Amazon vs Hachette

[Barcey]

Originally Posted by DiapDealer

Why does everyone keep listing the obvious fiscal irresponsibility of the current advance system (on the part of corporate giants, anyway) in the plus column?

Because it's the standard sob story that the publishers tell their authors. It's interesting that they don't talk about the percentage of books that lose money but always talk about the percentage that don't earn out the advance. They are very different things.

[Barcey]

Originally Posted by AnemicOak

Don't think this one has been posted yet...

Amazon Is NOT the Vladimir Putin of the Publishing World



James Patterson on this...
http://www.jamespatterson.com/about_...p#.U48J2_ldWSo

If Mr Patterson was really so concerned about the future of American literature I would think he could take some of the money he makes (from other authors writing his books) and start a new literary prize for up and coming authors. He could use the money he's spending taking out full pages ads and split it as prize money across the top five and assist some of the others trying to write great literary works. Maybe the authors could then self publish on Amazon and get a better deal.

The sad truth is that great literary works don't make as much money as popular fiction. Sure the publishers throw some charity towards it but let's be real, they're more interested in finding the next Dan Brown. They're in business to make money and they're every bit as greedy as Amazon.

[SteveEisenberg]

Originally Posted by DiapDealer

Why does everyone keep listing the obvious fiscal irresponsibility of the current advance system (on the part of corporate giants, anyway) in the plus column?

The advance system guarantees that if the non-fiction book proposal is accepted, the author knows how much money he or she will probably make by writing the book. This eliminates some of the tremendous financial risk of being an author.

With fiction, the risk reduction, to the author, of getting an advance, is less, since the author generally completes writing the book before selling it. But there still is some risk reduction when you, in effect, sell your book to a publisher rather than planning to rely on royalties.

Indie publication, for an author able to get a major publishing contract, accepts higher risk for more of an upside.

I can see criticizing the publishers for low advances, but not for low royalty percentages. As already noted, the percentages are irrelevant to most major publisher authors. There is nothing new about this. Prominent nineteenth century authors often sold their books outright to the publisher with no possibility of further earnings from that book. If the price is right, this shifting of risk from author to publisher can make a lot of sense.

[pwalker8]

Originally Posted by Barcey

Because it's the standard sob story that the publishers tell their authors. It's interesting that they don't talk about the percentage of books that lose money but always talk about the percentage that don't earn out the advance. They are very different things.

You do understand that a book that doesn't earn out the advance, then the publisher eats that loss. In the vast majority of cases, a book that doesn't earn out the advance, is going to lose money. There may be a few that are so close to earning out, that they aren't a loss, but not many. The million copy best sellers are what drives the profit margin for most publishers.

[BearMountainBooks]

Originally Posted by Barcey

Because it's the standard sob story that the publishers tell their authors. It's interesting that they don't talk about the percentage of books that lose money but always talk about the percentage that don't earn out the advance. They are very different things.

Finally! I wanted to point this out, but figured I would be talking in the wind. They are completely different beasts. Ofttimes a publisher does earn money on books that don't earn out their advance. If this were not the case, the publishers wouldn't continue paying out the advances the way they do.

[BearMountainBooks]

Originally Posted by pwalker8

You do understand that a book that doesn't earn out the advance, then the publisher eats that loss. In the vast majority of cases, a book that doesn't earn out the advance, is going to lose money. There may be a few that are so close to earning out, that they aren't a loss, but not many. The million copy best sellers are what drives the profit margin for most publishers.

No, this is not the case. They earn a high enough percentage on most books compared to the author that in fact, they can avoid a loss even when the book doesn't earn out. There are multiple articles about how these things break down, but the publishing industry does like to portray an advance that doesn't earn out as this huge loss for them. I used to follow several agent blogs and publishing news rags that had good articles now and then. I don't follow them now or I'd have links handy.

It is true that the bestsellers drive profit margin.

[pwalker8]

Originally Posted by BearMountainBooks

No, this is not the case. They earn a high enough percentage on most books compared to the author that in fact, they can avoid a loss even when the book doesn't earn out. There are multiple articles about how these things break down, but the publishing industry does like to portray an advance that doesn't earn out as this huge loss for them. I used to follow several agent blogs and publishing news rags that had good articles now and then. I don't follow them now or I'd have links handy.

It is true that the bestsellers drive profit margin.

As I said, it really depends on how close a book is to earning out. Obviously, the exact number depends on the publisher, the author, what the contract is and how good the publisher is at judging the market for a book (I use publisher here as the person who makes the publish/don't publish decision, not the umbrella publishing company). Most of the "make money on books that didn't earn out" that I see, tend to be big advances and big sales. The one that I link at the end, talks about printing 50K books and selling 25K books. You kind of need that level of sales to cover that $50K overhead that each title is charged. But quite a few books don't even hit the 10K books sold level, especially if it's a new author who doesn't have a big media blitz. One author blog I read talked about a first book and getting 5K in book sales on the first royalty statement.

