An Unappealing Byproduct, Part 3 (Author Impact)

As I explained in my first two blog posts in this series, the advances in technology, coupled with a change in buying habits, has impacted publishers in any number of ways (some good, some not so good.) During this flood tide of change (and partially as a result of it), the distribution-payment schedule for traditional trade sales has evolved into a seriously flawed model. Review those posts here and here.

By way of recall: a book with a $30.00 retail price nets each publisher (give or take a quarter or so), $9.75. That means publishers must pay everything--authors, printers, storage, taxes, shipping, design, formatting, editing, utilities, wages, insurance, office supplies, travel (I could keep going) out of the $9.75. "That's Impossible!" one person announced to me recently. He is not far from wrong.

This impacts authors in many ways, but the main result has been a significant change in the structure of royalty payments. The impact on authors can be positive and negative, depending upon the publisher the author selects, and the author himself.

Traditionally, authors were paid a royalty based upon the retail price of the book. If the book was $30.00, and the royalty was 10%, the author received $3.00 for each book sold, whether the publisher received the full price or something less than full retail. Recall that before the advent of the Internet, Amazon, eBay, etc., a large percentage of books were sold at full price. But buying habits have changed, and so few books are sold for full retail unless there is a value-added incentive (early shipment, signed copies, first or publisher edition as opposed to a cheaper book club printing, and so forth).

With some publishers, especially those who handle their own distribution (and so do not have to fork over 35%-50% in distribution fees), authors are still paid a royalty based upon the retail price. However, many (most?) of these publishers pay little or no attention to individual authors and titles, do not plan a book tour (even the large houses plan few tours), arrange media for only a select handful of dozens or even hundreds of titles, and then rapidly remainder their remaining inventory after the initial push into the book trade is over (just 90-180 days). Authors who have spent years working on a book suddenly find they cannot get a meaningful response from their publisher, little or no marketing support, and their labor of love is quickly thrown into the remainder bin at Walmart or online and sold for $3.99. Being paid off the full retail suddenly means very little when a very large percentage of the print run is remaindered.

The flawed distribution and payment model, coupled with the influences of the Internet, make it virtually impossible for small- and medium-sized houses to pay authors off the full retail. Some still do, of course, and we have on occasion depending upon the title and how and where we believe we can sell it. But for many authors--especially niche writers--this traditional arrangement is no longer as viable as it once was.

So what does this mean for authors? It means that, in most cases, they will be paid less for trade sales because there simply is not enough of a margin to allow otherwise. It has nothing to do with a publisher wanting a larger slice of the pie. Rather, it is about being able to continue publishing books. Understanding this, and then altering behavior and viewpoint accordingly, will be the subject of my next post, followed by the effect on end users: buyers.

--tps

An Unappealing Byproduct, Part 2

As I noted in part one of this series of posts, the confluence of technology and buying habits is affecting the industry from top to bottom. This post explores pricing structures, and how it affects many publishers, authors, and in the end, buyers.

Many publishers (usually the big guys) manage their own distribution. Many more (especially the smaller and niche publishers) do not, and so contract with a distributor to handle some or all of their access to the market (think general book trade--Amazon, Barnes and Noble, Borders, and so forth). Our distributor is Casemate Publishing. They know the military and general history market inside and out, and handle our distribution into the book trade only. We manage and oversee all other sales.

Technology and Dollars. In the not-so-distant past, a sizeable chunk of any print run sold at full price, or darn near retail. The advent of big box stores, the internet--eBay, Half.com, Amazon--and varying technologies has changed that dramatically--for the better and for the worse. Let me explain.

Let's say we publish a book with a suggested retail price of $30.00. If we sell it at full cost, fine. If we sell it to a book dealer (bypassing the distributor), they go from 25% - 50% off retail. Again, acceptable discounts with few or no returns. But usually the largest percentage of a print run goes into the book trade via the distributor. The division is rather ugly.

The original $30.00 price is cleaved in half because the bulk of books leave the warehouse at 50 percent off. That leaves us with $15.00. The distributor has to take a slice of the revenue, and depending upon your distributor, it can be anywhere from 25% to 55% of the $15.00. (Yes, you read that right.) I am not going to reveal our contractual details, but let's take a middle ground and use 35%. So, $15.00 less 35% ($5.25) leaves us with $9.75 from a $30.00 title.

Book wholesalers who pick up from the distributor (Baker and Taylor, Ingram, Barnes and Nobles, Amazon, etc.) pay months after the shipment, and we receive our check four months plus 15 days AFTER the month of shipment. In other words, if 100 copies of a $30.00 book ship in January 2008, the funds ($975.00) are paid to us in the fifth month thereafter: JUNE.

It gets worse.

These same wholesalers and stores allow patrons (that would be you) to read them in-store, eat over them, spill coffee on them, tear or fold pages, bump the corners, etc. and then put them down so they can go find a used copy on eBay or a cheaper copy on Amazon. These copies (and others--some that never get out of cartons) can be returned for FULL CREDIT to whittle down the outstanding debt to the distributor. So using our example, when June comes around, and the stores return 50 copies, that is immeediately deducted from our check, which cuts the payment from $975 in half. These same stores can the very next day reorder new books, and the cycle starts again.

What does this mean? It means that publishers must pay everything--authors, printers, storages, taxes, shipping, design, formatting, editing, utilities, wages, etc. out of the $9.75 we receive for each $30.00 book.

