Monday, February 23, 2009

Publishers Don't Pay Authors

Book A

Book B

Author Marketing Hours



Publisher Marketing Hours



Marketing @ $50/Hour



I had an epiphany the other day and it has caused me to rethink a few things. Publishers don’t pay authors. When a publisher signs an author, the publisher cuts a check for the advance. This looks very much like the publisher paying the author. It is often structured such that the author doesn’t receive the full amount until the book reaches various phases. This makes it look even more like the author is getting paid for completing the revisions. In actual fact, the advance is, exactly what the name implies, a loan. The publisher is loaning the author money, with the belief that they can recoup the loan by not giving the author royalties for the first books off the line.

Let’s suppose the author decides to forego the advance. That’s going to make the author’s agent unhappy, but let’s suppose he does. Now, with each book that sells, the publisher owes the author some amount of money. Let’s say it’s $1. This $1 goes to the intellectual property owner, not the author. In many cases, the author is the intellectual property owner, but the publisher will be paying out $1 per book whether the owner wrote the book himself, paid someone to write it (ghost writer) or inherited it from his great uncle Bob.

Unless the author gives up his intellectual property rights to a work, we can’t reasonably expect a publisher to pay the author for the time he puts into creating the manuscript. Let’s look instead at the work the publisher requires of the author after the contract is signed. Let’s suppose the publisher has two similar books and needs to sell 10,000 copies of each. Book A’s intellectual property owner is the author. Book B’s intellectual property owner is a 102 year old woman in a nursing home. From experience, the publisher knows that 100 man-hours are needed to market a book of this type. That gives us the table above:

This is an oversimplification, but in essence, the more time the author puts into marketing or editing or whatever, the less time the publisher has to put into it. In this example, the publisher realizes a savings of $4,500 on the book written by an active author versus the one written by the practically dead grandma. The good news for the publisher is that he gets to keep that savings. The bad news for the author is that publishers have been relying on this saving for so long that they can’t afford to pay their authors for the work they do.

What can we take from this? The author’s highest priority must be to increase and protect the value of her intellectual property. We do that first and foremost by improving the quality of our writing. We also need to focus our writing on what we write best. Our goal should be to become the go-to-guy for whatever it is we write. Instead of sending a manuscript off to our agent asking if it’s good enough to sell, what we want is for publishers coming to our agent and asking, “What’s your author working on and what will it take for us to get it?”

As much as we would like to tell publishers that we won’t work for nothing, we can’t do that. It turns out that the value of our intellectual property is directly proportional to a publisher’s ability to make a profit from it. The more the author is able to do for the publisher, the more profit the publisher makes and the more valuable the intellectual property will be. If the author has a huge platform, the author doesn’t need a traditional publisher to make lots of money from his intellectual property. Why doesn’t he then self-publish and take the higher percentage on each book? Big platform people are busy doing other things. They don’t want to take time away from their higher prioritites to learn to publish a book when there are experts who are willing to do it for them. For the rest of us nobodies, the value of our intellectual property isn’t high enough yet and we will languish in obscurity until we we find a way to raise it.