Aaron Allston and I will be teaching an expanded track of Inner Circle Writer Workshop Classes at DragonCon over the Labor Day weekend. Last year was our first year. Our program was so successful, they’ve had to move us to a larger venue. (We’ll have enough chairs this year—without raiding other rooms.) You can either purchase the entire 14 hours worth of classes at one bargain price, or pay ala carte. The link above takes you to the convention page which lists all of the classes.

I will also have all of my ebooks on writing for sale on disk, including some special deals. The coolest of these is the big deal this year: all of the how-to-write books (21 Days to a Novel, Plotting, Characterization, The Rules of Writing, Writing Fiction (a short course), Serial Fiction, World Building and the brand new Digital Career Guide) which is a $170 value, for $140. Plus, I have packaged all of these ebooks on a 4 gig flash drive, which is disguised as a pen. It not only writes, but also has a laser pointer. That’s a $25 device (you can actually pay more for the 4 gig flash drive itself) tossed in for free.

Okay, I know it’s totally a geek-gadget, but I saw them when looking for flash drives and they look great.Given that 4 gigs is more memory than my first five computers combined could muster, I just love these pens. Did I mention they have a laser pointer, too? When do you not need a laser pointer?

These pens were popular enough at Gencon that I’ve restocked. You have a choice of two colors this time: Silver or Black. (Limited quantities of each, I apologize if your color choice is gone by the time you buy.)

I also have one seminar on the Skeptic Track: Fiction Writing and Skepticism at 7pm on Friday. I usually have a reading, but I don’t know when that is yet. Ditto a signing. (I’ll have a few copies of I, Jedi to sell, and a few other things, at the signing.) I may have some other panels, but I won’t know until I get there. DragonCon prints my schedule on the back of my tag and it usually goes on forever. (Other guests look at what they have me doing and the blood drains from their faces.)

I’m really looking forward to this convention. DragonCon is always great fun. Lots of friends to see and things to enjoy. I can’t wait.

I knew it would happen. It had to happen. There is money to be made and whenever there is money to be made, people will rise up to make it. I don’t, in this instance, refer to hardworking authors, but the parasites who are looking to make a fast buck by making low-rent investments in properties they believe they’ll be able to exploit.

To what am I referring?

Digital rights to authors’ backlists. There are a variety of individuals—traditional publishers included—who are buying up the rights to backlists for little or no advances against royalties, with no firm schedule for publication, with no distribution deals in place, and with little or no expertise in how to actually create an ebook. And yet, writers who have complained for eons about how badly they are used and abused by publishers, are turning around and selling off these assets for a pittance.

This is what the landscape looks like right now.

Traditional publishers are offering 25% of the NET on electronic sales, zero for advances, with no pub dates attached. If any publisher made such an offer for a paper publication, they’d be laughed out of the marketplace, pure and simple. While the royalty might sound great, the lack of an advance, and the lack of a publishing window means the publisher has zero investment in getting the product out in a timely manner. They’re snagging the rights so they’ll have something to sell at some point.

By way of example, three of my novels are now available for the iPhone: A Secret Atlas, When Dragons Rage and The Grand Crusade. Random House sublicensed the electronic rights to those books to ScrollMotion, Inc., the creators of the Iceberg reading apps. The App itself has several screen shots to help sell it, the first being a picture of the cover of my book. The next three screen shots show the interface, and provide glimpses of text which I did not write—and would never have written on my worst day on the job. I hope no one mistakes it for text from the book.

The pre-2009 contracts with publishers grant authors 50% of the NET, which is a better deal, but this is still the NET. Let’s look at A Secret Atlas for a breakdown here, shall we? The App costs $6.99. This means that ScrollMotion, Inc. is paid $4.89 per copy sold (70% of retail price). I don’t know exactly what ScrollMotion, Inc. is making on the deal, but let’s assume 10%. They send $4.40 on to Random House. And then Random House sends half of that, or $2.20, on to me. (Under the new 25% royalty deals, I’d only be getting $1.10.)

