Here we go again. It’s been over two years since I wrote the first version of Think Like a Publisher. And a year since I updated it into a 2012 edition. Stunning how time goes by.
Since I wrote those first chapters for the first volume, Scott William Carter and I have taught three workshops by the same name, plus an advanced workshop helping indie writers make more money from their books. And in the fall of 2012 Allyson Longuiera and I taught a Print on Demand workshop to help writers get their books into print and learn how to sell them. We are doing the full POD workshop again in May and doing Covers and Interior workshops online now.
And during those workshops and from comments and from hundreds of sources I have learned a ton more information. The indie publishing world has gotten by the early years of the “gold rush” thinking and has now settled into a new normal that should last for years if not decades. 2013 is the first year of that new normal.
Plus the publishing company I helped start (WMG Publishing) now has a full-time employee and three part-time employees and has published about 300 different book titles. And Kris and I have started a new distribution program called Ella Distributing Inc. that will launch in early 2013. (I will announce it here.) That company already has a full time employee and one part timer and will be growing quickly over the spring of 2013.
And the overall publishing business is now stabilizing with traditional publishers holding their own and indie publishing doing great.
As traditional publishers grab for more rights and become even more difficult to work with, more and more writers are moving to indie publishing. As they make the jump, they ask basic questions on how to do it, how to be treated with respect as a publisher, and even how to do simple things like setting up a publishing business.
An indie publisher is still a publisher, the same as any traditional publisher.
Think Like a Publisher 2013 is an updated version of the book from about a year ago, including some of what has changed and what I have learned over the last year or more. I’m sure in another two years I’ll do a fourth edition.
Every few days I will post a chapter for free here with a link under the tab above. The 2012 edition is still available in book and electronic form. After I get done with these posts and reformatting the book, this edition will appear replacing the old one. But that will take a month or so.
Comments on each chapter are welcome and help us all learn, but keep the comments focused on the topic of the chapter, please.
I hope these chapters help you get a jump on learning how to be a publisher. And on finding an audience for your writing.
Chapter One:
The Early Decisions
Some of the earliest decisions a publisher has to make can be changed down the road easily. Some are difficult to change. So, I’m going to break down some of these early decisions into basic groups. And keep in mind, there are no correct answers on any of these decisions. Just what you want to do.
You are the publisher. And it’s your business. Always remember those two basic elements and you’ll be fine.
Early Business Decisions
1… Pick a Name.
Yup, as a publisher, your business needs a name. This could be one of the hardest decisions to change down the road, so caution.
My suggestion: Pick a name that is easy for everyone to remember, that is fairly short, and that sounds like a publishing house imprint.
CRITICAL!!! Make sure the name is not being used and go get the domain address. Do not wait. If there is any chance of using a name and it is open, grab the domain address. Just by simply checking on it being available might cause someone else to buy it. Grab it quickly.
If there is no available domain address with a .com in your business name, pick a new name for your business.
2… Pick a Business Structure.
You basically have two choices. One, keep the business as a sole proprietorship. That means you own it all and on your taxes in the United States you file a Schedule C business form with your yearly taxes. Unless you are planning on growing your business very large or making a lot of money, this is the easiest way to go.
The second way is go to an attorney and an accountant and have them set up your publishing company as a corporation of one type or another, depending on your long-term plans. If you need to ask why you would want a corporation instead of a sole proprietorship, you don’t need a corporation. All a corporation will do is cause you more costs and get you in trouble if you don’t know what you are doing.
(Note: WMG Publishing Incorporated just moved to a corporation structure. But we have employees and three hundred titles.)
3…Open up a dedicated checking account under your business name.
This is easy to do in both types of business. For a regular sole proprietorship in most states, you simply get a form from your bank called a “Doing Business As” form. (There are different names in different states, but most call it a DBA.)
File that with the state and give the response to your bank and you can open up the business checking account. Then, as you have money flowing in from all the sales in all the different sources, have the money go directly to your business checking account. And take all publishing expenses out of that account as well.
