Friday, May 16, 2014

Career Moves: Show Me The Money

When I sold my first book, I didn't think about what I could earn from it. A publisher wanted to BUY MY BOOK! I was officially a WRITER! 

That was all I cared about.  

A few books down the line, when I did start thinking about money, I discovered authors didn't talk about their earnings. After a while, they could talk to other author friends (if they were willing to divulge), but it most certainly wasn't done online. Discuss the dirty subject of money publicly?

Perish the thought!

Even the subject of the percentages an author could expect to earn from the cover price wasn't made apparent until you signed a contract.  There was no way to check what another publisher might offer. I didn't have an agent who could help me out with that, either. And when it came to getting information out of a royalty statement?

Suffice to say, a decade later, I still have no idea what half of it means. 

Making an educated decision on the best way to maximize earning potential was virtually impossible. So I simply kept writing and crossed my fingers when one contract ended, I'd be asked to sign another.

That was then (apart from the whole royalty statement thing). Now there is so much data available on the subject, you could spend months studying it.

I did. Some of it gave me a headache. But now I'm better educated, I can use the information to help me make a decision about my future.


Many authors struggle to make minimum wage.


Without another source of income, can I still afford to eat?

That's what we all need to know, particularly if we want to write full time. Unfortunately, it can take years to get an answer when you're with what is now known as a traditional publisher.

Royalties used to be distributed twice yearly. Mine now arrive quarterly. They're paid three to six months in arrears. And a portion of your earnings can be held for up to eighteen months against returns as books are sold to booksellers on a sale-or-return basis. In other words, the money won't arrive all at once.

You also have to keep in mind any advance you were paid, which the book has to earn before more money appears.

What does that mean?

It means the only way to make a regular, predictable income is to write three to four books a year for the advances. And even then, starting out, you still won't make minimum wage.

Why? Because advances are based on sales. Publishers predict what they think your book will make and until such time as you have a proven sales record which is greater than their initial estimate, will place your advance at the low end of the scale.

They can also limit the print run with your first couple of books or if it's a new line. And since a mass market paperback from a company like Harlequin is only on the shelf in a particular country for a month before it's replaced by new books,  it's highly unlikely they'll do a second run, regardless of the fact you may have sold out.

Even with the advent of self-publishing, or Indie books as they are now known, unless you have several books (preferably in a linked series) you can publish simultaneously, you have to look at things in terms of the long game. What's more, there isn't any 'instant cash' in the form of an advance to tide you over until the book starts to make money.

Course, the big attraction for a lot of authors is the percentage earned on cover price (we'll get to that in a moment). Another plus, the fact you can check your sales daily and, after a short wait when  you get started, are paid monthly.

An author being paid monthly isn't something I can see traditional publishers doing anytime soon, but some are making an effort to provide more up to date sales figures. Harlequin makes this data available on HAN, their author network. And the percentage earned on the cover price of EBooks has increased, too. But not to the same level as Indie books or some digital first publishers.

It's up to us to weigh the value of that lower percentage against the expense of things like editing, cover art and marketing, which a company like Harlequin provides.

Either way, starting out, the majority of authors have another job. 

I worked anywhere between forty and sixty salaried hours a week when I started. I wrote at night and on weekends and had sold ten books before I made the decision to quit the day job. When I did, I knew I still had to make up the deficit to survive. So I wrote for two lines and upped my output. 

Eventually I worked myself into the ground and hit a creative wall, but that's a subject we'll cover in the next blog.


Authors are small businesses


Some people simply want to put their work 'out there' for others to read and aren't overly concerned about money. The rest of us have to consider things from a business perspective, particularly if we rely on the income from our work to put food on the table.

We produce a product. We sell it. We want to make a profit.

Profit is defined as the surplus remaining after total costs are deducted from total revenue.

The main cost to a writer is time. Research time, development time, production time and marketing time. A professionally produced book doesn't appear in the marketplace without a lot of work. But how do we place a value on that time?

Few of us break down our earnings into an hourly rate like the rest of the world. With some effort we could probably work it out, but most of us are more interested in the answers to three key questions;


1/  What is the quickest way for my book to start generating revenue? 

It follows that the quicker a book can hit the marketplace, the faster it can start earning money.

With a traditional publisher, it can take anything from eight to eighteen months for a print book to hit the marketplace. Internationally, it can several more years for it to make its way from country to country. (Some of my early books are still hitting new markets nine years after they were first released.)

Few traditional publishers release books simultaneously in English reading countries*. None release them simultaneously worldwide.

Ebooks can take equally as long to get to the marketplace if they're tied to a traditional publisher's print run. The time frame is less with a digital publisher, though typically still counted in months. And for Indie books, it can be a matter of days.

EBooks released through distributors like Amazon can also be made available simultaneously (or shortly after the first release date) in numerous overseas markets.

Answer: Self-Publishing is clearly the quickest way for a book to start generating revenue.

*Simultaneous release of a book in English reading countries cannot be undervalued, particularly when the lack of it can add to the piracy problem.

While some of it can be written off as 'free promotion', piracy = loss of revenue.

