eBooks and the Future of Publishing

More writing on the wall for publishers and libraries.  Author Barry Eisler has turned down a very lucrative publishing contract so that he can self publish directly to eBook format.  The article comes from the Daily Beast.  Eisler states “If The Detachment does as well as I expect it to, and my subsequent books and shorts follow suit, it’s hard for me to imagine what could bring me back to legacy publishing.”

The rationale for Eisler is that he will make a lot more money by selling direct, and retains all control over copyright.  He lays out his plan here:

How much planning went into this decision? And was your family supportive?

A lot, and yes. Being so accustomed to, and dependent on, the legacy model, it took a fair amount of work for what I knew intellectually to start to penetrate at a gut level. The timelines, for example. I’m used to thinking in terms of publishing contracts, so let’s take a hypothetical two-book, $100,000 offer… or, okay, let’s make it real: a two-book, $500,000 offer. My tendency has been to focus too much on that big, seductive number. But to understand what the number really represents, you have to break it down. Start by taking out your agent’s commission: your $500,000 is now $425,000. Then divide that $425,000 over the anticipated life of the contract, which is three years (execution, first hardback publication, second hardback publication, second paperback publication). That’s about $142,000 a year.  This is a more realistic way of looking at that $500,000.

But there’s more. Some people have mistakenly argued that, for my move to make financial sense, I’ll have to earn $142,000 a year for three years. But this is one time when you don’t want to be comparing apples to apples. Because the question isn’t whether I can make $425,000 in three years in self-publishing; the question is what happens regardless of when I hit that number. What happens whenever I hit that point is that I’ll have “beaten” the contract, and then I’ll go on beating it for the rest of my life. If I don’t earn out the legacy contract, the only money I’ll ever see from it is $142,000 per year for three years. Even if I do earn out, I’ll only see 14.9% of each digital sale thereafter. But once I beat the contract in digital, even if it takes longer than three years, I go on earning 70% of each digital sale forever thereafter. And, as my friend Joe Konrath likes to point out, forever is a long time.

Ballantine managed to sell about 10,000 combined digital copies of my last two books at a $9.99 price point (a price point that was earning me $1.49 per unit sold, BTW) in the latest three-month period for which I have data. Call that 5000 of each book for three months, so 1,667 of each book per month. If I cut the Ballantine price in half and still can only move 1,667 units a month, at a $3.50 per unit royalty ($4.99 x 70% = $3.50), that’s about $5,833 per month. But unlike paper books and digital sold at paper prices, low-priced digital books sell steadily, so it seemed to me that I could make about $70,000 per year, per book on my own. Assuming nothing changes and digital doesn’t keep growing (and that would be crazy–Charles Cummings’ critically acclaimed spy thriller The Trinity Six just sold three times as many digital copies as hardback in its first week), I should be able to make $140,000 a year for the two books I could have sold in a $425,000 legacy deal, instead. $70,000 for the first year, then $140,000 for each year thereafter, when I’ll be selling two books instead of just one. So if I’m right about all this, and I’m pretty sure I am, I should be able to beat the contract about halfway through the fourth year. And again, all of that ignores the continued growth of digital, the way low-priced digital books reinforce sales of other such books, etc.

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2 Comments

Filed under eBooks, eReading

2 responses to “eBooks and the Future of Publishing

  1. I applaud Eisler for his move. I think for him it makes sense.

    The next day, the same publisher announced a huge deal with self-published phenom Amanda Hocking.

    The barriers between self-publishing and corporate are coming down. There is room for both and I’m sure many more will follow.

  2. It’s interesting to see bigger and bigger authors choosing to take the self-publishing route. Can you imagine what would happen if a AAA-selling writer decides to create their own publishing house?

    I wonder if Little, Brown has made any plans for how they’d respond to someone like James Patterson creating his own imprint. I’m envisioning a giant red envelope locked in a safe behind the executive suite labeled DEFCON 1.

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