For heaven’s sake, keep all your receipts, just as you do with your writing.
If you started a corporation, you will know what to do. If not, ask your accountant and think twice about starting a corporation.
Early Business Structure Decisions
Okay, you’ve got a business name, a checking account, and have decided what type of formal business you are running. Now you need to decide what kind of structure your business is going to take inside the publishing house. To determine that, ask yourself these simple questions and write down the answers.
Question 1:
Over the next five years, who is going to do all the production work?
A) You do it all.
B) You do some and hire out contract work for other parts.
C) Other people do it all.
D) Combination of the above depending on the project.
If you are going to do it all, ask yourself:
—Do you have all the tools to do covers and the computers and the software to do them?
— Do you have the ability to design covers? Or can you take a class and learn it?
— Can you layout books for PDF files for POD publishing, both interior and cover? Or can you take a class and learn it?
And if not on any of those questions, what is it going to cost and how long will it take to learn how to do all these things? Most tasks are not difficult, but there is a learning curve that takes a little time.
(An aside: I did some pretty ugly covers starting off with an old computer and no good software in helping out WMG Publishing. Some are still up for another month or two. I started getting a lot better once WMG Publishing invested in a computer and new software for my office. Now, with even more training, the WMG covers are looking more professional. It takes time to learn. Take the time.)
If you are going to hire some jobs out, do you have the upfront money to do so? Or if you are going to hire everything done, do you have that kind of up-front money? (Welcome to being a publisher. Traditional publishers can spend a lot of money on your book before they ever earn a penny. You are now a publisher, not a writer. Expect up-front costs.)
Question 2:
How much inventory do you have or will you have in the next five years?
How many books are finished but unsold? How many short stories? How many novels or stores sold are now reverted to you?
How much new product can you produce in the next five years?
If you only write one book every few years and have no inventory, frankly you don’t need to do much of this.
If you have a number of novels, numbers of short stories in inventory, and can write two or three novels a year and some side stories, then mark that down. Publishers work on a “publishing schedule.” Start setting that up as well and be realistic with yourself.
Inventory is critical in any business. I will talk about inventory-in-business aspects of publishing in a later chapter.
Question 3:
Editing and Proofing.
Every publisher has editors and proofreaders. How do you plan on handling that?
— Do you have a good first reader?
— Do you know whom you can hire for copyediting?
— Can you trade with other indie publishers (writers) for proofing, with you working on reading their books while they read yours?
— Or just not do it? And if you want a copyeditor, can you afford the up front fees.
There are other basic questions, but for now that should be enough to get you thinking on the right track as a publisher.
If you are going to compete on an international levels, your books need to be fairly clean. There are no perfect books, so don’t even shoot for that. But try to get them as mistake-proof as possible.
Early Business Chores
As you are setting up your publishing business, there are numbers of just basic chores that need to be taken care of.
I am assuming you plan on being both an electronic and POD publisher. If not, why not? Why make a decision so early on to limit your possible markets? Electronic only consists of about 30% of all book sales. Plan to do it all, so that means you have chores to do. And trust me, these are chores.
Chore #1:
After you have your business checking account, so you don’t have to change these later, set up publishing accounts on Amazon, PubIt! (B&N), Kobo, Smashwords, and CreateSpace (For trade paper. Yeah, I know, you might switch to LightningSource for POD later, but early on save the mistake money and do CreateSpace. Or do as I have done and set up accounts on both. Just practice on CreateSpace where you don’t get charged for every mistake.)
Chore #2:
Set up a PayPal account. Hooked to your business account if possible. You will need this in more ways than you can imagine, including down the road putting shopping carts on your web site.
Chore #3:
Set up a placeholder web site, even if it is under construction as WMG Publishing website was most of 2012 and is now slowly getting built. You’ll get it fixed later. For WMG Publishing Inc., later has arrived.
There are other chores, like starting to explore how to get books in libraries and how to get ISBN numbers if you even want them, but for now, just stay with the first three. I’ll talk about ISBN numbers and library sales in future chapters in this series.
