Friday, August 14, 2015

Let's Talk (John Scalzi's) Numbers! The State of the Genre Title 2015

Travis here with another business post! (Warning, tables and spreadsheets ahoy!)

The other day, best selling SF author John Scalzi posted an article called "The State of the Genre Title in 2015" in which he revealed some fascinating sales data for his latest release, Lock In.

The fact that this got posted at all is extraordinary. You almost never see traditionally published authors posting real sales numbers of any sort, especially not a big bestseller like Scalzi. He's giving us a rare glimpse of what the top of the trad/NY world looks like here, and for that reason alone you should definitely check the post out.

But fascinating as all the numbers are, Scalzi uses them to draw some conclusions about modern book selling that we, with all respect to John Scalzi, don't think are correct for the majority of authors. Specifically, when he's talking about the percent of his sales that came from hardcover and audio, he says:
"This continues to be my major concern with digital-only self-publishing, incidentally: there’s money being left on the table if you can’t address all these sales channels. Most self-publishers (or micro publishers) don’t have access to bookstores, nearly all of which continue to operate on a “returns” basis. This is not about the ability to create a physical copy of a book; at this point that can easily be done with print-on-demand options. It’s about having the book already on the shelves, attractively packaged and ready to buy, when the customer walks into the store. If you don’t have that, you’ve largely lost out in that sales avenue. Likewise audio if you’re not there."  
(emphasis mine)
What Scalzi is essentially saying here is that, by not having their book in bookstores, the self-published author is leaving money on the table. But I professionally think that he has left a lot more money on the table by signing with a NY publishing house, and that's what I'd like to talk about today.

Let's Talk (John Scalzi's) Numbers: Which Table is More Money Being Left On?

Before we get going, I just want to say that I'm a fan of Scalzi's work. Old Man's War and Ghost Brigade are some of my favorite sci-fi reads (second to the Paradox Series ^_~). I also have a lot of respect for him as a businessman. So if this post seems critical, please don't think that I'm down on John. I just politely disagree with something he's said.

(Rachel Note: John, if you're reading this, know that we both love you! Not hatin, just statin!)

In his post, Scalzi has a graph with all his numbers. I don't want to steal his images or his thunder, so I've copied the original sales numbers he posted into my own spreadsheet, which you see below. You can see the original pie chart of sales by type on Scalzi's blog, which again, is totally worth reading.

Click to enlarge to readable size.

The first table are my estimations on what John Scalzi has probably earned so far based off the sales he's shared with us. Here I'm using royalty rates that are fairly industry standard for all the Big 5 publishers. However, I'm betting that rather than getting paid the standard royalties based on Net Receipts, Scalzi's probably getting his royalties off retail cover price instead. It's good to be a bestseller after all ^_^.

(Rachel Note: If you're confused about the difference between net royalties and royalties as percent of retail, I posted a table breaking down the math into nice, easily digestible chunks in my Writers and Money (Part 1): Traditional Authors post. Check it out!)

Now, lets look at what those same sales numbers would have earned with self-pub,

I've removed hardcover sales entirely because (as Scalzi said) there are very few indies who can make meaningful hardcover money out there and because I'm pretty sure these are retail store sales which would be lost to authors pursuing the indie author route. We'll get into the fact that these sales volumes would most likely not be the same had Scalzi gone indie in a moment, but first...

Its the potential $270,000 difference, or 2.5x earnings difference if you will, that I want to call to attention here.

By going NY with this book, Scalzi certainly got a LOT of promotional oomph. He has celebrity audiobook narration for one, and I'm sure that Tor put in a lot of other marketing, PR, and general promo as well. The ability of NY publishers to promote books is very considerable and not to be discounted.

That said, Scalzi himself has 86k twitter followers, his blog (by my est) gets hundreds of thousands of views per month easy, and he has massive followings on other social networks as well. He has all the megaphone he needs to sell lots of books before the publisher even steps in, never mind all the good old Amazon recommendations he's certainly getting.

