How Authors Really Make Money: The Rebirth of Seth Godin
fourhourworkweek.com
fourhourworkweek.com
Tim Ferris's figures match my experience. What he doesn't make explicit is that "publishing" is about fourteen different vertically integrated businesses flying in loose formation -- genre fiction publishing, for example (my stomping ground) is utterly different from business publishing or academic publishing, although the products are sometimes sold via the same retail channels -- and the prospects for a successful career vary drastically between fields. Nor does success in one field imply a track record transferable sideways into another publishing field.
I'd also pick a nit: in my experience, ebook sales (and Amazon Kindle store sales in particular) are dwarfed by hardcover sales -- by a 50:1 ratio, in fact. Amazon are almost certainly cherry-picking if they can come up with books where Kindle sales outstrip hardcover. However, that's looking backwards -- it's fairly clear that ebooks are a rapidly growing sector and in another 2-5 years they'll definitively overtake hardcover sales by volume, if not by revenue. (Hardcovers net roughly $16 after discount, of which 10-15% goes to the author; Kindle store books net $7-10, of which Amazon takes a 30% cut before 5-10% of the remainder goes to the author.)
For me personally, I don't want books in hardcover, ever. I always hold out for the trade paperback. It's quite annoying that, from the authors' point of view, my preference works out to me being a cheapskate who gives them less royalty. But I just don't want hardcovers, they're not at all attractive.
There's been many occasions when I've been at my SF book store of choice, realizing some author I like has released a new book, and then my next thought is "okay, so in 3-6 months or whatever I can get this". :|
I guess I could move to e-books, if the price/royalty/release date data is better there, but I really like physical pocket books, still.
Alas, that's not how publishing works; I create and sell the IP that goes between the covers, but how those covers are put together and marketed isn't my department (and I have no control over it).
One point to note is that commercial fiction publishing runs on a reverse-auction basis: prices start high, then drop. Hardcovers (perceived as high value items) come out first, then are superseded by successively cheaper/smaller paperback editions after early-adopter demand is saturated by the high priced product. Unfortunately the pricing model is conflated with the physical product's format, and with the distribution channel (trade vs. mass market), which muddies the water enormously. (I'd love to do an ebook edition that launched at, say, $20, then dropped in price by 5% per month until hitting a floor of $4. It'd be interesting to graph sales against time ... but unfortunately the accounting procedures in place in the publishing business, and locked in via contract, seem to make this impossible without either (a) self-publishing or (b) protracted negotiations with a legal department that are not dissimilar to kicking a dead sperm whale up a beach. In high summer.)
And yeah, the e-book concept would be very interesting, too bad it's not possible from where you're at.
We need an author that is ... successful enough to not have to depend on publishing as an income to write something that people want, and then publish it using that e-book model. I'll go and sit over there, waiting for that to happen.
seem to make this impossible without either (a)
self-publishing or (b) protracted negotiations
with a legal department that are not dissimilar
to kicking a dead sperm whale up a beach. In
high summer.)
You already have a dedicated fan base (I'm one of them - I think you're basically the only currently-living sci-fi author I still read), getting the word out and selling the books online is surely possible?
Even tho you'd presumably get fewer sales from not being in stores, wouldn't avoiding giving 90% of your revenue to a middle-man possibly make up for it?
IIRC some rock band (I think it was REM or U2) recently successfully did just that by selling their album only in digital format online.
[1] I have no clue about the publishing industry, just curious as to why this isn't done more often.
Mr. Stross has indicated that he's not ready to 'do a Radiohead' yet. I can understand why.
I spent ten years working for a (very) independent UK record label (Warp) and am now managing an artist.
Self publication on any scale is still not as easy as it looks. You need a group of skilled people around you to make it work. Oddly enough, that group of people starts looks a lot like a record label, or a publishing house.
If you have found a really good (or perhaps even tolerably good) record label or publisher, one that you trust, that pay you good advances and royalties, that have good people on board that you enjoy working with - then self publishing doesn't look like that attractive an option. It's certainly not an easy one.
Having said that, I think Charlie should give it a shot sooner rather than later, because his fanbase will be disproportionately well connected, which reduces the effort of marketing greatly.
http://www.antipope.org/charlie/blog-static/2010/02/common-m...
