[LINK] Best-Selling Author Refuses $500k; Self-Publishes Instead

[Kim Holburn]

http://jakonrath.blogspot.com/2011/03/ebooks-and-self-publishing-dialog.html
> Saturday, March 19, 2011
> 
> Ebooks and Self-Publishing - A Dialog Between Authors Barry Eisler and Joe Konrath
> This is a live Google docs discussion. It examines the history and mechanics of the publishing industry as it exists today, analyzes the way the digital revolution

....

> We encourage everyone reading the conversation to comment, and to tweet and otherwise link to it. You also have our permission to copy all or any part of it, provided you link back.
> 
> If you'd prefer to read this on your ereader, you can download various versions for free here.


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> Joe: To the casual observer, you appear to be heavily invested in the legacy publishing system. They’ve been good to you, they helped you get onto the NYT bestseller list, made you wealthy with several large deals, and seem to have treated you fairly.
> 
> Barry: Well, I don’t know about wealthy, but I’ve been making a living writing novels for almost a decade now, which is a pretty great way to live.
> 
> Joe: You had six-figure and seven-figure deals. Logic dictates anyone offered a deal like that should leap at it.
> 
> Barry: You wouldn’t.
> 
> Joe: But I never had the treatment you had from legacy publishers. I would walk away from a big deal now, most certainly, because I have two years of data proving I can do better on my own.
> 
> However, what if a NYT bestseller were offered, say, half a million dollars for two books?
> Or, more specifically, let's say you were offered that.
> You'd take it. Right?
> 
> Barry: Well, I guess not... ;)
> 
> Joe: So... no BS... you were just offered half a mil, and you turned it down?
> 
> Barry: Yes.
> 
> Joe: Holy shit!
> 
> Barry: I know it’ll seem crazy to a lot of people, but based on what’s happening in the industry, and based on the kind of experience writers like you are having in self-publishing, I think I can do better in the long term on my own.


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> Barry: Well, again, I think they’re taking it into account, but they’re drawing the wrong conclusions. The wrong conclusion is: I’m in the paper business, paper keeps me essential, therefore I must do all I can to retard the transition from paper to digital. The right conclusion would be: digital offers huge cost, time-to-market, and other advantages over paper. How can I leverage those advantages to make my business even stronger?
> 
> Joe: We figured out that the 25% royalty on ebooks they offer is actually 14.9% to the writer after everyone gets their cut. 14.9% on a price the publisher sets.
> 
> Barry: Gracious of you to say “we.” You’re the first one to point out that a 25% royalty on the net revenue produced by an ebook equals 17.5% of the retail price after Amazon takes its 30% cut, and 14.9% after the agent takes 15% of the 17.5%.
> 
> Joe: Yeah, that 25% figure you see in contracts is really misleading. Amazing, when you consider that there’s virtually no cost to creating ebooks--no cost for paper, no shipping charges, no warehousing. No cut for Ingram or Baker & Taylor. Yet they're keeping 52.5% of the list price and offering only 17.5% to the author. It’s not fair and it’s not sustainable.
> 
> Barry: I think what’s happening is that publishers know paper is dying while digital is exploding, and they’re trying to use the lock they’ve always had on paper to milk more out of digital. In other words, tie an author into a deal that offers traditional paper royalties, which are shrinking, while giving the publisher a huge slice of digital royalties, which are growing. The problem, from the publisher’s perspective, is that their paper lock is broken now.

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> Joe: Yes. But it’s even more than that. Because there are two major difference between virtual shelves and physical shelves.
> First, a virtual shelf is infinite. In a bookstore, they have a limited amount of space. Often, my books are crammed spine out, in section--and I'm lucky if they have a copy of each that are in print. Many times they only have a few, and sometimes none at all. But a virtual shelf, like Amazon or Smashwords, carries all my titles, all the time. And I don't have to compete with a NYT bestseller who has 400 copies of their latest hit on the shelf, while I only have one copy of mine. We each take up one virtual space per title.
> Second, virtual shelf life is forever. In a bookstore, you have anywhere form a few weeks to a few months to sell your title, and then it gets returned. This is a big waste of money, and no incentive at all for the bookseller to move the book.
> But ebooks are forever. Once they're live, they will sell for decades. Someday, long after I'm gone, my grandchildren will be getting my royalties.
> 
> Currently, my novel The List is the #15 bestseller on all of Amazon. I wrote that book 12 years ago, and it was rejected by every major NY publisher. I self-published it on Amazon two years ago, and it has sold over 35,000 copies.
> 
> Barry: That is insane. Aside from some major external event--a big movie release, something like that--it’s almost unheard of for a backlist paper book to suddenly become a bestseller. Yet that’s exactly what just happened to The List.
> 
> Joe: Because I dropped the price.
> 
> Barry: Well shit, legacy publishers use dynamic pricing to move books all the time.
> 
> Joe: Sorry, I just spewed beer all over my monitor.
> 
> Barry: I apologize.
> 
> Joe: No problem. But right, with digital you have the option to put an ebook on sale. I originally self-published The List in April of 2009. It went on to sell 25,000 ebooks at $2.99. Now, two years later, I lowered the price, and it's selling 1500 copies a day.  Things like that don't happen in paper. But in self-publishing, I'm seeing more and more books take their sweet time finding an audience, then take off.
> Forever is a long time to earn royalties. So it makes sense for forever to begin today, not tomorrow.
> If you had taken the deal for The Detachment, when would it have been published
> 
> Barry: This was one of the reasons I just couldn’t go back to working with a legacy publisher. The book is nearly done, but it wouldn’t have been made available until Spring of 2012. I can publish it myself a year earlier. That’s a whole year of actual sales I would have had to give up.
> 
> Joe: We can make 70% by self-publishing. And we can set our own price. I have reams of data that show how ebooks under $5 vastly outsell those priced higher.
> 
> Barry: This is a critical point. There’s a huge data set proving that digital books are a price-sensitive market, and that maximum revenues are achieved at a price point between $.99 and $4.99. So the question is: why aren’t publishers pricing digital books to maximize digital profits?
> 
> Joe: Because they're protecting their paper sales.
> 
> Barry: Exactly.


-- 
Kim Holburn
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