Let’s Get Digital
How To Self-Publish, And Why You Should
by David Gaughran
Editor: Karin Cox
Cover Design: Kate Gaughran
Published by Arriba Arriba Books, July 2011
Copyright © 2011 David Gaughran
The authors in Part Three retain the copyright to their respective contributions
Smashwords Edition
This e-book is licensed for your personal enjoyment only. This e-book may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each person. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.
Contents
PART ONE: DIGITAL REVOLUTION
1. Challenges Facing the Publishing Industry
2. Copying Mistakes Made by the Music Business
3. Could Piracy Be Good for Authors?
4. Royalties
5. What We Talk About When We Talk About Editing
9. E-book Dominance Is Inevitable
10. Publishers: The New Travel Agents?
12. It’s a Great Time to Be a Writer
PART TWO: DIGITAL SELF-PUBLISHING
The Biggest Mistake Self-publishers Make
Step 1: Write Your Story
Step 2: Design Your Cover
Step 3: Edit Your Story
Step 4: Format Your Story
Step 5: Uploading and Pricing
Step 6: Blogging and Websites
Step 7: Social Networking
Step 8: Reviews
Step 9: Competitions, Discounts, Giveaways and Blog Tours
Step 10: What Happens When Your Sales Just Stop?
PART THREE: SUCCESS STORIES
4. CJ Archer
5. Beth Orsoff
6. Bob Mayer
7. Debora Geary
8. Sibel Hodge
10. Steven Hawk
11. Suzanne Tyrpak
12. Mel Comley
13. Jason Letts
14. Melanie Nilles
16. KC May
17. Terri Reid
18. Gerald Hawksley
19. N Gemini Sasson
20. Susanne O’Leary
21. Mark Williams
22. Shayne Parkinson
24. Sarah Woodbury
26. Katie Klein
27. Nell Gavin
29. William Esmont
30. Lexi Revellian
31. J Carson Black
32. Imogen Rose
33. Mark Edwards
Appendix A: Shorter Stories
Appendix B: The International Market
Appendix C: Practicalities
Appendix D: Resources
A Storm Hits Valparaíso (Sample)
This is the part of the book where I am supposed to demonstrate my expertise, list a string of impressive credentials, talk about my years of experience in New York publishing, and wax lyrical about all of the books I have written. But you know what? I can’t. Yet I can still publish professional-looking books like the one you’re reading right now. And if you keep reading, I can teach you how. The first thing you need to learn is: anybody can do this.
If you have the technical capability to operate an e-mail account and download this book, you have the capacity to learn what it takes to become a publisher. That’s right—a publisher. Never forget that’s what this is: a business. If you adopt a professional attitude and are willing to put in the time, you might even make some money. It’s down to you. There are no gatekeepers and there’s no-one else to blame if you fail.
I think it’s only appropriate that I tell you a little about myself. My name is David Gaughran and I am a 33-year-old Irish writer living in Sweden. I have written a couple of books and several short stories. I spent 18 months sending queries to British and American agents, collecting more than 300 rejections before coming to my senses and taking back control of my life. I still remember the day: Sunday April 3, 2011. The day my life changed forever. The day I decided to become a publisher.
I had been in bed with the flu all week and spent most of the time coming to terms with the changes in the publishing industry. Barry Eisler had just walked away from $500,000 to go it alone, and self-publishing star Amanda Hocking had just signed a $2 million deal with a New York publishing house. To me, these two developments, while in direct opposition to each other, were proof of the bona fides of self-publishing. I started listening to self-published authors, such as Joe Konrath and Dean Wesley Smith, who were showing others their sales numbers, real numbers, and urging others to make the leap.
I still wasn’t sure whether to self-publish my novel. At that point, I still had some interest from agents and I wasn’t sure how it was going to play out. I decided to start off with a couple of short stories, to test the water, and then follow that with a collection. My intention was to see if I made any money and to see how difficult self-publishing really was. I knew I had a lot to learn; what I didn’t know was how much fun it was going to be.
This book will teach you how to do exactly what I did: start with nothing and publish your own work to a professional level, then distribute it so that anyone around the world can read it, download it, and pay you for it.
The subtitle of this book is: “How To Self-Publish, And Why You Should.” That’s not just window-dressing. Part One gives you an overview of the rapidly changing publishing business. It explains why the big publishers are in serious trouble, how the internet has revolutionized publishing to the point where a writer, working alone, can make a living out of it, and why you don’t really need to fear piracy. It shatters the myths surrounding self-publishing, chief among them being that you will never make any money. And it explains why this is a great time to be a writer and how you can profit from the seismic changes that are taking place.
Part Two deals with the nuts and bolts of digital self-publishing. It covers everything from finding an editor, arranging a professional cover, formatting your book so it appears perfectly on every device, coming up with an appropriate pricing strategy, and a host of marketing tips covering everything from blogging, social networking, reviews, competitions, to how to arrest a sales slump.
Finally, in Part Three, I present the inspiring stories of 33 bestselling self-publishers, who share their journeys in their own words.
I’ve been scribbling something or other since I could hold a pen, but I have been writing seriously for about five years now. It all started with a trip to South America, where an old story from the independence wars hooked me. I started researching the background—just curious—and before I knew it, I was writing a historical novel. It was a monster, and it took me more than three years to write, but it gave me an excuse to go back to South America for another nine months. When I was finally done, I started querying.
I spent 18 months researching agents and sending out submissions, rewriting the novel three times based on feedback. At Christmas last year, I thought all that hard work had finally paid off. An up-and-coming, well-respected New York agent expressed interest in representing me and we spoke twice on the phone. He told me how “in love” he was with my novel, how everyone in his office had read it and loved it, and that it was “big, sweeping and really great.” Then he never contacted me again. I found that very disheartening. I couldn’t even summon up the energy to start looking for another agent. I was working on a second novel, but I found myself questioning everything. All the joy had gone out of writing.
