To sum up, a legacy author recently posted her sales figures, Lexi Revellian blogged about it, Passive Guy mentioned it, and the CEO of Kensington, in a brave and bold move, began to respond in the comments on Passive Guy's blog.
Kudos to Steve. I admire that.
At one point, Steve asked some questions of indie authors. He seemed sincere in wanting answers, so I'm happy to supply them.
Steve: I’d like to ask some questions of all of you self-published authors. For those of you that are starting out and even those that have a few books under their belt….how do you promote your book online? How do you distinguish it from the other 1,000,000 books on Amazon and other ebook retailers? Do you sell your books on all of the ebook stores or only Kindle?
Joe: I'm not starting out, Steve. I signed my first book deal in 2001, and had eight novels published by large legacy publishers.
My advances for those eight books were $265,000 combined, and they earned out and I made an additional $300,000 in royalties. Not bad, right? But over the course of 11 years it resulted in roughly $43k a year. And considering all the travelling I did (I signed at 1200 bookstores in 42 states and attended dozens of conventions, book fairs, and events) there was very little left over to live on.
In January of 2013, I was able to get my rights reverted back to me.
In the past 12 months, those titles have earned me $600,000.
Consider that carefully, as the CEO of a large publisher. Once I was no longer under contract, I was able to make over 10x what I was making with big NY publishers.
Why?
Many reasons. Better royalties, for one. Having the ability to control my prices and put my books on sale. Advertising through companies such as BookBub. Bundling titles together. Tweaking my product descriptions and keywords. Getting new covers.
Once I was in charge, I turned midlist titles into a cash cows.
Remember that these were old backlist titles, so it wasn't my legacy fanbase buying them (they had already bought them). I wasn't selling because I had a platform from my legacy days. These sales were from people who hadn't heard of me before, and discovered me via Amazon's many paths to ebook visibility (bestseller lists, rankings, also-boughts, email campaigns.)
I'm in KDP Select on Amazon, forsaking other platforms, because I can make more money on KOLLs in a month than I made on all other etailers combined. Now, with Amazon Countdown, I can earn 70% on $0.99 ebook promotions. On a great sales day, I can make between $5 and $15k. On a normal day, I make between $1k and $2k.
I have never been on the NYT bestseller list or the USA Today Bestseller list, yet I have sold over 1 million self-pubbed ebooks.
How many #1 Kindle Bestsellers has Kensington had? I've had three, and dozens more in the Top 100. And I don't have the experience, reach, deep pockets, and 90 employees that Kensington has.
I'm not the only one doing this. There were over 150 self-pubbed authors who sold more than 100,000 ebooks on Amazon in 2013.
How many Kensington titles have sold 100,000 ebooks in 2012?
The magic word here is ebooks.
You mentioned Kensington is the "last large independent publishing company in this country that is still in the mass market business."
Hmm, could that last part be the reason? You consider yourself first and foremost a mass market publisher?
Did you know Kodak invented the digital camera? They didn't pursue it because they had a lock on film sales, and didn't want to change their business plan.
It didn't turn out well for them.
But for Kensington, you really don't have a choice. Mass market is your market. That's something you can do that I can't--get paper books into brick and mortar stores.
For the entire history of Kensington, up until very recently, that meant you were in a position of power. Authors needed you.
But now we don't.
I made a million dollars in 2013, and my books weren't in any brick and mortar stores. Why would I need Kensington? Why would any author?
And what does my ability to do this say about the future of books (both ebooks and paper books)? And of publishers such as Kensington?
Steve: Now maybe you can answer this question without jumping down my throat….if indie publishing is as good as you’re all making it sound…..why do you think that the biggest and most successful authors in publishing don’t go this route? Why isn’t Nora Roberts, Patterson, Lee Child, etc….going this route? Do you think it’s just the large advances they get? And even if you go down a notch from the megastars….those that are getting above a $50,000 advance for example….why do they stay with publishing houses?
Joe: Do people in happy marriages have affairs? Or do they stick with their spouse?
If I had been making great money with my publishers, I would have stayed with them. What impetus would there have been to leave? And if I'd been given sweeteners like escalators, cover approval, expensive promotional campaigns, widespread print distribution, and large launches at BEA with massive media attention, I'd be defending legacy publishers right now instead of being on the other side of the fence.
But very few authors get that kind of treatment. The vast majority don't. In fact, a lot of them sign unconscionable contracts, are treated poorly, and make very little money (as referenced by the deleted blog post that started this line of inquiry.)
In the past, authors needed advances to live on, and if they were fortunate enough to earn out their advance and get royalties, they were paid twice a year.
It isn't easy to budget for your family when paid semiannually. And why does it have to be that way? It's kind of silly because in PG's thread you said: "Royalty programs are extremely sophisticated and the data is pulled in from sales systems from the biggest magnitude…generally SAP."
If that's the case, why not pay more often? How about quarterly? Bi-monthly?
Amazon pays monthly. I can track my sales in real time, not 18 months after the sale when reserves against returns are finally counted on a statement.
But we both know that a book can be profitable for a publisher even if the author hasn't earned out their advance. Which is why a publisher can offer Lisa Jackson big advances and not be too concerned if the book earns out.
