Fridays Were So Much Better When TGIF Was On

Friday round up, Laura style:

So last week went round up-ly awry, and I apologize. I will make it up to you with compliments. Ahem: the holes in your earlobes ever make me think fondly of the pock-marked landscapes upon the lunar surface. And you blink thrice warned that I can but think of the eyebrows of Richard Nixon covering a hostess of furry Twinkies. Impressed? The Surrealist Compliment Generator comes to the rescue, saving yet another relationship!

Yes, I'm (clearly) back on the train of internet love. But where else would I get the exclusive trailer for Under the Dome? How could you get electric literature without Electric Literature? Why else would the Nook be Barnes & Noble's best seller? Reading is fun in all sorts of mediums, like Kanye West's book of illustrated lyrics (sidebar: for someone who doesn't ever want a book's autograph, he puts out a lot of books), or Ang Lee's interpretation of Life of Pi, or the animated Zeitoun. And apparently costume type period dramas sell books like crazy.

Stephen King also sells books like crazy, and is putting out a graphic novel. And while he's a celebrity who writes books, he's not the kind people have been chatting about when discussing celebrity books killing or supporting publishing. Sarah Palin, with her million plus dollar advance (at least: no one knows!) is exactly what people are talking about. And yes, it's a loose interpretation to call it "Sarah Palin's book," since she didn't technically "write" it, but hey, if Sinclair Lewis ghostwrote, there must be something to it. Question: if I refer to Palin as "Turdsworth," based on her equivalent worth to a turd, is it classy because I'm quoting Byron?

If somehow that's not classy, then I'm out of classy ideas. And I can't even fall back on having good grammar, because that would make me classist and snooty. Also not classy in the new zombie romance anthology. I'm not pleased with this, as it's a slippery slope to zombie erotica (oh God I just thought of a zombie losing a limb mid-coitus and I can't get the image out of my head). And while some people are saying vampires won't die (get it? Because they're undead?)--although Anne Rice is saying angels are the new vampires--I firmly believe the zombie problem should get more attention. That, or Sully "I am awesome at landing planes on the Hudson"'s book should get our monies. Apparently people buy more books when they're cheaper, e-book or Walmart style, but we should really spend all that money on Sully and fighting zombies.

These cheap books might be the death of publishing, book sharing might be the death of publishing, Stephen King is delaying his e-book because e-books are the death of publishing...is anyone else bored of this conversation? I'll tell you how alive publishing is. It is so alive that someone made a list of reasons the novel isn't dying. It's so alive that a whole book festival says so. It is so alive that Isaac Asimov is writing a trilogy from beyond the grave. Robert Jordan isn't technically finishing The Wheel of Time from beyond the grave, but there's a really cute video of how his widow picked the writer.

When you go to pick up your (almost almost almost) last book in the series, remember to practice good bookstore etiquette. If an author is reading, be nice--a lot of energy went into organizing the tour. And don't shove when picking up your free copy of Gregory Maguire's new book.

That's all from this end. See you next week, with more library vandalism and cheap, lazy aggregation.

Tip O' the Week: Chasing Trends

Steampunk is the new vampire! Wait, no, it's apocalypse! Or is it Christian vampires? Perhaps zombies?

If you're currently penning a fantasy novel centering on a pious zombie vampire from an alternate 19th century in which science/alchemy/the Bible has predicted the earth's impending doom, uh, please send it to me, because that could be awesome. More importantly, though, stop doing it.

Everyone wants to be The Next Big Thing™, and no one's going to fault you for that. It's important to remember, however, that what's big now isn't necessarily what's going to be big in one to five years, which is probably the earliest any book you're currently writing/shopping to agents/editors is going to be published. I don't know about you, but I don't think vampires are still going to be cool in five years (at least, not as cool as they are now). Zombies will probably suffer a similar fate.

If you've got representation now and your novel seems to be along the same lines as other novels that are just starting to become big, that's great news, and you'll probably luck out and catch part of the wave of whatever craze is coming next. If not, then you may not. Luck is a big factor, friends. Talent and hard work are necessary, but can only get you so far.

The moral of today's post: write the best book you can, do everything you can for it if/when it's acquired, and don't worry about what the other kids are writing. Just like with stocks, trying to time the market is probably only going to get you burned.

Next week: Monday Mailbag, featuring responses to your questions!

Walmart.com: Part Deux

As I recall, there was some disagreement in the comments section of last Tuesday's post re: the Walmart vs. Amazon imbroglio, so I wanted to clarify a couple of points.

I agree with those of you who (correctly) pointed out that retailers like Walmart and Target don't stock title counts anywhere near comparable to those sported by the major chains or independent book stores. They generally only take expected bestsellers (books by big-name authors like Patricia Cornwell or James Patterson, or by existing celebrities, most of them actors or politicians). I remain concerned, however, for the following reasons:

