Tag Archives: the business side of writing

The Business Side of the Business: Publishing Industry News #amwriting

Autumn is arriving as we speak, and it’s a good time to look at how the publishing industry is doing.

publishingIndustryChatLIRF03162021Let’s have a look at how the Big 5 Publishers of literature did last year. You will note that the top players have changed since my last Big 5 article. Some of the big fish have been absorbed by the even bigger fish since we last looked at them.

#1 on the list is Penguin-Random House. They’re headquartered in Germany and are still the big kid in the schoolyard. Last year they reported earnings of 3.3 billion US dollars.

#2 is Hatchett Book Group. They are headquartered in France. Their reported earnings were 2.7 billion US dollars.

#3 of our top 5 is a corporation called Springer Nature. They publish periodicals and magazines like Nature and Scientific American. They’re headquartered in both the UK and Germany. Their reported earnings were 1.9 billion US dollars.

#4 is Wiley (John Wiley and Sons), a US company publishing academic and instructional materials. They reported revenue of 1.7 billion US dollars.

#5 is McGraw-Hill Education, with reported earnings of 1.7 billion US dollars.

So, did you notice the trend? Only two of the top five traditional publishers are focused on publishing fiction.

EPSON MFP image

EPSON MFP image

And what is affecting the profits for these companies? According to Publishers’ Weekly, supply chain issues combined with inflation and dropped earnings in the first quarter of 2022. However, strong backlist sales propped things up at Penguin-Random House, titles like Where the Crawdads Sing by Delia Owens and Atomic Habits by James Clear. They also report that the late Dr. Seuss’s titles sold more than 5.7 million copies in that period.

As always, audiobooks also performed well. Penguin-Random House’s global CEO Markus Dohle said the ever-expanding international audio business has become a strong growth pillar of their publishing efforts. He also noted a technology- and data-driven transformation of their sales, marketing, and publicity strategies.

This side note about the backlists propping up the Big 5 reminds us to be careful when we’re offered a contract. Legacy book contracts are a terrible danger zone for the author. A hastily signed contract means you might never receive back the rights to your intellectual property (your books), even if the publisher is no longer publishing it.

Quote from the Authors Guild post of July 28, 2015:

Diamonds may be forever, but book contracts should not be. There’s no good reason why a book should be held hostage by a publisher for the lifetime of the copyright, the life of the author plus seventy years—essentially forever. Yet that’s precisely what happens today. A publisher may go bankrupt or be bought by a conglomerate, the editors who championed the author may go on to other companies, the sales force may fail to establish the title in the marketplace and ignore it thereafter, but no matter how badly the publisher mishandles the book, the author’s agreement with the original publisher is likely to remain in effect for many decades.

Most of us are not attorneys. If we go the traditional route, we should consider hiring a lawyer specializing in literary contracts.

This is good advice, even if you are represented by an agent. The complexity of negotiating a literary contract is both confusing and intimidating. By not having the advice of a professional, you risk unwittingly signing away secondary and subsidiary rights to your own work forever.

Many well-known authors were smart or had good lawyers. They either weren’t offered or didn’t accept a legacy contract. These authors regained the rights to their work when the contract terms were fulfilled. They’re now self-publishing their backlists and earning more royalties even though they sell fewer books.

On the indie side of things, we’re in the same boat financially as the Big 5, but we’re better positioned in some ways. We’ve always relied more on digital sales, which have no upfront cost outlay. Many indies are moving to audiobooks too. However, we do need paper books.

Significant cost increases for paper and production (and for distribution and freight) will affect our costs and profit for the foreseeable future. Per an email I received from Draft2Digital, due to supply chain issues and the rise in material costs, their print partner will be increasing D2D’s costs. This means that effective October 1, 2022, the cost of author copies via D2D Print will increase.

I suspect the same will be true for Amazon KDP and IngramSpark.

Scientific American 1848For indies, our most reliable royalties have always come from digital sales, although we do sell some print books. But the best route to gaining loyal readers has been book fairs, conventions, and signings at bookstores.

