Stormwolf.com

It strikes me that in long essays, certain facts get lost. I wish to break them out here.

1) The purpose of writing for commercial distribution (electronic or print) is to make a profit. This means you have more money coming to you than you have flowing away from you. As with any business, you may have some start-up costs. Create a budget. Set aside an amount of money which you do not need, and use that for your business. Create a business plan, analyze the avenues for generating income. Hit those which have minimal costs and higher payoffs first, and work your way down. If ever you tell yourself, “Well, this won’t cost me that much,” stop. Do not do that thing. Once you start making rationalizations like that, you are being foolish.

Once you are foolish, you will soon be penniless.

2) My support for self-publishing in these discussions has been for digital publishing and digital publishing alone. It is true that I have mentioned services like Blurb.com where one can do a limited run (10 or less) copies of a book. I have used Blurb.com and the like for extremely short runs of books which I can bring to signings. This is so I have an inexpensive item for people to buy when they come up to the table and say, “I don’t have anything for you to sign.” I am fairly confident I can move ten copies of such books over a convention season, so I’ll be making a profit (see point 1). Never print more books than you have pre-sold. Volume discounts for printing don’t mean anything when the excess inventory is sitting in your garage.

3) I do not believe that even digital self-publishing is easy. I believe it is simple, and there is a world of difference between those two things. Establishing your own business is hard work. If you don’t put that work in, you will not reap the benefits of your business, pure and simple. To me, spending twenty hours scanning and preparing a novel for ebook publishing is “negligible,” because it’s only an expenditure of time. In my opinion, time is cheap compared to the money that will be returned by that effort. But then, I don’t own a television, so I may have a bit more time on my hands than others. Everyone will decide whether or not they will spend the time to enter the digital marketplace. I tend to think the cost of not entering is the greatest of all, but I expect others will disagree with me.

4) Publishing in the digital age is about more than files, formats, devices, DRM and shopping-cart software. It is about using new media for locating, building and sustaining an audience. In business, companies gear their publicity expenditures to accomplish one of three things: Customer acquisition, customer retention, and customer re-acquisition. Everything you do when it comes to new media should fulfill one or more of those criteria. All three would be nice.

I heartily recommend the book Crush It! by Gary Vanyerchuk for his discussions of using new media to find and build your audience and brand.

5) There is no get-rich-quick-scheme. You will be working your tail off. (This is the reason most of us get those chairs with the pneumatic lifts in them. As our butts get smaller, we have to raise the seat.) While doing the marketing and file prep and website coding may be tough, it won’t be nearly as tough as the writing itself. But once you’ve done the difficult work, you owe it to yourself and your work to get it out to your audience in a manner that lets them support you in your efforts.

6) Established authors do not have a leg up on new authors in this digital world. My previous post on The Myth of the Established Author makes my feelings very clear on this point. Those who would dismiss everything I’m saying because I have been previously published would do well to read that essay. They might also want to consider the following: it may not be the fact that I’ve got a following that allows me to be successful in the digital age, but that my experience in the pre-digital age is what allows me to see the ways to profit in the post-paper era.

7) One last point, which goes back to the first: money flows to the author, not from the author. Whenever anyone offers you a deal, ask yourself, “What’s in it for me?” If you can’t see a return in one or more areas as affects your career, it’s probably not a deal that works in your favor. People get taken by all sorts of scams simply because the scammer offers you an opportunity that is too good to pass up. One such is publishing a novel which, deep down in your heart, you know is not of professional quality. It might be close, but it isn’t there yet. Don’t let your desire to be published prompt you to open your wallet and give money to someone who promises you the moon, but can’t even deliver a moon-pie.

Whatever you do, do not trick yourself or allow others to trick you into believing that self-publishing—especially of print books in any quantity beyond a dozen copies—is the way to make you the next J. K. Rowling. Writing is not easy. Getting good at it takes years of hard work. Do the work. Do it on the writing. Do it on the business side, and the promotions side. Learn as much as you can and then, and only then, can you make the correct decisions about when and where to invest your time and (extremely reluctantly and penuriously) a tiny sum of money.

Learn from the mistakes of others. A garage full of books will not pay your mortgage. A solid, profitable business will.

There’s a stigma to self-publishing, and we all know it. Why? Because, in the past, self-published books have sucked. A lot of self-published work today sucks. And when I use that word, it’s a technical term.

Face it, most self-published books are a pig-in-a-poke. Looks good, but you can’t be sure. If it’s a physical book and has been professionally produced, it mimics the legitimacy of a commercially-produced book. It’s an ambush. You snag the book, you get into it, and it sucks. You feel you were cheated, and no one likes to be cheated. (And we won’t even touch on the topic of how many times that’s happened with commercially-produced books. Thank goodness the percentage is lower.)

Self-published work has become synonymous with “violation of trust” and buyers are wise to be wary of tossing money in that direction.

Self-publishing has long been the realm of someone whose belief in their work far exceeds the actual quality of that work, and they back their belief with their own money. The game industry from whence I come has, for the past forty years, has been a bastion of self-publishing. While there are a bunch of larger companies that publish very high quality work, the industry is open to someone whose warehouse is his garage. And the simple fact of the matter is that games by these small companies prove themselves through interaction with the buying audience, either falling to obscurity, or selling well and funding new creations by the game designers.

The same thing can, and should, happen in the realm of fiction.

In an effort to escape the stigma, the new practitioners of self-publishing have ascribed a number of different names to the phenomenon. A lot of folks call it Indie publishing. I actually prefer the term coined by Robert Vardeman: Vertically Integrated Publishing, or Vipub. What vertically integrated publishing allows is for an author to control every aspect of his work and how it is delivered. By putting in the work, he reaps the majority of the profit. It’s the equivalent of being a small winery—notice no one attaches a stigma to a boutique winery or cheese-making operation? Their products are described as “artisanal” and somehow better than massed produced rivals.

