Are you about to publish your novel? If so, should you try going with a traditional publisher, or should you go indie? How do you make that decision?

Lynne posted this question on my “Ask A Question For My Blog” page:

I’m planning to go indie with my WIP. It’s only my second novel, I’m still a newbie, but here’s the question: what are the biggest reasons for seeking an agent and/or traditional publisher?

There are a number of obvious negatives associated with traditional publishing, such as low royalty rates. And I’ll have to do much of my own marketing even if my manuscript is accepted. I’d also like to do my own kindle pricing, something I can only do as an indie.

Thoughts? I want to know both sides before committing to my course.

Randy sez: Lynne, I have a feeling your question is much bigger than a single blog post can handle. I’m pretty sure I could write a whole book on the subject, and maybe someday I will. But you’ve got to make a decision right now, so I’ll try to boil things down a bit.

First Some Definitions

It may be useful to define a few terms, for those who are new to the industry.

Traditional publishing means that you sell the rights to your novel to a publishing company. The publisher pays for all production costs, including editing, cover design, printing paper copies, warehousing, distribution, and sales calls to bookstore chains. Generally, the publisher also does some marketing, but most authors are responsible for most of their own marketing.

Indie publishing means that you act as your own publisher. You pay for all production costs, which are typically editing, cover design, and formatting your book for e-books (and optionally print books). Most indie authors who do print books use a print-on-demand service, such as Amazon’s CreateSpace, which means there are no warehousing costs. Most indies deal only with the online retailers, such as Amazon, B&N, Apple iBooks, Kobo, etc., which means they have no need for distribution or sales to bookstore chains. The author does all the marketing.

Vanity publishing means that you pay a “publisher” to do all the work that you would need to do as an indie author, such as lining up an editor and a cover designer. Most people in the industry agree that vanity publishing is a terrible deal for virtually all authors, so let’s put this off the table right now.

So our choices as an author are to work with a traditional publisher or to be an indie author.

A Side Note On My Background

I have many author friends. Some are exclusively traditionally published. Some are exclusively indie. Many are hybrid authors—they work with traditional publishers while also doing some indie work.

I started out working with traditional publishers and published 8 books with them—6 novels and 2 nonfiction books. The novels all eventually went out of print, and I’ve republished them as indie books. I’ve also published a nonfiction indie book and will soon be releasing another. At this point, I consider myself exclusively indie, but I do still get royalty statements for my two trad-pubbed nonfiction books.

Issues for the Big Winners

Let’s be clear that in publishing, there are a few big winners who take a large section of the financial pie. There are roughly 100 authors in the US who each earn more than $1 million per year. Most of these are traditionally published, but there are several indie authors in this very exclusive club.

My opinion is that the reason authors at the very highest levels tend to be traditionally published is that traditional publishers have a lot of marketing muscle and they can turn a winning book into a very big winning book, using methods that indie authors just don’t have. An indie author can’t buy space at the front of every B&N bookstore; a large traditional publisher can. An indie author can’t place a book in airport bookstores and supermarkets; a large traditional publisher can.

So if you’re one of the top 100 authors in the US, then you can make a strong financial case for working with a traditional publisher. (However, there are other considerations than just money. More on that below.)

Issues for Top 5% Authors

What if you’re not in the Top 100 Club but you’re still in the top 5%, meaning you’re earning more than about $5,000 per year? (That is not a typo. If you’re an author earning more than about $5k, you’re doing better than roughly 95 out of 100 authors.)

I have many friends in this category. A few are exclusively traditional. Many of them are hybrid—they work with traditional publishers on their current books, and they republish any books that have gone out of print as indie books. Some started traditional, but have now gone exclusively indie. Some started indie and have never published traditionally.

So how do you decide? There are several main factors that you have to weigh against each other:

• Convenience—do you prefer to “just write” and let a traditional publisher deal with the editing and cover design and formatting? (Be aware that “just writing” is not really an option. All authors have to market themselves. But it is true that indies have to do some tasks that trad-pubbed authors don’t—hiring editors and cover designers, and doing the book formatting.)
• Control—do you prefer to have control over the schedule of your book, how it gets edited, and the cover design? An indie author has complete control over everything. A trad-pubbed author has much less control.
• Productivity—do you write more books per year than a traditional publisher can handle? (Many publishers don’t want you “competing with yourself” by publishing a lot of books. Indie authors believe that your books market each other, so they would argue that “competing with yourself” is a nonsensical notion.)
• How often do you want to get paid? A trad-pubbed author gets an advance, and often this is the only money they ever get for the book. So the money is front-loaded in a big spike, with some possible royalties a year or two down the road, paid at six-month intervals. An indie author gets no advance and has to spend some money on production, but then they get paid royalties every month, and their royalty rate is roughly 5 times higher than a trad-pubbed author. (That is not a typo. Indies get all the profit from the sale of a book; traditional publishers get most of the profit and the authors get quite a small fraction.)

