For unpubbed writers, it sometimes seems that the “standards” held by agents and publishers are, at best, too stringent; at worst harsh, opaque, even perverse or malicious.
I don’t subscribe to that view. I think the actions of both agents and publishers are completely understandable when you consider the margins in the print publishing business. According to this New York Times article, for instance,
Publishers generally receive a wholesale price for new books that is about half of the retail cover price, or $13 for a hardcover book with a $26 jacket price. Thirty percent of the publisher’s share, or 15 percent of the cover price, goes to the author as royalties, and another 40 percent of the publisher’s take goes for the production, distribution, marketing and publicity costs of the book.
That leaves about $3 to $4 a book for the publisher, before accounting for the cost of corporate overhead or the books that will be returned — on which the publisher earns nothing.
For paperbacks, authors generally earn only 7.5 percent of the cover price as a royalty. But the lower price also means publishers earn far less, about $1 to $2 a book, before returns.
If you look at these numbers, it’s obvious that publishers can’t make too many bad acquisitions or they’d be bankrupt in a matter of months, if not weeks. Large publishers, in particular, can’t survive if they acquire books that only sell a few hundred copies. They need books that appeal to a wide audience, generate buzz, and inspire word-of-mouth.
It’s not their job to do me, the novelist wanna be, favors. I need to write a book that will meet their criteria. If I want them to publish it.
Amen! It amazes me how (seemingly) few unpublished writers have any appreciation of the financial side of the publishing business. It’s is not even a LITTLE BIT personal; it’s ALL about money. That’s why the publishers publish.
John
It’s not that simple.
40% of $13 is a good guess at the marginal cost of producing that average book of The Times’ article (it’s probably actually less). That’s about $5. If you produce 5,000 copies and sell only 2,000 at $20 average, you make $40,000 less author’s share (let’s assume an advance of $10,000 just for fun) for net revenue of $30,000. It cost $25,000 to produce.
So even in this awful situation, the publisher makes a marginal profit of $5,000, which goes right to the bottom line assuming fixed costs are already covered. So, volume, volume, volume, right up to existing capacity.
The real risks are: investment in new capacity; and paying exhorbitant advances to authors.
Have I missed something?
Hi, Ken,
By investment in new capacity, do you mean hard assets? E.g. new presses?
As far as exhorbitant advances, there’s no way of knowing, in advance ;-) whether any advance will be recouped, no matter now modest it is. So I’d say every advance is a risk. Large advances are just more spectacular when they fail :-)
A publisher can mitigate the risk in a number of ways. Some of the easiest/most obvious: stick to authors with proven sales track records or solid platforms; choose books with a celebrity angles, because they’ve got a decent chance of generating publicity buzz.
Other options are more subjective, like trying to guage whether a current trend has legs, or whether a book by an unpubbed writer has that special something that will generate word-of-mouth.
You’re right that volume is key, of course — that’s part of what my post suggests. If publishers don’t acquire books that will do volume, they can’t make money.
It will be interesting to see if POD technology and Internet-based infrastructure will help publishers take out costs, enabling them to improve their margins for lower-volume books . . .
btw Ken your comment on Miss Snark’s blog about the Thank God series was hilarious!