Authors create product, readers consume product—those in between must provide long-term value

When talking with an author about possibly partnering with Cool Gus, the second they drop the phrase “my agent” into the conversation, we know the odds of coming to a working partnership are not likely.  This is not because agents are evil or mean, but because we’ve found most to be mired in an outdated business model and unable to see the advantages of focusing on long-term profitability.  This is because traditional publishing didn’t particularly value the long tail because it wasn’t possible with limited shelf space in consignment outlets, called bookstores.

That’s changed.

Ten years ago when someone from the outside asked me to describe the publishing business, I would say:  “Slow and Techno-phobic”.  While the Big 5 and others scramble to adapt to the digital world, there is a segment that has been very resistant to the winds of change blowing through the publishing world:  agents.

When I present my Who Dares Wins concepts, whether for people inside the industry or those outside, I use the Myers-Briggs 16 character types as part of understanding character.  I focus not on what one is, but what the exact opposite character type is.  After all, we all like to do what we’re good at.  Where we need to improve is where we aren’t good.

For example, the least common of the 16 types is actually labeled Author.  INFJ.  Introvert, iNtuitive, Feeling, Judgmental.  The exact opposite, the ESTP:  Promoter.  Duh.  Big problem authors!

What do we want an agent to be?  Most agents want to be Sellers.  The exact opposite?  Architect.  That suggests to me that while agents might be very good at selling, they are not so good at structuring a business plan or analyzing the changes in publishing. An architect tends to be a strategic thinker, while a seller is tactical.

I’m generalizing here, and I know there are agents who have adapted swiftly, such as Kristin Nelson and Scott Waxman.  But overall, most agents are still so focused on the traditional format of publishing doctrine, they can’t see the bigger picture.

backgroundFirst, agents are focused on the advance.  The ‘guaranteed money’.  Authors have been propagandized into thinking an advance is the kindness of publishers giving them money so they can write.  Authors need to rethink that.  An advance is the money that binds the author’s content to the publisher via the contract.  Nothing wrong with that if the author is happy with the money and the almost complete lack of business control they’ve surrendered when they cash those checks.  The concept of monthly income after publication seems to escape many traditionally published authors and especially agents since over 90% of traditionally published books fail to earn out.  The concept of a publishing partner working for the author, allowing the author the final decision (after getting experienced advice) on everything from cover, to content, to product description, to metadata, to promotional opportunities, to pricing, etc. is one that doesn’t seem to do much for agents.  Also, working with a publishing partner that considers the publishing timeline in terms of days and weeks rather than months or years is a concept few in traditional publishing seem to grasp.

Let’s break this down simply.  The bottom line in publishing is:  Authors create the product, which is content (not the book).  Readers consume the content.  Everyone else is in between.  They must provide a value to that relationship or they are not relevant.  Since an agent is more focused on the relationship between author and publisher (not reader), their value is even more put to the test in a market where distribution no longer rules.  It is discoverability.

fresh green grass with bright blue skyRecently I’ve seen a spate of earning reports that indicate a trend:  while overall print sales are slowing or down for major publishers, they’re making more.  Where is this ‘more’ coming from?  The higher P&L on eBooks.  Where are the agents rallying to point out that this ‘more’ is being taken from the authors?  That authors getting a royalty rate that is pathetically out of date is lining the pockets of publishers?  When 75% of the cover price of an eBook goes to the platform and the publisher, something is very out of balance.  And then 15% of that 25% for the author goes to the agent?  In essence authors are getting just over 20% of cover price.  At Cool Gus our authors make over 50% of that cover price, varying depending on each one’s situation—which is another thing.  Every author, every book is a unique entity.  In Special Ops, one of the tenets is that Special Operations Soldiers can’t be mass produced.  Authors can’t be treated that way either.