· The price war is over bestselling titles, which is where publishers make a significant amount of revenue. Should a company like Walmart gain a significant majority of market share in those bestselling titles, they may (and I think they will) use that opportunity to dictate discounting and pricing to the publishers and for the rest of the industry. As I previously mentioned, I think this is potentially disastrous for the major chains and independent stores, some of which are barely turning a profit in the current economic climate as it is.
· In my opinion, Amazon's primary advantage over Walmart.com is their superior selection. Should discounting escalate beyond the current handful of bestellers, though—e.g. into romance titles, children's books, and so on—or if pricing continues to drop on currently discounted titles, say to $8.49, then to $8.00, then to $7.99, then I think the industry is going to be in serious trouble.
· While you, gentle readers, do represent an important subsection of the book-buying market, you are not necessarily representative of the much sought-after bestseller buyer. These are the folks who are going to determine who wins The Great Book War of Aught Nine: the men and women buying The Scarpetta Factor, The Lost Symbol, Going Rogue, The Secret, and so on. If they hand Walmart victory, it's going to be a rough time for the chains and the independents.
· Finally, as was also mentioned last Tuesday, the advent of e-books is going to completely reconfigure the pricing structure of books, which (in my opinion) the industry is, to its detriment, trying to put off dealing with as long as possible. As I said on Monday, I think forcing the industry to not only negotiate the transition from print books to e-books, but to simultaneously completely alter its long-held pricing structure for those print books, is going to be more stress than it can bear in the short term. Maybe I'm not giving them enough credit, but I really think that this kind of change needs to be enacted slowly (not publishing-slowly, but still slowly), and Walmart et al are not going to sit around and lose market share waiting for that to happen.

The Fame! The Fortune!

...or at least, the fame. A busy day today, dear readers, so I'm directing you to an interview I recently did with Shelli Johannes. Enjoy!

Power to the People

Due to an unforeseen Internet outage, Laura and I were unable to bring you your Saturday round-up here at PMN. A thousand apologies, dear readers, and I promise to make it up to you this week with some additional content (as well as answers to your questions).

Since we were round-up-less last week, we weren't able to give our scheduled shout-out to Lit Drift, so I'll do it now: Lit Drift (http://www.litdrift.com), a "brand-spanking new blog, resource, and community dedicated to the art & craft of fiction in the 21st century," is now open for business. They've got all kinds of awesome content, including daily creative prompts and (get this!) FREE BOOKS on Fridays, so be sure to check them out post-haste.

Oh, and before I forget—they also accept reader submissions, so if you'd like to contribute anything (fiction, bar napkin doodles, manifestos, original power ballads to your grandma, &c), send it along!

Now then. As you may recall from last week, I mentioned the price war between Amazon, Walmart, and Target being a source of worry for many of us here in the book publishing industry. Well, on Thursday of last week, the American Booksellers Association drafted a letter to the Antitrust Division of the United States Department of Justice, asking that the USDOJ investigate these practices to be sure they don't break all sorts of laws. I applaud the ABA's move because I agree that these price moves are predatory, that they are harmful to the market, and that, to quote John Grisham's agent, David Gernert, "If readers come to believe that the value of a new book is $10, publishing as we know it is over."

To be clear: I do not think Walmart will single-handedly kill publishing. But I think that if Walmart economics are applied to the book publishing industry, the speed and the immensity of the changes that will be involved will almost certainly change it for the worse. Nobody's going to bail out the book publishing industry if it starts to founder. E-books will soon totally and permanently alter its landscape, and if we add the financial stress of a major bidding war among Walmart, Amazon, and Target for control of the bestseller marketplace—and remember, gentle readers, that's where the money is made—we could see a drastically different book market in the next five years.

Round Up From the Ground Up

It's Friday, so Eric is out, Laura is in, and (o joy! O rapture!) it's time for a weekly round up.

Way back last week I had a crisis of conscience. Am I spending too much time on the Internet? Should I take an Internet hiatus? Am I potentially a crazy who cannot function face-to-face with sensible people? I decided no, probably not, and irrelevant, respectively. But I'm still not writing a round up today.

Instead, you guys are going to round up for me (what, no, this is not a gimmick because I procrastinated all week, how dare you accuse me, etc. etc.)!

I realized that I'm not spending too much time on the Internet—I might be spending too little, as I still have time to sleep. But I haven't updated my Google Reader (my tiny baby Jesus who blesses me with e-gifts) in a while, and I'm probably missing some good publishing blogs out there. So, I ask you: which blogs should I be reading? And what were your favorite publishing stories this week?

I'll incorporate the blogs and news you leave in the comments in a round up that will go up Saturday morning that you can read with your brunch-type shenanigans. Also feel free to leave comments about round up construction—would you prefer more links about industry news? About writing? About being a writer? About new (and old) sweet books and reviews of said books? I may not listen, since the Internet has stolen my social skills, but you never know.

Also, last week's contest to come up with a celebrity to endorse a book was won by bingol, who has Roman Polanski pimping Lolita. In a word: ha!

Welcome to Crazy Go Nuts University in the comments.

Give My Creation... LIFE!

In the spirit of the upcoming Halloween holiday (and the topic of yesterday's post), I've decided to experiment with polling here on PMN. Blogger (as far as I know) doesn't support polls in posts, only as sidebar widgets, so I'm going to have to go third party on this one. If any of you happen to have expertise in this area, please post in the comments!

Now then, today's poll:



Have at it!

It's a Book! No, It's a Vook! No, It's a... Nook?

As Joseph L. Selby pointed out in yesterday's comments, Barnes and Noble just unveiled the Nook, and I must say, it is a handsome device indeed. And with its dual screens, Wi-Fi capability, an open format, and (GET THIS) a "book lending" feature, I think it's my new favorite reader. (Sorry, Sony... we can still be friends.) And what are you talking about, Kindle? We were never anything at all.

With the e-reader market exploding and some even more promising technology on the way, I feel I must reiterate my position that e-books are absolutely the future of reading/writing/publishing. Don't get me wrong: there will be challenges, and there are some of you who will only surrender your printed books when AmaGoogleMart.com pries them from your cold, dead fingers, but I think change is in the air (and has been for awhile) and while e-books certainly won't spell the end of publishing, they're going to be game-changers. Industry professionals who can't keep one step ahead of said game (or at least keep up) will be left behind.

