A Matter of Infinite Hope

There are four words that book agents long to hear. An editor can wax on and on about how much she adores the novel or proposal you’ve sent her and about how well she would publish the book, but until an agent hears “We’re running our numbers,” he doesn’t dare tell his client that the house has moved from “interested” to “on the brink of an offer.”

“Running the Numbers” is code for, “I’ve been authorized by the editorial board to submit a request for an acquisition profit and loss report from the house’s business manager.” Because it is pure speculation, an acquisition P&L is much different than an “actual” P&L, which is based on the actual performance of a book. The acquisition P&L is a matter of infinite hope. The actual P&L is reality…and usually disappointing as only two out of five books published return any money to the publisher.  But, there is a science to the acquisition P&L too.

For example, when I was at Doubleday longing to acquire Steve’s second novel, I did quite a bit of work before I recommended we publish it. I already had about eight years of success and failure as an editor—like most…more failure than success—and had reached a high level of competent incompetence. All editors are essentially incompetent when it comes to guaranteeing the performance of a book, but like a good handicapper at Belmont Park with hundreds of thousands of dollars won and lost at the track, they learn how to pick the right horse for the right race more often than not.

Through years of trial and error pitching people like Tom McCormack, I’d figured out how to best position a project for a publisher in the shortest amount of time. Like high concept Hollywood, it’s a good idea for an editor to compare her project to previous successful titles that are in the novel’s genre and/or nonfiction category to pitch. Not too overtly schlocky, though. “It’s The Silence of the Lambs meets The Hangover!” will just get a lot of eyes rolling.

So when I went into the editorial meeting to pitch Gates of Fire, it went something like this:

“I have in a remarkable thriller (notice I didn’t say historical novel) about the crucial battle between Sparta and Persia that saved western civilization. It reminded me of Michael Shaara’s The Killer Angels and Patrick O’Brian’s AUBREY/MATURIN series in its “you are there” details, but it also has the narrative drive of a bestselling writer like Stephen Hunter.”

While you’ll notice that there is not one “number” in my description, the business manager, publisher, marketing director, and head of publicity would be thinking something like this when they heard this pitch:

–A Thriller! It’s commercial, not literary, phew!

The Killer Angels is Michael Shaara’s brilliant novel about the battle of Gettysburg that has sold millions of copies since its first release in 1974, if we can convincingly package and sell this book as akin to Shaara, we’ll have a sizable target market.

–Patrick O’Brian’s AUBREY/MATURIN books have also sold millions of copies since 1970, and they are about war at sea in the 1800s. So it doesn’t have to be Civil War to sell. Maybe an ancient battle is just the right kind of fresh to appeal to this genre?

–Stephen Hunter is a wonderful thriller writer who features a sniper (Bob Lee Swagger) as his lead protagonist and his sales numbers are very healthy…obviously there is a constant demand for military themed works.

A pitch like this can fast track a project at a publishing house because it communicates the range of potential sales the book could generate. And throwing in an in-house author (Doubleday was Hunter’s publisher at the time) tells the decision makers that they’ve published this kind of book before and have had success doing so.

So when the time came to “run the numbers,” I didn’t have to pull them out of thin air. The business manager checked on the sales figures of the books I mentioned and came up with a very healthy anticipated first print number on her own. So when I submitted the request to her with a number in the range she had already calculated, there was little questioning of the first print run I anticipated, the net sale, etc.

If on the other hand, I had characterized Gates of Fire like this:

“I have in a fascinating historical novel about an ancient battle called Thermopylae. In 480 B.C. King Leonidas of Sparta was concerned about the rapidly advancing approach of Persia’s Immortal army, which led to a mobilization of three hundred Spartan soldiers…”

You get what I mean? There is no way to adequately describe the experience of reading Gates of Fire and the last place to try and do that is when you are begging to get some doubloons out of the company coffers. What usually happens when an editor pitches a project without giving definitive comparison titles that have numeric subtexts is sort of an editorial Bataan death march.

The editor in chief will say something like “that sounds terrific, who wants to read?” And then some of the editor’s dutiful colleagues will raise their hands, agreeing to do backup reads on the book. Then the project will be on the agenda for the next editorial meeting. A week later, a discussion will ensue about the commercial viability of the project. If the consensus is that it’s a worthy book to publish, the conversation will inevitable lead back to finding comparison titles to use to estimate an acquisition P and L. In the highly competitive commercial fiction marketplace, an editor who loses ten to fourteen days going through this drudgery will have little chance of acquiring many “big” books.

