Sunday, May 8, 2011

The Internet and the Old Maid (Part 2): Dollars and Cents

One of the main reasons I started this blog was inspiration from this conversation between two authors, Barry Eisler and Joe Konrath.  Their post is long and full of a lot of back-patting, but money talks: Barry Eisler turned down $500,000 from a legacy publisher so that he could self-publish his next book.  If an author self-publishes he keeps 70% of the revenue from selling an ebook on Amazon (he also gets a $0 advance).  These two gentlemen now find that more attractive than even large advances from legacy publishers coupled with a much smaller percentage of revenue, now 14.9% for ebooks.  They are cutting out the middle man, the old gatekeeper.  Awesome.  Simply put:

Joe: Or to put it another way, getting half a million bucks and 14.9% royalties, forever, isn't as lucrative as no money up front and 70% royalties, forever.

This sets up a nice, easy equation.  For the sake of simplicity, assume Barry’s ebook is sold for $10.  So he gets $500,000 and $1.49 per book under the legacy publisher, or no advance and $7 per book if he self-publishes.  Then, simply solve:

    Legacy Publisher           Self-Publishing
$500,000 + $ 1.49 * x    =    $0 + $7 * x

to find

x = 90,774 books for Barry to make the same amount self-publishing versus legacy publishing (~$635,000). After this number, self-publishing runs away with it.  For every 100,000 more ebooks Barry sells, he makes over $500,000 self-publishing over a contract with legacy publishing.

Barry put his money where his mouth is so it’s clear that he thinks he’ll come out ahead self-publishing.  And he also put forth a bunch of stats and percentages, so you can fiddle around with the numbers and see for yourself.  But a lot of the numbers even in this brave new world are still hidden.  I can see the top-selling ebooks on Amazon, but I can’t see their total amounts.  I know that successful bloggers such as J.D. Roth from Get Rich Slowly and Trent Hamm from The Simple Dollar use their blogs as their primary incomes, but I don’t know what that income is

That’s not to say that these bloggers should or have an obligation to publish their incomes, but it would be interesting to examine, especially month-to-month variations.  I would also be apprehensive about broadcasting my primary income, but I have no qualms about reporting my blogging income.  It will especially interesting to see as the site grows.  So, without further ado, here is my April income from this blog:

$.87!  Not much money (and I made it off one click), but I expected it to be even lower.  Not too shabby for a blog that was started at the end of March.  I’ll report blogging income monthly.  This will at least provide a little data (or right now, datum) in the world of Internet self-publishing. 

An aside: I know that you’re supposed to file taxes quarterly for self-employed income.  I’ll probably make a post about this as I prepare to do it in the future.

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