Wednesday, November 30, 2011

A Lie About Publishing Doom and Gloom

A truth about publishing

by Doc Harvard

I was reading the article Makinson predicts "dark clouds" for 2012 book trade and it saddened me to think that either Penquin's chief executive John Makinson is so naive or so damned stubborn that about publishing and epublishing that he can't see where the money is to be made and a better way to make it. It's these so called professional publishers that really tic us off here at 42wd Publishing LLC. They are all doom and gloom about publishing, not because there's nothing to publish, the giant creative community on Google+ alone shows there's plenty to be published, but because there's nothing they WANT to publish. They can't see that their way of doing business is dead. They refuse to adapt.

Let me toss some numbers out there for you [ We'll use Carrie K Sorensen as an example because we happen to know she's working on a series. ]:

Carrie writes a series of 3 books released over 3 years.
Each book costs 60 hours of company resources billed out at $100 avg. per hour = 6,000 * 3 = $18,000 investment and development cost for the series.

Each book sales 10,000 copies with a profit off of sales of $1 for a run of 3 years total. In other words:

Book 1 = $30,000 over 3 years
Book 2 = $20,000 over 2 years
Book 3 = $10,000 over 1 year
Total = $60,000

Subtract the original investment of $18,000 from $60,000 = $42,000.
Then divide $42,000 by 2 [ because we at 42wd Publishing are Extra Spiffy Wow and profit share with our creatives ] = $21,000

That's $21,000 net profit for the author and 42wd Publishing. Sound like small change right? Not really, think about it. The big standard publishing house like Penguin literally have thousands of manuscript laying around and more coming in everyday.

So lets say they use this model to publish 1,000 authors of low yield eBooks. That's $210,000 over 3 years.

Now if they are smart they'll publish the collected works in eBook format as well in the forth year. The collected works yield a gross profit of $3 per sale. Ten thousand of the collected works yield $30k for the first year of sale and, the other 3 books are still selling 10k copies a year so that's an additional $30k. That's a total of $60k split between the publisher and the author, that leaves $30k in year 4 for the each the author and the publisher. That's more than double the first 3 years sales.

By year four the publishing company will have made a net profit of $51,000. Multiply this by the previous 1k authors and the big publishers will have earned $510,000 doing profit share and still only have $18,000 originally invested. And this is all with low yield eBooks.

Think about if it's a well known author that an eBook would yield $5 gross profit using the above model.

Book 1 = $150,000 over 3 years
Book 2 = $100,000 over 2 years
Book 3 = $50,000 over 1 year
Total = $300,000

Divided between publisher and author net profit for each of $150,000. Multiplied by 1k authors = net profit for the publishing company of $1,500,000

10k copies of an eBook sold in a year is not an unrealistic number at all. Admittedly these number are based on fixed growth but there could be a chance of increase or decrease in sales. The model I'm using is the Rule of 10. It's proved to be a pretty safe and reasonable predictive model over the years. Note: I named it but I didn't come up with the original use of the model - not actually sure where it came from originally.

Also, the above numbers don't include print, merchandising, video, and or international sales.

The point of all of this is to put a very realistic and achievable point of view on the so called doom and gloom of publishing. The doom and gloom comes from a publishing indurstry that much like so many other now extinct creatures that didn't evolve refuse to evolve. If they don't evolve then companies like +42wd Publishing LLC are going to take over the industry.

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