The Changing Face of Publishing &
New Ways Authors Get Rich
I reported yesterday on the surging popularity of the iPad and how the new generation of e-readers is going to change publishing, but I realized that a lot of people unfamiliar with the industry might not recognize just how dramatically things are about to change.
Two hundred years ago, writers were Rock Stars. When Edgar Allan Poe gave a reading in the 1840s, women would throw off their clothes and swoon, overcome by the power of his words. When Jack London sold a short story in 1910, he would make $6000—about as much money as an average railroad laborer could expect to make in 20 years.
With the advent of radio and then television, the writers fell out of favor. Singers and actors soon achieved cult status—to the point that most people today probably can’t even name a contemporary poet! Very few poets make a living at it anymore—unless they put their poems to music, and so writers are always grumping about how tough times are.
Throughout all of these shifts, it has been the distributors who have made most of the money. When a book goes ballistic—say a Harry Potter or Twilight series—the author indeed can make a fortune. But the publishers of books, films, and videogames make far more. When a book like Harry Potter takes off, the author might get 15% of the cover price on that book, but the publisher can make more—say 20%-25%. Meanwhile, other distributors join the feeding frenzy with tie-in products. Tolkien’s estate made millions, but the movies made billions, and for every dollar made by the film—sold at the box office, in DVD, or through television licenses—far more was made through licensing the merchandise rights. None of that money for video games, t-shirts, and toy sales goes to the author.
But among writers, many are beginning to ask, Why do I need a publisher? What do they really provide?
I can self-publish the book using print-on-demand technology. Sure, I won’t sell as many copies, but I’ll keep all of the money.
I can self-publish my book electronically, and current case studies show that I can sell just as many electronic copies as my publisher does. In fact, I can do better. Some authors who are testing the waters by selling electronic rights cheaply are finding that they make far more by self-publishing than if they allow their publishers to sell. Why? Because if my publisher sells a book, they raise the price in order to pay themselves. Thus, they have to charge $4.99, for example, to give me a dollar-fifty. Meanwhile, if I self-publish that same book and charge only $1.99, I get to keep a dollar. But by selling at a lower price, I sell ten times as many copies!
The same is true with audio rights. I can read into a microphone and sell downloadable audio files. In the long run I might make far more money. Once again, I’m not paying an actor or a distributor for the audio rights, so I can sell those audio files far more inexpensively and raise the chance of becoming a bestseller in that industry.
So some authors are beginning to realize that publisher’s aren’t necessary anymore. They are betting that they can make more by self-publishing. Right now, I’m concerned that if I sell a novel today and give up my electronic rights, I might be giving up millions of dollars in future income. In short, the need to pay a middleman for electronic and audio rights will raise the price of my work so high that it will actively hinder me from becoming a bestseller.
The publishers, on the other hand, recognize that publishing books is a business that is going into a rapid decline. Most publishers work on about an 8% profit margin per year. If the sales of Kindle and iPad reach their projections this year, paper book sales will probably drop by more than 8%. In short, many publishers will lose money on their paper book divisions.
So they are demanding electronic rights from the authors in order to try to make up for the lost revenues. They’ll be drowning, and the author’s electronic rights will be their lifesavers. But perhaps that’s not a good analogy. It’s more like this: the publishing industry will be drowning, and the publisher’s hope to stay alive by climbing on the backs of their authors. Sure, some authors might drown, but the publishers are telling themselves, “At least I will stay afloat.”
Authors, on the other hand, realize that we don’t really want to be floaties. So we will need to adapt to this changing environment. Fortunately, we’ve seen examples from other industries undergoing similar changes. In the recording industry, pirating of songs caused much of the industry to collapse in the past decade. Many recording artists just “drowned” as a result. But some of them took their acts on the road and began touring. In effect, they cut out the middlemen in their industry and let their pirated music act as advertisements for their talents. As a result, many of the classic rock bands are making far more money on tour than they ever did as recording artists.
As new authors, you probably can’t do something equivalent. You can’t go and charge reading fees or speaking fees. But you might be able to self-publish. You might let the middlemen go hang themselves.
As most of you know, I self-published a book last year, and I’ve been keeping a running tally to let you know how it is doing. In the Company of Angels has sold nearly all of its first print run, and the copies will be gone within the month. So I’m out of the red and into the black, and the book just won the Whitney Award for Best Novel of the Year, which should help bolster sales of the trade paperback. In short, as I look at this little book, I started the venture thinking that it was a really terrible idea. Yet as it evolves, I’m seeing that I could make more money from self-publishing this novel than I’ve made with almost any other book.
Conventional wisdom in the past has said, "Don’t self-publish." But the longer I live, the more I realize that all too often today’s “conventional wisdom” is just a myth waiting to be exploded. Changes in the publishing industry are such that we may soon realize that publishing books as we do now is a bad idea. Sure, I think that we’ll have a strong market for conventional books for the next twenty years, but giving up electronic rights in order to sell paperbacks is looking more and more like a losing proposition.
Reprinted with permission from David Farland's "Daily Kick in the Pants," a free email bulletin for writers. For more info and/or to subscribe, visit Dave's website: