The dirty truth about book publishing
OK, so this is my first attempt at this format, so let’s see how this works.
I wrote a novel and today, I’m going to tell you what it taught me about the underbelly of the beast that is the book publishing industry.
Welcome to WIBAI Radio Hour. What’s WIBAI…it stands for Wouldn’t It Be Awesome If…?, which is my favorite lens for looking at the world. A way to challenge yourself to think harder about what makes for a better world and why, from topics big to small. WIBAI is for the dreamers. The optimists. The storytellers. My name’s Arvind Nagarajan, and I’m a father, a writer, and an investor. Thanks so much for joining me. Ready? Let’s go.
WIBAI Theme - Book Publishing
Let’s start with the main theme of the day - the book publishing industry.
The Maker’s Dream
Just to recap, I published my first novel, The Maker’s Dream, a few weeks ago. It’s been a dream come true, especially hearing really positive words this past week from the first few readers that have reached the end. I got 200 copies of the book from my publisher, and now I’m down to 110 left. Anyways, I’ll leave the link in the notes for how to order.
Back to the point. We’re going to talk about making money writing a book. The first and most important point to make is that there really isn’t money to be made writing novels. Let me quote this great article called Could the creator economy work for fiction authors? -
The New York Times disclosed recently that “98 percent of the books that publishers released in 2020 sold fewer than 5,000 copies.” And according to Bookstat, a website that aggregates data around book sales, of the 2.7M books sold online in 2020, only 268 sold more than 100,000 copies—that’s 0.01 percent of books.
Meanwhile, 96 percent of those 2.7M sold between 0 and 1,000 copies.
**According to 2020 online sales from Bookstat*Let’s say that again. 0.01% of authors sell 100,000 copies. As someone firmly in the 96% bucket selling less than 1,000 copies, it is abundantly clear that novel-writing is not a wise path to riches. So, as we explore the different publishing options, let’s remember that none of these options are likely to be lucrative when it comes to book sales.
Traditional Publishing
OK, let’s talk traditional publishing. Almost any novel I’ve read (and probably you, too) has likely been published by what’s called a traditional publisher. These publishers offer the following value proposition:
- they pay you what’s called an advance before the book is published.
- they shepherd you through the process of editing, publishing, marketing, and distributing your book, and then
- they own the rights to your book and pay you a set fee per copy sold
This sounds like a reasonable setup. They are providing you money upfront, actively supporting your efforts, and then getting paid back on a per-sale basis. One could argue their incentives are truly aligned with yours. They are assuming the risk in the relationship. If your book doesn’t sell, they have lost their time and effort and whatever they paid you in advance. If they can generate enough sales, then they will earn money through the money earned per copy sold.
There are a few problems with this rosy picture, and they lie in the messy details.
One, the advance. The concept of getting paid to write a book sounds unbelievable. Almost too good to be true. And, turns out, in fact, it mostly is.
Yes, they pay you an advance before the book is published, that part is true. But…with few exceptions, book advances are highly correlated with the size of your existing audience. A book advance is not a publisher showing you they believe in your book and its impending quality. A book advance is not even a publisher showing you how many copies they believe they can sell. A book advance is a publisher showing you how many copies they think your book will sell. With or without their efforts. It’s based on the size of your own existing audience.
It’s like getting a mortgage when you buy a house. You apply for that mortgage, and the bank approves you based on your credit score. It has nothing to do with what value the bank is bringing to this relationship. You’re getting a loan because they think your credit score makes you a good fit to repay it. Same thing for a book advance. It’s not the book. They’re looking at your audience, your existing connections, and assessing whether you’re a good fit for their loan. Except they call it a book advance. Sure, there might be exceptions, but this is largely how the world of traditional book publishing operates.
OK, what about their help editing, publishing, marketing, and distributing your book? In truth, I cannot overstate the benefit of good editors and designers. My book is 10 times better than it would have been without their efforts. But, it’s 2022. And the work of editors and designers is now not just a company job, it’s a freelance job. You can find editors and designers to help you for a fixed rate, without paying a percentage of book sales.
And then, when it comes to distribution, unfortunately, we’re in the age of Amazon. More than ever, book sales are concentrated in channels that anyone can navigate, which greatly reduces distribution challenges. Most authors I’ve spoken to report that the publishers’ marketing and sales support is virtually non-existent. It makes sense. Those departments are cost centers, and those costs are reserved for the Stephen Kings of the world. For first-time, non-celebrity authors, you can pretty much expect to sell the book on your own.
