The Business Of Publishing

Publishers receive thousands of unsolicited manuscripts every year, known as ‘coming over the transom’, which they put in the bin for the most part. Those that they think are worth even looking at go into the slush pile and during quiet times, editors will browse through the slush pile picking and choosing. What they pick and choose is conservatively estimated to be just three out of every ten thousand manuscripts received. Most manuscripts published come from known, that is already published, writers.

 

It is something of a Catch 22 situation that to be published you need to be published. This is where literary agents enter the fray. They maintain relationships with publishers and do a lot of the sifting and sorting on their behalf. It is rare for an agent to not have previously worked for a publishing house prior to becoming an agent. They know what the various publishing houses prefer to print and therefore, along with their established relationships with the publishers, have a better chance of getting a new writer published. The challenge for the new writer, then, is to find an agent who is willing to invest their time and expertise, not to mention reputation and risk their relationship with a publisher, to push the writer’s manuscript in front of an editor.

 

Many publishers simply do not accept unsolicited manuscripts. These are ones they haven’t asked the writer to write. These publishers only deal with literary agents and in doing so, spread the risk of the manuscript becoming a commercial flop as two heads are usually better than one. It also saves them valuable time in studying the manuscript on offer. This puts the onus of choosing commercially successful (but not necessarily best seller) manuscripts firmly in the court of the agent. Hence why agent’s are often as hard for a writer to deal with as editors can be.

 

If we look at the situation from the point of view of the publisher and agent, they are in business to make money. They do not make money if they do not sell enough books and unless the public knows about, likes and buys the book they will not make money. It costs money to operate a publishing business as it does to be an agent and that has to be recovered and the only place where it can come from is the sale of books. They are, after all, in the book business, also known as the book trade. If they were selling books in the Soviet Union they could publish every manuscript produced by state approved and authorised writers but they are in a free market, democratic country and we all know what happened to the Soviet Union.

 

Literary agents charge between 10 and 15% of the author’s earnings. The author does not earn the RRP, or recommended retail price on the cover of the book. They earn a percentage of that, usually 10-12% of RRP. Advances paid to authors are usually a third of first print run royalties. If the print run is 5000 copies and the RRP is $14.95, the author can expect to earn $7475 if all copies are sold. The advance on this would be about $2490. When you read of an author receiving a ‘six figure’ advance you know the print run will be huge and the predicted total sales even more than this.

 

With hardcover books, the standard royalty rates are 10%, 12% and 15% with sales of the first 250,000 copies earning 10%, then the next 250,ooo earn 12% and any copies sold over 500,000 earn the full 15% royalty. When initial print runs of most hard cover books are between 1,000 and 5,000 copies, depending on the market (and obviously not including those big name writers) this means the book has to really take off in hard cover to make the bigger percentages.

 

When it comes to mass-market paperbacks, the standard royalty rates vary from as low as 1% to 10% with the average being around 6% of the cover price. In the USA where many mass-market paperbacks are sold for $6.50, this means the author pockets a whopping $0.39 for every copy sold. If there are 10,000 copies sold, then they make $3,900. Depending how long it took to write the book in the first place, let alone all the time and effort and no doubt expense in getting it published and helping to promote it with author signings, book tours and what have you there is a solid argument to give up writing and take up working at a convenience store as it pays a lot more per hour.

 

Most royalty advances are between $1,000 and $10,000 , if you get one at all. Usually if the publisher accepts your manuscript for publication they will pay some amount in advance otherwise they wouldn’t have enough faith in the book to publish in the first place. If you were paid $1,000 in advance of royalties earned, then you will have to sell enough books to cover this before you receive any more royalty payments. Depending on your contract with the publisher you might even have to repay any unearned royalties should the sales be insufficient to cover what you were paid in advance. This is not a common occurrence but it does happen. If you find a clause in your contract that says something to the effect of “All advances paid to the Author hereunder, to the extent unearned, shall not be repayable to the Publisher” you should be pretty safe. Unless, of course, there is a ‘basketing clause’.

 

This refers to multi book deals where the losses from one can be recouped from the profits of the others. In other words they are all in the same basket. As a multi-book deal may have each of the titles released a year apart for commercial reasons (every Father’s Day for example) even though you wrote the books and had them accepted months ago they aren’t going to be up for sale for months yet to come. Given most publishers pay their royalties twice a year, it can be a long time between drinks and what if the author no longer has any money from the advance to repay the unearned portion with? For every author who makes a million dollars from their writing there are a million writers who make very little… and then there are those still to be published.

 

You will have to pay taxes on your advances and royalty payments and you may not get every cent right away. Publishers will hold money back while waiting for the ‘returns’ figures to come in. When books are sent to bookstores for sale they are sent on a consignment basis and any unsold copies are returned after a period of time. Mass market paperbacks are not sent back, only the covers are torn off and returned. The sale of the stripped copy is illegal and these books must be pulped.

 

To put this into some sort of perspective, say you have a book and the publisher agrees to print 25,000 copies, sold at $13.00 each, RRP with the average 6% royalty rate and the all too common return rate of 50% unsold, the author would earn $9,750 on the sales of that book. Of that, 15% or $1,462.50 would go straight to your agent. This leaves a profit, before tax, of $8287.50. If you were employed as shop assistant in the book store selling that book at the award rate for $19.21 per hour, you would only have to work about three months to make that much money. How long did it take you to write it, pitch it, revise it and promote it? You see just writing the book is not the end of the journey. Once you have the manuscript you need to pitch this to an agent, or several agents until you find one that likes your writing but more importantly handles the genre you write in. Some specialize in chicklit, others are sci-fi and some only do self-help or crime. Specializing actually helps find an agent, even if there are fewer to pitch to as it eliminates all the ones you don’t pitch to.

