Archive | Publishing RSS feed for this section

The Death of “Self-Publishing”

It’s time to just say it. “Self-publishing” is dead. I’m not talking about the act of self-publishing a book. I’m talking about the phrase itself. “Self-publishing” now means two different things that are miles apart. It’s time to kill this useless phrase.

Barbara posted this question on my “Ask A Question For My Blog” page:

I am confused by all the different terms in current publishing. Like “indie publishers,” “traditional publishers,” “ebooks,” “ebook indie publications,” “small presses” “small publishers,” “independent publishers,” “print on demand,” “hybrid authors” and whatever it is that Amazon does.

I am former Washington, DC newspaper reporter writing a novel about the newspaper business. Though I have finished a first draft and am working one revisions, I am not quite ready to submit a manuscript yet. But I need to know what all these terms mean and how to go about deciding where I belong. Thanks always for your great blog and for answering my question.

Randy sez: Let’s start with the most confusing term of all—“self publishing.” This used to have a single meaning. But in recent years, it’s come to mean two massively different things:

  • Vanity publishing
  • Indie publishing

Let’s look at these and define them clearly.

Vanity Publishing

“Vanity publishing” means that you pay somebody to publish your work. You typically pay them a flat fee and with that money, they then hire editors, proofreaders, typesetters, graphic designers, marketers, and whatever else. They take care of the printing, warehousing, shipping, distribution, sales, etc. If there are any profits, they distribute them to you, usually taking a cut.

In vanity publishing, you do the writing and you take all the financial risk. The vanity publisher does all the other work and takes none of the risk. The profits can be divided up various ways.

It should be obvious that vanity publishing is wide open to abuse. When you are fronting the money and taking all the financial risk, the vanity publisher has little incentive to keep costs down or do a good job or give you a fair shake.

It is possible for a vanity publisher to give you a fair deal, but most professional authors, editors, and agents will tell you that vanity publishing is almost always a terrible deal for an author. David Gaughran does a great job of explaining why on his blog, so I’m just going to refer you to him. Here’s one of his articles to get you started.

Indie Publishing

“Indie publishing” means that you act as your own independent publisher. You write your book. Then you do all the tasks that a publisher would typically do, or else you find a specialist who can do the ones you can’t. These tasks are:

  • Editing
  • Proofreading
  • Cover design
  • Typesetting (for print books) or formatting (for e-books)

Indie authors often do all of the above themselves. Then they upload their finished book files to the various online retailers—Amazon, B&N, Apple, Kobo, Smashwords, Google Play, etc. Or they may work with a distributor, such as Smashwords, who will deal with some or all of the retailers.

The key thing here is that the author gets a large percentage of the money—typically between 35% and 70% of the retail price of the book. The indie author takes all the financial risk and gets most of the rewards, so she has a high incentive to keep costs down and do a good job.

As it turns out, indie publishing can be a great deal for authors. The very best-paid indie authors are earning millions of dollars per year, and a surprising number are earning hundreds of thousands of dollars per year. For a superb analysis of how much indie authors can earn, see the Author Earnings web site run by Hugh Howey.

Why “Self-Publishing” is Useless

“Self-publishing” used to mean essentially the same thing as “vanity publishing” and very few professional authors would have anything to do with it.

In recent years, “self-publishing” has also come to mean “indie publishing,” and a great many professional authors are doing it very successfully.

It ought to be obvious that “self-publishing” is a term that is too ambiguous to be useful. It needs to be thrown away.

We have two other perfectly good terms we can use instead: “vanity publishing” and “indie publishing.” So use whichever is appropriate, and nobody will be confused.

Let’s remember that there are some other publishing options. Let’s look at those.

Traditional Publishing

“Traditional publishing” means that you work with a publishing company that puts up all of the money to publish your book. They pay you some money upfront as an “advance” in exchange for the rights to publish your book for a certain length of time. They also pay for all the editing, proofreading, typesetting or formatting, printing, warehousing, sales, and distribution. They collect all the money earned and pay you a percentage as royalties.

