Hugh Howey
Hugh Howey

Bestselling author of Wool and other books. Currently sailing around the world.

The Reason for the Confusion

Some analysts appear to be confused about how so many authors can possibly be making more money while overall spending on reading is flat. Let’s see if we can’t figure this contradiction out.

The analyst linked to above gave a presentation at RWA (Romance Writers of America) last weekend. In both the blog post and the RWA presentation, we are shown this graph:

CES-2005-2012

If reading dollars are flat, then author earnings should be flat, right? Not necessarily.

Let’s start with the fact that the above graph includes newspapers and magazines, which are down. Here are the trends for magazines. And here are the trends for newspapers. You would think, at a conference for novelists, that this would be taken into account. Now, if the spending on total reading is flat, and two of the three reading types are down, that probably means the revenue for trade fiction is up. We can only guess here, because the wrong data is being used for the wrong purposes.

It gets worse. (Well, the misuse of data gets worse, but the picture that emerges once we correct that misuse is a rosy one for writers.) If the spending on reading material is indeed flat, that’s awesome news for authors. And not just because of the magazine/newspaper mistake. We also have to remember that the average price of a read is down, thanks to ebooks (especially the self-published variety). So flat spending might actually mean more reading. And there’s another thing to consider — the most important thing, something lost on industry analysts –and that is that overall industry numbers don’t tell writers anything. Bookstore and publisher income doesn’t affect our decision to publish one way or another. If people are spending more of their reading dollars on books that send 70 cents of every dollar to the writer, that’s a sea change from a time just five years ago when only a dime of each dollar went to the writer.

Spending on reading can stay flat while seven times as much money flows from the reader to the writer. SEVEN TIMES.

If you are an analysts who reports to publishers and bookstores, this thought never crosses your mind. You don’t care if some authors get 12.5% while others get 70%. It isn’t about the author. It’s about the industry dollars.

I sat in the panel where this chart was shown, and I listened to the gasps of horror, and saw how the fear, uncertainty, and doubt are spread. But the logical failings didn’t stop there. The same fixation on the industry causes this analyst to make another mistake. Author income was broken down based on publishing path. And instead of lumping aspiring authors in with the traditionally published authors, they were set aside. The audience was shown earnings from the top few percent of those who managed to go down the traditional path, and those earnings were compared to the entirety of those who self-publish.

You can’t make this kind of poor reasoning up. You have to see it to believe it:

20140725_101320 (Copy)

Check out the column for “Aspiring Writer” income. Unreal. How many aspiring writers are there? Are there 10 million aspiring writers and . . . say . . . 50 thousand who actually get published? Imagine if you lumped them all together on the same bar, how compressed the earnings would be toward the top. What sense does this graph make for a writer with a manuscript in-hand and a decision to make? None.

Wait. It gets worse. The same graph above also takes out the most successful self-published authors and calls them “hybrids.” Hybrid authors come in two main flavors: The first is the traditionally published author who got dropped from their publisher, got their rights back, and then self-publishes. Bella Andre, JA Konrath, Barbara Freethy and many others fit this profile. They barely earned a living with a traditional publisher, took control of their careers, and only then made millions of dollars. Industry analysts do not consider these to be self-published success stories. I’ve even seen some of them credit their former publisher for all the success they had after they were dropped for not selling very well.

The other main hybrid type is the author who does so well self-publishing that they get picked up by a major house. Like with the above group, the success for these authors came from the choice to self-publish. But again, credit goes to the publisher or the decision to go “hybrid.” In both cases, the above graph pulls these authors out of the category in which they belong (you know, the path that either earned them the most money or gained them enough readers to publish however they like) in order to create a false equivalence.

So take the graph in again. Out of the traditional publishing path, let’s remove all those who didn’t get in, despite making the choice to query an agent. Let’s also take the highest earners out of the self-publishing path. Can we artificially tilt the data any further?

Sadly, this is how industry analysts pose the question of potential earnings to authors. You want to laugh, but you have to cry.

Can you choose to publish with Random House? No. You can choose to send your manuscript to an agent and hope to secure their services and hope they submit your work to an editor at Random House, and hope you get an offer, and hope the book comes out. The only real choice is between self-publishing and querying an agent. But that’s not how the data on earnings and satisfaction were presented in this panel at RWA. What we saw were the results of publishing paths, not the expected outcomes of each potential choice.