In three to nine months after the sale.

Conversely, selling the same book for $5 myself off my website, I’d make $4.55 per copy. Immediately. Selling it myself via the Kindle, I’d make $3.50 in sixty days. Selling through the iBookstore directly I’d make the same as the Kindle deal, and selling through third parties, I’d pull at least $2.50. So, by controlling the rights myself, I’m going to make out better than the best deal anyone else is offering me.

Authors are now being faced with choices that are not easy, but they need to ask one question whenever offered a backlist deal: “If it is that valuable to them, how valuable is it to me?” By way of example, last month alone, ebook sales for Talion: Revenant via the Kindle, earned me over $400. That may not seem like much, but if someone is offering a token amount of money, like $1K, to snap up the rights to books, and yet one can turn around and make almost half that in a single month, you have to be crazy not to think about doing this stuff yourself.

If your reply to the above is, “But I don’t know enough about computers to be able to make an ebook,” stop and think about it this way. Making ebooks isn’t rocket science. It’s easier than dealing with copyedits on a novel, and you’ve done that. And this is a job that will pay you back. Instead of being happy someone is giving you a fish, this is your chance to learn to fish; and who’s going to be more motivated than you to let your fans know your books are available again?

If, on the other hand, your reply is, “I don’t want to learn how to make ebooks,” well, fine. Just don’t turn around and complain about how your being handled in the ebook realm.

Realistically, here are the things to demand in any ebook contract:

1) A cash advance equal to an estimate of the first two years royalties. (If this amount cannot be calculated because “this is a new market,” then don’t go for the deal. This person is speculating. Let them do that with someone else’s work.)

2) A 6 month window for publication of each book under contract. (Estimated time to prepare a book as an ebook is 20 hours from scan to publication. If they do not have the staff or equipment for this, don’t go for the deal. It’s a hobby for them, not a business.)

3) A sunset clause on the contract, preferably two years, after which the contract will be renegotiated at the author’s option. (The technology is changing too fast for you to be locked into a long-term contract without hope of renegotiation.) It is a seller’s market and will continue to be so as new formats and platforms develop, so royalties to authors will increase, not decrease. Do not get locked into a longterm contract for peanuts.

4) Clearly define which formats are to be used. At this time there are three: Epub, Kindle/Mobi and PDF which should be provided. All other formats, including smart phone apps and gaming console applications, should be treated differently and negotiated for in good faith. (Think of formats as foreign languages and this all becomes very clear.)

5) Copies of all files, including source files, are to be delivered to the author for his use beyond the life of the contract. Copies of the books should be DRM free, and the author has the option to make “review” copies of said books available for the purpose of publicity.

6) Electronic rights to the books are limited to one language only (i. e. English). Translations and electronic publication of translations are to be negotiated separately.

7) Where there are multiple books in a series, the negotiations should include royalties on a per volume basis and on an omnibus basis, with the publication of an omnibus edition being mandated.

8 ) Royalties should be calculated and paid every 60 days (within the Amazon and Apple pay windows).

9) The files will be made available to the author to sell from his own webstore, with him paying the publisher the equivalent rate as Amazon, with accounting every 60 days. (Because electronic sales are inherently immune to audit, only by selling work directly can an author have any idea of a) true sales figures and b) failure-to-deliver rates which might address why bandwidth-per-file figures do not match sales perfectly.)

I’m sure I’ve missed out on a couple of provisions that should be included. I know many of these will be considered dealbreakers by publishers. So be it. If they want to sell ebooks, they have to have ebooks. I know they can get them from someone else, but if they want mine, they’ll find I’m not giving them away.

And, quite frankly, no other author with enough neurons to form a synapse, should either.

