In an extract from ELT Teacher2Writer’s training module, Janet Aitchison explains how the bookselling business works and how the digitization of content is changing the traditional business model.
The business of bookselling
Most ELT print books are sold via bookstores or book distribution companies. Put simply, these businesses generate income by selling books at a higher price than they buy them. For example, a customer goes into a bookstore and buys an ELT book for $25. This is known as the list price. The bookstore originally bought that book from the publisher for $20. This is the net price. The bookseller makes $5 on the transaction – the difference between the net price that he/she paid the publisher, and the list price, the price at which the book was sold to the customer. This model holds true for print books bought online – online retailers such as Amazon operate in a similar fashion to bricks-and-mortar booksellers in that they buy books from publishers at a lower net price and sell them at a higher list price. In a similar fashion, when a publisher’s e-books are sold via Apple’s iBook store, or Amazon’s Kindle store, the online retailers keep a percentage of the list price (typically around 30%) in return for selling the product on behalf of the publisher.
Often the sales chain may be longer and publishers sell their books to distributors who in turn sell them on to bookstores. What may be more surprising is that publishers’ overseas operations are sometimes also their distributors (and often registered companies in their own right). Publishers sell books to them in the same way that they sell books to a third party distributor or bookshop. As a result, sales transactions take place between the company selling the books and the distribution company (in the market) that buys them. The publisher’s distribution companies usually run teams of reps who visit schools and promote books at conferences, and a sales force that sells the product to bookshops.
While booksellers have been central to the publishing business for hundreds of years, the advent of digital products means that publishing companies are beginning to sell directly to customers, missing out the ‘middleperson’ (the bookseller or distributor) altogether. It’s easy to think that with the middleperson out of the equation, and with publishers no longer needing to print, ship and warehouse physical books, prices for customers would be lower, and profits for publishers higher. However, this is not turning out to be the case. When publishers sell directly to their customers, they have to assume many additional costs. They may need to develop complex software platforms such as LMSs (learning management systems), and adapt those platforms to work on multiple devices, each of which has different specifications. The publisher may need to pay for server space to host the platform, and may need to provide training and technical support for customers, all the while keeping up with the rapid and constant changes in technology that necessitate constant rebuilds and upgrades. This is a long-winded way of saying that even as printed books are being replaced by digital products, the savings publishers make in printing and shipping are very often outweighed by the additional costs of creating, upgrading, supporting and hosting digital products.
Fees and royalties
There are two main ways that writers get paid: a flat fee or a royalty. I’ll look at each option in detail.
If payment by fee (or grant) has been agreed, a writer will receive an agreed sum for their work, say $1,000, for writing a set of worksheets to accompany a course. This fee will be paid once the writing work has been completed and deemed to have met the requirements of the brief, and is of the required quality by the publisher. The fee is not affected by the success or otherwise of the final product. If a fee is paid, the legal agreement you sign will most probably be a ‘work-for-hire’ agreement whereby, in return for the fee, your work becomes the property of the publisher.
The royalty system of payment originated many years ago when the only way to deliver printed content was in the form of a book. In essence, the publisher agrees to pay the writer a percentage of the income they receive for sales of their book. The advantage to the publisher of offering the writer a royalty is that it incentivizes the writer to spend as much time as it takes to create the best material possible. As the writer wants the book to be a commercial success, he or she may also help to promote the book/course to the market.
A typical royalty rate is ‘10% of sums received’ (or net receipts). This means that a publisher will pay a writer 10% of the net price they receive from the bookseller. In our example above, the net price of the book is $20 so the writer will receive 10% of $20, or $2 per book sold. The amount the writer (and of course, the publisher) receives is dependent upon how well the book sells. The more it sells, the more the writer will receive. Conversely, if the book is not successful, they may not earn very much at all; sometimes not even enough to compensate them for the time they put into writing it.
Advances against royalties
When writers need to give up paid employment in order to undertake a large writing job, publishers will sometimes offer an advance on royalties. This is essentially a loan against future royalty income, designed to give writers money to live on while they focus on the writing project. Typically, the writer will receive payments at different stages of the writing process, e.g. on signature of contract, on delivery and acceptance of the draft manuscript/ the final manuscript, etc. Advances are calculated based on projected sales, and take into consideration what the writer needs to live on while they’re writing. Once the book is published, the advances are offset against future earnings – that is, the writer pays back the loan out of their incoming royalties. Often this results in early royalty statements showing a negative balance!
Although the payment of advances is common in trade publishing, with million dollar deals for famous novelists being quite common, it is less common in ELT publishing. Advances are only a possibility under the following circumstances: a) when royalties are being paid, not fees; b) when the extent and intensity of the writing work is such that the publisher asks the writer to give up other paid work to dedicate themselves to the writing project.
Blended model: Fees plus royalties
There is a third way. Sometimes publishers offer their writers a combination of writing fees and royalties. This is an interesting model because it reduces the risk to the writer (if your book doesn’t sell at all, at least you’ll still have received some payment for your work) and it also keeps the writer committed to the commercial success of the book (and therefore willing to help with promotion).