If you want to show the outcome of each choice, you need to know how many people are submitting manuscripts that never get published. You need to know how many of those people give up and choose not to self-publish. Otherwise, you are taking the very top of one group and lining them up against the entirety of the other group. This seems so basic to many of us that we can’t understand how it doesn’t get through to these analysts. If you are trying to help authors make favorable decisions with their manuscripts, they need to know the odds at the outset, not the final outcome for those who won some lottery.

But what really blew me away about this panel, and why I applauded mightily at the end and thanked the analysts for putting the data together, was this: The artificially small and tilted selection of traditionally published authors did not fare much better than all of self-published authors in either income or satisfactionThink about that for a minute. Even making the gross mistake of just looking at the winners from the traditional publishing path, this analyst wasn’t able to show that they were better off than the path that lumps in every single self-published author!

And imagine if the hybrids were placed where they belong!

What we have here is very similar to that flat graph on reading spending above: A seeming contradiction when there is none. There’s just a massive mistake in how the question is framed. Why are self-published authors walking around at RWA with so many success stories and so much personal and professional satisfaction? Because as an entire group, they are doing as well as the top few percent of those who managed to get traditionally published. Imagine if an analyst actually averaged in the zero dollars that most query-writers earn from their mailed-in manuscripts? (You know, that bar to the far left.) Imagine if they averaged in the negative satisfaction from all those rejection letters. (That same bar to the left.) The equality in earnings and satisfaction would disappear. And these analysts would see what everyone in the trenches is seeing: The good news amid all the FUD and noise.

47 replies to “The Reason for the Confusion”

Okay, I’m not a numbers person so bear with me, but isn’t there a time factor to all this that’s being overlooked as well? I never pursued the legacy route, never queried, just went straight to self-publishing. It took me exactly sixteen months from putting the first words on the page (NaNoWriMo, 2012) to the book going live on Amazon. That included three re-writes, professional editing, professional cover and interior design, and much time wasted with rookie mistakes and sidelined by other obligations. Not very fast by indie standards, but super quick compared to legacy. Authors who go directly to indie have the potential to start generating income much more quickly than those who seek to go the legacy route. There’s an opportunity cost in seeking an agent and legacy deal, even if you ultimately do succeed. If a successful legacy author spends five years, say, writing, querying, hoping, praying, waiting, shouldn’t those five years of potential lost income they could have been earning had they gone indie be factored in somehow? Can you really measure each model from the same starting point? By the time that book hits the market, odds are very good that the legacy author has invested significantly more time (and lost opportunities in indie sales) getting there. Like I said, not a numbers person, so I don’t know how you’d quantify it, but it seems like it needs to be factored in somehow.

This is a bit off topic, but I just completed a study that compares the earnings of people who buy a winning lottery ticket vs. the earnings of people who invest their $1 in other ways.

It turns out that those people who choose the traditional path — buying a winning lottery ticket — are earning almost ONE MILLION TIMES what the “self-investors” are earning. This is actual data, and it’s shockingly conclusive.

I think this information should be useful to people who are deciding whether or not to buy a winning lottery ticket.

Now I get it!!

As usual, I followed RWA14 from my perch on twitter. Thanks again to the authors who give a detailed commentary in less than 140 characters.

Some authors were very interested to see how you would “react” to Dana’s workshop. Let’s just say the pre-commentary was interesting – from both sides. But what caught my attention was this tweet: Hugh Howey said “Dana’s workshop was the highlight of his RWA” and another one said you applauded very graciously. I couldn’t figure this one out so erring on the side of optimism I concluded that Dana’s presentation probably went 180 degrees from her usual (although I didn’t get that from the tweet commentary). But alas, all is normal if not well and good.

This current era reminds me of George Orwell’s words “During times of universal deceit, telling the truth becomes a revolutionary act.” Very kind of you to call it confusion.

I applauded the data, even if I was bemused by the way in which it was misrepresented and misinterpreted. The sampling still seems to be a huge problem, but the gist of the presentation was this: “I tried, in every humanly way possible, to show that traditional publishing is far superior to self-publishing. I stacked the deck on one side and crippled it on the other. But no matter how I push and prod, all I can ever do is say that traditional publishing is just as bad as self-publishing. But I’ll keep trying!”

