Traditional, Indie, Profit-Sharing, and Vanity Publishing

The war is on between traditional and indie publishing. Or so I've heard. I've also seen the vitriol, on both sides of the fence. Human nature, I suppose. You've chosen your path and once selected, seek to justify that choice. Sometimes the reasons make sense. Sometimes they appear to be grasping at straws. Often, an over reaction to the other side. So, what is the real story? What are the options to consider for an author and how does one evaluate them?

First, let's define some terms as I'm using them here so that we are on the same page.

Traditional publishing: The publishing companies and their imprints who distribute widely to bookstores as well as online outlets. There are other players who use a version of the traditional publishing model, from small presses to fairly big ones. I'm not suggesting that these companies are not a version of the traditional publishing model. However, without an established distribution network into bookstores, a publisher is not going to have much more impact than an indie publisher short of some heavy marketing investment, and so straddles the two areas.

Indie publishing: A self-publisher. An individual or small group of individuals who manage and oversee the publication of their own book(s). Though some do everything themselves, most will not. Many hire out help in cover art and design, interior design, editing, and distribution.

Which is right for a specific author and/or book depends on the situation in regards to the following factors.

Traditional Publisher

With a traditional publisher, the author leases to the publisher a set of rights for a guaranteed return, known as an "advance." This is a bit of a misnomer in that an advance typically means the receiver will pay it back in full, if not through future earnings, then out of the receiver's pocket. A true advance is a form of a loan. The "advance" from a publisher, however, isn't paid back no matter how little money the book earns.

So while the publishing world makes it out to be a loan of sorts, it isn't. Rather, it is a payment to the author for the rights to use his book. The author will not get any further payments unless the book earns out the advance, but the author has no obligation to return any unearned money. Therefore, it is not an advance or a loan. It is the payment for leasing rights from the author.

By obtaining rights to publish the book, the traditional publisher invests in the publishing of the book and takes the financial risk instead of the author. Yet both benefit if the book exceeds costs and makes a profit. Because the author does not have to pay back the advance if the book flops, they take minimal financial risk. The publisher takes the hit instead.

Likewise, the less of an advance an author gets, the more financial risk the author is taking on the back end, especially if the rights granted become too expansive. With a traditional publisher, you are negotiating how much rights you will grant them for a specified payment amount. The more rights you sell them for less money, the less of a risk the publisher takes financially, and the more the author assumes.

Indie Publisher

As an indie publisher, you should retain all the rights to your book and benefit from those rewards. Likewise, you also retain all the risk of failure. An indie publisher not only invests time and expense writing a book, but getting it edited, artwork, cover and interior design, marketing, etc. Therefore they take all the financial risks. That is, they invest in the publishing of the book in hopes of a return on that investment, but they may lose that investment if the book tanks.

The investment comes in two forms: time and money. A traditionally published author invests time and some money writing and preparing the manuscript, and sending it out in hopes of a sale to a publisher. It is expected that the advance will pay them back for their time and expenses.

For an indie publisher, the ratio of time to money invested will depend on their abilities and cash flow. If the indie publisher doesn't possess the skill to create cover art or design a cover, he will either learn how or hire someone to do it for him. He will possibly trade edits with other authors, which takes time, or hire an editor, which requires cash.

Many indie authors, if they can do most of the work themselves or very cheaply, have a low cash overhead to publish a book. It is possible now days to publish a paperback and ebook for a cash outlay less than $50.00. If you can earn around $3.00 profit on each book sold, on the average, you'd only need to sell 17 books to earn back that cash.

However, time cost is just as important. If we estimate you write 2000 words an hour, a 70,000 word novel would take around 35 hours of actual writing time. Double that, at least, to account for editing: 70 hours. Assuming you have the following down pat, creating/finding cover art: 5 hours. Designing the cover: 3 hours. Designing the print book interior: 3 hours. Creating the ebooks: 1 hour. Proofing the final products and uploading to various sites: 2 hours. Total time invested: 84 hours.

If we "pay" ourselves at least $15.00/hour, then our time costs comes to $1260.00. Add that $50.00 money cost on, and you end up needing $1310.00 to totally recoup your cost on the project. If any of those activities take longer, the cost goes up. At $3.00 profit per book, you'd need to sell 437 books to cost out and make a profit. If it never gets to that level, you lose money and/or your time invested in the project.