How does one get around the stigma—arising from the lack of quality of many self-published works—to attract an audience to your Vipub work? The solution is very simple: sampling. It’s a wine-tasting for your work. You, the author, publish for free or a nominal price, sample chapters from the work. You record a reading of chapters and make them available as an MP3; or using something like Second Life or streaming audio/internet radio, you provide listeners with a sample of your work. You release the entire book to a trusted cadre of reviewers and bloggers, enlisting them to spread the word about your work. You blog about it yourself. You engage the internet community and build an audience from it.

It has been suggested that my assertion that the production costs of preparing an ebook of a work, especially a work that it out of print and for which the author has no electronic copy, was “negligible.” I have had quoted to me a cost of hundreds of dollars for scanning a book, so the cost was considered substantial.

I disagree with this assessment.

I scanned my novel Once a Hero in three baseball games—I was listening to baseball on the radio, and scanned the book at the same time. Seven and a half hours, tops for that. And I spent another ten hours, roughly speaking, correcting scanning errors and formatting the book to be sold as a PDF, on the iPhone and for the Kindle. (Another hour or two will have it in epub shape, probably less.) So, let’s assume I have a whole twenty hours in the conversion process.

Scanners are very inexpensive—I used the one built into my printer. All scanners and printers come with OCR software, so there is no additional layout there. If an author doesn’t own a scanner, he undoubtedly knows someone who does. And if he doesn’t want to do the physical scanning himself, he can find a spouse, a child, an unpaid intern, or a dilligent fan, to do the scanning for him. (A fan or intern would love to have her name mentioned in the acknowledgements of a digital edition of a book she loves. And if the author feels guilty for accepting free labor like that, cut the scanner in for a percentage of the sales.)

Or, he can do what I did for my other books: I went out onto the internet, found pirated copies of my books, and ripped the text out of them for correction and reformatting. (Does that make me a digital privateer? I kind of like that idea.) I get the scanning and initial correction done for free. (Most pirates are very diligent in their production, having fewer typos and scanning errors than Google Books).

While the rescanning argument holds a limited amount of validity for works that were produced prior to the last decade, for anything published since? No. Authors have short stories that will sell in digital form (I sell tons of them) inserting corrections from the printed copy to keep the digital file up to date. And authors can produce new work related to print books that not only will sell to fans of the print books, but will serve as a taste of the world for those who’ve not yet purchased the print books.

For most folks, it’s not a matter of can’t, it’s a matter of “I don’t want to.” As my partner Kat Klaybourne says, “It’s simple. It’s not easy, but it’s simple.” And I have hot flash for any author who thinks doing this is hard—it isn’t nearly as hard as actually writing a story. It’s all clerical work, and you will get paid on that work forever and ever.

Jim also notes that some publishers will charge authors a great deal of money for an electronic copy of their own book file. That shocks me. First, if a publisher doesn’t have it written into the contract that he can do that, I don’t think he can. Second, all contracts require the publisher to give the author copies of his work in any form they appear, ergo, they should turn them over in all the formats for which they are available. And, three, the pirate option mentioned above is available. Four, authors could do what Dennis L. McKiernan and other authors do, which is to input corrections into a file which becomes the final for the publishers, thereby actually having the final in electronic form. (Publishers on several books have actually required that from me.)

In the latest two issues of my writing newsletter, The Secrets, I go into a lot more depth both on market issues and the variety and ways an author can produce work that will generate income as well as build sales of already existing projects. It also goes into ways that an author can use the internet as a means to heighten his visibility with the available audience.

The thing to bear in mind is that it’s all about profit. This very post is an excellent example of how new media can be used to generate income. I don’t mind giving away ideas on how all this works, but I reserve many of the best ideas for publication in my newsletter. The two issues I mentioned above (#134 and #135) are available as part of the current subscription series. The Secrets costs $25 for 25 issues that cover topics like the current publishing situation, provides solutions to same, and shares my insights into the art of writing itself. Hit the link above, subscribe, and you’ll pull down the last fifteen issues immediately.

My store has a number of other publications related to writing. I teach classes in writing at conventions like Origins, Gencon and DragonCon. I’ll be at StellarCon March 5-7, teaching my 21 Days to a Novel workshop. In two hours I teach writers a series of exercises that lays the groundwork for them to successfully finish a novel.

Because of these posts, because of the things I’ve been saying here, there are readers who will hit those links above or will attend my classes. What did it cost for me to mention them here? Nothing. What did the preparation of those files cost? Virtually nothing and long since paid for. Sales of electronic work, once made available, continue to provide income for no additional work. A short story for an anthology these days pays maybe six cents a word (we’ll be generous here.) So, a 6,000 word short story would net the author $360. Sold at $2 per copy off your website, less Paypal fees, an author would have to sell only 216 copies to match the anthology price. Pick a property that’s already popular and has a fan-base, turn out a new story related to it, and 216 copies shouldn’t be much of a problem. (True, with Amazon and Apple taking 30% off the top, the story would net $1.40, so it would take 258 purchases to match the anthology offering.)

The whole stigma connected with self-publishing is akin to the stigma of being gay, or interracial marriage, or being a gamer or a scifi geek. It has outlived its usefulness as a predictor of problems. Sampling eliminates the risk for readers. Negligible production costs for content providers eliminates the risk of production. The only reason not to do it is because you don’t want to do it.

And if, as an author, you don’t want to make a profit, if you don’t want to have money trickling into your pocket, there’s nothing I can say that will convince you otherwise. But if your intention is to make your life better, gain more exposure for your work, and build a career for yourself as the transition takes place, then just remember:

It’s simple. It isn’t easy, but it’s simple. Do the work, make the money. It’s what publishers have been trying to do since the invention of the printing press, and now we can do it better.

