The Business Rusch: How Traditional Publishers Are Making Money

[beatrice_otter]

I know you guys hate my math posts, but if I don’t do them, you can’t see what’s going on. And here the math is really clear. Simon & Schuster (through parent company CBS) says it all: the increased profits are “driven by lower direct operating costs, including expense decreases resulting from the significant increases in more profitable digital sales as a percentage of the total revenue.”

Imagine what these quarterly earnings reports will look like in 2012 after the increase in digital sales. Imagine what the earnings reports will look like when, like most are predicting, e-book sales hit 50% of the market.

Who will make money? Online bookstores, yes. But the largest chunk of the pie in those e-book figures I gave you above now goes to the traditional publishers. And if writers continue to sign away their profits just to get a book published traditionally, then that chunk of the pie will grow.

I know this made your brain hurt. Print the blog out, look at it carefully, and follow the links. Then think about this very carefully.

The industry is changing, and if a writer wants to stay in traditional publishing, she will make a lot less money that she would have made ten years ago—even with the same number of book sales.

Traditional publishing isn’t going to go away. If anything, traditional publishers will become more profitable in the years ahead.

But the traditionally published writers won’t.

Just sayin’.

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