Kevin says I’m a scammer

Kevin McLaughlin has advice for self-publishers to help them watch for scammers. It’s quite good, yet the whole time reading it I had this sense of discomfort. See, there’s a lot of overlap of how I said I’d run a modern publishing house. It bothers me a bit as I know I’d be doing it in good intent. This, then, is partly introspective examination and partly defense of the model I would use.

If you’re hiring assistance you have two basic types of payment. One is a flat fee, the other is a share of your royalties.

From the writer’s point of view, the advantage of the flat fee is that it is, indeed, flat. Done and gone, no need to keep track of where the second check is going, no need to deal with possibilities of audits, no need for contingency contracting in the event of extreme success, failure, or acts of law. Just one lump sum and you’re done. The disadvantages of flat fee are there’s no reward for success (good enough is paid just as well), and that done is done. You pay for an action, and there’s no back and forth without more money changing hands. This last is often hidden; you actually pay more because back and forth will vary and those who use it less subsidize those who do it more. What this means in all is that you need more up front.

That up front cost can be enough to cause most entry-self publishers to decide to just do it themselves, even though they don’t have the time, experience, or skills to do it well.

The “slice of royalty” is the reverse of all those. Your publisher is taking as much risk as you are that your work will be successful. He or she is also deferring payment for the services with the expectation that patience will be rewarded. However, in doing this the publisher is establishing a trust relationship. One of you will be getting the checks from the distributor and forwarding the appropriate share to the other(s). That means one of you is liable to the auditing (if there isn’t an audit clause and the other person won’t agree to one then you are being scammed), one of you is responsible for various accounting paperwork, etc.

The main reason I’d prefer to charge a portion of income is that the publisher can and should also provide marketing and layout and editing and a host of other things, all of which done well magnify your sales. Again the bottom question is whether you will get more from a solid flat fee or if you’ll get better performance by rewarding success.

A hobby horse of mine on this subject is book covers. Book covers can be purchased for flat rates. Book covers can also be purchased for ‘share of royalties’. The rate in the latter case needs to be small, but it’s a valid process. (Image copyright isn’t book copyright but it’s all under the copyright law. And you’re not purchasing the image, you’re purchasing the right to make numerous copies of the image. Want to paid a single flat fee for your book? Thought not.)

All that said, I think that if the publisher wants more than 50% of revenues after printing costs, consider it a scam. Note that I agree with Kevin that if the publisher is claiming more than what Lightning Source charges, or if it doesn’t provide at least the service that comes from Lightning Source or CreateSpace or their professional peers, they’re cheating you on the printing costs as well.

Kevin mentions one scam-like action that can be such or might not be. That’s the fees up front PLUS share of income. That is actually very similar to what traditional publishing does, and so I can understand why he considers it a scam. It feels that way to me, too – at least in most cases.

However, I’d ask you to not drop immediately but to look at the details. Look for a deal that is actually a mirror of the current advance model publishers use with authors. That is, you agree to pay 30% of income after printing, and you pay $300 up front with the agreement that you don’t pay share on the first $1,000 of income.

The bottom line is that not all scams are scams. Some look like them due to the biases, abilities, and experiences of the observer. As example/metaphor, I know many people who change the oil in their cars who consider shops that do it to be scams: you’re paying HOW MUCH for 15-20 minutes of work?

In the end, then, listen to the advice of others but don’t take it blindly.

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3 thoughts on “Kevin says I’m a scammer

  1. Hey Kirk. =) First off – I wanted to say that those “rules”, like everything else in publishing, are in flux. Will someone come up with a great, totally viable and fair business method which “violates the rules”? I wouldn’t doubt it. Things are changing too fast for anything to really be static.

    I think it’s possible you misunderstood me, too. I never said there was anything wrong with taking a percentage; that’s what most publishers do. It works. I might quibble about the fairness of the percentages currently in vogue in NYC, but the model itself is sound: publisher foots the entire bill for the production, which is generally tens of thousands of dollars or more, and gets a percentage of the proceeds for investing in the project.

    But that’s why it’s fair for the publisher to get a percent: they invested cold cash into production, and in the business world, that means they ought to get a fair return on that investment. Where it breaks down is when writers pay $1000 for a cover, print book layout, and ebook conversion plus pay for their own editing, and then the “publisher” uploads the work and keeps 50-90% of the profits anyway.

    The problems with that are two:

    #1 The publisher did not invest funds in the project (really: print layout for a book is $200-400, ebook conversion is $25-150 for all formats, and a cover for print and ebook runs you $50-200 for stock art versions like the ones those companies use. If the writer paid $500, they probably paid every cent of production costs.). Publishers who did not invest money in the production have not earned a percentage of the income.

    #2 As I outlined above, there are perfectly good providers who will do the work for flat fees. Why pay the same or higher fee PLUS half or more of your income for the same quality of service? Just makes no sense. I hire someone to change the oil on my car (to borrow your example above), but I don’t pay them $50 up front plus a penny a mile for as long as I am using their oil – especially not if the guy down the street is offering the same quality oil changes for $40.

    I found your idea of “reverse advances” interesting. Normally, the publisher pays the writer an advance, and the writer gets no royalty income until the writer’s royalty shares “earn out” enough income to match that advance. The advance is a loan, basically, against future earnings. So if the writer paid the publisher $1000, and the publisher got no income from book sales until their share “earned out” paying back that $1000, I suppose it would be equitable.

    As a writer, I’d be wondering “why”? The main reasons for using a publisher today are marketing and promotion of books. Writers can get into every distribution channel that most small presses can reach. Writers generally will earn more from a book self published than they will from a small press book, sans publisher marketing of the book. So the only real reason to use a small press is if that publisher is putting some serious effort into marketing, to build enough extra sales that the writer isn’t losing money by using them. I’d be very concerned if the marketing and promotion vehicle I was paying a substantial portion of my earnings to use was so insolvent they needed to borrow a thousand bucks to produce the book. I’d also wonder about the long-term viability of such a company, living hand to mouth like that. It’s not a healthy business structure, and I don’t want my books tied up in a bankruptcy court for years.

    All that said, the model seems fair. Just…questionable.

    Anyway, absolutely don’t take advice blindly. 😉 And be aware that things are changing rapidly. Do a little research and compare prices. See what it would cost you through a few methods, and pick a model which works well for you.

    • Thanks for the response, Kevin.

      Rather than my long-winded response or linking to the dozen or so long-winded posts, let me respond by summarizing the earlier posts.

      The modern/future publisher’s job is to handle anything/everything the writer doesn’t want to handle between writing and collecting the money. The measure of the publisher’s value is how much he can increase the sales of the writer over the work of the writer. This is supplemented by the value created through comparative advantage.

      I think salesmen are a good comparison. Some sell for a flat salary. But others sell for commission, either on top of or instead of the base salary. Each model has advantages for both the salesman and the company. To say either is always best is to ignore situational factors.

      Glad you liked the reverse advance concept. I think it’s the element that best identifies the difference between present publishers and what I think the future will be.

      That is: yesterday the publisher selected the author they served. Tomorrow the author will choose the publisher that serves them.

      • I think we’re in overall agreement. =)

        Like any rules, they’re broad strokes and there will be exceptions. If there was a publisher who asked for $1000 up front and 50% of the profits on sales, but marketed well enough to make you an extra 10,000 sales per year at $5 profit per sale (split 50/50, so $2.50 each) above and beyond what you were doing yourself, it’d be a no-brainer to work with them. You’d very quickly make back your investment.

        I just don’t know of anyone offering that sort of effort, not yet anyway. If you hear of one, let me know and I’ll update the “rules” with an exception. 😉

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