Over the last few months, I’ve noticed a number of new publishers in the erotica, romance, and erotica-romance genres mostly seen in emails sent to the several related Yahoo groups. Some of the names I saw associated with these new publishers (some seen in emails and others garnered in the email addresses) looked familiar. While publishers come and go in this business, especially in the world of ebooks where there is little up-front cost to creating a company, the number appeared larger than what one would expect. This lead me to direct some of my associates to look into the matter and see what’s going on. You see, for more reasons than might be readily obvious, I’m very interested in new publishers and their market plans and positions.
The results of the research are interesting to say the least. I will, however, remain a bit elusive on the details because I have no way of knowing if the principals of these new publication companies wish the general public to know who they are. As privately-held companies, the principals are allowed and entitled to such respect.
Between 01 April 2015 and 01 April 2016, there have been more than 40 new publishers crop up in the aforementioned genres. Of these, not less than 31 are still in operation as of 01 April 2016. Of the overall number, only 5 incorporated (all as non-traded), and the rest are sole-proprietorships or partnerships. In all but 2 cases, the company name did not reflect any reasonable connection to the principals.
Now here’s the really interesting bit…
In all but 1 case, the principals are authors who have self-published at least 5 of their own books prior to the creation of the company AND the company is now seeking to publish or has published books written by authors other than the principals.
In other words, independent authors are now starting companies to publish the works of other authors.
This may not seem too odd, at least not until you look at the bigger picture. In the last 5 years, the above genres have only seen an average of 7 new publishing companies started each year.
So what has changed? I think it’s all about the money.
Look at the traditional publishing industry in general…a publisher makes very little on any one (typical) book. If the book sells for (picking an easy number here) $10, the author will get (if they are established and have good representation) about $1.75. Production and overhead costs will be around $5.50 and marketing will set them back about $1.50. That leaves roughly $1.25 per copy sold as profit. Yes, the publisher typically makes the same or less than the author. Anyway, if the book sells 100,000 copies (a typical number for a non-blockbuster print book with a major house), then the publisher makes $125,000 or so on that one book. If the house has 100 books that are actively selling, their profit will be on the order of $12,500,000 per year. And to make the math easy for you, the author will gross about $175,000 on the book.
Now, let’s look at the self-publishing business as, say, Amazon runs it. The only costs Amazon have are the server space, bandwidth, and administration. Remember, they do NO marketing, editing, formatting, or anything else related to publishing. Frankly, these costs are so close to zero for a particular book that you can’t even see them. We’re talking pennies per exabyte here. Now, I’m going to be generous and go off the rails in favor of the author, so don’t freak out.
Let’s say that the book is priced at $1.00 (again picking an easy number that is close to the $0.99 many self-published ebooks sell for) and the author keeps 90% of that on each sale. That means that Amazon gets only $0.10 per copy. If the book sells 8,000 copies (the very high end of average for an indie ebook), then Amazon gets only $800 or so from that book. On the other hand, the author will gross about $7,200. Not bad money, but not enough to live on and you need to cover expenses, too.
BUT (and here comes the zinger) Amazon might have 1,000,000 active titles in a given year, so their income is on the order of $800,000,000. Yes, that’s eight-hundred MILLION dollars. Just as an aside, the FY 2015 reports from Amazon show the income from Kindle Books at $1.6-billion. And remember, the overhead costs to Amazon are VERY low.
So, no matter if you’re a publisher or an author, the secret to making money is to have a lot of books out there.
If you’re an author and you write stories around the 40,000 word point, odds are you’ll find writing more than about 24 of these a year is pretty tough. Unless you’re Issac Asimov. Anyway…if we use the above figures for self-published works, then your gross income will be around $172,800 before expenses. I would guess a more realistic number of books written would be closer to 10, so the annual income drops to $72,000. I won’t go into details on expenses, but I would think the net here would be on the order of $35,000. Again, however, I’m being very generous here, and from discussions I’ve had with many dozens of indie authors, their net income seems to hover at about two-thirds of that.
But look at the publisher…they don’t deal with one or two books, but with tens or hundreds or even thousands of times the numbers that any one author could turn out. To sum it all up, the publishers make a LOT more money than any single author makes, even after expenses.
Now, let’s get back to the small explosion in publishers.
After seeing the names of indie authors showing up as principals of publishing houses, I went and bought a few books by some of the author/principals. There’s no nice way to put this…I was able to finish reading only 1 of the 20-something books I bought, and it was a struggle to get through. Most I gave up on after less than a dozen pages. Absolutely horrid. Most of the books had rankings on the distribution sites well into the 5 digit range and some with 6.
This means that the writer wasn’t making much money at all from their books. Some people are writing more or less as a hobby. Others can dismiss the income because of various reasons (their SO is the real bread-winner, they’re rich, etc.). But for the majority of people, the time and effort invested needs a good return.
So, did they look at the balance sheet and follow the same logic as I did above? Have they decided that the way to make money is to sell other people’s writing instead of their own?
I say this because there is one more little thing that I found interesting in the research, and that is the fact that not less than 4 of the still operating new publishers are actually “Self Publishing Services” (my term) that will take your manuscript and prepare for posting on Kindle for a fee. For an additional fee in the form of a royalty share, they will post it in their “Kindle Area” (their term) on behalf of the author so the writer doesn’t even need a Kindle account. In other words, they are acting like a traditional publisher…every time one of your books sells on Kindle, the “publisher” sends you a royalty payment.
What this all means can be summed up in a saying my great-grandma often used…
What goes around, comes around.
I think she may have been Hindu.