Yes, there are big-name authors, in the top 5%, whose agents have negotiated for them higher royalty rates (hey, midlist author, ask your agent about that).  Good for them.  I submit however, that we will see some big name authors jump ship and go hybrid, not for more money, but for creative control.  The problems for these authors are several:

  1. Backlist is held hostage by their traditional publishers.
  2. The politics of becoming hybrid, where publishers and agents feel the author has ‘betrayed’ them, when in reality it is a positive for everyone involved if they work together.  For example, we’re working to promote Jennifer Probst’s books from Pocket with her backlist and also the frontlist we will publish.  We link and promote all her traditionally published titles.  We can actually run price specials, countdowns, and targeted ads that promote Jennifer Probst, which is a win-win for all involved, including her traditional publisher and her agent.
  3. Lack of awareness of how to ‘self’ publish.  I refer back to my Kirkus article on how the term ‘self’ publish is a misnomer.  Top authors need help in this area, especially if they are focused on writing.  They need the expertise and advice of an organization experienced in what they want to do.  But they don’t need boilerplate services:  they need a partnership tailor made for each one’s unique situation.
  4. Fear.  I won’t get into it, but fear is ruling publishing.  Many authors are terrified to break free and take a chance.  Understandable.  But potentially fatal to their long-term career.
  5. Editorial.  Some authors are wedded to the editors.  While we can say this is purely a business relationship, it goes beyond that.  We’re talking creative process.  However, there are very good freelance editors and one thing we do at Cool Gus is invite authors to our Write on the River retreat where we all work together on story and they also have access to my wife, who has worked with several NY Times Bestselling authors. A few weekends ago we had Jennifer Probst here and Richard Phillips and his writing partner.

We’ve negotiated with authors about their backlist, only to have the agent jump in between and shift their client’s focus toward selling their electronic backlist to a traditional publisher and getting an advance.  I submit they are harming their clients in their own self-interest (and mistakenly in their client’s interest).  They want that advance money which is guaranteed.  I occasionally check on the status of the digital version of books we tried to partner on, and not a single one has been published yet, over a year after talking to the author.  So a year’s worth of revenue that can’t be recouped is gone while they wait on the rusty wheels of traditional publishing to get around to their backlist.  And, as an editor at Random House told me:  We can’t promote our front list, never mind our backlist.  How do you think they’re going to focus on you?  I make more in one day from my backlist I own the rights to than St. Martins does in six months in the three books I co-wrote with NY Times Bestselling author Jennifer Crusie.  Who at SMP has a vested interest in promoting and selling those stories?  No one.  They’re overwhelmed dealing with their current authors and frontlist.

Lastly, agents are effective in securing foreign rights.  But even that model is changing.  Three years ago, people were laughing at eBooks in the US market at only 3%.  They aren’t laughing now.  Russ Grandinetti from Amazon said at the Frankfort Book Fair that they’re seeing a growth in digital devices in Europe matching the US market three years ago.  So three years from now, digital will be a huge earner in foreign markets.  A market authors can have control of via digital, instead of signing away their rights.  Something to consider.  While I believe in operating swiftly in most areas in publishing, foreign rights is one area I’m taking my time in.

Bottom line is that authors have to consider the long-term business, thinking strategically instead of tactically..  The long tail of earnings.  Publishers, and especially agents, seem to be more focused on the immediate dollar.  Authors need to be focused on their income stream five to ten years from now and also accept a fundamental truth: no one cares more about their stories than they do.

About Bob Mayer

West Point Graduate, former Green Beret and NY Times bestselling author Bob Mayer has had over 50 books published. He has sold over five million books, and is in demand as a team-building, life-changing, and leadership speaker and consultant for his Who Dares Wins concept. He's been on bestseller lists in thriller, science fiction, suspense, action, war, historical fiction and is the only male author on the Romance Writers of America Honor Roll. Born in the Bronx, Bob attended West Point and earned a BA in psychology with honors and then served as an Infantry platoon leader, a battalion scout platoon leader, and a brigade recon platoon leader in the 1st Cavalry Division. He joined Special Forces and commanded a Green Beret A Team. He served as the operations officer for 2nd Battalion, 10th Special Forces Group (Airborne) and with Special Operations Command (Special Projects) in Hawaii. Later he taught at the Special Forces Qualification Course at the John F. Kennedy Special Warfare Center and School at Fort Bragg, the course which trains new Green Berets. He lived in Korea where he earned a Black Belt in Martial Arts. He's earned a Masters Degree in Education.

Posted on December 3, 2013, in Write It forward and tagged , , , . Bookmark the permalink. 17 Comments.

  1. Very informative article. So much in there that I hadn’t thought about.

    P.S. Love the snowflakes. My friend and I decided at lunch that we must be descendants of Vikings as we both love cold weather.