I had read a little about self-publishing, but it only became a serious option for me in the week that Amanda Hocking signed a big trade deal and Barry Eisler walked away from one. I saw these events as a validation of self-publishing and spent a week tormenting myself, wondering whether I should self-publish my novel or not.
I broke the impasse, deciding to start off with some short stories. I already had some success publishing short stories in magazines and anthologies, so it seemed like a low-risk way to both learn the process and test whether I wanted to do this with my novel. At the same time, I began writing a blog about my journey. Within a week or two, I was getting more than 200 views a day, and feisty conversations in the comments.
After four weeks of manic preparation and very late nights, I released my first e-book. It cracked the Kindle Top 40 Short Story charts on the first full day and picked up some lovely reviews. In the three months since I made my decision to self-publish, I have never worked so hard on writing. Aside from setting up a blog and posting more than 1,000 words a day there, I had to hire an editor, and find a cover designer. I had to learn how to format e-books from scratch and how to sell them.
I found the whole self-publishing process exhilarating. I loved being in complete control of what I could write, what I could publish, and how I published it. I loved having the final say on every little detail, choosing the price, and promoting the book myself. I loved coming up with fun competitions.
But the most gratifying thing was how much my productivity as a writer went up, even with all the extra work I had to do. There is something very motivating about self-publishing. I guess it’s knowing that the reader will get to see your work as soon as you are done and they—and no-one else—will decide if it’s a success or not. It’s very democratic.
So, how did I go about it? I got my sister (a professional cover designer) to do the cover, found a professional editor through a forum, and learned the formatting myself. I wanted to put out a product that looked as good, if not better, than anything coming from large trade publishers, but at the lowest possible cost. I studied how the bestsellers were presented, and I copied them.
Right from the start I decided to blog about the whole process, posting each step as I went. All of the information on what I needed to do was out there, but some of it was hard to find. There was also a lot of misinformation. I wanted to gather all of the correct information in one place so that other self-publishers would find it easier.
Four weeks after I made my decision, my first e-book, If You Go into the Woods, went live. Before I even told anyone about it, someone had bought it and reviewed it—that blew my mind! I made 50% of my costs back in three weeks. At that point, I released my second title, Transfection, an old-school science fiction short. And, after six weeks, I had sold 200 e-books. Not bad for an unknown, previously unpublished writer. I thought it would take me six months!
On top of that, my blog really took off. I went from zero views a day in April to 3,500 views a week in June, with lots of readers deciding to self-publish and follow each step along with me. We all shared information and advice, and it was great to see some of my blog regulars release their writing a few weeks later.
So, should you self-publish? No-one can make that decision for you. But consider this: it’s not either/or. There is no reason why you can’t self-publish some projects and pursue a trade deal for others. However, before you make any decision, you should learn as much as possible about what is happening to the publishing industry.
My only regret is that I didn’t self-publish sooner. I’m having more fun writing than ever before. I’m connecting with my readers. And, best of all, I have made a ton of new friends.
PART ONE: THE DIGITAL REVOLUTION
This book won’t just tell you how to self-publish; it will tell you why to self-publish. This section is intended to give you an overview of how radically the publishing industry has changed in the last few years. The internet has revolutionized every single business it has come into contact with, and publishing is no different. The industry has always limped from one crisis to another. But, for the first time, these changes are handing power back to writers.
1. Challenges Facing the Publishing Industry
The publishing industry in the 21st Century is in the throes of some pretty major changes, and the full effects will take years to play out. Hardly a week goes by without distressing headlines. Publishers are downsizing, booksellers are going to the wall; even distributors are feeling the pinch.
Much of the modern-day woes can be traced back to the Great Depression, when booksellers insisted on a returns policy that would allow them to ship back unsold books. This policy kept booksellers (and some publishers) afloat during tumultuous times, but when the economy rebounded in the run up to WWII, and expanded in its aftermath, this policy remained in place, and still exists today. This has had a number of important effects.
It means that booksellers order more copies of a book than they think they will sell—just in case. They know a customer is unlikely to wait for an order to be placed when they can simply buy it elsewhere or go online. Stores can order as many copies as they like (the only restriction being the cost of storage), safe in the knowledge they can return unsold copies. Independent booksellers, which lack the storage capacity of large chains, tend to be more judicious in their buying habits.
Nevertheless, more than half of the books that publishers print are returned. Most cannot be sold again at full price, are tattered or damaged from shipping, and end up being pulped. In Canada alone, an estimated 50 to 100 million books are pulped per year. That’s around 600,000 trees, or, to put it another way, more than 200,000 tons of carbon dioxide emitted to produce books that are going to be pulped anyway. Per year!
If you think those numbers are high, remember that the publishing industry in the United States is 15 to 20 times bigger. Even worse, despite rising populations, readership numbers have plateaued, yet more and more books continue to be printed every year.
But what about the cost to publishers? Printing, storing, distributing, and pulping all of those books costs a lot of money. So why do publishers do it? Why not concentrate on fewer titles they are sure will sell? The answer is: because they are terrible at predicting what will be a hit. Books with multi-million dollar advances (and enormous print runs) can tank; the work of unknown authors, with little marketing behind them, can fly off the shelves, leading publishers to rush back to the printers hoping to capitalize on the wave before it subsides.
The truth is, nobody can be sure. Marketing helps, a “name” on the cover helps, a hot genre or topic helps, and good reviews help, but what really sells books is word-of-mouth. Think of your own buying habits. Think of your favorite books and authors. How did you discover them? I bet the majority were friends’ recommendations.
