Your Guide to How the Publishing Industry Works

Once a writer has finished writing a book, it is time to begin the process of publishing it. All new writers struggle with finding a publisher, and many people do not fully understand what the publisher does. We believe that understanding how the publishing industry works will help guide your new book to the bookstores and readers.

A Standard Publishing Agreement
While most people assume the publisher makes most of the money off the sale of a book, this is hardly the case--by far the largest chunk of the price of a book goes to the bookstore, with the author and publisher together earning less than half the retail price of a book. This way not always the case, but dates back to the great depression when publishing firms gave bankrupt bookstores a larger share of the profits of the books in order to prevent them from going out of business, and this remained the industry standard even as the economy recovered.

According to the industry standard, the author, printer, and publisher share 45% of a book's retail price, while the distributor and bookstore earn 55%. Usually, the publisher will offer the writer 10% to 30% royalties, part of which will go to the literary agent if the writer used one. Thus the publisher has between 35% and 15% of the retail to cover all editing, production, and marketing costs.

Because so little of the money generated by book sales goes to the author, we recommend self-publishing for authors looking to maximize their income. By working directly with the printer and binder and avoiding the royalty publisher and literary agent, you can keep a greater percent of the profits. We have outlined everything you need to self-publish on the publishing services page.

The Writer
For most writers working with royalty publishers, making a living as an author can be impossible until you have a best selling title. Novel writing is particularly difficult because there are so many competing authors, most of whom will never get their titles published. That is because most of the manuscripts new writers produce are what is known in the publishing world as mush--vast quantities of writing that shows little potential for good writing, and no potential for good sales. Sadly, the writers of all this mush probably didn't see it that way, and frequently writers tend to think their work is a lot better than it really is. That is why it is important to think realistically and critically about one's work before trying to publish--although writing a fifty-thousand word novel is an outstanding achievement on a personal level, it takes much training, experience, and acquired skill to make it worth reading. One should not get discouraged by this however, because while mush is not publishable, it is still great practice for a later, better novel.

One of the main goals of a publisher is to sort through all the mush to find a work with potential for sales. One of the most effective filters publishers have to do this is the literary agent. Nearly all the mush that gets submitted to the publisher comes directly from the author, whereas most (but certainly not all) of the works publishers accept come from literary agents.

The Literary Agent
Since many publishers will not accept works submitted directly by the author, known as unsolicited manuscripts, authors often go to literary agents. While agents will help greatly in trying to get a work published, the down side is that they are another middle-man, taking a sizable portion of authors' royalties. Using a literary agent may be the only option for new authors looking for a royalty publisher, but it will make it harder to earn a living as a writer.

The Publisher
The title "publisher" is somewhat poorly defined. Many people believe the publisher actually prints and binds the books they sell, but actually very few publishers have facilities to do this. Instead even the largest publishing firms contract to printers and binderies outside of the firm to produce the books.

The main role of a royalty publisher is to bear the financial burden of producing a book. They finance the editing, layout, design, printing, binding, and marketing of a book, accepting the financial risk in the hopes that sales will be enough to cover the costs. On top of this the publisher must offer the author royalties, usually between 10% and 30%. This means that over 70% of the time, the book fails to sell enough to cover the expenses, or even pay back the author's advance, and the publishers loose money. Thus the publisher makes a living off a relatively small fraction of the books it publishes.

People also often confuse the publisher's role with that of distributors, which are a powerful but less known force in the publishing industry. Bookstores usually do not by their books directly from a publisher, but instead order their inventories through the major distributors like Ingram. There are many different distributors that each work a little differently. Big distributors, however, have enough market clout to demand a "standard" publishing agreement, meaning that they purchase the books from the publisher at 55% less than the retail price, and that the publishers have to offer full refunds for any books that don't sell, which frequently come back damaged and un-sellable.

Combined, the bookstore and distributor make 55% of each book's retail price, according to industry standards dating back to the great depression. This is substantially higher than the 33% markup normal to just about any other consumer industry--not good news for writers trying to make money. Some bookstores will buy a few books directly from authors or publishers, but national chains such as Barnes and Noble require that the titles be listed with one or more of the national distributors. Getting placement on shelves in the big bookstores is a difficult process for new writers and publishers.


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