P&Ls and how books make (or don't) money

[alg]

Profit & Loss/Profitability & Liability: How Books Make (or Don't Make!) Money

A basic outline of what happens when an editor buys a book and wants to publish it. This is very much a basic look at publishing and publishing finance, with some explanation of terms commonly used by the marketing and sales departments.

Comments

Now, with identity!

[danielatlarge.livejournal.com]

Awesome redux of the lecture I got as an intern! Thanks, Anna!

[luna-the-cat.livejournal.com]

Dear god in heaven...I've done calculus, and this still made my head hurt.

I'm going to have to friend you just so I can have these essays in my memories list.

[jon-a-ross.livejournal.com]

Hope you don't mind, but I added you to my friends list so I don't miss the next part of the series. I found this essay thanks to a link from baralier

[jcfiala.livejournal.com]

Hi. Aspiring writer (aren't we all?) who found you through BoingBoing - I'm hanging around to learn more and see part 2.

[dd-b.livejournal.com]

Strange as it may seem, actually there are a few people, probably *at least* a dozen in the world at large, who really *don't* aspire to be writers. Given that all the aspiring writers I know also read, I can't even claim that our justification for existence is to be the market. But still, here we are.

Good luck with your aspirations, in any case.

I was first introduced to the internals of publishing through science fiction fandom -- sitting around the bar / consuite at a convention or even sometimes at panels hearing authors and editors talk about the business side some. That still goes on some -- but since I'm married to an author and have known numerous authors and editors for decades now, I don't go to the intro panels so often, so I may have a mistaken impression of how often they occur these days.

p and l spreadsheet paperbacks

[(Anonymous)]

You need to factor in cost of money, ie interest. While not as big a factor in prior low interest era, it is about to be much more important. It can greatly reduce profitability.

Re: p and l spreadsheet paperbacks

[mariongropen.livejournal.com]

That would be true for a company -wide P&L, but not as useful in the single title tool. This kind of management report is designed to help non-accountants sort through the choices available and pick the ones most likely to help the company. Interest costs should be pretty much constant across the company, as will the projected life of an unknown book within a single market segment.

Or, in short, not so much for this type.

Of course, this is just an opinion.

Great post!

[(Anonymous)]

This is a fantastic post Anna, and one I think every author (aspiring and published) should read. I'm very interested in reading part two. Thanks.
Tara Gelsomino

Re: Great post!

[alg.livejournal.com]

Thanks, Tara!

What, more questions?

[(Anonymous)]

I wouldn't want to seem ungrateful, but some of us are worse than hobbits, you tell us something and we have a thousand questions. Well, maybe not a thousand. But a couple, at least?

You made it clear that there's a definite difference between trade and mass-market, and phn made it clearer and maybe even fascinating. But, y'know, this sorta begs the obvious question:

Here's a new novel from author X. Is it to be trade, or mass market; and why; and who particularly makes that decision? Is it contractually negotiable? Should it matter to an author?

Then you have your grid of production costs, and I realize you didn't want to do an exhaustive breakdown but I am just assuming that it is a workable breakdown in context of this question: which of those items does Tor do in-house, which are contracted out, and which might go either way? And why?

For example, I know some printing is done in the US, while some is done overseas and shipped by slow boat, particularly if there's an important delivery deadline that can be missed. Is it a lot cheaper to have it printed overseas? Is the quality comparable? And are there other factors to the decision?

This next question arises because I bought what I thought was a new novel by a favorite author, from a major trade outlet while on vacation in Santa Fe. I was really thrilled to find their sole remaining(? It was the only one.) copy, in the course of looking for a geology text, so I scarfed it up (but didn't say, "OMG! SQUEE!") without looking too closely and went back to my hotel. I was all set to enjoy it when I realized that I'd already READ it, fairly recently, bought under a completely different title. A note printed inside the cover advised me that this particular book was for release to the Canadian market. (Insert extreme annoyance here.)

But how might that solitary volume have found its way from Canada all the way to Santa Fe to be sold as a new book? Is there a grey market in SF novels? This wasn't remaindered or used, and it was from a major chain, so I've been trying to figure out exactly what might have happened?

Re: What, more questions?

[alg.livejournal.com]

These are really good questions, but I am not going to answer them. Why? Because the answers are long and complicated and will take a long time, and I just don't have that kind of time. If you are serious about wanting answers to your questions, I suggest you hit my post where people ask their questions in the comments (http://alg.livejournal.com/74060.html?mode=reply"), and I will get to it and make a post about it. OK?

[wbledbetter.livejournal.com]

Thanks for the inside peek...now...just shoot me.

