This is a follow up to my post about self-publishing earnings

Jeremy Greenfield, Contributor

I write about e-books and digital publishing

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12/09/2013 @ 12:48PM |6,179 views

How Much Money Do Self-Published Authors Make?

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In short, not much.

According to data from a new survey from Digital Book World and Writer’s Digest, the median income range for self-published authors is under $5,000 and nearly 20% of self-published authors report deriving no income from their writing.

By comparison, authors published by traditional publishers had a median income range of $5,000 to $9,999 and “hybrid authors” (those who both self-publish and publish with established publishers) had a median income range of $15,000 to $19,999.

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At the high end of the spectrum, 1.8% of self-published authors made over $100,000 from their writing last year, compared with 8.8% of traditionally published authors and 13.2% of hybrid authors.

“Few authors are getting rich off of their writing or even earning enough from their writing to quit their day jobs,” writes Dana Beth Weinberg, Ph.D., professor of sociology at Queens College in New York City, and lead researcher for the study.

Read much more of her analysis here: The Self-Publishing Debate: A Social Scientist Separates Fact from Fiction.

The study was conducted online in October and November 2013 and gathered a sample of about 9,000 authors of different kinds. This is a non-scientific sample and so results may not necessarily be extrapolated to a nationally representative sample.

Weinberg will be discussing the state of authors, publishing and self-publishing at the Digital Book World 2014 conference. Last year, Digital Book World conducted a similar survey among nearly 5,000 authors. The full results of that survey can be found here.

Should you bother self publishing?

I know this post will create some hate mail, but here goes.

We've all read about the handful of success stories about writers that have self-published such as Amanda Hocking, E. L. James, etc...  but for the few that we heard about there are tens of thousands that sell a dozen copies and all to the author's family.  Now, I'm not saying this is a bad thing necessarily.  Many writers feel the need to put down the words into a story and it can be a very cathartic experience; just don't expect to quit your day job.  The constant media attention given to these very rare success stories vastly inflates the true value of self-publishing sales. 

Most of the companies that offer self publishing platforms make their money on offering add-on editing, design and marketing services.  They end up getting the writer to spend $1000 or more on services designed to help there book.  You can also just elect to put your title up on Kindle, iBooks, Nook, etc..

The absolute only way that these books compete is based on price.  Many are free and most are $.99.  Most consumers are willing to take a gamble on a $.99 book especially in popular genres like romance where the readers are voracious.  Some of these books might be good but the vast majority of them unfortunately are not.  The only way to find about these books is to make them free or $.99 so that the ebook retailer lists will show their sales climbing the ranks on the bestseller lists.  Keep in mind how many books a writer must sell to make any money at these low prices. Publishers still exist for many reasons, the most important being the editorial relationship that develops between the writer and the author.  The editor helps shape the story and once it's completed the publisher gets behind the book with marketing and publicity efforts.

As a publisher my biggest concern is the clutter of the books put out by publishing companies that have been professional designed, edited, copy-edited, proofread, etc... with the books that are just put up by self-published authors.  The established publishers have to charge more money because in most cases they have paid an advance; sometimes very substantial, and can't possibly afford to give the book away for $ .99.  If this were the business model and publishers were making greatly reduced revenue on the sales of these titles, the entire model of publishing would have to change.  There would be no way for the publishing company to recoup their advance and advances would drop precipitously. 

In my ideal world I would like to see a separate section for self-published books, maybe even separate websites.  I know this is selfish and self-serving from my perspective but I truly believe that it helps the reader help distinguish the books as well.  Readers don't purchase books based on the publisher and in most cases don't even know the publishing companies.  They might not even know if they're buying a book that was professionally edited versus one that was self-published.  Publishers are devaluing their own content as well by even adding to the confusion.  All publishers will discount first titles in a series, or a novella by an author with a new book coming out.  These get blended in with the other less expensive books and just adds to the clutter.  But to date, price has been the most effective marketing tool.  Publishers better start acting smarter and realize that free is not a viable business model.  If I were smart I would probably start a new website called $ .99 books and then I could retire :)

These self published books climb the lists to high ranking numbers because of the low price and then a few of the authors become big celebrities and end up going to a traditional publisher.  It remains to be seen how they perform when the publisher then has to payout an advance and raise the price of the book to cover this advance.  So far those that have made the leap to traditional publishing have not proven to be very profitable ventures in many cases for these publishing companies. 

