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