Tuesday, September 1st, 2009
The publisher or the author - who earns the most? Part 1: present
Posted by Mattias B of the book industry, Book publishing | Tags: f-price, publishing economics, Piratförlaget, royalty
21 comments
Who benefits most from a much publishing? Is it the author, publisher or someone else?
Let us take an example. A normal novel in bound format has been selling (f-price) 140 SEK from the publisher, giving a target price of more than SEK 300 out of the bookstore, but the price is almost never out. Instead, they end up at maybe £ 219 in the usual bookstore and down to 179 SEK in nätbokhandlarna and department stores.
I'm not a great bookstore economy so I do not know how good business dealers are actually doing. Many booksellers have obviously been profitability problems. Can someone familiar bookstore personally explain?
It must be added that the publisher did not get 140 SEK. Dealers have an average of 15-20% discount - say 17% to a figure in our calculations - and I count also the so-called marketing grant a discount.
The author receives a royalty on the f-price 140 SEK, traditionally around 27%. But there are things that reduce the royalty (eg, lower royalty rates in book club sales). Let us therefore say that the author has an average of 23% in royalties. (Writer's fees listed below are the gross amount, deducted before their own contributions and tax.)
This means that the 219 crowns - the book is priced in the bookstore - distributed as follows (figures are rounded): 32 kr author, publisher SEK 84, retailer 91 kr (24 kr in rebates and 67 £ in premium) and VAT 12 kr.
The publisher has understood some expenses. We look at their SEK 84.
The novel in this example is a debut. A circulation of 3 000 copies fails because sensible. Let us say that the book costs 17 kr / ex pressing. £ 51 000 payable to the printer. It is not easy to generate interest in newcomers by visiting ads and purchased campaigns, so we confine ourselves to adding 30 000 SEK in marketing. Instead, we work primarily with the few reviews and publicity for the book. We print out advance copies and send review books. 10 000 SEK for this.
But before we have come so far needed a book cover, a break (layout) of the pleading, author photo and proofreading. Most of these services buys publisher from freelancers. 38 000 SEK in total of this may sound much, but there are market prices.
Add to this the publisher's work with this particular book. Thus, no overhead costs, but only the hours the publisher, editor, sales, marketing and PR people spend on this particular debut novel. At least a hundred hours, it is about a total and a snittlön of say £ 25 000 so does this work 20 000 SEK (including soc avg).
Note that I take in quite low in the publisher's overhead - I just want to give an example based on the lowest possible initial wager.
We expect also that the publisher pays an average of 5% of book sales in the distribution cost.
Publisher SEK 84 has thus been divided on employee wages / freelancer 21 SEK, 18 kr printing, distribution, 6 SEK, PR / Marketing 14 SEK and the remaining to the publisher 25 kr.
(The printing cost / items is increasing - from 17 to 18 £ - because we can sell a maximum of 2 800 items of edition of 3 000 items, the rest is used as a legal deposit to include a writer and reviewers.)
In this example, then to author a total of 90 160 SEK and the publisher 69 432 kr. By contrast, had only 2 000 items were sold by the edition of 3 000 items that the author had received 64 400 SEK and publisher 6 880 kr. Is it less than 2 000 sold items is the issue rather quickly is a pure loss for the publisher. The author is always protected by the so-called garantihonoraret which amounts to 50% of total royalties for the author's first edition and payable in advance.
Something like this looks the economy out of a large proportion of the books published in Sweden today. But why give in this case publishing houses in this, when they already knew in advance that a publishing project might not go with any significant profit? Yes, it is about building writings - to believe strongly in the quality of the writer and the future demand for his books.
By initially taking great risks in a number of writers' careers, it is hoped that one or more of the authors Partnerships will reach editions in at least 10 000 copies. With the traditional royalty system in which the publisher earns more money than the author and may recover any of their previous losses. While there are of course major requirement for publishing the larger edition is, in terms of enhanced public relations and marketing efforts, which eats up some of the increased profits.
(Piratförlaget model differs from the above by the publisher and the author is always the same amount when you get up in the larger editions. For short runs, it is the writer who earns more money than the publisher, even in Piratförlaget.)
In addition to the hope that a writer is to grow, many publishers of loss-making projects for their literary importance. It is absolutely indefensible, not least out of respect, goodwill, but no publisher can survive alone in this, unless you build their business on a range of literary aid money.
So it is this reasoning which is the foundation of the publishing economy. Being willing to take many risks and losses, but then make money on the few writers who really sell really well.