Looking at that set up, any author who's had even modest success selling books on their own will tell you that John Scalzi doesn't need NY's help to move a lot of units. Further more, he might have given up a staggering amount of money to his publisher for the privilege.

Would Scalzi have sold as many books without Tor? Probably not. Tor put in a ton of marketing with a hardcover release and buying bookstore co-op (I know I saw Lock In on the front tables at my local B&N), plus the celebrity connection with getting Wil Wheaton to narrate the audio books. But the question here isn't did Tor do a good job. It's did all of Tor's promotions increase sales enough to justify Scalzi earning 60% less on the books he did sell?

Without launching the book again, there's really no way to answer this question. It doesn't actually matter, though, because unless you're John Scalzi reading this right now (Hi John!), you're not him. Whatever your writing career becomes, it will be fundamentally different from Scalzi's or Rachel's or any other author's, and that's exactly the problem. Because unless you're selling like John Scalzi with an awesome, well connected publisher who's completely on the ball and in your corner pushing your hardcovers like Tor has been doing for Lock In, his advice about not leaving money on the table doesn't work nearly as well.

My Point

In his post, Scalzi is offering advice to other authors based on his experiences. He's saying don't ignore NY Publishers because they bring in these other channels that indies can't really get into, and by losing that access, authors are cutting themselves off from potential money waiting to be earned.

I'll agree that he has a point on hardcovers. It's hard to POD or direct-sell hardcovers without a publisher or a lot of money and risk-tolerance. I also agree that Audio is a huge emerging sales channel, but it's one that's now very open to indies through Audible's ACX program and Audible's own headhunting efforts to get successful indie authors into audio contracts, such as the one they offered Rachel for her Heartstriker books.

I disagree with him about foreign sales. Everything I've heard from very experienced agents and professionals says that foreign sales are a long, tough game to earn a profit on. UK sales are the exception, but you get those with Amazon, CreateSpace, and ACX anyway. We're talking about German, French, Spanish, etc...

However, what we are really comparing here is the opportunity cost of chasing all these extra channels (especially print) via an NY publishing contract, or going it alone as an indie and focusing primarily on ebooks. Again, here's Scalzi's view on the matter:
"A writing career is not at all unlike a stock portfolio — diversify for long-term success." 
This isn't bad advice. Diversification is generally a good strategy in all businesses. But while I definitely think Scalzi's heart is in the right place, I don't think that his experience (ie, that of a popular bestseller) is one that the average NY published author has. This is especially true when you consider what the average author with an average publishing contract gives up in potential income when they sign an average NY contract.

Let's look at Scalzi's numbers again, only this time we'll run through a much more standard, boilerplate NY contract's royalty rates.

Again, these are not the sales of a mid-lister. If you can get these sort of sales in a year, then your agent would be on the phone getting you a better deal! But I wanted to show how much difference the special treatment that the top authors get makes in terms of earning potential. (BTW, I don't begrudge successful authors special treatment! This is business, not government. It doesn't have to be fair. If you get advantages for being awesome, you should take those and run with them! ^_^)

So as you see, what kind of contract you get makes a huge difference in your earnings, even given the same sales. But look what happens when we compare the self-pub earnings for those book sales vs the standard NY contract rate...

We see an earnings difference of almost 3x. That's not small potatoes.

One of the main endorsements Scalzi makes for going after these extra sales channels is diversity, and I get his point. It's risky to have all your eggs in one (ebook) basket. Many authors, like Joan Penn, who have been at the self-pub thing for years now have learned to diversify their income for this same reason. Those of us who rely entirely on Amazon for revenue and book sales are definitely taking a risk. up such a huge amount of potential earning power by taking a NY contract is, I feel, a much greater risk. Cash in hand is security. $270,000 represents 4-5 years of operations for Rachel and I. If the Amazon eBook market crashed tomorrow because Amazon turned evil, was busted up by the DoJ, or a new amazing competitor arose, we would definitely be in a jam. But while we don't make Scalzi money, the incredible-by-publishing-industry-standards earnings Amazon's current high royalty rates provide has let us build the cash reserve we need to weather any crisis long enough to change strategies accordingly.

