Liars and Outliers In The Publishing World

“There are three kinds of lies: Lies, damned lies, and statistics.”

Mark Twain made this saying famous in the US and he attributed it to Disraeli, but it’s not clear who said it first.

And why should we novelists care about statistics? That’s simple. Because the publishing world thrives on statistics. Print runs. Sell-in. Sell-through. Amazon ranks. Dollars earned. Royalty rates.

Last weekend I was at the Novelists Inc. (Ninc) conference in White Plains, New York and had a great time meeting a number of authors, editors, and agents.

One of the words I heard most was this one: “outlier”.

Bella Andre, a self-published romance novelist who has hit the New York Times bestseller list is said to be an “outlier.” (Bella recently sold the rights to the paper editions of her novels to Harlequin MIRA, while retaining the e-book rights.)

Barbara Freethy, who has sold over 2.7 million e-books of her self-published titles is said to be another “outlier.”

Julie Ortolon, who is selling boatloads of self-published e-books, is supposed to be yet another “outlier.”

These authors join a cast of other “outliers” who’ve sold massive numbers of e-books in the last couple of years: Amanda Hocking, John Locke, and Bob Mayer all come to mind.

What is an outlier and why are there so many of them lately?

Malcolm Gladwell popularized the term “outlier” with his book, Outliers: The Story of Success,” published in 2008. As Gladwell explains on his web site:

“Outlier” is a scientific term to describe things or phenomena that lie outside normal experience. In the summer, in Paris, we expect most days to be somewhere between warm and very hot. But imagine if you had a day in the middle of August where the temperature fell below freezing. That day would be outlier. In this book I’m interested in people who are outliers—in men and women who, for one reason or another, are so accomplished and so extraordinary and so outside of ordinary experience that they are as puzzling to the rest of us as a cold day in August.

Let me put on my physicist hat for a minute. In science, an “outlier” is anything that is so improbable that it demands an explanation. Some examples:

• A basketball player’s height is listed as 68 feet. This is in fact impossible. No human could be 68 feet tall. The most likely explanation is that the player’s height is 6’8″ and somebody made a typo when recording it. This kind of outlier is a simple mistake.
• In 1610, Galileo pointed his telescope at Jupiter and noticed four moons circling it. The current theory of astronomers then was that all the heavenly bodies — the sun, the moon, the planets, the stars — circled the earth. By this theory, it was impossible for moons to be orbiting Jupiter. But there they were. It took a few decades, but eventually it became clear that the existing theory was wrong. This began a revolution in science that continues to this day. This kind of outlier is a sign of a wrong theory.
• In 1982, an experiment at Stanford University detected an event which appeared to match the signature of a magnetic monopole. According to current physics theories, magnetic monopoles can possibly exist, but none had ever been seen before. None has ever been seen since, although a number of experiments have searched for more monopoles. There is no obvious interpretation for the event. This kind of outlier has to be classified as an unsolved mystery. It could be a mistake. It could be a Nobel-prize-worthy discovery awaiting confirmation. Nobody knows.
• Every so often, one of the major lotteries has a jackpot that goes up into the hundreds of millions of dollars. Eventually somebody wins it. The odds against winning are fantastically high, and the winner appears to be an “outlier”. However, the explanation for these “outliers” is simple: Somebody has to win the lottery. If you continue running the lottery long enough, somebody always does. It’s a statistical certainty.

So now back to the many so-called “outliers” in the publishing world. What’s going on here? Are they simply mistakes? Harbingers of a faulty theory? Unsolved mysteries? Or statistical certainties?

I think it’s obvious that these authors aren’t simply mistakes. Nobody added a couple of extra zeroes to these people’s sales numbers. The top self-published authors really are selling millions of copies.

There has been a lot of talk about the “e-book revolution” and some people believe that this means that the world is changing to one in which all authors will be rich. I believe there may be some truth to this, but it’s exaggerated. I believe that MORE authors will be rich in the future (because more money will be going direct to authors and less will be going to large corporations and to agents). But I don’t think that all authors will ever be rich. There will always be bad books that don’t sell. Always.

Are the new “outlier authors” unsolved mysteries that can be ignored because they’re not repeatable? This seems to be the view of some agents and editors I’ve talked to. In my view, they’re wrong. There are just too many authors selling millions of copies of self-published e-books. There needs to be a simple explanation. And there is . . .