  2. As always, observations both pragmatic and inspiring.
    Thank you, Bob.

  3. I would say an author has a lot more leverage to negotiate with a publisher than with Amazon. 70% net-receipt royalties (that are effectively 70% list price royalties, less a few nickels and dimes) is a powerful motivator, but I would be careful to assume that it’s a permanent one. When it comes time for Amazon to squeeze self-published authors (and, I assure you, the time will come) there’s only a terms-of-service agreement between you and exploitation, where your only recourse is to quit Amazon. Whereas an equitably negotiated agreement between you and a partnering publisher, brokered by someone knowledgeable about the machinations of publishing, will protect your interests in perpetuity.

    Authors, agents, and publishers have divergent interests at times, but mostly their interests are aligned: they want to sell good books. Selling good books is peripheral to Amazon’s interests. When it comes to negotiating, some agents (dumb agents) can be distracted by advances, but for professionals, our fiduciary interests align with that of the client. We want to make the most money possible, over the longest possible period. A successful agency’s income is divided fairly evenly between active income (commissions on advances and licensing fees) and passive income (commissions on client royalties from previously published works). The ideal book is one that has a high advance, earns that advance out quickly, and earns money in perpetuity. It does an agent no great benefit to go for the big advance at the detriment of their clients’ careers. There’s no security in a business like that, where one year you may make hundreds of thousands of dollars in commissions, and the next year have a roster of clients with unearned advances and no future.

    Also, editors usually have a graduate degree, they went to work in trade publishing as opposed to more lucrative fields (such as financial/medical content publishing), because they care about book culture. Even the most cynical among them, have a vested interest in the outcome of their author’s books. One can argue about their efficacy (and I often do) but not their commitment.

    I would agree that publishers should be shifting their primary focus from serving retailers, to serving end-users (see: readers). I would not agree that they are mere middlemen in the transaction between authors and readers. Publishers provide value that authors will otherwise have to provide on their own, and publishers have capabilities that are beyond what an average individual author can martial. It has been unfortunate that publishers have focused (arguably to their own detriment as well) on attempting to cultivate mega-best-sellers in lieu of a more comprehensive promotion across all titles, but opting out of publishing in lieu of self-publishing is certainly not going to encourage them to serve authors better.

    Authors deserve a strong publishing sector that can serve them, and readers deserve better too. There’s a lot of self-published books out there that are great, but there’s no argument that they couldn’t have been made better products by having a team of professional editors (not paid editorial service companies, but editors whose careers are determined by the performance of the books they publish), artists, and designers work on them. These things are cost-prohibitive for most authors, but a matter of course for publishers. Which isn’t to say publishers have never done a bad job, or that self-publishers can’t do better. There are plenty of outlying examples of each, but for most authors self-publishing isn’t going to work as well as a good publisher would.

    There is a sustainable, and profitable, model for professional publishing that can serve a greater swath of authors, and please a greater number of readers, but it requires participation from all the players. Self-publishing isn’t a panacea, it’s a stopgap between the old publishing paradigm, and the new publishing paradigm.

    • I’m not sure how much leverage the average author has with a publisher. Outside of the top 5% of authors, you are pretty much are stuck with boilerplate and a take it or leave it situation.

      Amazon will change how it deals with self-publishing. I agree on that. I’m not sure it will be by changing royalty rates though. Perhaps a publishing fee to raise the bar to those who are serious, which will be refunded once a sales threshold is met. Even if Amazon halved its royalty rates, it still beats the standard NY eBook rate. On a $2.99 eBook I still make almost 4 times what I used to get for a mass market paperback. And, owning rights, if push comes to shove, I can sell books myself directly to readers. Amazon is not the be all and end all. It’s a narrow view that doesn’t see the wide potential of the internet.

      As far as selling ‘good’ books. Who determines good? When a baseball player gets his own imprint at one of the Big 5, it throws out the definition of ‘good’. It also makes one wonder what the qualifications are exactly to be a publisher.

      In the name of clarity, you should also mention you work at an agency based on your email address. So you do have a dog in this hunt, aka your livelihood.

      I believe the vast majority of people in publishing are in it because they love books. But they also have to run a business. Not sure what a graduate degree has to do with anything. I could have gone gunslinging overseas for Blackwater and made more money too. That’s neither here nor there except apparently playing for the Yankees makes one an expert in publishing.