So while I feel Scalzi's advice of "diversify" is solid on its own, I don't think trying for an NY contract purely for the sake reaching the print bookstore market or pursuing a diversified sales strategy is a good idea. This is especially true for midlist authors who don't get the celebrity-read audio books, big hardcover releases, in store co-op, and multi-platform marketing push that bestsellers like Scalzi enjoy.

Again, I'm not hating on Scalzi for his success. He's clearly doing very well for himself and knows what's best for his business, and that's awesome. Good for him! But I do think that his advice not to ignore New York publishing because you'll be "leaving money on the table" by not having access to the diverse sales channels publishers provide isn't applicable for the average writer who isn't selling like John Scalzi.

New York publishing contracts are great for many things--fame, industry recognition, winning prestigious awards, meeting other famous authors, getting the attention of Hollywood--but earning money through book sales is not one of them. It used to be that authors went indie because they couldn't get the interest of a New York house and had no other choice if they wanted to be published. Now, though, more and more authors--debut novelists and established mid-listers--are going to ebook first indie publishing because the money is simply too good to ignore.

So while Scalzi is technically right that indies are leaving money on the table by not going with a publisher and consequently not getting access to bookstores, what I don't think he's considered is that, for most of us, the pile of money on the table we do have--ebook sales--is (relatively speaking) so big it eclipses the money left on those tables we don't have access to. And, you know, I'm okay with that. ^__^

In Conclusion

Should smaller writers (and if you aren't Scalzi, you're probably smaller ha-ha), take this advice and go with a NY contract in order to diversify and avoid "leaving money on the table?" I don't think so. You won't get good enough terms and you won't get the crazy support that a big name like Scalzi gets from the publisher. You will, however give up a ton of earning power, rights, and control.

As we always say here on Pretentious Title, though, money isn't everything. So while this post was very much about money because that's my point of contention, there's a lot more to writing and publishing than earnings statements. NY is great for fame and for seeing your books on shelves. If you're just starting out, or have money but not fame from self-pub, then traditional publication definitely has something to offer.

Just don't look at NY to make you rich. If you are good you might get famous, which isn't a bad thing! But just know that you'll pay a lot in lost revenue for the privilege and that you will need to strategize accordingly. Ideally finding a way to make a living wage from that fame. ^_~

But if making a living wage off book sales is your biggest publication goal, and you're not yet a bestselling big fish, then our numbers show you're better off doing the exact opposite of what Scalzi recommends. Rather than worrying about about leaving money on the table by not having access to print, you should take advantage of the indie revolution and focus on the amazing sales channels you do have access to, such as a 70% royalty on ebook sales and a 40% audio book royalty through ACX, and direct paper sales through services like Create Space.

These are crazy huge percentages by traditional publishing standards, and they are definitely not to be ignored. If anything, I'd say traditionally published authors are the ones leaving money on the table by not pursuing these opportunities!

This is just Rachel's and my opinion, of course. We took the numbers Scalzi posted, looked at them using our own experience with selling books, and drew our conclusions based on that. You may look at these numbers and come to a totally different final opinion, and that's fine. If you think we're wrong, we'd love to hear why. This is why giving advice to authors is so difficult. Everyone's got their own circumstances, goals, and ways of doing things.

Even if you think we're wrong, I still hope you enjoyed the post, and don't forget to check out Scalzi's blog! I didn't agree with what he said this particular time, but his advice and insights are usually awesome and always worth a look.

Thank you for reading, and I'll see you next time with more numbers! ^__^


Rachel Note:
Thank you Travis for that excellent analysis!! If you're interested in the details about New York publishing money vs. Indie money (or money in general), see my Writers and Money series:

What's good for the gander is good for the goose, so for real world reporting on my own sales numbers, see Nice Dragons Deserves Numbers. I'll also be doing one of these for One Good Dragon Deserves Another as soon as I get the final sales report for this month's launch.

