paid her a $100,000 advance.
...
So take the $12.50 the publisher received for the book and subtract author royalties ($2.50), hard costs ($3.75) and overhead ($2). Conservatively, the publisher is left with $4.25 per book after paying all the bills. In essence, the publisher is making more money per book than the author is making. (And no, there's nothing wrong with that.)
...
let's say the publisher printed fifty thousand copies and sold half of them. They received $312,500 from bookstores ($12.50 x 25,000 copies sold). They credit the author her royalty of $84,375 ($2.50 x 5000; $3.125 x 5000; $3.75 x 15,000). The author hasn't earned out — she's still in the red $15,625. The publisher is left with $228,125. Out of that they pay $150,000 on printing ($3 x 50,000) and $50,000 in overhead. So the publisher is left with a profit of $28,125. Even if they write off the rest of advance, they're sitting on $12,500. Maybe they remainder the rest of the books for a dollar each , so they just got in another $25,000 (and royalties aren't paid on remaindered books), so now the publisher has $37,500. Did you follow that? The book did NOT earn out, but the publisher still made money.

Publishers like everyone else who produces for the market can't predict the future. If you have some kind of strategy for predicting what books will be popular next year, please share it.

I'm working with an erotica publisher because I expect those stories will be very popular for at least the next few years. HarperCollins is welcome to jump on the explicit BDSM gay prostitute fiction bandwagon, if they'd like.

Publishers are like major league hitters. They put out the best product they can and hope to get a hit .300 of the time. Its the nature of the business-not a defect in their business strategy.

Small businesses don't have the cushion that allows a 70% failure rate. And what's reasonable to set as a challenge in sports is not necessarily a good plan for business.

That's six names. Count that against the hundreds (if not thousands) of names of authors developed by BPHs. Thanks for making my point. Note all are genre fiction writers- and not the top rank either.

I didn't question that most *current* well-known authors are from BPHs. I'm pointing out that non-BPH authors are selling millions of books, and no longer need BPHs to do so.

Or to go in debt faster. Another downside, as Charles Stross points out, is that writers who are marketing, editing, proof-reading, looking for cover art, etc, are writers who aren't writing.

Writers who aren't doing those things, and don't have a contract with a publishing house, are writers not making money at their craft. I'm not questioning the value of publishers for writers--I am questioning the value of BPHs, and pointing out that the value of other publishers is limited.

There are thousands of authors for whom BPH contracts are not going to happen--and now those authors have access to the public, and if their ideas are good enough and presentation skills solid enough (which may include "find someone to edit & format this for me"), the public gets access to their works. And from the revenue some of them are getting, the public is very happy with this change. Implying this is an irrelevant shift because none of those authors has yet won a Pulitzer or Nobel prize (or similar measure well-known talent recognition) for their writing is a very skewed interpretation.