Because publishers can’t predict what is going to be a hit, they need to gamble on a range of titles. That is why roughly one out of every five books makes a profit (out of the other four, two will break even and two will lose money).
Let’s pause for a moment and break this down. Publishers are producing twice as much product as they need, and have to destroy the half that doesn’t sell. Of all the titles they invest time, energy, and resources into producing, only around 20% of them are making money. Naturally, this is eating into profit margins, and in today’s market the eye is on the bottom line more than ever.
The logical move was to try to sell more books, but the expansion of bookselling to supermarkets and big-box stores has been a double-edged sword. While these retailers can shift huge numbers of books, this has led them to demand steep discounts from the publishers, cutting into publishers’ profit margins even further. If you doubt the power these retailers hold over publishers, here is something that might change your mind: if the UK supermarket chain Tesco doesn’t like a book cover, or if it clashes with their logo, it gets changed (at the publisher’s expense).
As the large publishing houses search for the next big hit, some scramble to sign up top writers by offering them eye-popping advances. Once a publisher has written a big check, they have to throw some serious marketing muscle behind the book to stand any chance of recouping their outlay.
What effect has this had on the average writer? On the surface, it’s not good. All those big checks leave less money for the rest. As a result, advances are falling.
Bad time to be a writer? Maybe not. After all, change brings opportunity, and in recent years, two developments have changed the industry forever: e-books and the internet.
2. Copying Mistakes Made by the Music Business
The challenges posed by digitization might be new to publishing, but they have been faced by other industries. In fact, many of the larger publishers are owned by conglomerates with significant interests in the music business.
Why did CDs eventually triumph over tapes and records? Convenience. You could skip back and forwards with ease, only selecting the tracks you wanted to hear, with no time-consuming rewinding. CDs were also small, so they didn’t take up as much space as records, and the players were portable.
Digitization took all of those advantages and added low prices and even more convenience—now you only had to purchase the tracks you wanted, and you could do it from the comfort of your home. Plus, you could rip your existing CD collection and not have to fork out to replace your favorites. Once the iPod was released, the digital future was sealed.
So what about books? About a year ago I was talking with a friend about e-books. I told him the uptake was going to be far slower with e-books than it was with music because of the way people consumed books, and the emotional attachment they had to tangible printed books.
Boy, was I wrong! The swing towards e-books has been a hell of a lot faster than I, and many publishing insiders, imagined. In 2009, the American Association of Publishers (AAP) revealed that e-books made up 3% of the market. In 2010, that figure jumped above 9%. However, that yearly figure masked an explosion of sales in November that only accelerated in the first half of 2011. In February 2011, e-books hit 29.5% of the market—ahead of hardback books, trade paperbacks, and mass-market paperbacks. In case you’re thinking that includes free e-books, that’s in dollar terms, not just overall downloads. That’s a huge leap in a very short space of time. Now you can see why I changed my mind.
It’s clear that bricks-and-mortar booksellers (especially those without an online presence) are struggling to cope with the digital revolution, but I still think they have a future. For starters, several years after the introduction of MP3s, Napster, the iPod, and iTunes, digital music sales are yet to overtake physical music sales. Vinyl, despite the music industry’s best efforts to kill it off, is booming again—sales are at their highest since 1991 and 71% of these purchases were made at indie record stores. That seems to be good news for indie booksellers.
But what about publishers? They must be rubbing their hands with glee, right? They must be salivating about the mountains of cash they will make from e-books. Wrong!
Here Be Pirates!
One of the reasons the publishing industry has been slow to embrace e-books is their fear of piracy. They saw what happened to the music industry, and they are scared. They know e-books can be disseminated a lot easier too. A typical MP3 is around 5MB of data; with a good connection you can download it in less than a minute. An e-book can be as small as 200kb, meaning consumers can download a year’s reading material in the same time it takes to download one album. And it’s happening already. File-sharing sites are full of books, often available prior to their official release date.
The industry has responded in two ways, both of which are amazingly short-sighted, ineffective, and have served only to alienate the wrong people—you know, the people that actually pay for books.
Digital Rights Management (DRM)
DRM was implemented by the music industry to prevent people ripping tracks from CDs they had legally purchased and putting them on their computers, where they could, in theory, share them with those who hadn’t legally purchased them.
The problem with DRM was that people who had already legally purchased music then had to re-purchase it to listen to it on their computers or iPods. The other problem was that it was so easy to crack it didn’t stop the pirates anyway (and there is nothing like announcing a new “impregnable” security measure to attract every hacker from Manila to Moscow).
Some of the digital rights security measures were truly awful. In 2005, Sony introduced new DRM technology on 52 different titles that installed a root kit on the user’s computer, causing a serious security breach which some were able to remedy only by entirely wiping their systems. Sony forgot to tell any of their customers about this and only came clean when they were rumbled. To fix the problem, they tried releasing a patch, which actually made things worse. They are now the subject of a class-action lawsuit in the United States.
Despite this, the publishing industry whole-heartedly embraced DRM, even in the face of opposition from the copyright holders—you know, the writers. The level of DRM is set by the publisher/distributor but, depending on what e-book you purchase and from whom, you may be prevented from reading it on another device. This may mean having to re-purchase your entire library if you switch e-readers.
You could also be prevented from cutting and pasting, copying (for personal back-up purposes), or even printing. Some go as far as to link your credit card information to the e-book file to discourage you from sharing.
Delayed E-book Release
The other measure the publishing industry came up with to combat piracy—this time all on their own—was to hold back the release of an e-book version. They wanted to protect juicy hardback sales as much as possible by forcing fans to shell out for the much more expensive version first. Publishers also hoped this would allow them to make some sales before the book hit file-sharing sites.
