Think Like A Publisher: The Early Decisions
Okay, I’m starting a brand new series right now. I have no idea how long this series will be, and I will continue to do “New World of Publishing” chapters and “Killing the Sacred Cows of Publishing” chapters as topics arise. But there is so much to talk about when a writer decides to become a publisher, I thought I would just do these in a new series.
THE EARLIEST DECISION
One day, after following Konrath’s blogs, a writer suddenly thinks to himself, “I should just publish that unsold story myself on Kindle.” Uh, oh… Right at that point the writer has made the decision to become a publisher.
The very first decision to go into a brand new business.
Being a publisher is a very, very different job than being a writer. Very different. And a very different business. Basically the two jobs must come together in one form or another for a story to ever reach a reader. And in traditional publishing for the last sixty-plus years, the only game in town was to form a partnership through a contract with an established publisher to get your work to readers.
Then a few years back the traditional publishers seemed to suddenly release their total hold on the distribution of books to readers. Writers suddenly saw a way around traditional publishing, a way to control what happened to their work. So the writers started becoming publishers again.
History aside: This writer as publisher is nothing new, actually. Before 1950 or so, self-publishing was an accepted form of publishing. Only from 1950 to 2008 was it looked down on. Now it is accepted again. Only difference is the difficulty and delivery systems.
As electronic books started to gain percentage of total books sold, a very small, but very vocal group of writers sprang up that I call indie publishers. And then a few established writers such as Michael Stackpole and J.A. Konrath started talking to other writers about the money that can be made as an indie publisher, and the control it gives writers. And more and more writers started paying attention. Especially those of us with very large, very dead backlists that suddenly looked like gold mines in our file cabinets.
And here we sit now in early 2011 with electronic publishing expanding quickly, more new reading devices coming on board almost daily, worldwide reading of electronic books expanding faster than anyone can keep track of, and a bright future ahead of authors who decide to indie publish.
And a ton of problems coming to authors who indie publish and don’t understand they have taken on a brand-new business.
And everyone has an opinion about what is the right way or the wrong way to do the indie publishing. And a lot of writers seem to be ignoring many basic business principles of being a publisher. So I figured I would try to put all the different aspects of being a publisher in one place and let each writer at least make a decision from an informed viewpoint. (In this series I will clearly state what are my opinions, what are my suggestions, and what are just plain facts.)
Very quickly, here is why I feel I can talk about this stuff.
I helped start and was the publisher of Pulphouse Publishing Inc. Pulphouse was the 5th largest publisher of science fiction, fantasy, and horror for a number of years. Kristine Kathryn Rusch and I started the business as a sole proprietorship in 1987, which I owned. We switched it to a corporation in 1990, and shut it down to go back to full-time writing in 1995. Pulphouse Publishing Inc. dissolved officially in 1996, and Kris and I assumed all the company debts, which we then paid off over the next ten years. During that time I worked with many other publishers, including the publisher of Bantam books on many projects. We had 19 paid employees and a two-story office building.
I also edited for Pulphouse, VB Tech Journal, and Pocket Books.
Last year, as this new electronic publishing wave was picking up steam, Kris and I helped start WMG Publishing and we are working closely with the different people involved with WMG Publishing to first get our huge backlist up and to secondly grow into a decent mid-sized publisher of other writer’s work in this new world. Unlike Pulphouse Publishing, WMG Publishing is growing slowly. And taking its time to make correct decisions at the right time and in the right way. WMG Publishing has 145 different books and stories published as I write this.
Also, I have started over twenty businesses over the years, many of which are still thriving. I have started four different corporations and attended three years of law school, although I am not an attorney and nothing in these blogs should be considered legal or accounting advice. I have been making my living as a freelance writer since before I became a publisher. (Trust me, Pulphouse Publishing did not make me any money. That is part of the mistakes I hope to not repeat with WMG Publishing.)
Some of the earliest decisions a publisher has to make can be changed down the road easily. Some are difficult to change. So I’m going to break down some of these early decisions into basic groups. And keep in mind, there are no correct answers on any of these decisions. Just what you want to do.
EARLY BUSINESS DECISIONS
1… Pick a Name.