The bottom line for an indie publisher is they retain all their rights, invest in the project, and retain all risks and rewards of that investment. The indie publisher may hire out people to do the various tasks, but they don't sell their rights to obtain a service. They pay a flat fee and hope to recover the cost with future sales.

The good news for indie publishers is the window to make that cost back is much bigger. Traditional publishers have a limited window since they depend on bookstore shelf space to move their books. If a book fails to sell well within three months, they are usually returned by the bookstores and the book hardly sells more. So they must recoup their cost in the first months, then it will likely go out of print unless it takes off.

As an indie publisher, however, your sales will not be on the scale of the traditional publisher, but they can sit on virtual shelves for years earning money. This allows an indie publisher to take five to ten years to earn out, if necessary. Once that initial set up cost are covered, it is pure profit save distribution costs, which are usually pulled from each sale.

Profit-Sharing Publisher

This is a hybrid between a traditional and indie publisher. There are some cautions with this model, but it can be a viable option for some authors. First, let's describe what it is.

A profit-sharing publisher is usually a smaller press. If they give any kind of advance, it is a small token one. Usually the author pays no money up front, but the publisher's cost in expenditures is expected to be paid back by future sales before the author sees any return beyond whatever advance he may have received.

This model is more like indie publishing, but rights are being sold to the publisher in return for services and help in the form of a limited partnership. The publisher takes on some financial risk in that if future sales don't cover cost to produce, they lose that money. The author is not obligated to reimburse the publisher for the loss.

Likewise, unlike a traditional publisher, the author also risk loss. If not in money, in time to create the book. Without an advance, the example of 70 hours to write and edit a book at $15.00/hour means the author's cost isn't covered until he earns $1050. If he received a $100.00 advance, he'd need another $950, or 317 books after the publisher sells enough to cover their costs.

The advantage for the author in this model is he is not required to front any money to pay for the services the publisher is providing. The authors this will appeal to are those who have decided not to go the traditional publisher route, don't have the desire or ability to manage self-publishing, and/or don't have the expendable cash flow to hire out what they cannot do.

For this model to work, the author needs to ensure the following areas are covered in the contract:

Limited rights are granted. The term of the contract should be time limited. No reversion of rights in an "out of print" clause. It should be for a set number of years in the range of 3 to 10. You want a definite cutoff point when the publisher is expected to regain their cost and make some profit, then rights revert back to the author.

No expected payment up front. The publisher's risk is the cost to publish. If the author is required to pay any of that up front, it is no longer profit sharing, but moving into a vanity press situation.

Set cost for publishing and marketing. The publisher should be able to give you a definite dollar figure. Avoid open-ended publisher costs. If your future profits are paying for their services, you have a right to know before you "buy" what you are paying. If it is open-ended, you could be in for some sticker shock.

With these limits in place, the profit-sharing publishing model is viable for authors who don't want to or can't self-publish due to finances, but the doors to traditional publishing are closed to them. Keep in mind, however, that the author is selling rights for services instead of money.

Vanity Publisher

The last model we'll look at is the vanity publisher. It is unfortunate that many traditional publishers have teamed up with vanity presses, usually Author Solutions and its multiple heads, and touted it as a "self-publishing" option. It is not. What's the difference, you ask?

Vanity publishing expects the author to lease them the rights to their book, often in a way that covers the life of the copyright, for free. The vanity press does not risk money on purchasing those rights in either an advance or the cost of publishing. Instead, unlike the profit-sharing model, the author is expected to pay for all cost of publishing up front, including often expensive packages for marketing and distribution.

In the vanity press model, the author gives away their rights, but retains all of the financial risks. They end up with the worst of both traditional and indie models. High cost and reduced rewards in terms of earning potential. It is not traditional publishing. It is certainly not indie publishing. Nor is it profit-sharing publishing. It is a rip off. The author gets no benefit from leasing their rights to the publisher. They might as well have purchased the services directly and retained their rights and profits.

If you encounter someone who wants you to pay for all services, including publishing, up front, but still expect you to give them your rights, but don't pay you any kind of decent advance—run from that contract. You'll be sorry if you put your signature on that paper.

