Archive for September, 2010

Do Publishers Rip Off Authors?

Tuesday, September 14th, 2010

Most people reading this know that it’s very rare for publishers to deliberately shortchange their authors on royalties or other obligations. (NB: Mistakes do happen, but that’s different.)

And almost all of us are aware that it’s not only wrong, but also generally pointless, and extremely rare, for a publisher to “steal your idea.”

The thought that does gain traction, though, is that publishers take the lion’s share of the profits on the books they bring out. So let’s look at where the money goes.

Let’s assume a typical non-fiction trade book in trade paperback format. (That is: a larger-sized paperback, on a general interest topic like those you might find in a normal bookstore.)

Let’s say that the price is $15.95.

The retailer buys it for about $9.57, maybe a penny or two less. (They have $6.38 to cover any discounts they give, their rent, payroll, utilities, and so forth, as well as a smidge of profit. And that’s not usually enough, which is why so many of them are going out of business.)

The wholesaler (and there usually is one in the mix) buys it for $7.18. (That is, they get $0.80 per copy to be in the middle between the thousands of stores and the tens of thousands of publishers — and that’s very slim, which is why there are only a very few of these folks left standing . . .)

Now, there’s either a distributor, or the publisher is large enough to do this function in-house. Either way, it costs something like $1.60 to $2.40 per copy to handle the orders, the picking, packing and shipping of books out of the warehouse, the storage of books in the warehouse, receiving the books into the warehouse from the printer, insuring them, and so on and on.

So, the typical trade publisher is going to see something like $5.18 out of that $15.95. Well, that’s a lot more than the author gets, isn’t it?

Oh, but wait: we still haven’t printed the book, paid the author, or any of the rest.

So, the typical tradepaperback is going to cost something like $2 to print.

And, preparing the manuscript for the printer (cover design, text composition, editing, copyediting, proofreading, and such like) will cost at least $3,500, and maybe $5,000. Let’s suppose that this book sells 7500 copies. And it cost $3750 to prepare. That’s $0.50 per copy.

A typical trade non-fiction tradepaperback royalty is 7.5% of list price on the first 5,000 copies, 8.5% on copies 5,001 to 10,000, and 10% of list price thereafter. On 7500 copies, the author will earn $5,981.25 on the first 5,000 copies, and $3,389.38 on the next 2,500, for a total of $9370.63, or $1.25 per copy on average.

Marketing will have cost the publisher something like $0.26 per copy.

Total direct costs (and I’ve been pretty minimal here) are: $2+.50+$1.25+.26, or $4.01

So, before covering overhead (salaries, rent, etc.) or getting a penny of profit, the publisher has:
$5.18 – $4.01 = $1.17.
Note that a reasonable overhead might well be $1 per copy, so this publisher is making a princely $0.17 in profit on every $15.95 book.

Compare that to the author’s take: $1.25.

And realize that the publisher is not only contributing expertise and effort and all of that, but risking a minimum of $25,000 up front on this book. (Printing, prep, marketing and an author advance all have to be paid before the book is published, and aren’t refundable!)

I truly don’t think that this author has been ripped off.

What do you think?