The ebook stores have limited ways to promote books just like a physical bookstore.  They can send out email blasts to readers who opt-in.  They can also feature them on the homepage, very risky for a low priced book, or in various category pages.  The reason this is risky for the e-retailer is because this marketing space is very valuable and you're better off selling higher priced books to generate more sales.  This is all very similar to the retail store experience where readers see books on a table in the front of the store or in the bestseller section or even on displays at the end of the aisle.

Now don't get me wrong, if I were a writer and I thought I had a story in me that had to be told, I wouldn't hesitate to self-publish it either.  I just think that these  story tellers should have their expectations put into reality from the media rather than the media focusing on those very rare exceptions that have made big money from self-publishing and then have gotten $1,000,000 contracts from publishers.  Let's give it a little more time yet and see how those that have crossed over to the traditional side of publishing perform.

Steve

Amazon drones?

Did you see 60 Minutes tonight?  Amazon has now created little remote drones that look to be about two feet long and about a foot wide,  that can carry a 5lb. package automatically to your doorstep.  It's not perfected yet, but it's close.  They need to get FAA approval which will take at least  another couple of years yet.  They currently have a 10 mile delivery range that they can fly and then return to pickup another package.  You can have your delivery in under half an hour.

 They continue to show losses but investors love to bet on the future.  They're counting on that one day in the not too distant future, Amazon is going to be wiping out most of the retailers.  By the way, 86% of the packages they deliver are under 5 lbs.  They are also already testing Sunday delivery in many metropolitan areas.

If you were a small mom and pop store how could you possibly compete with Amazon?  They sell items below cost in many cases to gain marketshare.  What does this say about the future of retailing and I'm not just talking about books?   How is any other company going to compete with this type of technology when Amazon has become such a behemoth corporation?

As I've said before, I use Amazon all the time.  I've bought everything from books to televisions from there.  Their customer service excels.  Their downloading of software is phenomenal.  I don't know what the answer is but I do not believe that they should be able to sell items below cost, which gives them an unfair advantage because of their size and being able to absorb the loss for a long period of time.

What do you think?

Steve

Who Am I?

I probably should have started my blog by giving you my background.

Let's start by stating that I turned 60 this past summer......yeah, I know....old.

Grew up on Long Island, first in Merrick and then Great Neck and I still live on Long Island today.

My first job out of college was with a firm called Kroll Associates, Inc., which was an investigation firm of white collar crime, specializing in the printing industry at the time.  While working there one of our clients was Rolling Stone magazine which was launching a new magazine at the time, called Outside.  After working on the launch of Outside magazine, I was very fortunate for Rolling Stone to offer me the job as Director of Manufacturing and Distribution when they moved from San Francisco to New York.  I worked there for three years and it was truly an amazing experience.  The highlight of that job had to have been when Elvis passed away and we had to redesign the entire issue virtually overnight and get to press within a day or two.

After working at Rolling Stone and armed with a background in printing, I decided to give printing sales a shot.  I sold publication printing for a couple of years and then commercial printing to publishers for a few years.  I finally started my own printing brokerage firm which only printed promotional material for New York publishers.  In 1992, my father's partner Roberta Grossman passed away at the very young age of 46.  At the same time my father was in the process of trying to sell the Company to Harlequin; a deal that ended up never being completed.  While Roberta was in the hospital and the Harlequin deal was pending my father asked me to sit with him and just be there to help out any way I could.  After her untimely passing, my father said he wasn't getting any younger, although he was only 69 at the time; and asked me to join Kensington.  I sold my printing business and started my career in publishing.

