The Economics of Word Count

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Hi, everyone!  I’m pleased to be joining Magical Words for my monthly mouthing off.  First, let me introduce myself.  “Hi, I’m Lucienne.  I’m a Taurus.”  I.e. stubborn, straightforward, creative, persistent…in short, a literary agent.  Specifically for The Knight Agency.  I represent over forty authors of fantasy, mystery, romance and young adult fiction, including two of Magical Words’ founders, David B. Coe and Faith Hunter, and past guest bloggers Diana Pharaoh Francis and Rachel Caine (hey, guys!).

The question of appropriate word count for various genres has come up time and again in my recent talks and on my blog, so I thought I’d use it to start off my very first post here at Magical Words.  First of all, if you’re J.K. Rowling or George R.R. Martin, you can get away with the kind of books that keep chiropractors in business, the big fat fantasies.  If not, here are some things to think about:

1)      Simple economics: it costs more to print big, thick books than it does for thinner volumes.  Shocker, right?  This means more economic outlay for the publisher without a guarantee of returns on their investment.  (And yes, I’m primarily talking about print publishing here, because while the audience for e-books is growing, their sales still only account for between 2% and 4% of the market and don’t yet pay a living wage.)  Before acquiring anything, publishers run a PNL (profit and loss statement).   The numbers they run are based on an author’s previous sales history, if any (or if not, an approximation of expected sales based on similar books on the market), the cost of printing the books (not just the advance to the author, but payments to editors, copy editors, cover artists, etc.), average returns, etc.  Based on this, the publisher decides whether it will be financially advantageous to acquire a book or series.  If the publisher doesn’t expect to earn enough money above their costs to make acquisition worthwhile, no offer will be forthcoming.

2)      Publishers can’t charge the same price for a new writer as they can for an established author with a following, one whose audience is already hooked and will automatically pick up the next title from favored authors, sometimes even waiting in lines the day before a coveted release.  Publishers want to charge a more attractive (read lower) price to entice readers to take a chance on someone new, someone whose market appeal is not a guarantee.  A free market society is built on the laws of supply and demand.  Houses must first build up demand for a product before they can increase the price on their supply.  (Note: there are always, of course, exceptions, but they are really exceptional, for example Susanna Clarke’s debut Jonathan Strange & Mr. Norrell.)

3)      Bookstores have limited shelf space.  This means that if you’ve got a big fat tome, booksellers can’t shelve as many in the allotted space and consequently might order fewer copies.

4)      So far we’ve been talking about maximum word counts, but there are minimums as well.  Agents and editors don’t bring these up because we want to impose artificial boundaries on your artistic creations.  We do it because we know that readers feel shortchanged by a book that’s too short.  Bigger fonts and wider margins don’t fool fans when they finish a book in a matter of hours.  It only makes them wonder why the book that entertained them for a week cost the same (or nearly so) as a book they finished in an afternoon.   Readers want to spend some quality time living in your world with your characters.  Publishing is more than just a creative endeavor, it is, like any artistic achievement meant for public consumption, a contract between the artist and observer.  If you provide satisfaction, your readers will come back for more.  Otherwise, they tend to complain rather loudly in on-line reviews.  In fact, a lot of authors who’ve been told to trim by their publishers for economic reasons 1-3 have had to explain to readers why their books are getting shorter.  (Note to readers: authors often have as much input into the font and trim size, etc. of their books as they have to whether or not their brunette heroine is a blond on their cover.  Sometimes we get to haggle.   Sometimes we see artwork, etc. too late for changes.)

More economics?  I’m sure you’ve been hearing a lot lately about loss leaders and price wars.  Let’s start with print books, because that’s what we’ve been discussing thus far.  There was a huge kerfluffle last fall because Walmart and Amazon got into a price war, taking losses on hot hardcovers and other books in order to drive traffic to their venues.  (See Wall Street Journal article of October 2009.)  They were willing to sell these books at such a price that they not only didn’t turn a profit, but lost money in order to lure consumers.