In traditional publishing, you do all the writing and the publisher does all the other work and takes all the financial risk. You split the rewards with them.

What’s not to like with this arrangement?

Let’s be clear that this can be a great deal for authors. Until very recently, most of the really famous authors worked with traditional publishers and made great boatloads of money. There are a couple of thousand authors currently doing very well under this system.

The problem is that in recent years, the deal has gotten substantially worse for authors. Here are some of the friction points that authors have:

  • Advances have gotten smaller.
  • Authors are expected to do all or most of the marketing.
  • Royalties on e-books are low—typically 25% of the wholesale price of the book, which works out to about 12.5% of the retail price. This is very much lower than the 35% to 70% earned by indie authors.
  • Many publishers require option clauses that lock in an author to working with the publisher on the next book.
  • Many publishers require no-compete clauses that prevent an author from working with another publisher (or from indie-publishing) during a certain window of time.
  • Traditional publishing takes a long time to move a book from concept to final published book. It may take a year or two or longer.
  • Traditional publishers often can’t handle all the books that an author can write, and this is a huge problem if there are option clauses or no-compete clauses in place.
  • Traditional publishers decide what will be published and what won’t, and this often feels arbitrary and unfair to authors.
  • Traditional publishers hold all the high cards in negotiating.

There are probably other friction points, but these are the most glaring. These are the reasons why so any professional authors have simply walked away from traditional publishing and gone indie—they believe they’re better off on their own. These are the reasons why so many indie authors have refused contracts offered by traditional publishers.

Some authors use the term “legacy publishing” to refer to traditional publishing.

Hybrid Authors

“Hybrid author” is a term coined by Bob Mayer. It means an author who chooses to publish some books with traditional publishers and some books as an indie author.

Hybrid authors are looking for the best of both worlds, and this can be a reasonable choice. I’m a hybrid author, because I have some books still in print with traditional publishers, while all my current projects are in indie publishing.

Small Publishers

“Small publishers” are traditional publishers that are small—typically just a few employees. Small publishers often give better royalties on e-books. They may give more attention to new authors. I’ve worked with a small publisher, and it can be a sensible option.

Small publishers seem to be fading as more authors go indie.

E-books and Print-On-Demand

E-books are electronic books that are sold and delivered electronically. In some categories of fiction, most of the books sold are e-books.

“Print-on-demand” books are paper books that are printed and sold only when a customer orders a copy. Traditionally, publishers printed thousands of books in a large print run and then warehoused the books. This kept the cost per copy low, but if the books didn’t sell, that was a problem. The unit cost of a print-on-demand book is fairly high, but the risk is zero because you don’t print it until you’ve sold it.

Amazon has made it easy for indie authors to create and sell e-books and print-on-demand books. You can upload your e-book at kdp.amazon.com. You can upload your print-on-demand book at createspace.com.

Numerous other online retailers let you upload and sell e-books, including Barnes & Noble (at nookpress.com), Smashwords (at Smashwords.com), Apple (at itunesconnect.apple.com), Kobo (at kobobooks.com).

The publishing world is changing fast. Traditional publishing used to be the only game in town for authors who wanted a fair shake financially. Now indie publishing is an exciting option. Indie publishing gives authors some negotiating power with traditional publishers, because now they have the power to walk away.

Barbara, I hope that answers your questions. I won’t tell you what you should do, because every author is different. But now you know what your major options are. Good luck!

 

If you’ve got a question you’d like me to answer in public on this blog, hop on over to my “Ask A Question For My Blog” page and submit your question. I’ll answer the ones I can, but no guarantees. There are only so many hours in the day.

 

Agents in the Indie Age

So you’re an indie author writing fiction and you’ve been thinking of writing a novel for a traditional publisher and you need an agent. How do you make that work? What are the rules for working with an agent in the Indie Age?

“Jane” (not her real name) posted this question on my “Ask A Question For My Blog” page:

Hi Randy,

I recently made a connection with a literary agent who is willing to represent me. I wasn’t seeking an agent; this happened through recommendations from a small press who is publishing my next series. I did all my due diligence and this agency totally checks out positive, but I need some advice from you.

