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pcarney
April 25th, 2006, 06:55 AM
Pretty interesting read that explains how the publishers make/don't make money. By interesting I mean a bit depressing, of course.
Oh well- keep writing!!

http://alg.livejournal.com/84032.html

TheGhost
April 25th, 2006, 07:36 AM
Interesting. Publishers have a lot in common with venture capitalists: they make many bets knowing that most of them will lose money, but there's always that one big hit that makes up for all those losses and more. But any business is interested in making money with little risk, which is why established authors are prize assets.


Ghostie

KatG
April 25th, 2006, 03:37 PM
That's interesting that you brought up this journal entry, PC, because I was going to do the same. The journal is by Anna Genoese, an editor at Tor, and some of her journal entries have come up before. I haven't always gone with how she's done things -- was she the one who did that rejection letter thing? -- but all of this material is, as far as I know, absolutely correct and helpful for authors to know, as will be her Part 2 of this essay.

But I also urge people to look at this sfwa article linked to the journal entry, that's about five years old, because it gives additional, more detailed information that is also accurate and helpful. Of chief prominence is the info that a publisher expects an author to not even start to break even until the third book on average. Publishers gamble, but they also invest in start-ups, as you say like venture capitalists. However, unlike venture capitalism, most of the investments never pay out. It's not all about the numbers for publishers, or at least about black numbers.

When I talk about a purge of mid-list authors in the category market, I'm essentially saying that because of flat sales across the board, sff publishers may be less willing at that time to invest and to wait patiently for authors to develop profitable sales. Under pressure from corporate parents -- who don't usually understand why publishing is so unreliable and low-profit -- publishers will cut titles, thus cutting their expenses.

Essentially, if a book becomes a bestseller, not only is there more chance of profit (though losses can result from price discounts to sellers,) but it creates a sales surge for other books. But that surge usually dies down after awhile. During the surge, publishers may increase how many books come out to take advantage of the interest. Then when the surge dies down, the losses become larger, leading to stagnation and potential purges. Kind of like the tides. Some publishers do take steps to minimize this cycle, but they are often constrained by the numbers and the needs of booksellers.

http://sfwa.org/bulletin/articles/profit-motive.html