The same kind of loss leading has gone on with e-books, particularly with Amazon.com’s insistence on a $9.99 price tag for all books.  When Macmillan negotiated with them recently to change things so that some e-books would be more expensive and some less (in both cases closer to the prices of their print counterparts), Amazon tried to convince consumers that Macmillan was being unreasonable, harping on the higher prices being discussed and giving no play to the lower.  What most readers weren’t aware of was that Amazon had been losing money on a lot of their e-books to build a loyal consumer base for their readers and e-book offerings.  While it is true that publishers don’t have to pay warehousing and shipping costs for e-books (the latter of which are not generally paid by the publisher in any case), they do have other associated costs, like formatting.  Also, publishers still have to pay authors, editors, copyeditors, designers, artists, etc. and the salaries of all those other people who make the publishing world go around, like contracts administrators, sales and marketing, publicity, subrights managers….  The economics of e-books really aren’t so vastly different from their print counterparts.

Well, there you have it.  My two cents on the economics of publishing.  No calculator required.

For more on the subject:

Romantic Reads on the Economics of Word Count

Getting Published (for academics) on Book Length and Word Count

Wall Street Journal article mentioned above on the Walmart/Amazon price war

Shelf Awareness with a take on the Amazon vs. Macmillan issue

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23 comments to The Economics of Word Count

  • Deborah Blake

    Great blog, Lucienne. I’ve been told by many of my pubbed author pals that they have been asked to reduce their word count in recent months to keep costs down. I guess we can look at it as good practice for clean, tight writing :-)

  • Lucienne, first, a HUGE thank you for agreeing to appear on MW in the new monthly spot. Much applause and happy dancing. I *do* know that your schedule is horrible and that you had to make sacrifices for the time to put this together. You are the BEST!

    Second, I’ll add a comment about word count. When you negotiated with ROCK for the first Rogue Mage book, the new limits on word count had been instituted. And I totally ignored them. I had always written 120,000 to 140,000 word books. I wasn’t sure how to write shorter books. When I finished BloodRing it came in just under 140,000 words, and the editor’s *first* comment was cut 40,000 words. Ouch.

    I did it and the book was better for it. I also learned how to write a shorter book. But it was a hellacious rewrite.

  • Hi Lucienne, thanks and welcome. Some of our readers might be interested in hearing your thoughts on what desirable word count range is for different genres/readings ages. If you have a moment, I’d love to hear your sense of ballpark numbers.

  • 80,000 to 100,000 works for most genres these days, though there is generally a little bit of wiggle room on the upper and lower limits. Epic fantasy might go up to 125,000 words. Category romance (the Harlequin and Silhouette lines) are different, each with their own strict length requirements (see http://www.eharlequin.com/store.html?cid=535). I did a whole post on young adult and middle grade, including word counts on my blog last year right here http://varkat.livejournal.com/111955.html.

  • I’ve been hearing the “Strange and Norrell” case for larger books, from a first-timer, a lot lately. Yes, it was her first book, but she worked for a publisher and had contacts, access, and influence that most first time novelists just don’t. Whew! I had to get that off my chest.

    Moving On.

    Thanks so much for posting on this subject. I’ve been doing a lot of research on this lately. Everybody has a different opinion, it seems. It is good to hear from someone whose business it is to know these things.

  • Bradley Robb

    Hi Lucienne,

    Thanks for the wonderful post on word count. Unfortunately, your economic discussion regarding eBooks is a bit off mark – specifically in the notion of initial cost with regards to the P&L statement. While the creation of a book is undoubtedly expensive (more so than most writers and readers are aware), the reflection of that cost is often misappropriated into the price of eBooks. Publishers tend to attribute cost in an absolute manner – attempting to price each format as if it were bearing the total production expenditure.

    That is, if a book cost $500,000 to acquire, edit, format, and finalize for publication, the current pricing structure assigns all of that cost to each format, hoping that each format will have a proportionate number of sales.

    For publishers, this is an ideal system. The current pricing structure for the flagship product – the hardcover – has been time tested to ideally cover that initial cost in the first run. Every subsequent printing or reformatting is thus entered into a lower cost and higher profit yield.

    As an example, if a publisher assigns an initial print run of 10,000 hardcovers to a new title and estimates a 25% return rate, and the book meets those sales, the publisher will have earned a profit on cost at 7,500 sales. This profit will, of ideally, cover not only the costs of production, but also those incurred in the return and consignment or destruction of the 2,500 unsold copies. The P&L statement is thus balanced out.