You’re probably thinking, but there’s a prestige factor to being ‘published’. And yes, traditional publishers do provide some ‘brand value’ or prestige. Especially if you publish through one of the Big Five. It is still the case that almost all literary awards go to authors published through the Big Five. There’s a certain cachet in having your book published through this route that serves as a form of validation for your efforts. Still, for the vast majority of traditionally published authors, that brand value leads to no awards and no tangible new opportunities as a result.
When you look at this calculus, the traditional publisher deal no longer sounds quite so rosy. And that doesn’t even include the worst part. That set fee that they pay you per book is usually set at somewhere between 5-10% of the price. So, you no longer own the IP, and they now pay you 5-10% of the income of the novel you wrote!
Imagine if a startup gave away 95% of its equity in its seed round instead of the standard 20-40%. Imagine if NBA players earned only 5-10% of the total NBA revenue instead of the 50% they get.
It just doesn’t make sense. Especially in a world where the efforts of editing, designing, and distributing are getting more commoditized, the effort does not match the reward structure.
The truth is - the reason traditional publishers are taking 90-95% of the revenue of books is two-fold.
One, the industry is oversized. Publishers grew enormous during the golden age of book publishing and I don’t think they’ve right-sized to reflect the advances in technology and the democratization of storytelling.
Second, they have all the leverage. Remember my initial point about how little money most authors make? Most authors fit the traditional cliche of a starving artist. The idea of a book advance that can pay the bills is incredibly attractive to a lot of writers.
Anyways, even if I’ve succeeded in convincing you that traditional publishing is a lousy deal, your response might be…isn’t it the only game in town?
Self-publishing
Well, there’s self-publishing, but that seems to have some obvious shortfalls. It takes a lonely process - writing - and makes it even lonelier by navigating all the non-writing parts of publishing on your own. Seems low-prestige and kind of bootleg. It feels more like writing a newsletter than actually publishing a book.
That stamp of approval from a publisher puts an air of authority around the book-writing project that doesn’t exist without it. And lastly, finding editors and designers on your own is a nail-biting process, ensuring you’re not getting bamboozled and you work with quality people at reasonable rates. And despite being largely on your own for marketing even with a traditional publisher, there’s something to be said for feeling slightly more structured. Self-publishing is so unstructured and self-directed that it can feel incredibly intimidating. So, it’s not clear that self-publishing is a great alternative if you want to create the best book and have it taken seriously.
Which is where we come to our third option. Hybrid publishers.
Hybrid Publishers
Full disclosure: On The Maker’s Dream, I worked with a hybrid publisher called New Degree Press to publish my book.
There are many different types of hybrid publishers, but I’m going to focus on what I believe to be the best version. At its best, a hybrid publisher offers you the resources of a traditional publisher (editors, designers, minimal distribution support, a cohort of peers, and a level of selectivity) in exchange for a fixed payment. Instead of taking a percentage of sales, they take payment and you continue to own the IP and the revenue generated by the book. Essentially, that means you continue to own 100% of the equity.
But you must be thinking, how can this be better? Without an advance, you as an author are assuming a lot more risk by spending instead of earning during the writing process. That’s true, but it takes money to make money. And like any entrepreneur, you have to be willing to bet on yourself.
But there’s another big issue…incentive alignment with the publisher. For a fixed cost, what is the incentive of the publisher to select and publish the best books possible?
Well, I think it’s the job of the author and their editors to make the best book, and that’s largely independent of whatever publisher you choose. It more depends on the quality of the editor, which hybrid publishers should be able to deliver.
But the selectivity, in my experience, is the biggest issue with hybrid publishers. They have no incentive to be selective. They want to publish the most books possible in order to generate income and have little incentive to maintain a quality bar. So, yes, while New Degree Press technically greenlit my manuscript to go through the publishing process with them, I don’t put a lot of stock in that green light. It’s not exactly getting into Harvard.
What’s the problem with that? There’s this famous Christopher Hitchens quote that captures my sentiments.
*“Everyone does have a book in them, but in most cases, that’s where it should stay.” *- Christopher Hitchens
We don’t just want a world with more books…we want a world with better books. So, none of the options seems to work well enough. Like a lot of other industries where the middleman has grown too big relative to the creator, the bloated publishing apparatus seems ripe for disruption. Which brings me to my thesis.
