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

Oh, I believe you that you're presenting your real numbers. My question is more about **why** these are the real numbers. Of course small presses work different from the big NY companies (thank god!). But why? I don't think we're any smarter than you, but I do think that we approach our business with a very different -- and much more positive -- attitude.

Seems to me that the big NY companies try to have it both ways -- on one hand, you all talk about how hard it is to make money on a book. On the other hand, firms like yours do little or nothing to work efficiently. It's not easy for me to make money on a book either, but at least I'm confident that I'm spending my dollars wisely.

In fact, from where I sit (both as a bookseller and a publisher), it often seems like your firm and others similarly situated are going out of your way to spend money inefficiently and ineffectively, at every step of the process. The waste that I see here as a bookseller is especially appalling, especially in terms of sales and marketing.

Maybe this is the right way to ask the question: how much have these numbers changed in the last 5 or 10 years? To what extent have NY publishers taken advantage of all the advances in technology that make it easier and easier to produce a quality book at a much lower cost?

-- Jim

Hi... gratuitous friending, here... I want to go back and read this a few times. Thanks for the insider's view!

I am especially interested in the, "However, she can't get another book deal to save her life," comment.

Is this a frequent occurence? Isn't it the publisher's fault, for giving the author too large an advance? Or was your comment more about the poor performance of the book than the fact that the advance wasn't met?

Can a book be written that only INTENDS to sell 8000 copies? I guess your example (mass market) doesn't really apply to that...

I worked for a big Canadian book chain, and the same deal at our store - absolutely no recycling of stripped mass markets, or stripcover magazines. Dumpsters full of *recyclable* garbage headed to the landfill every week. And as employees we weren't allowed to take home any of this "garbage" - as publishers require that stripcovers are destroyed.

Another ridiculous thing is how large quantities of mass market are ordered into a store, hundreds more than could possibly sell.. just so displays, tables and shelves look full. Screw you, Earth - I've got to complete this planogram!

It's a dirty secret, customers don't know about it.. and would probably be shocked if they knew how much waste a bookstore can generate.

Hello. Great article; sure shines a light on mass market book profitability!

I had a couple of questions:

1) Does an editor such as yourself have a bonus?
2) If so, is that bonus tied to the profitability of a book such as Crichton is an Idiot? Is it tied to revenue?
3) If not, what are the rewards to the editor for choosing profitable books? What are the disincentives to the editor when they choose an unprofitable book?

Totally different market for the trade paperbacks, then?

Not entirely. But what you are describing is different -- technical books are non-fiction, not novels.

The answers all depend on which publishing company one works for and how profitable the book is.

In general, if an editor has profitable books, that editor will see the profits reflected in the P&L done for the editor at the end of the year by the finance department. It shows the profitablity of all the editor's books, and adds them all together to show the editor how much money the company spent on that editor's books, and how much money the books made for the company. If you make the company money, you generally will get a good performance review and a raise of some kind.

Editors are not "entitled" to anything like a bonus -- i.e., most of us do not have it written into our "contract" with the publisher that we get bonuses when books we edit do well.

Some editors might. Most editors are just hired and fired and given performance reviews, and sometimes get a couple thousand dollars in bonus for books that do well. That's not often, though.

I think I read somewhere that the kid who acquired The DaVinci Code got a $2000 bonus.

...and, IMO, the biggest disincentive to an editor for choosing unprofitable books is that every single book builds an editor's reputation -- every single successful book builds a good reputation, and the unsuccessful ones build a bad reputation, and an editor with a good reputation has a lot more freedom, and can actually use the good reputation to get more house support for his/her books.

I have no idea. That's more involved than I've ever asked the explanation to be -- this particular area is not one in which I am an expert.

Can a book be written that only INTENDS to sell 8000 copies?

I don't know too many people who write a book saying they are only going to sell 8000 copies! Everyone wants their book to be the next 250,000 copy bestseller.

However, an 8000 copy hardcover run is not bad at all!

See, I would tend to think that novels would sell better, bigger market.

And a few of my books might qualify as novels, but they are still sold to the Computers buyers at the bookstores. "Hacker fiction" might decribe them.

