How do Authors Make Money?
Ask the Author Podcast Transcript
Episode 43, 1st April 2024
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Show Notes
- How a traditionally published author makes money
- Advances from publishers
- Royalty payments
- Library talks and writing teaching
- How indie authors make money
- There are no advances…but there are no middlemen either
- Indie Author Royalties
- How can readers support authors?
- Requesting a book from the library
- Leave a review
- Secondhand books
- We aren’t all rolling in the dough
Episode Transcript
I am actually going to cut straight to the question this week, because it's quite a meaty one and I want to give it the attention it deserves, so let's head straight into the question. Okay, so this week's question is one that I have been asked a couple of times, so I thought I would condense it all together and put it under the broad question of:
How do authors make money in today's publishing industry?
Okay, as I said, it's a meaty one, and it made me realise how little a lot of readers understand how authors make money, and even some authors. It can be quite convoluting to really understand how the publishing industry works and how exactly authors make money, and even some authors, it can be quite convoluting to really understand how the publishing industry works and how exactly authors make money.
How a traditionally published author makes money
So let's begin first of all between saying there is a difference between traditional publishing and indie publishing, and I'm going to base the following information on trad publishing only because they are where the questions that have been asked about money have been directed. I will include a bit of information about indie authors as well, but for the most part, let's start with how trad authors get paid.
Advances from publishers
First of all, advances. So when a publisher offers an author a contract, they often, but not always, they offer them an amount of money up front, which is called an advance. Now, this can vary from $500 upwards. New or debut authors will, of course, be on the lower end of the scale, and sometimes the zero end of the scale, while mid-list authors might be earning advances that are a little higher, and then, of course, obviously, your big name authors, your household names, are earning advances well into the higher end. However, high-end authors do only represent one to 2% of authors, so you'll find most authors do have advances towards the lower to mid section of the scale. So the advance isn't an extra payment, but it's rather money earned in advance of royalties.
Royalty payments
So let's talk about royalties. Royalties is pretty much the author's income from the books sold and it is a percentage as defined in the individual contract between the publisher and the author. It's easiest to talk about royalties in general or average terms, so we will do that. So let's say, on average, an author gets paid 10% of the recommended retail price of the book. For example, if the price is recommended to be sold at $29.95, the author will receive approximately $2.99 per book sold. Now I'm talking in Australian dollars, but you can convert that back to whatever your currency is. However, this figure does vary.
In some recent contracts that I've heard about, publishers have started to include a different royalty percentage depending on where the book is sold, for example, if it's sold in a large discount department store. So your big W's, your K-marts, your Targets they sell books there at a lower price, which is why a lot of readers buy books there. So because authors may get only 10% of the sale price, not the recommended retail price in that example, that can bring the royalties down. So basically, your royalties are a percentage of the book price and that's negotiated in your contract, and on every book sold you will get that percentage per book.
So, in regards to advances, if the author is paid, say, $2,000 advance, they will need to earn this money out of their royalties, so they won't actually start earning additional income from their royalties until they surpass that $2,000 amount that they've already been paid. So that's really important. So your advance is just that it's an advance on money that you will earn out of your royalties and once you've hit that advance figure, then you start getting paid your royalties for each book sale. Now, obviously, it's not paid to you every time a book is sold. It depends on your contract. Some publishers pay every three or four months, some pay every six months and again, that's negotiated in the contract and you will get a figure that you are sent every six months, every three months, whatever that term might be. So that's generally how an author makes money from book sales.
Library talks and writing teaching
There are, of course, other ways that authors make money, and that might be through doing library and author talks, it might be doing some teaching in writing, sharing their expertise, doing workshops, and so there's all those other things that come into play as to how authors earn money. But how we earn money from books, advances and royalties are the way, and that is negotiated through the publisher, through your agent, if you have an agent. Your agent will negotiate with the publisher to get you the best deal. And then there's all things that you could go into with rights movie deal rights, things like that, rights to be published in other areas of the world. There's all sorts of things that go into a contract, but we won't get into that today.
How indie authors make money
I wanted to keep it quite simple. So advances and royalties are the main way that authors get paid. Let's talk about indie authors. So, as someone who publishes their own books, rather than signing the rights of the book over to a publisher, someone who is an independently published author, they have full control over the publishing process.
There are no advances…but there are no middlemen either
So there's no advances. But generally, because you're indie publishing and there's no middleman, I guess there's usually higher royalties. But of of course, as an indie publisher, you're taking on all the risk as well, so you're paying for all of the financial expenses involved in producing a book for publication. So this all comes back to the author. Now I won't get into the details of what costs are involved that's a podcast for another day, I guess Only to say that these costs include things like editing, proofreading, typesetting, cover design, printing, distribution, marketing, all of that sort of thing.
So the author, when you indie publish, you pay for all of that, but in return you do make a higher royalty sale from each book, a royalty sale from each book. Again, the royalties vary.
