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Traditional Versus Self-publishing

Ted Weinstein moderated an online conversation between Amanda Hocking and Barry Eisler on March 28, 2011. The transcript of the conversation appears below.

You can download the simple spreadsheet referenced in the conversation (Version 4), to help authors look at their potential earnings from traditional versus self-publishing. We offer no warranty about its accuracy or usefulness.

Online conversation between authors Amanda Hocking and Barry Eisler, moderated by literary agent Ted Weinstein, Monday, March 28, 2011.

Ted: For anyone who isn't familiar with all the details, Barry Eisler is the successful author of eight thrillers published through traditional channels, and Amanda is the successful self-published author of several series of paranormal novels. Last week, Barry turned down a $500,000 book deal with a major trade publisher for his next two books and declared his intention to self-publish, while Amanda accepted a $2,000,000 offer from a traditional publisher to publish four new novels. In a plot turn no one would find plausible if either of them had included it in one of their novels, the offer Barry turned down came from the exact same publisher, St. Martin's Press (SMP), that Amanda has agreed to sign with.

Here are a few links with more background information:

Amanda book deal: Amanda film deal: Barry & Joe conversation: Ted: Thank you both for taking the time to have an on-line conversation about your recent news. When we have concluded, I'm sure all three of us will want to post this transcript on our own sites. I suspect there will be several different audiences reading this transcript: fans and readers of each of you, other authors trying to better understand their publishing options, and industry professionals including editors and agents.

Let me start with a question for you, Amanda. There have been all kinds of reports, and just so we start with accurate information, can you tell us how many books you have self-published, how many units you have sold, and how much you've earned so far? And what are the details of the deal you just closed with St. Martin's Press (SMP)?

Amanda: Thanks for doing this. I'm really excited to be able to talk about this and clear things up, because there has been so much speculation.

I have self-published eight full-length novels and one novella since March or April of 2010. I thought it was April 15th, but Amazon emailed me on my "anniversary" and said it was March 15th. I've sold somewhere over a million copies in that time (it was 1,030,768 when I last added up totals last Tuesday). I don't know the exact amount of money I've earned, but it's somewhere in the neighborhood of $1.5 - $2 million.

As for the St. Martin's deal, I haven't actually signed anything, and I don't know the exact terms of it. What I do know is that the offer was over $2 million for four books world English rights, and the royalty rate is on line with the industry average.

Ted: Interesting - to digress only a little, I'm a little surprised you and your agent have decided to talk about the deal publicly before the agreement is signed. Beyond any superstition, some of the leverage agents have when negotiating the fine points of a deal can be diminished when there has already been a public announcement. Although certainly in your case both sides have ample incentive and enthusiasm to resolve any contract issues.

Ted: Before we discuss your decision and the future for you, let's hear some more background on your self-publishing thus far. What platforms are your e-books available on now: Amazon, B&N, any others? What about paper editions? Just Amazon or others, too? And what percentage of your sales have been paper (unit sales, dollars)?

Amanda: My books are available on Amazon, Barnes & Noble, Sony, Kobo, and Apple's iBookstore. I also have paperbacks made through CreateSpace, and those are available on Amazon and my blog. My paper sales are minor when compared to my total. I think it's around 10,000 copies sold in paperback, compared to over a million in ebooks. The royalties I'm getting on my paperback sales are much smaller than my ebook royalties, too.

Ted: Until now, for all your self-publishing, who has been part of your "publication team"?
  • Editing?
  • Cover design?
  • Text layout & formatting?
  • Admin, accounting, royalty tracking, etc.
  • Publicity and marketing?
  • Subrights sales (translation, film/tv, merchandise, etc.)
Amanda: I'll start with the easier ones to answer. All my rights have been handled through the Axelrod agency. My agent Steve Axelrod does a lot of it or works with sub-agents on it. I did all my covers myself until recently when I began working with Claudia Mckinney at Phatpuppy Art. I found her through deviantART, and she does really amazing work.