It seems to me you're trying to have a very different conversation than the one

alg volunteered for.

She's trying to convey some fiscal realism to aspiring writers. You're taking it as an opportunity to demand that she defend costs and practices from a side of the enterprise that she already said is outside her area of expertise.

It may well be that we're dumb old lumbering dinosaurs and your operation is one of the tiny mammals that will eat our eggs while we're "doing little or nothing to work efficiently." If that's the case, I expect we'll see evidence of it soon, as your operation, with its "positive attitude," quickly overtakes ours. Meanwhile, I think you're kind of off on the wrong foot with

alg, who didn't set out to explain why Everything In New York Publishing Is Just Exactly Perfect. You know?

Indie music companies work much in this way: very small advance and higher royalites.

As Cool Indie Records, I might like The Hip Kids' sound and live show and the album they self-funded. So, I give them $1500 to $5000 to buy the rights to that album for specific terms and maybe I'll buy them a cheap van to tour in (which is like marketing: playing to new audiences who will hopefully buy the record).

The royalty split is generally around 60/40, 50/50 or 40/60, depending on the size of the company and their personal philosophies around the royalty split (artist run companies tend to give the most favourable royalties) (note - expenses, such as the cost of stamps and envelopes, long distance fees, % of in-house and/or independant publicist's salaries and expenses... are recouped at a pre-determined percentage - generally in favour of the label - from the artist's royalties.)

The Hip Kids have technically already earned their "advance" which isn't really an advance at all. As the creators of the music, they've already done the job of creating and recording the music, I, as Cool Indie Records am paying them for that job. It's no different for the writer: s/he's already sat down and written the book (the main labour of writing) and the publisher is paying the author for that job. It's a calculated risk whether the book/cd will sell and recoup the outlay.

I don't see it as very different from any other job. Most of us get paid to do something which generates profits for other people, but those people may not see the money from our labours for a long time. We are labouring and paid in advance of generating cash in hand for the bosses.

At the end of the day, The Hip Kids will likley break even with their cd. They will receive residuals in perpetuity in amounts that vary from $50 per quarter to $500 per quarter or more, based on sales and radio play. The bands will split the royalties portion between band members (according to their own percentages: maybe lead singer and lead guitatrist get a larger percentage than bass and drums, most likely they split it out evenly) and the publishing royalties, which are paid directly to the songwriters will be sent directly to those songwriters.

Back catalogues are important to indie companies. If Cool Indie Records releases 4 cds by The Hip Kids and that fourth cd starts generating airplay in the US and therefore record sales, the back catalogue will start generating lots of income. Cds and vinyl are warehoused a long time and stores send their overstock back for direct refund. I know of a Canadian artist who was a huge name in the "grunge"/"indie" heyday of the early 90's who is the largest grossing artist for one company who hasn't put out a cd for the artist for a decade. The first few releases on their label always sell at a slow trickle with little change in volume.

Ya know, I spent 5 years working my way through college as a lowly bookstore clerk, and I never knew any of this! Damn man, I feel all stupid!

That to me says 'give up all hope ye who want to write books'. If your first attempt bombs you're unlikely to recover.

Well I should say it is totally honest. But the question is how does a company stay in business then? The answer is that it is the same model as movies. MOST movies/books do horrendous and lose money for the company. However... the ones that are profitable, are usually HUGE for the company... and off-set the loses.

10 projects lose the company $21,000 each for a total of $210,000. But they have one book that hits the NY Times best sellers list and makes them $500,000... that's $390,000 more and can off-set the cost of 10+ more projects. Plus that same book that hits the NY Times best sellers list, well it turns out that Ron Howard really likes it and wants to do a movie of it. He offers to buy the rights for $500,000. But oh wait... A smaller director wants to do it... and he wants it to be his firt big hit, so he offers $750,000. But Ron Howard can dish out more so he ups it to $1,000,000. You get the idea.

Books become profitable when they sell off the subsidiary rights, including movie, tv shows, paper back rights, foreign rights.

This right up makes it out to be that the only profits are people buying books.

