How Authors Really Make Money: The Rebirth of Seth Godin

http://www.fourhourworkweek.com/blog/2010/08/23/seth-godin-and-print-publishing/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+timferriss+%28The+Blog+of+Author+Tim+Ferriss%29

by alexkiwi • 16 years ago

84 41 16 years ago

fourhourworkweek.com

bjonathan• 16 years ago

"If you choose to go digital only as an e-book, this is where profit rules and amazing numbers can be achieved. How amazing? I know one man who nets between $5,000,000 and $10,000,000 per month with a single e-book and affiliate cross-selling to his customer lists. I’m not kidding."

Any idea of what ebook is he talking about?

patio113• 16 years ago

There is a lot of money in "Internet marketing"/"Make Money Online", mostly in taking rubes to the cleaners. Affiliate CPAs reach into the several hundred dollar range (sell someone someone else's $500 course guaranteed to make you into the next parrot ebook king, take 75% commission).

At the risk of stating the obvious, returns followed a zipf distribution (the overwhelming majority make nothing, a few make small amounts, some smaller number do about what I'm doing with BCC, and a few make huge businesses out of it).

This is far from the only seedy sector which is awash in greenbacks, incidentally.

vaksel6• 16 years ago

none

it's bullshit...that's $60-$120 million profit a year from a single book. These numbers just don't exist.

If most of his sales are from affiliates, who typically get 75% per sale...that means the book would need to sell close to $200 million.

If the book costs $1,000, that's 200,000 sales.

If the book costs $500 that's 400,000 sales

If the book costs $250 that's 800,000 sales

If the book costs $125 that's 1,600,000 sales.

If the book costs $50 that's 4,000,000 sales

Then you need to take into account conversion rates. If the book sells at 1:200(average more or less)...

@$1000 that's 40 million uniques a year

@$500 that's 80 million uniques a year

@$250 that's 160 million uniques per year

@$125 that's 320 million uniques per year

@$50 that's 800 million uniques per year

And as far as I know the #1 site in the world is Facebook, not makemoniezonline.com

patio113• 16 years ago

Think less like a technically savvy HN reader who does not pay for content online, and more like an info marketing huckster who has an email list of 50,000 people who have bought a similar product in the last six months.

ThomPete• 16 years ago

Although I tend to agree with you I'm not entirely sure it's not possible.

Danish internet entrepreneur Martin Thorborg sold a 1000 ebooks at 300USD per book.

Also not all conversion is done the way you seem to think.

rumpelstiltskin3• 16 years ago

Your numbers are way off. Take the conversion rate for example - 1 in 200 is absolutely ludicrous and if that's what a marketer is averaging, then he should quit. I sling ebooks aplenty and I average around 10% CR, and I'm just an above average marketer.

Same goes for the affiliate commission. No seasoned marketer would give away 75% (unless there's a backend upsell). It's more like 25%-50%.

I think I know what ebook Tim is referring to here and if it's the same one, then the author is selling 100,000-200,000 units at $100 a pop with the affiliates making 40%-50% in commissions.

P.S. It's interesting that your comment got so many upvotes. I have a feeling a lot of ppl are voting based on their gut reaction of '$10,000,000 a month? No way. That's bullshit!' rather than actually thinking the numbers through.

coliveira• 16 years ago

I think your conversion numbers are very small. If the author is successful, he will get much better conversion rates.

wallflower• 16 years ago

Remember the Parrot e-Book?

Think bigger, more targeted audience (people who really want the edge on making money online vs devoted parrot owners)

"Cringely: Making 400k/yr profit on an eBook about parrots"

http://news.ycombinator.com/item?id=516215

kmfrk• 16 years ago

I didn't find the post to be very useful, but this part is worth the read:

>I believe (conjecture, yes) that the figure we are missing is Books-Per-Person.