Indie Author Royalties
With e-books, royalties differ from platform to platform and are also dependent on the price of the e-book, of course. So in general terms, because we need to talk generally, e-book royalties can be anywhere between 30% and 70% of the price of the e-book. Again, it does depend on the platform and the price that you are selling your book, but generally you will earn between 30% and 70% of the price of the e-book. Print copies are a little bit different. The royalty is the profit after your expenses. So, due to so many different factors, such as the size of the print run, print on demand costs, the length of the book, the size of the book, this amount differs greatly from author to author and book to book. So it's unable, like it's really hard, to quantify what that is. But generally you will make more off the ebook because obviously they're easier to produce. So there's that figure of between 30 and 70% royalties and, again, no advances.
How can readers support authors?
So I guess the next part of the question that I've been asked refers to how readers can support authors, because we know not everyone can go out and buy every book. But you don't have to. If you can buy a book, absolutely go for it Wonderful. If you can buy it from an independent bookstore, even better, because that supports bookstores and we all want to support bookstores. But any way you can purchase a book is helpful to the author. So, whether it's through a discount department store, whether it's online, whether it's e-book, audio book, we love it. Whenever you can buy our book, that's awesome.
Requesting a book from the library
The other thing you can do because, as I said, not everyone can afford to buy every book that comes out. That's where the libraries come in, so you can request a book through your local library and they'll be able to look it up and hopefully be able to stock it in their library, and the author actually receives what's called public lending rights income. Now, this is how it works in Australia. I'm sure it's similar in other areas of the world, but you don't get paid every time someone borrows your book. You get paid for the amount of stock that libraries are holding. So I think the minimum stock in Australia is 50 copies. So as long as libraries around Australia there's 50 copies of your book, you will start earning public lending rights. So if you're a reader and you can only read books through your library and that includes e-books and also audio books the author does receive some money from you doing that, so that's wonderful.
Leave a review and share on social media
The other way that you can help support an author is, of course, leave a review, even though we don't get paid. When you leave a review, word of mouth is amazing because it encourages more readers who will either buy or borrow the book. Hence authors get paid. Reviews don't need to be long-winded, just a I enjoyed this book or I love this book, because even if it's just a star rating, everything helps. And, of course, sharing on social media visibility is huge.
These days, it's harder and harder for authors to get seen and therefore earn income from their writing. So the more the book, more a book is shared and talked about the more sales and borrows for the author so you can create your own post. You can share the author's post or publisher's post. Every little bit helps. And another way that it may not pay the author or the author doesn't earn anything from this, but reaching out to an author just by sending them an email or a direct message on social media, it just it absolutely makes our day.
We absolutely love hearing from readers, so we might be having a terrible writing day and to see someone pop into your inbox and say, guess what? I really loved your book. Thank you so much. Like that that for me is almost payment enough. I mean, we do need to make a living from writing, but you know that is one of the best parts.
Secondhand books
So, um, I just wanted to also say something about secondhand books and sharing books, which I know a lot of people do. Although authors don't receive income directly from you sharing a book between friends or buying a secondhand book authors don't make money from that it's still a really important way for authors to become known, because you might discover a book in a charity shop or have it passed on by a friend and you might love that book and then you go and seek out the other books from that author. So, although it's not a direct way that authors earn money, like it's still really important. We are forever grateful number one for you guys reading our books, but also number two in helping create more readers. It's so important. So there you go. That's a bit of a rough idea. I hope that helps on how authors make money.
We aren’t all rolling in the dough
It is really hard to go into more detail because every author's situation is different, and I guess the other thing I need to say is authors don't make a huge amount Like we are not rolling in the dough If we are. I guess in that top one to 2% of authors who are household names, who are having their every book is a bestseller, going gangbusters and having movies and Netflix series made from their books, like absolutely they're doing pretty well. There's no doubt about it.
But the majority of authors sit in the mid list and the lower list, where they're not making full-time incomes from their writing. So they're having to supplement their writing by doing other things, whether it's a day job or other writing-related income. So yeah, there's not a lot of money in this game, but what we do earn we are so appreciative of because it means that readers are, firstly, reading our books and, secondly, hopefully, enjoying them. So there you go Advances, royalties, public lending rights, supplementary income, all of those things. That's how authors make money from their writing.
In Summary
If you'd like to know more about this week's topic, you can check out my website at wwwjfgibsoncomau, or if you have a question about writing or publishing that you'd like answered on the podcast, please reach out to me on my website or via Instagram, where you'll find me at jfgibsonwriter. The easiest way to find me is to google jodie gibson author, where you'll find my website and my socials. So I do look forward to hearing from you. So there you go. I hope that clears up um a few of the questions I've had about how authors make money. As I said, it's not a lot of money, but that's okay, and mainly through advances if you are traditionally published, or royalties, once you're earned out your advance, or if you're indie publishing, that's the royalty, so it's a percentage of the book, the price of the book. So there you go. I hope that makes sense.
If you've got any questions regarding this and you want me to go into further detail, just drop me a message, because I'm happy to share some more information because, particularly for aspiring authors, it can be a very grey area. Not many people talk about how authors make money, or even what sort of money authors are making. I don't have the stats in front of me, but it's the recent surveys that have been done. Like, authors are not making a lot of money. We're not making full-time incomes just from sales of our books. So it's really important for aspiring authors to know that, not to you know, put a downer on things, but just you need to go into this industry, being realistic, and of course, the aim is to write bestsellers, so that you know you can quit your job and you can write full time. Okay, I hope that helps.