Up until really recently, I've handled everything else myself. I've hired various freelance editors, and I've just hired a new one for my self-published work. I just got an assistant a few weeks ago to help keep track of things, like my royalties, and I have an accountant, but I'm just getting him to speed on what I'm doing. Formatting I still do myself.

I've done all my publicity and marketing myself, but apparently, someone from St. Martin's is going to take that over. We have a phone meeting set up tomorrow where I'm going to find out exactly what that means.

Ted: Sounds like you don't need much sleep... Let's bring Barry in now, before we go deeper into some other topics. So Barry, there have been all kinds of reports - to start with accurate information, can you tell us how many books you have published with major publishers, how many units you have sold, and how much you've earned so far?

Barry: Hey guys, good to be here, and thanks Ted for arranging this. There's been so much discussion this week of "Hocking and Eisler... which is right?" that we should definitely have our own conversation.

Let's see, eight books total, six with Putnam, the most recent two with Ballantine. Off the top of my head, I don't know how many units sold total (hardback, paperback, digital). How much I've earned... also a little hard to say. Some of the contracts have earned out, some not, and there are foreign sales in at least 20 different languages. But the advances have been six and seven figures and I've been making a good living writing for the last decade or so.

Ted: Thus far, who has been part of your publication team, whether at your publishers or in your own posse?
  • Editing?
  • Cover design?
  • Text layout & formatting?
  • Admin, accounting, royalty tracking, etc.
  • Publicity and marketing?
  • Subrights sales (translation, film/tv, merchandise, etc.)
Barry: Various people have handled various aspects of turning my manuscripts into finished books and selling them into various markets, but one thing I've always had is redundancy--redundancy in the positive, layered-defense, NASA, two kidneys sense. [Ted: laughing] I have a circle of family and friends who are all talented editors, for example, and I would never release a book before hearing from each of them.

On cover design, I've been consulted, with different results with different publishers. On publicity and marketing, same. I guess the short way of explaining my experience on working with legacy publishers on various packaging, marketing, and publicity matters would be to say, these are areas I've long wanted to be fully in charge of. I've always carried a lot of the weight when it comes to marketing and promotion, and have been disappointed more than once by my publishers' packaging decisions, so the way I see it, going indie won't represent much work that I haven't been doing myself anyway, plus I'll get to make my own decisions. Plus for me, I think indie will be more lucrative.

Ted: That's a good transition, now that we have the basic facts out. Let me start with Amanda, since you're following a path that has been established even before the advent of electronic publishing, namely self-publishing, building great success, and then having a traditional publisher acquire rights either to the self-published titles or to future works. The late-novelist E. Lynn Harris said he sold the first 40,000 copies of his books out of the trunk of his car before he signed with a major publisher, and I have a client, Peter Montoya, who sold 60,000 copies worldwide on his own before we sold rights to a revised edition of his book; many more examples abound. So for you, Amanda, was this path what you had started out intending to follow? And regardless, how did you decide that now was the right time to do this?

Amanda: I never had a clear plan on how I wanted to publish. In that I mean, I had clear goals - getting the best quality book out to as many readers as I could - but to achieve that goal, I didn't have one set idea on what it would look like. When I started to self-publish, I knew that whatever I would do would probably be a bit more "unconventional," especially in terms of success, because self-publishing had generally been viewed as a place where books and writers go to give up.

As for the timing, I was waiting for a point where I had enough of a name for myself that I could get leverage to do the kind of deal I wanted. What I mean by that is that I wanted to be "big enough," I guess, that a publishing house would pull out all the stops and give my book all the promotion, packaging, and editing that writers dream of books getting.

Ted: Barry, after your first few books had nice success, is what Amanda describing the way your experience has been re: promotion, packaging, attention, etc.?

