Think Like a Publisher
A Step-by-Step Guide to Being an Indie Publisher
2012 Second Edition
Dean Wesley Smith
Copyright Information
Think Like a Publisher
2012 Second Edition
Copyright © 2011 by Dean Wesley Smith
2nd Edition Copyright © 2012
Published by WMG Publishing
Cover Design copyright © 2012 WMG Publishing
Cover Photo by Edward Fielding/Dreamstime.com
For More Information about the Author, Dean Wesley Smith, former publisher and bestselling writer of over ninety novels and many short stories, please go to:
http://www.DeanWesleySmith.com
Smashwords Edition
This book is licensed for your personal enjoyment only. All rights reserved.
This is a work of fiction. All characters and events portrayed in this book are fictional, and any resemblance to real people or incidents is purely coincidental.
This book, or parts thereof, may not be reproduced in any form without permission.
Think Like a Publisher
2012 Second Edition
Table of Contents
Selling to Independent Bookstores
Electronic Sales to Bookstores
The Secret of Indie Publishing
One day, after following J.A. Konrath’s blogs, a writer suddenly thinks to himself, “I should just publish that unsold story myself on Kindle.” Uh, oh… Right at that point the writer has made the decision to become a publisher.
The very first decision to go into a brand new business.
Being a publisher is a very, very different job than being a writer. Very different. And a very different business. Basically the two jobs must come together in one form or another for a story to ever reach a reader. And in traditional publishing for the last sixty-plus years, the only game in town was to form a partnership through a contract with an established publisher to get your work to readers.
Then, a few years back the traditional publishers seemed to suddenly release their total hold on the distribution of books to readers. Writers suddenly saw a way around traditional publishing, a way to control what happened to their work. So the writers started becoming publishers again.
History aside: This writer as publisher is nothing new, actually. Before 1950 or so, self-publishing was an accepted form of publishing. Only from 1950 to 2008 was it looked down upon. Now it is accepted again. Only difference is the difficulty and delivery systems.
As electronic books started to gain percentage of total books sold, a very small, but very vocal group of writers sprang up that I call indie publishers. And then a few established writers such as Michael Stackpole and J.A. Konrath started talking to other writers about the money that can be made as an indie publisher and the control it gives writers. And more and more writers started paying attention. Especially those of us with very large, very dead backlists that suddenly looked like gold mines in our file cabinets.
And here we sit now in early 2011 with electronic publishing expanding quickly, more new reading devices coming on board almost daily, worldwide reading of electronic books expanding faster than anyone can keep track of, and a bright future ahead of authors who decide to indie publish.
And a ton of problems coming to authors who indie publish and don’t understand they have taken on a brand-new business.
For starters, everyone has an opinion about what is the right way or the wrong way to do the indie publishing. And a lot of writers seem to be ignoring many basic business principles of being a publisher. So, I figured I would try to put all the different aspects of being a publisher in one place and let each writer at least make a decision from an informed viewpoint. (In this series I will clearly state what are my opinions, what are my suggestions, and what are just plain facts.)
About Me
Very quickly, here is why I feel I can talk about this stuff.
I helped start and was the publisher of Pulphouse Publishing Inc. Pulphouse was the 5th largest publisher of science fiction, fantasy, and horror for a number of years. Kristine Kathryn Rusch and I started the business as a sole proprietorship in 1987, which I owned. We switched it to a corporation in 1990, and shut it down to go back to full-time writing in 1995. Pulphouse Publishing Inc. dissolved officially in 1996, and Kris and I assumed all the company debts, which we then paid off over the next ten years. During that time I worked with many other publishers, including the publisher of Bantam books on many projects. We had 19 paid employees and a two-story office building.
I also edited for Pulphouse, VB Tech Journal, and Pocket Books.
Last year, as this new electronic publishing wave was picking up steam, Kris and I helped start WMG Publishing and we are working closely with the different people involved with WMG Publishing to first get our huge backlist up and to secondly grow into a decent mid-sized publisher of other writer’s work in this new world.
Unlike Pulphouse Publishing, WMG Publishing is growing slowly. And taking its time to make correct decisions at the right time and in the right way. WMG Publishing has 190 different books and stories published as I write this.
