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How the publishing industry generally works (the other guys)
Many potential HWP authors and editors are new to the biz, and thus
don't know much about the industry. In order to appreciate how HWP does
things, and why we're different, you need to know something about the
other players.
Many of the practices of the publishing industry are a natural result of the tremendous momentum that any mature industry
acquires over a long period of time. But before we look at those practices, it’s a good idea to mention that the publishing industry has been undergoing tumultuous changes in the past fifteen years, more so than in any other fifteen year period since Gutenberg did his thing over 500 years ago.
As a result, the industry is getting a little manic in its behavior.
First, the concept of the superstore, such as Barnes and Noble and Borders, became popular in the mid-80’s, much to the chagrin of small, independent bookstore operators. A side effect was the consolidation of purchasing power in a smaller number of hands.
The next shock wave that hit was Amazon.com, where a virtual inventory of millions of books could be easily browsed and instantly ordered. Compared to the few thousand that were stocked (and often categorized and located incorrectly) in even the largest stores, the Amazon experience made book buying easier and more successful for many readers. Amazon consolidated its position by introducing such innovations as posting reader reviews, automatically suggesting similar titles, and continuing to enhance what is often regarded as the friendliest e-commerce interface on the Web.
The third shock wave, one that is just starting to make its effect felt, is that of the ebook. This has many different aspects, but the core idea is that once a book has been put into electronic format, it can be distributed in a variety of formats, and unlike a print book that has a fixed cost of production, never goes out of print.
As a result of these changes, the industry is being knocked about a lot. This uncertainty has caused daring risk-taking and brave new ventures in some areas, and panic and irrational moves in others.
However, the industry has been around in the same basic
form for hundreds of years. Thus, even given these changes, the publishing industry’s huge amount of traditional
momentum will keep it steering in the same direction for quite a while.
I want to emphasize that the often sad state of affairs of the traditional book publishing industry is the fault of the structure of the industry. It is not because book publishing is run by a group of sneaky, beady-eyed, greed-filled executives sitting in their offices, rubbing their hands over one another, cackling with evil glee as they produce another shoddy book to the detriment of the public.
By and large, publishers are in the business because they love books. But just as a lot of people are in the car business because they love cars, but still produce mediocre cars, mediocrity is generally the order of the day in publishing.
I also want to emphasize that this is the case for many, but not all publishers. There are a number of publishers, particularly smaller ones, that regularly produce very good books. Unfortunately, they have a small slice of the pie, just as Mercedes, BMW and Jaguar have a relatively small slice of the automobile market.
The book
For big publishers, there’s not a lot
of money to be made with a single book – unless that book
turns out to be a best seller. The way big publishers make
their money is through series, be it two dozen Danielle Steele
bodice rippers or a dozen Tom Clancy techno-thrillers – or
a brand like Hungry Mind’s “for Dummies” series. Thus, there
isn’t a lot of interest in producing a great book; rather,
they look for a formula that they can clone time after time.
This approach often leads to mediocrity, as a series requires
‘slots’ to be filled – the same type of title for Excel, Publisher,
WordPerfect, sendmail, Fortran VII, and so on.
This means that when an author has an idea for a new or different type
of book, a big publisher is most likely going to see risk, and it won’t
get published. The books that do get published – and you can see this
by walking into any mega store and seeing series after series crowding
the shelves – nearly all follow the same cookie-cutter mold.
The acquisition
Given that the publisher has to “fill slots” for a
series, the next step is to find authors for specific titles in that series.
Most publishers employ what are called “acquisition editors” – people
whose job it is to find authors. Sometimes, an acq editor is also charged
with developing new titles, and so you’ll often see these people at conferences,
trying to spot new trends as well as meet potential authors.
The acq editor, once they find an author for a title, will act as liaison
in order to get the book outline developed, a schedule hammered out, and
a contract signed. The acq editor may or may not act as a project manager
for the book; often that task is turned over to someone in the production
side of the business.
With very few exceptions, acq editors are not technical people – they
come from book publishing areas. Thus, they are not well qualified to
judge the technical quality of a book, nor the competence of a potential
author. As long as an author can talk a good story, convincing the acq
editor that they can write and meet a schedule, they are likely to get
the book deal. Once signed, the publisher and author have to live with
each other regardless of their future competences in, respectively, actually
writing and publishing the book.