Note: This is an edited version of this essay. Jim Lowder pointed out corrections that needed to be made; being quite gracious in dealing with my unintentional attribution of statements that he never made to him. As I had noted in the original, he is a very smart man, and gracious as well.

One of the things that keeps being bruited about in this discussion over digital books and pricing is a question of how much digital books really cost. The base cost of a book, of course, determines its final price. Repeatedly people have come out and said that the production costs of an ebook is fairly close to that of a paper book, so the prices need to be where they are. I want to break those numbers down.

In conventional publishing authors get a royalty of 10% of the cover price (on average). In the digital world, authors working through a publisher will get 25-50% of the publisher’s cut. Under the new Apple and Amazon models, that is 70% of the book’s cover price. The author, therefore, will get 17.5% to 35% of the cover price of the digital download.

In conventional publishing, the generally accepted cost for physical production of a book is 10% of the cover price. This number is a bit unstable because of volume discounts on printing and because of the returnability of books. For every book sold into a customer’s hands, two are printed. With digital publication, the actual production cost is negligible. The elimination of returns also eliminates the needs for the accounting dodge of reserves against returns.

In conventional publishing, physical books are sold into the market at a 50% discount off the cover price. Under the new digital models, that discount is reduced to 30%, so the publishers will be making an additional 20% of the cover price. (Yes, with an author’s percentage rising to 35% of cover for a digital sale, that increase is devoured, but the 10% physical production cost vanishes, leaving the publisher still 14.2% ahead.) (A $10 book at a 50% discount pays the publisher $5, and the author gets $1. The publishers gets $4, and then loses an additional dollar for the cost of the physical book, so they’re down to $3. A $10 digital book pays the publisher $7. After paying the author, they keep $3.50, so they’re over 14% better off with that digital sale.)

In conventional publishing, the remaining 30% covers everything from editorial, art direction and acquisition, warehousing, transportation, promotion, overhead and profit. If you’ve been following the math above, assuming that this 30% is fixed, the publishers are still 14.2% ahead through digital publication, and roughly 52% ahead if their authors have agreed to one of the shameful 25% of the digital take contracts that have been promoted recently.

The digital model, however, removes costs out of that 30%. Warehousing is no longer a cost. Transportation is no longer a cost. Typesetting is no longer a cost. Art direction is still a cost, but the cost of cover art goes way down. Digital books work well with iconic images, not the sweeping cover illustrations found on books. Even Michael Whelan does not reduce well to an icon. This might seem like an insignificant line item, but in the SF&F field, a cover illustration could cost more than acquiring the book. Going from even $1000 for a painting down to $100 for some graphics makes a significant difference in the profit picture.

Now, here’s the hidden, dirty little secret that the publishers don’t want you to think about. That 30% goes to zero for all of their backlist books. With those books, all the developmental costs have been written off years ago. Because digital books never go out of print, we suddenly have the return of the backlist. If a reader likes a book by an author and goes looking for more, they can find all of those books through a simple search or, if big publishers ever cotton on to this digital thing, through hotlinks at the back of the book.

In a previous post in this series, I’ve noted that the overhead category of charges, which some folks have suggested accounts for half of that 30%, is needlessly high for conventional publishers. Do they really need Manhattan offices? Baen Books and Night Shade Books seem to function perfectly well without them, just to name two publishers off hand. And the authors aren’t all located in New York. The internet is how I get my manuscripts to my publishers. And we have telephones, too. Moving the editorial and production offices out of Manhattan could significantly reduce overhead for any project.

Promotion is a sore point with authors. Publishers claim they do it. Authors find themselves encouraged to do more and more without any compensation. I have had my books solicited to stores including the fact that the author will do signings, but the publishers never set things up. I’ve had publishers refuse to pay $150 for a flight to Denver for a four store signing tour (the store chain manage got in touch with them, not me) because I wasn’t “on tour.” The lack of support and misplacement of advertising dollars is legendary in the industry; and authors are expected to pick up the slack on our own.

In the digital age, those promotion costs drop nearly to zero, consisting mostly of pages on the publisher’s website. If they do choose to do any advertising, at least it can be targeted to hit their audience by putting banners on author websites or online retailer websites.

Another point publishers don’t want anyone to think about is the cost of money. Publisher invoices are paid net 30 or net 60 (in one or two months). Authors are paid net 90 to net 270. A book sold on the last day of June won’t have a royalty sent to the author until, at the very fastest, the first of October. If the store pays the invoice for that copy on the last day of August, the publisher still has the money for thirty days. Often it is for considerably longer, and the interest earned on that money—which belongs to the author—is something the publisher retains. The current rate for a 6 month CD is 1.07%, or just over 2% per year. That goes neatly to the publisher’s bottom line.

Back to the cogent point: If every publisher today were to switch immediately over to the digital publishing model only, they would be 14-52% to the good on every new title they put out. They would be significantly better off with every backlist title they make available. If they just wanted to stay even, they could sell brand new ebooks at a 5% discount over the print price, and backlist books at 35% off. (Since most of the backlist books are currently out of print anyway, this becomes a new revenue stream for them, raising their overall volume, which, in turn, increases their profit because their cost of offering those books is zero.)

Industry insiders point out that there’s one flaw in this analysis: so few people are reading digital books, at this point, that if they were to make this immediate switch, there would not be enough volume to sustain the companies.

If that is true, however, how can traditional publishing’s suggestion that ebook sales are cutting into hardback sales be supported? It can’t and isn’t. They fear that it might, but there is no data to show that it has or will.

Moreover, and here is the trickiest thing, no one is asking them to do one or the other. We want them to do both. Since digital books produce a higher profit margin, increasing the digital offering only makes sense. In short, for every print book sale you don’t make because of a digital sale, you make more money! This is especially true of backlist offerings of the books to which they already own the rights. (I am repeatedly asked by books 3 and 4 of the DragonCrown War series are available as ebooks, but 1 and 2 are not? Beats the hell out of me. And why no omnibus digital edition? Another puzzler.)