A little about me: I have two ebooks indie published (one available in print), a contract with a small press for a digital serial style series with the option of print on demand copies later, and more ideas and drafts then I know what to do with other then publish them one at a time myself.

I looked over the contract and the exclusive clause gave me pause. They did say they could include an addendum that would allow me to continue indie publishing if I wanted, but made it clear they want access to all my writing since they will be putting work into my success as well now.

I’d love to have an agent, to be a “hybrid” author, but I’m not sure how realistic that is. The publishing industry has changed dramatically, yet lots of people are still in the same routines as before. Would signing with an agent be detrimental to me at this point?

I highly value your advice. Thanks for any input you can offer.

Randy sez: Well, I’m hesitant to give advice when I don’t know you and your work well. And I’d be hesitant to give advice even then. So consider this blog post to be “Randy’s thoughts” rather than “Randy’s advice.” I’ll tell you how I run my own life. That may or may not apply to how you should run yours.

You only need an agent if you’re working with a traditional publisher. That is, if you’re completely indie, then you don’t need an agent.

My opinion is that if you’re working with a traditional publisher, even a small one, you need an agent. Publishing contracts these days are complex, and you need somebody to explain the nuances of each contract and fight for you on the clauses that are important. The word I’m hearing is that contracts are getting less author-friendly, so you need all the help you can get.

In my experience, virtually all agents want to work with you exclusively–meaning they don’t want you to have two agents. If you happened to be working in two wildly different categories, it might make sense to have two agents, but that’s rare.

In my opinion, it’s reasonable for you to give an agent exclusivity on your traditionally-published work. An agent puts a lot of work into each client, and that effort needs to be rewarded.

Some agents are a lot more indie-friendly than others. The important thing is that you have an agreement with your agent on what your indie activities are going to be. Your agent is your business partner. You must keep them informed on what you’re doing, if you’re doing any indie work at all.

If you and your agent don’t agree on your indie publishing, then that’s a serious problem. It sounds like this agent is happy, in principle, with your indie publishing. The addendum to the contract sounds like a good idea to me, but you should also discuss it  verbally to make sure that you both agree on the meaning of the addendum.

Some agents, in my experience, are just not a good fit for indie authors. Indie authors typically believe that the more books they produce, the better, because each book promotes the others. Some agents just plain don’t buy that reasoning. (And it looks to me like most publishers don’t buy it either.)

If you believe that your indie titles help promote your traditional books, and if your publisher insists on a strict non-compete clause that keeps you from producing indie books during some long window of time, then you have a serious conflict. You need to have an agent who agrees with you on the issue. And not all agents do.

If you’re going to work with an agent, you need to have roughly the same set of assumptions. Some of the points where indie authors disagree most with traditional publishers are the following:

  1. Life of the contract. Should it be limited to a set number of years? Should it terminate when sales volume gets “too low?” What does “too low” mean? Or should the contract go for the life of the copyright?
  2. Option clause. Should the publisher get an option on your next book? Or your next TWO books? If so, can you live with the terms of that option?
  3. Non-compete clause. What is the length of time that you’re willing to NOT publish any indie material that might compete with the traditionally-published book? How broad is the clause? Who decides what “compete” means?

You need to be on the same page as your agent on all the important questions. Any decent agent will of course be working in what he believes to be your best interests. But if the two of you can’t agree on what your best interests are, then you’re working with the wrong agent. And it’s best to figure that out before you start working together, rather than after.

Publishing is more complicated than it used to be. The trend is for more and more traditionally-published authors to do a bit of indie-publishing on the side. The trend is for more and more agents to help them with this. The trend is for more and more traditional publishers to pursue contracts with successful indie authors.

Because of these trends, I’m guessing that ten years from now, all authors will be hybrids or indies, and there won’t be ANY authors who are solely traditional. I can’t prove this. It’s just a guess based on what I see, and so it could be wildly wrong. But ten years from now, if I’m right, then I’ll say I told you so.