Early Decision:
What Kind of Publisher Do You Want To Be?
Okay, to keep this basic, there are three major types of publishers in publishing, and I don’t see this model changing at all. In fact, I see it becoming stronger. You can be solidly in one category or actually can function in all three if your readers are clear. But my suggestion is pick one to start.
1) Traditional-Style Fiction/Nonfiction Publisher
2) Discount Publisher
3) High-End Publisher
I will say right off that Pulphouse Publishing Inc. (1987-1994) was a high-end publisher for the most part. In the late 1980s and early 1990s I sold some books for over $50.00 each and most of our books were signed and numbered and retailed between $20.00 and $35.00 each. Very high-end, and although we were trying to change it in the last few years with short story paperbacks and magazines, we never really made the shift before the end.
I will talk about each of these types of publishers and the different business models they demand in future chapters. But for now, here is a very quick summary of the three choices you have to make early on as a publisher.
High End:
I believe that High-End publishers will make great money in this new world with all sorts of enhanced products. This new world is gold for high-end collectors books. But it will take a publisher who can publish top names, do enhanced production and books, and knows how to put out top-quality leather and signed work. This area is difficult at best for a beginning publisher.
Traditional-style Publishing:
Basically, this is the New York publishing model.
Books sell for all the traditional prices, go to the traditional outlets, and are bought by regular readers. All bestsellers for the most part are traditionally published. We have positioned WMG Publishing Inc. in this model. Traditionally Published novels will continue to be the vast majority of all books published and where the highest profit margins are per product sold.
Discount Publisher:
This area is very large in the publishing world in general and has many large companies working it. But to most writers and readers, it’s been kept a secret.
The outlets for discount publishers consist of discount shelves in normal bookstores, discount mall stores, and other types of discount stores. Many books beyond the bestsellers that you see at Costco are discount books.
In electronic publishing, the price being set by discount publishers is 99 cents. Going into 2013, readers now look to the 99 cent area with distrust. It was flooded with a ton of garbage and still is flooded. Caution going there with your electronic work now. Use that price range only down the road when you have a large inventory and want to promote a series.
In this area of publishing, the margins of profit are thin and the publishers depend on volume of sales to make even a decent profit margin. Very few traditional publishers have discount arms, but they do high discount at times to some stores like Wal-Mart. That is different than discount publishing as a business model. Most discount publishers only focus on being discount publishers and go for the volume of sales.
Again, more on all three of these major types of publishers in future chapters.
As a new indie publisher, you want to decide what area of publishing in general you want to fit into.
As I said, with Pulphouse Publishing Inc., I started as a high-end publisher and that was our plan from the start. It was only years later that we decided to try to move to the traditional model. And the move, once we were established as a certain type of publisher, was difficult at best.
Summary
That’s most of the basic early decisions you have to make once you decide to publish your own work. Get the business set up, do the chores, look at your start-up inventory, and then look hard and fast at what kind of publisher you want to be.
Being a publisher is fantastic fun. And it can be frustrating and sometimes downright scary. Don’t expect to get rich instantly on your first or even your fifth book.
The gold rush is over and now you must produce quality product that readers want to read that can sit on a shelf beside any other book being done by traditional or indie publishing.
(A quick note for the blog post: Stunning how little in this first chapter actually did change in the last two years since I wrote the first pass. I guess basic business is just basic business.)
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Copyright © 2013 Dean Wesley Smith
Cover Photo by Edward Fielding/Dreamstime.com
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This chapter is now part of my inventory in my Magic Bakery. I’ve talked about the Magic Bakery a few times in various posts, but just think of this column as a pie and I am allowing samples of the pie here. Understanding the Magic Bakery is critical to making good money as a publisher. So I will talk about it in these chapters coming up as well.
If you feel this helped you in any way, toss a tip into the tip jar on the way out of the Magic Bakery.
If you can’t afford to donate, please feel free to pass this chapter along to others who might get some help from it.