Barry: It's been a mixed bag for me. There are things my publishers have done well, and things they've done that I think were poorly conceived and poorly executed. And this is one thing I was hoping we'd touch on in this conversation. Even though it's so obvious it seems silly to say it, my experience with legacy publishers isn't representative of every other author's experience. You could even argue that my experience isn't representative of any other author's experience, although I have a lot of friends in the business and it's fair to say that much of what I've found vexatious about working with legacy publishers vexes other people I know, too. There's been so much talk this week about "which of them is right?," but in fact, you have to look at each of our experiences, objectives, and motivations individually to have a meaningful answer to that question.

Though I've enjoyed all the commentary regardless cuz it's created more attention to both of us than I think either of us would have achieved alone.

Ted: Also, Barry, your friendship with Joe Konrath has helped with information about his track record of self-publishing, and when you and he posted your conversation that got a lot of attention, so we should acknowledge him.

Barry: I love you, man! (That was for Joe. Though I love you too, Ted. And you too, Amanda, though I don't know if I should call you "man"). [Ted: Next, Barry gives virtual noogies... And I'll forever love Joe for sharing a wee taste of that amazing Scotch whiskey when we three had dinner together last year.]

Ted: Barry and Amanda, you both have cited several different factors in your decision making, so let's pull them apart: money, publisher attention, and control. How do you balance those three in your own mind, and which is/are most important when you're making the inevitable trade-offs. Amanda?

Amanda: Thanks for the love, Barry, and right back at you, man.

I don't know exactly how to answer what's more important. I guess it probably would be publisher attention. But that doesn't sound exactly right. In my mind, it was about what was doing best for my career long-term, not what was best for my career this second. I think a publisher has a better chance of getting my name out there and reaching more readers than I could on my own.

Ted: In your new deal with SMP, what control do you retain: Title? Cover? Pricing? Publication dates?

Amanda: I'm not completely sure, because the the contract isn't finalized. But I'm not really fighting for control over any of those things, so I doubt I'll have much more than some input. Out of those, the only thing that really matters to me is the price of ebooks, and I am going to do everything I can to keep them down, but I don't know how low they'll be willing to go.

I knew going in that I would give up control on things, and I made peace with that before I looked into a deal.

Ted: Let's talk pricing, from both your perspectives, which is one of the biggest issues facing authors, publisher and readers in the emerging e-book world. Clearly readers would rather pay less, and authors would rather receive more, and the share of total cover price was one of the biggest factors in Barry's decision to self-publish electronically. But let's look at the total: let's compare pricing an e-book at $2.99 rather than $9.99. Will three or four times as many readers buy the less expensive book?

Barry: My first answer is, yes. But the more complete answer is, it doesn't matter.

Here's why. In a typical legacy deal, the author gets 14.9% of the retail price of a digital book. So when my of my publishers sells one of my digital titles at $9.99, I get $1.49 of that. When the same title is self-published at $2.99, I keep 70% of the retail price, or about $2.10. And if fact, I plan on pricing my first self-published novel, The Detachment, at $4.99, which would mean a $3.50 per unit royalty for me. So I don't have to sell as many self-published books as I did legacy; in fact, I can sell far fewer and still come out ahead.

Ted: Barry, could you explain how you calculate the 14.9%?

Barry: Sure. The standard legacy publisher contract provides that the author gets 25% of the net price of a digital book. If the net price is $9.99 (which I like as an example because I'm mathematically challenged, and ten is an easy number), it works like this. Amazon takes a 30% cut from the ten dollar retail price, leaving $7.00 to split between author and publisher. That means my 25% of net is now 17.5% of retail. And then my agent takes 15% of the 17.5%, leaving me with an actual number of 14.9% of the retail price of the book, and leaving the publisher with 52.5%. This seems obvious in retrospect, but more props to Joe Konrath for being the first person to point it out publicly (at least that I know of). Anyway, publishers are being a bit misleading, perhaps deliberately so, when they key on that 25% number. Authors need to understand what it actually translates into when all the smoke clears.

