Mysteries of publishing explained: Money

Hi, folks! Andi here with something I’ve been thinking about doing here at Women and Words for a while and I figured, well, no time like the present. So I thought I’d do my first blog on publishing — geared toward readers. That is, what readers wonder about publishing.

I’m going to keep this discussion limited here to novel-writing — that aspect of the publishing industry. Also, I have a background as an editor in mainstream publishing. I worked for about 13 years doing that. I learned editing and publishing as a “grunt” editor in a publishing house, and I worked my way up to acquisitions editor (finding and contracting books) and then became a managing editor, in which I was responsible for coordinating the publication of about 100 books a year through this publishing house. So I know a little something about the industry as a writer and as an editor, but I’m always learning new stuff. Anyway.

I thought I’d start with the number one misconception about writing: “Writers make a lot of money.”

I’m going to totally burst your bubble. Completely.

No. We don’t.

Why not? Read on.

Unless we have really awesome-paying day jobs, novelists are NOT rolling in the dough. Especially novelists who write to a relatively small demographic like lesbian fiction. Now, understand I am not at all dissing lesbian fiction by calling it a small demographic. There are lots of audiences out there for a variety of books, and some are smaller than others. Granted, the internet has allowed lesfic to expand a bit beyond U.S. boundaries and also to expand into ebook territory, which is cool. But if you think about the percentage of, say, the American population that identifies as lesbian, your audience as a writer of lesfic is much smaller than if you wrote, say, heterosexual romances. And if you take into consideration that a large portion of women who identify as lesbian in America (to continue with our region-specific example) don’t even realize there’s a lesbian fiction publishing industry, your audience as a lesfic writer is even smaller.

All right. So it’s a specialized, smaller audience already. So let’s do some figures. Most authors who publish through lesfic houses make industry standard royalty rates. On print books, that’s about 8-10 percent of “net.” That means you get 8-10 percent of the price of a book AFTER printing costs and AFTER booksellers get the book for anywhere from 40 percent to 50 percent off the cover price.

So suppose your print book is selling for $15. It’s going to cost your publisher about $3.50 to print that book. A bookseller is going to buy that book for $7.50. So what’s left over? $4. That’s the net cost of a book. You get 8-10 percent of that $4 as an author. Yep. About $.40.

Now, consider that the average lesfic book sells about 2000 copies over 3-5 years. That’s with some pretty strong marketing from the author and, hopefully, your publisher. Yep. That’s about $800 in royalties over the life of that print book. Which is why an author tries to “build a backlist.” That means, she tries to put out a book every year or two, because if a reader discovers one of her newer books, she’ll go looking for more stuff by that author. So if you as an author have a large backlist and you produce regularly, your earlier books could still make you a little bit of money over the course of the year. So if you have, say, 10 books in print (which is about 10 years of writing), and you’re a big name in lesfic, you could conceivably make royalties off ALL of them that might make as much as a part-time job. However, authors are required to declare royalties at tax time, and we are taxed on those.

Okay, so how about ebooks? This actually offers authors a better deal. The industry standard for ebooks through a publishing house is 30-35 percent of net and because it’s an electronic file, there aren’t any printing costs. However, booksellers still take a chunk to host your efile, and publishers get a cut of that, too. So if an ebook is $10 at Amazon, e.g., they get 40-50 percent of that. Which leaves $5. The publisher takes a cut, and then you get 35 percent of what’s left (Amazon grants 35 percent royalties). But a publisher can also offer an ebook in formats through other booksellers that Amazon doesn’t sell, so an author can reach a wider ebook audience that way. For example, through the Barnes and Noble Nook, the Sony e-reader, the Apple versions, and standard .pdf files.

So if I make 35 percent of, say, $2, that’s .70. Which is more attractive than .40, but it’s still not rolling in dough. However, ebooks–because they can be offered through a variety of formats and publishers–do offer authors a little more money. In lesfic, strong ebook sales might garner an author a couple hundred extra dollars PER YEAR. That’s an author like me, probably. 5 books in print, but not necessarily a big name. An author like me is probably pretty lucky to clear about a thousand dollars a year in royalties. Yep. A thousand dollars. A year. Writing, thus, is a second or third job and doesn’t even pay as much as an actual second or third job would.

Back to the matter at hand. Some publishing houses offer “escalating royalty rates.” What that means is that after an author sells a certain number of books — let’s say she sells 5000 in a year (she’s lucky) — her next 5000 books will get, say, 12 percent of net royalties. So let’s say she’s super lucky and sells another 5,000 and her book doesn’t seem to be on its way down. Per the “escalating royalty” clause in her contract, she’ll get 15 percent of net on the next 5000. OMG, she’s totally awesomely lucky and her book is rocking. She sells another 5000 and the publisher grants 20 percent of net royalties. Usually, a publisher will stop there or a little lower. Like, 18 percent. And that’s a rate mostly for print books, not ebooks, which start fairly high.

Okay. I tried to keep this fairly simple, because royalties can also be figured on “retail” vs. “wholesale” price of a book. It depends on an author’s contract, and what an author negotiates with a publisher. Oh, and in case you were wondering, generally, authors get quarterly royalties. That means 4 times a year, the publisher cuts a check to the author for the royalties her book(s) made over the course of that quarter.

So, readers. What this means is if you’re trying to help an author, buy a book directly from a publisher. In lesfic, that’s not always possible, so buy through a lesfic distributor like Bella. Now, wait. Before you get all cranky — I understand that books might be cost-prohibitive. So if you’re not going to buy direct from a publisher or Bella, buy your lesfic from a reputable source. That includes Amazon, Barnes and Noble, or Moonhorse Books (good for overseas readers, especially), and Rainbow ebooks. Buy from LGBT bookstores or independent bookstores. If you don’t know where one is, Indiebound can help you locate one.

Keep in mind that authors and publishers get no money from used books. But if you buy used books, again, please buy them from reputable sources and try to buy them from indie bookstores to help them stay in business. Indies are great community resources. You can’t hang out in the Amazon waiting room, after all, chatting to the local booklady and petting the ubiquitous bookstore cat or dog while sipping a cup of coffee.

All right. So there’s a brief foray into the world of royalties. Here’s a link that will explain in more detail about the types of royalties and percentages of retail vs. wholesale and all that good stuff so you can maybe get an even bigger picture about how royalties are calculated. And yes, it IS confusing! But it’s a reality, and it’s something that writers deal with all the time.

At any rate, please do let me know what mysteries of publishing you’d like explained and I’ll do my best to either answer myself or find someone who can. Thanks, and happy weekend!