Economics of being a fiction writer

Sometimes life doesn’t seem to be fair. Usually we feel like that when we’re the ones who see others flourish that we think are less deserving than ourselves. Less often (such is human nature), it occurs when we see others struggle that we believe are more deserving than ourselves.

I am not talking about “liberal guilt”, but about something else. Being a lifelong bibliovore, I’ve always had a lot of respect for skilled professional writers, including those who write fiction for mass audiences. It is often sobering to find out that people whose books have transported my mind to other worlds and held me in thrall have some trouble making ends meet, while I am lucky to make a very good living at what I do. (I won’t reveal here what.)

Via the blog of fellow Lizard refugee Yma o Hyd, I found this essay on the economics of being a writer at The Shadow of the Olive Tree. He links to a piece by award-winning SciFi author Elizabeth Bear describing how she has to write, basically, three full-length novels and about a dozen short stories a year just to make a (very modest) living wage.

Somebody like Michael Crichton (RIP) got really rich off his pen, and I would imagine Lois McMaster Bujold, Orson Scott Card, and perhaps David Weber live really well, but your typical mid-list author apparently needs either a day job or a well-earning and understanding spouse. Imagine being paid $10K in advances on a full-length novel, earning $1.50 in royalties on a single hardcover and much less than that on a paperback.

I had a lengthy discussion with somebody in Israel (a comparatively small market) and there the situation is even worse. Out of a book that sells for NIS 65 (roughly $18) at a Steimatzky or Tzomet Sfarim bookstore, the author may take home a lousy NIS 1 or 2 — the rest goes to copy editor, printer, distributor, book store, and various “unproductive middlemen”. Even Israel’s literary legend Amos Oz would not be able to live off the proceeds of his booksales in Israel — although in the aggregate he makes a very good living from two other sources: foreign publication rights of his work and (hefty) lecturing fees in Israel. (The latter brings to mind certain musicians who basically don’t care how much or little they make off record sales because their main income is from live concerts — and they see the records basically as advertising for the  concerts.)

Jim Baen (RIP) — who had a reputation for being generous to his authors — explains in the Baen Books FAQ that, for a typical print run, setup costs are about $4500 plus another $0.50 per copy. This  means in practice that any print run under 10,000 copies is an economic loss.

Of course, the coming shift towards electronic books may change the economics fundamentally. Print-on-demand technology allowed many an independent author to publish their own books with minimal setup costs, but per-copy prices were still prohibitive. As an aside: in publishing fields where unit cost is a secondary consideration — such as STM (science, technology, and medicine) scholarly works — print-on-demand allows publishers to keep their back catalog alive and exploit the “long tail”. However, STM is a field where authors generally don’t expect to earn money — their “pay” is in reputation, which translates into climbing the academic career ladder, easier access to grant money, etc.

In contrast, a self-publishing author can sell an e-book online for a much more reasonable price and keep essentially all of it as profit — at which points (s)he needs a publisher (other than a big name that may generate sales) like a fish needs a bike. [UPDATE: E-reader owners are still a small segment of readers, but there is evidence that they buy many more books on average, although this may be due to self-selection.]

The major fly in the ointment is of course that e-Books are even easier to bootleg than digital music. While somebody wishing to rip or download a full-length DVD movie may easily decide he’d rather buy the darn thing than waste hours downloading and ripping the movie, an e-book file is 4-5 orders of magnitude smaller and easily downloaded, Emailed between friends,… Unless, of course, the file is encoded/protected via DRM (digital rights management), which is its own bag of hurt.

Other models do exist. Sponsorship is one of them: an independent classical recording label such as Hyperion would be unable to operate without it. Another approach would be variants on the “threshold pledge” or “fund and release” system, which I personally regard as a form of “distributed commissioning”. If, say, David Weber were to say tomorrow he’d only start writing another Honor Harrington novel if, say, 10,000 people each ponied up $25 (in return for which they’d get advance copies of the eventual novel, autographed release copies, or whatever), he’d be assured of a tidy amount of money before even putting fingers to the keyboard (or, in his case, turning on the mic of his speech-to-text software). The trouble with such approaches is, of course, that they only work for authors with name recognition: a beginning author would have to basically release a couple of books for free until (s)he could get enough people looking forward enough to their next book that they’d pay in advance.

Baen (pretty much the first publisher ever to make real money off e-books) has been trying various creative approaches. For example, unedited “advance reader copies” of an e-book are available 6-9 months before the scheduled release date, at three times the regular price — cashing in on the small number of people who absolutely have to read the next John Ringo novel ahead of the rest. Furthermore, monthly “WebScription bundles” sell you 5-6 books — usually a mix of new, hot titles, back catalog titles, and first-time or second-time authors. After a book has gone out of print in hardcopy, Baen may put it in the “Baen Free Library“: they may generate an interest in the author and lead people to buy his/her other books. Especially if the book is the promising first installment of a good series (Weber’s Honor Harrington, Bujold’s Vorkosigan Saga, John Ringo’s Legacy of the Aldenata series,…) — especially with some well-calculated “cliffhangers” — it may lead people to pony up for all the remaining installments.