BTW, you have heard of Pottermore.com, right? Rowling won't be the first to exploit her own ebooks rights. Other name authors will follow.
Here's how it will happen:
1. Huge names will look at their royalty statements and see the eventual transition from paper to ebook sales. They may not be seeing them now, but when B&N closes, and as ereaders continue to become widely adopted, they will. Because once B&N is gone, it will cause more people to adopt ereaders because they can't get books otherwise, which will mean airports, drug stores, and department stores won't stock mass market because no one is buying them.
2. Huge names will then demand better ebook royalty rates since ebooks are their new main income source. But with the income from paper diminishing, publishers won't be able to justify huge advances and 70% ebook royalties.
3. So huge names will self-publish, banking on their brand to bring in 70% royalties.
I'm skipping steps, and it may take a few years, but this is how it all ends.
How is Kensington preparing for it?
Kensington has one invaluable thing to offer authors: paper distribution.
The rest of what Kensington offers is service-based: editing, cover art, formatting, proofing, marketing, advertising. But all of those are services authors can get without Kensington. And all of those are sunk costs for authors--they pay once, rather than pay forever.
Does it make sense for any author to give up the majority of their ebook royalties to Kensington, forever, in exchange for editing and cover art? Why would any informed author do that?
Right now Kensington can get an author's paper books into thousands of retail outlets. That's worth something.
At least, it's worth something to some authors. Other authors, like me, don't care, because we're doing fine without being in B&N or Walmart or Costco.
Blogs like mine are helping whole generations of authors decide they don't even want to bother submitting to Kensington because they see no advantage to it. There are tens of millions of ebooks being sold entirely outside of the publishing industry. That number will continue to rise.
Is your long-term business plan centered around hoping for writers to remain naive?
Steve: Lastly what do you all think about the power that Amazon has gotten in the marketplace? They currently sell books, both print and e, below cost quite often and are willing to take the loss to build marketshare; predatory pricing.
Joe: AKA "being competitive."
Well, they did invent the ereader and ap everyone wants to read ebooks on, at huge cost and risk. And last I heard, the DOJ doesn't consider Amazon predatory. But if Kensington does, can't you fight Amazon's unfair practices by removing your titles from their store?
I know that would be risky and scary. When I didn't like my publishers' practices, I got my rights back, which was also risky and scary. But sometimes, when you believe in something, you take that risk.
Or do you see the end like I do? That ebooks will become the dominant choice for readers? If so, I'd worry less about Amazon being predatory and more about how to exploit the potential they're offering.
Steve: They can afford to do this because of the size of their bank accounts. What happens when the other companies go out of business because they can’t afford to match these ridiculous prices?
Joe: I'm matching Amazon's ridiculous prices without difficulty. In fact, last I checked, I'm getting pretty wealthy.
As for other companies going out of business, I fail to see how that effects me. The system needs two groups to endure: readers and writers. Companies like publishers and bookstores once facilitated this relationship, and took a share of the profit. Now Amazon is doing that. One day it will be someone else in some other way.
My job isn't threatened.
Steve: Do you think they will suddenly change their terms? Are they suddenly going to change your royalty rate to 50% from 70% when there’s no other competition?
Joe: What are Kensington's ebook royalty rates? Are you 70%? Are you 50%?
Are you suggesting that Amazon may lower their rates to something like (gasp!) what Kensington offers authors?
Should authors be concerned about what Amazon might do, or what Kensington is currently doing?
Can you point to ANY situation where a company or companies who had a commanding share of a media market raised prices? DVDs and Blu-Rays have either remained stagnant or gone down in price. So have music downloads. Cable TV and streaming video have gotten cheaper.
Wait, come to think of it, there were some instances in the past where industries dictated price. The music industry forced listeners to buy $16.99 CDs in 1986 to get just the one song they liked.
Sort of like the publishing industry currently charges $30 for hardcovers.
We know what happened with music. The industry fought change, lost its power, and now a computer company is the number one music retailer in the world, selling cheap digital downloads.
Steve: Do you see any new companies being able to come in and compete with the existing players in ebooks now? Will Apple continue to grow…what about Google…probably the one company that can afford to absorb losses even more than Amazon if they wanted to? Android is an enormous platform; why aren’t they pushing books harder?
Joe: Why is the future of the industry, and of Kensington, based on what others are doing?
No one wins by playing catch up. No one wins by letting others call the shots.
When ebooks overtake paper in sales--and they will--what is Kensington's plan? Because it seems that your current plan is to continue to invest in a dying paper market, continue to treat authors as replaceable cogs, continue to whistle past the graveyard, continue to do business with the devil who will destroy you (Amazon), and take zero advantage of a backlist that could be making you tens of millions of dollars if you only paid a little bit of attention to authors like me and what we're doing.
I'm going to fisk a few more points you made during the discussion on Passive Guy's blog. I'll try my best to put them in context, because I hate it when I'm incorrectly quoted.
Steve: A contract is a private business transaction between the writer and the publisher and I don’t see why it needs to be shared.
Joe: Steve, I'm the one to blame for the trend of sharing numbers and terms. I began doing so publicly in 2009, when I first self-published on the Kindle.
