Series Note: I am now working on updating each chapter and putting together this book, finally, after over 100,000 words that started back in 2009. So I am updating each chapter and putting it up here now for those who have not seen them.  One new updated chapter every few days will still take me all summer to finish. Feel free to make comments and talk about each topic.

And again, anyone who has donated over the years will get a free electronic version of the book when it is all done. Thanks again for the support!

(Note: This post introduces the Magic Bakery idea and it caused a lot of stir when it was first posted. I have updated it for electronic publishing.)

This myth “You can’t make a living writing fiction” is so clearly hogwash, I shouldn’t have to include it as a chapter in this book. All anyone has to do is look at a certain fantasy writer in England being richer than the Queen. And the number of fiction writers on the Forbes List every year. And that’s not counting all the writers publishing their sales numbers each month just from Kindle alone.

But, alas, new writers hear this myth all the time, constantly, from every direction, and sometimes from longer-term professional writers.

So, it’s worth a long post I guess. It shouldn’t be a myth at all, but it is.

Myth Origin

We have all seen the silly studies that an “average” fiction writer makes something like $2,345 per year. And, of course, people look at that and think “Oh, my, no one can make any money writing fiction.” Of course, those who say that don’t know how studies are taken, or what a number like that really means.

Most of the big studies ask every person who has a dream of someday writing a novel. The writers asked maybe have finished a few short stories, maybe even mailed a couple. They go to a writer’s group regularly, and call themselves writers, because they are in the early days of learning their craft. They make no money. There are hundreds of thousands of this type of writer, all in the early days of learning.

Then, of course there are the writers who will never sell, a person with the best intentions, but no real drive to actually sell anything. Or if they do sell, it’s to a small press that pays in copies or worse yet these days, they give their story away free to an online press and don’t even get a copy.

Or they write poetry and are doing fantastic when they make a few hundred per year.

The studies ask all those writers how much they make, and the answer is almost always zero or not far above zero. Millions of “nothing” answers.

Then these studies include writers in organizations like SFWA, who lets a writer with three sales in the door. And Romance Writers, which has a huge chunk of membership that has never made a sale. All those thousands and thousands of unpublished or slightly published writers are included.

It’s stunning to me that the average is so high, actually. But the truth is to get the final answer up to a few thousand, a lot of people have to be making a lot of money with their fiction writing to pull up all the beginning writers.

Writing, to my knowledge, is the only profession that takes studies this way.

It would be exactly like trying to figure out what an average lawyer makes by also including every undergraduate who is thinking of going to law school and every law student in the study about what they made working the law. Lawyers, in that type of study, would make less than two thousand average I’m betting.

Where else does this myth come from?

Duh? The answer is simple. It comes from all the people who are, for one reason or another, simply too afraid to try mailing out their fiction regularly to places who buy it. Or too afraid to put the stories up electronically. Or only have one novel up and are wondering why they are not selling like Konrath. Or writers trapped in the agent myth, rewriting book after book for an employee.

For all those writers, it would be impossible to make a living at writing fiction. And thus, when you talk to them about making money, they are telling you the truth.

From their viewpoint.

How about a writer who has sold three novels and for the first time understands how the money flows? Or has gotten five to ten stories up electronically. Those early writers are saying the same thing, of course. Selling one genre book a year is not enough to make a living writing. Putting up just a few books electronically is not enough to make a living. Unless, you are fantastically lucky.

But most of us aren’t that lucky, so a writer with one book a year, who has bought in to the writing slow myth can’t make a living, and they are telling other writers the truth as well.

From their viewpoint.

So what about when you hear this myth spouted by a big name bestseller? I heard a New York Times bestseller in a keynote speech once tell 500 people there were only two hundred people in the nation making a living at fiction. Kris and I almost fell out of our chairs laughing, but we were just about the only people in the room laughing. Everyone else thought he was right. As it happens, I’m sitting next to him on a panel the very next hour, so as we were talking, I turned to him and said, “You know that 200 number is totally wrong.”

He look sort of stunned and said, “That’s what I had always heard.” (The myth hits again and is repeated by big-name writer who is making millions.)

I said, “If that’s the case, then don’t you find it pretty amazing that there are seven of the two hundred on this one panel?”