Tradition publishing (and apologists for it) note that they want to control the transition because there are a lot of jobs at stake here—namely truckers and warehousemen. Does anyone actually believe that if a mobile robot that could pick books faster, tirelessly, without making mistakes; was available tomorrow, that every warehouseman wouldn’t be out on his ear? In a heartbeat. This isn’t to say that there are not plenty of compassionate people working for publishers—heck, working with authors requires the patience of a saint—but when it comes down to return-on-investment decisions, people become numbers, and numbers can be subtracted with amazing speed and facility.

The very important thing for authors to look at is this: the costs for you to offer your work as digital files is less than that of the publishers. A previously published short story already has the editorial work done. Converting the file for Kindle or epub takes less than an hour. Loading it to Amazon or your own website, less than an hour. Off Amazon you currently make 35% of cover, in July that goes to 70%, same as the big boys. Off your own website, you’ll pull at least 87% of cover.

My point to authors is the same as my point to publishers: I don’t think you should do one or the other, I think you have to do both. Just like the publishers owning rights to out of print, backlist properties that could make them money, authors have the same sort of inventory. Get it out there. Start selling. Establish your presence and encourage readers to buy direct from you.

Why?

The simple fact of the matter is this: traditional publishing has repeatedly evidenced an inability to integrate itself with technology to its benefit. Traditional publishers are fighting to maintain an inherently dysfunctional business model which has been in decline for years. If not for J. K. Rowling, Stephen King, Dan Brown and Stephanie Meyer it and the wasteful consignment-system of book retailing would have suffered a serious and perhaps fatal contraction seven years ago. Traditional publishers have repeatedly showed not only a lack of understanding of its customer base, but a contempt for them (as evidenced most recently by predatory pricing of ebooks). Last year’s attempt to cut author royalties in half on ebook sales, despite claims that the market for ebooks was insignificant, is yet one more indicator of publishers seeking to redress their inefficiencies by pulling more money from authors.

The traditional publishers themselves are going to give authors who do the work the very means with which the publishers can be supplanted. By setting ebook prices artificially high, they allow authors to offer the same quality entertainment at a reasonable price that actually nets us more. As I noted yesterday, I can take out a novel that New York didn’t want, do up in a digital version, and make seven times per book what they would pay me for the print version, and double what I’d get out of the digital version. With no downside for me at all. As I’ve noted before, using the Apple Appstore as an example, there is constant downward pressure on prices, and traditional publishers can easily find themselves competing with authors who offer their own backlists at reasonable prices.

The numbers don’t lie. Ebook prices should be lower than print prices, by a minimum of 5%, and that’s just if publishers wish to maintain the status quo. Operations where the costs of physical production, warehousing, transportation and editorial (in the case a backlist material) are reduced or eliminated, significantly increase their profit profile through reduced costs and the higher discount being offered on digital sales. In my estimation, ebook prices could be 20% below current print prices without causing any hardship, and significantly lower on backlist titles which would now be returned to availability. And they could go even lower if publishers addressed overhead costs and ran their companies more efficiently.

It’s not a matter of change coming. It’s already here. How you decide to deal with it will determine where you and your career are in fifteen months and fifteen years.

One of the laments that is oft heard concerning the coming changes in the industry is this: “Look, I just want to write.” The whole idea is that the writer in question enjoys writing. All they want to do is just to turn out stories. They don’t want to have to learn HTML. They don’t want to have to learn how to put things in an online store. They don’t want to learn about different ebook formats, or set up accounts with online booksellers or find an artist to create graphics for their work.

I understand the sentiment.

And I understand it’s unrealistic.

Imagine, if you will, a really good cook who decides to open a restaurant because, “All I want to do is cook.” If all you want to do is cook (or write) you don’t open a business. You get a job. There is a significant difference between the two. In a job you have no control over your circumstances, you have bosses telling you what to do and to do it over again, your choice of assignments is not yours and, in short, you have very limited control over your work environment and situation. You are at the whim of others.

When you open a business—and this is what every writer is doing—you have to pay attention to the bottom line. The idea is to be profitable. If you cannot find an advantage in doing things, don’t do them.

Every single day I have to make decisions about what is going to be the best way for me to occupy my time. Sometimes, as when I have an assignment, writing a story that will pay me in a couple of months is a good idea. It may not pay me much, but there is usually another angle that I want to work. Perhaps I’m working with friends. Perhaps the subject is one that I enjoy. Perhaps the story goes into an anthology with a hot theme. I constantly have to measure the angles so that when the work is done, I am getting ahead. I am expanding my audience. I’m providing an entertaining read that will draw more folks to my work. I’m adding another story to a world of mine, which feeds my current audience and encourages new folks to buy the older work.

Sometimes there is zero monetary profit in a project. A number of years ago I was asked to contribute a story to a charity anthology. I immediately agreed. I like the cause. Lots of other, high profile authors were going to be in the book, too. The organizers wanted to try peer-editing, which was a cool concept. The good will and publicity certainly would be a plus.

That could all make me sound like a cold and calculating bastard. Fair enough. But cold and calculating is what has allowed me, since 1987, to be my own boss. As I noted in a previous post, three years ago Bantam dropped me as an author. I spent the next two years without a contract. And yet, in both of those years, my business as a writer showed a profit. How? By finding writing jobs. By finding other ways to make money using my skills. Via digital sales, via teaching classes, via industrial, not-for-external publication jobs. My market had collapsed, and yet I found a way to make my writing pay.

If you have the attitude that you “just want to write,” then just write. But don’t lament the fact that you’re not making any money. That’s like saying you’re hungry, but you don’t want to get up and make yourself a sandwich. It’s playing the victim. Playing the victim won’t get you anywhere.