Piracy is something the Music Industry still struggles to control. But in this instance, we can look to the Film & T.V. Industry which is seeking an, albeit partial, solution to the problem by narrowing the gap between release dates. In the case of T.V., they're doing this by utilizing Netflix and Amazon Instant deals to release episodes of a show the day after it airs in the States.


2/  Where will I make the most money from my book?

When attempting to calculate a book's earning potential, we have to consider the percentages paid on cover price.

Print books can earn between 4-25% of the cover price after discounts given to the bookseller are taken into consideration. In my experience, between 4-10% is more common with mass market paperback romance. Foreign translations mean another drop in percentage, somewhere between 2-5%.

Ebooks can earn between 2-70%, depending on where you choose to publish them, what language they're in and the cover price. The percentage is at the low end of the scale with a traditional publisher, particularly in the case of foreign languages. It's slightly higher with a digital publisher. Self-publishing is at the high end (between 40-70%).

Answer: Self-Publishing would appear to offer the greatest return.

Looking at those percentages, it can be difficult to understand why authors keep signing contracts with traditional publishers. So, why do they?

Apart from the attraction of an advance, it comes down to one thing: Distribution.


3/ How can my book achieve the maximum possible sales?

Realistically, a book has a finite number of potential sales. In order to maximize that potential, it must be made available to as many customers as possible.

Traditional publishers still have a major advantage when it comes to print distribution. And when it comes to foreign markets, Harlequin can't be beat (HarperCollins even cited the potential for overseas distribution as the main advantage to them after Harlequin's sale to News Corp).

EBooks, as we know, are available worldwide through a variety of distributors (Traditional publishers, Amazon, KOBO, Nook, ITunes, Smashwords, etc.) and the volume of sales has increased dramatically in the last few years.

But knowledge of distribution isn't enough. We also have to look at performance.

According to digitalbookworld in a report dated March 6, 2014, 'For the fourth straight year, romance book publisher Harlequin has posted revenue declines...' And it adds, '... the company's digital advances haven't outpaced its print retreat.'

This is worrying when we need volume sales to counter low percentages.

Then we have digital first publishers. What's happening there?

According to DearAuthor in a report dated May 11, 2014, 'The rise of self-publishing hasn't just affected traditional print publishers.' (It's referring to two well know digital first publishers in the romance genre, Ellora's Cave and Samhain) And concludes, 'Self publishing and even new digital publishers are hammering away at the base of older and established digital publishers as more and more authors are determined to forge their own path.'

Since digital first publishers offer a lower percentage rate on cover price than self-publishing, this is also worrying, because while the volume of sales doesn't have to be as high as print, it still has to be higher than that of an Indie book.

So what about the Indie book world?

According to authorearnings reports dated February 12, 2014, Indie books accounted for 35% of the titles in the genre best-seller lists (which include romance) on Amazon and 53% on Nook. (Another report is due three days from the date of this blog and should make an interesting read.)

Encouraging news, especially if the next report sees an increase in the numbers. And particularly when, theoretically, the percentages here would allow us to sell less and make more.

Answer: Currently traditional publishers still have the best print distribution, but it's in decline. And while many reports are saying EBook sales have plateaued,  it would appear the shift towards self-publishing is still on the rise.

Looking Forward.

Until things change dramatically in traditional publishing, more and more authors will continue to be drawn to self-publishing.

Currently it's the fastest route to the marketplace, it offers the highest percentages on cover price and the volume of sales is increasing as distribution widens worldwide.

EBook sales might have plateaued in some of the major markets, but there are still countries which haven't reached their saturation point in terms of reading devices. What's more, as print sales continue to decline and a new generation of digitally motivated readers enter the marketplace, how and where people buy books will continue to follow the same path as the music industry.

Here's the biggest problem: Traditional publishers have large overheads and when they make price/marketing changes it doesn't happen overnight. They will only tweak the pricing and invest money in marketing a book/line for a certain amount of time (I know that from recent experience!).

I'm not saying they don't care what an author earns. From that point of view, their success is tied to ours. But what the company makes is their primary concern and it has to be for them to stay in business.

In comparison, Indie authors have low overheads. And self-publishing is the only option which allows constant (and, if needs be rapid, as in immediate) changes to prices and marketing when books aren't selling well. That kind of control is incredibly important.

Why? Because maneuverability is vital in a rapidly changing landscape.


Conclusion:

Having already decided digital is the way forward, I have to choose the option in that area which allows the best opportunity for financial return from the time I've invested.

Currently, the evidence is pointing me towards self-publishing.

So that's another decision almost made.

What I know for certain is my royalties have been dropping. It's not as bad as it was at the beginning of my career, but the numbers have fallen to the point where, if something doesn't change, I'm going to need another job to survive.

Now, in fairness, part of the problem has been my lack of productivity. I have to admit to that. Guilty as charged. And again, a subject for the next blog. But it's not the only reason. 

Note:  If you are considering self-publishing, I highly recommend Nina Harrington's book Head Or Heart: Will Self-Publishing Your Novel Cost You Money? Or Make You Money?. It contains a wealth of information on the subject, some of which took me many, many months to research.

Next on the list is creative freedom and the effect it can have on an author's output. And if you missed the first blog in my decision making process, you can find it here.

As always, I'd love to hear your thoughts on the subject. Got questions? I'll answer them, too. Just pop them in the comments.