Writing, publishing, geekdom, and errata.

Publishers Making Money From Author Copies is Bull

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publishing.pngSo far this week, we've talked about print book prices. We've talked about how print books should cost more than digital books. And we even asked where the extra money goes when traditional publishers produce digital books at the same price as the print version.

But there's more.

I publish as Alliteration Ink, and have very clear core values:
  • Quality Will Out: Secret market tricks do not differentiate products and services. Quality sells products. This applies to the design of an eBook, as well as the words inside it.
  • Yog's Law: Money flows toward content creators.
  • Financial Transparency: Everybody involved with a project knows its performance. Each project's performance will be made public so that others can learn from our successes and mistakes.
  • Profit Sharing as Risk Mitigation: Profit sharing allows for innovation by lowering the capital investment needed.
  • Profit Sharing as Fruits of Labor: To the maximum extent possible, content creators will be compensated by how much revenue the fruits of their labor brings in.
  • Non-Zero-Sum Game: I help make awesome books, at affordable prices, and get creators the money they deserve.

There's one more thing. I play paladins. That's what led to a lot of my ranting about digital distribution scams, schemes, and general schenanigans.

As I went about creating a print version of The Crimson Pact: Volume One, I realized that CreateSpace has a wonderful calculator for determining two things - the royalties for each sale and the cost of your own copies of the book. This isn't something I am afraid to share - part of my job as a publisher is to justify why I get a slice of the pie. My slice is usually based around the amount of time it takes me to do the job in question. The remainder of the money goes to the authors who created the awesome stories. That's the way it should be.

Except that's not the way it always is.

It's been "business as usual" for authors to be able to purchase copies at a discount. While it's never been explicitly said, I've always had the assumption that publishers were just breaking even on those copies. I mean, that's the difference between a publisher and a printer. A publisher making money is based on being able to sell the book better than the author alone. Otherwise the author just needs a printing press and contracted artists and editors.

Let me repeat that - it's important.

A publisher making money is based on being able to sell the book better than the author alone.

This is (at least in part) the rationalization for the publisher taking a cut of the profits. It goes to pay for the sales force, the marketing, distribution, and advertising. The publisher expects to make money selling the book to readers, not by selling the book to authors.

We've heard about the scams. You can go on Writer Beware and find some egregious examples of Vanity Publishers in Sheep's Clothing and Pay to Play Anthologies. While some of these examples are obvious, others are not. There's two key quotes from those pages that apply here. Let's take a look at the first one:

The companies [that pressure authors to buy copies of the book] make a big point of emphasizing how much profit writers can realize if they sell the books, since they're purchasing them for less than list price. But for someone who doesn't already have a captive audience, it's not so easy to flog several hundred books. It's much more likely that contributors will never get their money back.

You might already know where we are going with this. A trend has started where "small publishers" do not pay any money up front. Sometimes there are promises of royalties after the book or anthology earns out, sometimes the payment is in contributor's copies of 40% - 50% off the cover price. This is the exact same behavior; it's just a matter of degree. Because now we can find out how much it cost to manufacture that book - and find out how much the publisher is making from selling our own work back to us.

Let me give you two real-life examples. I'm not going to name the publisher, and ask that you not name them in my space either. I use calculations from CreateSpace for two reasons:
1. More than a few small and independent publishers (including me now) use them as a printing solution. You may have several books from CreateSpace already in your library and not know it.
2. CreateSpace isn't the cheapest game in town. This is the equivalent of planning your coffee budget by using Starbuck's prices and then drinking Folger's. That means that my calculations below are on the low end of things.

The first book was an anthology, 330 pages in length, retailed at $29.95, and was sold to contributing authors at a 50% discount (e.g. $15 each) and one complimentary copy. No royalties were paid. The publisher required a pre-order of one hundred and twenty books from the contributing authors.

So let's plug that into CreateSpace's calculator.

So it looks like the publisher's barely making anything (a dollar a copy) unless they go the "Pro" route, and... oh, wait. That's the royalty calculator. The publisher bought the books and then shipped them to the authors 1. So what's that look like per book?
The per-book price doesn't change with the number of copies, by the way. So at the standard rate, that's $6.90 profit for the publisher per book, and at the Pro rate (after a one-time fee of $39) that's $10.19 profit per book. Shipping to the publisher would be $51 with standard shipping for 120 copies.

So... if they went the standard route, after shipping that's $598.8 profit. If they went the Pro route, that's $1026.98 profit. From selling copies to authors. Before a single book was sold to the general public.

The second book had a similar model (anthology, about 200 pages), but a lower retail price and theoretically will pay royalties 2 on sales other than author copies, and contributors could purchase copies at $9 a book. Let's assume the Pro route this time to avoid redundancy, and take a look at these two calculations.

In case you're math challenged like me, the publisher made $5.68 on each contributor copy. That's not only about the same amount as a sale on Amazon - it's actually more money for the publisher, because then the publisher doesn't have to pay the authors a share.

Maybe this is standard business practice.  It's not illegal, not at all. 

I do not give a damn. It's bullshit. This is taking advantage of authors. This is making authors into your primary customers. And now it's time for the second quote from Writer Beware:

A publisher that turns its authors into customers has little incentive to get books into the hands of readers, and is not likely to invest much money in marketing and distribution.

Don't get me wrong - I enjoy making money. Hell, I'd like to do this publishing gig for my full-time job.  I like publishing, and understand that there are expenses (and risk) that the publisher bears. I did - and continue to do - a lot of work with The Crimson Pact. I get 12%. Period. That's what I do to earn my cut. I believe that I could make my money back (and more) selling the book to the general public. That's how this works.  

If a publisher builds in a profit for themselves (as apparently this one did), then they are inherently less interested in making a profit through other sales.  If a publisher does not believe a book will make a profit through sales to the public, then they should not publish the book.  Therefore:

I believe that the only ethical thing for publishers to do is to sell contributor copies at cost.

Without the contributors, there would be no damn book. Publishers must at least regard authors as partners, not indentured creative servants, who'll work for next to nothing to see their work in print.

Authors, you have the tools to find out how much stuff really costs now. Hold your publishers - including me - accountable. Ask publishers for numbers. You must do this for yourself - with the rapid changes in the industry, you cannot expect anyone else to act solely in your best interest.

Remember, there is a reason I hold Yog's Law in such high esteem:

Nobody will read a book filled with blank pages.

Always remember that. Always.

Doing the research, screenshots, and writing up posts like this takes quite a bit of time, folks. If you've got the cash to spare, buy one of the books over there or drop a few bucks in a coffee cup. Thanks.

1 The authors were also charged shipping, so no slack there.
2 A 1/14 share of 25% of net reciepts. So if a sale on Amazon netted $5.67 for the publisher, each author gets ten cents. Royalties have to reach $20 before they get paid... but you can use that money to buy more author copies... extra credit for figuring out why that's especially sneaky!

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