Also, I have started over twenty businesses over the years, many of which are still thriving. I have started four different corporations and attended three years of law school, although I am not an attorney and nothing in these blogs should be considered legal or accounting advice. I have been making my living as a freelance writer since before I became a publisher. (Trust me, Pulphouse Publishing did not make me any money. That is part of the mistakes I hope to not repeat with WMG Publishing.)
Please Note: The chapters in this book started life as a blog post on my web site, deanwesleysmith.com. So, there may be different references to posts. Also, I will be updating these chapters at times on my site and doing other series that play into this book. Feel free to stop by and join in on the discussion.
Some of the earliest decisions a publisher has to make can be changed down the road easily. Some are difficult to change. So, I’m going to break down some of these early decisions into basic groups. And keep in mind, there are no correct answers on any of these decisions. Just what you want to do.
Early Business Decisions
1… Pick a Name.
Yup, as a publisher, your business needs a name. This could be one of the hardest decisions to change down the road, so caution. My suggestion: Pick a name that is easy for everyone to remember, that is fairly short, and that sounds like a publishing house imprint. CRITICAL. Make sure the name is not being used and go get the domain address. Do not wait. If there is any chance of using a name and it is open, grab the domain address. Just you simply checking on it being available might cause someone else to buy it. Grab it quickly.
If there is no available domain address with a .com in your business name, pick a new name for your business.
2… Pick a Business Structure.
You basically have two choices. One, keep the business as a sole proprietorship. That means you own it all and on your taxes you file a Schedule C business form with your yearly taxes. Unless you are planning on growing your business very large or making a lot of money, this is the easiest way to go.
The second way is go to an attorney and an accountant and have them set up your publishing company as a corporation of one type or another, depending on your long-term plans. If you need to ask why you would want a corporation instead of a sole proprietorship, you don’t need a corporation. All a corporation will do is cause you more costs and get you in trouble.
3…Open up a dedicated checking account under your business name.
This is easy to do in both types of business. Most states for a regular sole proprietorship, you simply get a form from your bank called a “Doing Business As” form. (There are different names in different states, but most call it a DBA.) File that with the state and give it to your bank and you can open up the business checking account. Then, as you have money flowing in from all the sales in all the different sources, have the money go directly to your business checking account. And take all publishing expenses out of that account as well.
For heaven’s sake, keep all your receipts, just as you do with your writing.
If you started a corporation, you will know what to do. If not, ask your accountant and think twice about starting a corporation.
Early Business Structure Decisions
Okay, you’ve got a business name, a checking account, and have decided what type of formal business you are running. Now you need to decide what kind of structure your business is going to take inside the publishing house. To determine that, ask yourself these simple questions and write down the answers.
Question 1: Over the next five years, who is going to do all the production work?
A) You do it all.
B) You do some and hire out contract work for other parts.
C) Other people do it all.
D) Combination of the above depending on the project.
If you are going to do it all, ask yourself if you have all the tools to do covers and the computers and the software to do them? Do you have the ability to design covers? Can you layout books for PDF files for POD publishing, both interior and cover? And if not, what is it going to cost and how long will it take to learn how to do all these things? Most tasks are not difficult, but there is a learning curve that takes a little time.
(An aside: I did some pretty ugly covers starting off with an old computer and no good software in helping out WMG Publishing. I started getting a lot better once WMG Publishing invested in a computer and new software for my office. Now, with even more training, the WMG covers are looking more professional. It takes time to learn. Take the time.)
If you are going to hire some jobs out, do you have the upfront money to do so? Or if you are going to hire everything done, do you have that kind of up-front money? (Welcome to being a publisher. Traditional publishers can spend a lot of money on your book before they ever earn a penny. You are now a publisher, not a writer. Expect up-front costs.)
Question 2: How much inventory do you have or will you have in the next five years? How many books are finished but unsold? How many short stories? How many novels or stores sold are now reverted to you?
How much new product can you produce in the next five years?
If you only write one book every few years and have no inventory, you don’t need to do any of this. If you have a number of novels, numbers of short stories in inventory, and can write two or three novels a year and some side stories, then mark that down. Publishers work on a “publishing schedule.” Start setting that up as well and be realistic with yourself.
