Sunday, April 3, 2011

Legacy vs. Self publishing revenue chart for Barry Eisler

On his blog, Joe Konrath is having an interesting discussion about the legacy publishing versus self-publishing decision that Barry Eisler has recently made.
In that discussion, Barry asked to see a chart of the math that they discussed. He calculated that he could make $142,000 per year for three years with the legacy publishing deal. If he instead self-published, he could make $70,000 in the first year and $140,000 each year thereafter. This latter estimate even assumed ZERO growth in ebooks.

Based on his numbers, here’s a chart I’ve made:
(You can see another chart and analysis over on the Sweetie Chronicles.)
This chart does not take into account interest you could earn on the legacy publishing deal, nor the present-day value calculations on the future royalties from a self-publishing effort.
Even so, the difference is quite evident.
Given these numbers, after ten years, Barry will have earned around $1,350,000 by self-publishing. Instead of around $426,000 from the legacy publishing deal he recently turned down.
Sounds like a good idea to me.

Oh, I forgot to mention. That blue column continues to increase FOREVER. It doesn't stop in 2020.

7 comments:

  1. Derek...

    Nice. Another point. If inflation kicks in... Barry does even better in the out years. :)

    Neil

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  2. lol I like the increase for-e-ver! I blogged the Barry vs Amanda before they did the follow up! I'm feeling all warm an fuzzy now.

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  3. In his situation, its hard to see how Barry could go wrong. He's already got the platform. He can capitalize on that and be taking more to the bank with almost zero effort. He may be pioneering a new movement of successful writers who jump ship because the money's better on Kindle.

    That said, the path Amanda Hocking took does make a lot of sense for her situation, which is just about the opposite. She had no platform and built what she had from the ground up. Even considering the very nice income she's earned, her audience is relatively small compared to what a major publisher brings to the table. These two writers have taken very different journeys, but both seem to have the best of both worlds.

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  4. Wannabuy,

    No, quite the opposite. Inflation lowers the value of dollars earned in future years. Therefore an increase in the inflation rate will cause future dollars to lower in value quicker, thus lowering the present value of that future income stream. In general, it's better to take money sooner rather than later, but that becomes especially true when the discount is high.

    Just sayin'...


    Michael Kingswood
    michaelkingswood.com

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  5. Woops. That should be when the discount RATE is high.

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  6. Two assumptions bother me about their math in this.

    1) They are assuming that corporate publishing sales flatline after X years, but indie sales continue forever. Does that make sense to anyone? Why would a book continue earning simply because it is indie, or cease earning simply because it is legacy published? Makes much more sense that the book would continue earning for just as long either route, just at a faster rate for indie because of the higher royalty.

    So I see that assumption as just flawed thinking.

    2) They are assuming indie sales will continue at the same rate forever. I question that. I'm not saying that they won't - just that we really don't have the data points to support that. I suspect that sales will continue to be at least decent for as long as the writer continues to produce new work (i.e. stay in the public eye). But I think longterm sales projections are risky at best when we simply have no data to base those projections upon.

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  7. Kevin, I agree that long term sales projections are sketchy, but look at it like this: A midlist book (traditionally published) has a 6-12 month shelf life. Most midlist books do not go into multiple printings, and therefore go out of print very quickly (and the profit margin is much more finite). They get one shot, and then it's over. That shelf space is needed for something newer.

    However, midlist authors are doing a better job of getting their books to the target audience in e-book format. That target audience has the potential to be millions and millions of people, assuming that the e-book market continues to expand and the titles in question continue to successfully reach their targets. The number of people who will own e-readers in the next decade alone is staggering. In order to be financially successful as a writer, you've only got to reach a fraction of a percent of those readers.

    A legacy-published book that has months, maybe a year to reach its audience simply can't get to all those potential buyers. It comes and goes too quickly. But an e-book can stay on the shelf forever. It has eternity to find it's market.
    http://jamiesedgwick.blogspot.com

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