We pay upfront for our stock of books and have to keep an eye on our inventory to ensure we have enough on hand for each event. So, with printing costs going up, we will either raise prices or see a drop in our already-slim profit.

So, that is the industry’s current state as of this week. The Big Traditional Publishers are still consuming each other as fast as possible. At some point, there will only be one Big Traditional Publisher owning thousands of popular imprints worldwide, and they will be based in Europe.

The publishing industry is currently in a downturn because of inflation and production costs, but little has changed for indies. We’ve always been at a disadvantage, so in some ways, we’re better equipped to deal with change. We adjust and go with the flow whenever the market goes up or down or moves in a new direction.


Credits and Attributions:

Wikimedia Commons contributors, “File:Nature volume 536 number 7617 cover displaying an artist’s impression of Proxima Centauri b.jpg,” Wikimedia Commons, the free media repository, https://commons.wikimedia.org/w/index.php?title=File:Nature_volume_536_number_7617_cover_displaying_an_artist%E2%80%99s_impression_of_Proxima_Centauri_b.jpg&oldid=675402098 (accessed September 20, 2022). ESO/M. Kornmesser (photo displayed on the magazine cover), CC BY 4.0 <https://creativecommons.org/licenses/by/4.0&gt;, via Wikimedia Commons.

Cover of Scientific American, the September 1848 issue Wikimedia Commons contributors, “File:SciAmer.gif,” Wikimedia Commons, the free media repository, https://commons.wikimedia.org/w/index.php?title=File:SciAmer.gif&oldid=655833071 (accessed September 20, 2022).

5 Comments

Filed under writing

The Business Sequence for Writers, guest post by Ellen King Rice #writerlife

Today I am featuring an excellent post by my guest, Ellen King Rice, on the business side of this business. Ellen is a successful indie author of an engrossing series of mushroom thrillers set in the Pacific Northwest.

Its a BusinessShe also wrote the brilliant, hilarious standalone novel, Larry’s Post Rapture Pet Sitting Service.

So, without further yak-yak from me, here is Ellen King Rice and her advice on how to treat this business like a business.

*** *** ***

Moving from hobbyist to professional can be challenging in any field. For indie authors, financial numbers and formal paperwork matter. There are several steps, and the sequence of them can make life easier or . . . not.

The first step in finding a path through the thicket of “business stuff” is to remember past challenges conquered. For many people this may be recalling a first bicycle ride or an early cooking effort. For others there may be a wince as we remember that first round of playing “Hot Cross Buns” on an instrument. Whatever your early challenge was, you didn’t know everything when you started, but you learned quickly.

Today, let’s build a ramp up to a business set up, including tax prep work.

  1. Author’s name.

Search your name on the internet. Make sure you are aware of other writers, activists, artists and business people who share your name. In my case, there were several, including one who shared my middle initial. After some agonizing, I decided my author’s name would be Ellen King Rice even as my friends and family know me as Ellen Rice.

  1. Publisher’s Name

I highly recommend that you chose something other than your author’s name. This gives the writer flexibility to write in more than one genre. There are also times when the publishing house name gives a bit more cachet to projects. I chose Undergrowth Publishing.

  1. Tax Number

This requirement will vary by nation. In the United States, you will want an EIN tax number from the Internal Revenue Service. There is an on-line application here: IRS EIN application online.

The EIN is a Federal Tax ID number used to identify businesses.

Having a Publisher’s name and Tax number helps with getting a business license and a bank account. Of course, I didn’t know this, so I did things backwards and sideways. I tried to get a tax EIN and failed when I was faced with the question “What is your name?”  I highly recommend brisk walks and much chocolate to break up paperwork-filing sessions.

  1. Business license

Again, requirements will vary by location and jurisdiction. If you are resident of the State of Washington, you can find the details here:

https://dor.wa.gov/open-business/apply-business-license

I chose Sole Proprietor for my business, but some writers choose to form a Limited Liability Company.

