Following the Money: Publishing 2010

“Publishing exists in a continual state of forecasting its own demise; at one major house, there is a running joke that the second book published on the Gutenberg press was about the death of the publishing business.”

This is from a must-read article by Ken Auletta about the iPad in April 26th issue of The New Yorker. It includes numbers that follow the money in publishing as it migrates to the Web. They also provide a perspective on the business and where it’s going:

P-commerce

* Six publishers produce 60% of books sold.

* 70% of the 100,00 books that industry produces a year don’t earn back their advances.

*On a $26 book, authors receive $3.90 in royalties, 15% of list price on a hardcover book. Publishers make a $1 profit.

* More than 50% of revenue at Random House comes from backlist books.

* Since 1999, the number of independent bookstores declined from 3,250 to 1,400.

(On the other hand, the San Francisco Bay Guardian just gave a Chain Alternative Award to the Northern California Independent Booksellers Association, which has two new members this year.)

* Independents have 10% of sales, chains about 30%, big-box stores like Wal Mart, 45%, which pressures big houses, like Hollywood studios, to produce blockbusters.

* Publishers have to run two businesses at once: a traditional publishing business and an electronic business.

E-commerce

* Marcus Dohle, the Chairman and CEO of Random, said “The digital transition will take five to seven years.”

* There are 50,000,000 iPhones in the world, which O’Reilly Media vice-president Andrew Savikas calls “a great customer base” for book apps.

* Most publishers are giving a 25% royalty on e-books.

* Amazon’s 3,000,000 Kindles generate 80% of e-book sales, which Amazon achieved, in part, by selling at a loss.

* When Amazon customer can choose between a paperback and an e-book, 40% of them choose the e-book.

* Kindles users buy 3.1 as many books as they did twelve months ago.

* An Apple adviser who used Netflix to download movies compared bookstores to video stores ten years ago.

* Three behemoths–Apple, Amazon, and Google–are competing, so one of them can’t dictate terms.

* Author Solutions works with 90,000 authors.

What these numbers suggest is that publishing is going through a transformation. Old and new media companies will in time establish a business model that works for them and makes money for writers.

What these numbers can’t capture is the article’s engaging, rough-and-tumble portrait of predators at play or the importance of

* publishers in discovering and developing new authors

* independent bookstores in launching them

* writers who keep the whole enterprise afloat by sitting in front of their computers creating the art that makes commerce possible

Former Random House editorial director Jason Epstein said: “When I went to work for Random Houe, ten editors ran it. We had a sales manager and sales reps. We had a bookkeeper and a publicist and a president. It was hugely successful. We didn’t need eighteen layers of executives. Digitization makes that possible again, and inevitable.”

Author Lee Foster says “This will be a golden age for content creators.” You will create your future as a writer with your head, your heart, and your fingertips. Three cheers for content, whatever form it takes!

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7 Responses to Following the Money: Publishing 2010

  1. R.Aghoram says:

    I am glad to see your publishing high notes which deserves the attention of those concerned with the subject matter. One thing I would like to suggest that you may also give your opinion as to which one , the conventional publishing or electronic book publishing is likely to flourish in the nearest future and if so which publishers are going to occupy the top notches.
    I really appreciate your assessment.
    Thank you.

    • Print books will outsell ebooks for at least the next five years. The “Six Sisters,” the six conglomerates that dominate the industry, will continue to do so. More authors will continue to self-publish their books using the growing number of options that are opening up to them.

  2. ann seymour says:

    I bookmarked this article and will paste the link on various blogs. It’s a must-read for authors. Thanks, Mike, for the time you took to do the research. You and Elizabeth give with both hands – do so much for so many. X0, Ann

  3. amanda says:

    Wow…these statistics are eye-opening. Thanks for sharing~

  4. Been away. Depending on the kind of book you’re writing and your goals, self-publishing may be the best way to get published. It’s easier for nonfiction than fiction. It can be an effective way to test-market a book. You can self-publish your book in a loose-leaf binder first, and as an ebook, and a podcast. Regardless of who publishes your book, promotion, distribution, and an impeccable book remain the challenges. Any choice you make involves tradeoffs. Know what they are before deciding. Good luck.

  5. Most books are self-published, and the trend will continue to grow. It’s a great way to test-market a book.

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