A number of folks have pointed out the 80/20 rule of business. Eighty percent of your profit comes from twenty percent of your product line. In publishing it’s much worse than that: ninety-five percent of the profit comes from five percent of the line. Two key points here: First, you want the entire line to be making profit. You know a minority of it will make most of the profit, but you have to do the things to see to it that the rest of the line at least breaks even, like advertising and sales support. Publishers don’t do this. They only do sales support and effective advertising for that 5% of the line. It is a model that bets on the “sure thing,” ignoring the fact that there are no “sure things.”

Second, you have to expand the line and change the mix. If you have items that are not profitable, you cut them. And then you open up other markets. You explore new opportunities. You find new ways of having income flow in your direction. You still work from your core strength, but you find new ways to profit from it. In this way the contribution of the 80% of your line is still in the black.

Many authors are resisting or denigrating the idea of digital self-publishing. This is like a farmer saying that the produce sold from his roadside stand just isn’t as good as the stuff you buy in the grocery store. It’s nonsense. If a writer provides samples (free, or low-cost stories), readers will have the means to make informed decisions about where they want to spend their entertainment dollars. Sure, will digital publishing mean that anyone whose ever wanted to write can have a storefront? Absolutely, but if consumers demand samples before they buy, the good writing will be weeded out from the bad very quickly.

And there are other ways to have stories rise to the top. Watch this space for some project announcements very soon.

Here’s the true tragedy of authors who don’t want to attend to the business side: every single one of us has inventory that isn’t doing anything right now. Could be a novel that never sold. Could be a handful of short stories that sold years ago and haven’t been seen since the anthology or magazine went out of print. Could be we get an idea for a story tied to current events, or we want to do a story that we can sell and donate the money to Haiti relief. The current publishing model doesn’t support such things, but digital can and will.

Let me give you two examples of ways that digital publishing works for both the authors and readers by circumventing economic necessities that encumber the current business model.

1) I’m not alone in having one or more novels which are of professional quality, which the large publishers rejected because, in their opinions, the books would not sell enough copies for them to bother with. Setting aside the issue of publishers’ lack of demographic data on reader tastes, the idea is that since the book would not be a huge bestseller, in an editor’s opinion, it goes unbought.

So, I have this book. I will never recover the time I’ve invested in it. If I turn around and publish it in digital form for $5 and I sell three copies a month, the sales of that book alone will cover the cost of my website and more. The cover illustration will cost me $25 or so, maybe as much as $50; so the sales of the first fifteen will cover that cost. After just fifteen books, I’m profitable, and I’m making the money now, not having to wait for a publisher to get around to send me money in six to nine months after a copy is sold. If the current sales figures for digital sales just hold steady, without any push on my part, I can sell a dozen copies a month, putting $50 or more dollars in my pocket a month. May not sound like much, but it is $50 more than I have right now. In ten months, that’s an iPad.

2) Back in 1997 I had a novel come out titled Talion: Revenant. The book sold well over 50,000 copies here, and sold in Germany. I already have the start on a sequel: Talion: Nemesis. Since Bantam has rejected me, they don’t want the sequel. Because they hold the rights to the first book, no other publisher wants to pick up the sequel, despite the strong sales figures and the fact that this is the single most requested volume for a sequel that I’ve got. (And if you want to register your support of my doing the sequel, please feel free to do so in comments.) Why won’t anyone else pick it up? Because sales of the current book would drive sales of the previous one, allowing Bantam to profit off their efforts. Even using current (and crude) models for estimating sales of the next book in a series, Nemesis would be projected to sell a minimum of 30,000 copies, which is a ton in the current environment. And yet, this sort of thing is seldom done under the current model.

If I do it as a digital book, and tap into that 30,000 sales figure, I’d been looking at a gross amount of money running, conservatively, at $100,000 on a $5 digital book. Even if I sell only a fraction of those copies, even if I only sell 10,000, I’d make more than I’d be paid as an advance for the book in the traditional model. Regardless, every dollar that flowed in would be one more dollar than I had before. Low effort, low cost, high profit. Why wouldn’t I do it?

And why on earth would I listen to anyone who denigrates digital self-publishing? I’ll let you in on a big secret here: those same authors are reading these very blog posts, and are the first to pigeonhole me at conventions to learn how they can do what I’ve been doing. They’ll be doing all this very soon, claiming that it’s different for them because of [insert feeble rationalization here]. Smile and nod when you see them.

In either scenario, providing samples for free to entice folks to buy would be part of the package. So folks would not be buying a pig-in-a-poke even if they had no idea who I was or what I’d done.

The simple facts boil down to these:

1) The old system has never treated writers well. Publishers have continued to cut back on services that build author careers, now expecting us to do that for them. This is not to suggest that publishers do not provide services that benefit writers. They do. But they have shifted things that they used to do onto the backs of writers, and they have not increased our cut of the take to compensate us for doing that new work. And if we refrain from doing that work—or even if we do it, but not well enough—it becomes grounds for severing their relationship with us. In essence, they throw a hundred infants into the ocean, and then rescue the five that bob to the top—who then go into the next load of a hundred and go right back into that cold, cruel sea. Lather, rinse, repeat—how long can you tread water?

2) Authors already have work product to which they own the digital rights, which they are not making available. This is akin to a farmer having produce the distributor doesn’t want and his failing to erect a roadside stand to sell it. The effort to get that material out there is minimal, and the reward is immediate.

3) The dark side of the digital world is this: you can never audit a digital royalty statement. There is no way to tell how much end-product has been delivered. A one meg file to which a gig of bandwidth has been devoted does not mean 1,000 sales. It could be one guy has failed to download that file on all but his 2,000th attempt. If an author does not sell his own work, he has no baseline against which to judge the sales statements coming in from others. (Based on my experience, transfer failures affect less than 2% of transactions.) Since publishers will be paying us substantially more for digital copies of our work than they do physical copies, and since the paper trail is a lot more difficult to break down, it behooves authors to be collecting data by which we can verify what’s going on.

