Publishing Business Data And Records

I've been on a little spending binge for the 2007 tax year, which got me thinking about record keeping and data collection. Most publishers who succeed in business are pretty good about record keeping, primarily for tax reasons. When you're publishing as a business, all of your publishing related expenses can be deducted from your gross income before paying your taxes, provided you keep reasonable enough records to prove those expenses. I save receipts and keep a travel log for the car, and I run 100% of my publishing income through my business checking account. With online access to historical records, it's made tax time a lot easier.

Anybody who's seen my Amazon Sales Rank analysis or retail publishing sales statistics knows I'm a bit of a data freak. What I'm not a fan of is data entry. I've never cared for spreadsheets, they strike me as a slippery slope that destroys the context for data and leads to fundamental errors in analysis. My routine is to archive transient records daily, which helps me maintain the discipline to check them. This routine means I'm never more than 24 hours away from spotting a problem with distribution, discounts or availability. The transient records I archive are the daily Ingram iPage sales and demand reports, and an Amazon snapshot taken through Aaron Shepard's SalesRankExpress.

In addition to the transient data, I check my Amazon Associates orders on a daily basis. While the numbers over the short term lack statistical significance, checking every day builds up a fluency in how sales flow, and the relationship between website visitors and sales. I'm going to have to beg your indulgence with the production quality of this little video showing my daily data collection routine. I recorded directly off the LCD with my Flip Cam rather than using software capture, because I wanted voice-over and I don't own a microphone!

I don't save Amazon Associates records on a regular basis because they retain them them going back to 2002. Somewhere on my hard drive I have saved all my Associates sales records from 1997 through 2002 for my old website, though I'd hate to have to find it. If I see the 2002 year go away after New Years, I'll start archiving that information on an annual basis as well. The part of my routine that I didn't show in the video is checking the usage statistics for my website, something that I also do on a daily basis. Again, the daily checks promote fluency in understanding how the website is functioning, and dovetail nicely with the information from the orders reports.

If the only record keeping you do is for tax purposes, you're missing out. There have been several occasions over the past ten years where the recording of transient reports has allowed me to demonstrate to the existence of problems higher up in the food chain that would have been dismissed as fanciful without the data. Nobody in the publishing industry is going to give you the time of day because you "seem to remember that it used to be different." It's also important for me to have a check on my own memory, especially when it comes to optimizing my sales approach or trying to figure out whether or not the sky is falling.

The Secret To Self Publishing Success

Many of my friends and not a few strangers have suggested that I'd make a good teacher. But I have a problem with the fundamental teacher's moto - "There's no such thing as a stupid question." I get stupid questions all of the time, primarily from people who can't be bothered to read the very page they claim to be asking a question about. But the king of the stupid publishing questions is the request to be let in on the secret. I suppose that our media drenched conspiracy theory world has encouraged the idea that it all comes down to who you know, but looking for a conspiracy in self publishing is pushing things too far. Self publishers don't have anybody to conspire with!

The secret to publishing success is that there aren't any secrets. Like any other business startup it takes a lot of hard work, some good ideas, and reasonable timing. Writing strangers and asking them to be let in on the secret doesn't qualify as a good idea. What's more, if you think I could write over three hundred posts to this self publishing blog without revealing everything I know about the subject, you've got more faith in my depth of knowledge than I do. All I'm trying to do at this point is to space out my endless repetitions:-)

But I still get e-mails and blog comments from people who think, for example, you have to know somebody to get your book listed on Amazon. There's no secret to getting your book listed on Amazon, and there must be a half dozen ways to do it by this point. You can join Amazon Advantage if you're small, or set up a direct relationship if you are very large. You can list anything you want in Marketplace, or you can have books printed by one of Amazon's two publishing companies, CreateSpace or Booksurge. Or, you can have your book printed by a company that has an Amazon relationship, like Lightning Source or Replica. Or you can place your books with a distributor who has a relationship with Amazon, which is most of them.

Figuring out a way to get your self published book on Amazon isn't the challenge. Choosing the best way is the challenge. Unless your publishing business is entirely focused on selling books on Amazon, there are trade-offs involved in any of the choices above. The Advantage program requires a 55% discount and you pay the shipping, and getting into Amazon by way of a distributor will cost even more. Both Lightning Source and Replica allow short discount access to Amazon, and in Marketplace, the pricing is entirely in your hands. CreateSpace and Booksurge have standard deals you have to agree to, their printing costs are also higher than you'd pay through Lightning Source. But the bottom line is that aren't any secrets involved in self publishing. If anything, there's too much information and it tends to confuse newcomers until they get a little real experience under their belts.

