Book publishing industry: How the revenue pie gets shared

In traditional book publishing, authors get the short end of the stick. You already knew that. We are talking about income in the form of book royalty.

So if an author does all the hard work of writing the book and the reader does the (harder?) work of patiently reading it, where does the rest of the money go?

This is where the supply chain comes into picture and it might help understanding the behind the scenes dynamics, so you are better positioned to write that bestseller.

If you thought you were writing your novel for the reader, you are only partially right. It’s true that a happy reader will buy your book and recommend it to other readers.

But before your readers can go gaga over your novel, your book also needs to make many other people happy. People for whom the commercial aspects matter more than the content of your book.

Between the writer and the reader there is a full-fledged business model competing for resources – primarily shelf space. And this massive machinery needs fuel to keep its wheels turning. The money from each book sale goes into incentivising each player in the publishing game.

Here’s the chain.

–> You sell the book to a publisher (or your literary agent does it on your behalf).

–> Your publisher doesn’t want to be stuck with several thousand copies of your book in their backyard. So they need to sell the book to distributors.

–> The distributors also have hundreds of thousands of copies of other books in their warehouses. So they need to push it down to retailers.

–> Now the retailers have smaller storage space for the thousands of other books. So they need to get rid of your book in one of two ways:

– A fan (or an unsuspecting reader) comes along and buys your book.
– If your book has been lying for too long, the book starts a reverse supply chain i.e. it goes back to the publisher, adding to the woes of your publisher.

Compared to the wonderful, imaginary worlds that lie inside the book, the real world has tough expectations from the book. There’s a risk at each stage of the supply chain. And the guys taking that risk demand their pound of flesh (replace with appropriate phrase, if you are a vegan).

Here’s how the revenue gets broken up:

Retailers: 40% (the shop-keeper has enough buffer to give the buyer a discount. The smaller ones do, the bigger chains don’t)
Distributors: 10%
Printers: 10%
Publisher: 30%
Author: 10% (could range from 5%-15%, lower for new writers)

And that’s how the cookie crumbles.

In some cases, the publisher may involve a few big distributors in the decision making process before agreeing to sign you up.

The digital medium disrupts the traditional model by taking out a few key players in the story. More about that later.

If you are placing your bets on the traditional publishing industry, what do you think the distributors or retailers are looking for to give the thumbs up to the book?

24 thoughts on “Book publishing industry: How the revenue pie gets shared”

  1. Navin,

    For authors who want to get their royalty rates higher, there are other options – self-publishing, ebooks on Kindle etc – but each comes with strings attached.

  2. I daresay the distributors and the retailers would be more likely to consider a book/manuscript as a viable investment if:

    – If the book is topical and in-sync with larger societal and media-consumption trends.

    – If the author has been long/short-listed for awards for previously unpublished authors – the Man Booker, fr’ex. It may not impact the domestic market much in terms of numbers but it is still a selling point to mention to customers. Also, I assume this would make the publishers more keen – international rights are more likely to fetch a good price – so the RoI cycle is shorter.

    – If the author has a visible on-line presence and enough regular readers to make the idea of selling the book seem more feasible.

    – If the book starts with a good hook and the author is ‘connected’ enough to ensure a decent starting buzz….strong enough for people to flip through the first chapter and swallow the hook.

    Your question assumes a different significance in context of a recent conversation we had. A couple of ideas begin to emerge but they are still germinating and my focus is still elsewhere.

  3. Between fundamentals and implementation lies a detailed cohesive plan that has been tested out on a segment of the target audience. 😉

    But when it comes to particulars, I was thinking of something else altogether. And since I do not intend to think of the branding baby until noon, let me request your indulgence:

    Certain genres are mainstream and, to my bibliophilian eye, are meant to be a part of the traditional publishing industry. But there are certain other genres, say self-help or spirituality. Such genres find representation in many different industries – multi-media industries, spirituality industry, ancient traditional practices etc.

    I am wondering how easy it would be to identify a few already established distribution networks in such sectors, form a distribution consortium, and then approach a major player in the multi-media sector and ask for their investment.

    The actual cost of printing a book is not that high after all. And I suspect this might well be a viable method if a major brand supports the project.