That’s why you see so many average books, and more than a few pitiful
books. The way the industry is structured, there is simply no way for
a technically qualified individual to properly evaluate book proposals,
search for and evaluate authors, and ensure high quality contents. It’s
similar to the situation with math teachers – many of the good ones go
into industry, where they can earn a lot more as engineers, scientists,
and programmers. An acq editor who has the technical wherewithal to properly
evaluate book proposals and authors can make a lot more in another job.
This doesn’t mean that acq editors are bad people – indeed, quite the
contrary. As with most others in the publishing business, they’re there
because they love books, and they want to do the best job they can. It’s
simply the infrastructure of the industry that constrains them.
On the flip side, there are lot more book deals going around than there
are qualified authors. That’s why, in many cases, a book topic will get
shoddy treatment – the publisher has been forced to settle for someone
who may not be technically qualified or competent. Sure, there are some
extremely great books out there, but those are usually the luck of the
draw, rather than happening because of an organized, repeatable process
of the publisher.
The schedule
There’s a hidden dynamic in the book business that
causes unreasonable schedules to be created at nearly the same pace that
unreasonable schedules are created in software development. This dynamic
has to do with how the majority of books are sold – through retail establishments.
There’s a tremendous pressure for the bookstore to have books available
for a version of a product or tool as soon as the version is released.
(These books are called “day and date” books.) In other words, as soon
as SuperDuperWord 2.0 is available for purchase, there’d better be books
on SuperDuperWord 2.0 in the stores. The bookstores will place large orders
for books that are scheduled for availability on or before that date,
and books that show up later will be crowded out.
This may sound bad, as you can imagine the pressure involved in getting
that book on SuperDuperWord 2.0 to the store on time. In fact, though,
it gets worse. The first books on the new version will garner the majority
of shelf space, and, naturally, will sell more, because they’re what’s
visible to the customer. Books that come later, even if they’re significantly
better, will get less shelf space, if any at all. Then, when reorder time
comes, the books that have done the best will be reordered, while those
books with poor purchase rates will be ordered in fewer quantity, or perhaps
not at all. Naturally, the books that came out the earliest, and had the
most shelf space, will have the best sales, even if they weren't very
good.
Thus, the pressure to produce a book for concurrent release with the version
of the product is enormous, to the exclusion of everything else. And that
“everything else” includes quality. That’s not to say that an author can’t
produce a good quality day and date book – but if that happens, it’s strictly
due to the talent and fortitude of the author, and a bit of luck with
respect to the product. If the author is expert with the product, has
a chance to work with it in depth during the beta cycle, has a close relationship
with the members of the development team, and the product doesn’t change
too much during the latter parts of the beta, the author could very well
produce a great book on the product.
But it’s also possible that other commitments on the part of the author
make it impossible to spend enough time to really understand and use the
new version of the product. And it’s possible that the product can change
drastically in later versions of the beta cycle, which means frantic rewrites
of material thought to be covered and put to bed months earlier – or perhaps
just letting incorrect material go through to print. And, finally, it’s
possible that the author, in order to meet a hectic schedule, or because
they don’t have that good a knowledge of the product, has to settle for
writing up a superficial treatment of topics, doing a disservice to the
reader. This is, unfortunately, more the norm than an exception, and that’s
why you see so many books that are warmed over rehashes of the help file
and marketing materials from the vendor of the product.
There are exceptions – books on technology that doesn’t change much don’t
have the pressure of a schedule to meet a new version’s release date,
for example. But those are relatively a small number of the whole.
The authors and tech editors
Once a book deal has been made, it’s the
authors’ responsibility to write the book. Authors come in
two flavors – those for whom the book writing gig is part
or all of their 'real' job (perhaps they also do consulting
or training, but book income is a significant part of their
ordinary income), and those who have ‘real’ jobs, and who
are producing the book on the side. The pressure on both types
is high. The full-time author, not having another source of
income to rely on, has to crank out books one after another,
hoping that one of their publishers will put some marketing
muscle behind a book so it will sell, in order to generate
any type of reasonable income. They’re a slave to the schedule,
because if they fall behind, the publisher can pull them from
the project, or bring in additional personnel, and thus reduce
their earnings.