Which option is right for you? Only you can decide. Hopefully the above has given you the business insight to make an informed decision rather than jumping at the first offer that moves your direction.

Is Indie Publishing the New Vanity Press of Old?

That's the question author L. A. Sartor ask on her blog, and invited author Anthea Lawson and myself to give our thoughts on the matter. Naturally, I opined mightily. You can check out my thoughts and Anthea and L. A. Sartor's thoughts on the subject by reading the article: Is Indie Publishing the New Vanity Press.

Thanks for checking it out!

"Stop Online Piracy Act" and Indie-Publishing

If you haven't heard about it yet, most likely you will. Today Congress held a hearing on a full Senate/House version of the bill known as the "Stop Online Piracy Act."  It seeks to deal with a real threat, the piracy of copyrighted works often through Internet sites where users share their creative work, or not so creative as the case may be. The grandaddy of them being YouTube. The New York Times has an article up on it that lays out the vast overreaching of this bill and how it will end up hurting mostly innocent users of the Internet, businesses, lost jobs, and lost future jobs due to the high cost of compliance by putting the burden on website owners to not allow copyrighted work on their sites or face stiff penalties. Currently, if someone complains about a copyrighted work being on a site, they file a notice to the hosting site, and the hosting site has a set number of days to remove it without any further consequences.

The article and others have detailed the impact this law will have in a very negative way of bringing about censorship and the suppression of creative works in general. But I wanted to focus on what this will mean for indie authors and presses. After all, don't indie authors and presses want to stop the piracy of their works? Isn't making it more difficult for sites to host such things and get away with it a windfall for the authors? On the surface, one would think so, until one digs a little deeper.

The problem is that pirates will be able to get around this, and people will find ways to distribute them illegally. Only those who are trying to play by the rules will be hurt, and that includes authors who self-publish and small presses. How?

Amazon's Kindle Direct Publishing, probably the biggest host of indie-published works on the Internet, and other companies like Smashwords and Barnes and Noble's PubIt who provide indie-published authors and small presses a way to get their work out there without having to go through the "gatekeepers" of traditional publishing houses, will, if this bill becomes law by the end of this year, be forced to evaluate all submitted works before allowing them to go on sale in order to avoid the liability of the government blocking their access to US book buyers and whatever fines that may incur.

Here's the practical results of what this law will do because of this necessity.

Indie-publishing sites like Amazon, Barnes and Noble, and Smashwords will now become enforcement arms of the government. They will out of necessity become censors. This presents a problem, in that any mistakes on their part could be costly. What that will mean is that some poor employee evaluating each submission before sending to the site to go on sale or out the reject door, with hundreds to look at, isn't going to take the time to evaluate your story properly. Like an editor, they will be looking for a reason to reject, and anything that doesn't pass the smell test will tend to get rejected without further research. Any doubt about whether your story violates copyright law will be cause for immediate rejection whether it actually does or not. Because they know if one mistake gets through and noticed by any watchdogs, their whole site could be shut down. With that hanging over their head, they aren't going to take any chances. They won't have time to research, to rub their chin and do a Google search. A lot of works which don't violate the copyright law will not be allowed to be published, punishing innocent authors for the transgressions of a small percentage of them.

Indie-publishing sites will be forced to hire new employees simply to comply with this law, simply to shift through everyone's submission to either give them the stamp of approval or not. "Isn't that a good thing, more jobs and working people?" I'm afraid the few that get hired to do that will not offset the many lost jobs. Why? Because hiring those employees and complying with the act is going to cost those companies some money. That will mean one or two things. Either those companies will charge more for their product/services and cut jobs in other areas to have the money to pay for review of all submissions and paperwork they will be required to file, and liability insurance in the event they miss something, and any resulting fines and cost if they are charged, or they will decide the cost simply isn't worth the potential benefits and cancel the programs.

Indie authors and presses are going to make less money. One way the sites may pay for the additional cost is to reduce greatly the percentage they pay authors and small presses. We'll likely say bye bye to the 70% cut Amazon gives us. We may even be lucky to keep the 35%. Or worse case, we'll have no place to put up our work, and we'll be back to looking only to the traditional publishers for our outlets, because these same dynamics will affect POD (Print On Demand) which small presses rely heavily on for publishing their works. The living some indie authors are making will evaporate and/or be greatly reduced.