In 1997, I was promoted to President of Kensington and in 2005, to Chairman and Chief Executive Officer.  My father continued working side by side with me until August 2010 when he became too ill  to come to the office any longer and he passed away in March, 2011 at 87 years of age.  I was extremely fortunate to spend close to 20 years working side by side with a man who was considered a legend in the business and was able to compete with the giants of the industry.  My son, Adam Zacharius joined the firm about 7 years ago and worked for us in our Los Angeles developing film interest in our books and looking for West Coast writers.  After the passing of my dad, Adam moved to New York with his wife, a little over a year ago.  He now sits in the office my father occupied and one day he will have his opportunity to run the Company as well.....but he's going to have to wait a while yet....after all my dad worked until he was 87.

On a personal note I've been married to my wife Robin for 23 years and I also have a daughter who lives nearby.  We're very fortunate to have a 3 year old adorable granddaughter from my daughter and her husband a new three month old cutie pie baby boy from my son and his wife.  (The Zacharius name will continue) !!!  I'd be remiss if I didn't mention that I also have a younger sister who decided many years ago to move to Fairbanks, AK......  we're still trying to figure out why :)

The Other 70% of the Publishing Revenue---Printed Books

My first Huffington Post blog created some controversy from some of the successfully self-published authors, some of which were also published in print previously.  So for this post I thought I would republish my original history of the book publishing business, the print component of books, along with some updated details.

Kensington Publishing is coming up on its 40th anniversary next year.  We continue to be a thriving family owned business; but what's happening to the rest of the industry?  Looking back 40 years ago when my father started this company, it was a totally different retail climate.  The accounts were broken down into a few categories which included magazine and book wholesalers, book jobbers, independent bookstores and chains.  Things have certainly changed over the 40 years and I'm wondering what's going to happen in the next five years.

40 years ago there were 750 magazine and book wholesalers.  These wholesalers distributed books and primarily magazines to all the newsstands, supermarkets and drug stores.  Over the past 15 years they went through a period of enormous consolidation and we're now down to a few large remaining companies. These include Readerlink Distribution Services, News Group and Hudson News.  To the average reader they probably recognize Hudson News more than the other two, even though the other two companies are much larger.  Hudson supplies the NYC metropolitan area newsstands and of course many of the airport stores that they own and that everyone sees when they're traveling.  Readerlink supplies many WalMart stores, Target, supermarkets, drug stores and some of the big box retailers.  News Group, the primary beneficiary of most of the consolidation of accounts, services a tremendous amount of supermarkets, drug stores and newsstands across the entire country.   Anderson News which was one of the largest wholesalers only a few years ago closed their doors but the family still owns Anderson Merchandisers which supplies most of the books, music and video for WalMart.  After these few big wholesalers, there are probably another 40 or so that are fairly small, but still have a successful account base in their local areas.

Book jobbers are "middle men" companies that distribute to independent bookstores, libraries and also help resupply some of the biggest accounts like Amazon and Barnes and Noble when they need books quickly to replenish their inventory.  Two of the biggest are Ingram Book Company and Baker & Taylor.  There are several other smaller companies as well.  When a bookstore runs out of a book they will quite often order backup supply from one of these book jobbers for next day replenishment. These book jobbers are also the primary supplier to the library market and are a very important piece of the publishing business.

As most of you realize there are fewer and fewer independent bookstores remaining.  They found it impossible to compete with the giant retailers and have been disappearing although there has been a slight resurgence in the past year.  The independent bookstores are still a great source for getting the buzz going on a book, and the best at hand selling books, even though as a category they represent a declining portion of revenue for most publishers.  There are some amazing independent bookstores that are still thriving and they should be supported whenever possible.  Many of them focus on certain genres such as mysteries or cookbooks.

We all know what's happened to the chain stores.  Borders has gone bankrupt and closed all of their stores leaving Barnes & Noble as the only national chain remaining.   They also have their digital business with their Nook digital reader.  The industry also thankfully has Books-A-Million which is a large chain, also owned by the Anderson family,  and there are other chains that sell books and other merchandise, such as Hastings.