There are several problems with this strategy. First, as mentioned above, some books are being pirated before their release dates anyway (in fact some are being pirated before there is even an e-book version; all you need is a scanner, after all). The file the publisher sends to the printers is a normal PDF file, nothing fancy. It passes through a lot of hands. It’s easy to see how piracy can happen.
Second, most people who have bought e-readers don’t buy physical books anymore. They feel they are paying the price for piracy by being forced to either buy an expensive print version they don’t want, or wait for the e-book version. A quick trip to any Kindle users’ forum will reveal this can turn a happy paying customer into an angry one who is tempted to download a pirated version.
How to Deal with Piracy
I’m going to make some suggestions on how the publishing industry can deal with piracy.
1. Stop antagonizing paying customers. This means no DRM. This means stop delaying the release of e-books. This means cut e-book prices to a reasonable level. Remove the justification from casual pirates.
2. Stop taking lessons from the music industry. One unsustainable business model seems intent on making the same mistakes of another that eviscerated itself. Good call.
3. Get those backlists online. I went looking for a Phillip K. Dick story the other day, but it’s not available for the Kindle. I know there is some legal wrangling with authors over who owns the rights and what the royalty split will be, but come on, cut a deal. I also know that there are technical issues with getting backlists online, but one sure way to make piracy attractive is to not have the product on sale at all.
4. Add some value. What about some extras, like they have on DVDs? There are a million ways publishers could add value to e-books at a low cost. What about deleted scenes? Alternative endings? Historical notes? Maps? Interviews? (But don’t forget to pay the author for all this extra work.)
I was tempted to add a fifth: don’t sweat it. The publishing industry has already done one major thing that killed a lot of piracy before it even got started.
Think back to the music business. What led to the initial boom in illegally downloaded songs? Napster. Suddenly there was a killer app, a piece of software, that made it easy to access digital music. One of the things that made Napster so successful was that the music industry was slow to react. Simply put, there was no legal way for fans to get access to a digital version of a lot of the music they could access on Napster.
Where’s the parallel here? Amazon’s Kindle store. The publishing industry has a delivery method in place to reach their customers, so the chances of something like Napster-for-books coming along are slim.
Joe Konrath has repeatedly made the point on his blog that the only way to combat piracy is with convenience and price. The convenience is in place. We now have Amazon, Sony, Kobo, Barnes & Noble, Apple, and Google, as well as some individual publishers, all selling e-books, covering every possible e-reader, phone, tablet, and computer. But large publishers are still dragging their heels on price. And they have wiggle room here. As I will show in Chapter 4, over 50% of the e-book cover price is going to the publisher.
The Future
There was a lot of talk about piracy at the London Book Fair in April 2011. It was disappointing to hear one of the larger publishers insist that the e-book royalty structure was here to stay. He defended it on the premise that they couldn’t raise e-book royalty rates for authors because of the increasing cost of fighting piracy. He even had the nerve to say that “unknown costs” would eat into the savings made on e-books. At least some agents pushed back on this nonsense.
This kind of talk makes me wonder if publishers are ready to cope with the challenges faced by the digital revolution or whether they are just sticking their heads in the sand.
3. Could Piracy Be Good for Authors?
When music industry revenues collapsed after the introduction of MP3s, many writers became worried. While musicians have alternative income streams, such as touring and merchandise, writers generally have just one: their words. Not even Stephen King or J.K. Rowling would fill a stadium for a reading, and most mid-list authors and new writers are lucky if there is a decent turn-out for a free bookstore event.
In the last chapter I spoke about how the publishing industry’s measures to combat piracy have only antagonized their paying customers, but now I want to look at piracy from a different perspective: its potential benefits. While I don’t condone piracy, I do believe authors need to challenge their assumptions about this issue.
Piracy: a Tax on Success
First off, piracy can almost be viewed as a tax on success. Writers who are only selling a handful of copies a month don’t tend to be pirated. Why would the hackers bother? It’s the authors of popular books—those appearing in the bestseller lists—who are targeted.
Mark Coker, the founder of Smashwords, insists that all work sold on his site is DRM-free. To Coker’s mind, the greatest threat a writer faces is not piracy—it’s obscurity. Anything that makes work less accessible and less enjoyable makes it more obscure.
Coker identifies two kinds of pirates: the “scoundrels and cheapskates who will never pay for anything… [and] don’t represent a lost sale,” and those who feel justified in pirating work because it’s only available in certain formats, it’s priced too high, or it’s not for sale in their territory. This second group does represent some lost sales.
Nothing can be done about the first group, but writers need to think about how to tackle the second. Mark Coker points out that “piracy is an indication that your work is in demand”—a demand that is only being filled by pirates because you have failed to make purchasing preferable to pirating.
The way to combat piracy is with convenience and price. Your work should be available in all formats, so it can be read on any e-reader, and on sale with as many retailers as possible, DRM-free, without territory restrictions, and priced fairly so customers have less incentive to steal it.
Neil Gaiman, Joe Konrath and Piracy
Internationally best-selling author Neil Gaiman used to be dead against piracy, but his views have evolved since he noticed two things. In countries where his work was being pirated, his sales went up. He convinced his publisher to let him put his novel American Gods, which was still selling well, up on his website for anyone to download and share. Sales of all of his books increased 300%.
Gaiman also argues that authors are not losing sales through piracy. At the end of each of his readings he asks the audience how they discovered their favorite writers. He estimates only 5% to 10% actually purchased the book, the rest were lent the book by a friend or received it as a gift. He now concludes that piracy is “people lending books” and amounts to free advertising.
