Wednesday, October 11, 2006

Royalties

A New York Times Bestselling author recently told me that you don't make any money until book #5. I'm paraphrasing:

"Don't quick your day job until you have five books in print, on the shelves. That's when you've earned out your advance and the royalties start. That's when your publisher will start pushing your books harder. Paperbacks are the important thing."

Since I knew he had a (reported) 120k print run in hardcover, I politely told him he was full of shit.

"I only sold through about 60k books in hardcover. That didn't make a dent in my advance. The paperbacks are the money makers."

The author went on to describe how small the advances were for his first few books. Years later, they have all been in multiple printings, and have long earned out their meager advances.

"Hardcovers are nothing but an advertisement for the paperbacks," he said.

I can understand his logic. A hardcover has a shelf life of less than a year--- and usually has only four months (average) to make a sales dent. But while this hardcover is taking up the coop space on the new release tables, it's signaling to people to check out this author's other books; books that have been selling for years.

While a hardcover can make money, the book usually doesn't get into a royalty situation until the paperback is released. Each year, the publisher's marketing dollars push the new hardcover, which reminds people about the backlist.

My royalty statements confirm this. As of my statement of June 2006, both Whiskey Sour and Bloody Mary have earned out their advances. They did this on the paperback releases.

Unfortunately, I won't see any royalties until next year, because of basketing. Basketing is a form of joint accounting. When books are basketed in a contract, the publisher doesn't pay out royalties until all of the books have earned out. So the earnings from Whiskey and Bloody are paying the advance for Rusty Nail. Which is fine. By next year, I should be in a royalty situation. This is a good thing.

Royalties are like found money. You're earning on work you did years ago. Your publisher also likes royalties. They no longer have to spend marketing dollars on your backlist, but it keeps generating income. Earning out an advance is a good indicator that the book made a profit, and the longer it stays in print, the more profitable it becomes.

But how does someone stay in print? What are the minimum sales that have to be reached each year to keep a book on the shelf?

I confess that I have no idea. I'm guessing it varies. But I can make an educated guess on why books stay in print.

First, there has to be a demand. This demand is fueled by old fans and new readers. Word of mouth is important.

Second, your publisher needs to be behind you. They are the ones with the deep pockets who can market you effectively, helping to establish your brand. They are also the ones who decide when to pull the plug.

Third, there should be growth. Steadily rising print runs, and corresponding sales, make everyone happy. As my friend said, hardcovers do sell the backlist. And the bigger the hardcover, the bigger the marketing campaign, the likelier backlist books will sell.

By book #6, I'm hoping to have a dump box (also called a cameo.) These are the stand alone cardboard displays featuring six different books all by the same author. These sell books like crazy. They also cost your publisher a mint, in both corrugation (the cost of the stands) and coop (the price of the real estate they occupy.)

We all hear the stories of the new authors who signed a huge deal and get a gigantic print run and marketing campaign. This is a great thing when it happens, but it's also a gamble.

Building up an author's fanbase with modest print runs and a solid backlist is a safer way to make money. Slow and steady wins the race. And it stands to reason that if your backlist is earning money, there will be more money available to promote your recently released title. Once you're in a royalty situation, you're no longer a gamble--you're a sure thing.

At least, until demand drops off.

That's where you come in.

I've heard a lot of authors talk about the insanity of doing an 8 hour store signing, handselling books to everyone who walks in the bookstore. "I could never do that," they say.

They also say that visiting 500 bookstores in a summer is even crazier. They talk about how their time is better spent writing. They talk about their shyness. They talk about how it's the publishers job to sell books. They say that if they just write a really good book, it will find an audience.

But they're overlooking a major plus of self-promotion; once you're in a royalty situation, every book you sell is making you money. The more you sell, the more you earn. And it's exponential--if you sell one book to a customer, that customer can buy your backlist, your future books, and tell everyone they know about you.

You're not working for free. You get a check. And the effort you put in will sell books above and beyond what would have normally sold.

Is it what you signed on for when you became a writer? No. But if you'd like to be doing this as a career, and someday hope to make a decent living (or a wealthy living) writing books, perhaps you should reconsider your priorities and what you're truly capable of doing.

I've said, from the very beginning of my career, that my goal is to make money for my publisher.

For my first two books, I'm doing just that. It will be interesting to see where it takes me.