4) Authors say they don’t want to learn graphics or HTML or anything else. Great. Have your spouse, child, grandchild, friend, assistant, unpaid intern or willing fan do it. It’s work that needs to be done. If a pipe breaks in your house, you don’t sit around in a flood lamenting the fact that you don’t want to learn how to be a plumber. You find someone who can fix things. HTML, Graphics and the rest are things others can fix. Incorporate them into your success.

All that said, there are still folks who will say, “I just want to write.”

Fine. Do that. Just don’t complain when the business isn’t going the way you want it to. Either you take control of your own destiny, act like an adult and make the business work; or your forfeit the right to wail and gnash your teeth about the vicissitudes of publishing.

My post yesterday, Authors Can Be Stupid: Please Feed The Authors, can seem to have been rather unsympathetic to authors who are caught in the Amazon-Macmillan fight. They could very well be in a difficult position, and panic can be expected. I have no idea what percentage of sales go out through Amazon, but it’s very clear that Amazon is one of the most visible book retailers. Some authors haunt the website, watching a book’s ratings rise and fall with the avidity of a doctor watching a critical patient’s heart monitor.

Any author, however, who believes that his career is going to be ruined by something Amazon does, is just kidding himself. Authors have never been in control of their careers. Here are some realities to consider:

1) The single thing which determines how well your book sells has nothing to do with your prose. Though we are all told from birth “never judge a book by its cover,” this is exactly what book buyers do. And by book buyers I don’t mean just the retail customer, I mean the buyers for the large book chains. If they do not like your cover, they don’t buy your book. And authors, with very few exceptions, have zero input on what will go on the cover. (I have had covers presented to me before a book is finished, requiring me to add a scene to the book so the cover is relevant.)

2) A second huge factor in book sales is promotion. I don’t mean ads and book tours, since most authors in SF&F get neither in any useful sense, but I mean in placement and special discounts for purchasing. In bookstores you’ll see books on wall racks or aisle end-caps. Publishers buy placement in stores (same as shelf space is sold in grocery stores). And a special discount for a particular book can inspire bookstores to stock more of them. Ask yourself which is better: having two books stocked in a store and selling both of them, or having eight stocked in and selling four? Most folks point to the 100% sell-through, but since virtually all mass market books are sold on a returnable basis, selling half the books stocked in, but a larger number, is better. The books that don’t sell are sent back, so it’s just sales volume that counts.

3) Every writer knows that the quality of writing has little to do with sales. There is not a single person reading this who hasn’t wondered why a book of inferior writing quality sells more than a stunningly well-written book. Think about it. Is Dan Brown really the best writer of 2009? (I’m happy for his success, but I could name a dozen writers who are head and shoulders better than he is. Why aren’t they selling so well?)

4) Why did Dan Brown make it? Why are Stephanie Meyer’s books so popular? One huge factor in a writer’s success is luck. You, the writer, catch a break somehow. The right editor gets behind your book. President Reagan says he’s reading it. Teen girls fall in love with your hero. Someone who is in a position to promote your book (*cough* Oprah *cough*) decides she likes your book. You get tapped to write a series of novels in a very popular tie-in line. You can’t script these things, they just happen.

5) You tap a fad. There are more writers than I care to count who have made good money off the supernatural romance fad. Great for them. But many of them have come away with the impression that turning out a financially successful novel is just a matter of writing to a formula.

Fads die. Bubbles pop. I’ve been in the game long enough to watch the Techno-thriller bubble burst. I remember authors who were on top of the world, making big bucks, who suddenly couldn’t sell a word after the cyberpunk and horror bubbles burst. The expressions on their faces resembled those on the faces of disaster victims. Their worlds had collapsed, and they had collapsed because publishers had pumped out so much material to feed the fad, that they glutted the market with lower quality work, and readers revolted. They stopped buying.

6) Calamities can destroy a book. A hurricane rips apart a warehouse. Truckers go on strike. A flood, an earthquake destroys a stock of books. (Publishers will get insurance on all the destroyed books, but the authors won’t get a cent, and the chances of their books being reprinted are zero, since the books never had the sales numbers (due to a lack of distribution) to support reprinting.)

Sometimes the economy crashes.

And some times book chain stores get overextended, can’t afford their stock, and close stores. (Curiously enough, no one has complained that Borders closed so many B. Dalton outlets lately, and yet that action likewise cost authors lots of sales.)

Notice a key point here. The decision to judge books harshly for a lack of sales despite extenuating circumstances has nothing to do with retailers. If a publisher believes in a book, they can push it (see point 2 above). Authors who have had their first book caught in the Amazon-MacMillan fight will be hurt only if their publisher decides to do nothing to spur sales on those books. And while I would like to hope that Macmillan would step up to do that, I don’t think they will. They never promote small books anyway because they expect them to fail.

Two years ago the New York Times printed an article which contained a number of revelations. The one that has stuck with me the most is this: 5% of a publisher’s line makes 100% of its profit. In other words, 19 out of 20 books lose money or break even. So, sales failure is expected, not the anomaly. Books sinking without a trace, regardless of Amazon sales figures, are the norm.

And consider this: what other business expects to lose money on 95% of what they turn out?

Or, to turn it around, if Walmart only made a profit on 5% of its product line, how radically would they shift the mix of things they stock in their stores?

7) You have to remember, authors are adults who have entered into a business agreement with publishers. In theory they go into it with open eyes, but the fact is that most don’t. The joy and excitement of selling a book blinds most authors to the market realities. Most writers buy into the Hollywood image of writers living on easy street, having long walks in the park with their editors, enjoying fancy and elegant meals in New York and otherwise just loving life.