That was the first of many posts, and eventually I disclosed my advances and royalties from my legacy publishers and compared them to my self-pub numbers.
I did it to show authors what was possible. I also did it because authors never had the power that came with transparency. We didn't know what each other made, because we didn't discuss it. Any mechanical engineer or podiatrist knows what they can expect, salary-wise. Writers never did. Could be $5k a year. Could be $50m.
So I showed other writers what a midlist writer earned, and other writers watched as my self-pubbed numbers began to catch up with, and surpass, what I made in the legacy system.
As a result, many authors treat transparency as the norm now. And because of that, we all have a much better idea of how we're all doing.
Steve: A legitimate publishing company works with the writer to improve the story.
Joe: I had an experience that disagrees with that statement. In a nutshell, my publisher, Hachette, rejected the second book in a two book contract, and when I wrote another one for them they wanted significant changes.
I self-pubbed those two books. They've earned me more than $300,000, and have gotten over 1000 Amazon reviews averaging 4 stars.
My publisher didn't work with me to improve those stories. They worked against me, and I had to buy my way out of the contract, and I wound up making a lot more on my own than I did with them.
Steve: I don’t know of any publishing company CEO from a respectable firm that doesn’t think its editors are its most valuable resource. They are the ones who bring in the new authors and discover them and have a good part of relationship with the author.
Joe: Actually, your most valuable resource is your ability to get paper books onto shelves.
Editors are very important, but they can be hired directly by authors. For one-time costs.
Can Amazon KDP be considered a publisher? They don't buy rights, but they do call themselves Kindle Direct Publishing.
If so, it is possible to publish without any editor bringing in new authors, having relationships with them, or even doing any editing.
Steve: We have artists that have been paid over $6000 for one time use of their art. I doubt there is one single self-published book where an author has spent anywhere near that amount.
Joe: Yikes.
In fairness, it was in response to the comment: "Better proofreaders can be found than those employed by the Big 6, and definitely better cover artists."
Now, we've all seen some terrible self-pubbed covers. But we've also seen some terrible legacy-pubbed covers. On average, I feel confident in saying that legacy covers are better than self-pubbed covers. But I've seen some knock-out self-pub covers, and I'm pretty sure they didn't cost $6000. I believe, for $6k, I can hire a necromancer to bring Picasso back from the dead and hire him to do a cover, with money left over for a lobster dinner.
So I have to call you out on this, Steve, because what you thought was an honest defense of Kensington's attention to quality came out more like a careless boast about how much money your company wastes on cover art. I'd love to see the $6k cover mentioned and compare it to some self-pubbed covers. It might, indeed, be worth it. But in a day and age where the average author advance is still $5k, is paying $6k for cover art really a wise business move? Especially when we all know that Kensington has offered author advances for much less than $6k?
Steve: If the publisher commits to the books they are required to pay for them even if the first book does poorly. That’s the risk the publisher takes.
Joe: I agree that the publisher takes the risks, and publishers do honor contracts even if the book doesn't succeed (this was in response to a commenter suggesting that "if the publisher wasn’t happy with sales of book 1 they could have cancelled 2 and 3")
But all publishing contracts have clauses that state a publisher can reject book 2 or 3 if they feel it isn't publishable. And, indeed, I know authors who have been dropped from contracts for this reason--a reason that is entirely arbitrary.
And who gets the blame if the book doesn't do well? The author.
The publisher can get out of a contract if it wants to. It won't cite "poor sales of book 1" but it can say "book 2 is unacceptable." Which is especially awful when the poor sales of book 1 were the publisher's fault.
I'm not going to get into detail about all the ways a publisher can hurt a book's sales, but it happens. And a bad sales record haunts an author forever, making changing publishers difficult if not impossible.
Steve: Did you see the recent posts from Writer’s Digest that 80% of self-published authors make less than $1000. That’s from a survey of 9500 writers.
Joe: And that's $1000 more than they would have made if they never were accepted by a legacy publisher.
BTW, why wasn't I surveyed? If I and a few choice friends were asked, we could have really bumped up that average.
The fact is, a lot of self-pubbed authors won't make much money, just like a lot of legacy pubbed authors won't make much money. But everyone has a chance to self-pub. Legacy publishing is an invite-only club. So, if given the chance to make some money over no money, I think most would choose some money.
And I have no idea how skewed the survey was. WD is infamous for advertising lots of predators; companies who charge authors fees for publishing assistance and reviews. A self-pub author who subscribes to Writer's Digest may believe they only way to self-pub is to use Authorhouse or Xlibris. That would put them far behind an author who reads my blog and understands how to self-pub on Kindle for free. If a lot of vanity press authors answered the survey, it's no wonder they're making so little.
Also, how much does the average legacy pubbed author make? Isn't that an important number, too? If we remove the Top 10 highest paid Kensington authors, what is the average advance of the remainder?
Finally, I don't understand the phrase "make less than $1000". Is this annual? Because ebooks are forever, and should theoretically earn forever, so there won't be a cap on how much a book earns.