Which brings me to today's question: has Barnes & Noble's e-reader changed your opinion about the technology in any way? Are you more likely to buy a Nook than a Kindle?

This Week in Doom: Walmart.com

Thanks to everyone who left feedback in the comments section of yesterday's post; I'll be checking it for a few more days, so if you've got a question or request, feel free to chime in. Answers soon to come!

As you may have heard over the past few days or weeks, there's a price war going on between Amazon and Walmart in the wond'rous (and occasionally terrifying) arena of cyberspace. Both retailers are vying for the much-coveted title of Lord of the Lowest Prices—otherwise known as The Biggest Loser, since both parties are buying their books from publishers at traditional discounts and selling them at a loss—and with Target now getting in on the action, it's going to be a very interesting fight indeed. Popcorn, anyone?

In all seriousness, though, this series of (perhaps soon-to-be unfortunate) events has just about everyone in the industry worried. While publishers aren't losing any money on books at the moment—on the contrary, increased sales of the selected $8.99 hardcovers are only going to boost publishers' sales—they are concerned about the long-term implications of what Walmart, Amazon—and now, Target—are doing. Here are a few of the problems:

· None of these retailers are specifically book sellers, so they can afford to lose money on books while making an overall profit through the sale of other goods. Major chain stores like Barnes & Noble and Borders, as well as smaller independent book stores, can't afford to do this and may either be substantially downsized or actually driven out of business by these sales tactics.
· Should Amazon and Walmart achieve the majority of the large publishing houses' market share, they will eventually be able to collectively demand that publishers sell to them at a steeper discount (such that they can continue to sell books at low prices without hemorrhaging money). If you remember the Walmart/Rubbermaid debacle of a decade or so ago, this won't seem too far-fetched. This could further decrease publishing houses' already slim profit margins.
· Even if Amazon and Walmart don't push for increased discounting, their potential statuses as the country's largest book retailers will make it more difficult for publishers to secure promotional space on their websites (or, in the case of Walmart, brick-and-mortar stores) simply because publishers will be competing not only with other houses, but retailers of completely different goods and services.

Walmart already has a stranglehold on our tupperware, our Kraft dinners, our small kitchen appliances, our dorm furniture. Will books be next?

Prithee, Inform Me: What's the Deal?

Much like a guidance counselor (or, I suppose, psychotherapist), I like to check in every once in awhile to make sure we're talking about what you'd like to talk about, gentle readers. So once again: what would you like to see me blog about? The future of publishing? The past? Profits, losses, comps, co-op, Sarah Palin, self-publishing, and so on?

To the comments with you, and make haste! The holiday season is once nearly again upon us, and with everyone from agents to booksellers kicking into high-gear these next couple of months, I don't know when I'll get the chance to do another You-Tell-Me-style post.

What are you waiting for? Haste! Make it!

The Day of Internet Addiction

Today's Friday, which can only mean one thing: a round up from Laura!

Good Friday, Bible re-writers and re-readers (and writers and readers for the first time). Your Bible edits from last week were hilarious and, in some cases, penguin themed, vampire themed, zombie themed, and cat themed. But my favorite Bible (and thus the winner, because that's how a cheerocracy works) was filled with judgment and sexiness. So congrats, Anonymous (God? Is that you?), and please do send me your pocket size Bible—my pockets are empty. New contest below!

In non-Bible news, blog type readers, I have something to share with you all: I am considering quitting the Internet. Yes, the whole thing. I just found out the average internet user is online for 68 hours a month, and I think I spend that much time online in like three days (I really, really wish that was some sort of joke or exaggeration). And, to be honest, I'm torn about how good technology is. I mean, sure, texting can make you a better writer, you can get free things to help your writing online, see a digital version of Jung's red book, and take e-books out from the e-library. And, yea, you can get the new solar powered LG e-reader, or make a DIY Kindle (or a home bookscanner!), or download Tracy Morgan's audio shenanigans. But what about all the bad things?

Oh yea, there are bad things. For example, book browsing: dead. And adults don't listen to Jim Dale's song about turning off cell phones. And Twitter is making us all functionally illiterate. And I'm really not sure how I feel about computers proving that Shakespeare had help, or the mass tweeted Gaiman audiobook. And although the Pynchon/Grand Theft Auto comparison is pretty cool, does anyone really need 886 palindromes?

Maybe if I spent a little less time on the Internet (read: unhooked the USB from my veins) I could read a book a day, or do crosswords about authors. I would have time to read literary journals (unless they're dead), listen to records to appreciate the book-to-vinyl metaphor, and really appreciate characters that like to read. Hell, I could even read this book about Jenga. And I love Jenga. And I am so, so good at it.

Then again, I am a boorish American (these colors don't run, in either the legs moving or the in the wash sense), and we are one of the lesser book buyers in the English language, so maybe I wouldn't read more if I stopped being so Internet crazed. Americans steal rare books (but return them!) and library books (but have poignantly touching stories about said theft that may or may not have made some people who blog at PMN emotional). And America is the genesis of both Michael Jackson's posthumous graphic novel which, holy crap, I want to read so bad, and the Simpsons phenomenon, which has recently spawned an unauthorized history and a Playboy spread. And eventually we'll learn how to treat Native Americans with respect (happy belated Columbus Day, by the way, and sorry about the smallpox!).

You know what else is American? Ghostbusters (also, apparently, Maureen Dowd being late to the Ghostbusters pop culture party). Even more American than that is leveraging your vaguely ghost related '80s celebrity to promote a book on seances, as Dan Aykroyd is doing for his dad. My challenge to you all: come up with a terribly apt celebrity promotion for a much beloved (or much maligned) book. And let me know: should I cut back on my Internet time? Or are the rest of you right there with me in terms of addicti—I mean, enthusiasm?

