The Profitable Publisher

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?

By Michele DeFilippo, owner
1106 Design
www.1106design.com

Michele is a frequent contributor to many of the publishing lists and email groups, so, when I knew it was time to discuss design, I asked her to pitch in. Thank you, Michele!

We’ve heard the question many times, “Should I layout the interior of my book myself?” Seems like a no-brainer. You have word processing software. You know how to set margins and choose a typeface. You even know about books that describe the process (written by folks who are not trained in typography by the way). So why shouldn’t you layout your own book?

Of course you can and should use your word processing software to write your text, but interior design and formatting are best left to people who do this for a living. Why? Because there are a lot more details involved in page composition than you’d think.

For starters, word-processing software does not have the sophisticated hyphenation and justification controls that professional page layout software does. This results in tight and loose lines that are unsightly and that distract the reader. And even if you were to buy page layout software, there is a very steep learning curve. It’s a mistake to assume that no knowledge of typography or design is required to use it effectively. As the saying goes, “Owning a hammer does not make one a carpenter.”

There are several dozen conventions to be followed in book design that may not be perceptible to the reader, but when followed, they give your book a polished appearance. But it’s not only about knowing the rules, it’s knowing how and when to bend or break them on a case-by-case basis that makes the difference between an amateur layout and a professional one. These decisions must be made quite often when the words in the text don’t cooperate with the page geometry.

Quality typesetting has never been about the tools. Experienced typesetters rarely use software at the default settings. We adjust the settings for better results, sometimes paragraph by paragraph, line by line, and even word by word. Why? We were trained to see the difference between “so-so” type and great type.

For what it’s worth, only beginning self-publishers consider using a word processor for page layout. Established publishers wouldn’t think of producing the text in this way. They know that experienced book designers bring real value to the table, offering creativity and aesthetic judgment that only comes with training and experience.
When we show customers the difference between their attempt at book layout and our own, they are usually blown away. They’ll say something like, “Wow! I thought my layout was just fine. Now I see how bad it really is!”
Here’s a current before-and-after example. IC_Book_Orig.pdf is the client’s attempt at book layout, and IC_Book_Designed.pdf is our design. (You may want to open or print both PDFs to compare the pages side by side.) See the difference? In addition to a much better look and the elimination of giant spaces between words in the original, professional typesetting saved 5 pages from the original’s 19 (more than 25%), thus reducing the client’s printing costs significantly.

It’s been clinically proven that quality typography improves reading comprehension. More importantly, an amateur job won’t satisfy the distributors, reviewers, and book retailers, the “gatekeepers” of the book industry, who will immediately spot a beginner’s efforts and reject your book as “self-published.”

Many people think that converting a word-processed file to a PDF is all the printer needs. That’s true. But it’s not all that YOU need. Printers won’t turn away a PDF that was made from a word-processed document. They’ll print your book because that’s what they’re in business to do. Their success is measured in how many books they print. Your success, on the other hand, is measured in the number of books you sell.

Your book design, inside and out, establishes your credibility in the eyes of the buyer. Buyers may not be able to pinpoint exactly what is wrong, but without a professional interior design, your book will not measure up to those that are professionally prepared. For the success of your new publishing endeavor, we hope you’ll give this issue some serious thought, and choose an experienced book designer to give your book the professional look it deserves.

Pete Masterson is a very generous man who shares his experience as a printer and a designer with many new publishers. He participates on many listservs, including the Yahoo Group Self-Publishing. It was on that group that the following piece first appeared. He has graciously given me his permission to quote it in its entirety:

Using the CreateSpace Publishing Plan Calculator that you can download from the CreateSpace web site (this is an Excel spreadsheet with macros). These prices are all based on a color cover and a black interior book.

A softcover book of 212 pages, 6 x 9 with a list price of $16.00:
CS standard plan, sold via estore you receive a net $7.06
CS standard plan, sold via Amazon you receive a net $3.86
CS ProPlan, sold via estore, you receive a net $9.41
CS ProPlan, sold via Amazon, you receive a net $6.21
Purchased direct from CS in small quantities for delivery to the publisher,
standard plan, you pay $5.74 per copy (plus shipping)
ProPlan, you pay $3.39 per copy (plus shipping)
Larger quantities may have a discount, but I did not see one show up
in the calculator up to 250 copies.