Yup, as a publisher, your business needs a name. This could be one of the hardest decisions to change down the road, so caution. My suggestion: Pick a name that is easy for everyone to remember, that is fairly short, and that sounds like a publishing house imprint. CRITICAL. Make sure the name is not being used and go get the domain address. Do not wait. If there is any chance of using a name and it is open, grab the domain address. Just you simply checking on it being available might cause someone else to buy it. Grab it quickly.
If there is no available domain address with a .com in your business name, pick a new name for your business.
2… Pick a Business Structure.
You basically have two choices. One, keep the business as a sole proprietorship. That means you own it all and on your taxes you file a Schedule C business form with your yearly taxes. Unless you are planning on growing your business very large or making a lot of money, this is the easiest way to go.
The second way is go to an attorney and an accountant and have them set up your publishing company as a corporation of one type or another, depending on your long-term plans. If you need to ask why you would want a corporation instead of a sole proprietorship, you don’t need a corporation. All a corporation will do is cause you more costs and get you in trouble.
3…Open up a dedicated checking account under your business name.
This is easy to do in both types of business. Most states for a regular sole proprietorship, you simply get a form from your bank called a “Doing Business As” form. (There are different names in different states, but most call it a DBA.) File that with the state and give it to your bank and you can open up the business checking account. Then, as you have money flowing in from all the sales in all the different sources, have the money go directly to your business checking account. And take all publishing expenses out of that account as well.
For heaven’s sake, keep all your receipts, just as you do with your writing.
If you started a corporation, you will know what to do. If not, ask your accountant and think twice about starting a corporation.
EARLY BUSINESS STRUCTURE DECISIONS
Okay, you’ve got a business name, a checking account, and have decided what type of formal business you are running. Now you need to decide what kind of structure your business is going to take inside the publishing house. To determine that, ask yourself these simple questions and write down the answers.
Question 1: Over the next five years, who is going to do all the production work?
A) You do it all.
B) You do some and hire out contract work for other parts.
C) Other people do it all.
D) Combination of the above depending on the project.
If you are going to do it all, ask yourself if you have all the tools to do covers and the computers and the software to do them? Do you have the ability to design covers? Can you layout books for PDF files for POD publishing, both interior and cover? And if not, what is it going to cost and how long will it take to learn how to do all these things? Most tasks are not difficult, but there is a learning curve that takes a little time.
(An aside: I did some pretty ugly covers starting off with an old computer and no good software in helping out WMG Publishing. I started getting a lot better once WMG Publishing invested in a computer and new software for my office.)
If you are going to hire some jobs out, do you have the upfront money to do so? Or if you are going to hire everything done, do you have that kind of up-front money? (Welcome to being a publisher. Traditional publishers can spend a lot of money on your book before they ever earn a penny. You are now a publisher, not a writer. Expect up-front costs.)
Question 2: How much inventory do you have or will you have in the next five years? How many books are finished but unsold? How many short stories? How many novels or stores sold are now reverted to you?
How much new product can you produce in the next five years?
If you only write one book every few years and have no inventory, you don’t need to do any of this. If you have a number of novels, numbers of short stories in inventory, and can write two or three novels a year and some side stories, then mark that down. Publishers work on a “publishing schedule.” Start setting that up as well and be realistic with yourself.
Inventory is critical in any business. I will talk about inventory-in-business aspects of publishing in a later chapter.
Question 3: Editing and Proofing. Every publisher has editors and proof-readers. How do you plan on handling that? Do you have a good first reader? Do you know who you can hire for copyediting? Or just not do it? And if you want a copyeditor, can you afford the up front fees. Good copyeditors run from $50 to $1,000 per manuscript. Good, respected editors actually editing are more.
There are other basic questions, but for now that should be enough to get you thinking on the right track as a publisher.
Early Business Chores
As you are setting up your publishing business, there are numbers of just basic chores that need to be taken care of. I am assuming you plan on being both an electronic and POD publisher. If not, why not? Why make a decision so early on to limit your possible markets? Plan to do it all, so that means you have chores to do. And trust me, these are chores.
Chore #1: After you have your business checking account, so you don’t have to change these later, set up publishing accounts on Amazon, Pubit (B&N), Smashwords, and CreateSpace. (Yeah, I know, you might switch to LightningSource for POD later, but early on save the mistake money and do CreateSpace. Or do as I have done and set up accounts on both. Just practice on CreateSpace where you don’t get charged for every mistake.)