If you enjoy these business posts, you can see all of them by clicking on the Business tag below. As you can see, we're all about numbers here! Yay spreadsheets!

Thank you as always for reading, and I very much hope you enjoyed our probably overly obsessive journey into a major author's sales numbers. Thank you very very much to John Scalzi for making his numbers available! We are disagreeing with you in with the utmost respect!

Yours always, and thanks for reading!

Update! Passive Guy joins the conversation!

Completely to my surprise, The Passive Voice blog picked up and reblogged our post! Even better, Passive Guy himself, who is a super smart cookie, chimed in with his own thoughts on the matter.
PG says that Scalzi’s “diversification” is not his diversification as an author, but rather his publisher’s diversification in selling books through a variety of channels Given the nature of publishing contracts and the ways publishers traditionally operate with most authors, a traditionally-published author is extremely undiversified. 
Most of such authors deal with a single publisher, sometimes by choice and sometimes pressured to do so by noncompete provisions in their contracts. Further, most traditionally-published authors deal personally only with a single person at their publisher – the editor responsible for acquiring the author’s books. 
A single point of failure is a part of a system that, if it fails, stops the entire system. A system with a single point of failure is the obverse of diversification. Traditionally-published authors are endangered by multiple points of catastrophic failure.
I highly recommend you read the rest over at The Passive Voice. He and the writers in the comments bring up several more points that we never even considered in our analysis. Well worth the read! Thank you to PG for featuring us!


Jennifer Wells said...

My own experience as an indie author could be taken as a point by point illustration of the salient assertions above. I've sold a single title and had only myself to rely on for marketing. And yet by most standards of measurement I was exceedingly successful.

AND, by the way, through Ingram Spark, my paperbacks are available to bookstores--they are in the Ingram Advance catalog, which most independent booksellers use for ordering purposes. I don't have hard numbers. It's certainly not in Barnes and Noble, but there are a few small booksellers who carry it. So, it's not impossible to break into that marketplace either.

I also quickly produced an audio version which has proved to be a nice income stream for me. So, John, you *could* have your cake (and eat a crapton of it) if you hadn't just signed a multi-book deal. In fact someone like Scalzi going indie could have a dramatic effect on the marketplace--helping to lift indie writing to legitimacy.

Writing IS a meritocracy, after all. I want to see good writers succeed and make a living wage.

Rachel Aaron said...

This is awesome!!! Thank you Jennifer! (And thank you for bringing up Ingram Spark, I totally forgot about them!)

Your success is definitely deserved. And on that note...when can I get book 2?! ;)

Sam said...

Thanks for the awesome posts. Did you ever talk about if libraries are good for authors? I'd be interested in hearing your take on it.

Rachel Aaron said...

@Sam we've done some research about getting our self published books into libraries, but so far there really doesn't seem to be any kind of successful avenue for actually getting indie ebooks into to libraries. As for my trad books, they're all in libraries as print and audio, but even there ebooks don't seem to be catching on. I don't have any real numbers, though, so I haven't made a post because hey, nothing to say!

I personally love libraries, but I don't actually get books from them much anymore since I do 99.9% of my reading on my Kindle and my library's ebook selection is kind of meh.

Quincy Drinker said...

I personally think that authors who do not self publish do not know much about it...As for distribution yes, but among royalties or anything..nope..I personally want to self publish a fantasy series as you have inspired me

Eric W Burgin @ericwburgin said...

What are your feelings about small press publishers? Is there enough advantage to do that route, or are they jack of all trades, master of none?

Travis Bach said...

@ericburgin we don't have any first hand experience with small press. Also they are so diverse in their offerings now that general statements are a little tough to make.

It comes down to what they bring to the table vs what they take. Any author should ask,"is my publisher worth their cost?". Book production is cheap, other than time of course, compared to other products. For $3000 or less you can buy all the editing, copy, and covers needed. Someone who takes 20% or more of royalties for that is definitely overcharging. A publisher that brings reach and promo to help ensure bigger sales makes it a less clear evaluation.

