Book sales and profits – article links

Since this topic is discussed on my blog frequently (not making money from publishing) this blog post is a compilation of articles I’ve found on the profits generated (or not) from publishing books and ebooks.

If you scroll all the way to the last article it covers how The Atlantic and One Story are selling individual stories on the Kindle as an experiment to making money on short stories.

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How Merger Mania is Destroying Book Publishing, Dec 17, 2012, The Nation – http://www.thenation.com/article/171508/how-mergermania-destroying-book-publishing#

The mergers are occurring because book publishing has proved to be less profitable than the conglomerates had hoped. For most of the past two centuries, Western houses averaged a mere 3 percent annual profit. The new owners had hoped to raise the rate closer to 25 percent, to match those of their other holdings: newspapers, magazines and TV stations (even though these depend on advertising). But try as it might, publishing failed to churn out enough bestsellers.

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Mark Coker’s 2013 Book Publishing Industry Predictions – Indie Ebook Authors Take Charge, Dec 21, 2012, Smashwords, the official blog for Smashwords — http://blog.smashwords.com/2012/12/mark-cokers-2013-book-publishing.html

The world’s 50 largest book publishers alone achieved $68 billion in sales in 2011, according to Publishers Weekly. When so much money and power is up for grabs, industry players have a lot to fight over, and much to protect.  Books are worth fighting for, so fight for the future you want.  Otherwise, someone else may determine your future for you.

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New York Magazine profile of Random House (2007) – http://nymag.com/news/features/2007/profit/32906/

 “Many books are unprofitable,” says CEO Peter Olson. Fifteen to twenty best sellers at a time and a huge volume of steadily selling older titles support Random House…. Every week, the country’s biggest trade publisher releases 67 new books, but it’s the the 33,000-book backlist (Ian McEwan’s Atonement, for example) that supplies 80 percent of its profit.

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How Long Will Publishers Be Able to Ride the eBook Profit Wave?, Feb 27, 2012, Digital Book World – http://www.digitalbookworld.com/2012/how-long-will-publishers-be-able-to-ride-the-e-book-profit-wave/

Sales are down, margins are up. And that will last as long as they [publishing companies] can continue to pay authors the royalties they’re paying them [for e-books] and sell the books at the terms they’re selling them on,” said Mike Shatzkin, publishing consultant (and partner on the Digital Book World Conference + Expo).

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How I Got a Big Advance from a Big Publisher and Self-Published Anyway, Penelope Trunk blog, July 9. 2012 – http://blog.penelopetrunk.com/2012/07/09/how-i-got-a-big-advance-from-a-big-publisher-and-self-published-anyway/?utm_source=sidebar

(This post was later picked up and covered by the The Guardian, UK under “From PR to Profits: the problems with publishing” http://www.guardian.co.uk/books/2012/jul/13/the-problems-with-publishing)

The profit margins in mainstream publishing are so low they are almost nonexistent.

It takes a print publisher about a year to publish a book, after it is written. It’s unclear what the  publishers are doing during this time. For example, in the age of the Internet, where most books are selling online, the cover needs to be very simple so that it works as a small image on Amazon. It’s hard to imagine going through months of design iterations for a cover that is going to be seen by most potential buyers as a photo on Amazon. Book aficionados might argue that there are essential things being done with books over the course of that year. What I will tell you is that newspaper people said the same thing. Right before they all got laid off. The most breathtaking example, I think, of how terrible margins are, is that if I sell my own book with a link to my publisher, I make a little less than $1 per book. If I sell Guy Kawasaki’s book on Amazon, I get a little more than $1 per book in their affiliate program. So it’s more profitable to me to use my blog to sell someone else’s book than to sell the book I published with a mainstream publisher.

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Profits Fall 48% at Penguin on 4% Sales Decline, Publishers Weekly, July 27, 2012 – http://www.publishersweekly.com/pw/by-topic/industry-news/financial-reporting/article/53318-profits-fall-48-at-penguin-on-4-sales-decline.html

After several years of steady growth Penguin Group had a 4% decline in sales to £441 million, and a 48% drop in adjusted operating profit, to £22 million, in the first six months of 2012, parent company Pearson reported this morning. The declines were attributed primarily to softness at Penguin Group USA, which the company said was due to a ”lighter” publishing schedule,”big sales of Fifty Shades of Grey and Hunger Games trilogies which siphoned sales from other titles, and continued pressure on physical book publishing and retailing. Penguin Group USA CEO David Shanks said that while the company had a number of strong selling books “none of them were Fifty Shades of Grey.” He said publishing is becoming more hits driven than ever, and observed that in last year’s first half Penguin was boosted by surging sales of The Help. Loss of shelf space has hurt sales of physical books, Shanks noted, particularly Penguin’s large mass market paperback business. He attributed the steep decline in profits to several factors, the most important of which was softness in the more profitable backlist business. “That really hurt,” Shanks said. Growth in e-book sales have also slowed. For all of Penguin Group, e-book sales increased 33% in the first six months of 2012 and accounted for 19% of worldwide sales, or about 84 million pounds.