[dd-b.livejournal.com]

Thanks for leaving the math in! And for using real-world type figures, not completely made-up far-too-large bogus numbers. Because it was clarifying the details where I really learned stuff from this (having hung around with real live authors and some editors and agents for a few decades, the basic outline was already fairly clear to *me*, though I know how rare that is in the world at large).

De-mystifying publishing is a worthy goal all around. Publishers can get more sympathy (and be beat up more for any actual bad things they may do, and less for how things work), new authors are less subject to exploitation by scammers, and book buyers can understand just how lucky they are that *anything* they like *ever* reaches the shelves :-).

P n L. Can you do a version for ebook sales

[(Anonymous)]

Great! I loved your breakdown. I haven't seen Part Two yet, but I'd like to know if you might consider doing a Part Three assuming similar (except for physical ppb costs) breakdown for a $6.99 ebook version? And could you come up with scenarios for the difference between letting someone like Fictionwise handle the sales versus TOR handling them itself?

Derek Benner

Re: P n L. Can you do a version for ebook sales

[alg.livejournal.com]

Unfortunately, I don't know much about e-books. Tor doesn't generally sell e-books ourselves -- we sell the rights to a company for a set amount (usually).

Sorry!

[hkoneko.livejournal.com]

Thank you for writing such an interesting article. I've added it to my memories. ^_^

[deviant-mute.livejournal.com]

Thank you.

[chiaki777.livejournal.com]

That was rather very informative, thank you.

[missmarypotter.livejournal.com]

Oh My... but hey, don't quit my day job right. Thanks! This was useful.

Part II?

[(Anonymous)]

Have you posted a Part II yet? If so, can you tell me where to click? (Keep in mind that Live Journal has made an idiot out of me so I'll need simple instructions.)

Thanks!

Re: Part II?

[alg.livejournal.com]

Part 2 has not yet been posted. In about two weeks, I should have it ready.

acquiring books that won't be promoted

[(Anonymous)]

I am a MM PB author very similar to Ms. Sun--a nobody, with no "platform," no blurbs, no fancy cover and no co-op dollars. Not surprisingly, my sales results were quite similar to Ms. Sun's. My question: why do publishers acquire books that they have no intention of promoting? It seems like a guaranteed recipe for failure, and then they blame the poor author! When Nabisco launches a new cookie, they promote the hell out of it. They don't just ship it to grocery stores and stand by passively while the cookies grow stale on the shelf. Why is publsihing different?

[(Anonymous)]

Your report was pretty interesting!

The bookbusiness..is a hard business!

Greetings from Germany

Irena

Pessimistic?

[frankleblanc.livejournal.com]

Your article may be slightly pessimistic but not nearly as much as an editor I once met in Banff, Alberta in 1999. Our conversation went like this:

"What do you write?" he asked.

"Short fiction."

"HA!" he mocked, "Good luck, buddy!"

"How can I improve my chances?"

"You really wanna make money writing? OK here's what you do: first become a big celebrity, then write a cookbook."

No kidding. That's what he said. I still write but not as much or as enthusiastically as I did five or six years ago. I have not yet started a cookbook.

letmeoutofhere

[(Anonymous)]

Read the whole thing, and feel like I've been beat half to death. No wonder I'd rather write. It's an escape from this kind of awful, grinding machinery. Hurray for the grinders!

[storytellersjem.livejournal.com]

Fantastic info even if I am reading it late.

Thank you!

Shannon

Thank you

[(Anonymous)]

I know it may be naive of me, but thank you anna louise. I got a form reject from an agent this weekend and I've been rather depressed since. But reading this post just reminded me why I wanted to tough it out and find an agent anyway so that I didn't have to be the one stressing over the numbers and business side. I understand that I need to know these things, to understand how it all works, but I am 100% OK with handing my 15% over so that I can focus on the writing part.

[amitabhbachchan.livejournal.com]

Several months late, but this was such a cool read. Now I feel better about blowing tons of money on books.

For Andre ...

[(Anonymous)]

Andre call me ,please ! Or my ICQ - 25634874 .Sorry for offtop о:( .
Regards.

Why???

[(Anonymous)]

You might as well turn off the lights and throw darts to determine how to make a profit. This book publishing nonsense is the most irrational and inefficient system still waiting to be laughed off of Wall Street today. The only industry in bigger denial of it's outmoded institutional dogmas is religion. But they still have a viable product: FEAR.
Speaking of religion, it's often said that Christianity succeeded when it did because it welcomed women and slaves. Sounds a lot like the POD movement which is eating the flesh off the bones of Bertelsmann et al.

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