NY is easy to compare because they take so much of the money. A smaller press that takes much less would be a tougher evaluation I think. Particularly if they are flexible, agile, and modern in the promotion techniques they use.

Travis Bach said...

@ericburgin we don't have any first hand experience with small press. Also they are so diverse in their offerings now that general statements are a little tough to make.

It comes down to what they bring to the table vs what they take. Any author should ask,"is my publisher worth their cost?". Book production is cheap, other than time of course, compared to other products. For $3000 or less you can buy all the editing, copy, and covers needed. Someone who takes 20% or more of royalties for that is definitely overcharging. A publisher that brings reach and promo to help ensure bigger sales makes it a less clear evaluation.

NY is easy to compare because they take so much of the money. A smaller press that takes much less would be a tougher evaluation I think. Particularly if they are flexible, agile, and modern in the promotion techniques they use.

Debra Dunbar said...

I consider myself a mid-list author, and I'm totally self-pubbed up to this date. That said, I did chat with quite a few agents at conferences this year to see if there might be some opportunity in going hybrid. My thought was if they could get me a print run in book stores and expand my readership base, I'd be willing to "sacrifice" a novel or series for the measly advance and poor royalties.

Uh, no. Agents honestly informed me that unless I was a "big dog" in the self-pub arena, my book would receive offers from the e-book lines of major publishers. Which means, no print run, only POD. I asked if they could negotiate something in the contract where with x number of sales happened in x timeframe, I'd be guaranteed a print run of x.

No. Would never happen. Ever. But if I did three of four books with the e-book line, and sales were in the six figure range, I might see an offer with the main publisher and a print run on future books.

I crossed that idea off my list. No way I'm "sacrificing" a novel or three or four, earning far less than I do now for exactly the same sort of thing I'm doing on my own, with zippo guarantees for anything in the future.

Big Five: Wake up. I've spent 30 years in Corporate America management, and I've never seen this sort of one-sided business arrangement.

shanadubois said...

Fascinating post and the first one I've read on the blog! I have a lot of catching up to do and have already bookmarked so many older posts. I love what you're sharing and how you share it, thank you for a quality and thoughtful discussion surrounding the numbers of publishing.

Rachel Aaron said...

@debra That is a fascinating story, and one I've never heard before since I started on the trad side of the fence. I think you made the right choice, because the numbers they're quoting are insane. If I was getting sales numbers like that in ebook, I'd be too busy hanging out in my island mansion and flying to conventions to pay NY any attention.

I totally agree with you, something has to give in the New York publishing mindset, and soon. The business agreements are simply too lopsided to compete with anything. I mean, Amazon offers us 70% just for listing our books. That number wouldn't fly in any other business. Can you imagine Ebay taking a 30% cut just for listing your items? The sellers would flee.

The only reason these kind of percentages fly at all is because the New York contracts pay so abysmally. 70% royalties sounds like a fortune when you're used to getting 25% of net.

I think the biggest thing Amazon has done for authors is give us another way, and more than anything, I hope the big publishing houses wake up before it's too late. I love NY publishing as an institution. I love how they package books and I definitely think there is a place for them in the future. But if they can't step it up and start paying authors a fair wage for the work, then they're not going to have any authors left in a decade.

Fame and industry recognition are great, but not if they come at the price of actually making a living. :(

Rachel Aaron said...

@shanadubois Thank you for reading and welcome to the blog! I hope you enjoy it!

Jennifer Wells said...

Rachel, I'm hoping for this fall. It's taking me longer than anticipated and I've been derailed a couple of times by life and some smaller projects (I've heavily contributed to Samuel Peralta's Chronicles series of anthologies--it's awesome and has helped to increase my readership a great deal. (BTW--if you're interested in getting involved with the Chronicles I am certain I can get you an invite!)