If you’ve got a question you’d like me to answer in public on this blog, hop on over to my “Ask A Question For My Blog” page and submit your question. I’ll answer them in the order they come in.

A Home Run For Apple

When somebody gets it right, it’s important to say so.

So I’ll say it straight out—Apple’s iTunes Connect just hit a home run with its new reporting tools for indie authors. (iTunes Connect is the web site for managing your account as an indie author.)

Gack, who cares about reporting? That sounds so … dull.

Indie authors care about reporting. They care when they want to know how many books they’ve sold in the last day or week or month or year or lifetime. They care when they need to know how much they’ve earned.

Let’s be clear, those are the two main numbers indie authors care about:

  • How many books did I sell?
  • How much did I earn?

You’d think that all the major online retailers would make those two numbers easy to get. You’d think those would be the first thing the online retailers tell you.

Well, no, most of them make it hard to get that information. Some of them make it impossible.

But before we go complaining about who gets it wrong, let’s talk about what Apple has done to get it right. (And until last week, they were getting it horribly wrong.)

How Apple’s New Reporting System Works

You log in to the iTunes Connect web page and you see a page with a number of options. Click on the first one, “Sales and Trends.”

A page immediate appears that shows a graph of your sales over the past week. You see the total number of units you moved in that time period and you see the proceeds, in US dollars. (You can choose what currency you want for the proceeds.)

Scrolling down the page, you see a list of each book you’ve published, with the number of units of each one that you’ve sold in that time period. If you click the “Proceeds” tab, the graph changes to show your total earnings each day, and the list at the bottom changes to show the total earnings for each book. Simple and easy.

You may want to change the time-period for the report. No problem. You have several convenient ways to do that:

  • Click one of the links: “Last 7 Days”, “Last 30 Days”, “Last Year”, “Lifetime”.
  • Click on the calendar icons for the starting date and the ending date to manually set the reporting period.
  • Adjust sliders to change the starting date and ending date graphically.

If you want to see how you’re doing in various territories (the iTunes store currently lets you sell your e-books in 51 different territories), you can click a tab to display your results by Territory.

If you want to see how your different categories of books are doing, there’s a tab to break out the results by category.

You can also see results for preorders.

It’s hard to see how the system could be simpler or better.

If you want your results in a spreadsheet, there’s a link to click that will take you to a page where you can choose the reporting period (annual, monthly, weekly, or daily). Then you just click the download button and you’ll download a text file with a table of data that you can load into a spreadsheet.

Authors tend to be obsessive about their sales numbers. Many indie authors log in every day to check their sales on various online retailers. Knowledge is power, and knowledge about your sales numbers gives you extraordinary marketing power. You can try a marketing tactic and measure in real-time whether it works or not. This is a huge advantage that indie authors have over traditionally published authors.

Apple’s new system is so simple and obvious, you’d think that every online retailer did something similar. But tragically, they don’t.

Let’s look at some of the other online retailers to see how they handle reporting.

Amazon’s Reporting System

Amazon makes it easy to view on the Reports page the total unit sales for the current month for each of your books for each of the online stores where your books are sold. This is nice, as far as it goes, but there are a number of shortcomings:

  • You don’t see the revenue you’ve earned.
  • You don’t see the total units sold for today (or yesterday or any day). If you want to know how many you sold today, you have to subtract the total sales for the month yesterday from the total sales for the month today. And if you didn’t write down the total sales yesterday, you’re out of luck.
  • You don’t see the total units sold on all the retailers. There’s a combo box you have to change so you can see the different retailers in various countries—the US, the UK, Germany, France, Spain, Italy, Japan, India, Canada, Brazil, Mexico, and Australia. It’s a major hassle to manually click on each of these and write down the totals for each so you can get a grand total.

Amazon also provides you with the ability to download a spreadsheet with the results for previous months. These are not available until 15 days after the end of the month. And they give you the numbers, but they’re extremely inconvenient.