Here are some of the pros and cons of the two payment methods:
|Advantages of fees|
|Disadvantages of fees|
|Advantages of royalties|
|Disadvantages of royalties|
* moral rights – this is a legal term that gives certain rights to the creators of copyrighted work. It includes, among other things, the right to the integrity of the work and the right to be attributed as the creator.
As you can see, there are pros and cons to both methods of payment. It is not possible to declare one ‘better’ than the other. Also, it is unlikely you will be offered a choice – the publisher will have modelled the project out either on a royalty or a fee basis.
The royalty model is becoming less common in ELT publishing. It was established at a time when the printed book was the only medium in which content could be delivered. But with the advent of digital delivery methods, content can be ‘sliced and diced’ in many different ways. It can be combined with other people’s content, and sold in a range of formats – as part of an online course, as an ebook, as an app, as content in a databank, and so on. The royalties system was not designed for such mutable content. It will soon be almost impossible to track where each piece of content is used and remunerate writers accordingly. Therefore, it is now much more practical for publishers to commission writing work on a fee basis as this enables them to both pay writers fairly for their work and deliver that work in the multiple ways that customers now demand.
When will I earn my first million?
For every J.K. Rowling, there are thousands of writers who have written wonderful novels that only sell by the hundred, not by the million. For every Lady GaGa there are thousands of singers with equal talent who are playing to audiences of fifty and selling their own homemade CDs after the gig. What does this have to do with ELT writing? Cast aside any thoughts that you will become a millionaire by writing textbook materials. While there are indeed some ELT millionaires, they are few and far between and, as I explained above, the business has changed so significantly in the last decade or so that it is unlikely any additional millionaires will be created in the future.
When the first course book series’ were published, there was little competition. These courses were not only well-written and effective materials, they were the only ones around, and consequently they sold extremely well. These days, as the ELT industry has matured, there are dozens, maybe hundreds, of ELT products available – the vast majority of them well-made, attractive and effective products. Competition between publishers to sell their products has become fierce and the inevitable outcome of this crowded market place is that each individual product sells less than it would have done a few years ago. One of the consequences of this competition is the need for new courses to be launched in their entirety. When customers have dozens of equally effective course books to choose from, they are not prepared to wait for all the levels and supporting components to dribble out from the publisher over the course of many months or even years. They want them all now, ready for the first day of class.
Back when ELT publishing was in its infancy publishers could release a new course book-by-book, and level-by-level. This allowed one author, or one small author team, to write the entire series. They would start by writing the first student book, then once that was finished they would start writing the corresponding workbook, then only when they had finished that workbook would they start on the teacher’s manual, and so on. These books would be published in a staggered fashion, sometimes stretching over two, three or even more years. These days, teachers have so many choices of course material that, in order to even consider a new course, they want all the components at every level to be available at once. This means they all need to be written, edited and produced simultaneously, an impossible task for a single author or small author team.
Furthermore, there has been an arms race in terms of the components required to make a series attractive to customers. Where it used to be acceptable to provide just a student book, a workbook and a teacher’s book for each level of a series, publishers now need to supplement this core offering with an array of products designed to support and extend the main course, including such things as online versions of the print books, photocopiable worksheets, apps, testing programs and so on. Competition between publishers has led them to encourage adoptions by giving away a lot of these supplementary materials to customers who buy the core texts. It is not uncommon for publishers to only sell the core text, usually the student books and workbooks, and to have to provide all the other material that constitutes the course for free. Publishers now need to offer the materials in a variety of formats. Student books are offered as printed books, as e-books, as tablet editions and as online courses offered through LMSs. Add to this the need to refresh successful courses every few years with new editions containing updated content, new features and additional components, and you can see that publishing ELT courses has become a mammoth task.
Given these requirements – that all components (print and digital) and levels are published simultaneously and that each series consist of dozens, sometimes hundreds, of components, many of which will be given away for free – it is not surprising that the way these courses are written has changed. It is now much more common for publishers to commission writing work on a fee basis than a royalty basis. This enables publishers to divide the writing work up among large groups of writers and allows them to easily convert the work to the many different formats that customers expect these days.
While this may mean that writers are increasingly unlikely to be invited to write an entire series or even an entire book, it does mean that more writing work than ever is available. It might not provide you will a full-time income (at least initially), but it can certainly augment your teacher’s salary. Of course the rewards of writing are not purely monetary: writing allows you to contribute professionally to your chosen field of English language teaching and it can be extremely personally rewarding to see material that you have written being used by others. I still get an enormous kick when I see books I have edited being used in a real classroom or even being read on the subway by students on their way to class. And I was only the editor of those books, not the writer!
Please note that the author is not qualified in publishing law and the article above should not be mistaken for legal advice. If you need advice, it’s a good idea to consult a lawyer or join the Society of Authors (UK), the Writers’ Guild (US) or other professional body who will be able to advise you about the terms and conditions of your contract.
All the opinions expressed in this extract are the author’s own and do not represent the views of her current or former employers.
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