Regarding LIBRARIES. My paperbacks are in 30 libraries across the country. And now there is a NEW a way for Indies to get into them with ebooks. Joe Konrath started a company called and it's *just* getting off the ground now. I believe so STRONGLY that I want my books in libraries that I broke my exclusivity with Amazon to do it. I grew up poor and libraries were my only access to books. I want to give back to that. It's insanely important to me. So much so that I'm sacrificing a great deal of income.

I was recently interviewed by a library journal where I talked up ebooks are forever and I hope that helps get it off the ground and get more visibility. It should be a great revenue stream once it takes off.

All my best,
Jen Foehner Wels

LG O'Connor said...

Great post! Thank you for taking the time to share it. You've hit on many key points, while Scalzi's perspective is skewed. His argument is like comparing apples (bestselling trad), oranges (average trad), and pears (indie). The only reason to go traditional at this point is for building a fan base, if you are one of the authors who will be 'pushed.' If not, and you don't have a big platform already established, print sales can actually hurt you. As a trad mid-list author, you'll need to keep your day job.

Many authors are enamored with walking into B&N and seeing their books, not understanding that unless you are getting that awesome co-op marketing or are a best-seller, that venue will come back and bite you when 30-50% of the books are returned 6-9 months later. Given that your margin on POD is about $2-3 per book (without a print run) if you are offering the required trade terms of 55% discount and make the books returnable (the ante to play in a bookstore), the cost to print can be $4-6 per book. Returns can come back in any condition, with 3-10% that need to be trashed as 'hurts,' making it a risky proposition. Translation: you have to sell 2 books for every 1 returned. That's why a high percentage of trad debut authors never earn out their advances. But there's no risk to them beyond not making a dime beyond their advance like there is to an indie. If you are indie, the financial risk can eat into those yummy eBook sales, and may require unexpected cash outlays. Been there, done that, have the T-Shirt. That said, if you're a bestselling indie like Barbara Freethy with a direct relationship with IPS (Ingram), it can work.

So as an indie, I'll take eBooks and audiobooks, all day long.

BTW, the highest royalty from ACX is now 40%, not 50% (unless you have a special deal with them). They lowered it a couple years ago. I have my audiobook there...

Thanks again for the awesome post!

Travis Bach said...

Thanks LG! I've corrected the post. It was just a typo.

Travis Bach said...

Also, The Passive Voice saw us and added some great points! Check it out!

LG O'Connor said...

Thanks, Travis! They slip by no matter how many times you check :-) That's why I love my proofreader.


Rachel at 11:31 AM:

Konrath is venturing into the library thing. He just blogged about it.

Ebooks and Libraries and Self-Pubbed Authors

Jimney said...

I only have one problem with this post.

If Scalzi, or you, hadn't first had a NY publisher (or any 'official' publisher, really), would you still have those numbers to sell in Indie? I've heard (and I am wary myself) about the stigma there is against self-published authors. The question that comes up a lot is 'Did you self-publish because you aren't good enough to get a publisher?' (Devil's Advocate, don't eat me, plxx). This is obviously not the case with you (since Eli was published traditionally), but you have to admit that most of your Heartstriker sales probably come from people who've (rightfully) loved the Eli or your other traditionally published books. These books are a kind of guarantee the stuff you publish is GOOD.

A regular self-published author doesn't not have this kind of solicitation and thus LIKELY won't get to these numbers. (The big overnight stars included, but I don't actually want to talk about these, seeing as they are veeeeery rare. Not just medium rare. They're like... minimum rare. Almost entirely rare. Ugh. I'll stop it with the steak metaphors!)

This leads me to the point: if you self-publish right away, you're... uh... screwed. It only (or maximum rarely/well done-ly) works if you're already 'a brand', and who can really say they are? Rachel and Scalzi, sure, but what about people who're just starting out?

PS: I'm sorry if you meant to say 'John Scalzi in particular could NOW self-publish and make more money'. I just wanted to make the point that's been bugging me for a while!