He looked down the panel at the seven of us, all full-time fiction writers sitting on the panel. Then I asked the 100 people in the room how many were writers making at least $80,000 per year with their fiction writing. Five more people, two of whom I recognized, raised their hands. Twelve of us in the same room at a writer’s convention. That stunned the keynote speaker, let me tell you, and we ended up spending the entire panel talking about this myth. And where that 200 number came from in the myth.

Turns out, there are about 200 NEW NAMES on the major bestseller lists every year. (There are 780 yearly slots on the New York Times list alone, not counting the same number on Publishers Weekly lists, same number on the Wall Street Journal lists, and the 2,600 spots on the USA Today Bestseller list in a year.) So there are about 200 NEW NAMES in fiction hit the bestseller lists every year that have never been there before. That’s just the top spots. I’m not talking extended lists.

And of course, in this new world, I’m not talking about the growing number of novelists making a living indie publishing. That number is growing by the day. But you get an idea where the silly idea of only 200 came from.

So, how many writers in the United States do make a living writing only fiction? Well, that depends on how you define “living.” That’s another shocker for me. For the longest time I figured over six figures gross per year was a living. At that level there are thousands and thousands of fiction writers making that much and a lot more.

But lately, I’ve been forced by discussions with students to look at reality a little bit more when it comes to “making a living.”

A $2,000 mortgage, $1,000 for various insurance, $1,000 for various utilities, and $2,000 more for food and other details, like clothing, trips and such. $6,000 per month after taxes needed to survive. $72,000 per year, but if you are married and your spouse works, cut that number in half. Your half, to say you are making a living writing fiction only needs to be $38,000 per year. Slightly over $3,000 per month.

And many, many people I know make nice livings on less than that. A bunch less. So my number was way high when it came to “making a living” so I have no idea how many thousands and thousands and thousands of writers make a living.

It’s a lot more than I even thought it was, to be honest.

How do fiction writers make money?

Numbers First: The common knowledge out there is that we make an advance against sales for our books. Now, if that’s where the income stopped, many of us would have a hard time making a living, to be honest. For those who have never had an advance from traditional publishing, let me break this down quickly.

Say you get a $20,000 genre book advance, two book deal. Total $40,000. Not bad money at all in this modern tight world. Advances can be much, much lower than that these days in genre, down to less than $5,000 per book without an issue. But for the math, let’s play with a decent book deal.

Each book is divided out into signing payment, acceptance payment, and publication payment. So $17,000 (after agent fee if you are still going that way) divided by three equals three payments per book of $5,666.

Say you sold this book back on January 1st, 2010. You got the contract in March, (if lucky after negotiations) sign it, get it back, and got the first payments on signing in June, 2010. First payment would be signing on book #1 and #2, for a total of $11,333. Not a bad check. I always like checks with more than one number to the left of the comma.

Your book was done when it was bought, but you and your editor in May had a conference for the rewrite, you get a letter, and you got the book back to your editor in June. They accepted the book in September, (if lucky) and in November, you got your second check of $5,666. Your total income for the year of 2010 was about $20,000. Not bad, but unless you have some very tiny expenses and a great spouse, you’re not making a living yet.

Publication comes in the fall of 2011 and you’ll be lucky to get the check a couple months later. How about book #2? You were writing it during the spring of 2010, turned it in during the summer, and the editor got back rewrites in the fall, and you got an acceptance check in early 2011. Publication for the fall of 2012. So your income from the two books in 2011 is $11,333, and only $5,666 in 2012.

Royalties (again, if you are lucky) wouldn’t even think of coming in until 2013 at the earliest, if the book is doing fantastic and earning out quickly, and you weren’t basket accounted and other details in the contract.

Do the math on this if your advance is $5,000 instead of $20,000. See why the myth gets spread so quickly and easily, even by early traditionally published novelists?

For that one contract to ever make you enough to live on for a few years, you are going to have to get very, very lucky and have the book take off big.

So, I seemed to have just made the case for the myth. Right? So how do so many writers make a living? Best way to describe this is a metaphor.

The Magic Bakery Metaphor

Think of us (every writer) as a huge bakery and all we make is pies. Magic pies, that seem to just reform after we sell off pieces of the pie to customers. And each pie can be divided into thousands of pieces if we want.

The Magic Pie secret ingredient is called “Copyright.”

Every story we write, every novel we write, is a magic pie full of copyright.

We can sell parts of it to one publisher, other parts to another publisher, some parts to overseas markets, other parts to audio, or eBooks, or game companies, or Hollywood, or web publishers, and on and on and on. One professional writer I knew sold over 100 different gaming rights to different places on one novel. He had a very sharp knife cutting that magic pie.