  4. Spirituality is a perfect example of an author (generally a Baba with a huge following) bypassing most traditional distribution channels to sell millions of copies that can put any best-selling (professional) author to shame.

    Probably a good case study for another independent post.

  5. If it works for you, please do go ahead. 🙂

    Sometime in the last few weeks, I did one post because of something you wrote on Firstpost….and right now my plate is so full that researching this notion will take me ages. Writing about it is not even on my agenda right now. 🙂

  6. very true indeed!even my father is an author who has published several books on Physics from leading publishers in India and abroad-it,i.e. the royalty is never more than 10-15%.

  7. Krishna,

    Book promotion concepts are similar for authors of big and small publishers.

    I’ve written several posts on book marketing including some creative and unconventional methods (like book trailers and in-person promotions). Do check them out.

  8. Sir what are the chances for a debutant writer to become popular by means of self publishing. I mean whats safe for the first books self publishing or traditional publishing

  9. Anson, neither is ‘safe’.

    Most authors (except for the very lucky or the very entrepreneurial ones) won’t make money from their first book.

    But traditional publishing does have the advantage of credibility (if you got with the leading names), compared to a first time author.

  10. Hi Sameer,
    Could you explain the same for self publishing as well. I have received the quote from a self publishing company that they would charge me 17K and make my book available on all online medium and the hard copies will be print on order basis.
    They have agreed on 70/30% model where i get 70%, but 70% of the profit. They will bear the cost of the novel printing.
    This is how it works?

    • In your shoes, I wouldn’t take up that offer.

      If I’m paying someone upfront for their services (primarily printing which I could do independently as well at a much lower cost), why should I part with such a substantial proportion of my royalty?

      Not to mention the fact that the price of the book could get bloated to impractical levels.

  11. Hi Mr. Sander,
    I have written a book academic interest in nature relating to Urban Resilience, a draft copy of which has been released by the Minister for Urban development recently. Please suggest me the best channel for international publication without initial payment by me. The topic of my book is of global concern at present, which is directly being propagated by the global leaders like Obama. I am new to the field of going for publication. Also please indicate the cost, circulation and publicity of the book, etc., involved in self publication. Thank you.

  12. I have published ebook named as PRABODH SHAKTI yesterday at Kindle Stores The Book is based on Ved, Puraan, Raamayan , Mahabahart and Geeta. The real interpretations of stories in a logical way so that today’s modern generation could realize and understand the utilities of these Vedic Granths. There are many things which appears to be wrong in our Shaastras, that has been correctly presented in the book, for example Shri Satayanaaarayan katha which says by offereing pooja one can get everything whereas Geeta says Karmanye waa dhikaarste … therfore Geeta message & Shri staynarayan Katha both are being told by the God but both are opposite in nature. At one place pooja has been given impotratnce and one side Karm . similirly many examaple like ravan had kidnapped devi Sita and jataayu had already told Ravan has kidnapped then why shri ram was serching devi Sita in forest? all these have been answered logically.

    The poision of castesim & corruption from our society can be removed but what is required for that ? it is explained.

    I want to publish this e book in Hindi but how ? Kindle Stores doesn’t publish the books in Hindi. can anyone guide me please.


    Chandra Shekhar Pant

  13. Hie Sameer,

    My name is Surya and I have just completed my novel (Fiction). I have ben sending the proposal to all mainstream publishers in India but I am slightly nervous about my approach. Is my work being seen? or is there something more that I can do? Maybe you can help me with some tips.

    Looking forward to a reply soon


  14. Hi Sameer,

    Found your blog by accident and I’m glad I did. 🙂

    I am currently working on my first book and have been weighing my options to finalize the route I am going to take (Self Publishing or Traditional Publishing). I have been reading about traditional publishing a lot and I haven’t come across a single instance where they have helped market a book extensively (other than commercial fiction). I saw that most authors who are published with the top 5 publishers in the country have tied up with a separate PR agency to promote their books (correct me if I’m wrong). So I don’t see how its worth publishing with these guys for just designing the book, printing and distribution. If a publishing company has already made their money by selling it to various distributors then where is the incentive for them to work for your book? Please correct me if I have misunderstood.


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