And that’s great news.

The hilarious thing is that, according to their chart, hybrid authors make the most. So isn’t that a message to every single traditionally-published author in the audience that they should self-pub their next book?

Time is definitely a huge factor. I am probably an extreme example, but I first pitched my novel to my now-agent in December 2011. It is being published by Random House in early 2015 – a wait of well over three years. (The novel itself was started in March 2008). Of course most of us would take a traditional deal if we were sure to get one – the question, as Hugh says, what do you do if you can just publish now and forget that whole step?

I think if we are honest, it is difficult to advise young writers what to do with their manuscripts. A lot of analysis on both sides falls prey to the survivorship bias. Ultimately so few people are successful as writers, whether in indies or traditional publishing, that every story is a crazy outlier from which it is difficult to draw broad ranging conclusions. Indie publishing is not a perfect meritocracy any more than traditional publishing, and many deserving books never get read by anyone.

In the end, it probably doesn’t matter. There are still a ton of perks to traditional publishing but it is probably becoming (if it has not already become) the sole domain of people who are already somehow successful (star pupils of MLA courses, prize winners, working writers at magazines, celebrities, people with successful twitter accounts, or people who have a best-selling indie book under their belt). Most people will need to start cutting their teeth on the indie scene, whether they like it or not.

“Of course most of us would take a traditional deal if we were sure to get one – the question, as Hugh says, what do you do if you can just publish now and forget that whole step?”

You presumed too much, my friend. What are the chances that a traditional publisher will allow me to publish 4 books in 6 months (books I have written over a 2-year period, mind you) and will pay me $15K a month? Only one publishing “deal” will allow/give me that — self-publishing.

Keep in mind that not all of us got into self-publishing because he couldn’t land an agent/publisher. Some of us didn’t even bother querying, because the idea of surrendering our creativity and the bulk of our profits to the whims of some NY snob to be barf-worthy.

I didn’t mean to imply that the only reason to indie publishing is because you can’t get an agent or a publisher, so sorry if that came off the wrong way. You’re correct that many of the advantages of a traditional deal are eroding. Still, it does not sound like your experience is very typical of moth aspiring writers. Do you have a link to your works? I’d be curious to check them out.

“Ultimately so few people are successful as writers, whether in indies or traditional publishing, that every story is a crazy outlier from which it is difficult to draw broad ranging conclusions.”

What is “so few”? Sometimes we erroneously use our immediate world and what we “hear and read” as the absolute measure.

A long time ago I used to believe this until I started to meet and discover writers I never knew existed who were making very respectable amounts self-publishing. And with this RWA, I discovered even more and I’m not talking about the members who attended. The internet chatter was blowing me away. There are many writers who are very quiet about their successes.

Sometime ago, someone said Hugh sees an ice cube and he shrieks iceberg. It was meant as a snide remark but I’m with Hugh. Most of these writers don’t waste a thought on trad pubs. It’s as if they’re waiting for trad pubs to catch up… or not. It’s like a huge silent underground movement – an iceberg indeed!

“So few” was just a reference to the bar graph that Hugh posted, which shows that something like 85% of self-published authors and 65% of traditionally published authors make less than $3,000. It is still tough to make a living in this business. I didn’t mean to say that there are not a ton of successful self-published authors. As Hugh points out, it is increasingly viable, to the point of there being little distinction any more.

which shows that something like 85% of self-published authors and 65% of traditionally published authors make less than $3,000

“Traditionally published authors” doesn’t include those submitting to agents, while “self-publishing authors” includes everyone. Do you really not see the problem in that math?

Of course most of us would take a traditional deal if we were sure to get one…

Speak for yourself, Clifford. I’ve had publishers approach me based on my self-published sales, and I’ve politely turned them down.

I think what you say might well be true for the older generation of writers who started writing when all that silly submitting and querying bullshit was the only way to reach readers.

But for newbie writers like me, who are nowadays starting to make up more and more of the publishing landscape, a traditional publisher would have to put together a pretty unusual and compelling offer with extremely equitable terms to be of any interest to us.