Ted: Amanda, your decision to work with a traditional publisher clearly involves the additional benefit she will receive from 1) an advance and 2) the new paper sales that she hasn't been able to secure on her own. By moving away from solely an e-publishing and Print on Demand (POD) model, she will now have distribution via physical retailers like Barnes & Noble, Wal-Mart, Costco, independent booksellers, airport bookstores, etc. This means royalties on newly-possible paper sales, as well as the "billboard" value of having your name and titles in physical locations right in front of prospective readers' eyes. Did you, Amanda, make these kind of calculations, either literally or figuratively?

Amanda: I actually didn't have to do the calculations, because the wonderful Joe Konrath did them a while ago on his blog. He repeatedly broke it down, so I knew going with a legacy publisher, I would make less money per ebook, and I would probably sell fewer ebooks because they would have a higher price.

But yes, the idea behind it is that I'll make up for in physical books, and it will increase the flow of readers to my ebooks after they see my books in stores.

The advance didn't really factor into my decision. The only reason I even cared about one is because I figured that the more money a publisher gave me, the harder they would work to earn it back.

Ted: Barry, you've decided to forgo the "billboard" effect (and income, of course) of paper editions and the publisher activities on behalf of your next books. But you also already have a sizeable base of fans all over the world (I've seen the groupies at some of your readings, as well as the look on your wife's face when they got too fawning). This is still more limited than what you had "access" to before. Beyond reaching out to all the folks who already read your bog and Twitter stream, as well as contacting everyone who ever gave you their email address, what are your marketing plans, both in terms of cash outlays as well as 'staff' time - Joe has said repeatedly that (I paraphrase slightly) "the best time an author can spend is to do more writing".

Barry: I tried to estimate as conservatively as possible how long it would take me to beat the contract (how long it would take me on my own to earn the $425,000 SMP had offered me. One of my conservative assumptions was that on my own I would sell no paper books at all. I'm pretty sure this won't be the case: Joe, Amanda and many other indie authors sell books through CreateSpace and though paper isn't the dominant part of their income stream, it's not negligible, either. But overall, what concerned me was the fairly simple question of: Can I make more on my own purely with digital than I could with a mixed paper/digital legacy partner? I ran the numbers and answered that question yes, and by comparison the more detailed breakdown of what I'd give up in paper by going it alone with digital didn't matter as much.

As for marketing, I have a pretty substantial online presence. And I expect to have at least one more short story up before The Detachment is itself available--hopefully more. And there are a few other things I'm working on that I think will bring a lot of attention to my self-published works.

But the main thing to remember is this: time. I'm fortunate in that I can live without the big advance, and that gives me breathing room. My conservative calculations tell me I'll beat the contract in the fourth year after The Detachment is released. But if I'm wrong, and it takes a bit longer? I still keep that fat digital revenue stream for the rest of my life. This is a long-term play for me. I'm more interested in how much money I can make from a book for the rest of my life than I am in how much I can make from it in three years.

[Ted: As a quick aside, I put together a little spreadsheet to calculate income via traditional versus self-publishing approaches - it's available for download by anyone here.] [Barry: I've played with it and it is great, even for the spreadsheet-challenged among us, such as, um, me.]

Ted: Let's look ahead: many questions have come in from authors who have not yet had the kind of success both of you have achieved. Looking at what you each have done, is the "new model" as one's success grows going to be "self publish, then get a deal from a traditional publisher, and then go back to self-publishing"?

Amanda: I don't view them as entirely separate entities, and I never have. So much of what you read about it is an "us vs. them" mentality, but I've never looked at that way. Each option strengthens the other. Having a presence in bookstores feeds your ebook sales, and having inexpensive ebooks feeds your print sales.

Ted: A big question is whether traditional publishers will start to price their ebook editions as aggressively as you two (and many others) are advocating.

