Money For Writing
January 2, 2006
The Paperback Writer blog has an interesting post today about how the FTC is cracking down on "word of mouth" marketing. That's not terribly relevant to me here, but she said something that made me pause for a moment. She said:
I bet you can guess what caught my attention. 20 cents per paperback? 78 cents per hardcover?
Well, yes, actually. Once I thought about it. Lynn's saying this is after her agent's 15% cut and the government's approximately 30% cut. God only knows if she's going to include things like health insurance and retirement accounts in there. And don't laugh, those of you with day jobs that include health insurance and 401Ks, because for you those are separate from your paycheck, but for those of us who are self-empoyed, it comes out of our paychecks.
So just a little math.
A typical hardcover costs about $25.
A typical hardcover royalty (it varies depending on your publisher, your track record, your agent and the number of copies you sell) is about 12%, which comes to $3.00 per copy. Your agent gets 15% of that $3, which is 45 cents, so you get $2.55. The government, if I'm being charitable here and count both federal and state, gets approximately 30% (maybe less), and that comes out of what you get after your agent takes her cut, which is about 77 cents, leaving you with $1.78. So I'm not entirely sure where Lynn gets her 78 cents, but her hardcovers may sell for $20 or it's even possible, depending on her publisher, that her hardcover royalties are calculated based on something besides cover price.
A typical mass market paperback sells for about $7.
A typical royalty on mass market paperback ranges from 6-8% so let's call it 7% here, so the royalty is 49 cents per copy. So for every copy sold, her agent takes 15% of every 49 cents, so the agent gets about 7 cents per mass market paperback sold and the author gets about 42 cents. Then take 30% out of that for taxes (about 13 cents per paperback)and you've got the author receiving, when all is said and done, about 29 cents per mass market paperback.
My math doesn't quite add up with Lynn's, but there are a lot of variables here.
When I first got published and Catfish Guru was selling for $17.95, an awful lot of people seemed to think that I was getting about $15 per copy of that book, when in fact I was getting about $1.80, which I was paying taxes on (and shipping, since this was an iUniverse deal).
I'm reminded, not for the first time, something that an expert on gambling once said, which was, if you want to make money in gambling, own a casino.
I'm not sure there's even a similar analogy for writing and publishing, actually. I once caught the late William Kienzle give a talk about writing and publishing and his comment on how to get published was, "Get to be famous and then get published."
Anyway, some sobering numbers to start out the year.
Best,
Mark Terry
The Paperback Writer blog has an interesting post today about how the FTC is cracking down on "word of mouth" marketing. That's not terribly relevant to me here, but she said something that made me pause for a moment. She said:
Many of you do go out and buy my novels because of what you read here, and I do receive royalties from the sales of those novels. This is the only form of profit I make that can be connected to my weblog. After the publisher, agent and Uncle Sam take their cuts, my share of the profits for my novels works out to about twenty cents per paperback and seventy-eight cents per hardcover. I appreciate anyone who invests in my novels, but I don't expect or demand it, and I have no control over those purchases.
I bet you can guess what caught my attention. 20 cents per paperback? 78 cents per hardcover?
Well, yes, actually. Once I thought about it. Lynn's saying this is after her agent's 15% cut and the government's approximately 30% cut. God only knows if she's going to include things like health insurance and retirement accounts in there. And don't laugh, those of you with day jobs that include health insurance and 401Ks, because for you those are separate from your paycheck, but for those of us who are self-empoyed, it comes out of our paychecks.
So just a little math.
A typical hardcover costs about $25.
A typical hardcover royalty (it varies depending on your publisher, your track record, your agent and the number of copies you sell) is about 12%, which comes to $3.00 per copy. Your agent gets 15% of that $3, which is 45 cents, so you get $2.55. The government, if I'm being charitable here and count both federal and state, gets approximately 30% (maybe less), and that comes out of what you get after your agent takes her cut, which is about 77 cents, leaving you with $1.78. So I'm not entirely sure where Lynn gets her 78 cents, but her hardcovers may sell for $20 or it's even possible, depending on her publisher, that her hardcover royalties are calculated based on something besides cover price.
A typical mass market paperback sells for about $7.
A typical royalty on mass market paperback ranges from 6-8% so let's call it 7% here, so the royalty is 49 cents per copy. So for every copy sold, her agent takes 15% of every 49 cents, so the agent gets about 7 cents per mass market paperback sold and the author gets about 42 cents. Then take 30% out of that for taxes (about 13 cents per paperback)and you've got the author receiving, when all is said and done, about 29 cents per mass market paperback.