Hugh’s post on the Lilliana Nirvana technique makes it clear what new writers should do: spend several years writing and submitting to traditional agents until you have a backlog of manuscripts – then self-publish them all at once.

You get the best of both worlds – a chance at a traditional contract, feedback from agents (I once got a 4 word rejection that was incredibly helpful), time to hone your skills, all while build up the critical mass for the LN book bomb.

Thanks for more encouragement and a reasoned voice in all the confusion!

The thing that puzzled me about those WD figures was how they had ANY aspiring authors earning writing income.

By definition, “aspiring” = unpublished. Surely that column should have been 100% zero income from writing?

But yes, combine “Aspiring” with “Traditionally published”, and “Self-published” with “Hybrid” to get a truer picture of how earnings really stand.

If those involved with that project cared about helping authors make decisions, they would certainly combine the bar graphs as you suggest. Not sure why they don’t. Either blinded by bias, or furthering an agenda. My hope is the former, as it’s excusable.

Dana Beth Weinberg poses a question at the end of the linked post:

Currently, it would seem there’s not enough money to feed everyone. If the pie is really only so big, then the key question going forward is, who gets a seat at the table, and how big is her spoon?

The answer is simple. There is indeed not enough money to feed everyone. So authors are taking seats away from agents and publishers, grabbing the big spoon, and taking the money that used to go to agents and publishers. Bon Appetit.

Let’s remeber that their are three kinds of lies:
1.) Lies
2.) Damned Lies
3.) Statistics.

No one’s mentioned if the presenter made her data available to scrutiny, a la Data Guy. I assume she didn’t.

If you have an extra $295 burning a hole in your pocket, DBW will be happy to sell you their “full report” here:

http://store.digitalbookworld.com/advantages-traditional-publishers-offer-authors-t3591

Not sure if it includes the data or not… but even if it did, it’s unclear what a handful of self-selected survey responses from Writer’s Digest subscribers, 42% of which — according to DBW themselves — came from “authors” who have never even completed a manuscript, could tell anyone about author income.

I just noticed the DBW “report” is labeled:

“What Advantages do Traditional Publishers Offer Authors”

Evidently, not much.

This is kind of related: I gathered from a comment that Data Guy made on the July report that there are 60,000 books in the top 100,000 books on Amazon that currently do not make it into the authorearnings data because they do not show up on any bestseller list. This is interesting in itself because it would seem to mean that some sub-sub-sub categories on Amazon are so competitive that you can easily be ranked above 100,000 on Amazon,and yet not be on any of their bestseller lists (even though 80,000 books ranked below 100,000 do make it onto a bestseller list). It also suggests that there are lots more authors making good income on Amazon that are not included in any of the conclusions on authorearnings.com. Who are these authors? What can we know about them? Is it reasonable to conclude that the proportion of self to traditional is the same for these authors? Or is the proportion different in the black hole of non-bestseller list ebooks? I wouldn’t even know how to make a guess.

It at least seems likely there are more genre authors making a living than the early 7000 ebook report showed. And perhaps those other authors are concentrated in the competitive sub-sub-sub categories. Maybe this explains the large number of romance authors reporting success.

Would it be possible to somehow do a random survey of some of these non-bestseller books and see what’s up with them? It might be hard to find them. Maybe you could program a spider to crawl all books by each author that has at least one book in the top 100 lists. This might uncover a bunch of non-bestselling books.

Wow! Just a few hours ago, someone posted this over on the latest authorearnings report which adds more info and questions about non-ranked ebooks to the ones I just raised in the post above this one:

“One of the major flaws IMO with the Author Earnings report (which I still like and immensely appreciate the efforts) is the reliance on category bestseller lists.

Let’s look at #100 on the subcategory of horror/glbt – its store rank is 593,800
Now let’s look at #100 on the subcategory of erotica/romantic erotica – its store rank is 6061

There are titles filling 587,739 rank positions between #100 in erotica/romantic erotica and #100 in horror/glbt. One of them is my title X, with a store rank of 89,462 (43 copies in the US store this month) and failing to appear on any bestseller list. Another is my title Y in the romance/contemporary subcategory with a rank of 12,087, also having no bestseller category appearance (where it would have to have a store rank of 415 or better to appear), but still selling 361 copies in the Amazon US store this month. At this particular point in time, all of my single-author titles but one (just released with about 370 copies sold in Amazon US store) would not appear in any Author Earnings report because they are on no bestseller lists. But I’ve sold over 70,000 copies of erotica and romance titles year to date (around 45,000 on Amazon US).