Established authors may also be able to sell or auction off “special packages”, such as autographed hardcovers, using somebody’s name for a minor character in the book, and the like. Again, novice authors have no such means at their resort. The one thing they can do in the digital age — rather than write the book and offer it to publishers until somebody will buy it — is circulate it online, or publish it online in installments, and thus generate interest at minimal cost. What it generally does mean is that making actual money off their craft will need to be deferred to future works.

One thing is certain: the publishing market will be subject to a process of ‘creative destruction’ no less brutal than what is playing out in the music industry right now.

UPDATE: Linked by… the great Lois McMaster Bujold herself on her Email list — I am not worthy, but thanks so much — this really made my day.

She says Zombie’s analysis (see comment #1 below) is painfully accurate. Good discussion in the responses on her Email list.

UPDATE 2: Lois McMaster Bujold herself weighs in. Some quotes:

Just for a standard of comparison, subscribers to World of Warcraft are said to number 40 million.

I, too, would be interested in some more scientifically acquired data than “a number I got off the internet”, but the [5 million regular book buyers] figure sounds intuitively right to me. The very best-selling of the best selling books maybe get up to 2 million copies sold, and those are outliers. I believe a new TV series with only 2 million viewers would be considered a flop? […] The average successful genre paperback sells maybe 30,000 copies. (That figure was 60,000 when I started my career, 200,000 a writer-generation before.) Most books sell even less. You only need about 35k hardcovers sold, over a sufficiently short period of time, to crack the NYTimes bestseller list.[…]

Tom D[oherty], founder of Tor Books, came up […] through the sales side. He’s been saying for years that what built book sales in the US was the casual market — drugstore and grocery store racks, airport bookstores, other places […] where people made impulse purchases. These used to be filled by some several hundred independent distributors, all making different choices and supporting a broad midlist of writers. In the mid-1990s, this distribution system underwent an implosion/consolidation, turning into just half a dozen big distributors, where a few people make the choices for the whole country. It was a huge blow to the paperback industry, and did a lot to bifurcate it into the “a few best sellers — everyone else nowhere” that we now see. Apparently very analogous to what’s happened to the music industry, [BTW], and for the same economic reasons; people trying to market art by the same efficient means they use for cereal.[…]

It’s unclear yet what the Net is going to do to the world of fiction and fiction writing. […] My private suspicion is that the Literature of the 21st Century is going to be fan fiction, but we’ll have to see. I’m kind of glad I got my writing career in while it was still possible to have one, though.

Read the whole thing.

UPDATE 3: Further observations by Lois here and here.

8 thoughts on “Economics of being a fiction writer

  1. This is a huge topic. A lot of important “details” are being ignored.

    First of all, the very concept of “books” is a slowly dying cultural form. Very few people have the patience and time to read a book, whatever the cost and whatever the format. That means that the “market share” for books is very very small.


    Setting aside the tiny handful of super-duper blockbusters (like Da Vinci Code and Harry Potter) which are extremely rare and only come around once or twice per decade (and which only benefit one author), even a “standard” incredibly well-selling NYTimes #1 bestseller will sell, if you’re lucky, a million copies in the U.S.

    “Oh — a million copies!” you might say. “That is such a culturally significant work!”

    Well, actually,when you sit down and think about it — no.

    Rounding things off for convenience, there are about 300 million people in the U.S.; The best selling book our culture can produce will sell, tops, a million copies to that 300 million-strong potential market.

    What that means is that ONE-THIRD-OF-ONE-PERCENT of Americans will buy a bestselling book. The other 99.67% of the country will ignore it.

    (Now, that’s at the uppermost top crust of the bookselling pile. Almost all books sell vastly less than a million copies.)

    Here’s a key fact that publishers don’t like to discuss much: it’s not like each bestseller sells to a different one million people. It’s the same audience buying books, over and over again. So that if a book sells a million copies, 750,000 of those buyers are the exact same people who bought the previous million-seller.

    Some estimates say (and I agree with them — the number sounds about right) that there are only about 5 million potential book buyers in the United States, grand total. Which may seem like a lot at first, but it’s actually only about 2% of the national population. That is an incredibly small potential market. Think of it the other way: 98% of Americans NEVER BOOK ANY BOOKS EVER.

    In other words: books as a concept are a niche market.

    100% of Americans buy food.
    100% of Americans buy toilet paper.
    95% of Americans buy telephone service.
    80% of Americans buy cars and gasoline.
    2% of Americans buy books.