  • Sales are broken out into groups of rows, where each group of rows contains results for a given country.
  • There will be a row for each book with sales at the 35% royalty rate, and another row for that same book at the 70% royalty rate. But there’s no row that shows the total sales.
  • Each row ends with the revenue to the author, using the currency of the retailer. But there is no exchange rate given, which means you can’t convert to one common currency.

The bottom line is that you can laboriously add up the various rows to determine the total number of units you sold for each book. But you can’t add up the rows to determine your total revenue. You don’t have enough information.

The Smashwords Reporting System

Smashwords gives you a dashboard where you can immediately see the total lifetime sales of each book. But it doesn’t show the total lifetime revenue.

If you want more detailed information, you can get it, but you’ll have to download it. And the time period of each report is a full quarter—three months. You can choose which retailers and which books you want a report for and click the download button. Then you get a large spreadsheet with numerous columns. With some work, you can find the columns you want, sort them by book, and then add up the results to get a total for unit sales and revenue for each book. It’s clunky, but it’s possible to get the results, which is better than Amazon’s system.

Barnes and Noble’s Reporting System

Barnes & Noble’s system has a Sales tab that shows you a bar graph of total units sold by month. The graph shows total units for all your books, so if you want to know the results for a single title, you’re out of luck. You can also see total units and total revenue for this month and last month, but this is not broken out for each book. You can also see yesterday’s sales, both in units and in revenue—but you can’t see today’s.

If you want more information than that, you can click on the “Monthly Sales” button to see sales data for any given month. There’s a table that shows sales for each day of month, broken out by title. But the totals at the bottom are for all your titles summed together.

You can download the same information for any month to a spreadsheet, but if you want total units sold and total revenue, you have to do some manipulation in the spreadsheet to get it. B&N only sells in the US and UK, and they do the currency conversion for you. It’s a hassle to get the total units and total revenue for each book, but it’s possible to get the information if you do some work.

What About Kobo?

I’ve not used Kobo directly (I get my e-books onto Kobo through Smashwords), but it appears that they’ve done a very good job of reporting sales to authors. I can’t tell exactly how good the system is. The info page on their web site displays an example page showing total units sold and total revenue earned all-time for all books. It appears that you can break that out by book. If you can break that out for any given time period, then that would be truly useful to authors.

I’ll probably create a Kobo account and upload my books to their store soon. Their system looks to be very author-friendly.

Questions About Hugh Howey’s Results

In my last blog post, Hugh Howey and the Tsunami of Cash, I talked briefly about the recent results posted by Hugh Howey and his collaborator “Anonymous Data Guy,” who analyzed in detail the sales of category best-sellers on Amazon. (The first study looked at about 7,000 books and the second study looked at about 50,000 books.) See all their results at AuthorEarnings.com.

These results had been criticized by a number of people, so I thought it would be useful in my blog post to try to estimate the broad spectrum of indie author earnings using the 80-20 rule.

I was able to make rough estimates of the number of units sold by indie authors from the very top earners all the way down to the very bottom earners.

Hugh left a comment on that blog post, and so did Chip MacGregor, a well-known literary agent. Chip is a “no-BS” kind of a guy, and his comment was quite long and had some good questions (but also a couple of clunkers). Chip is a long-time friend of mine, and was my agent for several years, and I consider him one of the good guys. I didn’t want to simply bury my response to Chip in a comment.

I’ve decided to do a whole new blog post today just to answer Chip’s questions.

First, just to set the context, here is Chip’s entire comment, which I’ll answer line by line in the rest of this post.

As a guy who is supportive of authors self-publishing, I find Howey’s work interesting, but not earth-shaking, For the record, he looked at one day of sales, at one company, and admittedly guesstimated many of his numbers based on what friends told him. Um… Would your PhD program have accepted that, Randy? Do you think his sample size is adequate? Would you allow him to create a trend line from that? The two big questions that stick in my head after reading this report: Can we rely on Amazon marketing info to be accurate? And if so, why isn’t Amazon sharing information with him?

