Swimming Pool of MoneyWe all know that self publishing your book is straightforward and hence a very easy way to get your story out to readers. Whether you decide on an ebook version only or an additional paperback POD (Print On Demand) version, it takes only a matter of days or even hours before you book is ‘out there’.

Then comes the potential to fall into a trap. And it can be quite an expensive trap as well. Most authors will know that the most logical places to publish are with Amazon Kindle, Createspace and then to have your book available in electronic form via a number of other online retailers such as Apple, Sony and B&N, publishing with Smashwords is almost mandatory.

But here’s the rub. Now that you have your book on sale, you will have to wait until you sell enough books to reach the minimum amount before you can be paid. In Kindle’s case this can be complicated as there are different levels under different circumstances and vary from $10 up to $100. Smashwords at least have an option to be paid by Paypal. (Why Amazon cannot pay by Paypal is a mystery. Well, perhaps not. Read on.) However Smashwords’ payment conditions are just as complex and range from $10 – $75 minimum.

Then there is Createspace if you have published a paperback. The minimum is $20 -$28. However, if you live outside the US, direct bank deposit is not available,  nor is Paypal, and as a check can cost up to $25 to cash outside the US, all your money has gone. In fact you probably just lost $5. So by only publishing with the three main distributors, you will need to generate somewhere from $50 – $200 before you see a cent of your royalties. That is quite a few books to be sold. Then if you do sell enough books to get over the minimum and be paid, you have to do it all over again.

Why I mention this, is because I was recently approached by another online ebook retailer who wanted me to have my books listed for sale on their site. Good news one would think? Well, a quick read of their Terms and Conditions, (Now you all read those, don’t you?) clearly stated that that their minimum balance for the payment of royalties was $35. Added to this, royalties were only payable 60 days after the end of the month in which the book was sold. When I checked out the bestselling book on their site, I discovered it had only been viewed a few hundred times. So how long would it take to see any money? I said no thank you of course.

To be perfectly frank, self publishing was never devised to help authors. It was designed to make big companies bigger and richer. Of the now tens of thousands of books being self published, how many of their authors actually sell enough copies to get over the minimum balance before royalties are paid? Answer? Not too many. Just check the sales ranking of some books and it’s an easy calculation. Check the number of reviews some bestsellers on Smashwords have received and you’ll be surprised at the lack of them.

My point is that there are swimming pools full of money now in the hands of these self publishing companies that has not, and may never be paid to authors. I can also quite easily be persuaded that this was always part of the business model of these companies, otherwise, why wouldn’t they just pay authors by Paypal at the end of each month no matter what the balance?

Because the amounts are too small? No way! I receive payments from other sources, including very large companies, by Paypal for often very small amounts on a regular basis without a problem. As little as $2 in some cases. No, this is about Amazon, Kindle and Smashwords along with a host of other book distributors who do not have an author’s interest at heart whatsoever. Only in pocketing your unpaid royalties.

So you may have thought self publishing was such a wonderful idea. But for who?

The Self Publishing Money Trap
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37 thoughts on “The Self Publishing Money Trap

  • 25/08/2011 at 3:55 pm
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    Excellent article, many thanks. I’ve wondered the same thing about these payment systems, and they will continue to rake in a fortune in our royalties until they’re forced to change. So I suppose we have to wait until someone with some power starts to feel ripped off.

    Thanks again,

    Chris

    • 25/08/2011 at 4:00 pm
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      I can’t see a self pubbers boycott happening unfortunately Chris. :( But one item I didn’t mention in the article was that Apple is probably the worst payer. About 4 months after sale! So they are all in this together.

      • 25/08/2011 at 4:26 pm
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        For sure, and it’ll take years before the outcry builds up to a sufficient volume. Thanks also for the heads up about Smashwords – I’d never heard of them (I only want to worite fiction!!!) but will get my book on there asap.

        All the best,

        Chris

  • 25/08/2011 at 4:05 pm
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    An important, but unfortunate warning. These are certainly things to consider when opting for self-publishing. Something I never actually considered, never even making the minimum for payment and then never seeing the money that is owed. In these cases the big companies are just keeping all the profits from the author’s hard work. Sad.

  • 25/08/2011 at 5:19 pm
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    Self publishers need to form a Self Publishing Association. Class action lawsuitsare the only things that will make the big guys behave.

    • 25/08/2011 at 8:10 pm
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      Self Publishing Association. Where do I sign up Louise?

      • 28/08/2011 at 3:22 am
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        Sign me up as well!