Publisher Income vs Royalties or Residuals

New self publishers, who have previously worked as authors or who have studied up on publishing from the author's perspective, often confuse income with royalties. Authors work for royalties, and the much sought after advances authors receive are advances on royalties, i.e., an up-front sum of money that will be deducted from the future royalty payments the author would otherwise receive. A book is said to have paid-out if the author actually receives any royalties in addition to the advance. I don't have any statistics on the subject, but I know of non-fiction authors who have written a dozen books without ever receiving a penny in royalties because they have never caught up with the advance payment.

Publishers don't get advances, they pay advances. When you are a self publisher, you are taking on all of the risk and working on spec (speculation). The income that you earn is regular Schedule C income, and it starts with the first book you sell. The expenses that you incurred in publishing the book are then accounted for against the income, and if you have more income than expenses at the end of year, you've made a profit on which you have to pay taxes, just like any other business. As a side note, neither the income earned by a publisher nor the royalties earned by an author are treated as "royalties" by the IRS, for whom royalties means earnings from oil-wells on your land or from the Broadway Musical that your grandfather wrote (I wish:-). If you're regularly employed in the creation of the revenue stream, it probably can't be counted as royalties, unless you die and leave it to somebody. The importance of the definition is that royalties aren't subject to self employment tax.

Now we come to residuals. I don't know if there's an official publishing definition for the term that everybody else abides by, but to me, residuals represent any income from books you've published in prior years that continue to pay long after you've earned back your expenses. Actors use the term residuals for ongoing money they receive for reruns of TV shows or commercials, long after they've been paid for the original work. The thing about residuals is that they can be a danger to the momentum of a new publisher. If the residuals reach the publisher's goal for income and remain there without the publication of new books, it can really take the wind out of your sails. It certainly took the wind out of mine.

I'm got to thinking about this specifically today as I'm staying by chance for two nights at a beach front hotel in Tel Aviv. I tried making a publishing video down by the ocean but the wind noise ruined the audio. The whole concept of living on the beach and wasting away in Margarita Ville always escaped me, but that's the ideal scenario for some writers. To achieve a level of residual income that allows for an endless round of hotels, restaurants, sunny beaches and loud disco bars, or all they trance bars now? All I know is I'm on the twelfth floor and I can hear the bass speakers thumping away to the wee hours of the morning, and I don't like it.

So I'm glad that my gross income as a publisher will be down this year, the first time in five years that it hasn't move up instead. The reason is simple, I haven't published a new book since 2004 and I spend most of my time working on projects that have little or no value for my publishing business. I like to think I haven't wasted the last three years, in the publishing sense. I've answered a couple thousand e-mails, written a few hundred blog posts and posted a half-hour worth of video. But without the goad of falling income, I'm not sure I could have put myself back to work. So remember that residuals can have a hidden cost on productivity, what the Fed would call a moral hazard (and then proceed to cut rates anyway:-)

Bestsellers And The Publishing Lottery Conception

The closest I've ever come (and ever plan to come) to a national bestseller list is a "Thank You" in the introduction of Chris Anderson's "The Long Tail." But I've made a living in publishing for the last ten years, first as a trade author, then as a self publisher. Thanks to some of my articles about Amazon, book sales, and this blog, I've enjoyed a large correspondence with literally thousands of authors and publishers. Or maybe it would be fairer to say I've conducted a large correspondence, it's not 100% enjoyable. Putting aside the loons and the authors who have the time to write multiple books but don't have the time to read a single article about publishing to the end, the most painful part of corresponding with unpublished authors is having to interpret their dreams. The most common dream, often hidden in a gauzy wrapping of serving mankind and changing the world, is to write a bestseller.

While I certainly encourage everybody to write the best book they can, writing the best book doesn't equate to winning a publishing lottery. Bestsellers share one common attribute that excludes most titles from even aspiring to a bestselling status, namely, they appeal to a heck of a lot of readers. I'm not going to pretend that I know how to create bestsellers, if I did, I'd have better things to to with my time than writing this crazy blog. But I think I have a pretty good feel for what books don't stand a chance of becoming bestsellers, unless they become the novelty title of the year that everybody buys and nobody reads. In eight years of corresponding with authors, the majority of titles I've heard described as potential bestsellers barely had a chance of selling beyond the author's immediate family.