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Amazon Pulls Thousands of E-Books in Dispute, New York Times, Feb 22, 2012 – http://bits.blogs.nytimes.com/2012/02/22/amazon-pulls-thousands-of-e-books-in-dispute/

Amazon.com removed more than 4,000 e-books from its site this week after it tried and failed to get them more cheaply, a muscle-flexing move that is likely to have significant repercussions for the digital book market.

Amazon is under pressure from Wall Street to improve its anemic margins. At the same time, it is committed to selling e-books as cheaply as possible as a way to preserve the dominance of its Kindle devices.

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How the Kindle Made Single Story Sales a Reality for Magazines, PBS “Media Shift” blog, Feb 16, 2011

http://www.pbs.org/mediashift/2011/02/how-the-kindle-made-single-story-sales-a-reality-for-magazines-047.html

Well-known magazine The Atlanticended its monthly publishing of short fiction in 2005, and now offers a single fiction issue yearly. However, the magazine, founded in 1857, wanted to explore other ways to continue its legacy of publishing fiction, and so recently finished a year-long experiment that made two short stories per month available exclusively on the Kindle.

The Atlantic’s access to established writers, such as Joyce Carol Oates and Paul Theroux, was a significant part of its success. Havens said the popularity of each individual story correlated to the prior popularity and “salability” of their writers. When Amazon customers searched for those authors’ work, The Atlantic stories also came up in the results.

If magazine publishers can identify stories that provide rich, deep reading experiences, and then add engaging multimedia to develop that experience even further, they may be able to leverage their brands and editorial authority to market individual stories successfully. Other possibilities might include packaging stories on one topic together in one download, or combining stories from different magazines in a collaborative product. Individual stories or packages of stories can be sold through apps, websites, and vendors like Amazon or Barnes & Noble.

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15 Responses

  1. There’s a lot going on here. Publishers deliver a profit if they make good editorial choices and run efficient operations. If they don’t, they suffer and decline. Sounds like any industry (substitute “editorial” with “product”). That said, we should never expect publishers to be high return enterprises – any more than we should expect a Silicon Valley darling to promote literacy across generations and centuries.

    • The issue I have is with the phrase “good editorial choices” because to big publishers good probably equals 50 Shades of Grey because it is a blockbuster seller and selling a lot of books is good because it helps generate a profit.

      In this case a “bad editorial choice” would be to publish a book of excellent quality literary short stories by an author with an as-yet unknown name.

      And because of this conundrum I think the publishing industry is in deep, deep doo-doo. Good editorial choices, at one time, may have equaled quality material (or at least some of the time.) Now it becomes the job of … I’m not sure who… to determine good quality literature is getting published.

      Maybe the closest answer I have for that is the remaining independent bookstores like Powell’s in Portland, a bunch of great bookstores in Seattle, and little places like The Golden Notebook in Woodstock, NY or Farley’s Bookshop in New Hope, PA or similar places. And those bookstores are curated collections, and in those curated collections they include plenty of independent presses and their staff read the books and make recommendations to their readers.

      But I doubt that model is sustainable from an economic perspective.

      What I’m trying to say is that things seem pretty grim to me when I look at those articles… and yeah, Amazon is doing what it does (just as Google does what it does) and tries to re-shape an entire industry through highly aggressive tactics in the spirit of a long term monopoly of an industry. And if that means taking losses to get there…(and putting Borders out of business along the way…) well, they’ve done it before……

  2. Publishing died in 1983, honey. Dow Chemical and Nabisco bought all the publishing houses specifically as a source of content to be leveraged into movies, whimsical coffee cups, and fast-food toys. It’s not uncommon these days for agents to pitch manuscripts to film producers before they even approach publishers. A book that doesn’t attract a film or cable TV development deal at or before its pub date is a write-off.

    • Yeah, I hear what you’re saying regarding the incestuous relationship between publishing and the film / cable TV industries. And yeah, right now it does feel like the articles are already a post-mortem of a nearly dead industry.

      But… people are still so hungry for stories. Sure, they may want salacious or unrealistic thrills from many stories, but they also “want” quality material too. At least I think they do…

      So if the literary book has already met its demise, then what do you think we’ll have in its place?

      What will people be doing to fill their need for great stories in the future?

      • That’s a different question. I thought we were talking about money.

        Great literary fiction is being written every day. It’s being written by hobbyists and writers with wealthy patrons, the way it was written before 1920 and since 1980. It will never go away. It’ll just never make anyone any money anymore.

        Once people become accustomed to getting something for free, as is the case with all content that can be digitized and disseminated, you can never charge money for that thing again. Books were one of the last holdouts, primarily because readers were older (50 and over, these days) and tech-averse.

        There’s no “incestuous relationship” between publishing and movie/TV production. They’re the same company, the same people around a single boardroom table, devoted to leveraging the same “big concept” content across different media to maximize market share. It’s like saying the guy who makes the paint and the guy who makes the paint cans have an incestuous relationship.

        The real incestuous relationship was always between art and money. And that relationship, with regard to literary fiction, is over now.