Point being, erotica and romance are such highly competitive categories that, to appear on an Author Earnings report, any individual title has to be selling far and away more copies than a title in a less competitive category. So the total % of earnings compared to the total store’s earnings is significantly under represented for romance and erotica.

If I am misunderstanding something that, once corrected for me, would lead me to believe the declaration that a mere 1.2% of kindle sales are comprised of erotica, please explain.”

What’s true of one publishing type is true of another. We are certainly missing a lot of ebooks. But we are capturing a huge sample size and looking at relative market share. When we went from a sample of 50K to 85K to 120K, our results didn’t appreciably change. I imagine if we could grab 500K, it would be a refinement of precision, not of accuracy. :)

Another observation: the author quoted above had no books on any bestseller lists and yet is doing well. So again, how to find these authors also and include them in any analysis. How about a spider that searches single keywords on Amazon and then explores the results to find the titles that do not show up on the bestseller lists?

I just did a search on Amazon for “erotica” and it returned over 200,000 results. I checked some random books and on page 10 of the results is the first time I found a book that does not list any bestseller lists on the book’s own page. This might be an effective way to supplement the results from crawling the bestseller lists, but it could quickly create a huge database to analyze. Yet it seems like it might be a way to catch many more titles for analysis, if that is desirable. And it would definitely catch the books and authors that currently fall “between the cracks” of the bestseller lists like the author quoted above.

Quick note: A Search for “romance” on Amazon returned over 500,000 results. It seems like you can go up to page 100 of these results. With 12 results on each page, that is 1200 books that you might be able to crawl. If you then searched each author name of those 1200 books to find additional books by that author, it might be possible to crawl a much higher percentage of all of the books on Amazon.

I have no idea how much effort and time is involved to do a much more massive amount of data collection and analysis, but if it is doable, it would be fascinating to see the results…

1 sale was sufficient to get me into the top 100 of Asian American literature. At my current rate of sales it will take me about 5 years to earn back my very limited investment and turn a profit, but I’ll probably still be listed as a bestseller. I just realised that that means I am probably included in the Author Earnings report dragging down the average earnings.

Great analysis on a very poorly done bit of statistics.

The scientist inside me cringes, fidgets and will eventually begin nibbling pretzels like a hamster on crack just to remain silent when I see charts like that. It is, as you pointed out, very poorly lumped but the entire premise is just wrong. Outcome bias in research dooms the research…even when it is a simple sales research report.

The elements they keep missing are time, resurgence, control over output and rate of publication and…not forgetting this biggie…the ability to change everything about the book any time the author wants.

These things are crucial to the financial reward part of the process as well as the satisfaction level the author achieves.

In one year I have eight publications with my name on them. True, three of them are short stories in anthologies but five are books. Books. And they don’t suck at all.

But even now, I am thinking of getting anniversary edition covers, maybe getting the first two re-edited by someone I actually like, creating a combined edition…all of that. My latest took four months to write, two months to get edited and cost about 3 grand to get to market. Can trad match that on their best day? The trad author can write that fast, but publishing? Nope.

Had I said yes when Trad came calling, I could do none of that.

Instead, the books they wanted would have gone off sale for a number of months (and I wouldn’t be earning) all for an advance that equated less than two weeks of my earnings at that time. Even with the books at .99 and 1.99.

Those charts need to be re-wickered and research needs to be done that includes time to market, numbers of books to market by time per author, cost of production (indie vs trad), author *time* spent on promotions, author *funds* spent on promotion and inclusion of all books that make up the top 50 or 75K of books in Amazon (not BS lists because some are hard to get on, others not so much).

That would be an eye opener. Thanks for snapping that great cell shot for us so we could get a peek, Hugh. You’re the best!

I just hit the e-publish button on my debut novel last week, due mainly to the data and explanations I’ve seen on this site, Author Earnings, and PG’s site. Of course, I still had jitters–after two years of work and a significant investment in editing, your incentive to avoid making a mistake is pretty strong. As you might expect, there’s an administrative learning curve (ISBNs, copyright registration, book formatting, uploading to Amazon, etc.) but it’s by no means insurmountable. I’m learning new things every day, and loving it. Next on the agenda–CreateSpace. Thanks for all you’ve done for authors, Hugh (and data guru)!

