What is the value of publishing?

Disruption is a word thrown around business school campuses with abandon – the ability to disintermediate established business models in favor of a less costly or more efficient new model, oftentimes leveraging technology in place of more-costly physical or human infrastructure (considering I’m ¼ through business school, you be the judge of whether I’ve wasted the $50,000 spent so far.)

Given my background in the book publishing industry, and the relative disinterest I’ve experienced from MBA recruiters, I continue to spend a lot of time thinking about the publishing industry (in books and increasingly video games), and opportunities for potential disruption or innovation in one of the world’s oldest businesses. 

While some may decry books’ antiquated ‘delivery’ method and are familiar with the annual obituary to reading and our attention spans, books have proven remarkably resilient, continuing to serve a massive place in the national and international news cycle and imagination, while maintaining a perception of high value ($30+ hardcover, $15+ paperback) in a world where:

1. Local newspapers continue to fail
2. Movie theaters have stopped their inexorable rise in prices
3. Music has undergone a profound (though stabilizing) shift
4. Podcasts have struggled to find a business model

Inspired by several recent conversations, the thought-provoking podcast by A16Z on the future of readers, writers, and creators, and Anne Trubek’s excellent Notes from a Small Press newsletter, I thought I would type up my thoughts on the value of book publishers, and try and explain why writers choose to work with publishers.

For simplicity’s sake, I will mostly speak to the benefits to writers, though these benefits are often symbiotic:

Audience

Publishers provide authors with an audience for their ideas and stories to be shared with the world. 

While exposure can be developed over time online via Twitter, Instagram, blogs, etc., most writers view writing as their full-time job, as opposed to strategizing, cultivating, and maintaining a social media presence and audience. 

Recently, this has begun to cut the other way: having an established audience / social media presence (xx followers) becomes an asset when pitching your book to agents / publishers: it provides a ‘floor’ of potential book buyers and preorders (as opposed to starting with 0, in the case of a previously ‘unknown’ author). Ultimately, this means less effort and creativity required for the marketing and publicity group of the publisher, who are contending with increasingly smaller book coverage and limited attention spans.

Expertise, or Comparative Advantage

Along these lines, working with a publisher allows the writer to focus on developing the best content possible, while the publisher is able to leverage its developed expertise in all of the non-writing aspects of books.

On a publishers’ payroll is an army (sometimes a squadron or squad) of folks dedicated to the success your book, including (but not limited to):

• Editing (in many cases a hugely effort-intensive exercise)
• Art and design (covers, photos, fonts, etc.)
• Production (all the details to get a book print- or e-reader-ready)
• Printing 
• Sales (getting your book into the major bookstores, indies, and online)
• Distribution (ensuring that your book stays in the major book stores, indies, and online)
• Marketing & Publicity (organizing publicity / book tours, sending out to authors / influencers, scheduling interviews and media coverage, etc.)
• Royalties (making sure you get paid)
• Etc., etc.

While it is possible to either do all of the above yourself, or outsource portions of it to freelancers (out of your own pocket), working with a publisher reflects a writer’s trust in the publisher’s ability to take a manuscript or idea and turn it into a book.

Capital

Most writers have day jobs to supplement their income, reflecting the reality that most writers do not make money from their talent and passion for writing. Even authors talented enough to enter our contemporary ‘canon’ oftentimes toiled in day jobs to subsidize their desire to write.

However, writers are fortunate enough to sell a book to a publisher will receive an ‘advance’ payment prior to the publication of their book. While the size of this advance can vary dramatically (see my post Publishing as Venture Capital for more here), and is normally received in portions (normally either ⅓ at signing, ⅓ at submission, and ⅓ at publication, or ¼ including a paperback release), a book advance oftentimes represents funds that the author will use as subsistence in the years that they spend writing, researching, re-writing, fact checking, etc. their books. 

In the realm of self-publishing and at (some) smaller presses, an advance is normally eschewed in favor of a flat royalty payment of each copy sold at publication. While some would argue that this scheme allows for much more creative control (I recently heard from a game developer that “the longer you wait to get money, the more creative control you have”), an advance-based system minimizes the risk borne by the author. 

Just to expand on this a bit, imagine that a writer receives a $100,000 advance on a book proposal they’ve submitted, with a ⅓ payout scheme. Upon signing the contract, the author will receive a check for $33,000-after-taxes prior to having submitted or publishing a word, with no give-backs (except in extreme circumstances publishers never request advance $ back). While the reality is that this amount, especially split across several years prior to submission, represents an extremely low-income salary in the US, the alternative must be considered as well: receiving $0 prior to publication, self-financing the entirety of your book project (read: editing, art, production, distribution, publicity, etc.), and then hoping that the royalties received by copies sold will collectively make up the $100,000 advance plus value-added costs borne by a publisher.

Using back-of-envelope and generous numbers, a $20 physical book with a 55% royalty (assuming a 60% royalty [the amount the author keeps] less 5% cost of production [generous], and no distribution fees), an author will need to sell approximately 9,000 copies of their book just to reach the $100,000 advance level above. Assuming the average internet user has ~650 social ties, and they all buy a copy of your book, this still means selling your book to 8,350 strangers. Whether this sounds daunting to you or not is probably a good bellwether of whether you need a publisher!

Keep in mind that the advance paid by a publisher is an estimate of the amount of copies that the editor/publisher believes you’re able to sell, rather than free money. But rather than having to sell books out of the back of your car, or shill your book online or at talks, there’s a well-oiled book distribution system already in-place to support you through this process.

As previously mentioned, a previously established audience or track record may be able to circumvent the traditional publishing process through the process of crowdfunding, but again, this requires a significant number of people (depending on average donation size) giving you money 1-2-3 years before they see any physical (or digital) product in exchange for their hard-earned dollars. 

Credibility

For an author seeking to demonstrate their expertise in a subject, there is still no better artifact than a book to demonstrate one’s competence, and monetize their research and original findings or point-of-view. 

Within the writer community (especially in fiction), a publishing deal with a reputable publisher also acts as a signalling mechanism–this person should be taken seriously as an author. While there are earlier gatekeepers such as MFAs (see here a fascinating argument on the tradeoffs seen between diversity and the mainstream MFA path-to-publishing) and book agents that serve as earlier hurdles, in many circles a published book (or books) allows one to justify calling themselves an ‘author’ or ‘writer’ in a professional bio or resume, rather than someone who writes.

Books oftentimes allow authors to leverage their developed domain expertise into further employment opportunities, such as speaking engagements, professorships, consulting gigs, etc. 

Curation

Similarly on the writer side, in a world where the internet provides us with instant access to infinite information, finding a book written on a topic gives the reader a comprehensive or definitive history of an event or subject. Even the most technologically literate folks out there (save maybe Vitalik Buterin) continue to rely on books to learn and engage with new ideas, and use bookstore browsing as a way to exercise and indulge their curious mind.

While Amazon has managed to take the previously limited shelf space of a bookstore and replace it with a practically unlimited number of books available at the reader’s fingertips, more than 7 out of 10 internet users fail to make it past the 2nd page of search results on an Google query, reflecting our limited desire to consume large amounts of information, and the potential limits of Amazon’s ‘limitless’ bookstore. 

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I will continue to expand on this in more depth soon, and delve into the economics behind a book in the traditional publishing industry.