        I use Payloadz for my Supernatural Study Guides, and they don’t bat an eyelash at 2.50 sales, paying immediately via PayPal. So it does support the implication that the others are out for themselves.

  • 25/08/2011 at 5:40 pm
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    An excellent article as always Derek. I forwarded it immediately to a friend, who is about to leap into the pit. You say that there are millions of ebooks available on these sites, and from what I understand they sell for 99 cents a download. (please correct me if I am wrong here, I have never looked into this model)

    Does this then mean then, that until an author reaches his/her minimum payment baseline they don’t receive a bean? So all of these millions of 99 cents are sitting in a holding account in the Caymans, just waiting for Joe(hana) to sell the other fifty-nine copies?

    How corporately, evilly brilliant! In some perverse way you have to respect their cunning don’t you? And then yell this from the highest mountain until the bar-stewards are outed!

    (Love the coma article too… maybe getting back to you regarding that theme!)

    Thanks for the heads up…

    R

    • 25/08/2011 at 6:35 pm
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      That’s right Richard. Until an author sells enough copies to reach the minimum payment threshold they don’t receive a cent. But as you mention 99 cent model, this makes it interesting. On each ebook sale the author receives 35 cents royalty. So to get to say, a $30 minimum, they need to sell 88 copies. And for each publisher they are with.

      So if they use 3 outlets, really they need to sell around 250 copies.

      But until then, the publish has the money. Which sounds ok I suppose until you multiply this by the number of self published titles there are out there.

      Whichever way you calculate it, there are millions of dollars in authors royalties as yet unpaid. Perhaps in the Caymans as you say.

  • 25/08/2011 at 5:42 pm
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    No doubt the eBook sellers and aggregators consider those hanging balances in thier business models. Much like the sellers of gift cards count on a certain percentage of non-redemption. If I’m over-wrought about the ten dollars sitting in my Smashwords account, things must be going worse than I thought!

    The other end of the spectrum would be worse. If I got paid every time a book sold, I would end up with carpal tunnel syndrome much like Jerry Seinfeld with all those royalty cheques from the ‘Super Terrific Happy Fun Hour’ in Japan.

    Okay, sales aren’t quite there yet, but if that’s still an issue for me down the road then I’ll likely be back on some design/construction team while trying to write evenings.
    Hmmm, perhaps I’ll go take a look at Whizzbuzz…

  • 25/08/2011 at 5:53 pm
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    Great post and fair argument, Derek. I think it also needs to be pointed out that traditional publishing payouts are typically even more nebulous and infrequent.

    In fact, if you’re given an advance of a couple of thousand $$ and your book doesn’t do well, you might not see much for years until the advance is paid out. Furthermore, your book may be pulled from shelves before it can build momentum at all. Granted, you’ve been given some money up front, but there’s a ceiling in place that you have no control over. At least in DYI publishing your book has as long as you’re willing to give it to earn its keep.

    Great discussion!

    EJ

    • 25/08/2011 at 8:07 pm
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      Exactly why I stay independent EJ. I may kick, scream and complain, but I think far less than if I was being told what to do and when to do it, and all for a pittance.

      • 26/08/2011 at 7:48 am
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        Hear, hear to that! Rather poor and independent than poor and a slave!

        Great article by the way, thanks.

        Henk (@tdaonp)

  • 25/08/2011 at 6:31 pm
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    Derek:

    This could be circumvented by opening an account online in a large American Bank then transferring funds when you so desire. Being careful to read the charges for the the fees- many have monthly service charges unless you have a direct deposit, transfer tiny minimum to savings etc… email me and I can help you with a free method to recieve the funds – can’t fix the long time wait they hold the money to pay us. Only way around that is to sell more books.
    I’m all for a indie writer’s guild if that offers some “klout” :-)

    Caroline Gerardo

    • 25/08/2011 at 8:06 pm
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      Thanks Caroline. I can assure you that there is no shortage of banking here in Switzerland! Getting a US account is not really a problem. What is though, although I didn’t mention it in my article, is the withholding tax that Amazon and Smashwords are legally obligated to hold on all non-US royalty payments. So there goes 30%!

      The IRS have been overwhelmed with non US authors trying to get their TIN to avoid this, but as I have discovered, they are not issuing unless your income is ‘substantial’.

      My solution for me has been to put all my royalty payments on hold (filling Amazon’s coffers even more!) and only request payment once per year. Then I claim back the withholding tax when I make my tax declaration here in Switzerland.

      An awfully long and complex solution.

      • 26/08/2011 at 7:00 am
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        Strange, I had no issues requesting a TIN despite the fact that my book isn’t even available (income zero).