I know the people who are raising questions about the validity of the study are being hammered as Luddites, but I tend to think this needs a bit more study before it’s declared as gospel. I like your idea of applying the principle of factor sparsity to the data, but your suggestions seem pretty optimistic. Out of more than a million authors, the average number sold is about 300. (Nothing wrong with selling 300 copies, mind you, and if they were charging a couple bucks, they made themselves about $400, which is better than a kick in the head… but it’s not the windfall you seem to make it out.) I’m not sure why you state that “the average and median sales are not very useful,” Randy. Seems as though those are very useful to give context — as in, “There are more than a million authors on Amazon, and last year 150 of them sold more than 100,000 copies.” On the one hand, I celebrate the successes. On the other, you have to admit those are fairly long odds. Again, I hesitate to say  that, because everybody WANTS this to be true, and to have discovered the secret to making a lot of money at this crazy business.

I notice Hugh came on your site to say he personally knows “several others who sold multiple millions last year.” Um… this is the sort of thing that makes me wonder about his veracity. I guess I tend to doubt that he knows “several” who sold “multiple millions.” Several? Really? Even your quick data analysis doesn’t support that, Randy. Look, I’m a guy who has self-published books and done well, and who encourages the authors I work with to self-pub… but I don’t like the Amway-like atmosphere being promoted by people who want to make it sound like there are publishing fairies out there, waiting to sprinkle hundred dollar bills onto everyone. My two cents.

Randy sez: Now that you’ve seen Chip’s comment in full, I’ll repeat it line by line and respond to each logical unit.

Chip wrote:

As a guy who is supportive of authors self-publishing, I find Howey’s work interesting, but not earth-shaking,

Randy sez: I find it both interesting and earth-shaking. Here’s why. I knew that indie authors were doing well. I know many of them. I’ve seen the difference indie publishing makes in their lives. I know the kind of sales numbers they’ve been getting.

What I didn’t know is that indie authors (as a group) have just about reached parity with the Big 5 authors (as a group). That is, the set of indie authors Hugh and Data Guy analyzed are moving just about as many copies and earning just about as much money as the Big 5 authors they analyzed.

I don’t think anybody knew that. That’s why it’s created so much excitement.

Chip wrote:

For the record, he looked at one day of sales, at one company, and admittedly guesstimated many of his numbers based on what friends told him. Um… Would your PhD program have accepted that, Randy?

Randy sez: He’s now looked at two days worth of sales, and the two sets of results are in very reasonable agreement. The company he looked at was Amazon, which is by far the biggest player in e-books. But he’s now doing a study on B&N, and I think we’re all looking forward to those results.

As for his method of analysis, it’s more sophisticated than guesstimating based on what his friends told him. Hugh and other indie authors have been compiling data for years that allow them to accurately correlate a book’s sales rank with its actual sales. This is approximate, but it’s a very reasonable approximation, and the Law of Large Numbers tells us that statistical fluctuations will wash out pretty quickly as you get more data. And 7,000 books is a boatload of data. 50,000 books is even more.

As for whether my Ph.D. Program would have accepted that, let’s not be silly. I got my Ph.D. In quantum field theory at UC Berkeley. That’s a high standard of rigor, and it’s far beyond what people normally try for in real life.

From what I can see, Hugh’s calculations are well above the usual standard in the book industry. I’m looking at the BookScan report for my book WRITING FICTION FOR DUMMIES right now. For the last royalty period, BookScan underestimates paper sales by about 30% and it has no estimate at all for e-book sales.

So the real question is whether Hugh’s data increases our knowledge of author earnings. My judgment is that it does.

Chip wrote:

Do you think his sample size is adequate?

Randy sez: Yes, even for the first data set, which looked at about 7,000 books. For the second data set, it’s an embarrassment of riches, with around 50,000 books covering all categories, fiction and non-fiction. This is good stuff.

Chip wrote:

Would you allow him to create a trend line from that?