>If you have a Kindle, as I do, how many books did you buy in the first week or two? How many unread books do you have on your Kindle? Unlike with print books, you don’t have to look at a stack of unread material like undone homework. Ergo, you purchase more digital books than you would ever purchase in print. If Amazon is selling 180 Kindle books for every 100 print books, I wouldn’t be surprised if 10-20 people are responsible for the former, whereas 80-100 people are responsible for the latter. This reflects that Kindle owners are buying more books per capita, not that paper purchasers are buying fewer.

patio113• 16 years ago

I want to hate Tim Ferris for his persona and frequent exaggerations of the truth, but grits teeth he writes good stuff sometimes.

lionhearted• 16 years ago

Used to think the same way - now I've got two modes when I'm reading a successful author. Either (1) absorbing his good information, or (2) trying to figure out how the bad stuff could be marketed so well. (2) is more meta-learning, but I start asking questions like, "Who does this appeal to? Why is this worded/marketed like this?" Etc. Sometimes I learn more from bad information, because it forces me to reconsider the level of complexity writing should be if you want to sell in volume (very, very low - dumb it down 10x... okay, now make it dumber) and things of that nature.

cstross2• 16 years ago

IIRC the Gini coefficient among authors in the UK is something like 0.7. The income stratification is insane.

Tim Ferris's figures match my experience. What he doesn't make explicit is that "publishing" is about fourteen different vertically integrated businesses flying in loose formation -- genre fiction publishing, for example (my stomping ground) is utterly different from business publishing or academic publishing, although the products are sometimes sold via the same retail channels -- and the prospects for a successful career vary drastically between fields. Nor does success in one field imply a track record transferable sideways into another publishing field.

I'd also pick a nit: in my experience, ebook sales (and Amazon Kindle store sales in particular) are dwarfed by hardcover sales -- by a 50:1 ratio, in fact. Amazon are almost certainly cherry-picking if they can come up with books where Kindle sales outstrip hardcover. However, that's looking backwards -- it's fairly clear that ebooks are a rapidly growing sector and in another 2-5 years they'll definitively overtake hardcover sales by volume, if not by revenue. (Hardcovers net roughly $16 after discount, of which 10-15% goes to the author; Kindle store books net $7-10, of which Amazon takes a 30% cut before 5-10% of the remainder goes to the author.)

unwind2• 16 years ago

On the happy (and perhaps naive, this being the Internet and all) assumption that you are a certain writer of awesomeness, hailing from Scotland, here's a very topical question: how about co-launching a book both in hardcover and trade paperback, at the same (high) pricepoint?

For me personally, I don't want books in hardcover, ever. I always hold out for the trade paperback. It's quite annoying that, from the authors' point of view, my preference works out to me being a cheapskate who gives them less royalty. But I just don't want hardcovers, they're not at all attractive.

There's been many occasions when I've been at my SF book store of choice, realizing some author I like has released a new book, and then my next thought is "okay, so in 3-6 months or whatever I can get this". :|

I guess I could move to e-books, if the price/royalty/release date data is better there, but I really like physical pocket books, still.

cstross2• 16 years ago

how about co-launching a book both in hardcover and trade paperback, at the same (high) pricepoint?

Alas, that's not how publishing works; I create and sell the IP that goes between the covers, but how those covers are put together and marketed isn't my department (and I have no control over it).

One point to note is that commercial fiction publishing runs on a reverse-auction basis: prices start high, then drop. Hardcovers (perceived as high value items) come out first, then are superseded by successively cheaper/smaller paperback editions after early-adopter demand is saturated by the high priced product. Unfortunately the pricing model is conflated with the physical product's format, and with the distribution channel (trade vs. mass market), which muddies the water enormously. (I'd love to do an ebook edition that launched at, say, $20, then dropped in price by 5% per month until hitting a floor of $4. It'd be interesting to graph sales against time ... but unfortunately the accounting procedures in place in the publishing business, and locked in via contract, seem to make this impossible without either (a) self-publishing or (b) protracted negotiations with a legal department that are not dissimilar to kicking a dead sperm whale up a beach. In high summer.)

jonknee• 16 years ago

> I'd also pick a nit: in my experience, ebook sales (and Amazon Kindle store sales in particular) are dwarfed by hardcover sales -- by a 50:1 ratio, in fact. Amazon are almost certainly cherry-picking if they can come up with books where Kindle sales outstrip hardcover. However, that's looking backwards -- it's fairly clear that ebooks are a rapidly growing sector and in another 2-5 years they'll definitively overtake hardcover sales by volume, if not by revenue. (Hardcovers net roughly $16 after discount, of which 10-15% goes to the author; Kindle store books net $7-10, of which Amazon takes a 30% cut before 5-10% of the remainder goes to the author.)