Steve: With our digital first lines, eKensington and Lyrical Press now, we publish many first time authors as well as others, who do not earn huge royalties. It’s a building area for us….like a farm team. If the numbers get bigger and the authors have good reviews we’re going to try to eventually get them into print. We’ve had many authors published only in e who have gone on to get big publishing contracts from other publishing houses as well.
Joe: Okay, so this seems to be part of your plan for the future. I missed it on the first read-through.
I'm fine with the concept of this, but I'd have to review a contract to see if it's something I'd agree with. I have no problem with farm teams, and you also mentioned paying quarterly, which is a step in the right direction.
Years ago I made up a term called estribution. Essentially, someone would take on all of the jobs of a ebook publisher--editor, cover art, formatting, proofing, accounting, etc--for a royalty percentage (10%-15%). But the rights remain with the author.
I fully understand authors not wanting to self-pub all on their own. And I can understand them willingly giving up royalties to have these things done for them.
But at what cost?
Amazon KDP offers 70% royalties. No publisher can offer more (because Amazon has to take their cut). So eKensington and Lyrical are obviously offering less than an author could get by self-publishing. If it's a small percentage, that might be worth it to the author--depending on the contract.
Giving up your rights for something you can do yourself (or pay someone a flat fee or a royalty percentage to do for you) makes no sense... until you bring up the farm team analogy.
It's a seductive concept. Play for us, and maybe you'll play in the big show.
I can see how that would temp authors. Sign with a known publisher, let them do all the heavy lifting, and maybe get a shot at seeing your book on the rack at Walgreens.
But farm teams aren't secretive. Scouts know all the names and stats. Everyone is aware of the top prospects. It's all out there in the public eye.
So, Steve, who are some eKensington and Lyrical authors who have gotten into print, or gone on to other publishing houses?
And anyone reading this who is an eKensington or Lyrical author, what are the contract terms (since Steve hasn't mentioned them and apparently seemed reluctant to do so in PG's thread)? You can post them in my comments, anonymously, or email me. I won't mention your name. I did read one author on PG's blog who got a $2500 advance from Kensington.
I made that much last Saturday.
Of course, all writers have different paths to follow, and I've never said that my success is probable, or even possible, for anyone else. But I do encourage everyone to get informed before you sign away rights to a novel for the price of a flatscreen television. Learn about contracts, and royalties. Research all options.
Steve: What I said was that in MY perfect world that self-published books would be separated from books that were done by traditional publishing on websites so that the reader can make an informed choice as to what they’d like to buy.
Joe: I'm going to let my friend, bestselling author Barry Eisler handle this one, since we discussed it in length and I appreciated his response.
Barry: What I find most noteworthy (and amazing) about Zacharius’s notion that self-published books should be forced to wear some sort of weird scarlet letter is how anti-democratic and paternalistic it is. The philosophy behind it is that readers need to be protected from reading what they like — protected, presumably, by people like Zacharius, who know better than readers themselves what’s good for them.
Beyond its perniciousness, Zacharius’s notion is good for not much more than a chuckle. Because if there really were something “bad” about self-published books (actually, I love Guy Kawasaki’s nomenclature — “artisanally published”) from which readers needed to be protected, wouldn’t readers be able to tell the difference without divine guidance from Zacharius? I remember when I was first living in Japan, and the Japanese government was trying to justify similar protectionist measures and rhetoric to justify tariffs on California rice because consumers needed to be warned that “California rice is inferior to Japanese rice.” In fact, California rice is identical to Japanese rice, and it was precisely this sameness that the Japanese government was trying to protect against. If California rice really were inferior, consumers would have preferred and been willing to pay more for the Japanese variety, and no “protection” would have been necessary. After all, I’ve never heard of a government attempting to impose tariffs on foreign cow flops. The tariffs, and the accompanying rhetoric, are always about something consumers demonstrably want.
For similar such bullshit in still other contexts, see also the history of the dairy lobby’s war against margarine, the evils from which consumers also needed to be protected. Plus ca change and all that.
It’s fascinating how the same old self-interested bullshit just keeps popping up again and again in new venues. The manifestations vary, but the fundamental excrescence is always the same. There are, and I guess always will be, people in the world who don’t trust other people to know what’s best for themselves, and who can’t control the urge to try to decide for them. When I read proposals like Zacharius’s, the novelist part of me always wonders to what degree he senses how neatly his position dovetails with that of protectionists throughout history, and to what degree he’s blissfully ignorant of history and un-self-aware. Ultimately, wondering what’s really going on in the mind of someone like Zacharius is not much more than an amusing parlor game. Far more important is knowing that when someone pops up and says, “I’m from big publishing and I’m here to help!”, it’s a good idea to wonder who the “help" is really for.
Joe: I'd also ask, Steve, if you think debut novelists should be separated from seasoned pros? Maybe debuts could come with a mark on it that says "UNPROVEN AND UNKNOWN AUTHOR". And with pros, perhaps a disclaimer of "THIS BOOK SOLD HALF THE COPIES THE LAST ONE DID" in big letters on the front would be helpful to consumers.
Or we could have some sort of ranking system based on sales, maybe lists that show which ebooks are selling the most, and perhaps some way for readers to rate what they like and don't like.