This model is seriously flawed. Publishers (and by extention the authors--more on that in the next post) shoulder the debt. Put another way, Savas Beatie is carrying the paper--making us creditors for booksellers. We do not rely upon the book trade for our survival and dedicate significant energy into marketing outside the book trade. Success, therefore, requires the right product and very active, and understanding, authors.

I will continue this post by addressing the impact on authors and a follow-up post on how this impacts you, the reader.

--tps

Sorry for the Delay

Mea culpa. Several other matters of import have intervened to throw my mostly regular blogging off the rails, including a couple of my own writing deadlines and prepping our "out of the blue"--and potentially most successful volume ever--for Book Expo 2008 in Los Angeles.

(Yes, more on that in mid-May.)

--tps

An Unappealing Byproduct, Part 1

A recent poll I conducted asked this question: "Where do you buy most of your books?"

Here is the breakdown for that poll:

From the Publisher: 5 (16%)
Bookstores: 11 (36%)
Amazon: 12 (40%)
Other: 2 (6%) (primarily eBay)

I will explore this in several posts.

The results dovetail exactly with our own internal data, which is that buyers in ever greater numbers are turning to the least expensive (and often most hassle-free) option to buy their books. This is completely logical. Why pay more?, as the Target slogan asks its customers. Like most of those who read my blog and patronize Savas Beatie, I too am a lover, buyer, and collector of books. Saving money makes sense and is a factor in deciding how, whether, and what I purchase. Most who buy directly from us do so because they want a first edition, want a signed author book plate or a signature in the book itself, or like to patronize the hand that feeds them (so to speak).

But hidden inside these poll numbers is an unappealing byproduct most book buyers do not fully appreciate: The natural tendency of buyers to gravitate to discount books chokes off the dollars necessary for publishers and authors to continue producing them. This is especially true in niche areas like the Civil War (or Revolutionary War, or . . . pick a category).

The consolidation taking place within the publishing industry at all levels over the past decade is not the result of simply poor business decisions (although that accounts for some of it). Mergers, bankruptcies, and the trimming of staffs and budgets is the direct result of the confluence of technology and buying habits. The development, implementation, and availability of the former has dramatically influenced the latter. One need only think of the Internet, Amazon, and Print on Demand (POD) to understand why.

The following example applies to most niche-type titles, and not just the one I will use. Eight or ten years ago, it was an easy decision to accept and publish a well-written and deeply researched regimental history. Niche titles are typically more expensive to produce than general titles (they are usually longer, need more proofing, and include more complex formatting issues), and they require a higher than normal retail price because the market for them is smaller.

But only a handful of years go, a very sizable percentage of buyers purchased these books at full retail price. The balance left the warehouse via traditional book trade sales or were sold to authors for resale. The money generated in this manner allowed us to stock the refrigerator, pay overhead and salaries, and produce the next similar manuscript, and also earned for the author a royalty check that did not induce heart-stopping dismay.

The advent of improved technology, which in turn made Amazon and eBay possible, has turned this revenue model on its head.

I will explore why and the ensuing ramifications, together with specific examples in how this impacts our own internal decision-making, in my next post.

--tps

Recent closed Poll

The result are quite interesting, and confirm what our own internal numbers demonstrate. I will be writing more on this soon, because it is something all publishers (and book buyers) must understand and deal with. The poll results have a much more significant effect on buyers than most understand or fully appreciate. This is especially true for niche buyers.

-- tps

New Website, New Reasons to support Civil War Preservation Trust

As most readers of this blog are aware, this publishing house sprouted its earliest roots in Civil War titles. Long before it was fashionable in many circles, we raised money for preservation, tried to raise awareness, donated books and money, and did all of it proudly.

Civil War Preservation Trust (CWPT), with its own roots largely seated in The Association for the Preservation of Civil War Battlefields (read about its genesis here), has been at the forefront of preservation for many years. It has saved thousand of acres of priceless land that, once lost, can never be replaced. We partnered with CWPT last year in the very successful effort to save the core of the Champion Hill battlefield, and look forward to working with that wonderful organization again in the near future.

CWPT has a new cutting edge website, which you can see here. On it, you will find hours of reading material, and one of the best flash presentations of a battle anywhere. The current action depicts first day of Chancellorsville here. If, like me, you have never quite fully understood Day 1 of that important engagement, watch the map.

Savas Beatie is pleased to announce that, after a phone conference with CWPT's Rob Shenk, we have agreed to provide content (articles, excerpts, interviews, etc.) to CWPT to help attract visitors and hopefully, help them raise money.

TEN PERCENT: We also have an arrangement with CWPT to forward 10% of any book purchased through our website. Just make sure you put CWPT in the coupon code box.

Please support this worthwhile organization any way you can.

Thank you.

--tps

Publishing Options

On average, we receive one manuscript submission each day, either in the mail, via email, or on the phone. A call almost certainly means the author has not read our guidelines. See here and here for more on that.

Sadly (or thankfully, depending upon your perspective), we receive many more publishable manuscripts than we can produce. That means we must often write the infamous rejection letter.

Other sources for publishing are available. Here is an article that discusses and disects the pros and cons of many of them. As a consultant to the industry, I am often asked about these options. I am a big fan of getting information out to the end user however that is possible. But . . .

Caveat emptor.

Or in this case author beware.

--tps