      It’s interesting you mention self-publishing as a stop gap. First, I’m not a fan of ‘self’ publishing as I point out in the article in Kirkus. I’m a fan of agile publishing. Small, focused, publishing for a handful of authors, with the long tail as the key. Not a place agents want to deal with, but surprisingly, a place authors are interested in. I’ve talked to five #1 NY Times bestselling authors in the past year and I can tell you NY has little clue how dissatisfied many authors are, even ones making the big bucks.

      Let’s be honest and admit that NY, both publishers and most agents, dropped the ball on digital. They had plenty of warning based on what happened to music in 2001 and very, very few, looked to the future with a business plan. Most still don’t have a realistic one. As Jeff Bezos said this past Sunday on 60 Minutes, complaining is not a business model.

      When you say self-publishing won’t work as well as traditional publishing, I’m not sure what you mean. How many authors last 10 or 20 years or longer in traditional publishing? Not many in self either. But at least the onus is on the author. The responsibility but also the authority.

    • You’re never stuck with a boilerplate, unless you don’t know what to ask for. You are however, stuck with Amazon terms-of-service. A self-publisher may be getting the same distribution discount extracted as the big 5.5 (30%) but the difference between the self-publisher and the publisher, is that the publisher’s agreements are binding when it comes to that discount. The internet’s a big place, but most e-book sales these days are device driven, not individual application driven. Amazon has captured a sizable group of consumers with their integrated internet distribution service. It makes them kingmakers. I doubt they’d see an exodus if they flipped the script to make royalties 70/30 in their favor. I doubt many successful self-publishers would want to abandon Amazon’s sizable consumer base, even if they were making considerably less per-unit than they used to be making.

      Dennis Lehane has his own imprint too, as does 50 Cent, you really think 50 Cent is approving all those books? Dennis Lehane might be. I don’t see anything wrong with celebrity cross-endorsement. It doesn’t speak to the quality of the books. Good is a subjective value, it’s true, but it’s not a meaningless one. I’d rather a person decide a book was good based upon their judgement (however flawed) about what a good book should look like, rather than have it chosen by algorithm.

      There’s nothing wrong with small publishers. So long as they can hustle, and they have staying power. Agents don’t prefer to work with upstart publishers, because when they go bankrupt it’s hard to get rights returned, and they go bankrupt startlingly often.

      As for big publishers, I would agree. Their business model needs to change. They’re hopelessly behind when it comes to marketing, but they’re making strides (look at what HarperCollins is doing under Angela Tribelli). I think the comparisons between the upset in the music business and the upset in the publishing business are a bit overstated. The music business actively resisted change, and were rightly crushed by it. The publishers, on the other hand, were releasing e-books before the Kindle was a gleam in Bezos’ eye. The only reason why the Kindle even got off the ground was because the publishers got behind it, and made the content available. Spats over pricing and backlist royalties notwithstanding, the publishers have been cautiously pursuing digital distribution in a way the music industry did not (until it was too late).

      Where the publishers could do more is in the pursuit, as you mention, of the long tail. They’ve been trying to focus exclusively on making best-sellers, when they ought to be focusing on cultivating a big and diverse list. I also agree that the current standard e-book royalty is untenable. I believe in escalators up to 50% as standard, and beyond 50% for some authors who have impressive e-book sales. Publishers also need to divide their marketing attention between working with retailers and communicating directly with readers. In a data driven marketing world, publishers can’t rely on the retailer as proxy, they need data their end-users. The current publishing paradigm leaves a lot of mid-list authors out in the cold, which is dumb. Either they’re getting screwed because they’re with a publisher and pricing and royalties are prohibitive. Or they’re getting screwed because they’re self-publishing, and are effectively cut-off from the physical retail market. I think there’s a way for mid-list authors to have their cake and eat it too.

      • I agree with pretty much everything you say. Your comments are on target. I brought up the Derek Jeter thing just to point out the high ground some in publishing believe they stand on, isn’t really higher. I’d let him publish my stuff too for the publicity.

        I do disagree that publishing was looking forward and changing. I’ve been at it for 25 years and techno-phobic doesn’t begin to describe things. I remember watching agents, editors and publishers laughing on panels about eBooks in 2010, saying they were less than 3% of the market. Why worry?