I’ll be at Gencon in Indianapolis next week, teaching my writing classes, doing a reading, and some autographing sessions, just hanging out and having a bunch of fun with friends and colleagues. My schedule looks like this:

Thursday 8/5:

10-12 Noon Signing (At the Catalyst Game Labs booth)
4 PM The Rules of Writing
5 PM Writing Success in the Post-Paper Era

Friday 8/6:

10 AM Signing (Author’s Alley)
4 PM 21 Days to a Novel
5 PM Writing a Successful Series (*New* seminar this year.)
6 PM: Reading (Not sure yet what I will read. Could be the story Covenant, from the anthology Stalking the Wild Hare, which will be on sale at the convention. It’s a collection of stories by the authors involved in the Writers’ Symposium, which Jean Rabe wrangles together. It’s a limited edition, and Gencon is going to be the place where you can get it signed by all the authors.)

Saturday 8/7:

2:15-2:45 PM Signing (At the Catalyst Game Labs booth, prior to their big 3-5 PM BattleTech Blowout signing.)
3 PM Characterization
4 PM Plotting
5 PM 21 Ways to Kill Your Novel(*New* seminar this year.)

Sunday 8/8:

10 AM Signing (Author’s Alley)

I know I have at least one more signing at the Catalyst Game Labs booth (I’m trying to confirm the time). I’ll edit this post as the schedule firms up. [Note: signing added to Thursday 10-12 noon and another, Saturday 2:15-2:45 PM prior to the 3-5 PM mass BattleTech signing.]

I believe all of the seminars will be taking place at the Marriott, which is where they usually are. You’ll want to check the program book to make sure. The seminars all cost $8, payable in tickets, generics, and cash.

I will also have all of my ebooks on writing for sale on disk, including some special deals. The coolest of these is the big deal this year: all of the how-to-write books (21 Days to a Novel, Plotting, Characterization, The Rules of Writing, Writing Fiction (a short course), Serial Fiction, World Building and the brand new Digital Career Guide) which is a $170 value, for $140. Plus, I have packaged all of these ebooks on a 4 gig flash drive, which is disguised as a pen. It not only writes, but also has a laser pointer. That’s a $25 device (you can actually pay more for the 4 gig flash drive itself) tossed in for free.

Okay, I know it’s totally a geek-gadget, but I saw them when looking for flash drives and they look great. (I might have a few left at Dragoncon.) Given that 4 gigs is more memory than my first five computers combined could muster, I just love these pens. Did I mention they have a laser pointer, too? When do you not need a laser pointer?

I’m really looking forward to Gencon and the classes. I always have a lot of fun with them. As I saw when teaching in Austin this week with Aaron Allston, it’s great to watch folks’ eyes brighten as a problem with their writing evaporates. I really enjoy training writers who will turn out the sorts of stories that will challenge and entertain readers. Means I’ll have plenty of good stuff to read when they put me out of business.

I look forward to seeing you there.

Monday and Tuesday (July 26-27) Aaron Allston and I will be at Dragon’s Lair Comics and Fantasy in Austin, TX to hold two days of writing seminars. Dragon’s Lair has posted the full schedule of events for your edification. We’re putting on ten hours of seminars, including my 21 Days to a Novel and Aaron’s brilliant Plot Analysis seminars. A cursory glance at the schedule makes very apparent the fact that these seminars will cover everything you want to know about writing. You’ll develop and strengthen your skills set, as well as learn about the business.

Aaron and I have taught seminars together in the past, most notably at DragonCon and Origins. We’ll do so again at DragonCon this year, expanding the above program to include four more hours of new content not available in last year’s seminar sessions. When I sit in on Aaron’s seminars, I am very impressed by not only the depth and wisdom of his analysis, but the very effective methods he’s developed for teaching others.

This has always been my problem with writing seminars in the past: Great writers aren’t always great teachers. It doesn’t matter how good a writer is if he can’t communicate to others what he actually does. There are a number of reasons for this lack. First off, it could be that the writer isn’t analytical enough about his own process to actually know what it is he does. You’d be surprised how many authors fly on auto-pilot and never identify the tricks of the trade that make them so effective. Aaron and I have done that, and are willing to provide our students with that information.

