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“There are three kinds of lies: Lies, damned lies, and statistics.”

Mark Twain made this saying famous in the US and he attributed it to Disraeli, but it’s not clear who said it first.

And why should we novelists care about statistics? That’s simple. Because the publishing world thrives on statistics. Print runs. Sell-in. Sell-through. Amazon ranks. Dollars earned. Royalty rates.

Last weekend I was at the Novelists Inc. (Ninc) conference in White Plains, New York and had a great time meeting a number of authors, editors, and agents.

One of the words I heard most was this one: “outlier”.

Bella Andre, a self-published romance novelist who has hit the New York Times bestseller list is said to be an “outlier.” (Bella recently sold the rights to the paper editions of her novels to Harlequin MIRA, while retaining the e-book rights.)

Barbara Freethy, who has sold over 2.7 million e-books of her self-published titles is said to be another “outlier.”

Julie Ortolon, who is selling boatloads of self-published e-books, is supposed to be yet another “outlier.”

These authors join a cast of other “outliers” who’ve sold massive numbers of e-books in the last couple of years: Amanda Hocking, John Locke, and Bob Mayer all come to mind.

What is an outlier and why are there so many of them lately?

Malcolm Gladwell popularized the term “outlier” with his book, Outliers: The Story of Success,” published in 2008. As Gladwell explains on his web site:

“Outlier” is a scientific term to describe things or phenomena that lie outside normal experience. In the summer, in Paris, we expect most days to be somewhere between warm and very hot. But imagine if you had a day in the middle of August where the temperature fell below freezing. That day would be outlier. In this book I’m interested in people who are outliers—in men and women who, for one reason or another, are so accomplished and so extraordinary and so outside of ordinary experience that they are as puzzling to the rest of us as a cold day in August.

Let me put on my physicist hat for a minute. In science, an “outlier” is anything that is so improbable that it demands an explanation. Some examples:

• A basketball player’s height is listed as 68 feet. This is in fact impossible. No human could be 68 feet tall. The most likely explanation is that the player’s height is 6’8″ and somebody made a typo when recording it. This kind of outlier is a simple mistake.
• In 1610, Galileo pointed his telescope at Jupiter and noticed four moons circling it. The current theory of astronomers then was that all the heavenly bodies — the sun, the moon, the planets, the stars — circled the earth. By this theory, it was impossible for moons to be orbiting Jupiter. But there they were. It took a few decades, but eventually it became clear that the existing theory was wrong. This began a revolution in science that continues to this day. This kind of outlier is a sign of a wrong theory.
• In 1982, an experiment at Stanford University detected an event which appeared to match the signature of a magnetic monopole. According to current physics theories, magnetic monopoles can possibly exist, but none had ever been seen before. None has ever been seen since, although a number of experiments have searched for more monopoles. There is no obvious interpretation for the event. This kind of outlier has to be classified as an unsolved mystery. It could be a mistake. It could be a Nobel-prize-worthy discovery awaiting confirmation. Nobody knows.
• Every so often, one of the major lotteries has a jackpot that goes up into the hundreds of millions of dollars. Eventually somebody wins it. The odds against winning are fantastically high, and the winner appears to be an “outlier”. However, the explanation for these “outliers” is simple: Somebody has to win the lottery. If you continue running the lottery long enough, somebody always does. It’s a statistical certainty.

So now back to the many so-called “outliers” in the publishing world. What’s going on here? Are they simply mistakes? Harbingers of a faulty theory? Unsolved mysteries? Or statistical certainties?

I think it’s obvious that these authors aren’t simply mistakes. Nobody added a couple of extra zeroes to these people’s sales numbers. The top self-published authors really are selling millions of copies.

There has been a lot of talk about the “e-book revolution” and some people believe that this means that the world is changing to one in which all authors will be rich. I believe there may be some truth to this, but it’s exaggerated. I believe that MORE authors will be rich in the future (because more money will be going direct to authors and less will be going to large corporations and to agents). But I don’t think that all authors will ever be rich. There will always be bad books that don’t sell. Always.

Are the new “outlier authors” unsolved mysteries that can be ignored because they’re not repeatable? This seems to be the view of some agents and editors I’ve talked to. In my view, they’re wrong. There are just too many authors selling millions of copies of self-published e-books. There needs to be a simple explanation. And there is . . .

Are these best-selling self-published authors merely statistical certainties? Are they like the lottery winners — somebody has to win, but whoever does is just plain lucky? The answer, I believe, is “partly yes and partly no.”

Yes, it’s a statistical certainty that there will be a few big winners among self-published authors.

No, they aren’t “just lucky.”

Here’s what’s going on, and in my view, it’s pretty exciting:

People often assume that there is some sort of “bell-shaped curve” that tells you how much authors are going to earn. According to this notion, there ought to be a few big winners, a few authors who earn almost nothing, and most of the authors are “in the middle” and earning a moderate amount.