P&L 4 of 4: The Future

In Tuesday's comments, PatriciaW asked about the role e-books currently/will play in the acquisition P&L. A felicitous question indeed, as we are now about to once more explore... THE WORLD OF TOMORROW™. (You'd think I'd make a lot more money with all the trademarks I apparently own.)

Currently, the ratio of e-books sold to printed books is around 5%, meaning it'll probably be a few years before e-books come to dominate the book market (which, admittedly, may never happen, but I expect it will). For this reason, e-book sales don't really figure into the acquisition P&L yet (at least, not as far as I've seen). The sales numbers just aren't significant enough.

But let's imagine the ratio were much higher—say, for every three printed books sold, two e-books were sold—which would mean a print run of 15,000 would also have to take into account an additional 10,000 e-book sales (instead of today's 750). That's a significant difference, and I imagine P&L analyses in THE WORLD OF TOMORROW™ will contain an additional field used to calculate projected e-book sales (based on historical data for that author/genre/&c).

As time goes by, however, I imagine another force will affect the e-book P&L, and that will be consumer demand to lower price point. Since many of the costs associated with traditional book publishing—printing/paper/binding, typesetting, returns, freight—don't apply to e-books, I think the average price publishers will be able to charge per book will drop significantly once the e-book reading market has reached critical mass. It'll eventually creep back up due to inflation, but if e-piracy becomes a major issue, people will be faced with either buying an e-book or simply taking it. As I've said before, I think we humans are decent to a point: we'll pay for something if we think it's worth it, otherwise, we'll either forgo the purchase or take whatever it is we want for free. With the presumed widespread availability of pirated books on the Internet in THE WORLD OF TOMORROW™, I imagine taking books will be sorely tempting unless you could skip the guilt and get said books legitimately for a reasonable price.

These are just my own speculations, but I foresee the P&L changing in the following ways over the next decade or so:

• The P&L will eventually principally consider e-book sales, taking POD sales into account for smaller titles and smaller (by today's standards) traditional print runs for books by major (i.e. bestselling, celebrity) authors.
• A shift from front-loaded advances and relatively small royalties to lower advances and higher royalties, as returns will no longer be as much of an issue.
• Costs not associated with e-books will be considered less and less, unless said costs (typesetting, printing, freight, &c) make a paper version of a book prohibitively expensive, in which case they will be important insofar as they determine whether or not a physical book is published at all.
• Profit margin will temporarily increase while costs decrease and price points stay high, but as price points are driven downward by consumer resistance, profit margin will normalize.

What do you think?

P&L 3 of 4: Exceptions

For those of you just tuning in: this week, we've talked about the basics behind acquisition P&Ls and some of the details. Next up: some exceptions to the rules.

As an anonymous poster mentioned in yesterday's comments, there are some differences between houses when it comes to the acquisition P&L, so some of the examples I'm about to cite may not hold for all publishers or editors in the business. Hopefully they'll still illustrate some of the strange nuances of the acquisition process.

So, as I mentioned yesterday, one of the exceptions to the book-must-make-profit rule is in the case of books that for whatever reason are expected to sell x copies, but with additional marketing dollars and sufficient support from the house may sell many multiples of x copies. As anon noted, some analyses incorporate these numbers into the acquisition P&L from the get-go, and some (like the P&L system with which I'm familiar) don't do this, but will instead include the increase in net sales and marketing dollars in one of those previously mentioned intermediary P&Ls.

Depending on how the P&L is run, this may or may not constitute an exception, but I think it's important to note that a P&L can reflect a loss for a potential title under one marketing scenario and a profit under another.

Another occasional exception to the rule is the short story collection. As I've mentioned before, short story collections don't really sell, but every once in awhile you see a house put out a collection of short stories by some hot-shot up-and-coming author with an Iowa MFA and ninety-three minor literary awards and publications in Very Serious Literary Journals. Why does the house publish these collections if they don't sell well?

Well, oftentimes said up-and-coming writer will be working on a novel—a MEGA SWEET novel—but since it's not done, all they've got to sell is the short story collection. A publishing house, in order to secure rights to the (potentially very lucrative) novel, will buy the short story collection on the condition that they also get the novel. The publisher then takes a loss on the short stories and hopes to earn their money back (and then some) on the novel sales a couple of years later. And that's something I can get behind: the theory that one invests in authors, rather than solely in individual books.

A related exception is the multiple book deal. Once in awhile, a publisher may project a slight loss on a book, but not on a two-book deal, hardcover + trade paperback combination, trilogy, &c. Arguably, since the only P&L that matters would be the analyses run on the set of books (and not the first book alone), this doesn't really constitute an exception, but I think it nonetheless explains why the first book by an author may lose a bit of money or break even while being fairly in-line with initial projections. The goal is to make money in the long run, not necessarily in the first year of the very first book.

In fact, I find this so important that I'll say it again: a publisher's investment in books, much like an individual's investment in the stock market, is most effective when done with an eye for the long-term outcome. Myopic projections and money-now-consequences-later sales strategies may seem great in the short term (oh, how I love puns), but without solid backlist sales—which account for a staggering amount of billing—and steady movement of inventory, you're pretty much sunk.

P&L 2 of 4: The Details

Yesterday I gave you the basic breakdown of how a publishing house's acquisition P&L works. Today we're going to go into a little more detail, primarily with regard to how editors and publishers might play with the P&L numbers to turn a book that initially looks unprofitable into one that could make them some money.