Second, some writers know what they do, but don’t want to share for fear of training up the competition. Speaking for myself on that point, I’m not worried about competition. First off, if any student gets better than I am, it’s because I’ve gotten lazy. In that case, I deserve to be shoved out of the market. Second off, I’m not training competition for me, I’m training the writers who will end the careers of lazy writers who are taking up my shelf-space in stores. Third, and perhaps most important in the shifting world of publishing today, there is going to be less and less competition for shelf-space, since virtual shelves accommodate everyone. So, in offering these seminars, Aaron and I get to train up a generation of writers who will turn out the sorts of stories that we like to read.

Third, teaching requires an entirely different skills-set than writing. In college I was trained to be a teacher. I’ve been teaching writing seminars since the early 1990s at Gencon. I’ve expanded to other conventions and other venues, including university conferences. Part of being a teacher is understanding that different students learn in different ways. Great teachers shape their lessons and hone their approaches to provide multiple vectors on making a point clear. In short, they figure out the ways to get the message across to you, so that you can make the most of it.

Some folks will think that $10 an hour for writing seminars is kind of pricy, especially in this economic climate. If you’re committed to becoming the best writer you can be, that’s a tiny investment in your career. The first story you sell to a professional market after these seminars would more than pay for the entire course. When else are you going have a chance to learn the craft of writing from a pair of New York Times Bestselling authors at such sensible prices? (And I would note that lots of people have paid a lot more for some of these very seminars in different venues.)

I’m looking forward to meeting folks at Dragon’s Lair. There’s an incomparable joy in seeing eyes brighten and smiles grow as someone hears a solution to a problem that’s been vexing them for a long time. I really love helping others achieve the dream that I’ve been lucky enough to have come true. Hopefully you’ll be one of them.

That elephant is this: publishers have yet to control their own overhead. If they were to reduce their overhead, by moving out of Manhattan and liquidating that very valuable real estate, their sunk costs would plummet and their profit margins would rise. This is how every other business does things. Until book publishers embrace that reality, they will remain mired in an old and failing business model.

Ebook Conversion costs.: The NYT report publishers as pegging some set costs for an ebook at:

Out of that gross revenue, the publisher pays about 50 cents to convert the text to a digital file, typeset it in digital form and copy-edit it. Marketing is about 78 cents.

I’ve beaten this drum before. Writers deliver their manuscripts in electronic form. I’ll grant that I’m a technophile, but starting from an electronic form—and be aware that most publishers are using Adobe InDesign which has an automatic conversion feature to epub—it would take me eight hours or less to put a book in shape for digital publication. Even paying myself $50 an hour, we’re talking $400. Copyediting could be significantly more—but if the book is that badly off, why did you acquire it in the first place? Regardless, both amounts are fixed costs, not scalable.

What about if they have to digitize the book, all that scanning and everything? Are they going to? Bantam has the last two books of my DragonCrown War series available as ebooks, but not the first two. If they were going to be digitizing backlist, you’d think they’d start with books in that situation. And what about doing an electronic omnibus edition? They don’t them, and why not? Because they’d never do it for print, so how can they do it for digital? It makes no sense to them.

The promotion budget of 78 cents per book is a real puzzler. Again, promotion is a sunk cost, not scalable. Each book has a promotions budget ranging from $0 to millions. Once it’s paid out, no more promo cost. But when was the last time anyone saw the typical first-novel with a promotions budget? You only get money spent promoting when the publisher has gone nuts in a bidding war, jacking the advance for a book so high that there is no realistic expectation of ever earning it back. This 78 cents per book figure is pure fantasy.