Even though they should know better, they willfully ignore reality. Once your book is out of your hands, its fate is decided by other people. They give you a crappy cover, you’re screwed. They decide that your book will be the second or third book in the list for that month, you’ll never make it into grocery stores, drugstores and airports. They don’t offer a special discount, you have two copies in the chains and maybe a week to get sales traction. Bookstores may want you to come and do a signing, but unless you have a budget for a tour, publishers will tell the store that “the author doesn’t want to go on tour.” (Without ever asking the author…)

The simple fact is that none of us, no writer, is entitled to a career. We are all a single sales disaster away from working with the phrase, “Would you like fries with that?” Whether it is the downturn in the economy, your editor leaving your publisher, your publisher cutting the division that publishes your books, a retailer (for whatever reason) deciding not to carry your book, no writer should ever have the expectation of a career.

We have never been in control of our own fate.

Until now.

Make no mistake about it: the fight over ebooks is a fight by publishers to stay relevant. I’ve already pointed out that they are defending a grossly inefficient business model. Authors now have direct access to their audience and by going direct (even charging less than the publishers) authors can make money faster than the publishers will allow. Authors have plenty of content which they can sell digitally, and can generate more, faster. When you can make more off a $2 short story than you can off an $8 paperback set in the same world, and not have to wait 6-9 months for a publisher to send you your cut, you can take control of your own economy.

Are digital sales to the point where they can supplant traditional publishing income? For some authors they are. Digital readers are proliferating, and the J. K. Rowling demographic is very comfortable with reading off a screen. They’re reading more. And if your work is not available digitally, you don’t exist to them.

It’s time for writers to stop lamenting how the inefficiencies of the old system treat them badly, and to embrace the future. If writers don’t take control of their future, they doom themselves to the obscurity that will swallow the current business model whole.

A number of authors who have books published by Macmillan have opined on their blogs that the authors whose books are no longer available on Amazon really need our support. We really need to go out to brick-and-mortar stores or to other websites and order their books. We need to do this because these authors are taking a major hit to their income since Amazon has removed Macmillan books from their website.

I certainly have sympathy for the authors whose work is caught in this catfight, but this call for readers to go out and buy their books right now is nonsense. The appeals make it appear that if we don’t buy now, these authors will starve. If you believe this, you also believe that publishers want to break Amazon’s non-existant monopoly on ebooks to protect choice for readers.

You’d be a lot better off trusting that the tooth fairy will leave you money when you put teeth under your pillow.

This is how the economics of the industry works. If you buy a book today, right this very second, from any retail outlet, the author will get, on average, 10% of that cover price.

In October.

Yep, eight months from now.

And that’s if their advance has been earned out. See, authors work on “advances against royalties.” The publisher fronts us money to work on the book, and then the royalties pay off that debt first, before we see anything. Books can take years to “earn out,” or repay that debt. Plus, since books are sold into stores on a returnable basis (consignment), the publishers always hold back a “reserve against returns.” So, even if your book has earned out, the publisher doesn’t have to pay you money if they believe some of your books will be returned.

In addition to that, we have to factor in pay periods. Royalties are accounted semi-annuallly. So, sales in the January through June period are lumped into one basket, and then the publishers have three months to check their figures, figure out their reserves, and cut a check. Checks should arrive on the first of October. The seldom do. Within my career there have been several periods where publishers—none of them affiliated with Macmillan—have taken until the end of October or into November to cut checks. One even seems to have a penchant for delaying the payment until I call to complain.

So, in reality, a book sold today—a book that came out this month—won’t generate income for the author, at best, until October. And, given the rate at which books earn out, that’s probably October of 2012.

If an author right now is facing so dire a set of economic circumstances that he’s pinning his hopes on money he might get in October, he’s got far bigger problems than Amazon not selling his books.

But I don’t want to be hard-hearted here. What could these authors do to get more income for their writing?

They could take all the stories for which they own the ebook rights, prep them for publication on the Kindle, and set them up for sale on their own websites. Sales of material from their own websites will pay them today. Kindle sales will pay them in sixty days. Between now and October, an author could easily and fairly effortlessly, pull in $1000 to $3000 via such digital sales. If they work at it, even more.

Sure, the tiff between Amazon and Macmillan is going to cost some people some money. But any author who ignores the larger import of this battle—the collapse of the current economic model for publishing—is an author who has already decided he no longer wants to write for money.

I’m not going to name any names, but as we move into the digital era, there is a spurious argument that gets brought up from time to time by authors who really ought to know better. It pretty much points out that a) most of us are not good dollars & cents kinds of folks and b) why publishers have been able to convince a lot of authors that the digital age will be an apocalypse that will destroy them and their standard of living.

The discussion centers around epub, the ebook format that all major readers, including the forthcoming iPad, use (the exception being the Kindle). Supporters of epub and publishing in it maintain that if they buy a book once, they should be allowed to transfer it onto any new devices they get. So, a story purchased now, will still be readable on a device manufactured twenty years from now, assuming epub survives that long.

A number of authors have stood up and announced that having an eternal format is a bad thing. Their rationale runs like this: if a reader buys a physical book he loves so much that he reads it until it falls apart, and buys another, they get paid again. With epub books, it’s buy once and never have to rebuy. Therefore, epub sales are going to cut into their income. And they get lots of other authors nodding in agreement.

So let’s break this little myth down.

1) While some authors do have books that does get read so many times that they fall apart, this is not a common phenomenon. We’d all love to think it is, and we cherish readers who tell us they had to buy another copy of a book because they read the previous to death, but the ratio of repurchase to one-shot readings is pretty darned low as nearly as I can tell.

2) A repurchased book, right now, nets the author 10% of the cover price. Let’s say that’s 80 cents on an $8.00 paperback.

