The Mysteries of Publishing

I've mentioned her before, but if you're not reading Anna Louise (Tor editor extraordinaire) on LiveJournal, you're missing out on a lot of great information about publishing. Recently, ALG posted about a P&L for a paperback book. A P&L stands Profit and Loss or Profitability and Liability. It's a spreadsheet that a publisher/editor puts together for every book they want to buy to see if it makes sense for the publishing house to buy the book and put it on bookshelves.

As ALG points out, many publishers make a P&L that only costs the physical costs of the book--printing, marketing, advertising, production costs like proofreaders--and not the costs of the editor's time, the marketing assistant's time, etc. I could say more, but ALG says everything more eloquently than I would, and it's silly to redo her exhaustive work.

Here's a longish snip from the end of Anna's article (you really need to read the first part to get to this, so this is my reverse teaser; you know the end and have to know how you got there):

Out of 25,400, Crichton is an Idiot sells 8,400.

On the initial profitability and liability statement, the excited, committed editor theorized it would print at least 50,000 and sell at least 30,000, and paid the author an advance of $12,500. She didn't want to go all the way up to $16,000, just in case she was slightly off the mark -- and normally a first time author would get something like $5,000 (just in case! and also leaving room to grow!), but this was out with four other houses, and the agent had a $10,000 offer from NAL, and, damn it all, the editor really wanted it, so her publisher let her pay an exorbitant amount.

Oops.

The author makes $4,697.28 in royalties. This means that she does not make back her advance. You may think this means she owes the publishing company $7802.72. You would be wrong! It's in the contract -- she doesn't have to pay that back. However, she can't get another book deal to save her life. (A couple of years later, though, she starts writing Blaze novels under a pseud., hits a bunch of in-store bestseller lists, and revitalizes her career.)

Out of the 8,400, 2,500 copies sold through direct, making $10,475, and the rest (5,900) sell through other outlets, making $16,496.40.

$26,971.40 is the net total this book earns for the publishing company. You have lost your company:

$12,500 +
$36,000 -
$26,971.40 =
$21,528.60

And this is totally normal. This is an average book! Okay, it's a slightly cynical look at the average mass original, but you won't find too many editors who don't have a couple of these on their list.

In a related post, SFBC senior editor Andy Wheeler adds his own comments about how/why publishers might take on a book that loses them money. Here's the snip:

[C]ompanies buy books because they will cover a reasonable share of overhead for that month -- really, to be blunt, publishers buy books because they're the best books they can find at that moment. Every editor has to acquire enough books to justify his continued employment -- and to, at the same time, try to make sure few enough of those books are such utter dogs as to put that employment in jeopardy.

When I worked for Tor, this is how you could justify new authors. You did need to keep putting books out, and there was always the chance that a new author would write a book that would go on to win a bunch of awards. But that's rarer than you'd like. And sometimes you pick up an author who just sells well for a publisher. And that's even rarer.