Nah. Let's segregate. That's best.
Steve: I think the bigger and more successful an author gets, the more likely it is that they are going to want to be with a traditional publisher. I think the facts show that.
Joe: Though some of my blog readers might not believe it, I'd certainly entertain an offer from Kensington for my print-only rights. I've personally advised several successful self-pubbed authors who have gone on to sell print-only.
As far as the facts, I've seen several newbie authors get some self-pub success then sign with legacy publishers, but I haven't seen any former legacy author who has gone all-in with self-publishing go back to legacy.
That's saying something, isn't it? No one re-enlists.
Steve: If you look at the printed NYT list, how many of the mega authors are self-published?
Joe: How the NYT list works notwithstanding (hint: it isn't by actual sales figures), I'll ask how many legacy authors manage to get on it? Kensington publishes 450 books per year. How many crack the NYT top 20? How many books are legacy pubbed every year? A few hundred thousand? And how many make the bestseller lists? How many authors make the lists who have never been on them before?
I've sold tens of thousands of copies of a title in a week. But I'm invisible to the NYT and USA Today lists.
If your dream as a writer is to become Nora Roberts or Lee Child, I don't think it matters much which route you follow--you're deluding yourself. What you should do is set realistic, attainable goals, and work toward them while learning as much as you can.
Steve: It’s very hard to become a major author by self-publishing…sure you can make money and some of you obviously make a good living. But you’re leaving out 70% of the market by not being in print and POD just doesn’t cut it….it’s not the same thing as being in WalMart or Target or B&N.
Joe: I agree that POD isn't the same as being in WalMart.
I do not agree that I'm leaving out 70% of the market. Perhaps that is what your company believes the market is, based on your sales figures, but it doesn't take into account the ebook sales you're missing by not positioning them correctly, and it isn't the market I'm catering to.
I wrote a book called The List which has sold 150,000 ebooks. If you believe that's only 30% of its possible sales, that means I should be able to move 500,000 paperbacks. Call my agent, and we'll sell you the mass market rights for cheap. Her name is Jane Dystel. Since 70% of the market is still untapped, you should be able to do well.
I also have half a dozen ebooks that have sold over 50,000 copies each. I'd be happy to let Kensington take the paper rights from me. As long as I earn more than the $1300 a month I currently make via POD, I'll entertain any offer.
I'm all about authors having choice, and making decisions based on logic, common sense, and facts. Self-publishing isn't an ideology for me. It's simply a means to reach readers.
If Kensington believes it can reach readers that I can't reach, I'll sign with you to reach those print readers.
Have you done print-only deals, Steve? If so, with whom? If not, why not? If you really believe there is money to be made in print, I'd be the perfect guinea pig.
I'll wait patiently by my phone until you call with an offer.
Steve: It’s not the same thing as being able to sell your books in different languages around the world or to sell the rights to large print or the book clubs.
Joe: My agent has sold rights to my self-pubbed books in over a dozen countries. That doesn't require a legacy publisher.
Large print? Wasn't that a format that used to exist before you could adjust the font on your Kindle? ;)
One of my previous publishers sold book club rights to one of my titles. I still remember that bottle of scotch I bought with the royalty check. Ah, MacCallan. 12 years is far too young...
Steve: Self-publishing is primarily an ebook format and right now, that’s still only 30% of the marketplace and the growth has leveled off for the time being. And yes I am using AAP figures since that’s what’s available.
Joe: Again, the AAP didn't poll me. Or any self-pubbed author. Or Amazon.
Perhaps Kensington's growth has leveled off. Mine has not.
Steve: I’ve been willing and have been having open dialog about self-publishing in my blog and I respond to all emails, probably more than any other CEO in publishing.
Joe: I'll email you a link to this blog and look forward to your response.
Happy new year. And good for you for engaging your critics. If you're smart and determined to take your company into the future successfully, you should be welcoming the opportunities presented to you, and closely monitoring those who are succeeding in this brave, new frontier. It's all about listening and learning and experimenting, not defending and reminiscing.
Failing that, you should sell your backlist to another publisher and get out while you still can.
Joe sez: Steve replied. And I replied to his reply. The ball is back in his court.
Steve: Good to make your acquaintance Joe and thank you for answering some of my questions. I think there's way too many questions for me to reply to in a format like this but I'll try to reply to some of them.
Joe: Good on you for responding, Steve, and pleased to make your acquaintance as well.
Thanks for your time. I understand I asked a lot of questions, and at the end of this I'll repeat the ones you missed. I'll put them all in a row to make them easier to answer.
Steve: First of all I never saw the original post that started this entire conversation. I wasn't able to see Lexi Revellian's post….somehow I got caught up in this conversation later on and was just willing to give my opinion about the market today.
On my blog I had talked about self-punishing and I guess that's how I ended up here somehow. I think the overwhelming point of my blog has been missed. My blog said the media hypes the huge success of authors like you and Hugh. But my point was for every one of you, there are probably ten thousand that have sold only 100 copies. That was it….that was the entire point of my blog and somehow the conversation got bigger than that. But at least you're willing to have an open dialog and I appreciate it.