I was convinced before reading that set of entries that self-publishing was a simple, obvious answer. I'm now convinced that like all other simple, obvious answers, it's wrong :-)
I still think that authors could form together and create a mutual publishing association of some sort and succeed that way. However, I can totally understand that anyone who writes a book does it because they like writing and not publishing - to an extent that they'd rather not make the money than as good as switch careers completely.
Didn't know it was such a common question...
As mentioned in the article, Amazon already sells more Kindle books than they do hardcover books so I fail to see why they would need to cherry pick. And no need to wait 2-5 years, the future is here.
But Amazon has talked about how they got to that number and won't provide many specifics about Kindle sales in general. In addition, if Amazon is selling an equal number of books, then hardcover sales can still generate more revenue, which is what Stross points out: "they'll definitively overtake hardcover sales by volume, if not by revenue".
Speaking as an owner of a K1, K2, iPad, and in a week or two a K3, I'm putting the future out to Five years before eBooks become the dominant form of consuming light fiction in the United States, possibly even less. Ebook readers are going to get very cheap, very quickly. I'm expecting WiFi Kindle will be sub $99 within twelve months. And that will be a Hot, Hot Christmas Gift.
But, we may see it more quickly in the TextBook Market - those new inkling textbooks are _killer_ - I'd hate to be in the business of owning a University Textbook store right now. Their days are _very_ numbered. My call is minimum 50% business lost within 3 years, and close to 100% within 7 years. The kindle made me think that there would be a long time before there was a market for electronic textbooks (The Kindle is a horrible experience for textbooks) - The iPad+Inkling (and similar tablet/e-textbook frameworks to be released soon) make me think we're going to be blown away by how fast the conversion takes place. Fall 2010 - .5% of Students get their textbooks in eBook format. Spring 2011 - 1% Fall 2011 - 3%, Spring 2012 - 8%, Fall 2012 - 15%. Spring 2013 - 25%, Fall 2013 50% of all University textbooks in eBook format.
Textbooks w/Social Networking are here! (Literally - the Inkling App lets you share notes on the content with your classmates - and has a world class highlighting feature)
Inkling is the Killer App for the iPad.
Any idea of what ebook is he talking about?
At the risk of stating the obvious, returns followed a zipf distribution (the overwhelming majority make nothing, a few make small amounts, some smaller number do about what I'm doing with BCC, and a few make huge businesses out of it).
This is far from the only seedy sector which is awash in greenbacks, incidentally.
it's bullshit...that's $60-$120 million profit a year from a single book. These numbers just don't exist.
If most of his sales are from affiliates, who typically get 75% per sale...that means the book would need to sell close to $200 million.
If the book costs $1,000, that's 200,000 sales.
If the book costs $500 that's 400,000 sales
If the book costs $250 that's 800,000 sales
If the book costs $125 that's 1,600,000 sales.
If the book costs $50 that's 4,000,000 sales
Then you need to take into account conversion rates. If the book sells at 1:200(average more or less)...
@$1000 that's 40 million uniques a year
@$500 that's 80 million uniques a year
@$250 that's 160 million uniques per year
@$125 that's 320 million uniques per year
@$50 that's 800 million uniques per year
And as far as I know the #1 site in the world is Facebook, not makemoniezonline.com
Same goes for the affiliate commission. No seasoned marketer would give away 75% (unless there's a backend upsell). It's more like 25%-50%.
I think I know what ebook Tim is referring to here and if it's the same one, then the author is selling 100,000-200,000 units at $100 a pop with the affiliates making 40%-50% in commissions.
P.S. It's interesting that your comment got so many upvotes. I have a feeling a lot of ppl are voting based on their gut reaction of '$10,000,000 a month? No way. That's bullshit!' rather than actually thinking the numbers through.
I'd like to see the product that you are getting 1:10 conversion rates on. Frankly that sounds like bullshit. And if you are really getting those numbers...then you wouldn't be saying you are "just an above average marketer".
The only way to get numbers like that is by pitching a product that has 0 competition(something like water bottle art making)....which usually means there is almost 0 traffic there.
This doesn't even make any sense as an argument, it's like saying water is wet and air is dry. And 'buy some paid traffic'? Virtually all marketing traffic is paid traffic, that's what marketers do, they buy traffic.
I'd like to see the product that you are getting 1:10 conversion rates on. Frankly that sounds like bullshit. And if you are really getting those numbers...then you wouldn't be saying you are "just an above average marketer".