That idea is completely wrong. That has never been true in publishing. There have always been a tiny number of gigantic-earning authors, a few high-earning authors, a fair number of moderate-earning authors, and a very large number of poorly-earning authors. That’s not a bell-shaped curve. It’s the 80-20 rule. 20% of the authors earn 80% of the money. Mathematicians call this a “Pareto distribution.” It’s not fair, but it’s the way things have always been in traditional publishing.

Exactly the same thing is happening in the new class of self-published authors. There are a tiny number of gigantic winners. A few big winners. A fair number of moderate-earning authors. And a huge number of authors who earn very little. And let’s be clear, the big winners aren’t merely “lucky.” They’re reaping the rewards of talent plus hard work.

Only a couple of things have changed, but they’re highly significant.

First, with traditional publishing, most of the money paid to the publisher didn’t go to the author. Some of the money went to the printer, some to the truck driver, some to the warehouse guy, some to the editorial staff, some to the sales team, some to the marketing people, some to the publicity people, some to the janitor, and some to the stockholders. By dribs and drabs, a lot of money leaked out, and the author ended up with 5% or 10% or possibly as much as 15%.

Second, with self-publishing, authors tend to price their e-books lower than the trad-publishers and those low prices tend to earn much more money.

In a nutshell, a self-pubbed author prices e-books smarter and gets all the money. These two facts make a huge difference.

A novice author who might have not sold at all to a trad publisher now earns a few bucks or a few hundred by self-publishing. Not much, but enough to get on the board.

A good debut author who might have earned $3k to $5k from a trad publisher now earns that much or more by self-publishing. Still not much, but the remarkable thing is that it’s sometimes a whole lot more than they’d have earned with a trad publisher.

A more seasoned author who might have earned $20k to $50k from a trad publisher now earns (in some cases) six figures.

An author with a strong brand and a good following who might have earned $100k from a trad publisher now earns (in some cases) seven figures.

Let’s be clear that there are no guarantees here. I know trad-published authors who’ve tried self-pubbing and have hardly earned anything. But I’ve also heard from a lot of formerly trad-published authors who are now doing MUCH better by self-publishing.

Something is going on here, and it’s lame to call successful self-pubbers “outliers”. Once an outlier is explained, it’s no longer an outlier. And I’ve given the explanation above.

Just to summarize it all, the explanation is in three parts:

• The Pareto distribution guarantees that there will be some big winners, a fair number of moderate winners, and a large number of low-earners. Just like with trad-publishing.
• With digital self-publishing, more of the money goes to authors than with trad-publishing.
• Self-pubbers tend to price their e-books smarter than trad publishers.

Given all this, does it make sense for authors to still have agents and to still work with trad-publishers?

Of course it does. Trad-publishers do paper books at a scale that beats what an individual author can do. This is why superstar Bella Andre sold the paper rights to her books to Harlequin MIRA. But she kept the e-rights. Why? Because she believed she could market her e-books better than any publisher. A lot of authors I’ve talked to believe they can do this better.

This week, Penguin and Random House announced plans to merge. The obvious reason is that a merger will let them get more efficient at producing and selling paper books. It’s not clear that a merger will make them a dime’s worth more efficient at producing and selling e-books. Paper books need scale. E-books don’t.

One last thing that I should be clear on: Some authors are not entrepreneurs and will do better by trad-publishing. The self-pubbed authors who do best appear to me to all have a strong entrepreneurial spirit. There is no reason for trad-published authors and self-pubbers to look down on each other. Many authors choose a hybrid model, where they trad-publish some of their books and self-publish others. Whatever works is fine.

But let’s have no more dismissing the most successful self-pubbers as “outliers.” An outlier ceases to be an outlier when you know the explanation.

And now you do.

How do you earn a decent living as a novelist? How do you get started? Who pays you and when does it happen?

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

You’ve probably already answered this question, but here it goes.
I’m in my second year of High School, and love writing fanfiction, so much so that I plan on making writing my career.
I’m wondering, how can I begin doing such a thing? Do I start as a freelancer and write blog posts and such, or write a series of short stories into one large collection, or move straight ahead onto the path of writing a novel (my big goal).
Also, while I’m in the process of writing this novel, how will I make income? I’m not entirely sure how all of this works; if a publisher will pay you as you’re writing, or if they only pay you when copies start selling, or what.
I know if you won’t be able to answer this, I understand.

Randy sez: These are good questions, Brennan, and plenty of older writers don’t think about them soon enough.

Your question came in while I was in New Zealand teaching at the delightful Romance Writers of New Zealand annual conference. My wife and I had a great time at the conference and also touring New Zealand both before and after the conference. I got to see Hobbiton! My wife conned me into taking a mud bath in the sulfur springs at a place called Hell’s Gate in Rotorua. We went sea-kayaking in Motoeka. We were out of the country for 15 days and it’s taken me almost that many days to get caught up on things.