The moonlighter, on the other hand, already has a full-time job, and quickly
finds that the publisher, while perhaps sympathetic to personal plights,
still needs the book done according to the schedule – the author has essentially
signed up for a second full-time job. In some cases, the quality suffers,
as the author pushes material out the door to the meet the schedule, with
concern for quality coming in a distant second.
Tech editors come in many different flavors – some are dedicated professionals
who know the product inside and out, and won’t let an inaccurate statement
get past them. Others, on the other hand, have pressures that don’t allow
them to do as thorough a job as they’d like, or are simply looking for
a quick buck or a fancy line on their resume. So the quality of the technical
review of a book can, like the writing, vary widely, and the big publisher
is unable to determine, much less control, the quality.
The marketing, selling and distribution
As putrid as the production of a book can be, it's
golden when compared to marketing. The weakness of publisher’s marketing,
selling and distribution are virtually universal complaints of computer
book authors everywhere. To understand why, you need to understand how
a book makes its way from the printer to the consumer.
A publisher will produce a run of books – typically a print run will be
between 10,000 and 20,000 books for most titles. A few titles might be
less, and some very popular will be more, but 95% or more will print in
this quantity range.
Publishers will market their books to the people who buy books – purchasing
agents (they’re called “book buyers”) at stores through a variety of standard
mechanisms, catalogs, direct mail, calls by sales reps, and so on. They’ll
also occasionally do some marketing direct to the consumer, such as with
ads in trade magazines, in order to develop some demand at the stores
that prompt purchasing agents at stores to order or reorder.
Additionally, just like every other industry under the sun, the publishing
industry has conferences with trade shows where publishers will exhibit
their books and book buyers from stores will wander around and investigate
what’s hot.
Eventually, book buyers will decide what to buy – but they don’t buy direct
from the publisher. Believe it or not, there are thousands of publishers
in the United States alone – and a bookstore doesn’t want to have to handle
buying from thousands of vendors.
Instead, publishers sell books to intermediaries called wholesalers or
distributors. Book buyers at bookstores then buy quantities of books from
these intermediaries, who do warehousing and order fulfillment.
Once the initial sales push has been made by the publisher, the sales
process is over. There might be some follow up, but it’s often a haphazard
attempt done by the seat of the pants, rather than a concerted, methodical
approach that you and I – technical people – might sort of expect.
An additional factor to be aware of is the issue of returns. The bookstore
doesn’t actually ‘buy’ the books from the intermediary. Instead, an intermediary
will send, say, ten books to a bookstore on consignment, and thus the
bookstore doesn't have to pay for those books for, on average, 90 days.
At the end of the 90 days, the bookstore will pay for what they sold,
and then return the rest. So if four of those books sell, the intermediary
sees income for 4 books, and has to pay for shipping for the other six
back. Eventually (as much as 180 days later) the publisher gets paid for
those 4, even though they shipped 10 to the intermediary a half year ago.
The returns concept can lend itself to all sorts of scams
on the part of bookstores in order to, er, "manage" cash flow.
For example, suppose a bookstore orders 20 copies of a book,
and over a month, sells 14 of them, leaving 6 in inventory.
Instead of ordering another 8 so that they'd still have 14
on hand to sell for the upcoming month, they'll return the
six they have on hand, and order 14 new ones. Why? Because
then they only have to pay for 8, instead of for the 14 they
actually sold. Kinda slimy, wouldn't you say? But this type
of thing happens more often than you would believe.
The money
How the
money is split up in the publishing industry comes as quite
a shock to most people new to the business. Here’s how it
breaks out. The huge majority of computer books sell at two
price points; one around $20 and the other closer to $50.
Since we sell high-end books, let's look at a book that lists
for $50 - that's the price on the back cover.
A publisher sells that $50 book to a variety
of sources such as wholesalers like Ingram, chains like B&N
and Borders, and online sites like Amazon for 40-45% of list,
so the publisher sees less than $20 of that $40.