Chore #2: Set up a business PayPal account. Hooked to your business account if possible. You will need this in more ways than you can imagine, including down the road putting shopping carts on your web site.
Chore #3: Set up a place-holder web site, even if it is under construction as WMG Publishing website is. You’ll get it fixed later.
There are other chores, like starting to explore how to get books in libraries and how to get ISBN numbers, but for now, just stay with the first three. I’ll talk about ISBN numbers and library sales in future chapters in this series.
Early Decision: What Kind of Publisher Do You Want To Be?
Okay, to keep this basic, there are three major types of publishers in publishing and I don’t see this model changing at all. In fact, I see it becoming stronger. You can be solidly in one category or actually can function in all three if your readers are clear. But my suggestion is pick one to start.
1) Traditional Fiction/Nonfiction Publisher
2) Discount Publisher
3) High-End Publisher
I will say right off that Pulphouse Publishing Inc. was a high-end publisher for the most part. In the late 1980s and early 1990s I sold some books for over $50.00 each and most of our books were signed and numbered and retailed between $20.00 and $35.00 each. Very high end, although we were trying to change it in the last few years with short story paperbacks and magazines, we never really made the shift before the end. What Cory Doctorow is doing is being a high-end publisher on his “experiment” book. He has one state priced at over $300 per book.
I will talk about each of these types of publishers and the different business models they demand in future chapters. But for now, here is a very quick summary of the three choices you have to make early on as a publisher.
High End: I believe that High-End publishers will make great money in this new world with all sorts of enhanced products. This new world is gold for high-end collectors books. But it will take a publisher who can publish top names, do enhanced production and books, and knows how to put out top quality leather and signed work. This area is difficult at best for a beginning publisher.
Traditional Publishing: Basically, this is the New York publishing model. Books sell for all the traditional prices, go to the traditional outlets, and are bought by regular readers. All bestsellers for the most part are traditionally published. We have positioned WMG Publishing in this model. Traditionally Published novels will continue to be the vast majority of all books published and where the highest profit margins are per product sold.
Discount Publisher: This area is very large in the publishing world in general and has many large companies working it. The outlets consist of discount shelves in normal bookstores, discount mall stores, and other types of discount stores. Many books beyond the bestsellers that you see at Costco are discount books. In electronic publishing, the price being set by discount publishers is 99 cents.
In this area of publishing, the margins of profit are thin and the publishers depend on volume of sales to make even a decent profit margin. Very few traditional publishers have discount arms, but they do high discount at times to some stores like Walmart. That is different than discount publishing as a business model. Most discount publishers only focus on being discount publishers and go for the volume of sales.
Again, more on all three of these major types of publishers in future chapters.
As a new indie publisher, you want to decide what area of publishing in general you want to fit into. As I said, with Pulphouse Publishing Inc., I started as a high-end publisher and that was our plan from the start. It was only years later that we decided to try to move to the traditional model. And the move, once we were established as a certain type of publisher, was difficult at best.
That’s most of the basic early decisions you have to make once you decide to publish your own work. Get the business set up, do the chores, look at your start-up inventory, and then look hard and fast at what kind of publisher you want to be.
Being a publisher is fantastic fun. And to be honest, I’m once again having a great time playing on the publishing side of the desk. I never thought I would move back to this side of the desk, to be honest. But at the moment I am glad I did.
Stay tuned for more in this series as I walk you though step-by-step the different aspects of being a publisher, both the problems and the good stuff. And trust me, there is a lot of good stuff, not the least of which is the amount of money you can make. The traditional publishers in New York didn’t build and buy those huge buildings on their good looks. This series will talk a lot about how to maximize your income and your inventory.
As I said, “Great fun!”
Copyright © 2011 Dean Wesley Smith
Cover photo copyright © Vladimir Melnikov/Dreamstime.com
And speaking about maximizing income, this is part of the income streams for me. And, to be honest, it keeps me going on these chapters. And anyone who donates a little to the Magic Bakery tip jar, I will send a free electronic book of all these chapters combined when I am finished.
And speaking of the Magic Bakery, this chapter is now part of my inventory in my bakery. (Confused on that, read the Killing the Sacred Cows of Publishing post about making money with writing.) I’m giving you this small slice as a sample. I’m giving you a taste, but not selling any of the pie.
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