So, let's say an editor runs the P&L on your book and it turns out to be either marginally profitable or flat-out unprofitable. They could tweak the following parameters to flip the book from the red to the black:

Scenario #1: Offer a smaller advance. This is a possibility if the editor and agent haven't had a lot of back-and-forth on the issue, but if the advance is more or less confirmed or is already at the point that the agent won't go any lower, the adjustments won't be made here.

Scenario #2: Change the format. If the P&L is returning a loss with the paper/printing/binding, freight, and return rates of a hardcover book, the editor may rerun the analysis for trade paper and mass market editions to see if it might be profitable in those formats. True, the price point will be lower, but the publisher will likely expect to move significantly more units of a trade paperback or mass market edition compared to a hardcover. If so, then those lost dollars per book are more than compensated for by increased number of units sold, lower direct/operational costs, &c, and the book will become profitable.

Scenario #3: Raise the price. Increasing the price point can result in fewer copies sold, but if the impact on net units is offset by a dollar or two increase in unit price, an unprofitable book can suddenly become a money-maker.

Scenario #4: Go big. The editor may decide that the book is really, truly phenomenal, despite low initial net sales estimates. He or she may then acquire the book on a losing P&L with the intent of feeding enough marketing dollars into it to turn it into a bestseller. Once the book sales start to snowball, the initial loss is recouped and the book turns a profit. This last one is almost an exception to the rule, however, and we'll deal more with those in-depth tomorrow.

You tell me, though: based on what I've told you yesterday and today, what would you, as an editor, do to convert a financially unpromising book into a fiscal winner?

P&L 1 of 4: The Basics

I'm finally making good on my earlier promise by bringing you a four-part series on one of the publishing industry's most important processes: the profit-and-loss analysis. So, without further ado: P&L Week™ commences here on PMN!

The P&L (which, as you can see above, stands for "profit and loss") is a financial analysis performed by publishing houses (generally in Microsoft Excel) to try and determine whether a book is profitable. There are several iterations of the P&L—usually one done before the acquisition as a predictive tool, a few revised versions generated throughout the editorial process, and one "post-mortem" P&L done post-publication to determine both profitability and how accurate the initial estimation was. They're all fairly similar, however, and for the purposes of this post, when I say "P&L" I mean the initial, pre-acquisition P&L.

When estimating profitability in the P&L, it goes something like this:

• Gross sales are estimated (that is, the number of books the publisher thinks they'll be able to sell x the proposed price per copy), based on historical data for that author/genre/format/&c. See? This is why comps are important.
• Returns (the number of books the publisher expects will be returned by the accounts x proposed price per copy) are estimated, also based on historical data.
• Net sales are derived from subtracting returns from gross sales.
• After that, direct costs (also called cost of goods sold, or COGS) are subtracted. Direct costs include plant costs (art, permissions, typesetting, &c), printing/paper/binding, and (o joy!) author royalties.

Another important point, now that I think of it: the publisher always offers a discount to the accounts, so the publisher never actually earns money based on the price you pay at the book store, but rather a fixed percentage of said price.

Back to the bullets:

• Once you've got net sales and direct costs/COGS, you only need one more factor in order to calculate gross profit: subsidiary rights. They vary from title to title and include things like book club, audio/large print, and foreign rights. Due to said variability, some houses don't bother to include them on the acquisition P&L, and those that take them into account calculate averages based on—you guessed it—historical data.

We've got net profit! Hooray! However, we're not done. We still need to subtract operating costs (to calculate contribution) and overhead costs (to get our net operating profit).

• Operating costs are exactly what they sound like: costs incurred by daily operation of a company. In book publishing, these costs include freight (variable depending on the format of the books being shipped), marketing (including co-op money), and departmental costs like salaries, travel, &c. After being in business for awhile, a company can usually figure out their average yearly operating costs, and those percentages are pre-loaded in the P&L Excel grid.
• Once we've subtracted operating costs from our gross profits, we're left with contribution—the departmental money available to cover any additional corporate costs, reinvest in the company, work toward overall growth, &c. Speaking of additional corporate costs—that is, overhead costs—those need to be subtracted before final (well, nearly final—see below) profits can be calculated. Overhead includes any and all corporate-level expenses that haven't previously been accounted for, including sales and merchandising, IT services, and any general administrative costs.
• Now we've got net operating profit, or EBITA (Earnings Before Interest, Taxes, and Amortization). This is the actual profit, less interest owed (e.g. on loans taken out to finance the company), taxes (variable by state) and amortization (e.g. goodwill, the price in excess of assets one company pays when it acquires another company).

In short: once the P&L analyzes all these figures, if it still looks like your book will turn a decent profit for the house, your book may well get the green light for publication. (You may even get acquired even if the P&L predicts a loss, but more on that later this week.) If there's no projected profit, then there's (probably) no book.

I hope this was more helpful than it was... uh, confusing. As always, leave any questions in the comments. Tomorrow: how all these factors interact to determine the details of acquisition!

Full Disclosure Fridays

Friday: round up day! Eric is out, Laura is in, round up below:

Before we begin rounding up, I think we all need to address the elephant in the room: the new FTC regulations for bloggers. Although I won't do the discussion justice, the FTC has more or less said that if a blogger receives a free product for review and doesn't disclose where that product comes from, they will get slapped in the face with fines, whereas newspapers etc. don't need to adhere to those rules. Slate discusses, Janet Reid discusses, and Ron Hogan writes not one but two open letters to the FTC. When it comes down to it, I firmly agree that we're so inundated with product placement on such a regular basis that we're basically immune, so what difference will bloggers really make? And honestly, who reads blogs?