The publisher has costs that eat up some of that $16-18.
Printing costs for a 500-700 page book would run $2-$3. Inventory costs,
including returns, run about $3. And shipping to the source is also born
by the publisher.
The majority of contracts for professional books (not "Dummies"
or other end-user type books) give an author between 10% and
15% of the amount the publisher sees – so for that $50 book,
the author would see between $2 and $3 for each book.
This money – a payment for each copy of a book sold
– is called a royalty. There are a large number of factors that drive
the variances here – for example, the number of books the publisher sells
at deep discounts (less than 40% of list) often changes the author’s royalty
from 10% to 5%. Foreign sales also often carry a lower royalty rate, as
do bulk sales, such as to book clubs.
So, if a book sells 10,000 copies, an author of one of those
$50 books would stand to make $20,000 - $30,000. If that book
sold 20,000 copies, the author could make, obviously, double
that.
How do these royalties actually get paid? Some publishers
pay the author a sum of money while they are writing the book.
This sum is divided into pieces, sometimes two payments, sometimes
three, and are paid after milestones of the book production
are passed. So an author might get a check after signing the
contract, a second after delivering half of the chapters for
the book, and the third after delivering the rest of the chapters.
This sum of money paid in advance of the book actually being
published is called an “advance against royalties”, or simply,
an advance. Advances for computer books from big publishers
typically range from $5,000 to $10,000.
The advance is then deducted against the royalties that are earned as
the book sells. So if an author gets a $5,000 advance, the first $5,000
in royalties earned on the book get credited against the advance. The
hope is that the book will generate enough royalties so that the royalties
eventually become more than the advance. This is called “earning out the
advance”, and if it happens, then additional sales produce additional
royalties that are paid to the author.
When an author actually sees the money varies. First of all, the author
won’t see any money during the time that the book’s royalties are paying
off the advance. However, it can often take even longer. Remember those
returns described earlier? Naturally, that timing affects the author's
income and cash flow, since the author isn't going to see the money for
at least that period of time. In addition, some publishers pay an author
quarterly, some as little as twice a year. There are some publishers who
also pay well into arrears, and if their payment schedule is bi-yearly,
that means a book shipped to an intermediary in January could show up
on an author’s royalty statement a year later.
What happens if the book doesn’t sell enough books to generate royalties
to cover the advance? The publishing company takes it in the shorts. Some
unscrupulous publishers will try to get authors to pay the advance back,
or will try to get the author to sign a contract in which deficits on
one book are covered by royalties on a subsequent book, but that doesn’t
happen all that often. Usually, the publisher just loses money on that
book.
You would think that a publisher doesn’t lose money on a book very often,
wouldn’t you? At least the ones that stay in business, right? Here’s the
shocker – about 70% of computer books do not earn out their advance. That
means that, on average, less than 10,000 copies are sold. Yes, 70% of
computer books sell fewer than 10,000 copies.
So if most computer books don’t earn a profit, how do publishers make
money? Volume? Well, sort of. You snicker. A book that sells 25,000 or
50,000 copies can quickly recoup the losses incurred by a book that only
sold 8500 copies – and a book that sells 200,000 copies can cover the
losses of a lot of books, and make the rest of an entire division look
great. Unfortunately, there are only handfuls of books that do that well.
Look at the hundreds – even thousands - of titles at your nearest mega
store – there are well over 10,000 different computer titles currently
available. And less than 100 sold more than 50,000 copies. That’s one
percent. And of those 100, half are for game titles (for Sega, Nintendo,
etc.) and another quarter are Dummies books. So the odds of hitting a
best seller for a big publisher are pretty slim.
Still, it’s a game of numbers for the big publishers, and that’s how they
work it – and why the business works the way it does.
The follow up
When I wrote this a few years ago, I had been rather
pejorative about how most major publishers supported their books after
they got into the distribution stream. Over the past year or so, generally,
publishers have gotten their act together in terms of making source code
and errata available on their website.
However, followup marketing and other sales support
is still mostly a crapshoot. Ask to see long-term marketing plans for
most major publishers and you'll get an embarrassed giggle. Just wanted
to mention this for a point of reference.
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