THE ELEPHANT IN THE ROOM: PROFIT MARGINS, THE EXPLOITATION OF AUTHORS AND THE DEMAND FOR MORE ETHICAL WAGES
Did you know authors earned 3% of publishing industry profits back in 2016? And I thought the career of a fine artist was harsh. You hear the term “starving artist” a lot (and I would know) but what about “starving author”? Really the phrase pertains to anyone in the creative clan: they are creating the product for which society consumes and enriches civilization — either visually (fine artist), through entertainment (actors) or listening (musicians). Well, just like the whole creative crew, we are not without greedy middleman and a place called Amazon that has forced the publishing industry to keep up with theire crazy low retail rates. The royalties paid out to authors today are almost criminal.
“Whitney, never lose your hunger to create”, someone once told me. ’Tis true with the vast majority of artists across all fields. I believe one needs a certain amount of “hunger” in life to achieve exceptionally great works — but there is threshold. When you are starving an otherwise good artist from providing the minimal amount of cushion and financial security in her life to create, then the hunger is no longer an endearing quality to have. You’re just trying to survive, so you have two options: you can continue to sell your soul to the beast who takes more money off your creations than you do OR you can sell your soul by getting a better-paying job outside of your craft which takes you away from the creations you could be making. Ladies and gentlemen, welcome to an artist’s conundrum.
I thought being a fine artist was bad — but this industry is next level. I am quickly learning that being a book author is not only one of the lowest margin industries but it is outright exploitive for the amount of creativity (brainstorming), time and money it takes for an author to create, publish and market a book. I never got into this industry thinking about the money I would make, but when its a negative return on investment then I call foul. This is with no advance; and even if you do have the opportunity to land a traditional publishing deal the advances are low average $5k range. Not to mention the pesky chain of middlemen — what I like top call the “chain gang” because they are robbing authors of ethical wages.
There are so many hardworking individuals and families working in low margin industries out there. My father is one. I grew up the daughter of a 4th generation fishing boat captain and started working in the family business at the age of 8. Commercial fishermen have massive overhead, here is a glimpse: $500k boat, $2700 to fill up the fuel tank each time, crew pay (10% out on average), and of course a fishing license for a particular fishing district ($60k-100k). My dad gets paid about $1.50/lb for sockeye salmon and when it reaches the end market it’s about $12/lb. Back in the late 90’s the price for sockeye salmon dropped to $0.50 cents in the Chignik district and the fishermen went on strike for weeks until they came up with a resolution to just bring it up to $0.70 cents. My dad ended the strike, but it was a stressful time in our lives trying to redeem an industry we knew for so long being pushed into tighter margin territory.
As a book author you will be trying to break even for the years on just the labour you put into it — before it becomes a legitimate income. Be that self published or published, it is all the same barbaric game. Granted, the people at Bookbaby, Ingram publishing and bookstore buyers are some of the warmest hearts and have welcomed me with open arms into this industry. Perhaps that is to alleviate the glaring truth that we authors get paid chump change for our work. That is why I wrote this blog:
1) to impart wisdom on the general public as to what is going on behind the scenes
2) to console and rally other authors who feel this way
3) to inspire the current system to provide more livable wages to authors so we can keep the arts thriving in our culture. ..
While the digital age has afforded the democratization of authorship and more books to be published in recent decades, it was nearly impossible to bring a book to the public without being signed with a tradition publisher. Modern day is different and affords more voices to be heard. But it’s the publishing industry who make authors invest a small fortune into getting their book produced before they get their ROI — which, could take years. After you have written and illustrated a book (which my first one “Roku & Tanza took me over 100 hours) the set up costs start around $150 (Ingram Spark fee $49, ISBN $25, CIP block $80.) In the meantime the people who are making a fortune off of authors are the publishing companies and their monopoly on distribution channels.
So, how do authors make money to recoop their investment and then (hopefully) make a living? Well, let us run through the different avenues that one can take using my book retail price:
1) DIRECT. Direct sales to customers work best because you have higher profit margin — only one middleman (the manufacturer). My average childrens’s book retail cost is $19.50. It takes $8.10 to manufacture the book so you have to subtract that number after multiplying the percentage by the retail price. I’ll make $10.40 (after factoring in shipping/handling costs.
Pros: establish a more personal repoir with customers and earn higher wages per book. You can reach out and get them to write more reviews on your books because you’ll know to whom you sold books.
Cons: not enough connections, often more localized, less overall sales
2) INDIRECT (one degree of separation). Secondly, would be direct sales to bookstores. You have two middleman — manufacturer and a bookstore — ‘between you and the end consumer. With a 42% (industry average for a bookstore buyer), the wholesale discount your royalty rate drops down to $3.21
Pros: Reach more customers, establish bonds with the bookstore and partaking in future books signing events there
Cons: less profit per book, you have to cold call/email reach out to the bookstores. Also, a lot of them are so used to bundle buying books through Ingram, they don’t want to deal with buying a DIRECTLY (one-off order). They want a seamless buying process — which is why a lot of them like to order straight of Ingram wholesale so they can buy directly from them instead of you, which bring me to…..