The Swedish publishing market holds of course lots of exceptions to the above examples, but the basic principle is the same for most publishers. In an upcoming blog post I will show the distribution of the corresponding economic calculation would mean the future of book market, where e-books and new sales channels, changes the charge mode as revenue opportunities.
21 comments to "The publisher and author - who earns the most? Part 1: current situation "
Trackbacks & Pingbacks:
[...] Novels deserves in this context, an honorable mention). The latest insticket about publishing industry and the economy are as clever as everything else he takes [...]
[...] Publisher or author - who earns the most? Part 1: current situation "Mattias Boström http://www.mattiasbostrom.se/2009/09/01/forlaget-eller-forfattaren-vem-tjanar-mest-del-1-nulaget - view page - cached # RSS 2.0 RSS. 92 Atom 0.3 Feed Mattias Boström Mattias Boström »publisher or author - who earns the most? Part 1: current comment feed Mattias Boström Why this bragging shelf? We need to talk loud to each other, so that all belong - From the page [...]
[...] A recent post Mattias gives an example of how the pie is distributed. If a book is sold for SEK 219 in the bookstore may [...]
[...] Publisher or author - who earns the most? Part 1: Economics Publisher currently in practice, part 7 Now we have the manifesto debate! Hurray, hurray! (Otherwise, I feel most unengaged by the whole manifesto thing. Or anyway, I love the title Do you have manifested, or?) Fantastik at the library: a study on how Swedish public libraries remained to three genres of the breakpoint between 1970 - and 1980's until today [...]
[...] Make money on books - the author or publisher - but it fell away. To read Mattias Bostrom mail instead, it is interesting. September 11, 2009 @ 6:00 • # Filed in Asides Tagged with [...]
[...] Bostrom - publisher or author - who earns the most? Part 1: nulägetSeptember 12, 2009 - Interesting calculation of who serves on a book. Worth [...]
Interesting. It is exactly like this that need to be explained. Transparency again. I saw a small record label (can not remember which) that the pie chart showed how the client's money was divided between different parties. I think of more things to come. It's so easy for us outside the industry to just see it as a kind of parasite.
Really good post Mattias. Interesting and good that it is highlighted in light
Very interesting to share! Always speaking with figures.
As usual, interesting Mattias. This is really nothing new though it is new is that you fully disclose it, which is good. It is the only way to eventually get to stability and confidence agreement with authors and other stakeholders.
For me, the great pedagogical problem for a publisher that in a sensible way to charge for editorial work. Linda Skugge thought that people should write and not edit much, but myself, I feel that the editor of and edited should evolve and get better faster and does not lap up. For the foundation course to all readers, authors, publishers, critics, etc. have as good books as possible. Good books takes time and effort and it is difficult to show how much it costs and is worth. Compare for example. with how difficult it is to put quality journalism and reportage in clear digits + or -.
"Publishers have understood some expenses," according to you.
But it has evidently not the author? The author has a significantly higher proportion of overheads. Food, rent, etc. is just the beginning.
Counting the costs for one party but not for the other, is the basis for the widely criticized Hollywood-type of calculation (landing at the instance Tolkien family did not receive a penny of the super success of LOTR movies, for "expenses" have been eating everything).
Of particular interest is that it is also the author's expense to deduct tax effects. Taxes on individuals' work tends to be significantly higher than corporate taxes.
But it is not the core problem. It is rather how the economy is changing as the cost of printing lapses, when no large trucks have to run out of cellulose core, expensive bookshop premises, etc.. It should in my view, mean * significantly * cheaper books (in the E-form, that is), but the question is whether publishers accordingly will cut their claims on how much of the pie they want?
When word processing and Desktop Publishing arrived, which simplify and speed up editing and publishing significantly, the authors had no part of the streamlining. Rather, they received less favorable terms. The Post says that writers "traditional" get 27% of F-price, but the fact is that the more traditionally existed until the 90s the so-called framework agreement which gave authors 16 2 / 3% of the AF-price - and there will be more.
What happened to the proceeds of the computer in publishing? The authors were smaller.
It is recognized easily that computers gave large productivity gains - I'm talking not about the network here. Just to avoid sending the paper manuscript to translators, who writes the text again saved multum. The actual editing is of course faster, too. What is not proof-reading programs? Should we dump it saves iaf half korrläsningsjobbet? What is not in the publisher's desk top management? The elaboration of simplified wrapper over image editing. Etc.. All this was 20 years ago.
But despite the fact that the publishers could streamline and cut costs, the authors got smaller.
It might not complain too much (and Piratförlaget have for writers favorable model, it is recognized) but the issue is really complicated. Publishers must focus on their share of the cake will fall.
-Ahrvid
Good review, Mattias.
