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Originally Posted by Ralph Sir Edward
If she's make 8% royalty, then the publisher is making 92% (minus the lump sum advance to the author).
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Correct. But the publisher is also absorbing almost all of the costs. Editing, cover art, proofreading (well, for the paper version at least
), marketing, not to mention the other distributed overhead. Apparently that can be anywhere from $10k to $20k or more. Her own estimate is that on that book, Penguin earned $250k in profit on $450k in revenue. (I'm guessing $50k for her advance, another $20k for editing/art/marketing etc, leaving $180k for taxes and other overhead.)
If the book
wasn't a minor hit, the publisher is out of pocket -- and the author is not. 92% of the revenues of a loss is still a loss. And since most books don't hit the bestseller lists, it's likely that most books do not break even.
I.e. the publishers absorb numerous risks on behalf of the authors, and don't get obscenely wealthy in the process (see below).
Quote:
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Originally Posted by RSE
If this is such a razor-thin business, why aren't the companies located in Podunk, USA, where office space is 10th the cost of Manhattan/LA, and salaries/cost of living is lower? It's not like they have to have the authors come into the office every day....
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Why are tech startups in Silicon Valley or San Francisco instead of Dearing, Kansas? Why would a painter or a photographer move to an expensive city like New York or LA, instead of Pine Bluff, Arkansas? Heck, why settle for a tiny US town? Maybe they should move their offices to Bangalore and use GoToMeeting non-stop.
New York, LA, London and so forth have the publishing infrastructure, the personnel, the networks, the agents, the media, the history. In the "can't win for losing" department
, I'm sure if the publishers collectively fired 20,000 people and all moved to Kansas and disrupted the lives of a few thousand families in the process, the detractors would just proclaim this as yet another instance of the heartless and callous nature of the publishing houses....
Let's look at some actual numbers on margins. The best I can find on short notice is some PW articles:
http://www.publishersweekly.com/article/CA6589673.html
http://www.publishersweekly.com/article/CA448532.html
Education is in the 12-15% range; trade is 7-15% range. Harlequin, by the way, fell from an excellent 21% in 2002-2003 to 13% in 2007.
Now, I will admit trade does better than I expected, but it's hardly extortionate. Most of these publisher's revenues are 1/3 or less of Amazon's, B&N's or Apple's revenues. It's certainly not a "92% margin" that one might conclude based on royalty rates alone.
Or, to put it another way: The author gets a profit of 8-15% of sales, in the form of royalties. The publisher (their shareholders, to be precise) gets a profit of 8-15% for its work as well. So why does this qualify as unfair or exploitative profit...?