Inventory is critical in any business. I will talk about inventory-in-business aspects of publishing in a later chapter.
Question 3: Editing and Proofing. Every publisher has editors and proofreaders. How do you plan on handling that? Do you have a good first reader? Do you know whom you can hire for copyediting? Or just not do it? And if you want a copyeditor, can you afford the up front fees. Good copyeditors run from $50 to $1,000 per manuscript. Good, respected editors actually editing are more.
There are other basic questions, but for now that should be enough to get you thinking on the right track as a publisher.
Early Business Chores
As you are setting up your publishing business, there are numbers of just basic chores that need to be taken care of. I am assuming you plan on being both an electronic and POD publisher. If not, why not? Why make a decision so early on to limit your possible markets? Plan to do it all, so that means you have chores to do. And trust me, these are chores.
Chore #1: After you have your business checking account, so you don’t have to change these later, set up publishing accounts on Amazon, PubIt! (B&N), Smashwords, and CreateSpace. (Yeah, I know, you might switch to LightningSource for POD later, but early on save the mistake money and do CreateSpace. Or do as I have done and set up accounts on both. Just practice on CreateSpace where you don’t get charged for every mistake.)
Chore #2: Set up a business PayPal account. Hooked to your business account if possible. You will need this in more ways than you can imagine, including down the road putting shopping carts on your web site.
Chore #3: Set up a placeholder web site, even if it is under construction as WMG Publishing website is. You’ll get it fixed later.
There are other chores, like starting to explore how to get books in libraries and how to get ISBN numbers, but for now, just stay with the first three. I’ll talk about ISBN numbers and library sales in future chapters in this series.
Early Decision: What Kind of Publisher Do You Want To Be?
Okay, to keep this basic, there are three major types of publishers in publishing, and I don’t see this model changing at all. In fact, I see it becoming stronger. You can be solidly in one category or actually can function in all three if your readers are clear. But my suggestion is pick one to start.
1) Traditional Fiction/Nonfiction Publisher
2) Discount Publisher
3) High-End Publisher
I will say right off that Pulphouse Publishing Inc. was a high-end publisher for the most part. In the late 1980s and early 1990s I sold some books for over $50.00 each and most of our books were signed and numbered and retailed between $20.00 and $35.00 each. Very high-end, and although we were trying to change it in the last few years with short story paperbacks and magazines, we never really made the shift before the end. What Cory Doctorow is doing is being a high-end publisher on his “experiment” book. He has one stated priced at over $300 per book.
I will talk about each of these types of publishers and the different business models they demand in future chapters. But for now, here is a very quick summary of the three choices you have to make early on as a publisher.
High End: I believe that High-End publishers will make great money in this new world with all sorts of enhanced products. This new world is gold for high-end collectors books. But it will take a publisher who can publish top names, do enhanced production and books, and knows how to put out top-quality leather and signed work. This area is difficult at best for a beginning publisher.
Traditional Publishing: Basically, this is the New York publishing model. Books sell for all the traditional prices, go to the traditional outlets, and are bought by regular readers. All bestsellers for the most part are traditionally published. We have positioned WMG Publishing in this model. Traditionally Published novels will continue to be the vast majority of all books published and where the highest profit margins are per product sold.
Discount Publisher: This area is very large in the publishing world in general and has many large companies working it. The outlets consist of discount shelves in normal bookstores, discount mall stores, and other types of discount stores. Many books beyond the bestsellers that you see at Costco are discount books. In electronic publishing, the price being set by discount publishers is 99 cents.
In this area of publishing, the margins of profit are thin and the publishers depend on volume of sales to make even a decent profit margin. Very few traditional publishers have discount arms, but they do high discount at times to some stores like Wal-Mart. That is different than discount publishing as a business model. Most discount publishers only focus on being discount publishers and go for the volume of sales.
Again, more on all three of these major types of publishers in future chapters.