I hope Ms. Weinberg comes here and responds. Her bio says, “I currently direct the Sociology MA program in Data Analytics and Applied Social Research, and I teach a mix of undergraduate and graduate courses on quantitative and qualitative research methods, survey design, social science writing and analysis, health policy, and organizational behavior.”

Hm.

I have no doubt she’s a wizard with statistical tools. But if you can’t properly frame the question or understand how to remove bias from your data, all the statistical modeling in the universe won’t give you even a glimpse of what’s really going on.

I would rather have someone with a deep understanding of the publishing industry and a modicum of statistical know-how than a Harvard Phd in statistics who doesn’t understand the basics about the book biz.

Everything I have heard about RWA is that they heavily favor the traditional publishing industry. This seems to support the findings shown in this chart. Traditional publishing has many tentacles out in the public eye to help support the mantra that they are the only way to true fame and fortune. Thankfully we have Hugh Howey and Data Guy on the job to call their bullshit.
As a business valuation expert who has critiqued many valuations of supposed experts I can safely say there is a 99% chance (totally made that up but it has to be true) that you can find some data somewhere to support you argument. It may be really thin but it is out there.
You have to wonder when these conferences will start changing to truly support writers in their craft to make the most informed decisions. Isn’t this all about producing quality work no matter how it reaches the reader’s hands?

Great meeting you at RWA, Hugh! (Hugh However as my phone keeps changing it to. :) )

I didn’t attend this panel you’re referencing, but I did go to the “Focus on…” sessions for all the retailers, went to the iBooks informal meet-up at the bar, the Amazon reception, etc. and the take-away is definitely *not* that reading or spending on books is flat. Just the opposite! They’re talking expanding markets and readership–which these retailers gave their own stats to support those conclusions since they’re actually, ya know, selling books to people–and I came away totally pumped about indie publishing in general and excited about specific opportunities for newer authors.

A question: what’s her source info? Where is she pulling data for self-published books and earnings, for instance? Some data sources only include self-published books with ISBNs, which would ignore a huge number of SP sales.

The “data source” used for the DBW report was a collection of survey responses from subscribers of Writer’s Digest. 42% of the respondents whose incomes are included in the DBW “author income” numbers had never completed a manuscript.

The DBW report was one of the shoddiest, most biased hack-jobs I’ve ever seen someone attempt to present with a straight face, let alone attempt to charge money for.

Harvard should ask for their degree back.

Looks like the degree was used to its fullest in presenting such garbage data in a way that furthered DBW’s agenda. I rate this con job a 4 out of 5.

In another year Author Earnings will show indies take up close to 40% of Amazon’s daily ebook unit sales and close to 30% of the $ sales. Authors taking notice of DBW’s crazy skewed reports will be in the minority (if they already aren’t).

The self publishing shadow industry has passed a threshold. The momentum is too great, with too much impetus and energy behind it. It’s time for publishers, agents and the industry to change or die. No matter there are still authors blindly worshiping publishers and agents, who clamor to be let past the gate. It doesn’t matter that authors are still submitting to them because a greater number are ignoring publishers, and it’s these authors who will continue to take market share from publishers.

Market share matters, and publishers are hemorrhaging ebook market share with no viable plan to stop it. Print is fast becoming a subsidiary right, and only of benefit to the 1% of 1% of authors who are the biggest and best sellers.

Publishers need to change but I fear they can’t. Too entrenched, too much bureaucracy, too focused on the next earnings reporting season rather than their long terms viability, as are most companies. The sad thing is, the next few years will be ones of mergers, consolidations, cut backs, acquisitions etc and the good people who work for publishers will be greatly affected. The fact publishers do some good things is testament to the fact that good people do good things. The companies themselves are rotten to the core.

DBW is the “Publisher Solutions” equivalent to the Author Solutions-style vanity presses :D

They shamelessly overcharge their unsophisticated publisher clients for garbage data and nonsense “reports” that anyone with an ounce of experience with indie publishing — or even anyone with an ounce of common sense — can see are a total joke.

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