So making a profit on a book that doesn't earn out really depends on if you are talking about someone who will sale in the 25K books range(best seller or well known author), or in the 5K book range (the vast majority).


url - http://chipmacgregor.typepad.com/mai...-earn-out.html

[BearMountainBooks]

Originally Posted by pwalker8

As I said, it really depends on how close a book is to earning out. Obviously, the exact number depends on the publisher, the author, what the contract is and how good the publisher is at judging the market for a book (I use publisher here as the person who makes the publish/don't publish decision, not the umbrella publishing company). Most of the "make money on books that didn't earn out" that I see, tend to be big advances and big sales. The one that I link at the end, talks about printing 50K books and selling 25K books. You kind of need that level of sales to cover that $50K overhead that each title is charged. But quite a few books don't even hit the 10K books sold level, especially if it's a new author who doesn't have a big media blitz. One author blog I read talked about a first book and getting 5K in book sales on the first royalty statement.

So making a profit on a book that doesn't earn out really depends on if you are talking about someone who will sale in the 25K books range(best seller or well known author), or in the 5K book range (the vast majority).


url - http://chipmacgregor.typepad.com/mai...-earn-out.html

Yes, agreed. The confusion comes in because publishers seem to throw out the idea of "not earning out" as losing money and that is not always the case. They seem to do this most often as a ploy to gain sympathy or cut advances. Not saying it is a bad idea to do that sort of thing, but it leaves an incorrect assumption out there for people not more familiar with the industry.

In some genres selling only 3k books is not unusual. One of the reasons the larger publishers now have "ebook only" imprints is because there is a market for books that sell a small number, but because they sell a small number, it is not worth: 1. paying the same advances as for a book expecting larger sales and 2. going to print 3. spending money on marketing in the same manner.

I think everyone is still learning about marketing and selling ebooks. They don't go "out of print" so I'm not sure it's been determined how long a company (or individual) will spend money marketing/selling a particular ebook or series. The "lifespan" of a book is different now than it was 10 years ago.

To some degree the ebook reader is a different reader than a print reader as well. And the market is still evolving so there is much to learn.

[fjtorres]

Originally Posted by BearMountainBooks

The "lifespan" of a book is different now than it was 10 years ago.

The revenue-generation "lifespan" of an ebook is to all intents and purposes the length of copyright control. On the order of 100 years...

And with the current corporate terms of 25% of net (with "net" arbitrarily defined as whatever the publisher says) the publisher gets a minimum 3x what the creator earns. For 100 years. Sweet deal, huh?

For a midlist title on a current $4k advance even a sales rate of 10 book a month will earn out in eight years and generate profits long before that. The only way the corporate publishers lose money on ebooks is through funky accounting ala Hollywood.

[SteveEisenberg]

Originally Posted by fjtorres

For a midlist title on a current $4k advance even a sales rate of 10 book a month will earn out in eight years and generate profits long before that. The only way the corporate publishers lose money on ebooks is through funky accounting ala Hollywood.

Humor me on the accounting.

What about all the years a given publisher is either losing money overall, or only making a small (say, 1%-2% of sales) profit. Surely you don't think that in those years, if you took away all the books that more than earn out, the publisher would have a profit?

As for the real accounting, how many editors (acquisition, structural, copy) are you allowing, and at what pay rates? How much graphic artist time and at what pay rate? However much for the publisher to pay managers, mortgages, rent, HR staff, janitors, and so forth, proportioned out to one released book? Then please explain to me how much they are getting per book, and how they are going to generate profits "long before" they sell 960 eBooks (10 times 12 months times 8 years).

Here's what I think. Publishers are not consistently profitable. The main reason for this is boom and bust depending on whether they had a tremendous best-seller that year.

As for why they publish books that won't sell well, the obvious answer is that they don't know in advance which will and won't do well.

As for the 100 years -- or the eight years -- it's quite properly up the author how much emphasis to put on the unlikely event the book will continue to sell that far into the future.

Major publishers take on risk that would otherwise be borne by the author. In the case of a 4K advance, it isn't much risk, but in case of larger advances, it seems to me they are performing a valuable service both to authors and readers.

[pwalker8]

I totally agree with you that people are just now learning about marketing and selling ebooks and that there is a lot to be learned. The economics of the situation is totally different than paper books. IMPO, ebooks is really going to help the mid list authors (i.e. authors with a big back catalog and name recognition, but no best sellers) and genre authors. They should have a nice steady income.

The biggest question mark, in my mind, is how new authors are going to connect with potential readers and who is going to develop the craft of potential authors. Baen use to like to pair new authors with established authors to develop the name recognition and let the established author show the new author "how it's done". My guess is that we will see a proliferation of small scale publishers who only put out two or three new books a month.