Wouldn’t it be awesome if…?
Wouldn’t it be awesome if there were a different type of publisher? Here’s what I envision. A hybrid publisher that was leaner, more selective, and embraced the power of technology. Imagine two quality human reviewers aided by an AI reader that evaluated anything from book pitches with writing samples to complete first drafts. Together, they could assess the quality and market potential of a book, and respond to the best ones with a customized bid. A customized bid that includes a book advance and a revenue split. This new publisher wouldn’t be burdened by bloated costs, would have aligned incentives with authors, and would be able to offer a unique value proposition. This would look more like a big-data VC than a traditional publisher.
And, believe me, the data is there. There’s a ton of data on book sales, and the technology in terms of analyzing writing is improving exponentially with AI.
Who knows - it might even be structured as a DAO? Collectively owned and operating in the web3 world, what better way to drum up interest in books than to take advantage of the most enthusiastic collectors in the world right now? Home libraries were the original NFTs, and its obvious people will pay more for the limited edition collectibles that web3 can enable for authors.
Crypto or not, ultimately, an awesome publisher ought to be driven by the mission of getting more of the best books in front of more people. And the dirty truth is…most publishers don’t operate that way.
Thanks for listening.
WIBAI Recommends
Now the part where I give you some recommendations for things to consume. One thing to read, one thing to listen to, and one thing to watch.
First, something to read. The first is an article called - Living in Expectation of the Unexpected Gift. (link in the notes).
Really weird,” Gilliard noted, “how tech companies are all promising to offload your decision making so you can have time for ‘what matters.’ If you aren’t making any of these decisions, what’s left that matters?”
Attend to the ordinary and the mundane with care and with gratitude.
Refuse the ever-present temptation to control and manage the thing we call life for their is no surer way to miss it.
My favorite line, with my own prefix attached.
Wouldn’t it be awesome if we “considered that rest is not a time set aside, but a spirit brought to every time?”
Next, something to listen to. This is a podcast from Hidden Brain called The Story of Your Life.
It’s all about how we ought to spend more time reflecting on our own lives, realizing that even our own reflections are just a story we’re telling our self about our lives, and we can actually take the time to rewrite those stories in different lights. It made me think - Wouldn’t it be awesome if we looked at our fantasies with less judgment and more curiosity?
Last, something to watch. This is a no-brainer for me. Get Back
The Beatles: Get Back (Disney+)
I am not a huge Beatles and, or at least I wasn’t prior to watching this. But despite the fact that this was 8 hours, the time flew by as it felt like I was just sitting in the room with one of the greatest bands of all time. It’s rare you get to see the creative process unfold so organically between people as talented as the Beatles, and the fact that it’s longer actually makes it more realistic as a viewer.
Wouldn’t it be awesome if we could spend 8 hours in the room with the greatest band of all time, watching the mundane and magical ways that greatness unfolds?
Also, I have a prediction to make. I think in the next two decades this footage will be re-mastered once more so that it can be experienced in virtual reality. It lends itself perfectly - basically all the action happens in two places…a studio in Twickenham and the Apple Studios. So, at some point, it will be very feasible to recreate those spaces virtually with high fidelity and allow you to experience it like you are actually sitting in the room with them. I, for one, can’t wait.
OK, that’s it for the recommendations this week. For more recommendations, you can check out Timeless Articles on my website, also in the show notes.
Kids Corner
Now, for the final segment of this episode of WIBAI Radio, Kids Corner. I have two girls, 5 and 3, who bring an incredible amount of joy and humor to my life. So I like to share some little nugget from them that I think you’ll enjoy.
This one - a few weeks ago - I picked up my girls from school. In the car, my 5-year-old tells me her teacher asked her what my wife and I do. Curious, I said, “So, what did you tell them?”
She says, “I said Mommy is a brain doctor.”
I thought to myself, that’s pretty good. She’s a psychiatrist, so not a bad description at all. Now, at the time, I was working in private equity, investing in schools. Not quite as easy for a 5-year-old to explain. So I ask her, “And what about me?”
She goes, “I said you’re an investigator that visits schools…”
After that doozy, I’m afraid to make eye contact at school dropoff.
Alright, that’s it for this week’s show. I hope you enjoyed it. If you did, please share this with a friend who might like it as well. And tune in next month when I think we will look at what it means to be successful as a parent.