Randy sez: No, of course not. Chip, that was a bad question. Hugh isn’t analyzing the rate of change of things. He’s analyzing the state of the industry right now. In any event, you can’t create a trend line from one day’s worth of data. (Now he has two days’ worth, but he’s doing a static analysis, not trying to predict changes, so a trend line is really beside the point.) And of course, Hugh didn’t create one.

Chip wrote:

The two big questions that stick in my head after reading this report: Can we rely on Amazon marketing info to be accurate?

Randy sez: I didn’t understand this first of the two questions, so I emailed Chip to ask what it means. He emailed me back to restate it:

Since the bestseller lists at Amazon are largely seen to be a marketing tool, do we want to rely on them as a database for research?

Randy sez: OK, I see now. Chip is saying that many people believe that the sales rank for books isn’t strictly correlated to actual daily unit sales. Most people believe that Amazon uses other factors to determine the sales rank, and some of those factors might be Amazon’s marketing needs.

This means that it’s possible that the daily sales rank for a book would not be a good predictor for its daily unit sales. In that case, Hugh’s calculations with Anonymous Data Guy would be incorrect.

Fortunately, that is a testable question. Here’s how to test it mathematically:

All you have to do is look at the raw data for a large number of books. Each day, you look at the sales rank (which is public information) and you look at the actual units sold (this is private information that Amazon only tells the publisher). Since indie authors are publishers, they can easily compile this raw information and then any math person can model it.

I would model it as a Pareto distribution curve, S = C/(R**E), where:

  • S = daily unit sales
  • C = some unknown constant to be determined by the data
  • R = the sales rank on the given day
  • E = some unknown exponent to be determined by the data

So the mathematical solution is to do a least-squares fit to the data to determine the best values for C and E. Then do a chi-squared analysis of the fit to see how well the theory fits the data. This is easy to do. We could also compute variations from the best-fit. This would tell us the uncertainty in the calculations presented by Hugh and Anonymous Data Guy.

I don’t know if Anonymous Data Guy has done this calculation, but it’s not hard and it would answer Chip’s question. I have sent Hugh an e-mail about this issue.

Chip’s second question:

And if so, why isn’t Amazon sharing information with him?

Randy sez: You’d have to ask Amazon, but my understanding is that they hardly ever share any info with anyone. One thing indie authors like is that Amazon does give them up-to-the-minute sales information, which is a welcome change from the hassle it takes to get info from traditional publishers.

Chip wrote:

 I know the people who are raising questions about the validity of the study are being hammered as Luddites, but I tend to think this needs a bit more study before it’s declared as gospel. I like your idea of applying the principle of factor sparsity to the data, but your suggestions seem pretty optimistic. Out of more than a million authors, the average number sold is about 300. (Nothing wrong with selling 300 copies, mind you, and if they were charging a couple bucks, they made themselves about $400, which is better than a kick in the head… but it’s not the windfall you seem to make it out.)

Randy sez: Well, as I said in my post, the average and the median are pretty useless because they’re both dragged down by the great mass of unpolished writers. Two things are important:

  1. How well are the top-performing indie author compared to the top-performing traditional authors?
  2. Roughly how many indie authors are at each pay level?

So my blog post was aimed at guessing the answers to these questions. The answer is that about 10 indie authors are moving more than a million copies a year. That sounds pretty cool to me. Look at the other numbers in my post! There are opportunities here for a couple of thousand indie authors to be moving more than 10k copies per year. That makes it clear that the whole “outlier” thing is a myth.

Chip wrote:

I’m not sure why you state that “the average and median sales are not very useful,” Randy.

Randy sez: The reason is simple. We’re used to that pesky “bell-shaped curve” when talking about results. We know that the average man is about 5’9” tall, and the standard deviation is about 3 inches. We know immediately from this data that a 7 foot man would be exceptionally tall and a 5 foot man would be quite short. Note that both of those extremes are reasonably close to the average (and the median). So the average and median are useful numbers for understanding bell-shaped curve distributions.

But the Pareto distribution is wildly different. The top-selling author in my estimates was selling 7.5 million copies. The average author was selling just under 500.