Consider the Bookstores: The NYT suggests that part of the reason publishers want to jack up the prices of ebooks is to save the poor bookstores:

Another reason publishers want to avoid lower e-book prices is that print booksellers like Barnes & Noble, Borders and independents across the country would be unable to compete. As more consumers buy electronic readers and become comfortable with reading digitally, if the e-books are priced much lower than the print editions, no one but the aficionados and collectors will want to buy paper books.

“If you want bookstores to stay alive, then you want to slow down this movement to e-books,” said Mike Shatzkin, chief executive of the Idea Logical Company, a consultant to publishers. “The simplest way to slow down e-books is not to make them too cheap.”

Read between the lines: the expansion of bookstores in the 1980s and 1990s to these big-box megastores to crush independent bookstores everywhere has left the major chains overextended and bloated beyond all reasonable expectation of profitability. Their business model is failing, too. They need to expand their online presence (to fight Amazon), get into the digital marketplace (with the Nook and other devices), close stores (like Waldenbooks outlets) and, in the near future, shrink their megastores to things that more closely resemble the independents they crushed, which will allow them to hand-sell books and make use of POD publishing in a back room.

Book publishers want to prop the bookstores up because that’s where they get most of their revenue. But those stores are in trouble, and the returnable/commissions model has been unworkable for decades. The fact is that the returns policy means that for every book sold in the USA, two are printed. Not only is it wasteful of resources, but it encourages sloppy business practices. If a store can over-purchase a title, then return everything that did not sell, where do they have to think? Why do they need a promotions budget? They’re just a warehouse with good lighting and carpet, not a true retail business driven to make a profit—and this combination of gluttony and sloth has brought bookstore chains to the brink of collapse.

And this surprises you why? The NYT offers the following as evidence that folks in publishing are completely detached from the real world:

Certainly, publishers argue that it would be difficult to sustain a vibrant business on much lower prices. Margins would be squeezed, and it would become more difficult to nurture new authors. “Most of the time these people are probably not going to make huge sums of money the first time they publish,” said Carolyn Reidy, chief executive of Simon & Schuster.

In fact, the industry is based on the understanding that as much as 70 percent of the books published will make little or no money at all for the publisher once costs are paid.

Two things are wrong with this: Authors make a percentage of the cover price. This means that the more books sell, the more they make. The author has done his job at the point where the publisher decides to go to work. The profitability of any book is not in the hands of the author, it is in the hands of the publisher. Now, if 70% of all books make “little or no money” for publishers, the fault, dear Brutus, clearly falls with the publishers. Either they’re not picking books that can sell, they’re not pitching them at the right market demographic, they have incurred unreasonable costs in producing the book or are engaged in other silly business practices that guarantee that financial failure is the norm, and success is an accident.

All of the above is the most likely scenario.

The New York Times article has other gems in there, like noting that publishers have to account for unearned advances, so they have to write those off. Really? Get more realistic in what you offer; and promote books so you maximize the profits out of the ones you acquire cheaply instead of doubling-down on loser bets. In other words, act like a business, not some badly run, Triple-A baseball franchise.

Here is the pity of all of this: traditional publishers are sitting on roughly fifteen years of content for which they own the ebook rights. They have asserted control well beyond that, but the courts and contracts dispute their argument. If, instead of worrying about the cost of acquisition going forward, they were to cull their lists and do sensible things, like pull series back into print, like creating omnibus editions of books (taking a page from media outlets that are bringing out DVDs of every old TV series ever, and doing full season compilations as well as compilations of film series); they would only incur the cost of digitization, since all those other costs were covered years or decades ago. It used to be, in science fiction anyway, that backlist sales kept many publishing houses afloat. They can revive that older revenue stream and it will buy them time to transition to the new age of publishing.

My bet is they won’t, and for two reasons. First, backlist has been dead since 1988, so most of them have forgotten it exists. Second, and far more dangerous, is that authors themselves own the ebook rights to much of that backlist. Once authors realize that we can do it ourselves and make 70% of the retail price of any offering or more, our incentive to accept 25% of net (the last deal I was offered)—which translates to 17.5% of retail price—goes away.