So my fault is being modest? Fine, I'm a kickass marketer. Either way, my product is an ebook for which I buy traffic via ppc, ppv and media buys and avg a CPC of $0.40, an EPC of $0.90 and a CR of 10%.
The only way to get numbers like that is by pitching a product that has 0 competition(something like water bottle art making)....which usually means there is almost 0 traffic there.
You have no clue what you're talking about. My numbers are peanuts compared to those of my colleagues (and no, they don't make them by pushing scammy rebills). Take some time to actually study the mechanics of the industry and you'll see what's possible and what's not. Maybe work with an experienced marketer or 2.
actually the third matters a lot...you can get .05 a click, but it won't matter if that particular keyword converts at 1:200.
I know the mechanics of the industry...nothing can actually convert at 1:10. That's bullshit and you should know it if you actually do affiliate marketing.
ESPECIALLY if you do ppv and media buys like you say.
Hell...most products don't have 1:10 conversions for the actual order form. That means that for every 10 people that actually tried buying the product...only one actually paid.
So you are going to tell me your colleagues are converting at 1:5 for an ebook product? How about 1:1?
If you are going to bs...at least make it believable.
Like I said...the only way you can actually get 1:10 conversion rates...is if you do VERY targeted CPC...which usually means you are getting low volume(which explains the 40 cents CPC).
How many actual sales do you have every month at that 1:10 conversion rate?
you can get .05 a click, but it won't matter if that particular keyword converts at 1:200.
Just because it converts at 1:200 for you doesn't mean that that's the rate for someone else. 90% of marketers can't make dating work on facebook, but the rest of the 10% make a killing. If you take their average CR, it'll be something atrocious (not as bad as 1:200, but bad nonetheless), but it makes no difference for those 10% of marketers. My point is that industry averages don't mean anything. It comes down to how good a marketer you are.
I know the mechanics of the industry...nothing can actually convert at 1:10.
Then we are in different industries.
ESPECIALLY if you do ppv and media buys like you say.
80% of my traffic generation is via media buys, 18%-19% via ppc and 1%-2% via ppv.
Hell...most products don't have 1:10 conversions for the actual order form.
Again, this comes down to the marketer. If that's all you can pull in with your landing page and copy, then that's all you can pull.
So you are going to tell me your colleagues are converting at 1:5 for an ebook product? How about 1:1?
1:1? No. 1:5? Yes. But they care more about the CPC and EPC than the CR.
the only way you can actually get 1:10 conversion rates...is if you do VERY targeted CPC...which usually means you are getting low volume(which explains the 40 cents CPC).
Of course I laser target my CPC, only a newb marketer wouldn't. But while low volume = low CPC, the inverse isn't necessarily true. It comes down to the marketer - a newb will pay $5 CPCs but an experienced one can get high volume traffic at a 10th of that price.
How many actual sales do you have every month at that 1:10 conversion rate?
Here are my numbers for July (rounded from memory) -
price of ebook - $8
visitors - 71,000
CPC - $0.40
expense - $28,400
CR - 10.9%
buyers - 7700
revenue - $62,000
EPC - $0.87
And yes I know Geary...and he never made 500K a day. It went $30K the first year, $100K the second, and $1.1m the third. Now he makes something like 5-10K a day.
For example, I sell information products as well as a New York Times best-selling book. My students do very well, whether it's learning how to automate their finances or earn more via freelancing. If they don't, they request a refund and I eat any costs of my online products.
Virtually every info-marketer offers generous guarantees and has to live up to their product's hype...or they go out of business. This is an extremely competitive area.
Vaksel, let me also offer some feedback on your numbers. You're analyzing them without knowing how the field works, and frankly every Web2.0 company could learn a LOT from studying the direct-response field. Want to know how to increase your AOV by 200% or 300%? How about finding undiscovered 6-figure revenue sources in your business (like I did 2 months ago)? Why not look to the people who have been doing this for decades?
You assume that most of the money is made from the sale of the ebook itself. That's not correct. Most of the revenue is actually made from the "back end," or other products that are either cross-sold, upsold, or repeatedly sold. Every direct marketer knows that you profit more from having a dedicated group of customers who buys from you time after time...which is why the very best ones take INSANE care of their customers. I'll speak for myself, but I continue to send lots of free material to both my free users and my customers. I email them free stuff. I call them. I write them hand-written cards (seriously).