Joe Konrath has similar views but understands why many writers fear piracy. To test his theories, Konrath decided to conduct an experiment. He gave a free book away on his website—the same book that was on sale on Amazon for $1.99—and encouraged pirates to download it in a blog post called “Steal This E-book.” He then asked them to push it out to all of the file-sharing sites. Not only did his sales increase overall, his sales increased for that book too—even though he raised the sale price of the Amazon edition by a dollar halfway through!
Meanwhile, the publishing industry seems blind to any other perspective on piracy. Most larger houses insist on putting DRM on e-books, restricting territories, and holding back the release of e-books to protect print sales. In addition to this, they have been pushing for legislation to allow them to sue their customers.
Why are they so insistent on making the same mistakes as the music industry?
People often ask how much money a writer makes per copy sold. The short answer is, not much (and as you will see below, it’s the wrong question). I think it would be useful to show how the money you hand over for your books is divvied up. There are exceptions to the foregoing, but it holds true in the case of most large publishers.
A $25 Hardback
Retailer: 50% ($12.50)
Publisher: 37.5% ($9.38)
Writer: 12.5% ($3.12 minus an agent’s 15% cut, leaving $2.66)
Don’t forget, the retailer has to pay staff, overheads, advertising, and storage. The publisher has all of that, plus production costs.
An $8 Mass-market Paperback
Retailer: 50% ($4)
Publisher: 40% ($3.20)
Writer: 10% ($0.80, minus agent’s 15% cut, leaving $0.68)
A paperback represents a lower author take per copy, but an author expects to shift a hell of a lot more in paperback than in hardback.
A $9.99 Trade-published E-book
Retailer: 30% ($2.99)
Publisher: 52.5% ($5.25)
Writer: 17.5% ($1.75, minus agent’s 15% cut, leaving $1.49)
Most publishers like to say they pay a royalty rate of 25% to their authors. However, this is before the retailer’s cut is deducted (and the agent fees, if an author has an agent). Thus, the “net” sum an author receives (before they pay tax on their earnings) may be as low as 14.9% if they have an agent. The retailer keeps 30% of the cost of the book and hands 70% to the publisher. The publisher then gives 25% of that to the writer, which is 17.5% of the cover price. The agent takes 15% of that, leaving the writer with 14.9% of the cover price.
An e-book retailer has fewer overheads (no storage or shipping costs) so the publisher forces a lower cut on them, but the publisher has fewer overheads too (and no print costs), yet they are still holding on to a stunning 52.5%.
It doesn’t take a genius to figure out why publishers are keen to hold back the digital tide—they make nearly twice as much off a hardback as they do off an e-book (despite the higher percentages). However, publishers’ e-book pricing policy has also been controversial. Publishing houses want to keep the price of e-books high in order to protect the sales of physical books. Most e-book releases from traditional publishers are priced between $7.99 and $12.99.
Small independent presses can be more flexible with their pricing (and pay higher royalty rates) because they have much lower overheads. Self-publishers have even fewer overheads, and many are prepared to sell at the lowest possible price ($0.99) or to give their work away for free in order to entice readers.
Large publishers, therefore, face further problems. When retailers such as Amazon discount print books, it can leave the e-book version more expensive than the hardback. Readers, of course, cannot understand why an e-book should cost more than a printed book, and many have been showing their displeasure by giving one-star reviews to such releases on Amazon, and organizing boycotts.
A $2.99 Self-published E-book
Retailer: 30% ($0.90)
Writer: 70% ($2.09, and usually no agent to get a cut)
Authors who publish their own e-books, without the help of publishing houses or agents, get a bigger piece of the pie. With Amazon (and the other retailers are similar), the author keeps 70% of the sale price if the e-book is priced between $2.99 and $9.99. If they price it below $2.99 or above $9.99 they keep 35% (although the latter rarely happens, for obvious reasons).
Either way, that’s considerably more than 14.9%, whichever way you slice it. Part Two examines pricing strategies for selling e-books, but it might be useful to run some numbers now to contrast trade publisher and self-publisher royalty rates.
An author with a trade-published e-book receives 14.9% in royalties (after an agent’s deductions). For a $9.99 e-book, that’s $1.49 a copy. If they sell 5,000 copies, this leaves them with $7,450.
A self-publisher with an e-book priced at $2.99 is getting $2.09 per copy. This means they only need to sell 3,565 copies to make the same money, and at less than one-third of the cover price! Of course, many independent authors are selling a lot more than that, and some at higher prices too.
If a self-published author prices work at $3.99, he or she will get around $2.79 a copy, meaning they’ll only need to sell 2,670 copies to beat the trade deal. At $4.99, the author’s cut jumps to $3.49, meaning they only need to sell 2,134 copies to make the same amount of cash.
Advances
The unfortunate truth is that most traditionally published authors (with the larger houses) never see any royalties. To understand why, we need to talk a little about advances.
When a writer sells a book to a publishing house (with or without an agent’s assistance), they receive an advance on future royalties. The advance offered varies and depends on a huge number of variables, but for a debut novel the average writer receives around $5,000. This average includes small publishing houses and New York publishers, but even if you are just talking about the Big Six publishers, unless you’re lucky enough to be involved in a “bidding war,” the average only rises to approximately $10,000. A writer with a few novels under his or her belt (and subsequent sales), may be looking at advances of up to $20,000 with the Big Six.
Obviously, the more copies an author sells of his or her first book, the more competition there will be for the second, pushing the advance higher. Industry estimates suggest that out of every five books, one makes a profit, two break even, and two lose money. Only 20% of books earn out their advance.