As a new indie publisher, you want to decide what area of publishing in general you want to fit into. As I said, with Pulphouse Publishing Inc., I started as a high-end publisher and that was our plan from the start. It was only years later that we decided to try to move to the traditional model. And the move, once we were established as a certain type of publisher, was difficult at best.
Summary
That’s most of the basic early decisions you have to make once you decide to publish your own work. Get the business set up, do the chores, look at your start-up inventory, and then look hard and fast at what kind of publisher you want to be.
Being a publisher is fantastic fun. And to be honest, I’m once again having a great time playing on the publishing side of the desk. I never thought I would move back to this side of the desk, to be honest. But at the moment I am glad I did.
Expected Costs
The first chapter was “The Early Decisions” which included picking a business name, setting up checking accounts, and so on. There were no real costs at all in those early steps unless your state had a small fee for registering a business name. Checking accounts are free, so are PayPal accounts, and so on.
So, the question on this second basic business-planning chapter is: “What are your expected costs?”
For those of you with a basic understanding of business, you can now see the structure of how I am setting up these chapters. Before starting into a business, there are certain things that need to be figured. Set-up costs, projected production and business costs, and projected income. You have no real data on the costs or the income, at least not accurate data, but anyone with a lick of sense who is starting a business will sit down and try to figure these factors out to some degree.
It would seem that expected costs should be tough to figure. But actually, in this business, they are not. At least for most levels. It just will take a little homework is all.
So, let me first divide this discussion into three major areas.
Cost in Money.
Cost in Time.
Set Costs.
All three areas are critical to figuring overall expected costs of producing a product.
In the first two categories I’ll divide the discussion down into three major ways of running your company: 1) Do All Work Yourself. 2) Do Some Work Yourself, and 3) Hire all work done.
And, of course, the categories cross over. If you find your time more valuable than your money, then hiring things done will be more of an option. And so on.
Cost in Money
1) Do It All Yourself: For Electronic Publishing
No costs. None, zero, zip. No actual costs that I can see at all if you want to do everything yourself, and I do mean everything. You lay out the book in some free program, lay out the cover in some free program, find free art at public domain sites or free photos or take your own electronic photos with a camera given to you as a gift at Christmas on a computer given to you for your birthday.
There is no cost at all to upload a file to Kindle, B&N, and Smashwords (which then gets your story out to Apple, Kobo, Sony and others). Use the free ISBN feature on Smashwords and use the free tracking numbers (which are like ISBNs) for Kindle and B&N.
So, do all the work yourself and there are no real expense costs per project.
However, most of us buy our own computers, some of us have bought software we use to format books, and so on. There are all kinds of accounting tricks depending on how you set up your business (see Chapter One) to get some of that early expense money back when you start making money. Talk to an accountant for help with business taxes if you do not understand taxes. But for this discussion, let’s just assume you had the computer and the software before you formed this business and can use that equipment at no real cost to the business.
So, bottom line, there are basically no direct costs if you do all the work yourself and put everything up electronic publishing. (I am not counting overhead at the moment, so accountants, stop shouting. I’m trying to be real basic here.)
2) Do Some Work Yourself: For Electronic Publishing
A few large warnings in this area that we have talked about in the New World of Publishing series. If you are going to hire help, do it the way you would hire day labor. Simply put, if you want to have a hedge on your property trimmed, but you don’t feel you have the time or the knowledge or the equipment, so you hire a gardener and pay him or her for the job. A one-time fee. That’s day labor.
Never give anyone a percentage of your property for a single task. Your copyright is a property (basically), so giving someone a percentage to do a simply job such as doing a cover would be like giving that gardener part ownership in your home for trimming a hedge one afternoon. When put that way, it sounds too stupid for any writer to do, right? Well, the stupidity of writers never ceases to amaze me when it comes to business, which is why I am saying this bluntly right here.
If you pay for a task to be done, pay a set price. Period. There are lots of new start-up businesses that offer a menu of tasks for set prices.
But let me also say this clearly right now. If you are worried about money, spend the time to learn how to do this yourself and have no real costs. This is not rocket science. At WMG Publishing, we offer a four-day class in which we will teach you how to do it all yourself, easily. And so much more. You would be better served coming to one of those classes (for information, go to deanwesleysmith.com) and then doing it yourself than paying to have someone else do every cover or every conversion.