In the interest of full disclosure, I have tallied up all of the fabulous free things Eric and I have been given because of this blog. We have, collectively, received: zero presents, zero freebies, and only one offer of marriage, which wasn't for me—always a blogsmaid, never a blogs. We only have until December 1st until the new FTC rules go into effect, so hurry up, people, and make with the perks. This paragraph was brought to you by Dungeons and Dragons Spellcasting Soda, and by the contest in the last paragraph.

I don't know if you guys heard, but the literature Nobel was announced yesterday, and Herta Müller, a Romanian German, won. There are great roundups of links at Bookninja and the Atlantic Wire. Shelf Life yawns, and the Guardian says the Nobel judges should start looking outside of Europe, but the excerpts at the Book Bench are pretty cool.

You know what else is cool? After 49 years, the author and illustrator of The Phantom Tollbooth are getting back together. Just like your divorced parents! Except, you know, for real. And after 80 years the official, authorized Winnie the Pooh sequel is happening (which hopefully won't suck, but might. Read the except and decide for yourself). I hope pirates can leave WtP alone...

Wil Wheaton (who was in the movie Flubber and also Star Trek: The Next Generation) has a bone to pick with pirates. Someone jacked the audiobook he made by himself, which means that it's not fat cat, pork barrel spending, big business publishing that's suffering, but rather a single individual, which is somehow way sadder than stealing from an industry with thousands of workers and slowly rotting said industry from the inside out. Dan Brown is being pirated all over the place as well, but since he only bathes in liquid gold it hurts my soul a little less. Booksprung writes about how publishers are encouraging book piracy, and I hear we should worry about the Napsterization of books. It would probably help if we could identify the five most important moments in the formation of digital publishing, or we could take a deep breath and realize: the mass market paperback was supposed to kill the hard cover, so maybe this won't be so bad either. Publishing should take a page from zombie culture, and learn to survive.

Some things are not worth surviving for, and one of them seems to be truly terrible agent/editor meals. Also distressing is that, while And Tango Makes Three (the picture book about the gay penguins) has been racing up the charts despite being banned, most people don't realize that the penguins were broken up by a lady type penguin. In 2005. (On the plus side, they did the John and Kate Plus 8 crash-and-burn with way more class, and fewer babies.) Librarians are going to be replaced by robots, Harvard bars books (by putting bars on the shelves...get it? Ah, puns.), and people are actually making lists of the top ten most depressing books.

Let's try and salvage the optimism of the day (it is a Friday, after all, and my one day to exploit the captive blog reading population) by sharing a dream of mine: being in Sarah Vowell's shoes and having Jon Stewart tell me I am so smart. Sigh.

Speaking of authors everyone wants to be, Joyce Carol Oates wrote a really spectacular article about her lack of mentors, and how it affected her writing. Michael Chabon is writing his next book about how he became who he is today (that one's for you, Moonrat), and Wanda Clark writes about how writing in prison is easier than writing outside (that one's for all of you struggling with procrastination).

So, I was going to have a contest that involved the now defunct Christian version of Sarah Palin's memoir, but then I chanced upon the Conservative Bible Project and just... I am so pleased with America right now. So my contest for you: edit the Bible! Come up with an ideology to support, and tell me in the comments how you would edit the Bible to support your beliefs. Winner gets featured next week, and potentially stalked by those involved with the CBP who don't appreciate being mocked, thank you very much. See you next week!

Co-Opportunities

With the holiday season drawing ever nearer, you may have noticed that those delightful front-of-store displays—one of a myriad examples of the magic of co-op—are starting to draw slightly larger crowds at your local bookstore (at least, that's what I've noticed happening around here and I pray is happening elsewhere). For my account, we generally do co-op on a monthly basis, but after October we simply dub the rest of the year "Holiday," the yearly book-based retail free-for-fall in which we generally make the majority of our money. (I once heard someone say that the industry loses money in the first three quarters of the year and finally turns a profit in the fourth, but I'm not sure that's true at all.)

As you know if you've been following along here at PMN, publishers pay retailers top dollar for co-op advertising/placement: all those big "New Release" tables, aisle endcaps, cardboard displays, &c are all part of the co-op system. As publishers prepare for the ramp-up into the holiday season, the complicated co-op dance of death becomes even more serious. That memoir everybody's gotta have for Christmas? As the publisher, you'll cripple sales if you don't pay retailers for front-of-store (or front-of-...website?) placement, prominent biography section positioning, &c &c. In short, it's going to be a madhouse out there. What does this mean for you?

Well, if your book is coming out this holiday season and you're a solidly mid-list author, it may be difficult to secure any kind of substantial promotional placement before the end of the year. Co-op is generally figured out several months ahead of time, so it might be a little late in the game to try to hammer something out now. If you're in this situation, however, consider asking your agent if there's any way to determine what co-op (if any) you've got scheduled this fall/winter, and if there's anything that can be done to improve it. (Note: please do not drive your agent insane with hourly requests for co-op updates.) Even if there's nothing you can do on a national/chain level, there's usually some co-op that's left to the individual stores' discretion, so think about popping on down to your local book store (you do already know everyone there, don't you?) and ask if there's any possibility of additional placement, events, signings, you name it.

It's a book-eat-book world out there, but that doesn't mean there's no room for you to step up and help yourself out. In fact, sometimes that's the main factor that separates the up-and-coming author from the one-hit—or, worse yet, no-hit—wonder.

This Is A Business

I haven't forgotten my promise to you that I'd share my profit-and-loss knowledge once I'd obtained it, so be on the lookout for that next week.