If the top-selling author were as tall as he is rich, he’d be almost 17 miles tall!

That is the sense in which the average is not very useful for a Pareto distribution. The average gives us no information at all on what we should expect from peak performers.

I won’t belabor this, Chip, because I know you’re familiar with the Pareto distribution. You blogged about it recently on your own blog, in your article The Pereto Principle. (Aside from misspelling “Pareto,” it was a good article.)

Chip wrote:

Seems as though those are very useful to give context — as in, “There are more than a million authors on Amazon, and last year 150 of them sold more than 100,000 copies.”

Randy sez: No, the average does NOT give the correct context for a Pareto distribution. When you have a bell-shaped curve, you typically report two pieces of information–the average and standard deviation. Anyone who understands the bell-shaped curve then immediately understands the complete spectrum.

With a Pareto distribution, you also report two pieces of information, but they AREN’T the average and standard deviation! The two pieces of information you report are the earnings of the top-performer and the critical exponent (in my calculations I used .8613, which is the exponent for the 80-20 rule). Anyone who understands the Pareto distribution then immediately understands the complete spectrum.

Chip wrote:

On the one hand, I celebrate the successes. On the other, you have to admit those are fairly long odds. Again, I hesitate to say  that, because everybody WANTS this to be true, and to have discovered the secret to making a lot of money at this crazy business.

Randy sez: Everybody agrees that the odds of a major success are long. I said this in my blog post in October of 2012, Liars and Outliers in the Publishing World. Joe Konrath has said this many times, most recently in his blog last Friday, where Barry Eisler did a guest post and then Joe chimed in: Eisler – Publishing is a Lottery & Konrath – Publishing is a Carny Game. I don’t know of anyone who claims that every indie author is going to get rich.

Chip wrote:

I notice Hugh came on your site to say he personally knows “several others who sold multiple millions last year.” Um… this is the sort of thing that makes me wonder about his veracity. I guess I tend to doubt that he knows “several” who sold “multiple millions.” Several? Really? Even your quick data analysis doesn’t support that, Randy.

Randy sez: Actually, my analysis is consistent with Hugh’s statement. My calculations estimate that there are four indie authors who moved more than 2 million copies last year and ten indies who moved more than a million. I can think of several off the top of my head who sold more than a million last year, and at least two of them I’ve met in person. I’m sure Hugh knows a lot more of the heavy-hitters than I do. I don’t know who he has in mind, but it sounds plausible to me.

Chip wrote:

Look, I’m a guy who has self-published books and done well, and who encourages the authors I work with to self-pub… but I don’t like the Amway-like atmosphere being promoted by people who want to make it sound like there are publishing fairies out there, waiting to sprinkle hundred dollar bills onto everyone. My two cents.

Randy sez: I’m also opposed to the Amway mentality, and I’ve consistently pointed out on this blog that only a few authors will ever get super-rich. But let’s remember that with a Pareto distribution, we’re interested in the expected earnings of the top performer. The expected earnings of everyone else follows from that. So it’s REQUIRED that we talk about top-performers, even though this misleads people who want to think in terms of bell-shaped curves.

The blunt truth is that most authors won’t do very well. What I’m interested in is the spectrum of author earnings from the very top all the way down to the very bottom—how many authors are at each income level. That tells authors how to plan their careers (and it might keep a few people from quitting their day jobs prematurely).

My Pareto calculations are a first cut at answering that question. I hope to show more data soon.

Chip, thanks for your questions. It’s important to ask questions, because the issue of author earnings is important.

I think that we’ll get a fuller picture as Hugh and Anonymous Data Guy continue to analyze more data. I don’t think we’ll see a radically different picture as we get more data.

I think we’ll continue to see that indie author earnings are spread across an enormous spectrum, with a very few authors earning millions per year and hundreds of thousands who earn only a few hundred per year.

The key thing is that a couple of thousand indies are earning some tens of thousands per year. That’s the “broad shoulder” of the Pareto distribution, and it’s where most professional novelists will find themselves.