Writer's Bloc
My SFWA Bulletin Column

Do You Make More Than Your Publisher?

from The SFWA Bulletin #159, Fall 2003

The Profit and Loss Statement

    Unlikely as it appears at times, publishing is a business and abides by the standards of good business procedure. One of these is the Profit and Loss Statement, an estimate made ahead of scheduling a book for publication.

    In "The Price of One Book" in the March 2003 Romance Writers Report, Deanne Carlyle asked Steven Zacharius, president and COO of Kensington Books, to provide one such sample analysis. The following costs are for a 50,000 copy first print run of a 384-page mass market paperback retailing at $5.99, with a 52.5% sell-thru (65% sales for direct channels and 40% for wholesale [supermarkets and mass merchandisers]).

      Cost Component Publisher Cost
      Advance and Royalties $12,579
        For budgeting purposes the advance and projected (8%) royalties on the first print run are combined.
      Proof/Copy/Edit $1,536
        Outsourced copyediting and proofreading @ $4.00 per page.
        In-house editing is part of Overhead costs.
      Typesetting $1,920
        Typesetting outsourced @ $5.00 per page.
        In-house interior design and layout is part of Overhead costs.
      Cover Art $5,000
      Printing and Binding $22,500
        At $0.45 per finished book.
        Optional: if done, $0.06 per finished book.
      Separations/Promo Covers $3,000
      Warehousing $2,750
        Storage and handling until shipping at $0.055 per book.
      Freight $2,750
        Shipping at $0.055 per book.
      Overhead $22,463
        15% of gross dollars billed – gross sales after discounts and before returns.
        Gross dollars billed = 50000 * $5.99 *50% retail discount.
      Subtotal – Publisher investment before returns $77,498
      Net Sales Total
        Gross sales * sell-thru.
      Total Net Profit

    In the publisher's eye, therefore, the author is making eleven times as much as the publisher for the first printing of this book. And there is simply no more room at all for an increased advance or higher royalties.

    Several comments could be made at this point. For one, the comparison of the author's $12,579 to the publisher's $1,121 is apples and oranges, comparing the author's gross against the publisher's net. Overhead is also a fudge factor category, almost impossible to quantify. While applying a standard percentage is appropriate, in practice the number of books printed is almost completely irrelevant to actual costs. And note that if books sold rather than printed were the criterion, the Total Net Profit would improve to $11,791 or nearly equal to what the author gets gross.

    Despite author quibbling, this is the way that publishers look at books and for that alone must be taken at face value.

Subsidiary Rights Splits

    While we're on numbers, Jeffrey Poston had a table showing what you should shoot for when negotiating subsidiary rights in his article, "Authors' Subsidiary Rights and Negotiation," in the April 2003 Roundup Magazine. He said, "If your contract's split terms end up looking something like this table, you can feel good about your negotiation results."

      Your Rights Split % (You/Publisher)
      First Serial 90/10
      Second Serial 50/50
      Book Club 50/50
      Foreign/British 80/20
      Reprint 50/50
      Performance 100/0
      Audio 50/50
      Electronic 50/50
      Merchandise 100/0

Legal Matters

    Just as the Sports and Business sections of the paper have been doubling as the crime blotter, legal issues continue to dominate news about the business of writing.

    While Jeffrey Poston may be able to give a table of ideal subsidiary rights, they continue to be harder to come by in the real world, no matter what the contract might say. In the Spring 2003 Authors Guild Bulletin, Kay Murray reports that a New York State court approved the settlement of a class action suit against HarperCollins. The publisher was accused of selling works to foreign affiliates at discounts of up to 75%, breaching its express royalty rates clauses in its contracts.

    By now, I'm sure most of you know that the Supreme Court upheld the constitutionality of the 1998 Copyright Term Extension Act (CTEA). Also in that Spring 2003 issue, Rebecca Fenigstein summarized the arguments made in the case. The petitioners advanced several arguments against the CTEA: that Congress had essentially made the term unlimited by serial extensions; that the extended length of copyright limited the incentive to create anew; and that the law unwittingly acts as a government-imposed restriction of speech in violation of the First Amendment.

