Tuesday, February 19, 2013

Self-publishing companies use some very weird math

Periodically, Outskirts Press sends me email messages to try to convince me to use them for publishing. One email from Karl related an alleged conversation with a happy Outskirts author. Karl said, “Outskirts Press was her first choice because our authors keep all their rights. And she liked our pricing flexibility. The other publisher pays her 200% less in royalties. Yes, 200% LESS.”

I’m no Einstein, but I think there’s something very strange about that number.

To keep it simple, let’s assume that Outskirts would pay a royalty of $100 for some quantity of books sold at some price over some period of time.
If the other publisher paid $50, it would be 50% less than Outskirts paid.

If the other publisher paid $25, it would be 75% less than Outskirts paid.
If the other publisher paid absolutely nothing, it would be 100% less.
Unless there’s a way to receive less than nothing, I can’t see how it’s possible to be paid 200% less than anything. I asked for an explanation but I didn’t get one.

Some self-publishing companies try to impress potential customers with the prospect of earning big royalties on each book sold. Don’t be impressed by big percentages: 50% of $8 is not better than 20% of $20.

Most self-publishing companies have multiple paths to get books to readers, and the path ("channel") determines how much royalty you will receive. On books sold from the publisher’s website, you could get a 50% royalty. This is the highest royalty percentage, but because of limited website traffic, your sales and income will probably be minimal.

On books sold through online sellers such as Amazon.com, you could get 10%, or possibly a bit more. On books sold through terrestrial booksellers that pass through a distributor or wholesaler or both, your royalty may be just 10%—or less.

If you earn a “royalty” of 50 cents or $6 per book, but you’ve already paid $300 or $3,000 or $13,000, you’re really just getting your own money back—very slowly.

Some publishers are vague or misleading about how royalties are calculated. They may offer what seems to be a very high percentage, but it’s based on the wholesale price of a book or the net profit, not the retail “cover price.” Be sure you know what to expect. e-Booktime says, “For ebook sales we pay 50% of the amount we receive from retailers. EBookIt pays me 85%
Laredo Publishing says: “When co-publishing with us, you receive 25% of the net profit from the books we sell.” That promise may be as empty as the “percentage of the net” deals offered by Hollywood studios to naive actors. There may be NO net profit to get a percentage of. How can an author know if a book is profitable to Laredo? She can’t know.

Mill City Press recommends selling books from your own website with "fulfillment" by Mill City. 

How many people are going to find your website and order books from you? How much will it cost to drive traffic to your website. What happens if nobody shows up?

The company recommends giving Amazon.com a 55% discount. Amazon will accept 20%. Don’t waste your money by following any of Mill City's recommendations.

Mill City says: "The typical earning for a book sold through your own site is about three or four times more than it would be if you were selling it through Amazon or another retailer. For every book you sell through your website, you’d need to sell three or four on Amazon to make the same amount of money." BULLSHIT!
  • With a 200-page, $20-list-price paperback printed by Lightning Source and sold by Amazon.com, an author would keep about $12 after giving Amazon its $4 discount and paying Lightning $4 for on-demand printing and shipping. 
  • The same size book would cost about $3 for offset printing by Mill City. The company would add $1.50 for handling, $5 for shipping and 4.5% for credit card processing. The author keeps $9.60. 
Mill City's mathematician must be smoking some very strange stuff to determine that $9.60 is three or four times $12.

The numbers are even worse when you consider that Mill City has a setup fee of $499 and a $199 fee for later years. With Lightning Source, the setup fee is $117 and the annual fee is $12.

As I mentioned yesterday, Booktango boasts: “we think you deserve 100 percent royalties. We won’t take any of your hard-earned e-book sales: no distribution fees, no transaction fees, no nothing. That means you’ll earn the full list price of any e-book sold through our bookstore. And when your e-book sells through a different online retailer, say via the iBookstore, you still get 100 percent of net royalties.”

That little word “net” is very important. The 100% royalties come only from books sold from the Booktango website, which will probably sell very few books. With sales from other booksellers, you’re supposed to collect 100% of what Booktango collects—but you’ll never know how much Booktango actually collects.
Also, if Booktango is paying you 100%, you may wonder how it makes money. How does it pay its employees? How does it pay its bills?
I can think of just one way: by pushing high-profit publishing services and packages priced from $49 to $2,999.
That’s a long way from “free.”

Booktango will provide U.S. copyright registration for $150. You can do it yourself for $35.

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Einstein photo by Oren Jack Turner

1 comment:

  1. Mr. Marcus, I am old school. I would love to get all the books you are publishing about writing in paper book form. I want/need to write notes,highlight, bend pages. Next year I have plans to to publish and want your books on my shelf for reference, and overall learning. Are all of your books available in paper form?