And, with it, goes traditional publishing.

I just released the most recent issue of my newsletter, The Secrets. This issue is titled Serendipity. In it I go through the thought processes that shaped my recent story Chance Corrigan and The Tick-tock King of the Nile. (It will be coming out some time this year from DAW—I’ll post on its availability when I get the information.) This issue pretty much works as a “making of” reel for the story, but includes some commentary about how this sort of story-creation process works into the world of digital publishing and career building.

That issue is part of the current subscription. Click on the image or link above and you’ll be taken to my store. The Secrets costs $25 for 25 issues. The content is exactly the sort of material which will speed your development as a writer.

In the current series we have the following issues:

Issue 126: Lessons from Rowling—A look at what can be learned about storytelling from the Harry Potter saga.

Issue 127: Angles—A breakdown of how I constructed the story By Our Actions, which goes on sale next month in the anthology Timeshares.

Issue 128: First Novel Problems—I go through a recent fantasy novel, breaking out a number of problems and suggesting very simple solutions so you don’t get caught doing the same things.

Issue 129: Writing for Women—An analysis of a book in the Twilight series provides some insight into how to mix emotions into genres that usually aren’t that much concerned with them.

Issue 130: You Are Your Brand—A basic look at the need for establishing yourself and the tools with which you can do it in the digital age.

Issue 131: Enduring Appeal—An examination of those common elements that make a story immortal, and how to use them to your benefit.

Issue 132: Triad Plotting—A new approach to story plotting which puts emotional, intellectual and action-oriented content in opposition to each other, creating dynamic stories with broad appeal.

Issue 133: Likable Folks—This issue delves into a myriad of techniques and elements which will create characters that readers will like and with whom they will identify. Because the art of characterization is key to having a career, this is an especially valuable issue.

Issue 134: Fiction in Bytes—A timely look at ebooks, the growth of the market, and the pitfalls facing the unwary author.

Issue 135: Cloud Creation—A further examination of how writing will change in the digital age, and how authors can use this new freedom to create properties that will attract readers.

Issue 136: Serendipity—This is the issue mentioned above, looking at the creation of the story and what it portends for the future.

My goal with The Secrets is to equip authors with the sort of useful information they need to be able to cope with the challenges of publishing today, and profit in the time to come. Especially now, in a time of change, you’ll hear a lot of authors lament the fact that they’re not making money. It’s not because they can’t write; it’s because the collapse of the old model requires new skills and new deployment of old skills. The Secrets provides solid information by an author who is making money in today’s environment. The Secrets will make you a better writer and help you build your career. And if that’s not the best bargain you’re going to get for $25, you sure don’t need advice from me on how to make money in a time of turmoil.

One of the things that keeps being said about self-published ebooks is that they lack professional book design. This is short for “they look like crap.” As you are aware, I have two ebook readers, and I’ve purchased commercially available ebooks from traditional publishers. Those designers are no great shakes, for reasons I can’t fathom. What most of you don’t know is that back in the 1980s, while working for Flying Buffalo, Liz Danforth and Pat Mueller dragged the entire game industry into the realm of professional layout and design through the work they did on all of our products. I was fortunate enough to learn from them the arts of typesetting, layout and design.

So, here are the quick and easy rules for making sure your ebooks (especially epub versions) don’t look like amateurish crap.

1) Get a book on coding HTML, or cultivate a friendship with someone who knows this stuff. There are a couple coding tricks you’ll need to know. Most ebooks work off HTML, so if you can do it on a web page, you can do it in an ebook.

2) Choose a font. For the sake of simplicity, just use Times New Roman. (If you are picky about fonts, experiment, but be aware that not all devices support all fonts. Times New Roman is supported.) Font size is irrelevant since the joy of ebook readers is that the owner can change font size.