Amanda: Even with my minimal interaction with publishers, I'm inclined to think they won't. I think prices will drop somewhat. It's insane to price an ebook at $12.99 and the same exact print version at $9.99. Hopefully, publishers will eventually go down to around $5.99 - $7.99 range, which isn't great, but it's better than a lot of the prices I've seen. But I don't think they'll ever price books at $2.99 for any length of time.

Barry: Actually, what's even more insane is pricing an ebook at $12.99 when other ebooks are available for $2.99. Take a step back, and you'll see that what's going on here is pretty simple. Publishers, which add a lot of cost to the process of getting a book to readers, are pricing their products high to recoup those costs. Eliminate legacy infrastructure--eliminate the legacy middleman--and you can deliver a book at lower cost and higher profit. This is basically what Dell Computer did to brick and mortar computer stores. There's no way around it other than to radically cut costs, and I don't know how legacy publishers can jettison enough ballast--New York real estate leases, employee pension plans, etc.--to ever be even remotely price-competitive with indie authors. It doesn't give me any pleasure to say it because I have a lot of friends in publishing (even now ;)), but this is a classic disintermediation dynamic and I don't see how publishers can arrest it.

Ted: Indeed, this is a textbook challenge for traditional publishers, as discussed in Crossing the Chasm by Geoffrey Moore and The Innovator's Dilemma by Clayton Christensen. So let's talk about the "human toll" of these changes. What do each of you see as the effects on the roles/responsibilities for the many smart, talented agents, editors and others as the publishing world evolves? All of us in publishing dearly love books. You two have been innovative thinkers about the role of writers. Any thoughts on how innovative agents, editors, marketers, publicists and so on should shape their own careers?

Amanda: Freelance. A lot of the role will still be required, just not as much by legacy houses. But just because you're self-publishing doesn't mean your book doesn't require the same things any other book does. The agent's role will change more over time. I was talking about this the other day with someone, and I thought there might be more streamlined groups, where an author could find an agent, editor, publicist, etc., already working together. But instead of the standard legacy house tradition of charging a royalty, it would be more of a flat fee. You would hire them, pay them, and be done.

Ted: There are "author services" companies offering that model now - the xlibris, Lulu, Blurb, AuthorsHouse, iUniverse model that is evolving (I don't remember anymore which ones are still around, and which got bought by another). Is that what you're talking about?

Amanda: Kind of. But those are more corporations. It's like calling someone at Dell. They have a factory of employees. I mean more specialized, like it would only be four or five editors, agents, and what have you who had previously worked legacy houses, and now branched off on their own to have a smaller boutique type thing. I guess it would basically be like a publisher, but without a publisher, and you'd know what you were getting up front.

I know one of the biggest issues publishers are having is that they outsourced all their jobs. Everything they used to do, they hire somebody else to do, and those somebody else's do a good job. But if publishers are cutting costs, and self-publishing is becoming more prevalent, I don't see any reason why authors wouldn't just hire the people the publishers hire.

Ted: As an advocate (nay, groupie) for authors, both by sensibility as well as career, what you describe makes some intellectual sense, but it concerns me, because it means that many more authors would have to be fronting hard cash. What you do is already heroic, sitting by yourselves for months and years working hard even before there is any possible advance. Expecting authors now to have to start ponying up money makes me... sad. [An aside: a smart and useful course teaching authors all the elements that go into successful self-publishing is "Self Publishing Bootcamp," both a day-long workshop as well as a detailed workbook.]

Ted: Re: role of agents, I've been imagining a few different models that might evolve:

1. The "Hollywood" model, i.e. traditional agenting but focused even more than now on the kind of projects with potential blockbuster commercial success, where only a traditional publisher's access to major retailers is essential.

2. The "Agents as Publishers" model, somewhat along the lines Amanda outlines, but without up-front charges, where 'agencies' become indie publishers, paying out of pocket for the editorial, publicity and other resources we all agree are essential to a book's success, but going on to POD and e-publish the final work themselves instead of selling rights to an external publisher. Scott Waxman, Andrew Wylie and other are starting to explore this model, although there are inherent conflicts (with clients as well as with publishers) that I predict will make it necessary to choose one or the other before too long.