        • I’m sure you’re right Harry (you usually are…)

          I’m thinking now about the “thank you list” in the literary fiction I’ve been reading lately, and there’s usually a list of monetary grants that writers get to help supplement their incomes while they write their books. Of course, not everybody would get such grants, only well connected people who are, let’s say, inside the University system and teaching literature. Like Junot Diaz and Annie Proulx for example.

          Do you have a sense of how much a Pulitzer Prize winning author could expect to “rake in” from having such a title published? Like The Shipping News (made into a movie) or The Great and Wondrous Life of Oscar Wao (not made into a movie, or maybe not yet…).

          Then again, I’m sure Proulx made much more off of the movie rights to Brokeback Mountain because everybody loves gay cowboys (I know I did.)

  3. Oh, another way of putting my question… which do you think is more profitable, the $10,000 prize money you get for winning a Pulitzer or the amount of money the author gets through sales of their Pulitzer Prize winning title?

    One would hope it’s the latter but given some of the comments above, I dunno……………………

    • Oh, sweetie, I could talk all day. I know a writer (no names, let’s just say Algonquin Press) who has never earned back a $15,000 advance and has published eight novels. Every one of those books earned a small but not inconsiderable TV option (Showtime, CW, Lifetime) deal that never led anywhere. Good agent. How does she make money? Editorial services. Seminars. Online professorship.

      Every person who devotes their life to the MFA Creative Writing path (Iowa, Stanford, wherever else) deserves everything advantage they get. I’m old enough to remember a time when real agents with real clout would read your queries and writing samples. That ended in 1997. And for good reason. The “editorial assistants” who read queries are $140,000 in debt. They don’t want to hear from Jill the Housewife from Iowa.

      There’s a story that’s unfolding right now that’s hardly been written. The demographic that’s willing to take out student loans (the ONLY kind of loan that can’t be renegotiated or voided) for English, Creative Writing, History, any kind of Sociology degree) is dropping off a cliff right now. There are no tweedy Jonathan Franzen types in the pipeline. (Except, again, wealthy hobbyists.)

      Anyway, what was the original question? Oh, $10,000. I spent that on cable TV, gas heat, and property tax last year. So did you.

      H

      • So maybe I should take great encouragement by the notion that if I can pay all my bills without any monies from publishing my works (and I can) and if I got any money from publishing my works and it was gravy (it would be) that it’s probably the best anyone could expect from the prospect of having their work published – even if it was amazing, prize winning literary fiction.

        $10K seems very paltry to me. Like you say… property taxes, cable TV, and a few pizzas and you’re already in the hole.

        What we’re not talking about are the freak hit making “novels” like 50 Shades of Crap. That woman ripped off Stephanie Meyers (another author I don’t admire), changed the names around, and published a trilogy that is selling hand over fist (or hand over handcuffed fist.) Rumor has it (because I refuse to look at those books) that they are poorly written, but it doesn’t matter because Jill the Housewife from Iowa will buy all three of them (and then send her own crappy query to the editorial assistant paying off the $140K in debt.)

        Still… it’s a sad, sad state for publishing. And although I know you’re a curmudgeon, you’re also an unblinking realist on this one Harry. Unfortunately.

        Eh… wealthy hobbyists unite?

        • We’re not talking about those books because they’re a completely different thing. They’re marketing-driven. A lot of big-box-store fiction (especially romance, YA, and fantasy) doesn’t start with the writer, it starts with the corporation. Marketing people at HarperCollins say, “We need a new werewolves-and-wizards series or a new dystopian-young-lovers thing.” So they reach out to a big-time agent and they say, “Who do you have that would be a good fit for this?” And the agent says, “I’ve got someone, she wrote that bulimia thing for Vanity Fair; Graydon really likes her,” and the marketing people say, “Okay, let’s see 10,000 words.” It’s top down, not bottom up.

  4. Good literary fiction reaches maybe 10,000 people. Really good literary fiction reaches 1,000. The best work of all reaches nobody. Write like you’re going to roll that piece of paper up and stick it in a bottle and cast it into the sea.

    • Maybe I’m still living in complete denial, but I don’t believe “really good” literary fiction reaches only 1000 people. I could believe, however, that good literary fiction reaches maybe 10,000 people. That does seem about right for a well written book with a literary fiction target market.

      I definitely don’t agree the best work of all reaches nobody. Maybe you’re metaphorically saying “only write for yourself and write what you like” and that’s decent advice because you have to go with your ideas and you have to be passionate enough about them to sustain you while you struggle to produce them as fully crafted genuine articles of literature, but it’s the tree in the forest. If there is no audience, why bother?

      We often exclaim a writer has something to *say* – well, unless we’re talking to ourselves, which on our crazier days we may do – we are *saying* something we feel is important enough to express to an audience.

      And since we’re philosophizing… it makes me wonder if I could have an audience of 10,000 people reading my work, but not get any recompense for it, is knowing that my writing reached 10,000 people satisfying as a goal unto itself?

      I think for right now I’d say yes, reaching a known audience of that quantity and having people engage with my work would be extremely satisfying, even without compensation.

  5. “It’s complicated”

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