The Scant Economics in Book Publishing

So few bucks!

First of all tonight, I want to wish all my readers a very happy and safe Fourth of July celebration. Happy Birthday, USA!

In this post I want to discuss a topic that we all probably know a little about - at least in part: The cash flow (or lack of it) in the current publishing landscape.

I just LOVE IT when I hear someones first person experience in publishing their first book. Especially from an experienced journalist or writer.

This scenario allows us to relate and learn from another's first-hand endeavors and will, hopefully, encourage questions and/or recommendations from others depending on their own past experience and position in the publishing food chain.

This from Thomas Lee, a San Francisco Chronicle Business Columnist:

Are there brutal economics in book publishing? Let me tell you...

Writing a book was like disappointing my parents all over again.

Like many Chinese immigrants, they wanted their only son to be a high-earning doctor or lawyer. Instead, he became a newspaper journalist who valued career satisfaction over dollars and cents. (Don’t worry, Mom and Dad, I sometimes wonder if I’m related to you, too).

So to my surprise, my mom was unusually excited when I told her two years ago that I was taking some time off to pen a book.

“Oh!” she exclaimed. “You make lots of money!”

I suspected she was confusing my project — a niche business book about retail and technology called “Rebuilding Empires” — with the work of J.K. Rowling: “Harry Potter and the Resurrection of the Big Box Store.”

Little did she know, there are some brutal economics underpinning the book publishing industry. As I would soon discover firsthand, most books — even those published by major houses like Random House, Hachette and Simon & Schuster — don’t make much money or any at all.

Blame it on a number of factors: the low-cost dominance of Amazon; competition with other entertainment venues like Netflix, cable TV and cineplexes; or the fact that I picked a niche topic in the business world.

In any case, an unknown first-time author like myself pretty much assumes nearly all of the financial risk.

I was actually one of the luckier ones — at least my publisher offered a modest advance. Many authors don’t even get that.

Not surprisingly, that advance disappeared quickly when I took a three-month unpaid leave to research the book. How else would I find the time to work on it?

Unless you’re independently wealthy, the choice comes down to begging your employer for a leave or not sleeping for the next 12 months. (Which happened anyway).

The publisher agreed to print about 5,000 copies, which it distributed to Barnes & Noble, Amazon and various independent bookstores and wholesalers. In order for the publisher to recoup its advance, “Rebuilding Empires” needs to sell 2,000 copies. After that, I get paid a percentage of the list price of each book sold, a royalty rate that gradually goes up the higher the sales.

That doesn’t seem so bad. But here’s the thing that most people don’t really know: Publishers have near-zero marketing budgets to promote your book.

It seems counterintuitive. To make money, you must spend money. Yet the author is ultimately responsible for spreading the word.

But maybe the book will build some momentum after positive reviews, right?

Think again. Outside major names like the New York Times and Los Angeles Times, the media hardly reviews any kind of book these days — never mind nonfiction business books like “Rebuilding Empires.”

The publisher recently sent me some sales data: since December, net sales for “Rebuilding Empires” (that is, sales minus the number of copies retailers ultimately shipped back to the publisher) totaled about 1,500 units and 100 e-books. Those figures also include international sales, from Great Britain, France, Canada, New Zealand (of all places) and Japan.

I’m actually pretty pleased with the results. Despite the lack of marketing muscle, “Rebuilding Empires” is considered something of a success, selling about a third of its printed run in just seven months and about 80 percent of the target set by the publisher to recoup the advance.

All in all, “Rebuilding Empires” will probably turn a profit, though I really can’t say when.

Until then, my mom will have to temper her expectations.

Read Thomas Lee's original article (with comments) in the San Francisco Chronicle.

The Writers Welcome Blog is available on your Kindle here :)

      

Research/Resource article: http://www.sfchronicle.com/business/article/Are-there-brutal-economics-in-book-publishing-6363578.php