    …etc. You get the gist.

    All of this is a roundabout way of saying that the entire book industry is very very small in our culture. It’s hard for book-lovers to admit this, because they live, breathe and think about books all the time. But they are less important as a capitalist segment than, say, Frisbees or dog grooming.

    (As a point of comparison, I read recently that of the top twenty most profitable cultural/creative products last year, something like 17 of them were VIDEO GAMES, and the other three were films. Even the worst-selling video game sells more copies and makes more money than a bestselling book.)

    So, what’s my point?

    I used a “million-selling” book as an example to set the upper parameters of success, but of course those themselves are extremely rare. Most books — and by most, I mean well in excess of 95% — do not sell more than 5,000 copies. And many sell even less than that.


    Because there are simply too many of them competing in too small of a market. I sometimes get access to big stacks of the book-catalogs that the nation’s publishers issue twice a year. It’s incredible just how many books they continue to pump out — thousands and thousands and thousands every season. And these thousands of books per month are all competing for those same 5 million potential customers.

    There are just too many fingers in the pie. You can slice up 5 million customers only so many ways, and with thousands of books jostling for position every month it’s no wonder that the average book — and hence the average author — can’t sell very many.

    There is an over-saturation of supply, and a diminishing demand.

    Another built-in problem makes the situation even more intractable: Books take a long time to read. So that even the most avid book-buyer can only read a handful of books per month at most. So you have a very slow burn rate for customers using up the product. It’s not like you can sell a book a day to your best customer, like McDonald’s can with its products. A few a month, if you’re lucky as a publisher.

    And to make matters worse, more and more people are fantasizing that they can become authors and writers, and the market keeps getting further saturated with product, while the number of potential buyers continues to drop.

    Add this all up and I’d say that the book industry is on the verge of collapse. It is no longer a viable concept. Gone are the days when books were a significant source of entertainment or information for the people. Now there are just too many other demands on our time to devote days to reading a book, and too many other (often free) sources of entertainment and information. Who needs a book any more?

    As a good example: When I used to travel to Europe and Asia, I of course would bring a guidebook (or two or three) to help me as I backpacked around. Recently a younger friend of mine said he and his girlfriend were going to Europe for a holiday. I was over at their house when they were packing. I didn’t see a guidebook in their stuff. I asked which guidebook they were going to bring. They just laughed! Guidebooks? There’s no need to lug around guidebooks any more. He held up his iPhone: “THIS is my guidebook — and it’s constantly updated with fresh and accurate information,” he said. He of course was referring to the fact that he can access the Web on his cell phone, and there are all sorts of travel info sites with far more information than can be found in any one guidebook.

    Back at home, I look sadly at my set of encyclopedias: I used to refer to them all the time, as they were so informative and comprehensive. But it dawned on me recently that I hadn’t referred to my encyclopedias in years, as I (probably correctly) assume that the information in many of the entries is out of date. I can just type my query into Google, and…well, you know the rest.

    And because of this, I will never buy another encyclopedia. And my friend will never buy another guidebook. And multiply that over and over countess times in countless subgenres of books, and you’ll see that the industry is in big trouble.

    If there a market specifically for “genre fiction” (sci-fi, romance, thrillers, mysteries, etc.) which commuters buy for the specific purpose of reading on the commuter train on the way home after work? Yes– that market still exists, but it’s part of that 5 million customer grouping. So there will still be a market for SOME books to be sold, but it’s never going to be a major part of our culture ever again.

    That means that the struggling author has very little chance of being able to make a living as a book author. Very very few succeed at it — and the key is that very very few CAN succeed at it, because there are simply not enough customers in existence to support more than a few thousand successful authors nationwide.

    And as for e-Books — for now they’re still a joke. I know plenty of authors and have seen their royalty statements — e-Books at most account for 1% of their sales, and often less than that. Maybe in the future they’ll take off, but for now, they’re still a niche market within a niche market.

    Sorry to be the depressing bearer of bad news, but sometimes we need a reality check.

  2. I did a little legwork, and perhaps the picture is not quite that gloomy. According to the following sources (Bowker, as in “Bowker’s Books In Print”):

    About 45-50% of Americans over 13 bought at least one book in 2008. Sure, a large part of this may be self-help books of various kinds, Harlequin romances, something kids need for school, work-related stuff, spiritual reading,… and the market for first sales of “fine literature” may be a lot smaller: I can even buy the idea that the market segment of people buying new “fine literature” fiction on a regular or semi-regular basis would be closer to 2%. (Somebody who buys “belles lettres” in used book stores — the older and more “classic” or evergreen the book, the more likely this is to happen — obviously is not generating any revenue to publishers or authors. Same with somebody who reads piles of books from the public library or buys them from their library sales — you wouldn’t believe what I picked up for $1 apiece in a suburban Chicago public library!)

