Wednesday, February 1, 2012

The Business of Writing: Time and Money, the Big Gamble



So, you’ve finally gone and done it. Shut yourself in a room for three years with no income or life and with dedicated and somewhat maniacal focus you managed to reach the last page of the manuscript for the next great American novel, Marvelous Marvin’s Magnificent Magical Muffin Muncher. With the last remaining credit left on the credit card that you have way over-used for the past three years to survive, you print up twenty copies of your manuscript and mail them out to different publishers. (Never mind that you could have saved yourself about $40 in postage by emailing your manuscript.)
With visions of advance checks dancing in your head, you sit back and wait for the offers to come in.
And wait.
And wait.
And wait.
Aaaaaaaaaand wait.
…?
Wherethehellareallmyoffersfromcompetingpublishers?!?!?!?!?!?
After about two months of dodging bill collectors, credit agencies, and hiding from your landlord, you begin to suspect that something is not aright. Just as you begin to become worried, your concerns are dispelled when, just like magic, an envelope from one of the publishers appears in the mail! Never mind that it seems a little thin, it’s probably a check! Though, in the back of your mind, you’re certain they would have sent the manuscript back with editing suggestions and corrections. Never mind that! With almost controlled desperation, you tear the envelope open and with great excitement you read their acceptance of your manuscript:


Dear Sir or Madam,


While we appreciate your interest in doing business with our company, we feel it necessary to inform you that we don’t accept manuscripts directly from authors.

We only accept manuscripts from literary agents. We suggest that you… Blah, blah, blah, yadda, yadda…


