If you haven't been following Joe Konrath and Barry Eisler's epic dialog on Ebooks and Self-Publishing, you're missing out. Go read it. Now. I seriously feel like they just put into words exactly what I've been talking to my husband and my friends about for months now. You can find the conversation in 2 parts (so far): Here and Here.
In part 2, Barry talks about how he crunched the numbers. He says it much better than I can, so I'm going to post a direct quote from Joe's blog, which is also from an interview Barry did with Daily Beast:
Being so accustomed to, and dependent on, the legacy model, it took a fair amount of work for what I knew intellectually to start to penetrate at a gut level. The timelines, for example. I’m used to thinking in terms of publishing contracts, so let’s take a hypothetical two-book, $100,000 offer... or, okay, let’s make it real: a two-book, $500,000 offer. My tendency has been to focus too much on that big, seductive number. But to understand what the number really represents, you have to break it down. Start by taking out your agent’s commission: your $500,000 is now $425,000. Then divide that $425,000 over the anticipated life of the contract, which is three years (execution, first hardback publication, second hardback publication, second paperback publication). That’s about $142,000 a year. This is a more realistic way of looking at that $500,000.
But there’s more. Some people have mistakenly argued that, for my move to make financial sense, I’ll have to earn $142,000 a year for three years. But this is one time when you don’t want to be comparing apples to apples. Because the question isn’t whether I can make $425,000 in three years in self-publishing; the question is what happens regardless of when I hit that number. What happens whenever I hit that point is that I’ll have “beaten” the contract, and then I’ll go on beating it for the rest of my life. If I don’t earn out the legacy contract, the only money I’ll ever see from it is $142,000 per year for three years. Even if I do earn out, I’ll only see 14.9% of each digital sale thereafter. But once I beat the contract in digital, even if it takes longer than three years, I go on earning 70% of each digital sale forever thereafter. And, as my friend Joe Konrath likes to point out, forever is a long time.
He mentioned that he'd like to see a basic graph showing how these numbers compare. My husband quickly put together this graph so anyone can see just how much more money Barry can make long-term with self-publishing than he ever would have with a legacy contract. It's super simple, but the message is clear. Here's the difference in earnings over the course of the next 10 years. This image assumes Barry wouldn't have earned out his original advance:
Of course, if Barry did earn out his advance at SMP, the blue legacy line would have gone up instead of staying static. Still, as he points out, he would only be making 14.9% of each digital sale after that. I doubt the royalties earned from that small percentage would be anywhere near what Barry will earn self-publishing with a 70% royalty.
The numbers here are definitely interesting. It might be fun to put together a webpage where authors could plug in various number scenarios to figure out possible earnings comparisons. G said he's going to work on putting that together.
For now, I just want to go on record as saying a HUGE thank you to people like Joe Konrath and Barry Eisler who are willing to speak honestly about the choices authors have to make right now. So much of what Joe says on his blog truly resonates with me. It took me a while to decide not to look for an agent. (Okay, I sent out ONE query letter.) But once I made the decision to self-publish, I knew I'd never look back.
More power to Amanda Hocking for making the decision that she felt was right for her. Like Joe says, I hope she succeeds and wish her the best. For me, however, I doubt I will ever take a legacy publishing deal if it were offered to me. Regardless of the money aspect, I just don't think I could ever give up creative control. I love being the one with the final say on my covers and titles. I love being able to break the so-called "rules" and write what I want to write without worrying if an editor or agent will like it. I love being an indie author. Besides, I love getting my books out as soon as they're published. I like the instant feedback I get instead of waiting a year after I finished the book to finally see it in print and have someone finally review it. I could go on and on, but I'll spare you the talk.
For now, check out Joe's blog. It's epic.