The unfortunate result of all this consolidation is that there's less and less physical shelf space left for publishers.

The more recent development of big box retailers like BJ's, Costco and Sam's, which all sell large quantities of varied merchandise, also happen to sell books.  They carry a more limited selection of titles in comparison to a retail store, but their prices are extremely competitive because of the low profit margins that have defined their business model for consumers and therefore they sell large quantities on the titles that they do stock.

Along came Amazon and some other smaller online retailers and they caused the physical space to diminish even further because so many people found it so easy to purchase books online.  Of course the fact that they started selling New York Times bestsellers below their cost and were willing to take a loss on these titles in order to gain marketshare has helped them crush competition.  How long this policy of selling books and other merchandise at a loss can continue and how long shareholders can tolerate them not making a profit is for another discussion.  Now that they have so many warehouses there are many parts of the country where you can get books the same day or next day without any problem.  The online retailers were the primary factor in causing the decline in book club companies that sold books via direct mail.

So here's the approximate count of physical bookstores that remain:
Barnes and Noble about 675
WalMart 4100 stores in the US and 11,000 total world wide
Target about 1800 US stores
Books-A-Million about 250 stores
Hastings about 150 stores
Hudson News more than 600 airport stores
WH Smith about 1200 stores primarily in the UK
Independent bookstores in the US-about 2000

To these numbers you'd have to add all of the supermarkets and drugstores that also sell books; some with very large book departments.


The Trade Book Publishers:

So what about the publishing side of the business?  We've had the same sort of crazy consolidation.  The industry frequently calls the largest publishers the Big 5 and now that Penguin and Random House have merged, they are actually the Big 4.  These companies are all billion dollar conglomerates and are frequently owned by overseas firms.  They include Bertelsmann (German) which owns Penguin Random House, Simon & Schuster (US)  which is owned by Viacom, Holtzbrinck (German) which owns St. Martin's Press and Macmillan and finally, Lagardere (French) which owns Hachette and what used to be Warner Books (now Grand Central Publishing).  In addition to these big four, I would add Harlequin (Canadian), which is owned by the newspaper company, the Toronto Star.  I'm referring to general trade publishers.  There are several educational publishers, some of which are also owned by the above companies.

Kensington Publishing, being privately owned, is a fraction of the size of these companies but is the largest of the remaining paperback publishers.  There are still hundreds and hundreds of small presses  that publish from just a few books per year to several hundred books.  There are also educational and religious publishers which are not considered "Trade" publishers.

It is nearly impossible for a new company to develop in this industry because of the limited places available to now sell printed books.  This is why there have been so many smaller digital presses that have started like Ellora's Cave, Samhain, Entangled Press,  Lyrical Press, and many others as well as other independently owned print/digital publishers like Sourcebooks.   The digital sales for most of the large publishers is now in the 30% range of their total revenue although the rapid growth has come to a screeching halt in the past year.  During these past couple of years while digital growth was exploding,  the sales of print books dropped precipitously.  Hopefully these rapid changes have slowed down and will allow publishers to adjust their financial models so that we all stay healthy viable businesses.

Unfortunately for publishers, most readers pay very little attention to whom the publisher is of the book they're reading.  The one big exception might be in the romance genre where series romance is dominated by Harlequin.  In the coming years it will probably become more critical for publishers to emphasize their brand to help distinguish their books from the other books from traditional publishers as well as the huge number of self-published books that are being done digitally.

Next week I'll go into a discussion on the ebook market and the retailers, as well as print on demand technology which allows most books to be reprinted at the push of a button in quantities as small as one copy at a time.

Happy Holidays to all.

Legal Point of View

Over the past couple of months we've seen two major rulings that were related to the book publishing business.  The first was the Department of Justice ruling against Apple in a price fixing case.  The more recent decision just announced the other day was that Google can continue to scan millions of books for the purpose of  making them searchable.  So far they've scanned over 20,000,000 books and their goal is to scan every book.  Of course both of these decisions will be appealed.