But that said, now that I have been clear, there are some tasks you might not have the equipment to do. For example, I have a bunch of old books and short stories that at some point I will want to republish electronically or in POD form. But I do not have a good scanner and software to scan the book. I can clean it up afterward to a degree, but I will pay someone to do the scanning for me on a one-time fee per story or novel. (And don’t offer. Thanks, but I already know whom I will hire.)
So sit down, do the research (the homework I mentioned before), find the people, the businesses who can do what you need for a single fee, then compare prices, shop around, and mark the price down.
3) Hire All Work Done: For Electronic Publishing
In this area you have a lot of work to do to find someone or some other business to do all the work for you. (Giving a percentage of your property is again just silly. It may sound good, but it is too stupid for words.)
But if you do plan on hiring everything, do your homework, find the costs out, and then get the costs totaled and written down for all size projects you might do. You will need that number for the profit-and-loss statement you will be doing later on.
Print On Demand (Trade Paper)
1) Do Everything Yourself: Print on Demand (POD) Publishing
When we get into POD publishing, we start running into some costs and projected project costs. First off, just the POD publishers have some basic per project costs. CreateSpace is by far the cheapest to start and learn. CreateSpace is pretty much a flat fee of $25.00 plus cost of proof and shipping the proof. WMG Publishing usually gets a book done and approved for under $60.00 per book. LightningSource has “mistake fees” that can mount up. And their per-book charge is higher. So do your research on the two to determine what you need and then decide.
As far as software and computers, you can do it yourself on any number of programs as readers have made clear in the comments sections of The New World of Publishing. WMG Publishing has gone ahead and invested in a top-line Mac computer, InDesign, and Photoshop for me to help out on. And I am learning slowly. Plus with new programs there is the $25.00 per month fee for Lynda.com to learn the programs.
Again, talk to an accountant (which will cost as well) for how to figure in the capital expenditures of buying computers and such. But for per-project figuring of a POD book, the costs can range between $60.00 at CreateSpace to hundreds at LightningSource. Estimate and research before you start to know which way you would like to go.
2) Hiring Some Help and 3) Hiring it Done Completely: POD Publishing. Do your homework. Get estimates. Then make sure you have those figures handy for figuring out a profit and loss calculation later on.
Cost in Time
1) Do It All Yourself: Cost of Time For Electronic Publishing
Wow, is this going to be tough for you to figure. Unless you already have book design skills and some cover skills, the learning curve will be painful and frustrating at times. Again, this is not rocket science, but there is a learning curve, and learning not only takes time, but feels uncomfortable.
The early books and stories will take the longest amount of time. And you will make a lot of mistakes. But the book can always be changed later. That’s one of the values of electronic publishing.
As you learn, the time spent on each project will be less and less. But how do you figure your time? That’s a calculation you will need to figure out.
As I have said before, I like Mike Resnick’s saying. “If you aren’t earning $500 per day, you are not having a good day.” Since I work over ten hours per day, I just divide the $500 by 10 and get $50.00 per hour. That’s the number I use in my calculations and on any profit and loss calculation. It works for me. And I can tell you that some of those early stories I put up for WMG Publishing will never earn out my wage because I was in major learning curve mode. Expect that.
However, I have another way of looking at this:
Your early projects are just school.
You don’t expect to get a direct return on an hourly basis from going to class or college to learn a skill. Think of the early books as learning classes and don’t charge your time against them. WMG Publishing had a meeting and decided that we all needed to develop skills, so we only did short stories for the first six months, just practicing, as if we were in school. Now the novels and other real projects are starting to go up and they look a ton better. And we are making some money on those practice projects as well, but wow do some of them need to be switched out. We’ll get around to that at some point down the road.
And a side note: WMG Publishing does some basic workshops in publishing. Check out the web site or my web site for lists of workshops.
2) Hiring Partial Help and 3) Hiring it all Done: Cost of Time for POD Publishing.
This is where you as a publisher need to balance your available money with your available time. My suggestion to you is hold off on POD if you don’t have the money to hire help until you have the electronic sales earning money for you. And also, by then, you’ll be more comfortable with book production and can do it yourself.