    As often noted, eBook are saddled with significantly fewer costs, not only in the printing but also in the shipping and return cycles. Those are the immediate benefits to publishers, and are generally reflected in the pricing levels that Macmillan (and now Hachette and HarperCollins) are looking to push on Amazon.

    The problem with eBook economics arise when the current markets are examined. eBooks and print books serve relatively exclusive markets – that is, the sale of one format does not necessarily cannibalize sales from the other. Several studies have shown that sale (even the piracy) of one format actually has a correlated positive influence on the other, giving credence to old economic cliché that a rising tide lifts all boats. Increased eBook sales in turn create increased print sales and vice versa.

    Because the initial print run of a book is designed to achieve profitability against initial costs, and since eBooks frequently sell to “new” consumers (those not relied on to achieve profitability in a print-only market), all eBook sales are unaccounted for profits, a cash buffer if you will. This is evident by looking at the converse, if publishers were including eBooks in the P&L statement for a particular title, the whole sale price of the print version would drop. However, the 5% current market share of eBooks has not resulted in a 5% drop in the price of hardcover books.

    The motives for MacMillan’s actions seem to be less concerned with cost sharing and more about buttressing future profit margins on print books. As you noted, Amazon was selling numerous titles (outside estimates put that figure as high as 25%) at a loss. The concern amongst many was that if Amazon managed to achieve a statistically significant sales monopoly (rather than a mere mindshare one), future eBook sales might actually cannibalize print sales and Amazon would have a much stronger bargaining position.

    The increase in price to be reflective of current print edition ($12.99 – $14.99 for hardcovers and lower prices for trade and massmarket editions) is thus less about covering costs for the production of eBooks and more about maintaining the status quo for the print-only P&L statement. The data shown by Verso Digital’s own study shows that potential eBook sales will fall from around a potential 62% at $9.99 and under to around a potential 35% at $10 to $12.99 and a measly potential 22% at $13 to $14.99. That is 2 out of 3 customers are willing to buy an eBook for less than $10, but only 1 in 3 at $12.99 and less than 1 in 4 at $14.99. These prices turn customers away and they are the very reason why Amazon used the $9.99 price point as an advertised loss leader to spur Kindle device sales.

    Pair this with the fact that MacMillan is earning less money per title, and the net result is that MacMillan eBooks will earn less per title and sell at a significantly lower volume. MacMillan isn’t worried about this, because eBooks are unaccounted for profit, buffer earnings, and they’re willing to work to preserve the print market. If they happen to “condition” customers to expect higher prices for eBooks in the meantime, than so be it.

  • Wolf Lahti

    Hmmm. This directly contradicts everything I’ve been hearing from publishers, at least SF and F – namely that they want epic-length stories, and preferably those that can be made into a series. Me, I’ve always been of the mind that a story should be told in as many words as needed, no fewer and no more.

    As far as Jonathan Strange & Mr. Norrell goes, I felt it was 200-page story told in 900 pages.

  • Wolf, publishers do want books that are epic in scope, but not so much in size. Ask many authors these days and they’ll tell you their publishing houses have been telling them to keep the wordcounts down.

  • Hmmmm. Bradley. I think your math is a little off there. Using your estimate of a $500,000 initial cost of the book, that 10,000 copy initial run if it sells out COMPLETELY — no returns — only generates, at today’s prices, $279,500, barely half that initial cost. The other thing is that sales of books at cover price have to generate profits for bookstores, too. So publishers are getting less than that 27.95 per book that I used as my figure above. Publishers actually only get back 60% of that price point to offset their costs. And for most books, that 10,000 book sell through in hardcover is high. So the costs for a publisher are a bit more than you’re indicating here, and it certainly does not follow that ebook sales are mostly profit. Hardcover sales need to reach nearly 30,000 copies for publishers to earn back their entire investment, and that doesn’t happen with most midlist books. It might make for a nice argument to frame things the way you do here, but it’s not accurate.

    Lucienne, it’s great to see you here. Thanks so much for a wonderful and informative post. Great stuff.

  • Bradley Robb

    Hi David, that number was just an example to illustrate how large a P&L statement can be. I should have clarified that.

  • Bradley Robb

    (hit return too soon) As you pointed out with your math, the current industry setup is that publishers purchase books with the hope that they will be a home run, a method that is destructive to the midlist. The current pricing method is the exact opposite of what basic economics espouses – publishers are pricing based on cost rather than costing based on price. This habit is then reflected in the pricing of eBooks and thus mitigates the potential good that eBooks can have while attempting to preserve the status quo – a system many a midlist author has rallied against.