        • 26/08/2011 at 7:48 am
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          It was some years ago I applied Jeroen. I might see if it’s worth applying again. Thanks.

      • 29/09/2011 at 1:14 pm
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        I had no trouble getting a TIN last year. Well I did have to get up at 5:30 AM to travel to my nearest US Embassy, stand in the rain for an hour and pass through three security checkpoints in order to get a notarized copy of my Passport.
        The US Embassy also only gives change if you pay your fees in US$ so unless one has the exact amount in Euros they also keep the excess. Luckly I counted out my loose change and had the exact fee.

        The same thing happened to me a couple of years ago when I tried making money for Google Adwords Ads on my site. It took me nine months to earn the $100 minimum payout. So Google must also have many millions sitting unclaimed in a bank somewhere.

        • 29/09/2011 at 1:21 pm
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          You might inspire me to try again Lance. All I need to do is wait for a rainy day!

          But it was some years ago now, and at the time of a fight between the US and Switzerland over tax evasion. Maybe my timing was bad.

          Thanks for the tips.

          • 06/02/2012 at 3:33 pm
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            I applied for and received a TIN (also from Switzerland) around the time you posted this, Derek. It was no problem… though slow and the form is a but curly.

            Once I sent it to KDP and CreateSpace it took about 1 week to get a response. Great service.

            Also, a tip on the CreateSpace front, you can ask then to hold royalty payments. When you have accumulated enough to make a US cheque worth it, then release payment to yourself.

  • 25/08/2011 at 7:48 pm
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    Is there ANYTHING which is not designed to get money from the ordinary Joe into the hands of Big Business?

  • 25/08/2011 at 8:40 pm
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    This is pretty common with many (most?) companies. I assume there are fees involved with sending out payments. I make money from Google Adsense and the minimum payout is $100 there. It’s usually in the $50 range for the various affiliate programs on the web. I don’t see it as a big deal since the money keeps rolling over, month to month, until you sell enough to reach the threshold. If anything, maybe it’s an incentive to sell more, eh?

    If self-publishing is a threat to the wallet, I think that’s more likely to come from the various companies that want to “help” you get your work out there. Some of them charge upwards of $1000 for things you can do yourself.

    For the record, I doubt Amazon will ever use Paypal since it’s owned by eBay, Amazon’s arch nemesis.

    • 27/08/2011 at 2:11 pm
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      Thanks for the heads up on Paypal Lindsay. Perhaps Amazon are big enough to start their own payments system?

      The minimum payments in themselves are not the real problem. As you rightly point out with Adsense. But it is the amount of money that is now ‘locked away’ that causes concern. There are undoubtably 1,000s of accounts that never (or rarely) make it to the minimum. 1,000s of Blogger users with very low traffic being a good example. A tidy profit.

      I wonder how much money Google have tucked away just from unpaid Blogger Adsense accounts?

  • 26/08/2011 at 8:13 am
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    Great insight into a mysterious process. I have seen a lot of hype about how great self publishing is but this is a great article to explain the pitfalls too! Thanks W.C.C.

  • 27/08/2011 at 1:23 pm
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    Hey Derek!

    I read this article a few times, part of me agreeing, part of me disagreeing. But in the end, I must say that you are quite right with the information here. Self publishing is a great option right now… but only for those who have it planned out.

    When you self publish, the first thing you need to realize is that you are now a business. Your product is your book and with any product and any business, there is expenses. An author must research all expenses and come up with a plan to make sure their book can and will be profitable.

    See, I live in the US, so I haven’t had any problems with the payment situations you’ve listed. I get my deposits monthly from KDP and Createspace, without a glitch. And Smashwords is nice because you can buy ISBN’s for your books without paying… they’ll deduct it off your royalties.

    I agree that the time length for most of the vendors is terrible. That’s why I prefer readers to go through KDP for my ebooks – Amazon at least pays in 60 days. But even then, remember, we have to learn how to budget ourselves to that point. The first two months a little rough, waiting for a payment. But once it comes, it’s a monthly deposit…

    But for those who aren’t in the US, I can understand how tough it could be. My hopes are that as self publishing grows, so will the opportunities for those abroad.

    NOW, one thing I have been tearing myself apart for for a while is the paperback costs of books. It’s basically free to upload to KDP. But for Createspace, there’s all these little costs that eat away your future revenues and profits. Right now, in my basement, I have a small inventory worth over $300 in paperbacks. I cringe each time I see it.
    Now, do I sell paperbacks? Yes. I get requests each month for authographed copies. I sell some on Amazon too.

