The profits from publishing: authors' perspective

Publishers’ figures show authors aren’t getting a fair deal. Bodley Head founder John Lane was notoriously mean in paying authors. Oscar Wilde took his revenge by naming the butler Lane in The Importance of Being Earnest. Lane’s distant relative, Allen Lane, was more equitable: when he launched the paperback in 1935 he calculated royalties to share profits equally between author and publisher after all expenses were paid.

Sadly, publishers today are following the example of the older Lane. Authors’ incomes are suffering: a 2013 Authors’ Licensing & Collecting Society (ALCS) study showed professional authors’ typical annual income had fallen by 29%, to £11,000. ALCS is updating the study: we ask all authors to take part.

According to their own published data, the profit margins of the big corporate publishers are increasing. In 2008 Simon & Schuster Inc reported a profit margin of 9%; in 2016 it was 16%. Together, Penguin and Random House now record a margin of 16%, almost double what they recorded separately. You don’t just need to take my word for it. The Bookseller editor Philip Jones believes that trade publishing is now more profitable than it was, possibly by as much as third. That is a spookily similar figure to the 29% by which author incomes have fallen over a similar period. According to Jones, the average profit margin of a corporate publisher is now around 13%, where once it was 10%.

In the Publishers Association’s recent study The Contribution of the Publishing Industry to the UK Economy, consultancy Frontier Economics estimated that in 2016 £161m was paid to authors in advances, royalties and secondary rights revenue, and that the UK publishing industry’s turnover was £5.1bn, of which book sales contributed £3.5bn (69%) and sales of academic journals £1.2bn (24%). That means authors received around 3% of publisher turnover. Even if we take out journal revenue—where authors are, shockingly, paid next to nothing—authors were receiving less than 5% of turnover in the same year that (major) publishers’ profits were around 13%. (That turnover figure includes non-trade publishers, where margins are typically even higher).

What’s clear is that instead of the 50/50 after costs that Allen Lane tried to achieve, authors’ share was around 26% of the total. Or to put it another way, once everyone in the publishing house was paid, publishers’ shareholders received up to three times the amount paid to authors. And authors still had to pay their own expenses and agents. Publishers may contest these numbers, but we cannot break down these figures between publishers because they do not publish author share. It is easy to ascertain that public libraries spend around 5% of their budgets on book stock but impossible to find equivalent figures for publishers.

A new era

We challenge publishers to state in their accounts how much they pay to authors, illustrators and translators in advances, royalties and secondary income. It can be done. In an article for the Author last year, Andrew Franklin revealed Profile’s cost breakdown and noted that it pays 22% of its revenue to authors. That is much higher than the publisher average of under 5% —and Profile is still making good profits.

Society of Authors president Philip Pullman comments: “To allow corporate profits to be so high at a time when author earnings are markedly falling is, apart from anything else, shockingly bad husbandry. It’s perfectly possible to make a good profit and pay a fair return to all of those on whose work, after all, everything else depends. But that’s not happening at the moment. I like every individual editor, designer, marketing and publicity person I deal with; but I don’t like what publishers, corporately, are doing to the ecology of the book world. It’s damaging, and it should change.”

The PA’s own report shows that since 2012, UK publishing’s gross value added (GVA) sum has grown 19%, more than the UK economy as a whole (15%). Of course GVA isn’t the same as profit but it is closely correlated, being the difference between the value of goods and services produced (turnover) and the cost of raw materials and other inputs. Publishing’s huge rise in GVA over a period when author incomes are falling suggests strongly that publishers are not paying enough for their “raw materials and other inputs”—i.e. author contribution.

Publishers, of course, have a duty to make a profit for shareholders. But unless authors receive proper returns, the supply of quality work will inevitably diminish. The decision to become an author often means eschewing the security of a stable job. A 2016 EU study raised concern at the low remuneration and lack of legal safeguards for UK authors. The proposed EU copyright directive includes provisions for bestseller clauses if agreed remuneration is disproportionate to the revenues derived from their works. We ask publishers to adopt these and also revert unexploited rights, improve advances and adopt escalator [royalties].

Our experience shows that what publishers do pay is going to a smaller pool of authors. That is short-sighted. Figures from Nielsen BookScan, compiled by The Bookseller, show 5,093 authors had sales (not income, of course) more than £10,000 in 2017. Collectively, those authors accounted for 56% of the £1.59bn total books sold. So a big proportion of sales—44%, or £699m—came from authors with sub-five-figure sales. Publishers cannot ignore authors who net 44% of their sales, and authors cannot continue on the earnings they recoup from these sales: an EU study found the average an author earned from lifetime sales of each book was £6,000.

Long-term damage

With these figures how can we encourage new and diverse voices into the industry? Author Paul McVeigh says: “Working-class writers can’t afford to take up a career in writing, it is considered elitist and too risky. Families with uncertain incomes often expect their children to leave education earlier and to support them, and press them to get a ‘proper’ job rather than rely on writing.” Data shows that whatever their level of income, 7%–8% of the population identify themselves as regularly engaged in creative writing. But Aaron Reeves and Sam Friedman of the London School of Economics proved that 12% of the poets and novelists included in Who’s Who attended one of the UK’s top nine public schools; half went to private schools; and 44% went to Oxbridge.

We are all dependent on readers. Author Kit de Waal says: “Publishers should consider new readers and new audiences. We don’t know who doesn’t buy books because they don’t see themselves represented on the page.” Paying fairly and encouraging underrepresented voices to consider writing might just widen our reader bases enough to give everyone a bigger share of the pie. So for the sake of publishers as much as authors, we challenge publishers and other uses of content to be fair.

That means:

  1. Fair terms. Ahead of EU legislation, all publishers should sign up to our CREATOR principles.
  2. Accounting. Transparent and clear accounting to show exactly how much publishers pay authors, illustrators and translators.
  3. Increased shares. Publishers should commit to paying authors a higher proportion of turnover, and increase advances and escalators.
  4. Redistribution to a wider pool, not just celebrities, but writers from across society. And publish how author share is distributed in accounts.

We look forward to working with publishers to achieving fairness in the interests of everyone.

Read Andrew Franklin's blog 'The profits from publishing: a publisher's perspective' here.