Of Indie vs Traditional…

You always know when I am going to do math, it will not be pretty. But a number of things happened in the last week that I figured it was time. First off, dealing with that myth of it costing so much to do an indie book.

And second today a viral post from a traditional writer who got six figure deals and was whining that no one told her what would really happen (even though I am 100% sure she would have never listened.)

So with those two in mind, let’s play a math game. With other important factors involved.

Now you can be angry at me because I am going to make one assumption. I am going to assume the traditionally published writer is horrid at business and doesn’t know taxes, while the indie writer understands taxes and business. (That seems to be a very safe assumption from my observation and the viral post today.)

So hang on, here goes…

TRADITIONAL PUBLISHED WRITER.

The Deal… $120,000 for two books. (A good deal, not normal, but not unusual either. Notice the author will call it a six-figure deal.) This all happens a great deal in genre books for like $5,000 per book. But for this going with the six-figure deal.

The Loss… Author loses all copyrights and the books and all control of the books for the life of the copyright.

Payments… Four payments per book, spread over four years for the two books. Eight payments total sent through the agent.

Agent Fee off the top of each payment… 15%

State and Fed taxes since author does not understand business…. 40%

So author, for six figure book deal will get the following to live on, basically…

$60,000 per book divided by 4 payments per book equals $15,000 per payment.

Agent takes 15% leaving $12,750 per payment.

Taxes take 40% leaving $7,650 per payment. (As I said, the author does not understand how to save on taxes.)

Assume payments are signing, turn-in, acceptance, and publication, one book published per year.

So first year author gets 2 signing payments and a turn-in payment. $22,950 for the three payments in year one.

Second year author gets acceptance of book 1 and maybe turn-in of book two.  Maybe. So two payments of $15,300 total for the year.

Third year author gets publication of book one, acceptance of book two for another $15,300 total.

Fourth year author gets publication of book two. $7,650 total.

Years Five through Year Twenty, author gets nothing.

So author cash flow looks like this for this fantastic six-figure deal.

Year One… $22,950
Year Two… $15,300
Year Three… $15,300
Year Four… $7,650
Years Five through Twenty… $0.00

Total usable income over twenty years… $61,200

The only hope this author has of continuing on is if he/she can sell another deal and double up on some of those years of payments with two more books. The author will make no royalties because the books will never “earn out” and have little to no overseas sales, most of which were included in the advance. Audio also included in the advance.

In other words, there will be no extra money.

But selling two more books before the author gets dropped might happen and help a few of those years. But if normal, the author above will be done with publishing after year four and out.

What do I mean by “earn out” in traditional publishing. It means making enough sales to pay back the $60,000 advance at the author rate. Traditional writers get from 6% to 12% of book price per sale depending on the state. And anything sold at a discount the author will get less or nothing. All of this is in a standard traditional contract.

So being generous in a couple ways, lets say the traditional publisher prices the electronic book correctly (big if) at $6.99 electronic and the author at 10% would then get about 70 cents per sale. (They earn less on paper and hardback per sale.) To earn even $30,000 (half of the advance back) the book would have to sell about 43,000 books. That would hit every bestseller list at that number. To only earn half of the advance back.

Chances are these books would sell in the 20,000 copy level, at best, including paper. (Yes, publisher makes money at that sales level, author gets nothing more.)

And note: Chances of an author getting another one or two book deal at the same amount is slight. Traditional publishing is not set up that way. Most authors are two books and out. A few really lucky ones get four books. You have to hit the lottery to keep going longer than that in traditional except maybe at low genre numbers.

Traditional publishing these days is not after books that sell, but in most cases just the IP. All accounting stuff. If they end up with books that hit the lottery, so much the better, but they win even when an author loses.

And once the books are published, the author has lost them completely, remember. The publisher owns them and all IP for the life of the copyright and since the sales did not earn out, what few sales that trickle in over the years of coming neglect will just go to that black hole.

To live on this six-figure deal, the writer better be teaching college.

INDIE PUBLISHED WRITER…

Only fair way to compare this is two books for an indie writer. Even though an indie writer has no traditional publishing delays, let me try. But the assumption is that the indie writer will be writing at speed, maybe four books per year, has no agent, and is good with taxes and has learned how to shelter money.

The Deal… Author puts the two books out in the same series, spaced three months apart. Author puts them wide, meaning around the world, to as many places possible to sell the book. Author also does trade paper through Amazon Print and Ingram Spark and hardback edition through Ingram Spark.

Cost… Around $300 per book, so $600 total costs for the two books. Author retains all copyright to the book. And all control.

Payments… Monthly from many, many places, starting two months after the book is published.

Author gets from electronic book sales around 70% for the most part. Paper and hardback sales vary in the 10% to 20% range depending.

So now I have to make a couple of assumptions. Indie author is going to continue to write and put out books regularly for readers. (Traditional writers are stopped by their publishers.)

Also going to make some general sales assumptions.

First Year… Both books published, both sell well around the world, both sell about 500 copies each electronic over the entire year. In all channels. Or about 42 books each per month through all channels.

$6.99 cover price.  Author makes $4.89 per sale. Each book sells 500, so each book makes $2,445 so the two books make for the author the first year about $4,890.

NOTE: To indie authors, this will look like nothing is coming in. They call this “coffee money” since only about $400 comes in per month and that is divided into a half-dozen payments from different sources over the month, some payments only $50, some over a hundred bucks. This looks like failure to beginning indie writers and many quit writing even before they add it up at the end of the year. (Smart indie writers though see the good side of this trickle that adds up.)

Second Year... If the author keeps putting out more books in the series, the first two books would make about the same. $4,890.

Third Year... Repeat

Fourth Year… Repeat

BUT… NOT INCLUDING A TON OF OTHER SALES CHANNELS… The above was only for electronic. Both books would be in paper and audio. Sales would trickle there. Both books have translation possibilities. Both books have bundle income and BookBub and direct sales and so much more, not counting all the chances at licensing.

(Traditional publishers do none of that and the author would get none of it even if they did because it would go against the huge advance.)

Remember, the indie author has retained all copyright and all control. Traditional writer has (for an advance payment) given away all copyright and all control.

So say you redo your covers every few years in the series, keep the books active, the series active and selling.

Years Five through Twenty… Each book in just electronic goes along at the 500 copy rate per year AVERAGE, never really catching on, never falling much, staying around the average because the series is being tended and kept up.

So over those 16 years the author would make another $78,000 approximately ON JUST THOSE TWO BOOKS. Not counting paper, audio, hardback, and all the other licensing stuff. Or new markets that will come along.

So indie author will make around $98,000 on those two books over the same twenty years. Minimum.

Again, to be clear, that is minimum. And author retain all rights, all control, and all other money.

So traditional writer sells a great six-figure deal for two books and over twenty years makes about $61,000 to spend and still no hope of getting the books back or making another cent from them.

Indie writer has made on just the basic, coffee-money level of sales on the two books over the same twenty years at least $98,000 and is still earning.

ONE LAST POINT…

Indie writer would make that same amount on the next two books written the first year while the traditional writer was waiting for rewrite notes from their editor on their first book and approval on an outline for the second book.

And in the second year indie writer would write four more books while the traditional writer was writing the second contract book and waiting for checks and rewrites.

So in the first two years, the traditional writer wrote two books and made a finite $61,000 on the six figure deal.

Those two years the indie writer will write eight books and make upwards of $400,000 real, useable money on the eight novels with the potential of so much more.

Wonder why so many of us ran from traditional publishing to indie???