Joe: Not sure if you meant self-publishing or self-punishing, but if that's a Freudian slip it's a funny one. ;)
I understand that the media talks about authors like me and Hugh, but that's because industries have celebrities, and success is measured in unit sales and dollars. Though I don't have access to the actual data, I can agree that for every Hugh Howey there are probably ten thousand who have sold only 100 copies.
But for every Lee Child there are probably a hundred thousand who were completely rejected by publishers like Kensington. And you're the one who brought up Lee and Nora and Jim. How is hyping their successes any different than hyping me or Hugh?
The point, as I see it, is that huge success is difficult, no matter which route you take.
But what does that have to do with why authors should sign with Kensington?
Keep that question in mind, because I'm going to repeat it several times, and my blog readers and I will want an answer.
Steve: Some of the replies on the other site were just nasty and there were a lot of misrepresentation of information which I tried to correct. I've also had many emails from current Kensington authors and some former authors, and a few of them have replied on The Passive Guy blog.
Joe: I'll try to head off any nastiness here. Commenters are only allowed to insult me on my blog. If they start insulting guest posters, or each other, I kick them out.
I have no doubt you're sure Kensington is a great company, with honorable employees, and you all try your best. I believe you.
But I know Kensington authors who are unhappy. I know this from emails and from this blog and from the years I went to dozens of conferences and bellied up to the bar, talking shop.
I'd rate Kensington's value to authors at 4 out of 10. That's the same as the Big 5, but not as unfavorable as Harlequin (they're a 1 out of 10).
Amazon Publishing is 7 out of 10. They were once an 8, but their contracts are becoming more legacy-like. Still, their terms and royalties are much better than industry standards.
Amazon KDP is 9 out of 10. The two things that prevent a perfect 10 are exclusivity with KDP Select and their refusal to publish in Epub format. I've been trying to get them to change for years, and cited many reasons they should. So far, no luck. But I keep trying.
As a 4 out of 10, Kensington is not only competing with the Big 5 and Harlequin for authors' attention, along with many smaller publishers, but you're also now competing Amazon. Authors no longer need agents. Some agents are assisting authors in self-publishing (like mine). They realize (rightly so) that they can earn 15% dealing with a publish like Kensington, or dealing with KDP. Either way, the author gets their book in front of readers, and someone else does all the heavy lifting (the aforementioned estributor).
Steve: Kensington is in this for the long haul. We've been in business for 40 years and hopefully we'll be around 40 more. My point in stating that we were the last remaining privately owned mass market publisher wasn't to infer that we're not players in the ebook market, because we are….a big player. We are a top Kindle vendor which is pretty amazing for a company our size and by top; I'm estimating top 10…although of course Kindle would never disclose this information since they're so secretive about everything.
Joe: As opposed to Kensington being secretive about everything, such as contract terms, royalties, advances, and average author earnings?
You're more than welcome to share numbers here. People do it all the time. :)
Steve: My main point again is that obviously self-publishing has been a huge success for you, but that is not necessarily the case for all the other people who have self-published. Unfortunately the people who are blogging on the site that I was on are probably the more successful self-published authors, although there were some that said they were just getting started. You're really not going to hear much from the people who don't sell many copies.
Joe: You don't normally hear from legacy pubbed authors who don't sell a lot, either. Not many people trumpet failure. They tend to keep that private, like herpes.
Also, I don't find it unfortunate that the people on PG's blog are among the more successful self-pubbed authors. I find it refreshing. But I can see how could view them as a bit of a hostile audience.
The thing is, a lot of authors have been badly hurt by the industry you're a part of. Their anger is justified, and it isn't every day that a big publishing exec drops in.
We both understand that some writers are huge success, and some do poorly. Let's move away from that point, because it isn't helpful. The majority of authors wind up somewhere in between billionaire and $50 a year.
Those are the ones looking to publish. Those are the ones who will chose between the traditional route and self-publishing.
And those authors have instant access to information about both legacy publishing and self-publishing. When they Google "self-publishing" they find me and Hugh, talking about how legacy publishers don't measure up, among many other pro-indie blogs..
Steve: Kensington too has many ebooks that only sell under 1000 copies. And if we have that happening, it's happening with tens of thousands of self-published authors as well.
Joe: If you have ebooks selling under 1000 copies, be a stand-up guy and revert the rights back to the author.
Of course, if they're selling well in paper, you shouldn't do that. That's Kensington's big advantage over Amazon; paper sales.
But do you think your paper sales are enough to lure authors away from Amazon KDP?
On Passive Guy's blog you mentioned Kensington has $100,000,000 in sales, and annually sells 450 titles.
As a thought experiment, let's pretend those are all mass market paper sales.
That means the average theoretical Kensington author (at 8% royalties—are you 8% or 6%?) will sell 25,000 mass market copies and earn roughly $18k (450 titles at $8.99 each paperback).
These are very loose numbers, because they don't take ebooks into account, or backlist sales into account. I'm simply and roughly calculating that 8% of $100m in sales of 450 individual titles works out to $18k earned by the author per book.
$18k is hardly a living wage. And because Kensington has a standard non-compete clause (you said in PG's thread: "Generally we do not want our authors writing in the same exact genre as we are publishing on their own or with another publishing house. We want to control how the books are released to the readers.") it means they likely won't release more than one book per year.