But if you have enough money, again do your homework. Expect help on POD layout and covers to cost more because it takes longer. Get quotes per job and shop around. And then try to figure out how much time it will take you for each project, even with someone else doing some or all of the work. Each project will be different.
Set Costs
Set costs are expenses set by your work situation. Your computer connection fee, your electric bill, your office rent, and so on.
Best way to figure these costs if you are set up at home is set up a room or area in your home only for publishing. Then figure what percentage square foot of your house your office is. (Example: 1,200 square foot home. 200 square feet of dedicated office space. So 1/6th of all your home expenses are office expenses.)
Do not ignore these set costs. They mount up and should be calculated.
At first, these costs will be tough to figure in a per-project basis. But you need to try. For example how many projects can you get up per month? If your set costs are say $300 per month and you can manage 3 projects per month, than you need to put $100.00 in set costs against each project.
Given time you’ll catch the hang of all this. It doesn’t have to be to the penny, but do count set costs to act like a real publisher. And if you do, you’ll save money in taxes and such.
My Suggestions About Expenses
Back in 1987, Kris and I started Pulphouse Publishing because it seemed like a good idea at the time. And I was in a hurry, so instead of making sure I had the money first, I went out and borrowed enough money to get the business off the ground. And from that moment forward Pulphouse seemed to always have higher expenses than it had income.
Let me simply say: NEVER AGAIN!
So my suggestions from the school of hard knocks are:
1… Do it yourself.
If you can’t do it yourself, wait and keep learning until you can do it yourself. (I think this is the most important suggestion I will ever give you.)
2… Don’t spend one extra buck you don’t need to spend.
All successful business people are cheap.
3… Don’t put money pressures or expectations on the business and the sales of any project.
Sleeping is a lot more fun and you won’t sleep if you are constantly worrying about what you are doing wrong or trying to sell as many copies as some other writer.
4… Do Not borrow money to start this up.
Too much pressure. Let the money build slowly in the business account and only spend what you have available and then only after careful thought.
5… Remember, if you do this yourself completely, this is a production business that has no real project costs beyond set costs.
Sure, as a writer, you have time and writing costs and office costs and such, and all that needs to be figured in. But you have no real production costs per book sold through your online stores. And you can make up to 70% of retail. Let the money build. There is no other business I know like this one.
6… Do Not get in a hurry.
Sure, I know this feels like a gold rush and that if you don’t jump in with everything all at once, you will miss out. But hogwash. Stop reading the Kindle Boards. This is no gold rush. Books do not spoil and readers do not vanish. In fact, in six months there will be more electronic readers than now, and even more a year from now. You have the time to learn.
7… Think of the early projects as a form of school or class.
They are practice. Figure a profit and loss for them as well as practice, but don’t sweat that they might not make a profit until 2015. Call them practice.
8… Keep learning everything you can about publishing and business.
I’m afraid this does not mean listening to the other beginners on the Kindle Boards. It means talking to real business people who are running successful real-world business. Talk to them, ask them questions, ask them about bookkeeping and how they keep track of set costs and so on. Find people, not just publishing people, who run a successful business in your area and pick their brains. You will be stunned at how much you will learn.
Projected Income
To actually get a profit-and-loss calculation for a book project, you must now make some pricing decisions and projections of income.
Yeah, I know. I know. This is all so new, how can anyone predict how much money they will make on any project? Well, you can’t. Not really. But you can try. And you want to know a dirty little secret. New York traditional publishing can’t predict how much they will make on any book either.
But they try.
And that’s the key. To really act like a publisher, you need to understand what you are trying to gain. You need to know how many sales will get your expenses back. And you need to know at how many sales will you start making a profit.
So this chapter is about why you need to try to determine set income ranges, and how to do that at this moment in 2011.
This is the last of the basic three set-up chapters. After this one, we start getting into more detail on specific areas.
Caution!!
Here we go again, back into pricing. Remember, this discussion is about acting like a real publisher, not a hobby writer. Real publishers are in the business to make a profit. That’s the focus now, so please keep that in mind. If that is not your intent, fine.