I don't believe this has been addressed on your blog and perhaps that's because the answer is too long, but, I was wondering why it is that big brand name authors (JK Rowling, Dan Brown, Stephen King, Lee Child etc) don't self-publish their books instead of going with a traditional publisher that will keep 90% of the revenue from sales?
I understand that traditional publishers will get the book into the stores through distributors and handle marketing etc, but it seems to me that by self-publishing these authors would still make more money. Let's say Stephen King can sell 1-million copies through a traditional publisher, taking a 10% royalty. He could surely easily sell more than 100,000 copies on his own, through his website and Amazon, and therefore make more money because he's keeping most of the revenue?
I'm sure I'm missing something here, so your expert insight would be most appreciated.
What you're missing is a concept economists call opportunity cost. That's the cost of what you don't choose. If I do not choose to hire an assistant, the opportunity cost is what I would have earned if I'd spent my time making sales calls instead of filing, copying and tracking royalty statements.
When you earn a lot of money with work you do, it's smart to hire people who cost LESS than you and invest your time in things only you can do (ie the things you cannot hire out.)
The opportunity cost for self-publishing is writing time.
Particularly with big name (ie successful) authors, writing time is VERY expensive: the money they earn from the book divided by the number of hours it took to write.
If they use some of that writing time to do things like accounting, production, sales and marketing, they forgo writing time.
Doing the work of self-publishing instead of writing is expensive for them. MUCH more expensive than it is for a writer making less money.
If a writer makes ten million dollars a year, that's a nice paycheck.
If it takes 25 weeks of 8 hour days to write and revise the book the hourly "wage" is:
$10,000,000/(8 x 5x 25)
Ten million dollars divided by the number of hours it takes to write the book
(figure 8 hours a day, five days a week, 25 weeks)
$10,000.00/hour is your opportunity cost for every hour you forgo writing to do something you could have someone else do.
Now, you don't have to be a math genius to see that it makes a lot of sense to hire people who cost a whole lot less than $10,000 an hour to do all the things that aren't writing.
Essentially big name authors "hire" publishers to do this work. They "pay" by letting the publisher take a chunk of the ensuing royalties.
So why do they "hire" publishers instead of hiring a team to run a company that publishes only their own books?
First, they do it because self-publishing still requires hands on supervision of the work even if someone else is doing it. Reviewing 500 drafts of a cover, tracking down an errant shipment of books (because it's not just electronic books you'd need to deal with)....ALL of that costs you $10,000 an hour.
Second, if you hire your own team, you pay all the cost. By "hiring" a publisher, these big name authors only pay a piece of the cost. Other big name authors at the publisher are availing themselves of the warehouse space, the marketing department, the accounting department.
They've also realized there are certain aspects of being published by an reputable trade publisher, rather than self publishing that can't be quantified on a balance sheet: availability of reviews, access to the marketplace, retail relationships, editorial expertise.
The more successful you are, the more you focus on doing the one thing only you can do, and you hire people to do things someone else can.
Only JK Rowling can write Harry Potter. Only Stephen King can write his novels.
I think too that most of these very successful writers have figured out something pretty important: writing well and publishing well are two very different skill sets. It's hard to do two things really well.
On the other hand, this is EXACTLY why many writers have turned to self-publishing. They can earn more than what it costs them to publish their books.
Each writer has to decide what's important, where they want to spend their time, and their money. One answer is not right for everyone.