3) THRICE REMOVED. The most indirect way is through POD wholesale distribution on ingram Spark. There are now three middleman between you — the manufatur, distributor and bookstore. This is WHY I am writing this blog: a bookstore buyer emailed me other day and said he noticed only 20% wholesale discount on his end. I said that’s where because I gave a 42% discount from my end. Come to find out, there was Ingram Distribution taking a cut between us! They is a whole different entity and they take between 10 and 20% profit when distributing to bookstores. So that’s why book buyers was seeing so low on there end. Ingram Spark does not make the discount price that the bookstore sees on their end visible to the you the author.i believe there needs to be more transparency and I already reached out to Ingram about this. In my email I also laid down their glaring exploiltation of authors. If they expect a bookstore to see 40% on their end, then I need to bring my wholesale discount up to 55% because distribution is going to take a piece of the pie in between. And there you have it: authors are left with a fraction of a fraction of a fraction of the profits. With a 55% wholesale discount (industry standard competitive rate) I am left at $0.70 cents royalty per book sold
Pros: the most reach out of all the outlets, your book is exposed to the global market and all bookstores
Cons: You have now joined the parallel universe of Spotify’s starving artist musicians — they get pennies in royalties per song.
The higher the royalty, the lower the reach and visa versa. It’s essentially an inverse equation. The real bone to pick with Ingram Spark is their lack of paper weight options — that’s huge in terms of presentation. See my Trust Pilot review of the company.
Now anyone with a 5th grade education and a little self respect will quickly realize that distribution and book buyers are making more off the author in earnings per book. And here is another disturbing inverse equation: while publishing houses have been exploding in profits in recent years, the wages and royalties for authors have decreased.
Solomon estimates that payment of authors accounted for a mere 3% of publishers’ turnover in 2016. “The industry pays so little for the raw material. Publishers talk about diversity then pay lip service to sustaining writers’ careers. They have a responsibility to see that authors are properly paid and their earnings do not go down,” she added.
They gave us no choice. The industry standard is 55% discount rate as I mentioned — anything beneath that and you risk being cut out of the market. The book buyers and the manufacturer are making more than the author in the chain of wholesale. This is barbaric. Yes, they have employees to pay and they need to “keep on the lights” but the candle of creativity and innovation can only burn so brightly in the harsh reality of publishing that keeps authors from having a liveable wage for the product that THEY produce to fill the pockets of publishing that leech off them. This is what concluded my email with Ingram when I told them to put up this disclaimer on their site:
“You will basically be per persona non grata, cut out of the market place if you don’t sell your soul (mark it at 55%) to feed US — the bigger industry — that earns MORE money off the product of which YOU create for us to make money.” Say something like that. I’d respect you all a whole lot more if you just said that.
NOTABLE COMMENT SECTION (from The Guardian article:
The catch 22 angle (damn if you do, damn if you don’t):
In 2013 I had a book published by a major publisher. According to my royalty statement, I sold almost 10,000 books and yet I still owe the publisher money for the advance they paid me. Since then I’ve been self-publishing and I make twice as much selling 400 paperbacks myself than 10,000 books for a major publisher. Go figure. So you can either reach a big audience and starve or concentrate on a niche audience and just about survive.
Authors are meant to get between 7.5% and 15% of the RRP. However, when books are discounted by retailers, the “high discount clause” kicks in, which automatically reduces that percentage down to far below the original royalty. Some authors are earning as little as 1% from their cover price because of the high discount clause.And the fact remains that other pars of the supply market are making bigger profits, which authors share is going down. Typically a retailer will take the biggest chunk of money — as much as 75% in some cases to account for the very cheap price they retail the book for. I hope that helps,
The nepotism angle:
It is now becoming a harsh reality that careers in The Arts are becoming a luxury only rich kids can indulge in with Daddy’s support.
Much has been written about how only Etonians and their brethren can now become professional actors.
Writers, I fear will suffer the same fate . The future of literature, and a writers vision will then become one long endless main stream publishers dream of Downtown Abbey, with few exceptions.
The only way to survive in this cruel environment is to self publish. Whether, you are an up coming photographer or writer it seems the best way to go. Screw the publishing houses.
But the point is that if you don’t have well off parents or the right connections a career in the arts probably won’t be possible.
More comments
10% royalty? Even that is a pipe dream if you want to be competitive in the market….
The Society of Authors suggests a royalty of 10% of the retail price, which is what we at Akeman Press pay our authors. Few publishers do. I have written for other companies and only one, a little local publisher like ourselves, paid that.
We started our own company because we wanted to produce high quality books that people could afford. We will not pay the crazy discounts demanded by people like Waterstones and Amazon because this pushes down the quality of the book and the amount left to pay authors. As a result, Amazon frequently declares our books are not available when they are and Waterstones is reluctant to stock our books. Since our last one was a local best-seller, the independent bookshops were delghted but bemused.
Support your local independent bookshop and local publisher and the book trade will flourish.
I’m in the book trade, albeit collectable books, but know a fair few authors. Every one that I know has a “day job”, and some are successful, authors of best sellers, yet still cannot make a living from it. The age old adage comes to mind: we live in an age where everyone knows the price of an item, but not it’s value.
So much bile in the comments. It’s surprising that the essential unfairness of this is so hard to understand — publishers’ profits and sales are rising, but authors’ income is dropping. That means other people are making money off their labour and creativity.
Why are creative people expected to work for free? It’s not like we’re talking about wannabes moaning about people not buying their work. These are hardworking authors who are connecting with their audience, whose value is being extracted by everyone else.
Media links for further educational reading on this subject:
