A New Attempt to Quantify the US Market, Part 2: Authors

Cader opens his last installment (paywall) by remarking on how it’s “rather astonishing that, until [Author Earnings] came along, we didn’t even talk about how much authors earn collectively, and even now there’s little or no industry data on the topic.”

Cader met Data Guy (of Author Earnings) at Digital Book World 2016, and they quickly developed a rapport, even working together in a session. Cader was taken with the efforts to compare scraped sales-page data at Amazon with an earnings curve Data Guy develops from author royalty statements. The Author Earnings quarterly assessments, which are what we’d call an “estimate of estimates,” have been a useful addition to efforts to quantify the industry.

What Cader now brings us, however, is a needed counter to Author Earnings, which has an agenda: to demonstrate self-publishing as a viable financial alternative to traditional publishing. Its indie-cheerleading tone is an understandable but not always helpful shortcoming.

Cader underlines two key differences in how traditionally published and self-published authors make their money:

• Advances vs. royalties: The biggest difference in how traditionally published and self-published authors are paid, Cader writes, “is that most traditionally published authors make all of their money from advances rather than royalty earnings.” The most successful trade authors receive high advances that are not expected to earn out, effectively earning them a higher royalty rate. Cader estimates that Penguin Random House pays advances each year that are roughly 25 percent of its annual gross sales. The informal industry standard (unpublished and unverified) is that about 40 percent of publishers’ sales are paid annually to authors in advances and royalties.
• Ebooks vs. everything else: Cader estimates that 85 percent of self-published author earnings come from ebooks. But traditional authors “earn across a broader marketplace. … Ebooks generate only something like 15 to 20 percent of traditional author earnings.” Here’s a factor we’re especially glad to see Cader highlight, as it is too frequently overlooked by self-published authors who have a much harder job translating their domestic success to territorial rights sales: “The rights business is substantial, and the author’s portion of those earnings—whether paid directly or credited against their advance—is also very substantial. While the most successful self-published authors often have representation and are licensed extensively around the world, there is a logical argument that, as a body, traditionally published authors are earning far larger sums from their sub-rights activity, drawing on an established network of trusted and active trading partners.”

Cader does his own Author Earnings–style look at potential trade author earnings, and estimates that self-published authors earn about 20 percent of the overall $2.479 billion earned by all authors each year in the United States.

Bottom line: The high royalty rates for self-published authors can obscure how and where most authors make their money. Here’s how Cader puts it: “The US consumer publishing market is generating substantial money for authors, most of it from established companies but a growing and meaningful amount from self-publishing, and proprietary offerings like Amazon.” However, as Cader can tell you, without better data, we’re still a long way from really knowing what authors are making.