I don’t think there’s any one right answer. A lot depends on you, the author. I have a pretty strong entrepreneurial streak and I hate deadlines. I’ve done much better financially as an indie and I like not having deadline stress in my life. So for me, going indie has been a good decision.

But I know authors who’ve done better traditionally than they have as indies.

Issues for Bottom 95% Authors

What if you’re in the bottom 95%, meaning that you’re earning less than about $5k per year? (Again, that’s not a typo. That’s just the hard reality of the publishing world. Most authors are not well-paid. I wish they were, but I’d be a liar to say they are.)

There are several reasons you might be in this category:

• You might be a newbie who hasn’t published anything yet, nor sold anything for a big advance. In this case, some issues you should weigh are these:
  • Speed to get published: it can take a long time to break in to traditional publishing, whereas you can indie-publish as soon as your book is written.
  • Validation: it feels good to have a traditional publisher make you an offer, whereas if you go indie, nobody is validating you except your reviewers.
  • Quality control: a traditional publisher will set standards for the quality of your book, which means that your book will only get published if they think it’s good. If you’re an indie, you can publish the worst drivel imaginable, and nobody will stop you.
  • Cost: it can be expensive to go to writing conferences to make the connections needed to get traditionally published. If you go indie, there will be some costs for editing and cover design, but you can make these quite low if you want—you decide whom you’ll pay and how much.
• You might be selling to very small publishers who pay very low advances. In this case, some issues you should weigh are these:
  • Convenience: Small publishers take some of the burden off your hands—editing and cover design and formatting. If you went indie, you’d have to do this.
  • Quality control: Small publishers might be small because they’re not actually very good at editing and cover design and formatting. That’s something you can only determine by looking at their products. But if their quality is not up to your standards, you don’t have much say in the matter. If you’re an indie, you get to control the quality.
  • Royalties: Small publishers often pay a higher royalty rate than the big publishers, because they have lower costs. So that may be an advantage. They may be paying you as much as half the profits, which would be good for you.
• You might be publishing very infrequently with big publishers. In this case, you face the same issues as the Top 5% authors, so see those above.

Marketing Issues

There is one other main issue to talk about, but this applies to all authors everywhere. You have to market your books. If your books are doing well, then your publisher will help out on the marketing. The better your books do, the more the publisher will help out.

This is a classic Catch-22. Your books won’t do well without marketing, and your publisher won’t market your books much unless they’re doing well.

As I noted above, if you’re in the Top 100, then your publisher is going to do marketing things that you can’t do as an author.

Otherwise, pretty much all authors use the same kinds of marketing methods. But here the indies have an advantage, and this doesn’t get discussed much.

Suppose you’re using a marketing method that gets 100% ROI (return on investment). By definition, that means that for every $100 you spend in marketing, your book earns $200 in gross profit that gets paid back to the publisher.

If you’re an indie author, you get that $200 in gross profit, and you recover the $100 you spent on marketing, giving you $100 net profit. That’s a good deal for you.

If you’re a trad-pubbed author, and if you have an agent, the gross profit is still $200, but now it’s paid to the publisher. You get approximately 20% royalties on that, which works out to $40. Your publisher and agent get the other $160. But you spent $100 to earn your $40, giving you a net loss of $60! Which means your publisher and agent got $160 from your marketing efforts and you lost $60. That’s a terrible deal for you, but it’s very good for the publisher and agent.

In fact, it’s just not cost-effective for a trad-pubbed author to pay for a marketing method that only gets 100% ROI. If you’re trad-pubbed, you’ll lose money if you pay for marketing methods that get less than 400% ROI. (Whereas an indie author makes money if the ROI is more than 0%. So indies can afford to use more marketing methods than trad-pubbed authors can, and that’s an advantage.)

Let’s check the numbers. If you spend $100 on a marketing method that has a 400% ROI, the book earns $500 in gross profits. Your publisher and agent get $400 of that and you get $100 in royalties, which covers your original $100 marketing costs, which means you broke even.

That sounds terrible, but in fact, your marketing situation is even worse as a trad-pubbed author, for two reasons :

• If your book actually earns royalties, you don’t receive that money for several months, because most traditional publishers only pay royalties every six months, and they typically cut the check a month or two after the royalty period ends. So you might spend marketing money in January and not get reimbursed until September! That creates a cash-flow problem for you.
• But most trad-pubbed books never earn out their advance, which means they will never earn any royalties at all. Which means that any marketing money you might spend on the book will never earn you one extra penny in royalties. This is a strong disincentive for the author to do marketing, unless the publisher pays for that marketing.

If you’re not a math person, you may be thinking that there must be something wrong with my numbers above. You may be thinking that the marketing picture for trad-pubbed authors can’t possibly be as bad as I’ve painted it.

I’m a math guy. I’ve done the numbers every way I know how. The marketing picture is as bad as I’ve painted it. And this is one reason a lot of formerly trad-pubbed authors have gone indie.

Lynne asked a short question, and I’ve gone about twice as long as I intended to in my word count. My apologies on that. There is very much more to be said, and no more space to say it, but I’ve tried to lay out the main issues.

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