Are these best-selling self-published authors merely statistical certainties? Are they like the lottery winners — somebody has to win, but whoever does is just plain lucky? The answer, I believe, is “partly yes and partly no.”

Yes, it’s a statistical certainty that there will be a few big winners among self-published authors.

No, they aren’t “just lucky.”

Here’s what’s going on, and in my view, it’s pretty exciting:

People often assume that there is some sort of “bell-shaped curve” that tells you how much authors are going to earn. According to this notion, there ought to be a few big winners, a few authors who earn almost nothing, and most of the authors are “in the middle” and earning a moderate amount.

That idea is completely wrong. That has never been true in publishing. There have always been a tiny number of gigantic-earning authors, a few high-earning authors, a fair number of moderate-earning authors, and a very large number of poorly-earning authors. That’s not a bell-shaped curve. It’s the 80-20 rule. 20% of the authors earn 80% of the money. Mathematicians call this a “Pareto distribution.” It’s not fair, but it’s the way things have always been in traditional publishing.

Exactly the same thing is happening in the new class of self-published authors. There are a tiny number of gigantic winners. A few big winners. A fair number of moderate-earning authors. And a huge number of authors who earn very little. And let’s be clear, the big winners aren’t merely “lucky.” They’re reaping the rewards of talent plus hard work.

Only a couple of things have changed, but they’re highly significant.

First, with traditional publishing, most of the money paid to the publisher didn’t go to the author. Some of the money went to the printer, some to the truck driver, some to the warehouse guy, some to the editorial staff, some to the sales team, some to the marketing people, some to the publicity people, some to the janitor, and some to the stockholders. By dribs and drabs, a lot of money leaked out, and the author ended up with 5% or 10% or possibly as much as 15%.

Second, with self-publishing, authors tend to price their e-books lower than the trad-publishers and those low prices tend to earn much more money.

In a nutshell, a self-pubbed author prices e-books smarter and gets all the money. These two facts make a huge difference.

A novice author who might have not sold at all to a trad publisher now earns a few bucks or a few hundred by self-publishing. Not much, but enough to get on the board.

A good debut author who might have earned $3k to $5k from a trad publisher now earns that much or more by self-publishing. Still not much, but the remarkable thing is that it’s sometimes a whole lot more than they’d have earned with a trad publisher.

A more seasoned author who might have earned $20k to $50k from a trad publisher now earns (in some cases) six figures.

An author with a strong brand and a good following who might have earned $100k from a trad publisher now earns (in some cases) seven figures.

Let’s be clear that there are no guarantees here. I know trad-published authors who’ve tried self-pubbing and have hardly earned anything. But I’ve also heard from a lot of formerly trad-published authors who are now doing MUCH better by self-publishing.

Something is going on here, and it’s lame to call successful self-pubbers “outliers”. Once an outlier is explained, it’s no longer an outlier. And I’ve given the explanation above.

Just to summarize it all, the explanation is in three parts:

• The Pareto distribution guarantees that there will be some big winners, a fair number of moderate winners, and a large number of low-earners. Just like with trad-publishing.
• With digital self-publishing, more of the money goes to authors than with trad-publishing.
• Self-pubbers tend to price their e-books smarter than trad publishers.

Given all this, does it make sense for authors to still have agents and to still work with trad-publishers?

Of course it does. Trad-publishers do paper books at a scale that beats what an individual author can do. This is why superstar Bella Andre sold the paper rights to her books to Harlequin MIRA. But she kept the e-rights. Why? Because she believed she could market her e-books better than any publisher. A lot of authors I’ve talked to believe they can do this better.

This week, Penguin and Random House announced plans to merge. The obvious reason is that a merger will let them get more efficient at producing and selling paper books. It’s not clear that a merger will make them a dime’s worth more efficient at producing and selling e-books. Paper books need scale. E-books don’t.

One last thing that I should be clear on: Some authors are not entrepreneurs and will do better by trad-publishing. The self-pubbed authors who do best appear to me to all have a strong entrepreneurial spirit. There is no reason for trad-published authors and self-pubbers to look down on each other. Many authors choose a hybrid model, where they trad-publish some of their books and self-publish others. Whatever works is fine.

But let’s have no more dismissing the most successful self-pubbers as “outliers.” An outlier ceases to be an outlier when you know the explanation.

And now you do.