Thursday, October 28, 2010

Observations at #8

Currently, SHAKEN is #8 on the Top 100 Kindle Bestseller List.

Ranked lower than me are four authors and a game, EA Solitaire. If we disregard the game, I'm the seventh bestselling ebook on Amazon.

So who is outselling me?

Stieg Larsson is a phenomenon that really hasn't been seen since the DaVinci Code. He's an anomaly, a supernova, and his three titles have been bestsellers for years with no clear end in sight.

The other folks currently beating me are Lee Child, John Grisham, and Vince Flynn--all #1 NYT bestsellers. They sell well in all formats, even at the $9.99 to $12.99 they're priced at in ebook.

But here's the kicker--at $9.99, Child and Grisham are earning $1.75 a pop, and if the current trend applies, they're selling more ebooks than hardcovers. So they're making less money than they did on previous books.

Their publishers, in the meantime, are earning $5.25 per ebook sold--a much better profit than they make on hardcovers, especially when you consider the smaller amount of work and overhead it takes to publish an ebook.

Flynn, at $12.99, is making $2.25--also less than he would on a hardcover. But he's also selling fewer copies, because Kindlers HATE anything over ten bucks.

Now, these guys got huge advances. Advances they will likely never earn out. In this volatile publishing climate, I encourage authors to take the money and run if given a huge advance, knowing full well they'll probably never get their rights back.

But what if you don't get a million dollar advance? Should you not sell your books to publishers?

Let's look at the 30 year plan, using simple numbers.

Assuming a perennial ebook will sell 1000 copies a month self-published at $2.99 (a low estimate, but a reasonable one) we'd be talking about $24k per year, or $720,000 over the thirty year period for the self-pubbed author.

Now, let's say you get an advance from a big publisher. Not a million dollar one, but a nice one, say $300,000. Will you get your rights back at the end of 30 years?

No, because it isn't likely you'll ever earn that advance out, so your publisher will fight to keep the rights.

Why won't you earn out?

First, because the royalty is too low. Second, because when the book is first released and "hot" it is priced too high.

Let's say the book sells really well the first year, because it's new. 40,000 copies sold, at $9.99, earns the author $70k. But then the next year the price is dropped to $6.99, and only sells 12,000 copies. That's $14,768 for the second year. Let's say it has steady sales for five years at the price, then the price drops to $2.99 (the number I believe publishers will eventually settle at, and some already are.)

Selling 12,000 copies, that's $6300 per year to the author. Ouch.

Year 1 - $70,000
Year 2 - $14,768
Year 3 - $14,768
Year 4 - $14,768
Year 5 - $14,768
Year 6 - $6,300
Year 30 - $6,300

Total royalties: $286,572

So you haven't even earned out your $300k advance in 30 years, even though you've sold 388,000 eooks. Compare that to the $720k you could have made on your own, selling fewer copies.

Now, these numbers are hardly accurate. No one knows how well ebooks will be selling 30 years from now, and I'm just assigning numbers whimsically to prove a point. I also haven't factored in print sales, even though I just read a report that Kindle versions of the Top 1000 ebooks are outselling ALL print versions combined, 2 to 1.

But even if my numbers and predictions are fanciful, the trends I'm talking do seem to make sense.

1. Publishers are charging too much for ebooks.
2. Publishers are paying too little in royalties to authors.
3. The price of ebooks will come down.
4. Publishers are fighting harder than ever to maintain control over erights (and all rights.)
5. Ebook sales are increasing, while print sales are declining.

If you get a huge advance, run to the bank. It doesn't matter if your books ever revert back to you, or if you ever earn out your advance. You just won the lottery, go celebrate.

But if you're being offered less than $500k per book, like 99.9% of us mere mortals, really think about the long term ramifications of your actions. Especially since your agent and the taxman will take a big hunk of your advance money, when you could have kept a much greater percentage of it if it had been paid out over three decades.

Also keep in mind that if you do earn out an advance, like I've done with my print books, you will be forever losing money because of the high price/poor royalties set by your publisher.

I don't think Shaken will climb higher than #8. Too much competition.

This doesn't bother me. I've already made peace with the fact that Amazon will sell Shaken forever, and I'll never get the rights back. But that's okay, because with Amazon's help, I was able to hit the Top 10--something I haven't managed on my own yet. And though I'm making better royalties, and will probably earn more in royalties than Child, Flynn, and Grisham over the next few decades, I really didn't sign with Amazon for the money.

I did it because my backlist sales, spurred by Shaken, have all shot up. Shaken is not self-published, but its success is allowing me to earn more money from my self-published ebooks, by introducing my work to a whole new audience thanks to Amazon's marketing power.

Whiskey Sour is now ranked #115. That's as high as it has ever been. My publisher priced it at $4.69. Of that, I make 82 cents per copy sold.

If I had my rights back, I'd price it at $2.99, earn $2.04 per copy sold, and guaranteed it would be in the top 100 by now. So how much money am I not earning because I signed with a traditional publisher? It hurts me to think about.

As for ranking, it doesn't matter that Child, Larsson, Flynn, and Grisham are outselling me. My ego can handle it.

Especially since I'm currently outselling the following celebrities and bestselling authors also in the Top 100:

Keith Richards
Glenn Beck
Ken Follett
Jonathan Franzen
Rick Riordan
Suzanne Collins
Richard Castle
James Patterson
Jogn Sandford
Robert B. Parker
Danielle Steel
John LeCarre
Dean Koontz
Iris Johansen
Dan Brown
Stephen Hawking
Philip Roth
Bob Woodward
Janet Evanovich
Harlan Coben
Time Magazine
The New York Times
The Wall Street Journal

Not a bad group to be outselling. I think my ego is pacified for the moment. :)