    I can also agree that for many types of nonfiction (particularly reference works and certain “how-to” types of works) the market for hardcopy books will dwindle to basically none as ubiquitous internet access becomes as common as running water and electricity.

    But a potential market of 2% of the population for all kinds of books combined — that’s the same percentage of people as have a high enough IQ to join Mensa, after all! (Not that I am implying equivalence between the categories) — is almost certainly too pessimistic. The true situation is quite bad enough.

  3. I found your post via Lois M Bujold (who says that Zombie’s analysis is bang on BTW). Anyway thanks for linking to me.

    I tend to mildly disagree with Zombie’s claim that there are only about 5 million purchasers of books in the US – working out as about 2% of the population.

    I think the claim is wrong – but not wildly wrong. As in it may be understating things but it isn’t out by an order of magnitude and I can certainly believe that only 5 million people in the US regularly buy books for pleasure (as opposed to being forced to buy them because they are textbooks or similar)

    I don’t think, by the way, that the US is especially bad in this regard. I’m fairly sure that the same applies in other countries. I should also note that many more people read than buy. My father* reads a lot but he doesn’t buy much – he reads magazines and newspapers and gets books out of libraries. Some of this is because many of the books he wants are obscure books to do with Byzantine Saints and other related bits of early church history, but quite a lot more is that he doesn’t reread things and therefore has no real interest is making sure the book is present in the house.

    I think he’s far from alone in this (well apart from the patristics bit).

    One of the reasons why I wrote the original essay that inspired you is that I’d like to see a way to keep authors paid even though the audience is small and apparently shrinking. The other reason is that I want to think of ways to grow that audience. I think ebooks have the potential to grow the market because they can appeal to people who have got out of the habit of reading paper (or never got into it). These people would never dream of paying $15 for a book but they might take a chance on a book at $5 – if it were easy to purchase and didn’t have DRM or other impediments to opening the ebook and reading it.

  4. FrancisT said:
    “I tend to mildly disagree with Zombie’s claim that there are only about 5 million purchasers of books in the US – working out as about 2% of the population.

    I think the claim is wrong – but not wildly wrong. As in it may be understating things but it isn’t out by an order of magnitude and I can certainly believe that only 5 million people in the US regularly buy books for pleasure (as opposed to being forced to buy them because they are textbooks or similar)”

    Well, maybe I was being a bit harsh, but my guesstimate was based on a recollection I had of some stats quoted to me by a New York publisher. Still, as you say, the average person may buy a “book” or two each year, but they are likely to be learn-how-to-read book for their babies, or car repair manuals, or Bibles, or schlock romances, or required textbooks for school, or a gift for someone else, etc. Most likely, the 2% number refers to the percentage of people who regularly buy “belles lettres,” that is to say the kind of book when think of when we look at the bestseller lists or look at major publishers’ catalogs; e.g. literary novels, and adult nonfiction on serious subjects. It is those kinds of books which receive 95% of the attention from major publishers and the media and yet which in reality attract a tiny audience, possibly somewhere around 2% of the population.

    As for e-Books: from my experience looking at royalty statements, for each 1,000 paper-and-ink copies of the average authors’ books that are sold, s/he might sell just ONE e-Book version. For now, at least, downloaded books are a TINY proportion of authors’ incomes.

    Five years from now, ask me the same question again — it’ll take at least that long for iPads and Kindles and the rest to achieve sufficient “market penetration” that e-Books could be an actually profitable outlet for the average author.

    And that’s being optimistic — I still don’t think it’s the format that’s the problem but rather the LENGTH of the work and the TIME required to consume it. Most people just don’t have the patience for book-reading anymore. Especially if you’re reading it on a device that could, with a swipe of a finger, give you access to the entire Internet, breaking news, etc. Too tempting! The only way I can settle down and read a book these days is to TURN OFF THE COMPUTER so as to not be tempted by it. But if I was trying to read the book on the computer itself, such as on an iPad — hard to keep the hand out of the cookie jar.

  5. Just throwing my two cents in here. I am a huge fan of e-books. Especially from Baen. Yes I am a science fiction nut. I also tend to re-read a lot of books as well. The biggest plus for me and e-books is cost. A typical new e-book from Baen costs me about $6 USD. An older one costs between $3-$5 USD. Even in a used book store some copies start at $5. I used to be a voracious reader. Going through about 2 to 5 novels in a month. One other bonus to e-books was weight. Photons and electrons don’t have the same heft to them as the dead tree editions. I carry on my Palm Zire about 100 books that I have read, going to read, or currently am reading.

    I started looking at other online publishers and was greatly disappointed in their costs. Some books in electronic format are more expensive then the dead tree version. I love the Baen model and I keep returning to it. Over online publishers are shooting themselves in the foot and may have to change the way they do business if they want to grow in this field.

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