So not only is the money mediocre, but Kensington is preventing the author from earning more by publishing more.
You also mentioned Kensington has 90 employees.
Steve, how many of your full time employees earn more than annually than the average Kensington author?
I'd guess a lot. And if I'm right, I see a big problem. Because Kensington needs authors, but authors don't need Kensington.
Don't you think authors will negatively view Kensington taking the majority of the profit for books they wrote? Authors don't care about your overhead. They aren't considering your salaries or benefits or rent or utilities or all the costs to bring a book to market.
They only know their writing grossed $100m annually, and they only earned $8m. If they sold $100m worth of ebooks, they could have earned between $35m and $70m.
How long do you really think that business model can sustain itself?
Steve: You asked about bestsellers. I think the Top Kindle list is really not the way lists should be prepared. As I've said numerous times, the lists should be based on revenue, not unit sales because there is an enormous difference when people are selling books at $.99 versus a publishing house selling them for $9.99 or more. (I'm not saying you did this by the way, I have no idea)….but most of the books that climb the Kindle list from self-published authors are very low priced.
Joe: Steve, you're the CEO and President of the largest mass market publisher in the USA. If you see that ebooks are selling at lower prices, shouldn't you lower your prices?
Unless you're worried that ebook sales will cannibalize your paper sales, which you don't want to happen because Kensington's greatest asset and advantage over Amazon is their ability to sell paper books.
In that case, I probably shouldn't be waiting by the phone for you to call about acquiring print-only rights to my thriller The List, huh? Because I sold 150,000 ebooks, you might be thinking there won't be anyone who wants it in paper.
Hmm. I guess I'll have to be content with only catering to 30% of the market.
Wait… that no longer makes sense, does it?
Steve: We've acquired many books that were previously self-published and when we do, the author always talks about their Kindle ranking. We always have to ask what was the price point? How long was it for sale at $ .99 and how long at a higher price.
Joe: So you're acquiring self-pubbed titles that sold well at a certain price point, and then you raise that price point?
Steve, what sense does that make? Shouldn't you be responding to what the market is telling you it wants?
Steve: I'm jumping all over the place here because it's hard for me to look at the blog you posted and I'm doing most of this from glancing back and forth at your blog…so I'm sorry.
You mentioned there are over 150 authors who sold more than 100,000 ebooks. This is an amazing achievement, but once again were they at $.99 or $9.99? I can do the math and I understand that you get 70% of the revenue so you come out further ahead even by selling the books at a low price…but my point is that the top 100 list is very misleading because it's counting units and not dollars sold. No one banks units. They bank dollars.
Joe: Authors don't care how much their publisher banks. They care about how much they bank.
If a Kensington author is ranked #52,345 in Police Procedural, priced at $6.99, and sees I'm ranked at #30 priced at $3.99, what is the first thing that is going to pop into their head? Could it be: "Why the hell is my publisher charging so much?"
Let's go back to those 150 authors who sold over 100,000 copies on KDP.
At $0.99 per copy, they banked $35k.
At $3.99 a copy, they banked $270k.
How do those numbers compare to the average Kensington author?
But those were just the 150 biggies. Amazon didn't mention those who only sold 90k ebooks. Or 80k. Or 70k…
At $3.99 a copy, 40k units sold earn an author $108k per year.
At $2.99 a copy, 10k units sold earns an author $21k a year—still more than the fast and dirty $18k Kensington average I calculated.
A self-pubbed author only needs to sell ten thousand ebooks—only 834 copies a month—at three bucks a pop to make more than one of your average authors.
Doesn't that scare you? It should. That's just 1.14 ebooks per hour sold.
Steve: Yes, we are a mass market publisher but we also do trade and hardcover as well and it's tradepaper that is the fastest growing segment of the business in print…not mass. Ebook accounts for 30% of our sales, which is typical for most larger publishers.
Joe: Where are you getting your data, Steve? From your own company?
I'd guess that different publishers and genres have different print/ebook ratios than 70/30. And to confirm my suspicion I talked to an industry insider.
She mentioned a bestselling author who sells 95% ebook, only 5% print. Others are 50/50. She mentioned a few mass market bestsellers where print outsold ebooks, but that seemed like the exception, not the rule.
Kensington may indeed be 70/30. But I wouldn't expect it to stay that way if I were you.
Steve: Although you made a million dollars, we have authors and other large publishers have authors, that are making more than that in advances alone. That is not to disparage your accomplishments because they are amazing. But there are many big authors who make a lot more than that. I'm sure you saw the NYT article the other day about the deal that Sylvia Day signed for two books for an eight figure advance.
Joe: How does that matter unless you're offering authors (or me) an eight figure advance?
Very few writers are going to get rich, let alone filthy rich. Many won't make peanuts. Somewhere in between are the rest of us.
Why should we sign with Kensington?
If you really expect to be in business another 40 years, you need to answer that question.