3) Under the current agency model, that same $8 epub book will net the author $5.60. (And even with the publishers taking half the electronic money if they’re selling the book, It’s still $2.80 due the author.)

4) Now, since I wasn’t a math major, someone might want to check my ciphering here, but it looks like the purchase of any epub would cover 3.5 to 7 purchases of a physical book. So epub and digital publication, even though it’s only going to be a one-shot, will make the author substantially more money unless this author is someone who, with everything he turns out, has people buying four or more copies of each book. (Doesn’t happen, unless you have a PAC that purchases your books in bulk for contributors.)

Some folks, who want to get absurd, could point out that if we forced repurchase of ebooks (through proprietary software choices and device-linked DRM) we could make that huge cut each time an ebook is bought. But this is assuming your book is worth repurchasing. Since most books are read-once and shelved, loaned, discarded or resold, this just isn’t a realistic argument by any stretch of the imagination.

Authors can, when hoping they have a winning lottery ticket, miss the fact that there’s plenty of money right at their feet. They’d do better to scoop it up steadily, than waiting for that jackpot that just ain’t going to come their way.

The latest issue of The Secrets newsletter is up and available for subscribers. In this issue I go through all the parameters of how to create a likable character—someone the readers warm to fairly quickly and consistently. It’s one of the toughest things to do in fiction, and writers always run the risk of becoming mawkishly sweet or just silly when trying to do it.

This issue is available as part of the current series subscription. Just hit the link here or the graphic above to subscribe.

Over the weekend we all got to watch the first of several fights over the pricing of ebooks. It occurred between Amazon, who is dedicated to keeping ebook prices as low as possible (having previously noted that delivering an ebook costs about 15 cents) and wants ebook bestsellers at $9.99 or less; and Macmillan. Macmillan, and other publishers, see this price as artificially low and undercutting the price of hardbacks, thereby eating into their sales. They maintain this happens with no solid demographic data—and the data for the same phenomena in the gaming industry indicates cannibalization does not occur. Macmillan, using perceived leverage resulting from Apple’s willingness to let publishers set whatever price they want in the forthcoming iBookstore, dug in its heels with Amazon over this issue.

Amazon pulled all Macmillan content from both the Kindle store and its regular store. You’ll recall this was the same thing which Costco did in refusing to sell Coke products until they reached a pricing agreement with Coke. This is the same thing Walmart and other retailers do all the time when a supplier wants too much for a product. Retailers have a right to decide if a transaction will be profitable, and Amazon decided it wasn’t going to be.

In a letter to authors and agents, Macmillan’s John Sargent said:

Amazon has been a valuable customer for a long time, and it is my great hope that they will continue to be in the very near future. They have been a great innovator in our industry, and I suspect they will continue to be for decades to come.

It is those decades that concern me now, as I am sure they concern you. In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated.

(Emphasis mine.)

What Sargent is saying here is that the digital world, and digital sales, are not suited to paper publishing’s current business model. Mind you, this is a model where the cost of actually printing a book is 10% of the cover price. Another 10% is the royalty paid to the author (that’s actually 6-15% in most cases, averaging out around 10%). This leaves an average of 80% of the cover price to cover discounts, warehousing, transportation, editorial, publicity and overhead. 50% is the margin many books are sold at, so 30% of the cover price is nut that has to cover overhead, operating costs and profits for the publishers.

Mr. Sargent, and most of the other large publishers, are missing a simple point: their current business model does not work (hasn’t for years, as industry data proves). They’re fighting to maintain profits on a product—hardback books—which are not truly under assault by digital publishing. If anything, it’s the economy, stupid! Who wants to spend $25 on a single book, when they can spend that same money at a used bookstore and get ten books, or go to a library and get all they want to read for free?

In any other business (writing, for example), when profit margins get squeezed, business people have to undertake drastic measures to make economic corrections. This means lowering costs. How could big publishers do that? Use the digital age to their advantage. Move out of New York. Sell off their high-priced warehouse space and offices. Use the cash to buy a town in Kentucky near rail and Fedex hubs. They could pay their staff to move and keep their salaries as low as they do, and they would be kings and queens in such a place. Buy their own server farm, set up their own POD (print on demand) kiosks in all the malls and coffee-shops in America. Allow folks to order a copy of a book online, swing by and pick it up as they get their latest latte.

And remember the bottom-line: If you’re making more off a digital download than you do off the physical sale of a book, you are ahead of the game. Manipulating the publication time of digital books (delaying them, a practice known as windowing) only encourages piracy, and delays your profiting from a non-returnable, non-loanable, non-piratable copy of a book that has minimal production and delivery costs.

Amazon as already indicated that they will accommodate Macmillan because Macmillan has a monopoly on its content. And prices will be set by the big publishers. I urge them, however, to take a good look at how prices fell sharply for apps in Apple’s Appstore as people fought for market-share. There is and will continue to be constant pressure to push prices down.

Since I already sell digitally-delivered stories and novels for between $2 and$5, or the rough cost of a cup of coffee, I don’t think I will face quite the same pressures. And since I can get editorial help cheaply, can do my own publicity, and can produce and deliver the books myself, I do fall into that camp of folks wondering what the heck the publishers are doing out there and why, exactly, we need them.

And wondering how long they will last in the decades to come.

Tomorrow, Saturday, January 30th, at 6 Eastern/3 Pacific, I’ll be reading the first three chapters from my new book At The Queen’s Command. This is your chance to get a preview of this new novel.

The reading will be conducted via Second Life. Second Life is a graphics based chat software suite that includes VOIP. I use it for my weekly chats and it works really well. The software and registration is free, so you can download them and click on this link to take you to the site of the reading.

If you show up early we can make sure you’re set up to hear sound.

I’ve been doing the edits on this novel, and I’m really excited about it. I’m also looking forward to sharing the beginning with all of you.