Like any other corporation, a publishing house exists to generate profits, and through that commercial success ensure its own future. Without a stable cash flow, the house wouldn’t be able to pay their staff, grow their stable of authors, nor maintain a far reaching distribution network. With hundreds of thousands of books crossing their desks each year, acquiring editors must choose which books they think will sell, not necessarily those that are the best art.
Furthermore, it is in any business’ best interest to secure their raw materials as cheaply as possible. In the case of publishing, the publisher will offer a smaller advance and lower royalty rates first, increasing their financial commitment only when they feel they need to. By doing so, they reduce their own financial risk and maximize the potential profit margin.
The truth of the publishing business is that most new authors will actually lose money in the short term. One book on the shelves simply doesn’t sell enough copies to earn out all the money the publishing house invested in bringing the novel to market. Instead, I’ve heard it quoted that it usually takes three to four books for a new author to start selling well enough to maintain a positive cash flow. That’s why there are so few publishing slots available for debut authors. After all, if your next mortgage payment depended on the commercial success of another, would you choose the unknown and unproven newbie or the established mid lister?
The high risk associated with debuts means that new authors tend to be offered smaller advances and lower royalty percentages. The house can’t afford to bet big on each and every young writer they give a chance. At that point in the relationship, the publishing house has the power because they control the thing of value — the ability to produce and distribute the manuscript. The young author has no leverage with which to negotiate and must therefore except the deal as offered or choose to walk away.
Once, all authors faced this conundrum when they started working with traditional publishing. However, with the indie revolution, things have changed. An established indie author has a verifiable sales record that proves their commercial viability as a writer. By that point, they are already making money off their IP, and so the balance of power shifts to favor them more. They control the thing of value — a property that would be sure to make money. They could continue to do so with or without the publishing house behind them, and so have a better position from which to negotiate.
As an author, you need to get used to the fact that you’ll never be paid what you deserve for a manuscript. Instead, you will be paid what you are able to negotiate for. The key is to understand who has the thing of value, and therefore the most power in the negotiation. Writing may be an art form, but publishing is a business.Tags: Sequence 07: Living the Writer's Life