And I would like to thank all the fine folks who have donated over this last year. The donations and the comments both after the posts and privately are really keeping me going on this. Thanks!
Tip Jar: Go To Paypal
Your site is required reading for anyone who wants to self-publish the right way. Thank you for what you do.
Good to revisit these posts, to see what is changing and what stays the same. Thanks for continuing to update them as needed, Dean. This brave new world of publishing is moving so fast! But it’s great, and I love every bit of it.
Excellent advice. I will be referring the new writers I know to this series.
Great article, Dean! I would only add one caveat about PayPal: unless you want PayPal to have the ability to freeze your money on PP and/or the ability to seize money in your bank account, I would advise NOT giving them your banking data. Have them mail you checks instead to your business name, and never leave more than $300 in PP at any time. It’s a $1.50 deduction per check, but it’s worth it.
I’ve run an eBay business for 10 years now, and during that time there have been a number of lawsuits against PP because they act as a bank without following banking regulations. You can have no problems with them for years and suddenly they hijack your funds and accrue interest on them because PP claims the funds are “suspicious.” Exercise caution.
Beth, yes, often caution is better, but they are still the best game in town, even with the occasional hiccups that more often than not are for safety concerns. But I do agree with not keeping a lot of money in the account at any one time. Just better to move it and track the withdrawals.
Firstly, great post. I don’t think I’ve read all of the 2012 version….so this is great timing for me. (I see Part 2 is up already….will catch up on that when today’s work – including my 1000 words – is done.)
Secondly, paypal.
There ARE a gazillion horror stories about Paypal out there…I’m not going to add to them. My experience with Paypal is the opposite. In 4 years of trading using Paypal as my main processor I’ve had hardly any problems. (We’re talking approx $300K so you can get an idea of volume. Not mega bucks. Not peanuts.)
There are occasional hiccups – I got my account limited once when accessing my account from two separate IP addresses within 5 minutes of each other triggered their automatic security. And I had to go through some ome security checks. Those checks took one phone call and less than 5 minutes of stuff online (like changing passwords, confirming alternate email addresses, confirming phone numbers etc). And things were back to normal within 24 hours.
I can’t say for the US, but on our side of the pond we have Paypal support in Ireland…I’ve used them several times and they’ve always been quick and efficient. (NOT what you hear in the horror stories). I’ve looked at other digital processors. If you’re in the US there is an Amazon based one you could use, not available yet for us in the UK. But Paypal is just about the best of them both in terms of ease of use, and in terms of people’s familiarity with using them and already having a Paypal account.
Some caveats/thoughts though:
1. Never leaving a lot of money in there is sound advice. At the end of the day it’s YOUR money and you don’t earn any interest leaving it there. Even if you’re not going to spend it, you’ll earn more from it in your own account.
2. When you DO withdraw money though, leave some in your paypal account. Paypal likes this – had this from one of their business advisors. Sometimes people ask for refunds, or dispute a transaction or file a chargeback. Paypal likes to know this is covered by your account. I always leave a minimum of $100 in my main paypal account.
3. If someone disputes a transaction, unless you have really good cause it’s not worth fighting. Paypal will come down on the purchaser’s side 9 times out of 10. It’s not worth the creative time to worry over a few dollars from a buyer who is unlikely to buy from you ever again. So accept responsibility and give the refund.
4. Should you add a verified bank account to your Paypal account or not? Beth says no. Again, I don’t know what the US is like, but in the UK if you don’t you will have very severe limitations on how much you can take out of your Paypal account unless you link a verified account. (I think the limitation is $1000). So my advice is to add your business account. Your mileage may vary.
5. Read the TOS. The TOS when you join Paypal are actually stringent. There are things they like, and things they really don’t like. I think I read they stopped allowing ‘erotica’ to be bought with Paypal sometime last year. As Beth says the TOS DO allow them to suspend your account for up to 180 days with all money in it, and not pay you a cent of interest. If you agree to their TOS you’re agreeing to this.