Originally Posted by BearMountainBooks

Yes, agreed. The confusion comes in because publishers seem to throw out the idea of "not earning out" as losing money and that is not always the case. They seem to do this most often as a ploy to gain sympathy or cut advances. Not saying it is a bad idea to do that sort of thing, but it leaves an incorrect assumption out there for people not more familiar with the industry.

In some genres selling only 3k books is not unusual. One of the reasons the larger publishers now have "ebook only" imprints is because there is a market for books that sell a small number, but because they sell a small number, it is not worth: 1. paying the same advances as for a book expecting larger sales and 2. going to print 3. spending money on marketing in the same manner.

I think everyone is still learning about marketing and selling ebooks. They don't go "out of print" so I'm not sure it's been determined how long a company (or individual) will spend money marketing/selling a particular ebook or series. The "lifespan" of a book is different now than it was 10 years ago.

To some degree the ebook reader is a different reader than a print reader as well. And the market is still evolving so there is much to learn.

[pwalker8]

Originally Posted by SteveEisenberg

Humor me on the accounting.

What about all the years a given publisher is either losing money overall, or only making a small (say, 1%-2% of sales) profit. Surely you don't think that in those years, if you took away all the books that more than earn out, the publisher would have a profit?

As for the real accounting, how many editors (acquisition, structural, copy) are you allowing, and at what pay rates? How much graphic artist time and at what pay rate? However much for the publisher to pay managers, mortgages, rent, HR staff, janitors, and so forth, proportioned out to one released book? Then please explain to me how much they are getting per book, and how they are going to generate profits "long before" they sell 960 eBooks (10 times 12 months times 8 years).

Here's what I think. Publishers are not consistently profitable. The main reason for this is boom and bust depending on whether they had a tremendous best-seller that year.

As for why they publish books that won't sell well, the obvious answer is that they don't know in advance which will and won't do well.

As for the 100 years -- or the eight years -- it's quite properly up the author how much emphasis to put on the unlikely event the book will continue to sell that far into the future.

Major publishers take on risk that would otherwise be borne by the author. In the case of a 4K advance, it isn't much risk, but in case of larger advances, it seems to me they are performing a valuable service both to authors and readers.

As was mentioned in the article I linked, some publishing houses will assign a $50 K overhead charge to each title to account for all the things you mention. That's a whole lot of ebooks.

[speakingtohe]

Originally Posted by DiapDealer

Why does everyone keep listing the obvious fiscal irresponsibility of the current advance system (on the part of corporate giants, anyway) in the plus column?

I don't think I said it the advance system was a plus?

Not sure it is a fiscally irresponsible way of doing things either. I am sure it is not the best way in todays world, and I am equally sure I do not know of the best way or even a substantially better way.

Perhaps you could explain why it is so obviously fiscally irresponsible.

Helen

[speakingtohe]

Originally Posted by BearMountainBooks

It should be noted that publishers could easily pay authors more--but it does not have to be royalties against potential sales. There are models out there where the author gets a higher percentage--but not so large an advance or no advance at all. This model is usually seen with small to medium sized publishers.

It's nice, but it's not a necessity. A necessity is sales. Authors earn a higher percentage from ebooks, which means many more paperbacks have to sell to keep up with ebooks. For a mass market paperback, authors earn about 35 cents per copy. For an ebook selling at near the same price they are likely earning 20 to 40 percent of the list price.

This holds true for indie as well, only more so. I can earn 60 to 70 percent per ebook while I only earn about 10 percent for a print copy (or far less depending on where it sells because of third party cuts along the way). So, while a paperback costs approximately 10 dollars in my print world, I might earn 1 dollar per copy. An ebook sells for approximately 2.99-- and I earn closer to 2 dollars per copy sold.

It should also be noted that in some genres and at some publishers, ebooks outsell print copy already--and in fact, several ONLY do ebooks now unless the sales are high enough to warrant stretching into the print world. This is also certainly true for most indies.

Just to try to get a bit back on topic:
Amazon pays more per copy in general as do other self pub methods and they will pretty well market anything legal AFAIK.

Hachette et al pick and chose, pay less per copy, but may give a better overall return for a slightly successful author. And for the less than intrepid reader, there is a fairly strong likelihood, that the book will not be an overall disappointment.

Still there are statistics indicating that there is more money to be made selling through Amazon.

I'll know which is true probably when established authors (and I don't mean great authors, or better authors, just those who do well already) start switching en masse to Amazon or self pub.

And I hope for the best outcome for authors, readers, and even publishers.

Helen

[DiapDealer]

I was joking more than anything, but I can't help but see continually advancing more money than they expect to earn back as irresponsible. So irresponsible, in fact, that I suspect its simply not true, or as others have suggested, it just doesn't mean what they want people to think it means.