The “Big Five” publishing companies control approximately 80% of the trade book market. These five are Penguin Random House, HarperCollins, Simon & Schuster, Hachette, and Macmillan. Two of the five, Penguin Random House and Simon & Schuster, are in the process of merging, but the Department of Justice is suing to block the merger on antitrust grounds. Testimony at trial has provided a fascinating look inside the book publishing business. Here are a few major takeaways from the trial (supplemented with data from other sources):
- It’s tough to determine which books will sell. The CEO of Penguin Random House asserted in his testimony that the book publishing business is random (which is where the name “Random House” came from). Nobody knows the mix of attributes that will result in a book selling well. Thus, each book is a gamble.
- Only about 35% of books turn a profit for publishers.
- Just 4% of books account for 60% of the profits.
- Data from BookScan on the top 10 publishers finds that 66% of books sell less than 1,000 copies, and a mere 2% sell more than 5,000.
As noted above, book sales follow a power law distribution where most books sell way fewer copies than the average because a tiny slice of books sell a huge amount. This results in most authors making little to no money, some being able to make a decent living, and a small slice making a ton of money. Here are the top earning authors from 2008 -2018 and their estimated earnings over that period (source):
- James Patterson : $836 million
- J. K. Rowling : $546 million
- Stephen King : $259 million
- Danielle Steel : $231 million
- John Grisham : $192 million
- Jeff Kinney : $165 million
- E. L. James (Tie) : $153 million
- Janet Evanovich (Tie) : $153 million
- Nora Roberts : $128 million
- Suzanne Collins : $114 million
- Dan Brown : $111 million
- Dean Koontz : $101 million
- Rick Riordan : $91.5 million
- Stephenie Meyer : $75 million
- Ken Follett : $68 million
- George R. R. Martin : $60.5 million
- Veronica Roth (Tie) : $52 million
- Bill O’Reilly (Tie) : $52 million
- Nicholas Sparks : $46 million
- John Green : $45 million
- Tom Clancy : $35 million
- David Baldacci : $26 million
- Paula Hawkins : $23 million
- Gillian Flynn : $22 million
- Michael Wolff : $13 million
This is the very reason most writers are moving away from traditional publishing. The gatekeepers have their cash cows and allow few other writers into their stables. Traditional publishers have remained a myopic and inbred business group with no risk tolerance and little imagination. They fail because their long-used methodology for finding new writers is archaic and somewhat exclusive. This results in many “one-book-wonders” who, although talented, have little meaningful to say. Most major corporations and businesses have true R&D departments that are endemic to their systems. Traditional publishers depend on literary agents who, although independent, must cater to editors who are locked within this low-risk mindset. Yes, they want to merge, but only because it preserves their poor business practices, while maintaining earnings for them and the select few writers they publish.
Almost all thriller or fantasy writers!