Publishing is not a lottery. Unfortunately, the lottery conception has developed quite a following in the world as a sort of an equalizer, a chance for the little guy to compete with the big guy. In reality, lotteries are about a lot of little guys competing with a lot of other little guys with the proceeds going to create some upper middle-class jobs for relatives of politicians. But the conception of taking a chance and coming out trumps seems to dominate the dreams of unpublished authors in a destructive way. The belief that publishing is a lottery and a bestseller is the winning ticket leads authors to ignore the realities of the business and to excuse their own failures. I've also heard my share of conspiracy theories from authors who believe the world is suppressing their masterpiece for socio/political reasons. Trust me on this one. If a publisher thought they could make a profit on your book, they'd publish it.

I think the attraction of the bestseller lottery philosophy is that it absolves the author of all responsibility. Writing the book becomes the whole job, after which, success is supposed to be determined by a bunch of numbered ping-pong balls coming up in the right sequence. If writing books is your hobby or your quality time activity, more power to you, but if you're trying to start a self publishing company so you can earn a living, you're not going to make it. The big trade publishers employ acquisitions editors for a reason, and that reason is to pick out the commercial books. If you can't do that for yourself, your dreams are going to remain dreams.

Book Editing vs Blog Editing

I took a look at the Word statistics for the two files comprising the new book I'm working on his morning. I was pleased to see it already a good 25% over my idea of the ideal word count for the book, even though it's not finished yet. That means I'll be able to do some cutting myself before I hand it over to my editor, who will cut it some more. A big part of the book editing process is simply cutting out text that proves a distraction from the main theme or introduces an uneven feel to the quality of the writing. It's entirely possible to improve a book by no other process than cutting, but it's pretty hard to make a book better stuffing in new content.

Unlike some professional bloggers, those who work in teams or are the spokespeople for companies and organizations, I do my own blog editing. Now you understand why I employ an book editor to go over my books before publishing them. The only part of editing that I'm good at is the cutting, but cutting is the last thing a long form blogger needs when trying to make the word count for an installment. I do get regular editing suggestions from new readers, which I appreciate, sort of;-) I can't get excited about going back and fixing old blog entries, unless somebody points out a factual error.

I'm somewhat less amused by book editing suggestions from readers, though I try to learn from them. My problem isn't with having errors pointed out, it's with suggestions that go against the theme of the book. This bothers me because it makes me wonder if the reader got all the way through the book and entirely missed the point. In some instances, I know this is just due to people seeing the world through their own filter, but in other instances, it seems to be that an open-minded person can read everything I've written on a subject and not be convinced. As a self styled preacher of print-on-demand self publishing, I find that depressing.

That brings us back to book editing, and the question of focus. I've always found it entertaining to read my professor friends academic books and see them arguing with their own point of view. That's just part of the academic style; you're supposed to think up the possible objections to your position, quote sources supporting those objections, and then dispose of them in such a manner that convinces your readers not to run out and check the sources. The result is that most academic books end up introducing a few ideas and a lot of footnotes without helping anybody reach a conclusion.

That may sound noble, but you wouldn't want to buy a nonfiction book that purposes to explain something and ends up leaving you more confused then when you started. The cutting process in editing is where the author and editor can concentrate on making sure that the book says what the author believes, and doesn't just offer a safe survey of the field. It's also a chance for the author to revisit the text and say, "Maybe I don't quite know what I'm talking about here."

edited by MR

Statistical Significance Of Book Sales Online

Every once an a while, the sell through of one of my titles through Amazon Associates will dip to surprisingly low levels and make me wonder what I'm doing wrong. This often leads to actually doing something wrong, like making broad changes to the site or to my order page in order to "fix" the problem. I keep forgetting about statistical significance, probably because I got a "C" in Statistics in graduate school. I'm a great lover of stats, but in order for the numbers to have meaning, the sample size has to be large. For example, if you take a coin out of your pocket and flip it twice, there's a good chance you'll get the same result both times. If you redesign your business around this new found fact that a flipped coin always comes up on the same side, you're making a mistake.