The writer also doesn’t get all of the advance money up front. Typically, the advance is spread out over three payments: one on signing the publishing contract, another on acceptance of the final version of the manuscript, and another on publication (although thriller writer James Rollins said his last advance was split into five payments, with the last two being made on publication of the paperback and one year later). As the publication process usually takes 12 to 18 months or longer, the writer must wait quite a while before they see the fruits of their labor.
Most books don’t earn out. In other words, they don’t sell enough copies to cover the amount of royalties the publisher would have paid out without an advance. It’s important to point out that this doesn’t mean the publisher has lost money on those books, just that they made less than they estimated they would.
Because of the returns policy, a book doesn’t have much time to convince a publisher it could be the one out of five that will make them money. Some booksellers start returning books after one month if it appears they have ordered too many. This means that advance check (or three checks) is all the money most authors are going to see for that book. Ever.
However, when an author self-publishes a book online there is no pressure to remove it from sale because there is an infinite amount of virtual shelf space. There is no reason why an author can’t have his or her entire backlist on sale all the time, making money.
All of the production costs are at the start, and, as I’ll cover later, can be kept to a minimum. Everything after that is profit. You don’t get an advance, but what’s a one-off payment versus getting paid forever?
5. What We Talk About When We Talk About Editing
A lot of the focus on my blog, in the news, and in this book has been on the challenges the digital revolution poses for trade publishing houses. Most of the talk is about what is best for writers, and how they will be affected. Now I want to talk about editors.
Editors are the unsung heroes of the publishing world. While some editors might have made a name for themselves within the industry, they mostly remain anonymous to the reader. Yet the books that readers buy would not be the same without them. Editors have suffered the most from the upheaval in the publishing industry, and I fear their pain will worsen as the Big Six continue to make missteps.
Commissioning editors acquire books from agents and authors, although their power to do so has diminished in recent times and they almost always need approval from sales and marketing before they can make an offer. But, aside from that, what do editors do?
Well, they edit. They take an author’s work and turn it into the story the writer meant to put down on the page. They have the requisite emotional distance from the work to cut without remorse, tighten prose, and make writing more powerful. They comb the story for plot holes, red herrings, clichés, cardboard characters, split infinitives, and dangling participles. They cross-reference, they fact-check, and they nudge flabby prose back into line. Some writers need more work on their manuscripts than others, but all writers need editors.
Take Raymond Carver, a legendary short story writer and master of economy. You would struggle to find a wasted word in much of his work. His long-time editor, Gordon Lish, worked with some of the biggest names: Ken Kesey, Neil Cassady, Allen Ginsberg, Jack Kerouac, Don DeLillo and T.C. Boyle, as well as Nabakov and Kundera.
Carver’s prose wouldn’t have been the same without Lish’s input. If you want to see that for yourself, The New Yorker published the original draft of Carver’s famous story “What We Talk About When We Talk About Love,” with his editor’s corrections visible. I recommend you read it in full (http://nyr.kr/nKeFMl); when you do, you will see Lish’s contribution is huge. He even came up with the title (it was originally called “Beginners”—not quite as catchy).
Gordon Lish was no one-off. There are excellent editors who improve every book they work on in every imprint of every trade publishing house. Some of them, like Gordon Lish, are fine writers in their own right. But they are under threat. Consolidation of several big players in the industry led to downsizing, and many talented editors were let go. Some ended up at other houses; others founded their own small presses or became agents. Many, however, were lost to the business. With the inevitable next round of lay-offs, we may lose even more. But it’s not all doom and gloom. I think the digital revolution will eventually to lead to an increase in readership, with people now reading on computers, laptops, tablets, e-readers and smartphones—some of them people who haven’t bought a book in years. Readers will always want new books, and writers will always need editors.
While some self-publishers have decided to take their books to market without using an editor, this always shows, and readers are great at separating the wheat from the chaff.
Writers shouldn’t consider editing an expense; they should consider it an investment. The smart ones already do. There will be more and more freelance work in this brave new world. There will be opportunities to partner with agents and set up new companies that help writers with design, editing, formatting, and marketing. And maybe, without having to deal with all that corporate crap, editors will have a chance to spend more time doing what they really enjoy: editing. They will be able to work on challenging fiction without having to get the nod from sales and marketing, and they will be able to help a writer grow, without worrying that poor sales figures on debut novels will see their authors cut loose.
A good editor can be one of the clear advantages of going with a trade publisher rather than self-publishing, so what is an indie writer to do? Later, in Part Two, I will talk about your options.
In our mad dash around the new publishing landscape, there’s one group we have only mentioned in passing: literary agents. Nothing in the publishing world inspires more diverse reactions than the mention of agents.
For some they are the holy grail, the star-makers, the gatekeepers to the dream factory. Others are less kind, and I won’t repeat their opinions. Suffice to say some writers view agents as amoral Svengalis and an additional, superfluous barrier between writers and publishers (and readers).
The truth is somewhere in between. Agents, as with any profession, run the full gamut of experience, ability, competency, and propriety. Some can send a writer’s career into the stratosphere; others may actually prove detrimental.
For those unfamiliar with an agent’s role, agents are authors’ representatives. Their primary role is to sell books to editors and negotiate deals on the author’s behalf, and they also seek to monetize the author’s work in other ways by selling foreign language rights, audiobook rights, movie rights, and so on.
For this, they take a cut of the author’s royalties, usually 15%. But because they don’t take any money up-front for their services (at least, scrupulous ones don’t), an agent will only take on an author they think might make them money.
Ok, so that’s the basics covered. What I want to ask is what happens to agents in a future where most people are reading e-books? After all, you don’t need an agent to self-publish, and fewer authors are likely to seek a trade publishing deal when all the money is in digital and the royalty rates are up to four times higher going it alone.
