Why does everyone make money off a book but the author?

A big regional book sellers association in my area has a literary prize and invites nominations. You’d think that it would be a great opportunity for a local writer to gain visibility, exposure, and catch the interest of bookstores.
But there’s a catch.
Any nominated book has to be “returnable” before it can be nominated for the prize. If unsold copies can’t be returned to the publisher for a full refund, something most small presses can’t do, the book is ineligible for even consideration for the prize. The writer is out of luck. This is usually what buries any efforts with local booksellers, as well – if they can’t send unsold copies back, they’re not interested in carrying the book at all.
This particular literary award is associated with bookstores; I don’t know how many other awards are handled. But this brings a much bigger issue into focus.

When do authors get paid anyhow?

Bookstores are in the business of selling books; distributors are in the business of distributing them; publishers are in the business of publishing them; editors and cover designers and all the people involved in the production of the book are in the business of turning that story, that book into a physical object; and one way or another all of these people are somehow financially compensated for their involvement in the process.
You want a book cover, you’d better be prepared to pay up front for it. Rightly so, of course, because the artist is actually producing something solid and concrete which has a certain intrinsic value to it, right? A cover artist can be paid hundreds of dollars for a single image.
Then why is the story, the book, the ephemeral WRITTEN MATERIAL on which all of this rests… treated completely differently?

The disappearing midlist writer

A few decades ago, midlist authors, those who had a niche and fans, could make a modest living writing fulltime. But then publishers began focusing only on ‘bestsellers’, books that sold, at least potentially, in the hundreds of thousands or millions. They were no longer interested in midlist writers who only sold a few thousand copies, even if the publisher made a profit. Small profits don’t interest the big publishers.
Author's pay posterA writer today is lucky to get a very small advance against royalties and unless and until the book “earns out” that advance, the writer sees no more income at all. Even if it does earn out, then the writer’s royalties per book can climb as high (as high!!) as 10%, for a hardcover, in traditional publishing circles, but more likely it’s something like 7% for paperbacks. And fewer and fewer authors get any advance at all.
In the modern era, indie and self-published books directly put up on the Internet can net royalties of up to 70% – but THAT comes at the price of not being traditionally published, of not having traditional distribution and promotion, and 70% of minimal sales is a very minimal amount of money indeed. So indie writers then have to plough all or most of that that income back into making their book more visible to buyers to begin with.
Add to this both the still-lingering stigma of indie/self-publishing (if this book was any good why wasn’t it published by a big NY publishing house?), and the outright ban on mentioning one’s own work in most online book/reading forums, too many writers are put in a no-win situation.
You have the perfect storm: Bookstores won’t sell your books without SUBSTANTIAL discounts, and without the “returns” clause. Without their visibility at that level, potential readers who might buy your book won’t because they never knew it existed.
That’s royalties. Which many trad-published writers never even see because the book never “earns out” its advance at all. And the advances that are being offered – well, let us just say that in order to command a living wage in terms of an advance for a book, you either have to be already famous or be writing about someone who is.
Political non-fiction authors regularly get millions of dollars in advances. There is a “bull market” for memoirs by politicians and celebrities and yes, they’re selling well, the market is geared to that. It’s soundbites, it’s already semi-familiar enough so that you don’t have to pay that much attention, and the part that isn’t familiar is often sufficiently salacious to make it ‘interesting’ in terms of finding weak spots in the impenetrable armor of wealth and fame of the subjects of these tell-alls and making them seem more like “us”, the readers, the ordinary folk.

Fiction is quite different

When it comes to fiction, I’m not sure how most novelists are making ends meet. The person who creates ALL these jobs – the writer – basically gets pushed to the bottom of the pile. Give us the book and we will make money from it – but never mind the person who writes it. They are doing this because they love it, because they have to, right? Well, they’d be doing it anyway, right? So why not just hand it over for us to package, handle, distribute… return…
I looked up a few industry parameters.
Back in the early 80s, there were several (then relatively new) national chain stores where books were sold – places like Walden Books, and Dalton. Those two were subsumed into more familiar names by the 90s, with superstores like Barnes and Noble and Borders (which subsumed Dalton and Walden, respectively) These adopted discounting as a selling strategy, and they began to limit selections, to “bestsellers” and romance (in fiction) and to category non-fiction books such as fad diets and self-help.
Things were a little better in the indie bookstores – but back then there were a lot MORE of them than there are today. These had the advantage of the personal touch – the hand-selling approach – and you might count on something if the bookseller personally liked your offering enough to stock and push it. The indies were much more amenable to a relationship with an author – they would carry author reading events and host book clubs. But for these events, the stores had to pre-order books, and, as one indie bookseller was quoted as saying back in 2015, “the more events  we do, the more returns we generate – we never want to run out of a book at an event so we basically always over-order”. In the absence of an event, can you hold a couple of copies of a book by a local writer in your local indie shop, and hand-sell those to readers who are looking for something that doesn’t necessarily have a “NEW YORK TIMES BESTSELLER!” stamp on its cover? Do these HAVE to be returnable in order for you to carry them?
The books returns figures for 2015 start at 20% for trade paperbacks, 26% for hardcovers, and a mind-boggling 48% for mass market paperbacks. A VP of marketing at the Readerlink Distribution Services was quoted, in 2015, as saying, “The key is picking the right book, at the right time, in the right quantity.”
Indeed – but might buying fewer copies help, so that you don’t have to return so many of them?
An article I read on it had these immortal lines in it: “When your title flies off the shelves, the returnable status becomes irrelevant because there is no book to return. They may even order more if your title performs well for them!” – well, yeah. Fine. But consider the fact that booksellers already demand “discounts” like 50, 55% in order to stock and carry a book. Booksellers – indie ones – speak of returns as something that allows them to “take more risks”. But these are already calculated risks.

What about the authors?

Again, I ask, what of the authors? What kind of risks are they expected to assume? Factor in the booksellers and the distributor’s cut, factor in the tranche that the publishers rake in to pay themselves and their staff, and you leave your writers scrabbling around in the dirt for the pennies left over – and without the writers there would not have been a book AT ALL.
Returnability is a spotlight that squarely shines on the provenance of a book. For those entities that don’t have access to vast warehouses where to house returned stock or the ability to deal with such stock when it becomes too onerous to continue storing… the smaller publishing houses, the independents… this becomes a game they can no longer play at all. No matter what kind of books they publish, no matter whether a story will die smothered in darkness because nobody will take a “risk” on it.
No award eligibility for those books. Because of the quality of the book? No. Because the publisher doesn’t have a returns policy or a warehouse to store returned books in.
In a fair world, things would at least be divided equally. A writer should probably get a minimum of 25% of every book’s retail price. THEY MADE THE BOOK. It seems that the only person in this chain who isn’t expected to make a profit on the product is the person who created the product.
The people who sell it, the people who distribute it, are seen as operating a “business” and therefore they need a “profit” – and risk is antithetical to profit, after all, so they take steps to ameliorate the risk. But they are just kicking that can down the road. If there is value in a book, why doesn’t it rest with the person who CREATES the book, rather than creates the channel in which it is distributed? Right now, it seems like what is of most value for someone who administrates a book award is whether or not a book purchased by a retail middleman is able to be tossed back if it fails to generate enough at profit for that middleman. I would think that the criteria for a book award would rest on the quality of the book, itself, instead of its retail parameters.
But what do I know. I’m just a writer.
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