3) Prepare the text by reducing it to single-space. And justify the text. Nothing screams amateur like ragged-right text.

4) Do not put empty lines between paragraphs (the way most webpages like this format themselves). That looks like crap, doesn’t look like any print book anywhere, leaves tons of blank space and makes for weird page spacing. Instead you will indent your paragraphs, just like in a physical book. The code is easy to write and I use the measure of 1.5em. (I know, looks like code. It is, and you or your HTML-savant friend will put it right where it needs to go.)

5) Instead of putting in a blank space to suggest the passage of time, find a small illo (even just a straight line) to drop into that space. I have disks upon disks of copyright-free illustrations. I pick one appropriate to the story and slip it in as my break spacer. If you use the same illo throughout the book, it doesn’t add much to the file size. I prefer .pngs, but .jpgs work just fine.

6) Your cover should not be representative, it should be iconic. The cover for The Silver Knife was done by Kat Klaybourne and is just such an iconic image. It reduces great to an icon for the iPod/iPad interface and is attractive enough to catch buyers’ eyes. It is the bestselling of the titles I have on through the appstore, in fact, because of this cover. (Doesn’t hurt that the story rocks, too… Mycroft Holmes, Jack the Ripper and a lot more. A *lot* more.)

Put that all together, add the cover to the front of the file, convert it to the Kindle format, or any other format, and you’re set. A professional looking book that will look as good as or better than anything coming out of traditional publishers.

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 . 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.

For the most part, At The Queen’s Command is going along pretty easily. When I edit, I break things down into two round. First I read over and make hand edits on the physical copy of the manuscript. I used a magenta pen this time: colors differ, and a magenta pen came to hand easily. There wasn’t too much scribbling, and some pages are untouched. Others, however, have these vast swaths bracketed off, with the note “mod” or “fix” or “smooth” in the margin.

The internal editor is really good at picking out words to change and the like, so that’s what I do when I make changes on the page. But when large blocks of text need to be fixed, I wait until the writer half of the brain is engaged to actually do the writing. This way the editor doesn’t get frustrated and neither does the writer.

In this book there are two main reasons why chunks of text need to be rewritten. The first involves dialogue. One of my main characters didn’t come into his voice until later on in the book. In doing my edits it was fascinating to watch him slowly get there, but the early places were way off. He was too wordy—as if he’d had some sort of an education. He really hasn’t—at least not an education where grammar played a big part.

Getting his voice right involves a lot of going line by line and rewriting things the way I know, now, he would say them. I am shortening a lot of sentences, breaking big words down into shorter ones. There are also a few conventions and catchphrases he uses, so I slip those in. Ideally a reader could look at a run of dialogue without any attribution, and be able to tell who the speaker is.

The other big set of changes is the emotional through-line for another character. I started out wanting to approach his relationship with his wife one way, and wrote most of the book with that in mind. I decided, late on, that it’s much better if I reversed it. It makes the pain he feels in the end much sharper, and makes him more believable. This necessitates, however, the rewriting of some emotional stuff, including a couple scenes that go on for several pages.

I know that sounds like a lot, but you’d be surprised how easy it is. In a parallel example, you want to take a daytime scene and want to make it nighttime. You have the following sentence: “The sunlight pierced the leafy canopy and dappled the tombstones.” Clearly daylight, probably noon, lots of green, white stones, probably some moss and fungus. We all have the visual.

But if you change it to: “The moonlight pierced the leafy canopy and bathed the tombstones in a ghostly glow,” suddenly you have an entirely different picture. It’s midnight, there’s an owl in those trees, shadows everywhere, the tombstones are all knocked around and cracked, and it’s cold enough to shiver. And yet all you’ve done is swapped a couple words and added one or two.

These are my days now, through the end of the month. I should have a special announcement about the book tomorrow. We’ll see. So far I am very happy with the book and how it has come together. Editing is a lot of work, but when the book is as fun as this one, it’s not a chore.