6. Have a secondary payment system set up. So that if you ever do get banned or suspended, you can implement alternate payment measures immediately. (Actually if this side of your business starts to become a major income source I think you should have at least TWO payment gateways on every sales page as a safeguard anyway.)
7. Beth counsels to “exercise caution.” Whatever payment processing you choose this is sound advice. A friend of mine in the mid 2000′s had around $15k scheduled for payment from his payment processor when they went belly up. At the time they were a ‘reputable’ payment processor with no track record of anything untoward. (I forget the details of why they went belly up).
Hope that helps some folks….
For what it’s worth, the US Department of Justice really likes shutting down online payment processors. Which leads to Paypal doing everything they can to err on the side of not annoying the DOJ, which leads to them annoying their customers instead.
While this is bothersome, it’s also going to be true of any other provider doing business in the US – or if it isn’t, it’s worse. Getting money back from DOJ in remissions after they shut a processor down is no fun even if it happens. So unless you want to do business in Bitcoins (probably a bad idea unless you’re trying to be Neal Stephenson) you’re kind of stuck with it.
Thanks for updating these posts, Dean. Though I set up my publisher a little over a year ago, I’m still reading through them to glean new insights. For example, I don’t have a Paypal account associated with my publisher, and I should do that.
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Do you see much potential for lawsuits as a Publisher? If so then a Sole Proprietorship is risky. Go with an LLC. While a lawyer or an accountant will do it for you, you can go to your state website and get the form and file the basic LLC for $25 (in my state, others will be more/less) so the cost can be low.
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J. Gordon, an LLC might be easy to file. I agree. But use an attorney. And it will cause a ton more paperwork and offer some protection against lawsuits, but not much.
Unless you do something such as call someone names in your fiction, or take someone else’s work, lawsuits that actually get to a court are rare. Common sense will avoid most of them. (Yeah, I know, I’m talking about writers using common sense when they still give all their money and all their paperwork for that money to complete strangers. But I keep hoping…I told a judge friend of mine(not a writer) that writers did that as common practice and I could do nothing to talk any sense into anyone and all the judge could do was shake his head in sadness.)
Even though I bought the 2012 version of Think Like a Publisher, I’m glad to see you posting this series again.
One thing I think ought to be added to the setting up your own business part is getting an EIN (Employer Identification Number). You can do it for free, online, in about five minutes. This is because, if you pay any one of those contractors who are editing or formatting or designing covers for you more than $600 in one year, you’re required to send them a 1099-MISC for tax purposes. Since so much of indie publishing is done through online contacts, I don’t think it’s a good idea to expose your social security number to someone you barely know. While you’re at it, make sure to get name, address, and either SSN or EIN from those contractors prior to payment.
This caught me by surprise this year and I’ve been chasing an editor who shall remain nameless for several weeks trying to get her information so I can comply with IRS regulations.
Elise, I agree, but too complex for these starting posts. But one of the pains of hiring someone to do work for you, that I agree with. Again another reason to do most of it yourself early on. Thanks!
One caution on the EIN for individuals–Pubit! and iTunes do not allow you to switch an SSN to an EIN once you’ve established the account. (Amazon, Smashwords and Kobo appear not to care.) You have to create a new account to make the switch, which means re-uploading books and possibly losing reviews, sales rank and time. Nothing to take lightly unless you’re starting out.
Also, the legal entity the EIN belongs to is you, the person-not your publishing imprint name.
Elise – Thanks for the clarification on why to have an EIN! I’ve been working through the process and this was one of the items I kept having questions about.
Is there any reason why my publishing schedule shouldn’t be “release as soon as it’s done?”
No reason at all, Michael, unless you plan to send out review copies. Those have to be out four or five months ahead of the pub date. But early on, “release as soon as it’s done” is fine.