With indie publishing, most writers are only focused on one tiny aspect of their pies, the electronic rights. But interestingly enough, when a story or novel gets published electronically, it gets spread out to many, many stores, and sometimes other publishers see it and want to buy it for their project, or a movie producer sees it and options it, or a game designer sees it and makes an offer. So in this new world, getting stories up electronically can help out other sales given time.

So each professional writer has this Magic Bakery, making magic pies that can be cut into as many pieces as we want and many of the pieces can return as if never taken, even after being sold off. (You must learn copyright to really understand this.)

Each piece of the pie is a cash stream.

And extending this metaphor just a little bit farther, you don’t even have to have the same flavor of pie. Kris has Kristine Kathryn Rusch, Kris Nelscott, Kristine Grayson, Kris Rusch, Kristine Dexter, and others, not counting combining with me every-so-often for Kathryn Wesley or Sandy Schofield.

Each story, each novel is a pie. If you spread them out over a number of names (flavors) you have a pretty consistent cash flow stream because you have so many cash flow streams working. (Think a bunch of small streams flowing together to form a river and you get the idea.)

Indie writers who are successful at this new world are saying this all the time. Joe Konrath constantly talks about getting up more work, Locke didn’t even start publishing until he finished five novels, I push writing more and more here all the time.

Indie writers are finally starting to see the advantage to having more and more product, more and more magic pies. Traditional publishers always did. They would have five or six new books per month per list, and they built those big buildings on lots and lots of small slices from many pies.

So for you traditionally published writers, advances on novels is only one cash flow stream for a few pieces of a pie.

Repeat: Each piece of the pie is a cash stream.

Let me try to explain this using just one piece of the pie.

Say you sold the tiny piece of the pie called French Translation Rights, and your contract with the French publisher limited your book to trade paper only. (You could have also sold the piece of the pie that had French hardback rights, or French audio rights, or French mass market rights, or French film rights. You still have those in the pie and can sell them at any point as well. Get the idea?)

Your French publisher will have advances like your American publisher, and there will be royalties and so on. In other words, your French piece of the pie will flow money into your accounts just as your English novel sale does. And in this new world you don’t need agents to sell these slices anymore. In fact, you’ll sell them more often with just e-mail and direct contract. I’ll explain more in the agent myth chapters, so read on.

And your German sale would be the same. Your Russian. Your Italian. And so on and so on. Thousands and thousands of pieces of the magic pie can be sold.

One more time: Each piece of the pie is a cash stream.

Say you sold English Language audio rights to a story you had indie published. Does selling this one piece of the pie stop you from selling any other piece of the pie?

No.

And when the audio contract goes out of force, the audio rights piece of the pie suddenly appears back in your pie and you can resell it again.

Magic!

You create the inventory, the pie, just once, but can sell it for your entire life, having pieces you sold keep coming back to the pie over and over, and your estate can keep selling that pie for seventy years past your death. Nifty, huh?

But here is the problem most writers face:

Magic Bakery owner who opens a shop and has only one new pie per year, only one flavor, has little chance of making enough money to make a living and keep his business open.

Just imagine as a customer walking into your mostly-empty store. You have a huge empty bakery that you have promoted everywhere, but you have only one pie on the shelf.

Customer turns and leaves.

But imagine my store… I have shelves and shelves and shelves full of pies, twenty flavors, willing to do new flavors at any moment to customer demand, willing to sell off small slices of any pie at any time. I have a lot more chance of having a lot of customers and making a living than a store with only one or two pies.

When you step back and look at any retail store, what I am talking about is sort of basic business. I have inventory. I have a crowded store and am making more inventory all the time.

Each piece of the pie is a cash stream.  If I have four hundred pies in my shop, each with a thousand possible pieces, I have a huge inventory to make money from.

Go back and look at my myth chapters about writing fast and about rewriting. See how it’s all starting to fall together?

A Real Life Example:

One afternoon while at a writer’s retreat I wrote a short story called “In the Shade of the Slowboat Man.” The story took me about five hours.

— Five hours to create that pie. It was rejected at the market I wrote it for, so I sold it to F&SF Magazine. Decent money.

— Then I sold another slice to the Nebula Awards Anthology, another small slice (nonexclusive anthology right) sold and then returned to the pie.