The concept of the P&L, however, as well as the slight brouhaha in the comments section of one of Nathan's posts and the post following that one have reminded me more than ever of one of the central tenets of the publishing business:

This. Is. A. Business.

I've gotten my fair share of scorn and derision (not from you, fair readers) for expressing this sentiment before, but I stand by it. If you think art and industry are irreconcilable, don't shop your book to agents or editors. If you decry the publishing industry for trying to make a buck, don't participate! I think this also touches on my main argument against self-publishing, that being: you can't have your cake and eat it, too. If you want no part of the Great Big Publishing Machine, don't expect to make a ton of money. If you want to make a living as a writer (which is no small task), you're going to have to write something that's not only good from a literary/aesthetic standpoint, but also salable, and you are probably going to have to go through the publishing industry to do it.

Publishing houses aren't charities or libraries or Foundations For Ye Olde Publick Goode. They are businesses. If they don't make money, they close, and if we publishing folk don't make money, we don't eat. Sad, but true. So please keep this in mind: yes, you as a writer are practicing a form of art. Yes, it's always tricky when art and commerce get tangled up together. And publishing houses really do care about selling good, engaging, entertaining, well-written books. But they have to make money doing it, and if an agent/editor/publisher/&c doesn't think (s)he can turn a profit on your book, (s)he probably won't acquire it.

I mean, think about your current job: would you make an acquisition or other career move that you thought would bleed money everywhere? How would you justify something like that to your colleagues and superiors? And, if you're nodding along with me now and admitting that you couldn't: what makes that any different from buying a nice book that just won't sell?

More On Comp Titles

I've posted about comp titles before—those magical, previously sold books (sometimes yours!) that are used to ballpark the future sales of new books. And yes, I've said that you don't have a huge amount of control over what title(s) your book will be comped to when it's sold in to buyers at the major accounts, which remains true.

However.

I've treated you all to a fair amount of doom over the past few weeks, so I feel I owe you a bit of sunshine every now and again. The truth is, you can (and should!) exercise a small amount of influence over the comp titles chosen for your book, and it begins relatively early in the process. That is, with (drumroll, please): the query letter.

If you read Nathan's blog (and who am I kidding? 99.9% of you are here because you do), you may know that when writing a nonfiction book proposal, you're expected to do market research, which partly entails (you guessed it) coming up with a list of previously published books that are similar to, but not quite just like, your book. Necessary for nonfiction, and, à mon avis, a great idea for fiction as well.

Caveat (there's always a caveat): if you choose to do this, be smart about it. Do not compare yourself to Dan Brown or any other mega-bestselling author. While it may be true that your new paranormal thriller has secret societies and child wizards in it, who's going to take you seriously if you write "Lost Symbol meets Harry Potter" in your query? No one, that's who. So do a lot of research, pick a couple of books that have been published in the last few years that are similar to your own, and only devote a small portion of the query to said books (remember, you're selling you, not somebody else. Vende te ipsum*, and all that). Of course, if your book is nonfiction, you can (and should) spend more time talking about potential comp titles and the similarities/differences between them and your book, as that's supposed to be part of the package.

And another thing: please, please, please resist the temptation to say (or even think, if you can help it) that your book is 100% unique and original, and nothing like it has ever been published in the history of publishing, because this is almost assuredly untrue. Yes, your book should stand out in some way from the crowd, but it's probably similar to a lot of other books already out there, and (counter-intuitive though it may seem) you actually stand a better chance of demonstrating the unique qualities of your book by explaining how it's similar to, but ultimately different from, the existing books in the genre, rather than coming off as ignorant/arrogant/what have you by insisting you've written something totally unlike anything that's ever been published.

Now, after all that, the upshot of including a well-chosen comp or two in your query is this: if and when you get an offer of representation, said comp(s) will already be floating around in your agent's brain when (s)he starts shopping your manuscript to editors. It's likely (s)he will mention said comp(s) when doing so (you can always ask him or her to do so if you feel strongly about it, though you may want to check the BookScan numbers beforehand). Now those comps are floating around in the editors' heads, meaning that if one of said editors acquires your book, those comps are already being talked about long before the book is ever sold in. With a little luck, those might be the very books the sales team uses as comps when they sell your book to the major account buyers.

So, in trademark Bullet-O-Vision™:

• Admittedly, you don't have a lot of direct influence over those pesky comp titles, but there are some things you can do: namely, include a couple of well-chosen comps in your query and spend the appropriate amount of time discussing them (less for fiction than for non-).
• Be smart about the comps you choose—don't go crazy comping yourself to mega-bestsellers and don't go around telling everyone you've got nothing to compare yourself to because your book is that groundbreaking.
• Don't be disappointed if they don't stick, but if they do, talk with your agent (once you've got one) about mentioning them to the editors they're shopping your MS to. Consider checking the BookScan numbers (your agent may be able to do this for you) to make sure you're not inadvertently shooting yourself in the foot.
• Whether or not the comps you prefer are used, it can't hurt to have your agent ask the publisher what titles are actually being used as comps. If you're sufficiently hands-on/neurotic, feel free to read these books, check their BookScan numbers, &c to get an idea of to what and to whom you're being compared.
• At the end of the day, your writing is your writing, and you're selling yourself and your book, not the guy next to you clutching his. Write well, work hard, and take advantage of any opportunities that come your way. And good luck!





*Not bad for a guy who never took Latin, no?