As a result, on the rare occasion when I sell something, I can sell it for premium prices (often 100x more than my competitors charge for their products) and people happily pay it because they trust me and they know it's the best.
Here's another example. I know an info marketer who pays a 200% commission for any affiliate who sells his book. So if you sell his $27 ebook, you get $54. How does he afford that? Because he's systematically built a funnel that offers his customers more products that they want and are willing to pay for, making it a simple no-brainer customer-acquisition cost -- even at 200%.
A skilled direct-response marketer could take a $27 ebook and turn it into $500 of LTV...and the customer would be DELIGHTED to pay it if the material is of outstanding quality.
IMHO, a lot of Web2.0 companies should stop poo-poohing marketing and learn how it really works. Virtually every Web2.0 company should be doing upsells, cross-sells, and partnerships...and as a guy who co-founded a venture-backed startup and know a lot of other startup CEOs/marketers, I know that very, very few do.
I've put together several bookmarks that might be interesting:
* http://delicious.com/ramitsethi/emarketing (direct-response stuff)
* http://delicious.com/ramitsethi/marketing (general marketing)
* http://delicious.com/ramitsethi/monetization
Hope this helps.
Without any concrete examples, I'm inclined to assume that it's some variation on the "get rich quick" scheme. This makes the numbers even less believable, as the ebook author has even more incentive to claim extraordinary sales numbers. No one wants to buy a get-rich-quick book from someone who claims to sell 10 copies per month. If an author claims to rake in $5,000,000 per month, then people are going to want to hop on the bandwagon and buy his ebook.
Ramit has a way of marketing like a scammer, but delivering solid content every time. Seriously "I will teach you to be rich"? I was really reluctant to buy a copy, but after a few solid recommendations picked it up. I trust Ramit's opinion on finances highly, enough to bring my people to see him at sxsw and keep reading his blog. My copy of his book has been passed through probably 10 people by now (haven't seen it in a year) and I link to his articles from my University niche sites, because they have tremendous value.
When is "I will teach your business to be rich" book coming out?
I'm focusing on helping people earn more via my Earn1k freelancing course right now, so it's basically an IWTYTBR business course. We teach a lot of techniques that can apply to freelancing or even product-based companies.
Btw, thanks for the kind words!
Lists like that get a 15-17% open rate(# of people who view emails)...and out of those 3-5% click rate(# of people who click on the link)
So that 50,000 list = ~400 clicks.
Even if every one of these converts(not going to happen), that's only 400 sales.
Even the biggest names who sell these info products, the guys who have their own lists with 2-3 million emails, and who have tens of thousands of affiliates...only manage to make 5-10 million a year in revenue. Before you take into account the 75% commissions they pay to affiliates(pretty much a must have now).
Reason: build a LIST ... the, build a relationship with this list (free monthly newsletter) THEN sell high-end product (eg membership system @ $19pm 7m7y.com for an example).
AJC
Danish internet entrepreneur Martin Thorborg sold a 1000 ebooks at 300USD per book.
Also not all conversion is done the way you seem to think.
Think bigger, more targeted audience (people who really want the edge on making money online vs devoted parrot owners)
"Cringely: Making 400k/yr profit on an eBook about parrots"
>I believe (conjecture, yes) that the figure we are missing is Books-Per-Person.
>If you have a Kindle, as I do, how many books did you buy in the first week or two? How many unread books do you have on your Kindle? Unlike with print books, you don’t have to look at a stack of unread material like undone homework. Ergo, you purchase more digital books than you would ever purchase in print. If Amazon is selling 180 Kindle books for every 100 print books, I wouldn’t be surprised if 10-20 people are responsible for the former, whereas 80-100 people are responsible for the latter. This reflects that Kindle owners are buying more books per capita, not that paper purchasers are buying fewer.
I have written several books, and only a few have sold well, so I have to admit that my net worth would be more if I had spent my writing time doing working (software development). However, echoing the article:
1. writing books gives an author access to very interesting people and experiences
2. writing has a long tail of benefits that often come in the form of interesting work and offers for collaboration
Also, it is not any more work for the author. You usually don't even have to sign any additional paperwork. It's extra work for the publisher to be sure, but it's all gravy for you.
I miss the long-gone days of clever, concise and original titles for stuff.