Monday, 2 September 2013

PAYBACK PERIOD - Books might be forever but royalties are not.

There have been a few great articles lately about older authors, writing the books they want to read. Never before have we seen octogenarian romance. I wholly applaud authors take the time to follow their dreams, and it goes to show that it's never too late in life to do so.

What it may be too late for, however, is getting a meaningful financial return. I don't mean this in a disrespectful way, but let's have a quick comparison between a hypothetical 55 year old baby boomer author, and me.

Baby Boomer = 55 years old.

Me = 25 years old.

If we then assume, purely for the sake of easy maths, that both of us live to 85 (and actually, I'm likely to have a longer life expectancy thanks to future medical advances) then we've got

BB = 85 - 55 = 30 years to sell.

Me = 85 - 25 = 60 years to sell.

That means I have twice as long for my work to pay off if I publish it today. If you think about things that we start writing today, I'm doing even better comparatively. E.g. assume a one year period to write the next one (again, purely to make the maths easy - I know you can write much more quickly).

BB = 56 at time of publication = 29 years to sell.

Me = 26 at time of publication = 59 years to sell.

So, more than twice as much time. Younger authors have a huge advantage in that they can think long term.

 Let's extrapolate a bit further. If both BB and I continue to publish one book a year then our total published books at time of death looks like this:

BB = 30

Me = 60

 

Now, the average number of titles on sale per year over the long haul looks like this:

BB = 15

Me = 30

 

Now let's think about the life expectancy thing again. BB has 30 years left, and an average of 15 titles on sale. I have 60 years and an average 30 titles on sale.

There in books available x years on sales...

 
BB = 30 x 15 = 450

Me = 60 x 30 = 1800

 
I.e. I have 4x more Books Sales Years to sell in than our hypothetical baby boomer author.

 Now let's try a more prolific approach of two new titles a year.

BB = 30 years which gives 60 titles on sale total. This is 30 sales out on average over 30 years = 900 sales years

Me = 60 years which gives 120 titles. 120 x 30 = 3600.

Again, still a 4x differential, which appears to be a static multiplier (and it is because I'm according us the same work rate).

What if we both retire from writing? At say, 65 (the current pension age).

Then the difference is much more marked.

BB = 10 more year writing.

Me = 40 years writing.

 
So now, I'm putting out 4x more than our BB and have twice as long to recover my investment. That's an 8x advantage over the BB.

 
Then, we have to factor in that as the # of titles rises, visibility goes up with it. New books lift every book before it. We can therefore say, add in a 5% increase per title.

So 'retiring in 10' BB writing twice a year has 20 titles = 1.05^20.

Against that, a comparable me has 30 years to write, or 60 titles pre retirement = 1.05^60

 
1.05^20 = 2.653297705144420133945430765152

1.05^60 = 18.679185894122945668381742854713

 
See what happens? My success, increasing at 5% per year, has much longer to exponentialise. I will sell 18.6x compared to 2.65x simply by dint of having more titles.

If you then assume another growth factor due to visibility increasing over time, then multiply that by our shelf visibility factor then factor in the extra time I have to write AND to sell...

BB = (Years on sale x Books on sale x Shelf Visibility Factor x Time Visibility Factor)

Me = (Years on sale x Books on sale x Shelf Visibility Factor x Time Visibility Factor)

That gives, as a quick and dirty guesstimate for a retiring at 65 author writing twice a year...

BB = 30 x [first ten years = 10 books out on average, remaining 20 have 20) so 20*20 + 10*x10] = 500 x SVF of 2.65 x TVF (let's assume 5% growth here too) x 2.65] = 3511.25 adjusted sales years (ASY)

Me = 40 years of writing = 80 books out. 60 years alive. 40y x 40 books on average = 1600 in years 25-65 then 80 on sale for the subsequent 20 years = 1600 = 3200

x SVF of 18.68 x TVG of 18.68 = 1,116,615.68 adjusted sales year.

So our 55 year old baby boomer has just 3511 Adjusted Sales Years to my 1.1 million Adjusted Sales Years. I have 318x more sales years to sell in.

That means, to make the same gross amount of money off our work, the Baby Boomer will need to sell 318 x more copies than me at the same price (gross - i.e. not account for inflation)

No matter how good you are, that isn't very likely.

In summation, younger authors have a huge opportunity. Of course, these rights are on sale for the life of the author + 70 years so in estate terms, this narrows the gap. But I'm not interested in thinking about those 70 years (I'll be dead!). If you factor that in then our sales period in years difference is not 30 v 60 but 100 v 130. So if you're thinking about estate planning, the difference is less extreme but still substantial.
This is also a fairly good argument for older authors to consider Traditional Publishing contracts if the advance makes sense - it's money up front (/ in parts on signing, acceptance/ publication / 6 months after paperback anyway).

I will point out we haven't adjusted for the cost of money / inflation - this is purely illustrative mathematics and makes a number of assumptions to get to the headline figure.

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