    But my plan is this: for my next book, it will be released as an ebook only. Once the ebook profits are enough to cover the initial cost of the ISBN, upgrade fee, and a small order of books to have, I’ll sign up for a paperback. This way I’m not sitting on my own money.

    But you are right, self publlishing can get expensive, and fast. Those who want to do it – who read the stories of all the authors making money – need to pump the brakes and look at the potential cost of everything too.

    -JB

    • 27/08/2011 at 2:01 pm
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      Great points Jim.

      Indeed if you are serious about self-publishing, you are in business, and it involves damn hard work. The writing is the easy part I think.

      Also your point about releasing an ebook first is very logical in the current market. Although I have released both at the same time up until now, I really think the next will an ebook first.

      Thanks again for your contribution to the discussion.

      • 27/08/2011 at 2:19 pm
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        I think some people feel you just upload a book and wait. And that’s where the pesky expenses and costs can sneak up and bite them.

        This is all about a long term strategy.

        The fact of self publishing does not make it easier then going the traditional route. Both are tough. Both have ups. Both have downs. It all depends on what the author wants today and tomorrow.

        -JB

  • 31/08/2011 at 6:41 am
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    Great post, as always, Derek. This is something I actually wasn’t aware of, and I’m currently in the final stages of editing my book for release in October. I’m living in the UK, and so this definitely applies to me. And as much as I can respect the genius from a business sense, I’m shocked at the reality of it.

    I think I may have to start researching US bank accounts and TINs.

    • 31/08/2011 at 10:45 am
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      It’s always glossy on the outside Daniel. All the nasty stuff is hidden in the fine print of the terms and conditions. Which of course we usually only read when trouble strikes. Good luck with your book. By the way, I’m not sure, but I believe by working with Amazon UK, you might get an easier ride. Worth checking out.

  • 06/09/2011 at 8:45 pm
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    Anyone who has written a book already has put many, many hours into the project. What’s another few hours to upload the thing to a few e-book sites? I guess I just don’t see the downside. Most of us have family and friends who would love to read our books, and I’m very glad that Amazon and Smashwords are making this possible without the ridiculous costs charged by the vanity publishers — now, THERE’s a target for your indignation, if you like!

    You can’t expect a business to run itself like a charity. Let Amazon (or whoever) keep their ten bucks (or whatever) — I think, quite frankly, that they have earned it.

    That being said, I must confess that I have had eight novels and a novella published by Penguin Putnam. So I have absolutely no right to complain about anything.

  • 29/09/2011 at 12:30 pm
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    Smashwords is not too bad. you need $10, and you get that fairly quickly if you have a reasonable book. The big problem is if you do not live in the US, and then it is the IRS that makes it hard to actually get that money without them taking a 30% chunk out of it.

  • 30/09/2011 at 12:50 am
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    As with most things in life, nothing is set in stone. Self-publishing is not for everyone. As a matter fact, it is for the minority. But there are several forms of self-publishing and benefits of each one. Additionally, there are several paths to traditional publishing and benefits to each.

    For example, my first book was self-published. Between Amazon, local book stores where I travel, and back of room promotions where I speak, I have sold over 8000 books in 2 1/2 years. With my percentage of profit being just over 80%, that makes my income from those sales very substantial.

    On the other hand, from the average per-book royalty from traditional publishers for first books, I would have to have sold somewhere between 100,000 to 180,000 books to have the same profit.

    But few will promote at the levels that I do, so as I say, it is not for everyone. But there are good reasons for self-publishing.

  • 10/11/2011 at 8:13 pm
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    Thanks for bringing this to my attention. Never would have thought of this otherwise. Didn’t even sound like a problem till the end of the article. Good points!

  • 10/12/2011 at 12:59 am
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    You were right. I’m ashamed to say it but my book was 99 cents on Amazon and I didn’t sell enough copies to even surpass the $10 mark before I finally pulled it. At the 99 cent price point, it just wasn’t selling enough fast enough for me to ever get paid. I was going to revise it but it’s on the back burner for now. Anyway, Amazon kept the money I made from the sales.

    You were right.

    • 10/12/2011 at 3:45 am
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      If you’re not doing anything else with your book, why on earth did you pull it? More people are buying Kindles and other e-readers every day. Their relatively small percentage of the book market is going to jump this Christmas when everyone opens their Kindle Fires. If I were you, I’d put it back up and be patient.

      You can read about my own self-pub journey at http://www.bestbyfarr.com. It has been amazing – at least to me.

      Diane Farr

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