 

Once the agent agrees to act on your behalf they will make the necessary approaches to publishers. This might take months as the publisher has many manuscripts to choose from and needs to monitor the market and make sure the time is right for a particular book, or crystal ball when it might be more propitious to release your baby.

 

The publisher, once they agree to print your book will have a commissioning editor negotiate the purchase of the intellectual property rights to your work. Now they own it and can make copies, hence the term copyright. They will also negotiate royalty rates and then assign the different rights they wish to purchase. These include regional rights and electronic rights, rights to the movie and the use of the characters or plot for add on sales such as merchandise, spin offs and sequels etc.

 

In some regions the right to make and sell copies covers everywhere, but if there are different languages involved, then there are translation rights to negotiate. No point selling the English version in France although as they are part of the European Union the English version sold in the UK and Ireland might also be allowed to be sold in Norway or France. But if they want to sell a Norwegian edition or a French edition, these rights are negotiated separately. You will often see ‘Not for sale in USA and Canada’ on some books or similar warnings about not being sold in the UK or Australia.

 

Once the legalities and financials are agreed upon, the manuscript is given to an editor and enters the first of three stages, These are the editorial, the design and then finally the sales and marketing stage.

 

The editorial stage involves the writer the most where they may be asked to do major rewrites to match the house style or because the editor feels they know the readership (read that paying customer) and critics best. If the book is a work of non-fiction there will be fact checkers employed to make sure the publisher doesn’t wind up in the dock alongside the writer getting sued for defamation. While the bookseller can’t be prosecuted for something the writer writes in the book on sale, the publisher can and very often they will refuse to publish manuscripts because of the risk involved with being sued. It is for this reason several books have been published overseas and not in the author’s home country. George Orwell faced this with several of his titles, as did D.H. Lawrence and of course, Vladimir Nabokov and his ‘Lolita’.

 

In the design stage the cover and any maps, photographs, charts, tables and other graphic pieces are decided upon and set in place. While this may just mean an eye catching, book selling cover for a novel, it could mean a lot of work for a cook book or travel guide.

 

The sales and marketing stage is often begun at the editing stage with the target market decided and changes made to suit known foibles and features of this demographic. As details of the story, the cover art and so on are finalized the sales people start to talk up the book and gauge the reaction of sellers and customers alike. Promotional campaigns will be planned including press releases, galley copies to reviewers and author interviews on television and the radio as well as the internet.

 

Once the book is ready to be printed, it is first created in a pre-press proof. This is checked and double checked before being signed off on and sent off for printing. If there are any errors in the book, they will be reproduced in each copy for however many thousand copies are printed in that first run, hence the meticulous care before this to make sure it is all perfect.

 

The final part of the publishing puzzle is distribution. Where the book is sold can make all the difference to sales. As much as many writers hate to see wholesalers and discounters slash the cover price of their book, it is at just such places like the really big department store chains where big sales can occur. Bookstore chains are also targeted and so too, the small, independent bookshops. It is this distribution that for decades gave publishing houses the advantage over self published or limited press run publications. Today with the internet and online book stores as massive as Amazon.com and Barnes&Noble.com covering the globe it is a very different ballgame. Anyone can now get their own book published via print on demand, printing and despatching just one copy at a time if need be or selling them as downloads in eBook form.

 

This is a business and has been commonly known as such ever since the 1911 edition of the Encyclopaedia Britannica labelled it a ‘purely commercial affair’ with little regard for the quality of what is published. There are traps for new players in this game and a lot of them begin when the author gets the offer of having their manuscript turned into a book. Selling off their rights, often unknowingly has caused more than one author to regret taking that deal. Many publishing houses refuse to return the rights to a book to the author, even though they have no intention of printing another edition and the book is long out of print. They would rather sell it to another publisher or package it and sell it off with other rights than let the author regain the right to make copies of their own intellectual property. This is not personal, it is simply business as the publisher wants to maximize their investment in the manuscript.

 

What some do, though, is to purposely allow a book to fail, more so if the contract gives them an out should the book not hit specified numbers of sales. This is known in the trade as ‘Privishing’. Basically the publisher prints and releases such a small number of copies, often sending only a few out, that the book has no chance of being found, bought and read. This can happen to a manuscript that might become a political hot potato between the time of being bought and released. An example of this might be the autobiography of the last Governor of Hong Kong who wrote a scathing account of his handing over of the Crown Colony to the People’s Republic of China.  Rupert Murdoch purchased the publishing house that had bought the rights to the book and was in the process of printing it, but then the book was for all intents and purposes killed off and never properly released. The reason for this was that Murdoch was negotiating for the satellite television rights to China and it cost far less to lose that book’s sales than could be made from being the satellite tv monopolist in a 1 billion people and growing marketplace.

 

Self publishing and selling eBooks cuts out the agent, the publisher and all the nasty sides of the business. What it doesn’t do, however, is make selling books and less hard work. It still takes a lot of effort and commitment to market and sell the books. Simply putting them on Amazon.com and Barnes&Noble.com and at the iTunes bookstore is not enough. They have hundreds of thousands of titles. You still need to promote the book, drive targeted traffic to where they can make a purchasing decision and present them with an attractive enough proposition that they spend their hard earned cash and buy your book instead of the million or so others vying for the same couple of bucks. Now, don’t give up your day job.

2 thoughts on “The Business Of Publishing

  1. Pingback: Why I Self Publish | Making A Living With Your Online Writing

  2. Gary

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