Money Matters, Part II

If my first column didn’t depress any beginning writers sufficiently, let’s take another look at how writers are paid—royalties. This method isn’t as simple as advances because the methods of calculating royalties are as widespread as your imagination and often based on type of publisher. Today, we’ll start with small press and e-books.

I currently sell my reissued e-books for 50% of cover if they’re purchased through my e-book publisher, and anywhere from 25-40% of cover if purchased through a distributor like Amazon or Fictionwise. I’d have to do considerable research to calculate my rates from my NYC publisher on current books, but it seems to be running in the neighborhood of less than $2 a book—a high rate compared to print, but considering I’m lucky to sell 50 a year, not a number I can live on—especially after my agent takes her share and the IRS gets theirs.

It’s pretty much impossible to calculate if a writer can earn a living wage from e-books and small press because the payment spread is enormous and depends on genre, longevity, marketing, and luck, just like print except with the disadvantage of no advance payment. Advance payments force publishers to share the risk with the author and give publishers an incentive to push the book. Without money up front, authors are on their own, which means they have to do more marketing than print books, thereby increasing their costs and time spent for a completely unknown amount of payment.

I understand erotica sells well in small press, but I have no idea of what “well” means. If anyone has solid numbers they can recite, please speak up. Most small presses are small for a reason—they’re operating pretty much on the basis of New York hot dog vendors: they earn enough to get by that day, but if a bus runs over the stand tomorrow, they’re out of business and so is anyone to whom they owe money.

Essentially, selling a book to a publisher without an advance is buying a lottery ticket. First, your'e risking that the publisher will be there tomorrow or even next year. But even if they're solid, if you have no established name, aren’t selling erotica, and have no reliable marketing experience to draw on, you’re selling your book to family and friends and praying they spread the word. Unless you have a lot of family and friends, you’ll be fortunate to sell 50 books a year. If you’re working with a generous publisher who sells your book at $10 a copy and gives you half the cover price, you might earn $250 in a year. That won’t pay your internet bill—although you’ll have so many expenses to run up against that tiny income, you won’t have to pay income or social security taxes! A good investment only if you happen to need losses on your tax return.

I understand that some writers can write and sell an e-book a month. Let’s round that down to ten books a year since Stuff happens. In the above case, that would mean the writer has probably worked 2000 hours, full-time, and earned $2500. That might be just enough to pay the computer and internet but certainly not enough to be called more than a time-consuming hobby.

We can up the ante and say the writer is writing erotica which sells well, maybe 2000 copies of each book. Big moola— 2000 copies of 10 books at a royalty rate of $5 will get you $100,000 a year! I think I need to change genres. But first I need to write 10 books a year, and I can’t. I’m lucky to write two—which might earn me $20,000 and get me into living wage country, IF my publisher is generous, my audience is faithful, and a bus doesn’t hit my publisher before I get paid. Again, I don’t know if 2000 books is a realistic number for e-book erotica, and I’m fairly certain most e-books do not sell at 50% of cover.

And yes, I understand the Long Tail theory that says these books will keep on selling into infinity. That may be so. But based on my own experience, books sell well the first year and drop to a trickle after that. It’s difficult to consistently double one’s audience each year, so there are only a few new die-hard Patricia Rice or erotica fans coming along each year. The mass of them buy the first year a book is out. If roughly 1% more buy the next year, that’s 20 copies each of the big erotica seller and nil for the little guy. By now, you should be able to do the math. You might afford a hot dog or a night out at O’Charlies on your backlist. You’ve got to keep writing new books, and you’ve got to keep up with the changing market to keep selling in the same numbers.

BUT—remember my saying I get paid less for selling through distributors? So do most e-book authors. And distributors for e-books and small press are just as bad as distributors for print press—they take the biggest share off the top and pay you when they have the money. That $100, 000 the erotica writer worked so hard to earn can quickly drop to $50,000—for ten books—just in paying the distributor their share. If the distributor goes belly-up or delays payment for months, the number keeps dropping. Again, small press and online distributors are not yet an established source of income, so they can’t always be relied on. In other words, the erotica writer (and I'm talking about my theoretical one) had better wait until she has cash in hand before buying that new car. Good advice for any creative.

I’m guessing the number of erotica e-book writers who can earn $100k a year is probably in the same likelihood of print writers earning what Nora Roberts does—almost none. Write only five books a year (ONLY!), sell only 1000 copies of each, sell at a discount so that you’re receiving only 25% of cover price, use a $10 cover price, and you’re earning $12,500 before expenses—under that minimum wage figure again.

You have to write hard for your money! Tomorrow, I’ll tackle royalties and the larger publishers. And again, anyone with hard facts and figures, throw them in here. We can all learn from them.

Money Matters, Part I

This one is for my fellow writers, but if readers have any interest in how writers get paid, here’s a place to start:

For creatives like writers, managing money tends to be anathema. In the current economy, in the current state of the industry, we risk becoming court jesters if we continue to ignore business reality—creativity is about as well paid as a lemonade stand these days.

Yes, there are artists, authors, and musicians who bring in the big bucks. I’d venture to guess they’re about 1 in 10,000. For the rest of us—we’re fortunate to earn minimum wage, and the numbers are going down. We write, paint, and play because we can’t not do it, but we’ll be lucky to ever earn a living at what we love.

I don’t know any beginning musicians or artists, but I know dozens of writers who think they’re on the road to success when their first book is accepted. For them, I recommend studying Brenda Hiatt’s Show Me the Money survey. It’s updated annually and can be found at http://www.brendahiatt.com/id2.html. Just glancing through this survey will tell you there may be four publishers left who give an author a chance at a living wage (Harlequin/Silhouette is one publisher, despite Brenda’s breakdown between categories).

A “living wage” is subjective, of course. If we round the minimum wage to $7 an hour and a full time job to 2000 hours a year, then the government is saying we need at least $14,000 a year to live on. The chances of a first mass market fiction book earning at that level is probably equal to the 1 in 10,000 number above. Or worse.

Except—even if a book does miraculously sell for $14,000, that’s not the same as earning minimum wage. Most writers must pay at least 15% of earnings to their agent. And since they’re self-employed, they pay ALL their social security taxes, not just half, as a salaried worker does. That’s an additional 7.5% they won’t see. Full time minimum wage workers are generally protected by health insurance, at a minimum, That alone is worth roughly half of that $14,000! After other expenses such as computers and internet connections, marketing, and so forth, an author would be fortunate to net $3500 for their $14000 advance. If it took them our theoretical 2000 hour year to write, they’re earning $1.50 an hour.

Sadly, most beginning authors these days are receiving no advance at all. They’re hoping for the creative equivalent of a lottery ticket—that their book will sell well enough to earn royalties. That’s the topic for the next few days.

(If anyone has the stats on any of these numbers, like how many new mass market fiction books come out each year, I’d love to hear it, because this is a discussion we need to keep open.)