I was shuffling through some papers on Friday when I came across a speech titled “The Economics of Publishing,” which was delivered by Otto Penzler at a Mystery Writers of America/New England Chapter meeting in April of 1999. Penzler is a well-known editor, publisher, and bookstore owner. Here is some of what he had to say:
“Why are you trying to write? It makes sense only for people with a creative urge not satisfied in other ways and who have other means of support. If you need to earn a living from this, I’m suggesting that you reconsider. Many of you—no mater how talented you are—are not going to get published. If you do, you are not going to become a success. Even if you are published and have success, you won’t make it multi-million big. Very few people do.”
He goes on to talk about what happens when and if your agent is able to get your manuscript into the hands of a publisher.
“When the manuscript gets in-house, unless the agent or writer has a track record as a star, the manuscript is read first by a first reader or junior editor. It moves from junior editor to assistance editor to editor. Assuming they all like it, the editor takes it to a weekly marketing meeting. This meeting includes such people as the directors of advertising, publicity, sales, and art. The editor has to convince the committee that it’s saleable, and that it may actually make money.”
Most books, he concludes, do not make money and here’s why. As an example, Penzler uses a $10,000 advance and a per book cost of $20.00.
“10,000 x $20 does not add up to $200,000. The average discount to bookstores, libraries, etc is 48%, which means that if the whole run sells out, the publisher gets $104,000. Almost never does the whole run sell out. If the author is lucky, 7,500 copies will sell—a “75% sell-through,” a very good percentage. (50% is more typical.) This means the publisher actually gets 75% of that $104,000, or $78,000.”
According to Penzler, here’s where the rest of the money goes:
Book Sales 78,000
Advance to author 10,000
Line editing 200
Cover design 3,000
Dust jacket printing 4,000
Prepare printing process 1,000
Printing ($3/book) 30,000
Advertising/promo ($1/book)* 10,000
Royalties to author (less adv)** 5,844
TOTAL INCOME 78,000
TOTAL EXPENSES 67,044
NET PROFIT 10,956
*Usually includes only a prorated share of the catalog space and small ads in local newspapers
**Generally 10% of the cover price on the first 5,000 copies, 12.5% on the next 5,000, and 15% of all copes over 10,000.
Penzler notes that the drain on profit doesn’t stop there. The publisher must also deduct overhead, which he estimates as 15% of sales or a flat fee, usually $20,000, leaving the publisher in the hole to the tune of $9044. The house may be able to recoup some of that loss by selling subsidiary rights (book clubs, foreign rights, audio rights), but in the publishing world, there are no guarantees.
I first read this article in July 2005 and remember feeling slightly queasy. It still leaves me feeling astonished that anybody can get a book published these days. On the other hand, somebody has to be multi-million big. It might as well be you. May the force be with you!
n n n VERY IMPORTANT ANNOUNCEMENT n n n
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And because I want to leave you laughing...
Words fail me.
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