Books? Full time? In this economy?

We're talking about money; royalties & breakdowns on margins across the book trade.

My earliest professional angsts in the literary world have been toward passive attitudes or latent discomforts regarding money. At best, it’s a tired sentiment. Yes, the margins on trade-released books are tight. In the middle, it’s lazy, removing even a basic concept around what an economy surrounding published works may look like. At worst, it’s exploitative. Books are an opaque field when it comes to how money moves and hedges of information, or low expectations, are commonly used as a vehicle for taking advantage of those in the dark. 

In general, artists must reclaim a sense of ownership in their own sentiments toward money. The story of artists being above capital is indeed something of a disservice to the sovereignty of the artist in their own career, a vulnerability that can be patched with a conscious acceptance that art is inextricably influenced by the system of capital surrounding it. 

It’s true, making money publishing books is hard, but it is not impossible to create a competitive economy as a publisher and author. Like so many things in this millennial workforce era, it comes down to diversification; we cannot rely on any one thing to be the thing for us. This is true for most millennial professionals hosting a suite of side-gigs or multiple jobs to stay vertical during increasingly volatile times. Similarly when it comes to content, we must set aside our expectations for a singular break-out hit and instead focus on developing long-term catalogs of compelling work. 

This is why a healthy, enjoyable creative process is a necessity; we’re talking a long game, a durational build-up of labor to produce a buffered list. With this in mind, the purpose of this survey is to provide a basic understanding of some typically hidden variables. With these variables mapped out, we then consider ways of creating varieties of buffers within our creative business. 

MARGINS

We’re starting with book sales made through a distributor to the book trade. 

Let’s consider a trade paperback that retails for $18.95; this is the title’s list price. $10.43 is the maximum 55% discount deducted from the list price, leaving us with our wholesale rate of $8.52. This margin is where wholesalers and booksellers make their profit. Distributors make their money by taking anywhere between 20% - 28% of this wholesale price. For the sake of our example, we’re going to say 26%; $2.22 goes to the distributor. 

$6.30 is what remains, the publisher’s compensation per unit on a wholesale trade for an $18.95 object. This figure gives us a tidy bucket to consider our print cost, which will ultimately influence our margin and recuperation on the upfront investment for the title across design, editing, and advance against royalties. For the sake of this example, let’s assume this book costs $2.00/unit to print. 

This means in the highest wholesale discount scenario of 55% off the list price, our net profits before royalties are $4.30 per unit sold through our distributor. We define royalties by paying a percentage between 15% - 20% of the above-defined net earnings. This means for every dollar we make in net profit, we pay .15 - .20 cents to the author. In the scenario of earning $4.30 from distribution, let’s say we pay a royalty of 18% of net; the author earns .77 cents per unit sold through distribution. Our final net profit is $3.53 per unit. 

BUFFERS

That wholesale margin is indeed tight. The function of distribution to the book trade is, however, supposed to make up for the narrow margin by title exposure and sales volume; distribution at this level functions best for titles that are assumed to break at least 1,000 unit sales within their release season. 

A competitive edge that Not a Cult and other Chapter House imprints have cultivated alongside our distributor sales channels is the art of e-commerce; direct sales to readers through our website. Nothing groundbreaking conceptually, but a stark difference in margins. If there’s an opportunity to purchase a new title direct from an independent publisher or author, take it. Here’s why:

Let’s consider that same $18.95 trade paperback. In the direct sales scenario we do away with any wholesale discounting and distributor cut. We’re left with our $2.00 print cost, and a payment processing fee from either Stripe or PayPal, which is 2.9% of the transaction value plus .30 cents; a total processing fee of .85 cents. 

Last, we factor in an average expense of our storage, fulfillment, packaging, and web hosting costs across titles fulfilled on a monthly basis. This generally comes out to $1.50 per unit. All said, we’re left with a pre-royalty net of $14.60. A little over four times the margin on a wholesale exchange. The 18% of net royalty comes out to $2.60, leaving us with a final net of $12.00. 

DIVERSIFICATION

The key asset of a traditional  book publisher is their backlist. A backlist is a catalog of published titles, done and dusted, out in the world passively making revenues on whatever sales channel. It is up to the publisher to maintain the supply chain and make sure a title remains accessible. A title is considered frontlist for the first twelve months after its publishing date before it joins this esteemed list of things that have been. 

The hope is that backlist revenues at least subsidize operational costs, and provide enough profits to invest in future frontlist production. The sneaky X factor here is the curatorial choices of the publisher; did we make the right bets on the right titles? It is one of the several ways our capital-fueled landscape influences the type of art that is produced and distributed; a symbiotic relationship between what is patroned, what is consumed, and what remains fringe. I encourage authors to think about these dynamics.

This is not a call for authors to pump out content solely to juice their numbers, but rather an impersonalized way of looking at something that is finished and desired to be in the hands of as many people as possible, for as long as possible. The lifecycle of a product. The neat thing about books is that this lifecycle has the potential to far exceed our own brief and exploratory jaunt in this world. No pressure.