Eh?
A form letter?
They didn’t even sign it, they just used a generic stamp for the signature. Gadzooks! They printed it in Comic Sans?!
Fast forward another month and you finally found a literary agent who was willing to market your manuscript, only to discover that it may be another six to eight months before he might find an interested publisher, and it might be a couple more months before a check appears if they are interested. Your agent figures you might get lucky if he finds a publisher willing to advance you as much as six or seven thousand dollars. If you get lucky.
So, being a writer, you begin to tally up the months—and pull off your shoes so you can get over ten—and you discover that it might be another year before you see any kind of money for your book. And that money probably won’t be more than $3,000.
You haven’t worked for three years. That meant no income for three years. You’ve wracked up over $25,000 in debt on your credit cards. You emptied your IRA just to keep the lights on. You are a couple months late on your rent. Now you have to wait another year before you have $3,000 in your pocket? Even then, royalties won’t come in until the advance has been covered by sales of your book.
Suddenly, Jean Shepherd’s Cold Light of Truth shines its painful brilliance upon you and you realize that you are totally screwed! And if your book doesn’t sell, you are going to have to use much stronger words than ‘screwed’ to describe the situation you are in.
Welcome to reality.
J.K. Rowling, author of the Harry Potter series is a perfect example of a first-time writer. The Harry Potter franchise today is worth over $15 billion! But when Rowling submitted her book, it was rejected by twelve publishers before one finally decided to take a look at it.
About two years after she finished writing her first book, it was accepted by Bloomsbury Publishing and she was paid £1,500, roughly about $2,300 today. By that time, she was on public assistance.
Rowling started writing Harry Potter in 1990. She finished writing it in 1995, and it wasn’t until 1997 that she had a check in her hands. Seven years for just $2,300.
Of course, Bloomsbury started printing her book! They printed 1,000 copies.
To figure this next bit, I’m going to make some assumptions. I know my numbers are a little off because of these assumptions, but they are in the ballpark.
A new author is lucky to see maybe 5% of the net sales of the book. That’s net profit, not the full price of the book. In fact, it is the net profit from the wholesale price of the book! Not the full sale price!
I bought my hardcover copy of Harry Potter and the Sorcerer’s Stone for $15. I’m going to assume that the book store paid a wholesale price of around $11 for the book. Assuming the printing cost was around $8, that means the net profit for each book was maybe $3. The net profit would have been $3,000, and 5% of that would be $150.
Of course, because she was given an advance, which is basically a loan against future sales of the book, she didn’t receive that $150. Royalties don’t come in until the sales of the book cover the advance.
Seven years of her life, and the first run of her book earns her $150.
Her agent advised her to get a day job.
(At this point, I need to be fair and point out that, obviously, Bloomsbury had more printing runs of the book, so she did make some income for her efforts. But as you can guess from the above, it wasn’t that much money.)
In order to write the next book, Rowling applied for and received a grant from the Scottish Arts Council in the amount of £8,000 ($12,500). If not for that grant, Harry Potter probably would have stopped with the first book and that would have been it.
Sales for Harry Potter in the United Kingdom were fairly mediocre.
In the spring of 1998 Scholastic bought the rights to publish Harry Potter and the Sorcerer’s Stone in the U.S. When they called Rowling, she nearly died when they told her they paid her just over $100,000 for it. When sales began in October 1998, something magical happened and Harry Potter and the Sorcerer’s Stone became a huge hit, and sales around the world began to surge.
Rowling started writing her book, it took her five years to finish, and she didn’t get a big check until three years after that. In the meantime, she ended up on welfare, struggling to make ends meet. It was nearly nine years since she began before she finally hit it big.
I love using Rowling as an example because she really is the perfect example of the struggling first time writer who comes out of nowhere and produces a big hit. Anyone who sits down to write a book, this is what they are hoping for. This is the fairy tale for writers, and Rowling is truly the real life example of it. She is what every aspiring writer hopes to be.
Writing a book is a gamble.
Writing a book takes time. A LOT of time! Like it or not, time has a value. It has both a material value and an immaterial value.
The material value is easy to calculate. Just take your annual salary and divide it by the number of hours you worked for the year. That is what an hour of your time is materially worth. How many hours are you willing to put into writing your story each day? Do you give yourself time off? When published, is your book going to pay you enough to cover the time you put into it? This is not a trivial question! When you decide you want to become a professional writer, that means you have to ask yourself whether or not you can actually support yourself.
If you become a writer, you have to consider a lot of things. The IRS wants you to consider a lot of things, such as what are you going to pay in taxes? There is no social security for self-employed people, so you have to take care of that, too. You may want to consider disability insurance. If a laborer suffers some horrific accident and can no longer work, that person can apply for Social Security. But if a self-employed writer suffers some horrible accident that leaves that person unable to write, that person is out of luck. As a writer, you have to buy your own health insurance. (Suddenly, affordable health insurance becomes a major issue for you!) Gasoline is another thing to consider. The average person pays about $2,000 per year per car to put gas in the gas tank.
As I said, writing is a gamble. You are putting your hours into generating a document from which you hope to make a living. There is no guarantee that it will be a hit or even if anyone will buy it. If it turns out to be a flop, then all the hours you put into it are lost.
The immaterial cost is your life.
Writing is a complete lifestyle change for someone who was previously an office worker. Or a steel worker. Or a ditch digger. Or a mechanic, doctor, hair stylist, etc. In fact, even for a journalist—someone who makes their living at writing—switching to writing a book is a huge shift in gears! Jay Cronley nailed it when he wrote Funny Farm, which became a movie starring Chevy Chase (one of my personal favorites). Chevy’s character was a sportswriter who wanted to write the next great American novel and discovers that wanting to and doing it are completely different things. Cue the deer…
Remember that old work schedule? You used to work eight hours a day? Go home on the weekends? Sleep late? Ah, yeah, those were the good ole days! When you become a writer, seriously a writer, you discover that things are quite different from what you or other people expected.