  • What would be the price they shoucl cost on?

  • Hi Bradley, just out of curiosity, who are you? How did you come by your figures?

  • RE e-books: as David points out, publishers aren’t counting on making their profit on one format alone, so why would the entire cost be attributed to a single format? Publishers count on not only original releases, but subsidiary rights like large print, book club and e-book, which are generally held by the publisher. Sometimes, publishers make offers attractive enough that agents and authors grant other rights, like translation. The PNLs run and the offer made are based on =all= of the income the publisher anticipates for the book.

  • Welcome to MW, Lucienne and thanks for the great post. Here’s the question: Does word count ever become a make or break issue with books (assuming the word count isn’t horribly off (ie 300,000 words or something equally ridiculous))? I understand that if the writing is fantastic, word count will be worked out one way or another, but what about a good writer who writes a good book but it’s too short or too long? Will that ever influence things or is it just a matter of “Yes, we’ll buy it but add/shave X amount of words”? Hope that was clear. :)

  • Hi, Stuart, thanks for the welcome! There are absolutely no hard and fast rules, just guidelines that if followed give you the very best chance of appealing to a wider range of publishers. For example, a young adult novel I represented was rejected by one publisher a few years ago because it was 80,000 words and the line topped out around 60,000. (They’d reconsider if the author cut 20k words.) I went on to sell the book at auction, so others felt differently. Might the auction have gone bigger if we’d had a fourth participant? Yes. However, the book still sold. That’s not always the case. It depends how far off a novel is in one direction or another, how excited the publishing house is about the book and whether they feel they’ll be able to sell the novel in sufficient volume at the price they’ll have to charge. Some retailers have flat out told publishers that they can’t or won’t sell hardcovers, for example, that are above a certain price point. Bestsellers can break the mold, but bookstores won’t stock books (or not many anyway) that they feel are prohibitively expensive for their consumers.

  • Thanks for the information, Lucienne. The way publishing houses are cutting costs these days, it’s understandable that word counts would be affected. I, too, have been hearing that authors need to cut words.

  • Beatriz

    Welcome, Lucienne. Great post!

    As a reader I’ve encountered the too-short book a few times and each one has left me feeling cheated. It has nothing to do with page count, it has everything to do with finishing a book in an hour or two and tossing it aside, thinking “Man! I spent money on that? I could have bought David’s new book and it would have entertained me for days!”

  • Lucienne, thanks for visiting and providing some accurate insight on the economics. The word count information is especially useful.

    Bradley, it sounds like you’ve some knowledge of the industry. For a better understanding of specific publishing costs, you might want to check out Tobias Buckell’s blog during the Amazon vs Macmillan problem. http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-longer-for-sale-via-amazon/ The post is a little long, but jam packed with great info using reasonable examples. Have fun.

  • Thanks, Carol, Beatriz and NewGuyDave! Dave, that’s a great link that sums things up very nicely.

  • Tom

    I must be weird, but I love shorter books. I recall the old “Hawk and Fisher” series. I loved them. Very short, but packed with action and adventure. Of course, that was back in the 80s. I just wish I could teach myself to write that short.

  • As a P.S. to all this, an article came out today in The New York Times, “Math of Publishing Meets the E-Book.” A must-read for all those interested in the subject: http://www.nytimes.com/2010/03/01/business/media/01ebooks.html

  • Is there no hope for a paranormal romance that comes in at 155,000 words then? I did my research and the first novels of other paranormal romance authors were around 130-150,000 words so I thought that this might be alright, but clearly it isn’t! I doubt I could cut 55,000 words without losing a heck of a lot of the story. It’s quite an epic tale, both plot and character driven, so it would be very difficult to chop out 55,000 words to bring it down to 100,000 and I don’t think I have the heart to destroy the story that much.

    I do have two other novels written in the 120,000 word ballpark, and another around 90,000, but all of my focus last year was on this novel, which turned out at 155,000 so I’m only on second drafts.

    Of course, reading this post, I’m now seeing why I haven’t heard back from The Knight Agency after a month. The editor probably had a heart attack when she saw the word count!