Another Blow to Traditional Publishing
The splashy launch of the publishing startup Authors Equity is a massive validation of why you, as a book author, should self-publish. (It’s also, ahem, a validation of our business model at Hal Clifford Associates and shows why authors should look beyond traditional publishers to reach their audiences and generate a return.)
Authors Equity has a simple proposition for authors: They get zero cash advance on their books, but receive 60-70 percent of “profits” (always a word to be wary of, but there you have it). Compare this to the traditional publishing model of a cash advance against royalties of 12-15 percent on “net sales” (that is, wholesale price), which translates into about 6-7.5 percent of retail price, and that big number can get your attention.
That’s an appealing model for high-performing authors like James Clear (Atomic Habits) and Tim Ferriss (Four-Hour Workweek), both of whom have sold millions of copies of their books. Both say they will publish their next book with AE, rather than sticking with their traditional publisher.
Authors Equity’s approach similar to ours. Typically, our authors collect 40-60 percent of their gross (retail) publishing revenue. Even better, authors who publish with us retain all their rights, which means they retain ALL their revenue from all channels.
The business wisdom of what Author’s Equity is doing is in the details: they are going to publish only a few dozen books a year. That tells me that AE will ONLY publish authors like Ferriss and Clear who already have massive audiences and can guarantee book sales in the hundreds of thousands of copies.
In other words, Author’s Equity is cherry-picking the most profitable authors.
AE will be able to attract those authors with that generous profit-sharing split yet still cover their costs because those authors have done all the marketing work in advance to build a huge audience. That is as close to a risk-free model as you can get in the publishing world.
Side note: I have seen a rise in zero-advance contracts from traditional publishers, which pay slightly higher royalty rates (starting at 15 percent rather than 12.5 percent). This is another way you see publishers de-risking their bets by shifting more of the financial risk to the author. (Authors who get such contracts must be able to afford to write their book without an advance in hand.)
The weakness of AE’s approach is that it’s predicated on all the profit coming from book sales. What matters for most of the authors we work with is that you don’t have to sell a lot of books to make money from your book. Our approach with authors shows how to generate ROI through many channels once you’ve written and published a great book—and all of that ROI accrues to you, not your publisher.
If can get a deal with AE, by all means do so. But many excellent books won’t find a home in such rarefied circles because they will never sell hundreds of thousands of copies. Take this development as a vote of confidence by the publishing industry in the new model of self-publishing that we practice. Authors can—and should—retain more rights and more revenue than in traditional publishing because they are taking on more risk and responsibility for building audience. We lean into that idea at my company. Maybe you should, too.