My math doesn't quite add up with Lynn's, but there are a lot of variables here.
When I first got published and Catfish Guru was selling for $17.95, an awful lot of people seemed to think that I was getting about $15 per copy of that book, when in fact I was getting about $1.80, which I was paying taxes on (and shipping, since this was an iUniverse deal).
I'm reminded, not for the first time, something that an expert on gambling once said, which was, if you want to make money in gambling, own a casino.
I'm not sure there's even a similar analogy for writing and publishing, actually. I once caught the late William Kienzle give a talk about writing and publishing and his comment on how to get published was, "Get to be famous and then get published."
Anyway, some sobering numbers to start out the year.
Best,
Mark Terry
posted by Mark Terry at 6:31 AM
10 Comments:
Pitchfork- Bought it. Read it. Enjoyed it. Look forward to the next one. Thanks.
bmack!
Thanks. Glad you liked it. The next one is The Serpent's Kiss, due out July 1st. (And I think it's even better).
It's like that with any product. I sell brake controllers for travel trailers. I alway hear "How come this thing costs $400 when there's only $80 worth of components in there?" People don't understand advertising, overhead, taxes, everything that goes into every product they buy. By the time I sell that $400 controller, I've got about $50 in profit. I think Business 101 should be a required course for every high school senior. Then maybe there'd be less complaining about "rich" authors and business owners.
Yes, I think so, too, Ron. I've never had a business class in my life, so running a business has been a bit of an education.
My brother is a PhD in music. We both noted that a few years ago one of the top music schools started requiring that their performance music majors (versus say, education) be required to minor in business, because, as they noted, the majority of musicians are essentially running a business; even ones that get a gig playing for a major symphony orchestra will often teach on the side or even perform on the side, and are essentially small business owners.
And of course theres' Mick Jagger, who graduated from the London School of Economics. And who, in 2006, was the largest grossing musical act? You bet, The Rolling Stones. Not bad for a bunch of old guys.
There's an assumption that publishers don't know what they're doing and I think there is often a lot of truth to that assumption; at the same time, it's not a simple business (although its business model seems particularly screwed up to me), especially complicated by this entire business of dealing with returns and discounts. I don't know the actual figures, but it's been pointed out to me that those 30 and 40% discounts you see on bestsellers at Borders and B&N and some of the Sam's Club-type outlets essentially are selling the book nearly at cost. Who's making money on those? Nobody knows, if those numbers are accurate.
I think the problem with the arts is that they go against people's assumption that if you'e good enough to do something professionally you can make a living at it. With most jobs that's a good assumption.
As for taxes -- we just sent off our quarterly so I don't want to hear it! I guess, though, that if your agent gets a cut of your royalties before the feds then at least the feds aren't getting quite as much of them which is good.
I based my calculations on $22.95 for my hardcovers and $7.99 for my paperbacks, which are the highest prices at which my books have been sold (to my knowledge, based on royalty statements from my publishers.) My royalty percentage and income tax bracket are also different from your calculations, which is why we came up with the different figures.
I also didn't subtract anything for my business overhead, medical insurance, self-promotion costs, shipping, computer service, software, hardware, office supplies, charitable donations, etc. because most of them are tax-deductible expenses, and I choose to spend that money versus being required to.
Lynn,
Thanks for stopping by. As an author, I'm endlessly fascinated by these breakdowns and have to admit that I have yet to find a reasonably consistent number, which is why I give ranges. I think the thing to take away (if there is something to take away) is that authors don't make a fortune per book. In some ways I'm appalled that you only get about 20 cents per mass market paperback, except they do sell in generally higher numbers. Since I'm published in trade paperback, I'm somewhere in between. I'd love to have a hardcover/mass market deal, but I am aware that the hardcover deal can kill new authors if things don't go well, and many in the publishing industry view the hardcovers as library sales and a better way to get reviews than MMP or TP deals. This is something I think review outlets, such as they are, need to get over, but I'm sure I'm not the only person who thinks so.
Q. How do you make a small fortune in publishing?
A. Start with a large fortune.
Keith,
Yes, a classic. And I've always pondered the late Malcolm Forbes' advice on how to get wealthy: "Be born to wealthy parents and stay on their good side and inherit when they die. In other words, choose your parents wisely."
Alas, I seem to have screwed up on that one.
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