Okay, so based on the pitch at the editorial meeting, but after the publisher and editor in chief agreed with my editorial assessment (you don’t have to read much of Gates of Fire before knowing you are in the hands of a master), the business manager ran an acquisition P and L within a few days of the novel being submitted. A group of us (Publisher, Editor in Chief, Business Manager) analyzed the P and L. I was then authorized to offer a compelling enough advance to secure Gates of Fire and another book by Steve for the Doubleday list.

So what does a P and L look like and how do you “read” it? Each publishing house has its own version, but they are fundamentally alike.  Here’s an approximation of one that I’ve put together.

Next week, I’ll go line by line and explain what each item and number means and how it is calculated.

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  1. Rick Novy on September 30, 2011 at 9:06 am

    What really interests me about this P&L sheet is how askew the expenses on e-books are compared to both paper versions. Really? $187,930 in overhead for electronic books?

    And the author earned $281,156 royalties on the hardcover while the publisher earned $161,116. BUT, for the electronic version the author earned $261,013 (Over $20K LESS than hardcover) but the publisher kept $487,700 in profits (almost twice what the author earned and over THREE times what they kept for the hardcover version).

    Something very wrong here.

    • Shawn Coyne on September 30, 2011 at 11:26 am

      Hi Rick,

      The P&L I included for this week is an example of an acquisition P&L, which is the best case scenario for a book anticipated to be a bestseller…one that can warrant a high price point in all three formats. That’s why I entitled this post, A MATTER OF INFINITE HOPE as the acquisition stage is the honeymoon for a project.

      Trust me. There is a reason why Warren Buffet doesn’t own any publishing houses. Most books published, even at the big houses, don’t get beyond a 10,000 copy distribution, let alone sale. Plus most books cannot justify a $30 price point. And most, yes most, result in red ink.

      It’s the big winners that make up for the disappointments. And you’ll see that because of the very competitive nature of the business, the publisher in my example had to pay $400,000 + over the projected earnout of the book to secure it for its list. I hope this example debunks the notion that a publisher can’t make any money if a book doesn’t earn out.

      Your insight is spot on, though. Over the next couple of weeks, I’ll try and give as wide a net of analysis re: P&Ls as I can and project what controversies about the new era of e-publishing at the big corporations may arise in the future.

      I think the only thing more difficult than being a writer, though, is being a publisher… I’ve been on both sides of the relationship.


  2. Paul C on September 30, 2011 at 3:09 pm

    The numbers are interesting. I’m also curious about your views on potential controversies with e-publishing. I don’t understand why the publishers can’t just deal directly with the Walmarts and other retailers as e-publishing becomes mainstream. Without authors, Amazon is just the middleman. The advantage of their warehouses and logistics becomes irrelevant. The e-books don’t require much shelf space in the retailers. Just a spot for promotional material that can be placed anywhere in the store, or taken home like advertisement.

    • Shawn Coyne on October 1, 2011 at 11:01 am

      All of your observations are spot on. The future is bright for the entrepreneurial author/writer. But the artist will have to learn how to put on a bunch of other hats in order to seize the reigns of her career. More to come in the coming weeks about all of these developments…

      • Jeremy on October 3, 2011 at 7:44 pm

        Thanks again Shawn, this is vital information. I’m humbled by how much work everyone has to do to get a book on the shelf. This makes me appreciate those who’ve gone to bat for me even more.

  3. Ronald Sieber on September 30, 2011 at 8:02 pm

    Reading this makes me wonder:

    should I shoot myself now for writing a historical nonfiction, or shoot myself after I’ve completed writing it?

    • Shawn Coyne on October 1, 2011 at 10:51 am

      Put down the gun! Nonfiction historical is very commercial and popular today. Think of Devil in the White City or Unbroken or Manhunt or Destiny of the Republic, all wonderful narrative historical nonfiction. Keep writing!

      • Liz Wallace on October 3, 2011 at 12:49 am

        I love writing and am working on several stories, one historical fiction and one science fiction. I also love short stories a la Kawabata and Joyce Carol Oats. Is there any hope at all or should I stick with my day job?

        • Shawn Coyne on October 3, 2011 at 5:48 am

          Hi Liz,
          There is a “market” for all kinds of stories and books etc. What is so exciting, and getting more exciting with each passing day, is the ability of writers who have been frozen out by the traditional gatekeepers to find a compelling readership for their work. The barriers to enter book publishing are crumbling. They are practically rubble right now. Keep writing! Don’t let external (your naysaying cousin or some guy writing on a website) or internal (far more insidious) resistance keep you from your desk. Do the work and enjoy the labor. The rest will take care of itself. The only way to become a better writing is to keep writing.

          • Liz Wallace on October 4, 2011 at 12:09 am

            Sweeeet! Thank you for the encouragement. Nice hammers by the way. Been a silversmith for16 yrs n I know a good crosspeen. Will get restarted on my writing about native American protagonists.

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