

How Authors Really Make Money: The Rebirth of Seth Godin - alexkiwi
http://www.fourhourworkweek.com/blog/2010/08/23/seth-godin-and-print-publishing/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+timferriss+%28The+Blog+of+Author+Tim+Ferriss%29

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cstross
IIRC the Gini coefficient among authors in the UK is something like 0.7. The
income stratification is insane.

Tim Ferris's figures match my experience. What he _doesn't_ make explicit is
that "publishing" is about fourteen different vertically integrated businesses
flying in loose formation -- genre fiction publishing, for example (my
stomping ground) is utterly different from business publishing or academic
publishing, although the products are _sometimes_ sold via the same retail
channels -- and the prospects for a successful career vary drastically between
fields. Nor does success in one field imply a track record transferable
sideways into another publishing field.

I'd also pick a nit: in my experience, ebook sales (and Amazon Kindle store
sales in particular) are _dwarfed_ by hardcover sales -- by a 50:1 ratio, in
fact. Amazon are almost certainly cherry-picking if they can come up with
books where Kindle sales outstrip hardcover. However, that's looking backwards
-- it's fairly clear that ebooks are a rapidly growing sector and in another
2-5 years they'll definitively overtake hardcover sales by volume, if not by
revenue. (Hardcovers net roughly $16 after discount, of which 10-15% goes to
the author; Kindle store books net $7-10, of which Amazon takes a 30% cut
before 5-10% of the remainder goes to the author.)

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jonknee
> I'd also pick a nit: in my experience, ebook sales (and Amazon Kindle store
> sales in particular) are dwarfed by hardcover sales -- by a 50:1 ratio, in
> fact. Amazon are almost certainly cherry-picking if they can come up with
> books where Kindle sales outstrip hardcover. However, that's looking
> backwards -- it's fairly clear that ebooks are a rapidly growing sector and
> in another 2-5 years they'll definitively overtake hardcover sales by
> volume, if not by revenue. (Hardcovers net roughly $16 after discount, of
> which 10-15% goes to the author; Kindle store books net $7-10, of which
> Amazon takes a 30% cut before 5-10% of the remainder goes to the author.)

As mentioned in the article, Amazon already sells more Kindle books than they
do hardcover books so I fail to see why they would need to cherry pick. And no
need to wait 2-5 years, the future is here.

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jseliger
_As mentioned in the article, Amazon already sells more Kindle books than they
do hardcover books so I fail to see why they would need to cherry pick. And no
need to wait 2-5 years, the future is here._

But Amazon has talked about how they got to that number and won't provide many
specifics about Kindle sales in general. In addition, if Amazon is selling an
_equal number_ of books, then hardcover sales can still generate more revenue,
which is what Stross points out: "they'll definitively overtake hardcover
sales by volume, if not by revenue".

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bjonathan
"If you choose to go digital only as an e-book, this is where profit rules and
amazing numbers can be achieved. How amazing? I know one man who nets between
$5,000,000 and $10,000,000 per month with a single e-book and affiliate cross-
selling to his customer lists. I’m not kidding."

Any idea of what ebook is he talking about?

~~~
vaksel
none

it's bullshit...that's $60-$120 million profit a year from a single book.
These numbers just don't exist.

If most of his sales are from affiliates, who typically get 75% per
sale...that means the book would need to sell close to $200 million.

If the book costs $1,000, that's 200,000 sales.

If the book costs $500 that's 400,000 sales

If the book costs $250 that's 800,000 sales

If the book costs $125 that's 1,600,000 sales.

If the book costs $50 that's 4,000,000 sales

Then you need to take into account conversion rates. If the book sells at
1:200(average more or less)...

@$1000 that's 40 million uniques a year

@$500 that's 80 million uniques a year

@$250 that's 160 million uniques per year

@$125 that's 320 million uniques per year

@$50 that's 800 million uniques per year

And as far as I know the #1 site in the world is Facebook, not
makemoniezonline.com

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patio11
Think less like a technically savvy HN reader who does not pay for content
online, and more like an info marketing huckster who has an email list of
50,000 people who have bought a similar product in the last six months.

~~~
ramit
Let's be careful here. Patrick, you and I both know how the conversion models
in this area work, and while the info-marketing world is filled with scammy
sleazebags, there are also some very credible ones.

For example, I sell information products as well as a New York Times best-
selling book. My students do very well, whether it's learning how to automate
their finances or earn more via freelancing. If they don't, they request a
refund and I eat any costs of my online products.

Virtually every info-marketer offers generous guarantees and has to live up to
their product's hype...or they go out of business. This is an extremely
competitive area.

Vaksel, let me also offer some feedback on your numbers. You're analyzing them
without knowing how the field works, and frankly every Web2.0 company could
learn a LOT from studying the direct-response field. Want to know how to
increase your AOV by 200% or 300%? How about finding undiscovered 6-figure
revenue sources in your business (like I did 2 months ago)? Why not look to
the people who have been doing this for decades?

You assume that most of the money is made from the sale of the ebook itself.
That's not correct. Most of the revenue is actually made from the "back end,"
or other products that are either cross-sold, upsold, or repeatedly sold.
Every direct marketer knows that you profit more from having a dedicated group
of customers who buys from you time after time...which is why the very best
ones take INSANE care of their customers. I'll speak for myself, but I
continue to send lots of free material to both my free users and my customers.
I email them free stuff. I call them. I write them hand-written cards
(seriously).