Let me be blunt: Earning a living as a novelist is hard. I just sent out the September issue of my Advanced Fiction Writing E-zine this morning (only 9 days late!) and there I talked about the economics of fiction writing. A very few writers do stupendously well, earning millions of dollars per year. The top 1000 novelists make quite a good living at fiction writing. Everyone else struggles. They have a day job or a working spouse or an inheritance or they live in poverty.

There is no way to change that, because the market for fiction is a free market, and free markets reward only the top performers Xtremely well. There are fields where you can earn excellent money for mediocre performance. Fiction writing is not one of them.

All of that is the bad news. The good news is that fiction writing is immensely rewarding to you personally. If writing fiction is in your blood, then it’s in your blood and you won’t be able to stop yourself from writing. If writing fiction is not in your blood, then my comments above may steer you away from it into something safer and more lucrative, such as whipless lion taming or blindfolded skydiving.

OK, so let’s assume writing fiction is in your blood. What’s your career strategy? How do you break in? Who pays you and when?

Brennan, since you’re in high school, you’ve got plenty of time to develop the fundamentals. Fan fiction is not a bad place to start. It normally doesn’t take you anywhere moneywise (with rare exceptions like the Fifty Shades of Grey author). But you can get your feet wet using other people’s storyworlds and characters to learn how to write.

But fan fiction is not real fiction. If you’re going to write fiction, at some point you need to be an original. You can write short stories, but there isn’t a lot of money in them right now. (Short fiction may make a comeback with the rise of self-published e-books, but I’d say the jury is still out on how this is going to work out for short stories. Definitely novellas seem to be on the rise.)

So I’d say that eventually you’ll want to write a novel. A novel is a complex project and it takes a lifetime to master this art form. You won’t get paid until you sell your work to a traditional royalty-paying publisher or until you self-publish it. Either way, you MUST have a strong story before you’re going to get paid a dime. Let’s look at those two avenues for payment:

If you decide to publish with a trad publisher, then you’ll need an agent to help you sell your book. Your agent will expect that your story is strong, fully developed, and well-polished. Some agents have the patience to work with an author who is 90% of the way there, but most agents have hundreds of wannabes submitting stuff that is 90% of the way there. If you get an agent, he or she will try to sell your work to a trad publisher. There is no guarantee this will succeed. If it does, you’ll sign a contract that sets up a payment schedule. You normally get paid in stages: maybe 25% on signing, 25% on delivery of the manuscript, 25% on acceptance of a polished manuscript, and 25% on publication. Right now, publishers play all sorts of games to prolong the payment cycle, so don’t expect these terms. Your agent gets paid 15% of what your earnings, and he doesn’t get paid until you get paid. A trad publisher will pay all the costs of editing, cover art graphic design, marketing, sales, production, and distribution. They also take the lion’s share of the money. High risk, high reward for them. Low risk, low reward for you.

If you decide to self-publish, then you have some upfront costs. You have to pay an artist to design you a cover. You really need an editor. (Every novelist needs an editor. I pay a freelance editor to review my work.) You may need to pay somebody to create the e-book files. Then you just upload those to Amazon, B&N, and the other online retailers and start earning money. If you take this route, all the responsibility is on you. If you have a crappy cover, bad editing, lousy marketing, or anything else goes wrong, it’s your fault. It’s high risk, high reward for you.

One of your questions was how you get paid while you’re writing. The answer is that you don’t. This is one of the horrible truths of writing fiction. Income is backloaded. Nobody is going to pay you during the early years when you’re learning to write. The big rewards, if they ever come at all, will come to you after years and years of unpaid labor. There is no way to make this sound cool. It’s not cool. When everybody wants to be a rock star, it naturally makes it hard to become a rock star. This is one reason why it makes sense to start working hard now while you’re still in high school and still have free room and board.

I hate to be the bearer of bad news, but the fact is that it’s hard to become a novelist. It’s even harder to get rich at it. You need talent–loads of it. You need training (people like me are here to provide that). You need persistence–this is the main ingredient. Keep persisting and in five or ten years, you’ll reach whatever your potential is as a novelist. If that’s good enough to get published by a trad publisher, then you’ll probably sell your work for an advance. If it’s good enough to reach your market, then you could also do pretty well as a self-publisher in the exploding e-book market.

But there are no guarantees. None. It’s quite possible to work for five or ten years and never earn a dime from your writing. I spent ten years writing fiction and in the tenth year, I finally sold a short story to a local magazine for $150. This worked out to $15 per year, or 3 cents per hour of effort. In the eleventh year, I sold my first nonfiction book and then my first novel, and I was launched. But I didn’t know that would happen when I began my eleventh year of writing. I was going on faith that someday I’d sell something.

What it all comes down to is how much you believe in yourself as a writer and whether that belief is well-founded. If you have talent and if you get the training you need, and if you believe in yourself enough to keep at it for years, then you can get published. Tens of thousands of writers have done that. Probably hundreds of thousands. But only a few of them ever become millionaires, so be careful of setting unrealistic expectations.

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.