Understanding the Business of Books

Understanding the Business of Books
What most people don’t understand about the book business is that the conventional sales route of books through physical bookstores is to the advantage of the bookstores and big publishers. To stock a book, bookstores usually require discounts of at least 55% off the retail price of the book, plus they usually require that the book be fully returnable so they can get their money back if the book doesn’t sell in a fixed amount of time. Bigger publishers have the economies of scale to play that game, but for smaller publishers, getting books stocked in stores is often a risky game with high potential to lose money.

Considering all that, you may wonder then why I went the small publisher route with this book. Well, the reason is multifaceted and is subject to change if I were made a decent offer from a bigger publisher. For one, with big publishers comes a lot of bureaucracy, which slows down the publishing process and means giving up a lot of control. And given the fact that, in the modern world, traditional publishing is becoming more and more archaic and unnecessary (thanks to technology), as a new, young author, going that route seemed to me potentially risky and excruciating. The extra two years it probably would have taken me to get the book out with a larger publisher may have made the economies of scale advantage of the bigger publisher to get books stocked in stores irrelevant. In two years, we may see the undeniable trend that more and more physical bookstores are closing down due to the rise of ebooks on ereaders.

Another reason for going the small publisher route was royalties per book. When a person buys an average book published by an average publisher with a retail price of say $15, the author usually only gets between $1.15 and $2.25 from that sale. The rest of the money goes to the bookstore, distributor, and publisher. In my current small publisher setup, I’m receiving much higher royalties per sale. So, considering the lack of bureaucracy, lack of risk due to future uncertainty, and much higher royalties allowing me to sell less books while potentially making more money, you can see why I initially made the choice I made. It would be nice to have the economies of scale to efficiently stock the book in stores. And it would also be nice to have the economies of scale to print a fancier version of the book (although the current first run of the book has the most potential of being a collector’s item worth money someday). But for the time being that isn’t the case.