Arrr Ya Worried?: E-Piracy Returns

I've mentioned this before (indeed, more than once... or twice), and though I missed International Talk Like A Pirate Day by a fair margin, it nonetheless seems that the topic of e-piracy remains timely. The New York Times reports that the incidence of stolen e-books is on the rise, with sites like RapidShare serving as cyberspace versions of the Somali coast. The article ends:

Ms. Scheid, of RapidShare, has advice for [authors and publishers] if they are unhappy that her company’s users are distributing e-books without paying the copyright holders: Learn from the band Nine Inch Nails. It marketed itself “by giving away most of their content for free.”

I will forward the suggestion along, as soon as authors can pack arenas full and pirated e-books can serve as concert fliers.

I find this interesting. On the one hand, it's true that authors don't always have the same rabid fans as musicians, so every lost sale is a higher percentage of total sales. Then again, if the audience isn't that big, the pirate audience won't be either, right? Or has the age of mega-bestsellerdom (e.g. Stephenie Meyer, J.K. Rowling, Dan Brown) ensured that some authors are that popular and will suffer that badly in terms of lost sales?

Prithee, inform me, dear readers: are you worried about e-piracy, especially now that it looks like it's at our front door? What do you think we can do to stop it, if anything?

Rounding Up, Rounding Up the Road

Friday is Eric-takes-a-nap-and-Laura-writes-a-round-up day. So, round up below (cue sweet tunes):

Last week, contest entries offered great pairings of classic books and modern adapters for the screen. While they were all fabulous (read them all!), my favorite was Quentin Tarantino's adaptation of The Magic School Bus. So congrats, Sarah: as the winner you get to play Miss Frizzle in the movie. Spoiler: you will probably be hacked to pieces in a terrifying way, but Tarantino will make it fabulous.

So a lot of things happened in publishing this week that were probably serious and informational. Today, however, is going to be short and sweet, and pull almost exclusively from my category labeled "cool shit" (oh yea, I have labels. Ask me about my system some time—it. Is. Fascinating. Like watching paint dry). Slate has a cool article about the journey of sex (and its more vulgar synonyms) into the dictionary. These evolutions have led us to the erotic retelling of 1,001 Nights. Slate also puts together a primer on the term "racism," and there's a new dictionary for drinkers. Oxford has modernized, to keep up with the drunks, by dropping extraneous hyphens. Also for your referencing needs are these books for frugal fashionistas. I'll comment on these fabbosh reference books in one of my two future careers: as America's Next Top Pundit, or as an extra in A Game of Thrones on HBO (what? I could be a man adept at horse riding).

If I can't be a horse-riding extra, I'm kind of screwed, because an alternate career path as a writer seems kind of less than awesome, mostly because being an artist requires living like one. And understanding copyrights. And having an online platform and a "positive reputation." On the other hand, I wouldn't have to go to workshops, and age has nothing to do with talent sooo... no, still not happening.

And don't go thinking about releasing all of my round ups as a posthumous collection—it won't do justice to my intentions. You can, however, write historical fiction about my life, as it is making a comeback. Also forthcoming and potentially weird and/or awesome: vooks! Yea, that's right: video books. Everyone is talking about vooks, here and here and here. Honestly, I think this is a stupid name—it couldn't be v-books? Sounds like e-books? Isn't so stupid? But maybe other people are all about this.

So a question for you, readers: vooks? Good? Bad? Fun? Irritating? Let us know in the comments!

Going Rogue & the New York Bubble

If you've been reading the news lately, you may have heard that one Mrs. Sarah Palin is releasing a book this fall. Going Rogue: An American Life is already #1 on barnesandnoble.com and amazon.com, set for an initial print run of 1.5 million copies, and it's got everyone I know in New York asking: who the hell is going to buy this?

Now, I pride myself on having a fairly diverse group of friends, but even my conservative compatriots are scratching their heads over this one. It's not like we all think that people who are interested in Sarah Palin are illiterate or hillbillies or anything, but no one I've talked to (in the industry or outside it) seems to be able to name anyone they know who'd really want to read it (or, at least, spend $30 on it—and with the e-book delayed until after Christmas, there won't be a $9.99 version anytime soon).

And then I realized something: all of the people I talked to are currently in New York City, are from New York City, or have otherwise been significantly influenced by New York City, one of the most liberal cities in the United States. Suddenly, it all sort of makes sense.

If you haven't heard, we're notorious for believing civilization ends at the Hudson, and more than one coworker has expressed his opinion to me that acquisition editors are often hampered by the fact that what they think people want to read is really just what they think New Yorkers want to read. We New York folk live in a bubble of sorts, and since the heart, left lung, left kidney, and spleen of publishing are all in NYC, it makes sense that a lot of books will skew in that direction. Thus, if the books we generate favor a New York audience and a New York audience, in general, tends toward liberal politics, there would be some correlation between what's being published and that which is politically left of center (QED).

Despite this, however, we publishing folk (especially those of us in sales) are aware of the broad appeal conservative voices have in the market: just look at recent bestsellers by authors like Glenn Beck, Michelle Malkin, Ann Coulter, Bill O'Reilly, and Dick Morris. We might not really get it, but we know from last year's election that there are a lot of people (roughly half the country) who might be interested in reading Sarah Palin's memoirs, and by golly, if we think you'll buy it, we're going to publish it. Done and done.

Now, before I open this up for comments, a necessary disclaimer: PMN is not a political blog and, while open and honest debate are highly encouraged, I realize that political discussions could potentially get out of hand. Therefore, any and all inappropriate comments—especially anonymous ones—will be deleted post-haste.

That said, you tell me: are you going to be buying Going Rogue on November 17th, either for yourself or as a gift? Who do you know who will? Do you think the New York Bubble™ has clouded the collective Jedi mind powers of publishing industry insiders (yours truly included)?