What I was talking about was those of you with backlist of some sort, meaning work sitting in drawers that never sold, or things that sold and you have the rights back. Doing an inventory when you start up a business like this is always a good idea. If you are just starting writing, of course you would have no inventory and no need of a pub schedule. Kris and I are on the other side of just starting up. We have thirty-five years of work EACH that needs to get out and most of it sold at some point or another. We have about 300 titles up now and we figure we’re about a quarter of the way through the backlist. The value of writing regularly for 35 years. And the problem of doing so when the world we knew flipped on its head four years ago. (grin)
What an excellent resource. Thank you for sharing it.
(Just a little typo that jumped out at me, since you’re revising this: “If you are going to compete on an international [levels]…” should be “level”.)
Cheers,
Elle
Dean, I may have missed it in all the outstanding posts you’ve made on the topic, but have you discussed seed money for the company anywhere? Including all the various fees for setting up the company, website, domain names, paperwork fees, etc. any ballpark idea on what a good start-up deposit would look like for that shiny new business bank account?
I know it’s entirely dependent upon what direction the writer intends to take their company, but is there a baseline? $500? $1,000? More?
Jim, I haven’t talked about it because of all the businesses I have started over the decades, starting up an indie press is the only one that took no seed money. None, zero, zip, if you already had a computer you were working on and could fumble through a cover on some program you already had.
Most writers do start up a web site for their publishing, as they should, but that’s $10 per year or less in some places for hosting. And down the road, as the money flows, many writers end up buying InDesign to help out, and we tend to spend $15.00 or so per cover art license. But that’s about it.
This business, unlike most, has no seed money.
Now, as far as starting a larger company like WMG Publishing Inc. and Ella Distribution Inc, which Kris and I are doing, that requires some pretty solid seed money. But what we are doing is not what 99.9% of all writers will do.
Just chose a name for my indie publishing business, registered the domain name, and threw up a quick placeholder page. Now I think there’s nothing else I need to do with the site until I get some stories up for sale. Has anyone else done this?
John, we’ve done that on a bunch of pen names we don’t have published yet. And early on, when we were just starting this up, we did exactly that with WMG Publishing.
Thanks, Dean. So how many titles should I have, or how many author names, before I do something else with my publishing company website?
Oh, heck, John, totally up to you. We’re at 300 titles and haven’t done much with WMG Publishing yet, at least not in a big way. But all that will change over this spring and summer as the distribution company comes up. But numbers, up to you. And what you want to do.
That’s the great thing (and the maddening thing) about self-publishing, right? It’s all up to me. Thanks, Dean.
Dean, I have one more question if you don’t mind. What do you think about several authors sharing one indie publishing label? I don’t mean anything quite so grand in scale as what you and Kris have done with WMG. Just if I had some friends who (like me) have very few titles, we could band together and get a somewhat more respectable list of titles. Or would this necessarily mean complicated legal and financial arrangements?
John,
Honestly, without a complex legal set-up, I don’t know how you would do it.
Understand, WMG Publishing is just me and Kris and we’re married and have a ton of pen names and a huge backlist. Fiction River is just a magazine added into the mix because we both wanted to get back to editing a little. We don’t publish other writers at WMG Publishing except through Fiction River.
Makes sense. Just brainstorming. (:
John, you might want to email the guys over at http://www.crazy8press.com/ and ask how they’re handling it. They’re all pro writers who worked together.
Dear Mr. Smith –
I just found your site and WOW, you are so generous to share so much information with writers. Thank you. I have one question that’s driving me nuts – perhaps you can help. I am self-publishing a novel with Createspace. I have my publisher name and the domain to go with it. Do I need to file a dba? I’m not actually trying to go into business, I just want any queries or requests to come directly to me, not to Createspace, so I’m using a publishing name I came up with. Thanks for any help you may provide, and for your excellent site.
It’s always better to do the DBA, since it’s free and that way you can have the money and such go to the business account. But it’s still just you and you include the income on your own taxes and such. Just makes it easier all the way around.
Good luck with the publishing and have fun.
Maybe we should stop calling it self-publishing and just call it publishing. The wave of the future is here.
I never call it “self-publishing” Andy. It’s Indie Publishing.