Best Selling Author Turns Down Half A Million Dollar Publishing Contract To Self-Publish

from the leaping-into-the-future dept

Joe Konrath, who we've written about numerous times, and Barry Eisler (who we haven't...), contacted me late last week to pass on the fascinating news that Eisler, who has been a NY Times Best Selling author of a variety of thrillers, has turned down a $500,000 publishing deal from a mainstream publisher, in order to self-publish his next book. That's a lot of money to give up. The link is to a (long, but fascinating) dialog between Konrath and Eisler, discussing the thinking behind passing up that kind of money to go the self-publishing route. The key takeaway: the $500,000 comes with strings (as does any publishing deal), and in this case, Eisler feels he's likely to be better off on his own.

Konrath, of course, has spent a lot of time sharing real world data on why the math works for people to self-publish digitally, pricing the book cheaply, but making much, much higher royalties per book sold. I'm still not convinced this move is right for everyone yet, but if you can handle the key functions that a publisher provides (things like editing, marketing, etc.) it can work out quite well. Publishers used to also be key for distribution, but that's less and less an issue these days, when physical book stores are less and less important, and online/digital is key. But you don't need a publisher for those things. Marketing is still the big issue for many, so this depends on how well you can market yourself, or work with someone else (perhaps the person who used to be your "agent") to market the work. And, of course, it's entirely possible that even if you went with a publisher, they'd do an awful job of marketing your book anyway (happens more times than you'd like to believe).

And, of course, the money in that deal is really an advance, that needs to be earned back. As we've discussed with RIAA accounting, earning that back is a lot more complex than it may sound -- and the gatekeeper (the publisher or the label) gets to reach a level of profits way, way, way before the content creator ever does (if they ever do). This part of Eisler and Konrath's discussion is instructive:

Joe: What was the ultimate basis for your decision? Did it come down to pure dollars and cents?

Barry: Financial considerations were a big part of it, yes. You and I have discussed various models to understand what a publisher's advance represents: a loan, an insurance policy, a bet. On the loan model, the first place I heard the concept articulated was in an extremely ballsy and persuasive blog post by Terrill Lee Lankford.

Joe: I like that analogy. I also believe signing with a big publisher is like signing a life insurance policy, where the payments keep getting larger while the payoff gets smaller as time goes on.

Barry: Yes. Now, of course there are numbers where the loan, the insurance, or the bet would make sense. If the loan is so big that you don't think you'd ever be able to make that much on your own, plus you won't have to pay it back, then sure, take it. If the insurance payout is so big that it eclipses the event it's supposed to protect against, okay. And if you find a publisher willing to put down so much money upfront that you feel they must be stoned because no one could ever earn that much back, then by all means, take the bet.

But short of that, you have to wonder if the person you're betting against isn't yourself.

Anyway, yes, much of this was financial. A lot of people don't realize--and I probably wouldn't have realized myself if you hadn't pointed it out--that the appropriate measure for determining how much your books can earn you in digital is forever. In paper, with rare exceptions, there's a big upfront sales push, followed by either total evaporation or by years of low backlist sales. Digital isn't like that.

Joe: Time is the ultimate long tail. Even with a big wad of money upfront, if something sells forever, the back end is what ultimately counts.

Barry: Right. So if you think you're going to die on Tuesday, for sure take the advance on Monday. If you think you're going to stick around for a while, though, and you have resources to draw on such that you don't need that expensive loan, don't take it. You'll be better off without.

Joe: Or to put it another way, getting half a million bucks and 14.9% royalties, forever, isn't as lucrative as no money up front and 70% royalties, forever.

Barry: Yes. Especially because you first have to earn out the half million at 14.9% per book. That could take a while. After which, as you note, you're still only earning 14.9% rather than 70%. You need to move five times the volume at 14.9%.

Of course, the conversation doesn't just focus on Eisler and his decision to turn down half a million dollars up-front. It talks about the publishing industry as a whole, and how it -- like so many other industries -- is struggling to recognize that it's moving away from being a gatekeeper business, and needs to start becoming an enabler business. Instead, it's trying to hang onto the gatekeeper side of things for as long as possible (again, like some other industries we're familiar with).

Joe: I also love print books. I have 5000 of them. But print is just a delivery system. It gets a story from the writer to the reader. For centuries, publishers controlled this system, because they did the printing, and they were plugged into distribution. But with retailers like Amazon, B&N, and Smashwords, the story can get to the reader in a faster, cheaper way. And publishers aren't needed.

Do you think publishers are aware of that?

Barry: I think they’re extremely aware of it, but they don't understand what it really means.

Joe: I believe they've gotten their business model mixed-up. They should be connecting readers with the written word. Instead, they're insisting on selling paper.

Barry: Yes. There's a saying about the railroads: they thought they were in the railroad business, when in fact they were in the transportation business. So when the interstate highway system was built and trucking became an alternative, they were hit hard. Likewise, publishers have naturally conflated the specifics of their business model with the generalities of the industry they're in. As you say, they're not in the business of delivering books by paper--they're in the business of delivering books. And if someone can do the latter faster and cheaper than they can, they're in trouble.

Joe: You say they're aware of it, and some evidence points to that being true. The agency model is an attempt to slow the transition from paper to digital. Windowing titles is another one. So are insanely high ebook prices.

Barry: All signs that publishers are aware of the potential for digital disintermediation, but that they don't understand what it really means.

Joe: Because they still believe they're essential to the process.

Barry: I would phrase it a little differently. They recognize they're becoming non-essential, and are trying to keep themselves essential--but are going about it in the wrong way.

Joe: You and I and our peers are essential. We're the writers. We provide the content that is printed and distributed. For hundreds of years, writers couldn't reach readers without publishers. We needed them.

Now, suddenly, we don't. But publishers don't seem to be taking this Very Important Fact into account.

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?

Now, I know we have some publishing folks among the readership here, and I'm sure they'll disagree, but there's clearly some truth to this. And, in fact, there may be many individuals within the various publishing companies who do get this. But institutionally, they seem to be reacting to try to hold back the tide, rather than embrace the tide. This is a pretty standard reaction, and we've seen it in other industries before. One typical response that we hear when pointing this out is that these publishers don't want to make that "leap" to really embrace the new until they know that it's sustainable and that it can work. But the key lesson that we've learned over and over and over again in other industries is that if you wait for such things, it's too late. In ceding that leadership position, you give up on being the enabler, and what's left for you is often... not much.

Filed Under: barry eisler, business models, ebooks, ja konrath, self-publishing