3. The "Artistic Management" model, where an agent takes on fewer clients than before, but manages every aspect of their career, although of course this pertains only to authors working on the kind of projects that have rich multimedia, merchandise, paid-speaking and other opportunities.

There are conflicts among all three of these models, but I think every serious agency is starting to consider and experiment, just as each of you has done.

Barry: Joe and I talk about this with a very smart indie author--Dean Wesley Smith--at Dean's blog. I recommend that conversation for all authors and agents.

Ted: But let's hear from you two again - any questions you would like to ask each other, or topics we haven't yet covered you'd like to comment on?

Barry: Well, I've been listening to Andrew Bird's The Mysterious Production of Eggs while we chatted. And drinking jasmine green tea with Sonoma wildflower honey. People like to know these things.

Amanda: I've been drinking Red Bull. (And mentioning how frequently I drink it every chance I get in hopes of getting a lifetime supply free.)

Ted: A major revenue stream - celebrity endorsing!

Barry: Definitely we need to do a little Red Bull product placement in our books.

Amanda: This is more of a comment than a question, but I've been surprised by how many people keep asking "which one is right?" in terms of our publishing choices. It never occurred to me that you'd make the wrong choice, or that your choice to self-publish somehow negated mine to go with a house. I definitely think it's a smart move on your part, just as I feel like this is something I had to do try with my career. I don't think either of us are wrong, and I don't know why other people do.

Barry: I think a lot of has to do with an either/or mentality I encounter fairly frequently in my other guise as political blogger at Heart of the Matter. And as it happens, Joe and I spent some time this weekend doing another online conversation--Part Deux!-- where we address some of the misconceptions we've seen in response to your and my announcements. We'll have that up soon.

Here's what I think most people are missing about your move. They're focusing too much on the four books that SMP will publish. Now, there is a ton I don't know here, and I could be wrong about this, but based on your track record in self-publishing, I don't think it's likely that SMP, as good as they are, will be able to make you as much money from those four titles as you could have made from those four titles on your own. But the key phrase there is: those four titles. If SMP finds you legions of new paper readers, people who otherwise wouldn't have heard of you, and those people in turn become customers for your entire self-published oeuvre, then however much you've "paid" in the form of the difference between what the four books could have made you on your own and how much they did earn you through SMP, you have bought a lot of value in exchange.

There are a ton of variables, of course, but anyone who doesn't look at the value you could be receiving for whatever you might be "paying" is being silly, and probably has an agenda.

In my wishy-washy opinion only, of course.

Amanda: Thanks, Barry. I hate to do this, but I have to run to see a guy about a fence. I didn't properly estimate the time of this conversation. I can BRB, if you like, but for the moment, I must leave you two to talk amongst yourselves.

Barry: See how these things get fun and then go on and on? I say that for anyone who's given Joe and me a hard time for our 13,000-word magnum opus, and the coming sequel... ;)

Amanda: That conversation with Joe was really great, and I'm definitely looking forward to the sequel.

Barry: Thanks! And thanks to you both--this was great, and I hope it'll be useful for the writers and other people in the biz who might read it.

Amanda: I second that, and thank you both for letting me talk with you. :)

Ted: Let's end the conversation here for now, and reconvene when we're all in the same town and can hoist a glass with some combo of green tea, Red Bull and single malt Scotch whisky. Thank you both for being so generous with your time and your insights and your willingness to let the world get a peek at your personal finances.

If there are any lessons from today, I'd say there is no single right answer for every author, the world is changing lightning fast, and it's ever-more important for authors to take control of their own careers. Congrats to both of you on your remarkable success, and best wishes for even more success to come.


©2013 Ted Weinstein Literary Management
New York • San Francisco