    The seven justices in the majority turned these arguments around. They noted that no such objections had been raised the four earlier times that Congress had extended copyright. By keeping the term in step with the Berne Convention, the CTEA increases incentives for creativity by making protection equivalent essentially worldwide. There is no restriction of free speech, because only expression and not content is under copyright. Additionally, "fair use" allows the public to use both ideas and expression when appropriate.

    Justices Steven Breyer and John Paul Stevens in the minority argued vehemently that copyright is for the long term benefit of the public and not individual creators. Allowing heirs or corporate successors long years of protection after the creator's death keeps the work from the public without promoting any new acts of creativity.

    In the Summer 2003 issue, Fenigstein discussed a case involving the 1995 Federal Trademark Dilution Act (FTDA). Victoria's Secret sued Victor's Little Secret, a store selling adult entertainment items and lingerie, claiming that the name bred confusion and was likely to dilute the distinct character of the Victoria's Secret mark. The Supreme Court ruled that the FTDA required a showing of actual dilution that must be proven before action could be taken. Even if consumers were likely to confuse the firms, Victoria's Secret had demonstrated no economic harm by it.

How to Beat the System – Free Audits

    SFWA has conducted a number of audits of publishers, a difficult, expensive, and time consuming task. So why not get the State of New York to do it for us – for free?

    Skeptical? So was RWA President Shirley Hailstock when she looked into this. She found, as reported in her "From the President" column in the May 2003 RWR that the Escheat or "Unclaimed Property" laws in New York says that any business operating in the state must distribute the funds it receives for another person to that person. This would apply to undispersed royalties. Sending a letter, even an e-mail, to the state with a name of a company can – and presumably would - trigger an audit of that company. All complaints receive "serious consideration."

    There is a caveat, of course. The State of New York cares whether corporations are obeying the law, not with whether you personally get your money back. They do not disclose to the public which firms are under audit or what the results are. However, they also do not disclose the names of complainants.

    Send your detailed complaints to J. Hanson at jhanson@osc.state.ny.us

YA Science Fiction & Fantasy Markets

    Connie C. Epstein's "Publisher's Corner" in the SCBWI Bulletin almost always has news on new children's and young adult f&sf markets.

    After the success of its Starscape paperback imprint for readers 10 and up, Tor has announced Tor Teen for those 12 or 13 and up. According to Senior Editor Jonathan Schmidt, who heads both imprints, Tor Teen will publish one book every other month and is open to unsolicited manuscripts of up to 55,000 words. He's defining the field broadly as "work that shows a recognizable element of imaginative writing" and urges writers not to feel limited by boundaries. Send manuscripts to Jonathan Schmidt, Tor Books, 175 Fifth Avenue, New York, NY 10010.

    The well-know Cricket Magazine Group already pushed through a similar brand extension, starting Cicada for readers aged 14 and up. Editor Deborah Vetter is looking for fantasy and science fiction stories with an average length of 5000 words, although they do one longer story of up to 15,000 words each issue. Payment is 25 cents per word on publication with rights negotiable. Send manuscripts to Submissions Editor, Cicada magazine, PO Box 300, Peru, IL 61354-0300.

New Fantasy Imprint

    In the April 2003 issue of NINK, Terey daly Ramin noted that Harlequin/Silhouette has launched Luna Books, which, say their guidelines, "delivers a compelling, female-focused fantasy with vivid characters, rich worlds, strong, sympathetic women, and romantic subplots." Executive Editor Mary Theresa Hussey says that it will publish one book of 100,000-150,000 words a month starting in 2004. Mercedes Lackey, Catherine Asaro, Sarah Zettel, and Michele Hauf have already sold to Luna.

    Full Luna guidelines and submission information are available on the eHarlequin web site at: www.eharlequin.com/cms/learntowrite/ltwArticle.jhtml?pageID=030317wu01001 or at the Romantic Science Fiction and Fantasy site at: www.romanticsf.com/news/00000093.shtml.

    A listing of paranormal publishers and their contact information is available at: mywebpages.comcast.net/glick/ppubpara.htm.