The CS ProPlan has a $39 start up charge per title. A $5 per year per
title fee is charged to maintain the listing.

———————————————
Using Lightning Source figures as comparison:
the same book with $16.00 list price:
With a 20% wholesale discount, you receive $9.14 per copy sold via LSI/
Ingram
With a 40% wholesale discount, you receive $5.94 per copy
With a 55% wholesale discount, you receive $3.54 per copy
The print cost per copy (in all cases) is $3.66 per copy
There is a start up cost of $75. A $12 per year per title fee is
charged to maintain the listing.

If you purchase copies direct from LSI for shipment to the publisher
this book would cost $4.08 per copy plus shipping.
This charge also applies to shipments made direct to customer at order
of publisher. (This charge is based on .015 per page instead of .013
per page for the interior. Cover charge is unchanged.)

orders of
50-99 units receive a discount of 5% (reduces unit cost to $3.88)
100-249 units receive a discount of 10% (reduces unit cost to $3.67)
250 – 499 units receive a discount of 20% (reduces unit cost to $3.26)
Over 500 units receive a discount of 25% (reduces unit cost to $3.06)
(plus shipping).

======
Analysis:

So, the CreateSpace ProPlan offers a slightly lower unit cost for
books shipped directly to the publisher — but does not seem to offer
any discounts for quantity purchases. (Per page rate is .012 for the
CS pro plan and .013 at LSI — the ‘cover’ charge is .85 for CS Pro
plan vs .90 at LSI — and this is the price difference.)

LSI gives greater flexibility in setting wholesale discount rates and
terms. Using LSI/Ingram distribution, the book is available to all
booksellers where CS is only available to Amazon. Using the CS
‘estore’ would allow a slightly better return on direct to buyer
orders from your web site.

In the end, the deciding factor is if the 20% discount through LSI is
more appropriate for your business plan or if limiting sales to Amazon
(and the CS ‘estore’) is suitable.

===============================================
Pete Masterson, Author of
Book Design and Production: A Guide for Authors and Publishers
Aeonix1@Mac.com
Aeonix Publishing Group http://www.aeonix.com
===============================================

So, the original Google Settlement is dead, dead (spell that D-O-J: dead). As frequent readers of this blog may remember, I wasn’t too enthused about it, and I won’t be grieving.

I do, however, hope that some version does come to fruition. I think it has the potential to make enormous sums for most small and micro-presses, and to keep authors’ work alive for a far longer time.

It might even help reverse the steady decline in book reading that has afflicted this country.

What would I like to see in that agreement?

1. Compensation for the infringements to date going not to rightsholders, but to the formation of the rights registry. The proposed compensation in the old agreement was so small per title as to be utterly useless, but in the aggregate, it could move many mountains. That registry could benefit all of us in much larger ways, and forcing Google to pay for it will ensure that no other corporate behemoth gets the idea that they can infringe with impunity.

Part of the cost of establishing this registry would include widespread advertising in the US and elsewhere covering how the works can be claimed, or registered if not yet scanned, and where. It should also be possible to try to port the LOC rightsholder database over to the new registry.

2. All non-search uses on an opt-in basis ONLY during the life of copyright. This is critical, because anything less eviscerates all of copyright. It’s a precedent we cannot allow.

3. Search results displaying a reasonable amount (half a page? A whole page?) on an opt-out basis for all book length works. This is an exact parallel to web search (which has already been tested and found to be fair use), and is critical to growing our knowledge base. To do this, Google will get the right to scan anything not excluded by the rights holder. Google can monetize this with ad display, as is currently done for web sites.

4. Opt-in only licensing to libraries. A reasonable split would pro rate the licensing fees by the length of the file covering each work, payable to all rights holders as long as the work is in copyright.

5. Opt-in only licensing of the right to sell ebook, POD and other versions of the works in the database. I liked the 65/35 split between Google and the rights-holders. It seems reasonable.

So where do those enormous sums come in?

6. Every time someone clicks on a book search link, the page should include a free ad for the book. And if the book is available through their site or a major on-line source, it should include links to those sellers. Affiliate links, perhaps, so that Google gets a commission, but links nonetheless. I suspect that this will greatly increase book sales, especially for small presses and self-published authors.

I’m sure I missed some important points. What would you like to add?