Many people think writers have the life. A writer can lounge around all day in their bathrobe, sipping a martini and checking the stock market on occasion. That a writer has all the free time in the world. I can’t tell you how many times people call me and ask me to take care of something for them because I “don’t work for a living.”
I put in about fifteen hours a day writing. Oh, sure, not all of that is tickling the keyboards for fifteen hours non-stop. There are times I’m doing research on one thing or another so I know that I have a description correct. I once spent a couple hours reading up on codpieces of all things! Codpieces?! Yup. Why? You’ll have to wait until book four of the Aggadeh Chronicles comes out. You’ll never look at holly bushes in quite the same way after that…
There are edits to be done. Corrections are annoying, rewriting scenes can be a chore. There are times I am absolutely amazed at the stupid mistakes I’ve made. The dumbest was when I changed the name of a character. The strangest was when I had kept writing long past when I should have given up and gone to bed. I fell asleep at the keyboard, woke up and continued writing. My editor emailed me asking, “What the hell happened on Page XX?” I sat there thinking, huh? What? Looked at it and discovered that was the point where I fell asleep and woke up again and continued writing. I had omitted a few pages of writing without realizing it! It did make for a very bizarre disconnect in the story.
When you have finally written that manuscript and you are ready to either submit it to publishers or you are going to self-publish, you as a writer have the responsibility to yourself to work out just how much you should expect in compensation for your efforts. This must be balanced on the other side of the equation.
If you are going with a publisher, you must accept the fact that as a business, the publisher needs to make a profit selling your product. Your wholesale price to the publisher is the royalty you expect to be paid for each copy sold of your book. It is vital to understand that an advance is a royalty payment given you by the publisher before the book actually sells.
In simple terms, if you agreed on a $1 royalty per book and the publisher is pretty sure they will be able to sell 10,000 copies, then a 30% advance on 10,000 copies would be $3,000; $1 each for the first 3,000 books expected to be sold. You won’t see any other royalty checks until book number 3001 sells. Then your regular royalty payments will start arriving.
What happens if your book is simply not popular, and you only sell 2,500 copies? Technically speaking, because the advance of $3,000 was a royalty payment, you owe $500 to the publisher. Most reputable publishing houses will probably write this off as a business loss, and you can probably expect that they will not be interested in future books you write. But, there are some less savory publishers who might push the point to have the $500 overpayment returned to them. Before you become incensed by that comment, think of it in another way. If you purchased a product for $3,000 and then discovered the next day it was on sale at the same store for $2,500, wouldn’t you go back to the store the next day and ask for a refund to match the sale price? Most stores will gladly do so rather than lose a sale and a customer.
If your book sells incredibly well, those royalty checks should start coming in with a delightful regularity. Plus, they might be willing to cut a much larger royalty and advance on a second book, because they know they will make that back very quickly.
This is why terms are usually so poor for a first time writer. Just as much as it is a gamble for that writer to devote so much time into writing their story, a publisher takes on a gamble by taking on that new writer’s story to sell. If they write a big advance on an unknown writer, they have to sit on their hands desperately hoping they were right and the public really likes the book and it sells like crazy. If they write too many advances to writers who just don’t sell copies, a publisher can go out of business.
You as a writer can cry, “I poured three years of my life into writing this story and this is all you can offer me? I have to pay off my credit cards and put food on the table!”
The publisher can reply, “We don’t know you and neither does the public. We think you have a good enough story to make a go at it, but if it doesn’t sell well, we’ll lose money. We have employees we have to pay so they can put food on the table.”
Consider all of the above. As a person, what is your time worth? Are you confident enough that your story is good enough that it will sell well? The more it sells, the better your royalties will be. If you are really confident, then perhaps you can negotiate a lower advance in lieu of a better royalty. At least the smaller advance will allow you to pay the bills for a couple of months until the real royalties start rolling in.
There is a flip side to this for the publisher. What if this new writer turns out to be the next Stephen King or Isaac Asimov? Two writers who were so prolific, there are times I wondered if while they were typing one story with their fingers, they were typing a second story with their toes. A writer who is popular and can produce like a machine is a gold mine for a publisher! If they don’t offer enough money for a new author to keep them interested—or even solvent for that matter—they could lose out on the possibility of greater future sales. (This is the big gamble for publishers. They have to speculate on each new author that approaches them. Remember that twelve publishers passed over Harry Potter…)
What is your time worth to you?
You must consider this when you decide that you are going to write a book. Sure! Do it as a hobby in the background while life goes on around you. If you are going to be serious about it and go at it full time sans employment, then you have to sit down and think very hard about what you are about to do to yourself financially.
Once the book goes out the door for publishing, it does not mean money will magically and intsantly appear in your wallet. It might be months before any kind of income begins to trickle in. You should be prepared for that situation. Even if it means picking up a “day job” as was suggested to Rowling by her agent.
If your book is a success and a big hit, you are then pretty much set! But if it isn’t a big hit, you have to have a Plan-B in place. Writing is a gamble and it is best to hedge your bets. Even if your story is a hit, it might actually be while before it catches on. Rowling’s stories took a couple of years before they began to catch on and become a hit. If you worked on your book right to the end of your finances, you might fall into trouble before income starts being generated by your book.
While all this sounds discouraging, it is a reality you must face as a writer. By facing this reality head on instead of trying to make believe it won’t happen, you can remove a potential source of stress that could actually cause you to stop writing. Setting up a safety net should be part of your business plan for becoming a writer.