It's easy to mistake noise in statistics for significant information. For example, the last ten days, the sales of my strongest title through Amazon Associates has been horrible, with a far below average sell-through of just over 4%. During the same ten day period last year, the sell-through was over 17%! It's tempting to pull up a copy of my site from the Internet Archive for last December and just replace my current version. Yet, if I compare Jan 1st to December 10th 2006 vs 2007, I find that the overall 2006 sell through was 9.44% and the overall 2007 sell through has been 10.25%. Whatever changes I made during the year, my Associates sell through for the title is up around by about 10%, though I haven't computed the margin of error for the sample size.

The difference between random noise and statistics is this. The ten day sample from 2006 was based on 58 click throughs to Amazon, and the ten day sample from 2007 was based on 73 click throughs. The Jan 1st to December 10th sample was based on 2,745 click throughs for 2006 and 2,858 click throughs for 2007. The larger sample is statistically significant, the smaller isn't. Just for fun, I went back and looked at 2005. The sell through for the 10 day period that year was just 2.74% (and I have no doubt I panicked) while the sell through for Jan 1st to Dec 10th 2005 was 10.34%.

So, I hope I've reminded both you and myself not to get excited about statistics based on small sample sizes, and certainly not to rush into altering your book sales platform based on such short term information. What's really sad is how often I fall into this trap. A quick Google search shows that I wrote about this subject in a post about publisher failures at online marketing just this past March. And this from a guy who is known for writing about book sales statistics!

The Publisher's New Website

I suppose everybody remembers the story of the emperor's new clothes, how an emperor was conned into walking naked through town wearing "invisible" clothing. The emperor was taken in because the con men explained that the clothes could only be seen by intelligent people who were competent to fill their posts. This led the king, his trusted advisors, and everybody else who heard the story to pretend they could see the clothing, so as not to appear stupid and unqualified.

Publishers spend a lot of money on new websites and occasional make-overs when the old website proves to be useless, but they rarely understand what they are paying for. They end up acting just like the emperor, who walked through town naked and even held his head high after a little boy pointed out he had nothing on. I have a lot of sympathy with people who are trying to learn something new and having trouble grasping the basics, but I have no sympathy for people who put on a show that they know what they are doing and assume that their money will compensate for their shortcomings.

The publisher's challenge, when setting up a new website or embarking on a major redo of an existing website, is deciding what its purpose will be. A publisher who counts on a web designer to design a publishing business website is a fool. What do web designers know about the publishing business? It would be like a home building company hiring an interior decorator to build their model home. A professional designer might have some useful suggestions when it comes to tweaking the aesthetics or the usability, but the business structure and content of the website has to come from the publisher.

Another problem I've seen publishers run into is building a website based on their ideal business goals, rather than tying it in to the reality of their current publishing business. Unfortunately, it's a lot easier to create a new website that looks like an ideal business model than to create a publisher website that will actually generate business and profits. The aesthetics and the mission statements are the easy part. Attracting customers to buy books and the media attention that translates into free public relations is the hard part. Most publishers rely on the opinions of their friends and of the very people they are paying to design the website, and don't even realize they've failed until a small boy points from the crowd and say, "Nobody goes to that website and their books don't sell!"

So here's the video publishing lecture of the week from Moe Two Times:

Register That Copyright

Most writers today at least recognize the name Tasini from the Supreme Court's Tasini opinion, which confirmed that writers of articles used in electronic databases without their permission had some right to recourse. For a brief write-up, see Tasini Case Final Decision - Authors Win.

But apparently some of the writers weren't happy with the class action settlement that was eventually determined in the lower courts, and pressed forward with the case. That's when a fatal flaw appeared and they got the 411 on copyright law. Apparently, not all of the works included in the class action had registered copyrights, whether before or after the infringements, and registration is a requirement for pursuing a case in Federal court.

The overall settlement of the suit had been around $18 million according to my lawyer, with the bulk of the money going to authors who had registered the copyrights. The authors without registered copyrights who felt they'd been short changed appealed the settlement, which the court of appeals vacated on the grounds that writers with unregistered copyrights should never have been included in the class action suit to start with! I'm told the defendants lawyers weren't even arguing this point. The judges, or at least, two out of three of the judges, came to this conclusion on their own.

So the moral of the story is to register your copyrights before joining a class action copyright suit, or, if you are part of a copyright suit as the owner of a registered copyright, don't let any writers with unregistered copyrights join you. It's unclear whether the plaintiffs with registered copyrights will want to go back and start the whole process all over again, but it is clear that the writers with unregistered copyrights have traded something for nothing.