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Donald Sensing points to this story in the NY Post reporting that Simon & Schuster, publisher of Hillary’s autolieography, is undergoing downsizing.
Don and I were among those incorrectly predicting that S&S would take a bath on Living History. My inexact calculations were that S&S would need to sell 578,572 books to break even. They’ve sold roughly twice that, so they’re way ahead on it. I’d never have predicted the wild popularity of reality TV, either.
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But that’s the retailer, not Simon & Schuster. Indeed, Amazon was selling it for $19.60 right from the get-go–which is 30% off exactly. Indeed, I’d imagine it’d be hard to sell it for much more since Amazon’s setting the market. $5.60 isn’t a bad profit on a $14 investment for the retailer, especially if they move quickly.
The usual industry author’s royalty rate is 15% of the retail list (not discounted) price. The book’s retail is $28. That means that each book sold at retail results in $4.20 of royalty costs reclaimed by S&S.
In other words, S&S paid Hillary in advance $4.20 per book, up to the number of books sold that pays them back the $8M they paid Hillary.
$8 million divided by $4.20 equals 1,904,762 books needed to be sold in order for S&S to break even only on the advance. Many more would have to be sold, of course, for S&S actually to make a profit, as there were huge costs S&S incurred other than the advance.
Books unsold at retail are returned to the publisher for credit or refund.
Even if S&S breaks even on the advance, the enormous other costs – publishing, editing, marketing, distribution, salaries – they have to recoup before they show a profit. That’s why gross sales figures don’t compute the question.
S&S needs to sell 1.9 million copies to retailers to make their $8M back, and that’s 1.9M unreturned copies.
Ain’t gonna happen.
Don,
I’m actually in the publishing business as an acquisitions editor these days. Royalties of 15% of retail are rather high, although not unheard of. And they tend to escalate for higher sales. Salaries and other “overhead” costs aren’t figured into the book’s costs, either because they’re fixed costs.
Still, the author doesn’t have to “earn” the royalties for the publisher to make its money. An advance is part of the cost of doing business. All the publisher has to do it recoup its plant, production, marketing, and advance costs to break even. My rough estimate–I’m not used to print runs anywhere near that high and don’t know what sort of arrangement S&S has for them–was that the break even point is a little under 600,000 copies.
I haven’t seen the latest figures but I understand that there have been over a million copies actually out the door to consumers, which means those are unreturnable.
James, what can I say? My information comes directly from another man with decades in the book industry, too. I can only report what I’m told, as I have no personal experience in it.
I too understand from printed sources that a million copies have been sold at retail. So by your calculation S&S has indeed made back from sales the money it paid in advance to HRC. But by by the calcs of my own insider source, it hasn’t.
Color me confused.
But by any standard, Living History has been a hige bestseller.
Don,
I think we’re just using two different standards. I agree that Hillary hasn’t “earned” her advance, in the sense that she certainly wouldn’t have $8 mil in royalties yet. I’m just saying that S&S has sold enough books to recoup that $8 mil plus production costs. So, they’re in the black but have effectively paid Hillary something on the order of 25% royalties instead of 15%.