If agents have no books to sell to editors, they have 15% of nothing. So how are they planning for tomorrow? Different agents have responded to this question in different ways, leading to an obvious rift in the publishing community.
Agents Becoming Publishers
In May 2011, The Bookseller reported that Ed Victor, one of the top UK agents, had announced he was setting up his own publishing division—Bedford Square Books.
Andrew Wylie made waves last year when he announced Odyssey Editions—his own imprint to publish his authors’ backlists (including Roth, Bellow, and Updike), the rights of which had reverted from trade deals. Scott Waxman has also set up his own publishing company, called Diversion Books.
However, some powerhouse agencies, such as Trident, insist, “it is a mistake for agents to become publishers. There are substantial conflicts of interests involved.” In the UK, Sonia Land walked away from a publishing deal to go it alone with e-versions of Catherine Cookson’s estate. Piers Blofeld, of the same agency, has called for a change in the code of conduct governing UK agents (it currently precludes publishers as members). Other top agents, like Simon Trewin, have cautioned against this.
Ed Victor’s move is particularly newsworthy because he was the first well-known UK agent to announce that, on top of publishing backlists as e-books, he will be seeking the stars of tomorrow. He is offering a 50/50 split with his authors on e-royalties. This sounds okay, but when you examine it closely, it all falls apart.
The first problem is that the split is after the retailer gets their 30% of the list price. It is also after the producer of the book—a digital production company called Acorn Independent Publishing—gets a percentage too.
The Bookseller article also says that net receipts won’t be divvied up until “production costs” are covered, but doesn’t say if these are referring to the percentage going to Acorn, or further costs such as marketing and promotion.
Ed Victor may have the best of intentions, but there are a few reasons why I think this is a terrible deal for writers. First off, it’s absolutely crazy to be paying a digital production company a percentage of your royalties forever instead of a flat fee. There are plenty of companies out there who do top-quality work for a fee—no need to pay a percentage.
Also, the author ends up with a lot less than 50%. Once Amazon gets its cut (30%), and Acorn get their cut (for the sake of argument, let’s say 10%), that leaves the writer and Ed Victor to split 60%—leaving 30% each.
Finally, if these “production costs” are not coming out of Ed Victor’s percentage (the article seems to indicate this is not the case) and are not accounted for in Acorn’s percentage (the article is unclear), then the writer gets even less than 30%.
This is not significantly better than a trade publishing house, is far worse than what an author would get in some smaller presses, and is less than half what they would get from self-publishing.
Plus, the best agent in the world might know a lot about contracts and royalty statements and how to sell books to trade houses, as well as how to sell foreign rights and movie rights, but they might know nothing about how to produce a successful book and get it into the hands of lots of readers.
How much does the average literary agent understand about Amazon rankings, Google PageRank, Twitter, Facebook Pages, Goodreads, SEO, cover design, formatting, editing, CPC, CPM, regional targeting, AdWords, blogging, spam laws, Shelfari, or blurb copywriting?
How much do they know about tagging, proofing, pricing strategies, DRM, giveaways, digital piracy, EPUB, Kobo, link tracking, mailing lists, MOBI, effective back-matter, Smashwords, KDP, or PubIt?
These are just some of the many things a digital publisher will have to get their head around. And, looking at the production levels, the covers, the formatting, the front matter, and the Amazon rankings of some of the Catherine Cookson e-books, I would respectfully suggest that these skills have yet to be mastered.
Right now an author has four choices with a manuscript: a major publisher, a smaller press, self-publishing, or one of these new agent–publisher hybrids. My advice to anyone weighing their options is to think very carefully before going with an agent–publisher. The royalty rates are bad and they don’t have experience in breaking new digital authors.
Some may turn out to be good at it—I’m sure some will—but I wouldn’t want to be the lab rat. None of the agent–publishers, as far as I am aware, have broken a new digital star, even though some of their operations have been going for more than a year.
Plenty of large trade houses have done it. Plenty of small presses have done it. Plenty of self-publishers have done it. Consider those three options first. Choose according to your circumstances.
If you don’t want to deal with the minutiae of self-publishing, there are plenty of companies that provide a one-stop shop such as Ed Victor is proposing, but they only charge a flat fee. Telemachus Press is one. John Locke uses them and he is doing just fine.
There’s only one thing in The Bookseller article that made sense to me. Ed Victor said that, in this turbulent future, what he brings to the table is an ability to be “lighter on his feet.” That’s true: there are advantages to being smaller and nimbler in changing times.
But you can’t get smaller and nimbler than a self-publisher. If you don’t want to go that way, I would take the experience, marketing power, and advance of a trade publisher over an agent–publisher hybrid anytime.
Also, there is one final problem with Ed Victor’s venture. An agent is supposed to be the author’s advocate, and the publisher’s interest isn’t always aligned with the writer’s. Blurring those lines makes it difficult to be an independent advocate. There are conflict of interest issues here. If your agent becomes a publisher, how do you know she will seek the best deal for you when publishing your work herself is the best deal for her?
In fairness to agents, some have come out strongly against this nonsense. Trident in the US and Peter Cox in the UK have been particularly vocal about why this is such a bad idea. But many others are considering joining the fray, such as Curtis Brown (UK).
We will see a lot more of this in the future. Writers need to be on their guard. Don’t give away a percentage of your future earnings unless it’s for a trade deal you can’t say no to.
As for agents, there is another way for them to make money in this brave new world, and agencies like Trident are leading the way, but we will get to that in Chapter 12.
In trying to create a snapshot of the rapidly changing publishing landscape, we have taken a look at the challenges facing traditional houses, the rising digital tide, how the price of a book breaks down, piracy, and agents moving into publishing. Now we are going to talk about the 800-Pound Gorilla.