— Then I sold it to another reprint anthology (same right again), another small slice sold and returned to the pie magically for another person to buy.

— Then I sold the rights to an audio play made from the story, making more off of that slice than the other three before, and then I was hired with Kris to write the script from my story, so more money yet again.

— Now I have that story on Kindle, B&N, Sony, iBooks, Smashwords and other sites selling and making nice money each sale. And I have put it in a collection so it is making more that way each month as well.

I have made well over $10,000 income from one short story, and I still have the pie on my shelf in my Magic Bakery, still there for sale, even though it is selling electronically.

Say I decide to make a novel pie out of the story. Short story pie will remain and continue to make money, novel pie will be created and both will have thousands of slices to be sold.

I had Hollywood once give me $1,000 every six months for three years simply to give them the chance to buy a slice of one pie (story) on my shelf. That’s right, I never SOLD anything from the pie. I simply said “Give me a thousand bucks every six months and I won’t let anyone else buy that one small slice of that one pie.”

They never touched the pie and I made six thousand bucks off of that option.

I love this business.

It Doesn’t Take a Lot of Sales to Make a Living.

Now understand, Over thirty years I have published over 100 novels traditionally and hundreds of short stories. I have over 9 million copies of my books sold. Yet many of you reading this have never read a single word of any book or story I have written. But somehow I have been making a living with my fiction for over 25 years now.

Why? Because I have a very full Magic Bakery, with a large number of pies to sell pieces from.  You haven’t read any of my fiction. Yet here I am, making a living with my Magic Bakery.

Can you do the math on my short story challenge? Not counting the money I am making selling short stories or novels to traditional publishers, just do the math on my challenge stories.

Let’s pretend I actually hit 100 stories this year.  And each stories sells 5 times around the world each month. Only five times average. Some stories will sell like crazy, other stories will rarely sell. But with 100 stories I can get a good average.

(As of this writing in July, my stories from the challenge are averaging around 10 sales per month and the collections are better, from what information I have so far. But I’m going to just say 5 sales average.)

The math:

Each story makes 40 cents x 5 sales = $2.00 per month.  When I have all 100 done that will be $200.00 per month.

Each story will be in a five-story collection, and each collection will sell for $2.99, so I will make $2.00 per collection sale x 5 sales per month = $10.00 x 20 collections = $200 per month.

Each story will be in a ten-story collection that sells for $4.99, so I will make $3.50 per collection sale x 5 sales per month = $17.50 x 10 collections = $175 per month .

Total Conservative Sales for 100 short stories is $575 per month. Or $6,900 per year.

And that should just go on into the future the way electronic sales are going.  And I did not count the POD sales on the collections. That’s another slice of each pie. Or overseas sales of each story. That’s another slice.

I sell one slice here, another slice there, a bunch of slices over here, and I keep selling them and the new stuff as well, over and over and over. I understand copyright completely, and I use that knowledge.

Can you make a living after writing only one or two novels and a few short stories?

The answer is no, of course, without getting fantastically lucky. You have a bakery with no inventory. You have nothing on your shelves. Nothing to really sell to customers, and even if they do buy a slice and decide they like your bakery and your goods, there is not much else for them to buy.

But once you fill that Magic Bakery, once you have customers who know where to buy, know that your product is a good, quality product, then the money will come.

Each piece of the pie is a cash stream.

And a writer with a good inventory and the ability to sell the inventory to customers can make a large amount of money with fiction writing.

If I can do it, if I am one of the thousands and thousands of fiction writers making a living with our fiction writing, you can do it as well.

The Secret?

Just write, finish what you write, mail or publish what you write so someone can buy it. You know, Heinlein’s Rules will build you one very nice Magic Bakery in a very short amount of time, actually.

And, oh, yeah, it’s also a lot of fun.

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Copyright © 2011 Dean Wesley Smith
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Because of the new world and technology, my magic bakery got a lot more valuable lately. This is now part of my inventory in my bakery. I’m giving you this small slice as a sample. I’m giving you a taste, but not selling any of the pie.

If you feel this helped you in any way, toss a tip into the tip jar on the way out of the Magic Bakery.

And I would like to thank all the fine folks who have donated. Once this book is done, I will send you a copy. The donations and the comments both after the posts and privately really kept me going on this. Thanks!

If you can’t afford to donate, please feel free to pass this chapter along to others who might get some help from it.

Thanks, Dean