Granted. My comments might be considered to be off-topic. But part of what's wrong with NY publishing is that there are certain "truisms" that really aren't all that true. The fact that something costs XX dollars isn't necessarily written in stone. That's my real point.

You can make fun of my attitude -- folks often do -- but I believe that it's a mistake to instruct new writers (or others in publishing) on the inevitably of losing money on most all titles published. As I've written elsewhere, I believe that the notion that a book might lose money has turned into a license to lose money. That's not a good thing, and it's not part of the "realism" that I hope aspiring writers learn.

I don't believe that people in publishing are "dumb." Most folks I know who work in publishing are both intelligent and committed to their work. It's also true that most folk I know in publishing are often scathing in their criticism of the way things are done -- even at their own companies. And, for the most part, feel unable to change the system.

-- Jim

It's not actually a 100% chance, sadly; ask Jennifer Crusie's fans, who would dearly love copies of The Cinderella Deal. Unfortunately, Bantam is sitting on the rights; Crusie's comment is "The Cinderella Deal and Trust Me On This belong to Bantam, and they're waiting until I get famous to reissue them." And, yes, Crusie does make the NYT, Publishers Weekly, and USA Today bestseller lists.

Um, no. She seems to have both had the plotting done for her by a packaging company and have plagiarized some of the text.

http://jonquil.livejournal.com/414980.html

You will notice that I say several times throughout both the comment threads and the post itself that this is one example, and should not be taken as the only example, nor as The Word Of The Gods Of Publishing.

The subsidiary rights for books are only profitable for the publisher when they are owned by the publisher, or when they affect the rights owned by the publisher.

Surely by the time it's remaindered, it's too late for my buying full-price to do the author any good?

In no place throughout any of my entries, this particular entries, or any comment thread do I tell anyone that it is inevitable that all or most titles lose money. Your comments seem to me to be reacting to something that is not in my text. I suggest you get a livejournal and blog about this yourself.

Okay, sorry -- it's a 99% chance!

I shouldn't have nitpicked you; I'm sure you are completely correct. It's just frustrating to see certain paperbacks (Susan Kay's *Phantom* is another) priced at four times the cover price and higher, and yet remain unavailable in editions that would actually pay royalties to the writer.

I completely understand. I feel the same way about Suzanne Brockmann! (Although now her out of print stuff is being put back into print, finally.)

Part of the problem here is that publishers only have so many slots -- and unless an author is Nora Roberts, we just can't, most of the time, justify using a mass market paperback slot for a reprint. I am not saying this is the only reason -- but it's definitely one of them.

Thanks for a wonderful analysis. It re-affirms the main reason I ended up going the self-publishing route. Here's my math for comparison:

1. Copyediting/proofreading: $300 per book
2. Cover artwork: $150 per book plus an 8% royalty to the artist for each copy sold
3. Layout, etc: free, I taught myself how to use QuarkXpress
3. First print run, 1000 copies: $4400 (glossy cover, good quality paper); Reprint, 1000 copies: $3300
4. Marketing: web site, http://www.autumnjade.com, $24.95 per month; email: free

Sales to date:

#1 Bullets on the Bund: 1454
#2 The Emperors' Pendant: 1039
#3 Sing Song Girls: 651
#4 Sisters of Shanghai: TBA later this year

I sell the books through my web site for $7.99 or the three set for $21.99. Doing the math that's ~$2.50 profit for a first printing and ~$4.50 profit for subsequent printings (books #1 and #2 are both into their second printings).

I get paid at the time of the purchase. I've never had a returned book. I will have stock as long as my niche market remains active (families like mine who have adopted children from China). I also have complete control over my intellectual property.

I can't imagine going the traditional publishing route, it's just not worth it for 99% of the authors in the world.

Thanks,

Steve Whan
Autumn Jade Mystery Series
http://www.autumnjade.com/

Well, as a reseller of some TOR books to the school market, when we buy the books we're paying freight on a collect account.

Great explanation, I'm totally sending everyone who comes to me begging, "oh you're in publishing/the book business, here's my manuscript" over to your site... expect lots of hits.

--K

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

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Movie Biz and Why this isn't totally honest...

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