        You hit the nail on the head with the long tail and the midlist. The latter are going to be particularly slammed if B&N goes under. Looking in any supermarket or airport bookstore now, all I say are known names. Some of whom are dead. Publishers seem less willing to push mid-list authors. Backlist is gold, but only if someone is willing to do the hard work with it.

        Thanks for the input. Knowledge is power.

  4. As a newby author these are the questions that I have to admit leave me feeling overwhelmed. I had hoped to write a book, send it out to a publisher, have them help me with the editing process and then see it looking all pretty on a store shelf. Unfortunately I’m learning now that there is so much more to this business than that, I wish there was a cut and dried answer but all I keep finding is more and more to confuse me :(

    • That’s the point of the various blogs and getting all different perspectives. There is no ‘right’ or ‘wrong’ way. Each writer has to chart out their own course. The good thing is we have more options than ever before.

  5. Great post, Bob, as usual.
    Just what you’ve been saying for as long as I’ve known of you!
    All these reasons are why I’d like to partner up with Cool Gus.

  6. Thought provoking and informative as always. Thanks

  7. Your article Bob hits perfectly at the heart of the accelerating and irreversible changes in publishing due to digital. Certainly an increasing number of dissatisfied traditionally published authors are moving into hybrid to acquire creative control and regain rights to their languished backlists. I believe new writers, with a manuscript ready to go, do need to chart their own potential route through the digital publishing terrain from the beginning and explore. Digital opens new doorways and flexibilities but requires more than just writing. A good starting point is to know your own likes and aptitudes on the spectrum of left to right brain, providing some pinpointing to how you may want to spend your time on technical, writing and marketing and where you may need a “team” alongside, for specific aspects. If you are like me, proficient with maths and art then the whole process of “doing the book” is a totally creative process and you will want to do it all. Your budget to buy in the team needs to then figure, how much and when. Also useful, if you haven’t done so, is to pinpoint your psychological profile and undertake a quick self awareness test like Myers Briggs. Are you a finisher or a big picture enabler? Introvert or extrovert? This will help you maximise how you work best as a writer and editor of your own work and as a marketer. Writers fall across all the spectrums, know yourself then plot your route to success.

    • The failure rate of those who self-publish is probably higher than the chances of getting an agent and then getting a book deal. The first reason is too many people are publishing their first manuscripts. Talk to authors who’ve been traditionally published and they’ll tell you their first, often second and sometimes more, manuscripts are sitting in drawers. They had the perseverance to stick with it, to get through the rejections.

      On top of that, a traditional publisher can give a new author a platform. Not much of one, but still, it gives some legitimacy to the author and some forced distribution. So, as noted about, self-publishing is not a panacea. The people I’m addressing in this blog are those who’ve already been through the traditional publishing meat-grinder and are exploring their options.

      • As a business owner who occasionally prints books for local authors, I hear about low sales figures, and from discussions with the authors (I recommend that they read Bob’s blog posts.), I don’t think many people are aware of how much work is involved in marketing a product. Some of the local authors I work with think that if they sell a hundred or so books to family and friends, they are flying. Others would prefer their families not be their main audience, but have no networks of any kind through which to market their books, nor seem amenable to cultivating any networks. (I think they’re afraid people won’t like their book.) Others, the best I can tell, are just plain lazy — if they have written the book and paid me to print it, people are supposed to beat a path to their door to purchase it.

        From readers — I know several people who will read just about anything handed to them, and who read a minimum of two books a week — the main complaint I hear about self-published books is the number of errors and poor design. (It seems the people I know who read as much as I do are as fanatical as I am about wanting to read error-free books.)

        With the technology available to check spelling and grammar, you would expect fewer errors than in books published 50 years ago. Not so. The number of errors is rising, even in books from large publishing companies, not only in spelling but in verb tense and use of correct words (site instead of sight, etc.).

        When you add into the mix of self-publishing woes poorly formatted and designed books, it is no wonder that self-published authors fare so dismally in the marketplace. From an artistic standpoint, any product that is well-designed and attractive entices shoppers to pick up the item and inspect it, and most likely purchase it, no matter if it is a bottle of hand lotion or a book.

        Bob has workable, insightful advice in his blogs, and it would behoove all authors to read the blogs. I have found some points that apply to the printing business as well.

        Bob, keep up the good work.

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