But if we expect that a book takes a year to complete of an author's time to serve him / her in your example, only half as much this year as publisher economist at selling 5000 items - and it may be experienced as a bit ohemult. The creative force sas valued lower than the administering.
Ahrvid a Poong with the author also has costs. But then the author may well organize themselves so that the costs are handled in the best manner, for example in a company.
I think it is important to remember that nearly all the publisher's expenses are also available for an author who is publishing the book herself - it is even when printed layouts, market place etc etc etc. It is the place that cost, not necessarily the publishers who profit from the individual authors .
But given phase, the question is as complex as Baskervilles dog!
Ahrvid: The costs I mentioned are only those that arise with the publisher to adopt the book for publication. If I could even count all the other costs the publisher does, that the publisher's counterparts to the author's "food, rent, etc.", so there would be no money left to the publisher's profit on a sold out run of 3 000 copies, but rather a loss. This is why publishers must have some really selling books to get the whole thing to go around.
It is not the livelihood I raise. Your parable of Hollywood's calculation methods are not donning here.
What's happening in the future will be the subject of my next blog post about the publishing economy, so it does not concern me here.
You mentioned earlier how technological advances have made it easier for the publisher - and cheaper - and that it should have done to the authors thus would have received a larger share of the pie than they received. I myself have not been in the industry over the older technology shifts. But it would be super interesting to count on this and see how the costs and time changed. I take it is not self-evident that modern work on computer systems will always be cheaper than more contemporary manual labor again. But this is just speculation - until I or someone else looked at it.
Kjell Ake: As I am writing in response to Ahrvid above, I take the example not the livelihoods. A writer is a risk, there is no fixed monthly salary. Sell it to copy it pays at all, we sell many copies you earn more than the "publisher's economist."
Jonas: You are quite right that nothing in the blog entry is no news and it is not even any secrets. It can be a personal matter which publishers at any time and the publisher would have no reason to withhold these figures. There is general industry knowledge. And it is hugely important to publishers is clear that even for the authors. Cooperation between publishers and authors is based on much more than just a contract - trust, understanding and friendship are just as important. I think it is a huge exciting effect on you for the editorial work. Anyone who has been in the vicinity of the publishing work know how much the editorial work means for the published books - for some titles, it is more, others less. While it is extremely important for the publisher to highlight the author as an independent brand, it should not be labeled that there is a team of people around the author. Thus osynliggör deliberate editorial work. Clash between showing and hiding is clear.
Joshua_Tree, Leffe and Frida: I am glad you enjoy my attempts to talk about things that are everyday knowledge of the publishers, but we reserve that then spread further. Given the enormous amount more hits this post got compared to what I have, so it is clear that I will continue along this line.
Very interesting. Naturally, I am just in the beginning of publishing my book myself and therefore have everything on my own shoulders.
Also want to thank you for your wonderful site CHAPTER1 where I of course are with. It is thanks to which I now write more than I've ever done, and quite possible on about my job career.
I add your blog to my favorites list.
Ha det gott!
To Mattias:
Well, if a publisher consistently manage to sell end-to editions of 3,000 items of books, I am convinced that it goes round, and more than that - including all costs. (The problem is rather that not all books sell out of an edition of 3,000 items.)
I still think that it is not appropriate to calculate net for one party and brutta for the second. But heck, for the publishing economy looks like now is not that interesting. That is how it will look like in the * future * of E-books.
My rule of thumb (= you can interpret it approximately, and there may be exceptions) is that the "natural" price for a digital e-product will be 10% of the corresponding analog physical product. And it is because the physical cost of production is lost, the distribution is virtually free, that intermediaries should disappear and the fact that the price falls, the number of items (with more items to be price / items to fall).
If a physical book now costs 300 SEK, an e-book of the same title cost SEK 30 - but when the rule of thumb is approximate, we can be generous and say 50 kr. It is also about what a physical paperback book costs, as a recently published "standard" version can compete with a re-printed paperback.
I imagine that the author should get 30 SEK, 20 SEK publisher. About 3000 items sold, it will be 90 000 to the author, 60, 000 to the publisher. Can a publisher can afford to edit a book of 60 000 kr? Yes, I think. It should be a couple months' salary, and such a long time need not be. It should go in far less time, so it could be a gain to m.
I note that the numbers will be right near them you have in your example. (But this assumes that when a lot of overhead cost goes away.)
Another problem is that the books are competing with other media. We are inside the bokvärlden at heart might not want to acknowledge that some prefer computer games, Facebook, reality shows on TV, MP3s, etc - but there it is. So the question is what future books to be done to at least maintain its share of people's time and attention?