F and SF, not F&SF

    In the June 2003 NINK, Terey had another publishing tidbit. Market research in the UK has shown HarperCollins that fantasy should not be displayed or even marketed together with science fiction, but sold as a separate genre with separate display and shelf space. Cover art is the bugaboo. "The key thing is to simplify the jackets, and not to ghettoize them into what used to be traditional fantasy," said managing director Amanda Ridout. "What we want to do is make sure that people who have enjoyed a wide variety of fiction aren't put off by the traditional fantasy look." The carefully coded wording is intended to state that just as there is an audience for women's fiction that will not touch traditional romance, the marketing gurus see an analogous interest for fantasy. Jane Johnson, the publishing director for the Voyager f&sf imprint, makes this explicit: "It's a hidden audience, and that's all we're looking for."
A Good Change in the Tax Law

    Good news for writers who have home offices, reported Joseph Anthony in the Summer 2003 Authors Guild Bulletin. You should already know that the IRS allows you to take deductions for mortgage interest, property taxes, utilities and other expenses on that office. If you devote 15% of your home to your office, you can proportionally deduct 15% of these expenses. The catch came when you sold your home. While under most circumstances people don't have to pay taxes on any appreciation in the value of their homes, capital gains taxes did apply on that 15% of the house that was a business office, "in addition to taxes on the deductions you took all those years, a provision known as 'depreciation recapture.'"

    No longer. The new law requires that taxes be paid only on the depreciation recapture portion, not on the gain itself. And the new rules are retroactive, so if you recently sold a house and paid taxes on the gain, you can amend your return. In most cases, you have up to three years from the date the return was filed. Therefore, returns back to 2000 can still be amended.

New Insurance Plan at Authors Guild

    Members of the Authors Guild in New York City now can purchase discounted health insurance from Oxford Health Plans. Guild plans using other insurance companies cover much of California, Connecticut, Florida, Georgia, Illinois, New Jersey and upstate New York. Additional areas may also be covered. You can contact the Guild at staff@authorsguild.org or by calling 212-563-5904. Authors Guild dues vary by income, but start at $90 per year.
Too good not to be shared

    From the Summer 2003 Authors Guild Bulletin: "The Fitzpatrick-O'Dinn Award for the Best Book Length Work of Constrained Fiction offers publication by Spineless Books. Spineless Books defines constraints as 'a systematic writing technique or overt formal structure.' Manuscripts must be unpublished, at least 48 pages, and typewritten or word-processed. Electronic submissions are accepted through floppy disk, Zip Disc, CD-ROM or URL. Contact: Spineless Books, Box 515, Urbana, IL, 61803. http://spinelessbooks.com/award/ Deadline: October 31, [2003]."

  • 10,000 new publishers debuted in 2002, says the R. R. Bowker industry survey.1

  • According to the Wal-Mart "Words are Your Wheels" literacy program, 50 million Americans cannot read or comprehend above the eighth-grade level; existing literacy programs reach less than 10% of these people; 60% of prison inmates, almost 50% of adults who receive welfare, almost 75% of adults who are unemployed, and almost 90% of juvenile offenders are illiterate.2

  • Deborah Treisman, the new fiction editor at The New Yorker, says the magazine receives 200 unsolicited manuscripts per week and each of the five editors in her department receives another 10 or so "recommended" manuscripts daily. Five of the 50 or so stories published annually are from "virtually unknown" authors.3

  • The New York Times Book Review receives 80,000 books per year.4

      1. Vicki Arkoff, "Book Expo America 2003," SCBWI Bulletin, July-August 2002.

      2. Anne Holmberg, "The President's Voice…," NINK, April 2003.

      3. Campbell Geeslin, "Along Publishers Row," Authors Guild Bulletin, Spring 2003.

      4. Chip McGrath, "Reviewers' Revue," Authors Guild Bulletin, Spring 2003.

    Organization, Publication, Address, Web Address

    Authors Guild, Bulletin, 31 E. 32nd St. 7th Floor, New York, NY 10016, www.authorsguild.org/

    Novelists, Inc., NINK, P.O. Box 1166, Mission KS 66222-0166, www.ninc.com Romance Writers of America, Romance Writers’ Report, 16000 Stuebner Airline Dr., Suite 140, Spring, TX 77379, www.rwanational.org

    Society of Children’s Book Writers & Illustrators, Bulletin, 8271 Beverly Blvd., Los Angeles, CA 90048, www.scbwi.org

    Western Writers of America, Roundup Magazine, 1012 Fair St, Franklin, TN 37064-2718, www.westernwriters.org

    Copyright 2004 by Steve Carper

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