Amazon opened its doors in 1995 and has been making headlines ever since, aggressively pursuing market share over profits. Less than two years after they started trading they were sued by Barnes & Noble for claiming to be the world’s largest bookstore. The matter was settled out of court (and Amazon continued to use the slogan). Nobody would challenge that claim now.
The company expanded quickly, opening four European sites, one in Canada, and one each in Japan and China, in the process changing the shopping habits of customers worldwide.
Today, Amazon sells a range of products and services, and, more importantly for the purposes of this book, they currently control around 60% of the US e-book market and are on the way to controlling 50% of the overall US book market by the end of 2012.
In addition, Amazon partners with specialist, independent, and used bookstores, provides the most popular digital self-publishing platform, and has expanded into Print-on-Demand, audiobooks, and social-networking. If that isn’t enough, they also manufacture the top-selling dedicated e-reader, the Kindle.
The Kindle
E-readers have been knocking around, in one form or another, since the late 1990s, but didn’t really take off until Amazon got into the game.
The very first Kindle was released in November 2007, retailing at $399. It sold out in five-and-a-half hours, remaining out of stock until late April 2008. In the face of competition from Barnes & Noble, Sony, Kobo, and Apple, successive versions were released with greater memory capacity, expanded functionality, wireless capability, rudimentary browsers, and greatly reduced price. The market exploded.
In January 2011, the Kindle 3, on sale for just four months, overtook the final book in the Harry Potter series to become the top-selling item in Amazon’s history. While the company has remained tight-lipped on exactly how many Kindles it has shipped since day one, industry estimates place this figure at 15 million, with a market share of 59%—and that was before the release of the lower-priced, ad-supported Kindle.
To highlight the challenge facing bricks-and-mortar booksellers, Amazon was estimated to have sold 4 million e-books on Christmas Day alone (along with another 1 million by Barnes & Noble).
Kindle Direct Publishing
In 2007, Amazon launched their own digital publishing platform, allowing anybody who owned the rights to a book to upload an electronic version for sale to the general public. The rights-holder (i.e. the publisher or author) could set the price they chose and receive 35% commission, with Amazon keeping the rest.
But it wasn’t until 2009, when the Kindle started to sell in real numbers, that successful print authors, such as Joe Konrath, started to experiment with selling e-books. Konrath enjoyed a solid, if unspectacular, mid-list career before he decided to e-publish some of his books that had been rejected by his publishers—books he had been giving away free on his website. While he wasn’t the first to publish e-books with Amazon, he was the first to share his sales figures. Straight away he was making $1,000 a month.
Sony, Barnes & Noble, Kobo, and Apple soon all began offering digital platforms for authors to sell their work. For the first time, self-publishers had access to a distribution network that could rival anything trade publishing could access. Additionally, the low cost of publishing an e-book meant many writers could consider self-publishing for the first time.
Trade-published writers whose backlist titles had fallen out of print also began publishing them as e-books. Unpublished writers, unable to crack trade publishing, began publishing themselves. By the end of 2010, Konrath had forsaken traditional publishing, released a string of self-published titles, and was selling 1,000 copies a day. He had also become an evangelist for self-publishing, and his sales figures represented a thorn in the side of traditional publishing.
Previously unpublished writers were raking it in too. Amanda Hocking, unable to convince an agent to take her on, sold a million e-books in nine months! Then John Locke, who never even sent a query letter to an agent, became the first indie writer to hold the top spot in the Amazon Kindle 100, selling a staggering 350,000 copies in the first two months of 2011 and around the same number again in March alone. By June, he was announced as the eighth author, and the first self-publisher, to sell a million Kindle books—most of those in five months.
The Agency Agreement
Amazon was approaching a virtual monopoly of the e-book market at the beginning of 2010, and the larger publishers knew they had to do something. If a business sells all of their widgets to one customer, that customer controls their pricing policy. Publishers could not allow Amazon to continue heavily discounting e-books. They needed to allow other players to gain some foothold in the market to prevent Amazon from abusing its dominant position.
The Big Six publishers proposed the Agency Agreement (also known as the Agency Model), which stated that e-book prices would be set by the publisher, not the retailer, and that no discounting would be allowed. It also set the 70/30 split in which retailers kept 30% of the cover price of the e-book and the rest went to the publisher to divvy out as they saw fit.
Amazon fought hard against the agreement, going as far as to remove Macmillan’s books from sale. The publishers were backed by the agents and, with Apple cozying up to the publishers, Amazon was forced to back down and sign the Agency Agreement.
The Future
When Amazon could no longer price new entrants out of the market, its competitors’ sales boomed. Now, the marketplace has leveled out a little. The rest of the world remains far behind the US in terms of e-book market share and e-reader sales, but some trends are developing. Apple is emerging as a key competitor in Europe. Kobo has been making inroads in Australia. Gradually, Amazon is losing market share to hungry competitors.
The 60% or so US e-book market share I mentioned at the start of this chapter sounds impressive, but that has dropped from a high of near 90%. Barnes & Noble is grabbing between 20% and 25%, while Kobo, Sony, Apple, and Google share out 15% to 20%.
But while Amazon’s share of the e-book market is diminishing, the overall market is growing—rapidly. Amazon can be confident of future profits. Self-publishers and trade-published authors with reverted rights on backlist titles are in pretty good shape too. Since the Agency Agreement they earn double the royalty rate, keeping 70% of their books’ cover price at certain price points.
At the start of 2011, Amazon VP Russ Grandinetti declared that, “however fast you think this change is happening, it’s probably happening faster than you think.”
It’s probably happening faster than anyone thinks, except for Joe Konrath. He’s now making $50,000 a month.