One answer I have is: short stories. I tend to nag about it, but I think short stories are a perfect shape for a disjointed, stressed era. Shorter works can be read in the pauses, when you have time. But there may be several answers.
But some answers we are trying on is unfortunate. Tie-in books with celebrities, they in all cases inferior detectives (I like detective stories, but there seems to be a surplus!), Conspiracy novels, à la Dan Brown, infinite continuations of old successes, yes, I do not know everything. What is the 2000s winning literary form and / or genre?
-Ahrvid
Mattias:
It is precisely this which I think is an interesting approach to culture building.
Ie: those who create artistic works are presumed to be "risk taking", while the person administering the same work need not be.
I believe the old myth of an artist haunted. Piratförlaget systems with shared cookie is a way to balance out artist myth, I think.
Publishers are indeed risk-taking, but can spread their risks in a completely different way than the individual author. Right?
Interesting numerical summary. Guess you take the cost of sales (clean "sit down with booksellers and hammered home" in addition to marketing) and layers of distribution costs? Wonder if the printers are those who live most of Calculations so far
Hi and thanks for a great blog!
Naturally, I think that there are too many black paint and publishers talk about thirst for profit. As I see it, so it is fortunate that the publishers are, otherwise we would never get to see some good books out there on the market.
Then I think there is an over boiled potatoes, or perhaps an entire pot, in the fact that the detective seems to be the only one that applies everywhere. I think this is a more important debate than the people to hold on to lambast the publishers are taking "too much" of the cake.
Ahrvid (good to see you here!): I do not know what you are living in the world where 60 000 represents a couple of months' salary (rather around 3 weeks with VAT, social charges, material costs and office) and the distribution and marketing for an e-book is negligible. To build a successful distribution system is extremely costly. And to use such as Amazon-like models are hardly free.
Mattias: Interesting discussion, I think Piratförlaget model makes sense. Furthermore: "The collaboration between publishers and authors is based on much more than just a contract - trust, understanding and friendship are just as important." Good that you realize it. Publishers, which ignores this fact is causing personal and economic disasters in their surroundings.
One more thing: For me it is obvious that the publishers, economists and others in many positions will earn more from the book than the author. It is simply about supply and demand (fortunately softened by a lot of passion for the industry). It is very easy to find people who want to write novels in his spare time, more difficult to find someone free to engage in double-Italian accounting and korrläsning. Likewise, I demand more for boring recipe editing the work of others than when I write articles with a byline.
Anitha: Good luck with the book publishing! It is not easy to be self-publishers, but enormously useful and instructive. I have some such experience from the mid-90s, but I can imagine the possibilities of reaching out today is larger, mainly thanks to social media.
Ahrvid: In my example, I took only the basic costs that a publisher has a book project. There will be a variety småkostnader beyond this and working at a publishing company dedicated to treating the issue as a whole rather than that it can be linked economically to a particular project. So the publishing house that never comes up in editions of more than 3 000 copies, it may be difficult, unless they receive support literature or may be co-financing from other sources.
I disagree with your reasoning regarding profit distribution in the future. For as soon as there is no intermediary of e-books between publisher and reader, so of course it would have paid the broker. And do you really think the publisher's only task is to edit the book? If the book will get a proper distribution is needed is probably a lot of marketing and public relations as well. But I will come back to these things in an upcoming blog post about the publishing economy in the future.
Kjell Ake: risk-taking by the author (and other artistic professions) is an interesting topic - and damn sensitive. I will consider whether there is a good way to discuss it. I'm not afraid to address sensitive topics, but I would rather take them down on a practical level than just discussing theory.
Ann: Distribution costs include storage and distribution. Selling expenses squeezed me into the one hundred hours of the publisher's employees spend on the book. I know it's very conservative estimate, but I mainly wanted to show how publishers' economic model looks. That in fact it is even worse for publishers economy on sales of short runs is quite another matter.
Magnus: Everything goes in waves. Since a number of years now, detective position was strong. And mysteries in itself I think is not a problem, there are many mysteries which are very good. However, I believe that within all genres are threatened by the issue will be a backlash and the worst books in the genre is cleared away. To publish a detective is no shortcut to success for a publisher, only if you give out a good detective story.
Lisa: I agree with you in the criticism of Ahrvid. Sure, we can not exactly know what the future will look like and it will probably be a number of parallel methods for book sales. But to erase all the middlemen are often much harder than you think.
As for the distribution of money between authors and publishers are not the last word I said, it is an area where a development will happen, but I know bloody well not exactly what will be the end result. The author is the basis for the entire operation, the publisher is the breeder and the broker.