Steve: In terms of your questions about royalties, I mentioned that on our digital lines we pay royalties quarterly. The reason we don't do it more often is because it's very time consuming. Remember we're not doing one author, we're doing hundreds of them. We're not dealing with one vendor, Kindle…..we're importing data probably in 15 different formats from 15 different ebook retailers. It takes time to import the data, verify it and report it. We don't do printed royalties more often because there are well over 1500 books that we're probably paying royalties on in any given royalty period. Every one of those royalty statements has to be verified and because printed books are returnable, we have to look at the reserve for returns on each and every title to make sure we're paying the author the correct amount.
Joe: Steve, Amazon has tens of thousands of authors on KDP. And they pay monthly.
You expect sympathy from authors because you're a publisher? Paying royalties is one of the things that publishers are required to do. For authors, it may be the single most important thing.
Amazon understands that.
Steve: Your statement that you're matching Amazon's low prices without any harm isn't really an appropriate comparison in my opinion to them selling big author's books at a huge loss to them. When you lower the price, you're not losing money on each sale. You're only making less. When Amazon actually cuts the price below their cost, they are losing large amounts of money on each sale and the other companies like B&N, OverDrive, Kobo, don't have the bank roll that Amazon has from its shareholders to absorb this loss.
Joe: What exactly are you complaining about?
I'd kill to sell ebooks to Amazon for $12 , which they sell to readers for $5 while paying me the full $12. That sounds like a recipe for printing money. I'd be whistling zipideedoodaa all day long.
You do realize that is your complaint, right? The Marx Brothers used to do that. For fun, they would go out into the street and sell $5 bills for $1. Invariably, a policeman would come by and try to figure out how to arrest them, because he was sure it was a scam, even though they were losing $4 each transaction. There had to be a trick. Why else would they do it?
Steve: This is why I'm saying it's predatory pricing. They are purely trying to drive the competition out of business and capture market share. Once again, it's totally different than you just lowering your price and making less money on that sale. Amazon is not losing money on your lower priced sale.
Joe: Actually, it's called competing. And capitalism allows companies to compete. That's kinda the point of capitalism.
That's why the Agency Model sucked. I was ahead of everyoneon that, including the DOJ. But they caught up eventually.
My point: consumers benefit from lower prices, and authors and publishers are still paid on the wholesale price—which publishers set.
Wholesalers shouldn't be allowed to set retail prices. No business does this.
Well, except for books and magazines, which have the price printed on them. Can you name five other products with prices printed on them? Can you name one?
What's the reason for this, do you think?
As for predatory pricing, you may have a point. Once digital music downloads became the rage, iTunes lured more people to their platform by selling individual songs for $0.99 to $1.29 and entire albums for $9.99, and paying artists 70% royalties. But once Apple gained a huge market share and began to dominate the industry, they slashed royalties and raised prices to $5 a song and slashed royalties to 25%.
Oh… wait. The royalties and prices haven't changed.
Nevermind.
Steve: BTW, I give Amazon tremendous credit for what they’ve accomplished. It’s an amazing success story and I’m a huge buyer from Amazon. I buy books from many online retailers as well. I own Kindles, iPads, Nooks but frankly, I still prefer to hold a book in my hands. I don’t think it’s an age thing with me, it might be because my background is in printing. I’m much more a techie than most people.
Joe: Steve, isn't it a teensy weensy bit hypocritical to have Kensington's entire catalog available on Amazon, and to be a "huge" Amazon buyer, and then treat them like they're the enemy?
As for holding a paper book, I debunked that one years ago.
Please follow my links and read them. It will save us both a lot of time in the long run, and will save me from repeating myself if we're both equally informed.
Steve: Talking about cover art….I mentioned that we paid large sums of money for cover art. This is done for the print books because it's the cover that catches the consumer’s eye on racks and racks of books. Studies show you only have about six seconds to catch a buyers eye in a retail store. We have a much larger space to design for when doing print books than we have with ebooks, so the art has to be catchier. We do foiling and embossing and spend a lot of time and money on designing covers. Ebooks are different. When it comes to showing the book cover online, you're primarily dealing with a postage stamp area until the potential buyer clicks on a link to see more information about the book. Artwork also shows up very differently online than it does under lights on a shelf.
Joe: I'm sure I could get my cover artist together with your cover artists to discuss the nuances of vectors and the rule of six and the variance in hue under incandescent vs. florescent, but all that would likely do is make my cover artist overcharge me like you're being overcharged.
I realize the difference between a postage sized jpg (you forgot to mention it also needs to look good in greyscale) vs. a full paper cover that is foiled and embossed, but $6k is too much to pay.
My point: the cover artist shouldn't be paid more than the author. For some reason, that just seems wrong to me. And with Kensington giving out advances under $6k, that's bound to irritate some people.
Know what else seems wrong to me? The publisher netting more than the author. Unless the publisher put in a few hundred man hours on a manuscript like the author did, I feel the author should make the lion's share of the profit.
You know who else feels that way? Amazon.
Steve: In terms of our new digital acquisition, Lyrical Press; that we just announced two weeks ago, I gave some of the terms of the contract. We are paying quarterly royalty payments and we pay 40% of net receipts. I imagine that most of these authors will be newer authors and we will not be paying advances, but there will definitely be some that will get an advance based on prior successful performance.
<div clas