As mentioned in the article, Amazon already sells more Kindle books than they do hardcover books so I fail to see why they would need to cherry pick. And no need to wait 2-5 years, the future is here.

jseliger• 16 years ago

As mentioned in the article, Amazon already sells more Kindle books than they do hardcover books so I fail to see why they would need to cherry pick. And no need to wait 2-5 years, the future is here.

But Amazon has talked about how they got to that number and won't provide many specifics about Kindle sales in general. In addition, if Amazon is selling an equal number of books, then hardcover sales can still generate more revenue, which is what Stross points out: "they'll definitively overtake hardcover sales by volume, if not by revenue".

ghshephard• 16 years ago

Yeah - I didn't get that part either. I'm guessing what the OP was saying was that for "new best selling releases that come out in Hard Cover and Kindle, but not Softcover, the Hard Cover Sells 50:1" - or something like that. I find it hard to believe that 50x more Hard Covers than Kindles are selling in 2010 - I saw three kindles and One iPad on the Plane back from BWI to Phoenix last weekend (Plus my iPad).

Speaking as an owner of a K1, K2, iPad, and in a week or two a K3, I'm putting the future out to Five years before eBooks become the dominant form of consuming light fiction in the United States, possibly even less. Ebook readers are going to get very cheap, very quickly. I'm expecting WiFi Kindle will be sub $99 within twelve months. And that will be a Hot, Hot Christmas Gift.

But, we may see it more quickly in the TextBook Market - those new inkling textbooks are _killer_ - I'd hate to be in the business of owning a University Textbook store right now. Their days are _very_ numbered. My call is minimum 50% business lost within 3 years, and close to 100% within 7 years. The kindle made me think that there would be a long time before there was a market for electronic textbooks (The Kindle is a horrible experience for textbooks) - The iPad+Inkling (and similar tablet/e-textbook frameworks to be released soon) make me think we're going to be blown away by how fast the conversion takes place. Fall 2010 - .5% of Students get their textbooks in eBook format. Spring 2011 - 1% Fall 2011 - 3%, Spring 2012 - 8%, Fall 2012 - 15%. Spring 2013 - 25%, Fall 2013 50% of all University textbooks in eBook format.

Textbooks w/Social Networking are here! (Literally - the Inkling App lets you share notes on the content with your classmates - and has a world class highlighting feature)

Inkling is the Killer App for the iPad.

allwein• 16 years ago

This all ties in with a blog that I just started reading yesterday. It's written by a genre fiction writer that has also made the switch to predominantly ebooks. I guess the most relevant post is http://jakonrath.blogspot.com/2010/08/beginning-of-end.html but the whole blog is really interesting and worth reading.

http://jakonrath.blogspot.com/

mark_l_watson• 16 years ago

Good article! Don't skip the video.

I have written several books, and only a few have sold well, so I have to admit that my net worth would be more if I had spent my writing time doing working (software development). However, echoing the article:

1. writing books gives an author access to very interesting people and experiences

2. writing has a long tail of benefits that often come in the form of interesting work and offers for collaboration

mattmaroon• 16 years ago

He's wrong about paperback, they're a gold mine for authors. Halving the price doesn't multiply the number of purchases by 2, it multiplies it by 20. That's why ebooks outsell hardcovers on Amazon but are still a trivial fraction of overall rev.

Also, it is not any more work for the author. You usually don't even have to sign any additional paperwork. It's extra work for the publisher to be sure, but it's all gravy for you.

Emore• 16 years ago

As much as I enjoyed the article, the title is simply too SEO for my stomach. "Money"? Check. Famous guy's name? Check. At least 10 words? Check.

I miss the long-gone days of clever, concise and original titles for stuff.

petercooper• 16 years ago

For anyone interested in a "programming book" specific perspective: http://beginningruby.org/what-ive-earned-and-learned/

How Authors Really Make Money: The Rebirth of Seth Godin

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