In the DOJ case the DOJ said that Apple conspired with several of the major publishing firms to fix ebook prices. (BTW, Kensington was not one of those).  Apple offered publishers a new publishing model for their digital business where they would act as an "agent" and take 30% of the proceeds and give the publishing company the other 70%, but the digital prices had to be at a specified price which was directly related to the price of the printed book.  The publishers also were accused of telling the other ebook retailers that they would have to go along with this same type of arrangement.   The bottom-line was that the price of digital books increased.  Publishers thought this was a great idea because they felt that the low prices that Kindle was charging, below cost in many cases, were devaluing the content.  Consumers enjoyed the benefits of Amazon's low prices and the DOJ basically won their case stating that the new business model, which several of the publishers all switched to at the same time, raised the price of ebooks.....and that's all the DOJ cared about.

Most publishers were outraged by the decision because the agency model was seen as a way for the publishers to put the ebook retailers all on the same footing and make them all charge the same price. This would prevent Amazon/Kindle from selling ebooks well below cost even though they had to pay publishers based on the digital list price.  Amazon's philosophy is that they will continue to absorb this loss on much of the merchandise that they sell because they say they are giving the consumer a great value.

What do you think about this?  Do you think it's fair that Amazon/Kindle sells books below cost making it impossible for any other smaller ebook retailers or printed book retailers to compete?  How long can Amazon continue to do this?  Do you think they'll continue doing this and gain marketshare until they wipe out the competition and then eventually raise prices?  What happens when the other ebook retailers eventually throw in the towel and does Amazon then raise their prices and finally  other book retailers get back into the game again?  Do you feel that Amazon's shareholders are going to get fed up that the Company continues to lose money even though their revenue increases?  Or is Amazon really the greatest thing to happen for the consumer since the internet really exploded?

The Google case has been going on for years now.  One side wins, then the other side appeals....For most consumers this will not have any bearing on them.  Do you think that it's right that Google is able to scan all of the books they want, even though they are copyrighted; just so they can make them searchable when you type in a related subject in Google?  Or do you think they should be required to get the author's approvable before scanning copyrighted material?

I'd be interested in hearing your comments.

Steve

BTW, I am a frequent user of Amazon and Kindle as well as just about all of the major ebook retailers, including B&N and Nook, Apple and Kobo.  I constantly try different ebook retailers to see which offers the best user experience for me.  I've also had the luxury of trying most of the major ebook readers and tablets and own a Kindle New Paperwhite, several iPads in different sizes, the new Nook Glowlight and the brand new Kobo Aura.  And of course everybody uses or has tried Google as the search engine of choice and it has become the defacto standard.

eBook Subscription Services

The hot new trend in the digital arena are these eBook subscriptions that are popping up all of a sudden.  There's Scribd, Librify, Oyster, eReetah and I'm sure more are coming.  Basically you pay a very low monthly subscription price for unlimited reading of selected ebooks.  Is this a viable business model for these companies?  My thoughts are that this is basically the same type of business model that gyms use.  They get a lot of people to join up for a very low monthly price and they then hope that nobody shows up to use the facilities.  (I can't tell you how many times I've done this).

None of these services can make money if they have voracious readers who are going to read more than two books per month because they are paying the publishers full price each time a book is read.  This ends up costing more than the member is paying for the service each month.  But if the reader comes on and only previews a book or takes a long time reading one book, the service is only paying out a few dollars and will come out ahead.

Kensington Publishing has agreed to provide title for some of these services and we're finalizing contracts on others.  I personally feel that it's a model that we should experiment with and see how it performs.  We're getting interesting feedback from some of these services.  We learn how long it takes a reader to read one of our books as well as if they started a book and decided not to finish reading it.  What we end up doing with this data is a different matter as I'm not really sure how we're going to utilize it at this time.

Have any of you tried any of these services yet and what do you think?

Steve

In the beginning

After my guest blog on writersinthestorm.wordpress.com, I decided it was time to get back to creating  my own blog about the book publishing industry from my perspective as CEO of Kensington Publishing Corp.

Stay tuned.........more to come.