Forget seeing your book get up for sale within two days. It will then go into a queue waiting for the few overworked employees they do hire to get to them. Expect it to take more than a month or more before you see that story go up. Depending on how many employees the particular company feels they can afford, don't be surprised if it takes half a year or more. That all represents time your book could be making money instead of sitting on a hard drive, waiting for approval.

You'll have less and less options of where to publish. Some companies will probably keep going, with reduced rates, increased processing time, and you cross your fingers and hope nothing in your book "looks" like a copyright violation, causing it to get rejected. But some companies will give up, and shut down, or remove that service from their mix. Companies like Apple will reevaluate their contracts with Smashwords if this bill passes, and access to those channels could easily disappear. Expect to have fewer outlets to sell your work.

Some of those predictions could be off the mark. I pray we don't have to find out whether I'm right or not, because based on the bill and these logical consequences of those actions, I fear I'll be much more right than wrong. And the only way to prevent it at this point is for enough people to contact their congressmen and women and tell them to vote against it.

I'm sure the traditional publishing companies are for this bill, because it will end up shifting power back in their direction that has been flowing to indie authors and small presses over the past several years. We need to let our representatives know that the people who put them in office are watching, and if they don't vote as we expect, they cannot count on our vote. If they get enough of those notes, they will take note. We might not have a lot of money, but votes count for more than money. Enough of them and they will have a change of heart.

Bottom line: this bill is bad for the economy, bad for anyone who wishes to start up a business whether that is a social site or a creative work like writing a book. The government can surely find ways to help prevent piracy without restricting the freedoms of its citizens and making it harder to make money in this recessive economy. Write your representatives and let them know what you think and how you intend to vote come when they are up for election again.

How to Make an Ebook: Step 5 – Creating the EPUB Ebook and Uploading toB&N

The EPUB format has become the widely accepted standard for ebooks. Every non-dedicated e-reading device out there (cell phones and tablets) have apps that can read this format, whether we are talking Stanza for the IPhone or Aldiko for Android. Additionally, Barnes and Noble's Nook uses a modified version of the EPUB format, which is why I suggest using an EPUB file to upload your book to their PubIt service. It can take other formats, but if you're going to create an EPUB, it makes sense to upload using their native format.

To manually create an EPUB file, however, is not an easy task. The EPUB file is actually a zipped file containing several files. There are some control files that "direct traffic" so to speak, artwork files for any graphics used, and the text in an html format divided up by any needed page breaks. But luckily there are some programs that will automate this process, even free ones, that will make quick work of the conversion process.

How to Make an Ebook: Step 3 - Creating the PDF Ebook

This series will eventually become an ebook I'll make available for sale once we complete the chapters and I can make time to edit them. Visit the chapter list if you want to read the prior steps. If you appreciate my efforts and find them useful, please consider a donation (top, right) to aid the continued work on this book. Thank you.

Now that we have the text of the file properly formatted, and the cover ready to go, we are ready to start creating ebooks. The first one we want to work with is the standard ebook format, the PDF. The acronym stands for "Portable Document Format," and has become the most common way to share documents on the Internet. The cool thing about PDFs is they most closely resemble a printed book. That means they can usually display graphics and other elements that are generally harder for other ebook formats to handle. But that is also their downside as well. Because they are more "static" in format, they are harder to read on smaller devices like cell phones, and even on tablets are not ideal. Computer screens make the easiest reading device for these files.

But of all the formats, it is the one most anyone can open and read as the Adobe Reader software is free to download and the format is universally used across all platforms: Windows, Linux, and MacOS. It is hard to find someone who can't open a PDF file. Because of that, it is a good format to have on hand and sell from your website.

And even if you don't plan on creating a PDF ebook, you'll need to do some of the items in this step to prep your ebook for the rest. I'll let you know when to skip onto the next step.

New GftW Column: Wading Through the Crap

My monthly column came up today at Grasping for the Wind. I explore one fallacy presented by Fr. Felton's article at the Wall Street Journal about the affect of indie publishing on finding good authors/books:

Wading Through the Crap

Be sure to comment at that blog or here, if you are so inclined. Thanks for checking in.