Do you need city or county licenses? In my area, obtaining a state business license triggered a letter from the city demanding I purchase a local license. It took some research, but I determined that the local vendor’s license did not apply to my circumstances (I live in the county, and I sell books on-line).

It’s wise to learn about your community rules, but often these rule sets only apply to those who are selling in person (i.e., your online sales aren’t part of the local tax structure). Even then, there are times when small vendors or special events like an arts fair are exempted.

  1. Bank account

With your writer/publisher names sorted, a Tax EIN and your business license number, getting a business bank account should be straightforward. Mine is with the Washington State Employees Credit Union. I was able to open the business account with $50 and a $5 savings reserve. This gives me an account for Amazon expenses and deposits. I also asked for a dozen checks, which the credit union provided as a courtesy.

Credit card? A business debit card is easy to request once your account is set up, but a business credit card is hard to get. So far, I’ve managed without one.

  1. Spreadsheet and Tax Forms

Last steps! At this point, it is wise to print off the small business end-of-year-tax form that you’ll be using so you can see the information required.

In the United States, this is the Schedule C “Profit or Loss from Business” form from the IRS website. We can use this form to set up a spreadsheet, by category.

We want things set up so a “Sum this category” command will make it easy to fill out the Schedule C at the end of the year.

Details matter. Take some time looking over the Tax form for your situation. Think of it as your End-of-Year Party destination. A party in the tropics requires different prep than a party with penguins. Knowing the lines to be filled makes for clever spreadsheet set up. And, yes, it feels wonderful to be fast and accurate at year’s end.

For Americans, pay attention to Schedule C, Part I which asks what your “gross receipts or sales” are (line 1) and your “cost of goods” (say, printing 30 copies of your book) for line 4.

Next look at Part II. Lines 8 to 27 list different expense categories you can report. Line 8 is Advertising, so I want an “advertising” category when I set up my writer’s spreadsheet for the year. Line 11 is “Contract Labor”, so I’ll set up that category too. My book cover designer fees can go here. Line 18 is “Office expense.”  I set up Office Expense as a category and that’s the designation to house all my paper and printer cartridge charges.

DEFINITELY check in with a qualified tax advisor (which I am not!) to make sure what you are doing is correct before you file your taxes. All I’m encouraging here is to use the Schedule C as a guide to setting up bookkeeping for easy end-of-year number crunching.
Once you have slogged your way through all six of these steps, you should be well on your way as a writing professional. Be sure to celebrate!

Footnote for American tax filers: What happens if I don’t make money? After filling in Part I (income) and Part II (Expenses), I typically show a Net loss (line 31).  That loss amount will go onto a Schedule One form, and from there to Line 8 of the 1040 form as a negative number, which will lower my taxable income.


Thank you, Ellen, for a wonderful and enlightening post. If we intend to sell books at book signings and conventions, we have a business. If we want to avoid problems with our respective taxing agencies, we must jump through the proper hoops.

The next post in this series will talk about book signings and book fairs, and tracking inventory for both tax and insurance purposes. When the pandemic eases and we can go back to having signings and in-person events, we need to manage our costs and protect our investments. This something we all need to consider no matter where we live in this ever-smaller world.


EKR_author_photo_2022About Ellen King Rice:

I am a wildlife biologist who suffered a spinal cord injury many years ago. Although my days of field work are over, biology continues to intrigue me.

I am fascinated by sub-cellular level responses to ecosystem changes. I also like the predictability of animal behavior, once it is understood.

A fast-paced story filled with twists is a fun way to stimulate laughs, gasps and understanding. I work to heighten ecological awareness. I want the details and your new insights to remain in your thoughts forever.

You can find me and my books at www.ellenkingrice.com

​Please join me on Instagram at:

https://www.instagram.com/mushroom_thrillers.

And on Facebook:

https://www.facebook.com/mushroomthriller/

EKR_3book_covers_01162022LIRF

13 Comments

Filed under writing