As a result, on the rare occasion when I sell something, I can sell it for
premium prices (often 100x more than my competitors charge for their products)
and people happily pay it because they trust me and they know it's the best.

Here's another example. I know an info marketer who pays a 200% commission for
any affiliate who sells his book. So if you sell his $27 ebook, you get $54.
How does he afford that? Because he's systematically built a funnel that
offers his customers more products _that they want and are willing to pay
for,_ making it a simple no-brainer customer-acquisition cost -- even at 200%.

A skilled direct-response marketer could take a $27 ebook and turn it into
$500 of LTV...and the customer would be DELIGHTED to pay it if the material is
of outstanding quality.

IMHO, a lot of Web2.0 companies should stop poo-poohing marketing and learn
how it really works. Virtually every Web2.0 company should be doing upsells,
cross-sells, and partnerships...and as a guy who co-founded a venture-backed
startup and know a lot of other startup CEOs/marketers, I know that very, very
few do.

I've put together several bookmarks that might be interesting:

* <http://delicious.com/ramitsethi/emarketing> (direct-response stuff)

* <http://delicious.com/ramitsethi/marketing> (general marketing)

* <http://delicious.com/ramitsethi/monetization>

Hope this helps.

~~~
alexkiwi
Back in the day I used to do a ton of affiliate sales for information
products. Personally I stay away from the long-winded sales copy pages, I see
them as insanely scammy, but they still sell to normal people.

Ramit has a way of marketing like a scammer, but delivering solid content
every time. Seriously "I will teach you to be rich"? I was really reluctant to
buy a copy, but after a few solid recommendations picked it up. I trust
Ramit's opinion on finances highly, enough to bring my people to see him at
sxsw and keep reading his blog. My copy of his book has been passed through
probably 10 people by now (haven't seen it in a year) and I link to his
articles from my University niche sites, because they have tremendous value.

When is "I will teach your business to be rich" book coming out?

~~~
ramit
Not for a while : )

I'm focusing on helping people earn more via my Earn1k freelancing course
right now, so it's basically an IWTYTBR business course. We teach a lot of
techniques that can apply to freelancing or even product-based companies.

Btw, thanks for the kind words!

~~~
alexkiwi
Loved the briefcase technique, but Earn1k wasn't exactly for me. I just
emailed you, if you have a minute. Keep up the good work Ramit.

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kmfrk
I didn't find the post to be very useful, but this part is worth the read:

> _I believe (conjecture, yes) that the figure we are missing is Books-Per-
> Person._

>If you have a Kindle, as I do, how many books did you buy in the first week
or two? How many unread books do you have on your Kindle? Unlike with print
books, you don’t have to look at a stack of unread material like undone
homework. Ergo, you purchase more digital books than you would ever purchase
in print. If Amazon is selling 180 Kindle books for every 100 print books, I
wouldn’t be surprised if 10-20 people are responsible for the former, whereas
80-100 people are responsible for the latter. This reflects that Kindle owners
are buying more books per capita, not that paper purchasers are buying fewer.

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patio11
I _want_ to hate Tim Ferris for his persona and frequent exaggerations of the
truth, but _grits teeth_ he writes good stuff sometimes.

~~~
lionhearted
Used to think the same way - now I've got two modes when I'm reading a
successful author. Either (1) absorbing his good information, or (2) trying to
figure out how the bad stuff could be marketed so well. (2) is more meta-
learning, but I start asking questions like, "Who does this appeal to? Why is
this worded/marketed like this?" Etc. Sometimes I learn more from bad
information, because it forces me to reconsider the level of complexity
writing should be if you want to sell in volume (very, very low - dumb it down
10x... okay, now make it dumber) and things of that nature.

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mark_l_watson
Good article! Don't skip the video.

I have written several books, and only a few have sold well, so I have to
admit that my net worth would be more if I had spent my writing time doing
working (software development). However, echoing the article:

1\. writing books gives an author access to very interesting people and
experiences

2\. writing has a long tail of benefits that often come in the form of
interesting work and offers for collaboration

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allwein
This all ties in with a blog that I just started reading yesterday. It's
written by a genre fiction writer that has also made the switch to
predominantly ebooks. I guess the most relevant post is
<http://jakonrath.blogspot.com/2010/08/beginning-of-end.html> but the whole
blog is really interesting and worth reading.

<http://jakonrath.blogspot.com/>

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mattmaroon
He's wrong about paperback, they're a gold mine for authors. Halving the price
doesn't multiply the number of purchases by 2, it multiplies it by 20. That's
why ebooks outsell hardcovers on Amazon but are still a trivial fraction of
overall rev.

Also, it is not any more work for the author. You usually don't even have to
sign any additional paperwork. It's extra work for the publisher to be sure,
but it's all gravy for you.

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petercooper
For anyone interested in a "programming book" specific perspective:
<http://beginningruby.org/what-ive-earned-and-learned/>

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Emore
As much as I enjoyed the article, the title is simply too SEO for my stomach.
"Money"? Check. Famous guy's name? Check. At least 10 words? Check.

I miss the long-gone days of clever, concise and original titles for stuff.

