About once every three months I get to be really depressed for a few minutes, and then really proud for a few minutes. O’Reilly, the publisher that released my YouTube book, sends me quarterly royalty statements. I just got one of those statements this morning.
This past quarter I sold 295 copies of my YouTube book. After two years of being available, that’s not too bad. The book sells at a retail price of $29.95, so that’s $8,835.25 for 295 copies sold. That means I’m taking everyone out to dinner at Red Lobster right? Hah, no.
For those 295 copies of my $30 book, I received $119.46 in royalties. That’s 40 and a half cents per copy. Of a $30 BOOK!
This is where that moment of depression sets in every three months.
Had I published that book through DFTBA Records – the record label I co-founded with Hank Green almost two years ago – those same 295 copies, retailing for a total of $8,835.25, would have paid me $6,184.68 cents. That means I would make 50 times more (that’s over $6,000 in this example) money per book had I published it with DFTBA Records.
DFTBA Records artists are paid between 60-70% of retail price for their releases. Yes, DFTBA does take a cut of every sale, because DFTBA has bills to pay in order to offer the valuable services that we do; bills like rent, and electricity, and server/hosting packages, and we have to buy all those pretty padded envelopes, and my salary…
But how O’Reilly (or any other large book publisher) can justify taking 98%* of retail on my book is just beyond me. I can’t imagine the overhead and waste and inefficiency of a company that needs to take 98% of profits earned by their artists and authors. Of course, some of that money goes to advertising and paying Barnes & Noble to face the book cover out on its shelves instead of the spine, etc, and a small distribution company like DFTBA Records can’t offer that to our artists. But most of our artists aren’t even interested in that.
That’s when the moment of pride sets in. I just finished sending out DFTBA’s payroll for last month. We paid out $48,799.42 for last months sales alone. That is an astonishing number for a company with no advertising or marketing department, no venture capital, no paid celebrity spokespeople… it’s just me and Hank and two dozen of our friends doing something we’re all passionate about. Something that enhances not only our lives, but the lives of the people who decide to support us, both with their word of mouth, and their money. This kind of thing doesn’t happen often. And it’s amazing when it does.
* Full disclosure: my royalty percentage from O’Reilly is actually 4%, but O’Reilly calculates that royalty on wholesale prices, not retail. For this comparison to be fair, I had to use retail prices for both companies, at which point, my royalty cut averages out to 2%.
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{ 6 comments… read them below or add one }
Wow… thanks for the honesty and transparency. Great post, Alan!
You sir, are the man. Seriously inspiring sir. I wish to someday achieve a mere fraction of your self made success.
The transparency here really fascinates me and gives me that warm fuzzy feeling. Alan, your business practices are absolutely top-notch. If everyone ran their companies the way you do, the world would be a much, much better place.
@Brad Which begs the question… why don’t they?
This article both excites me and depresses me. Im currently in negotiations with an indie record label and from looking at the contract, I would be getting a similar royalty cut. However, after reading the fine print, it would turn out that I would not recieve a cent until the album was paid off. This is pretty normal for any indie record label, and I was pretty fine with that, until I was presented with the budget proposal. At first, when they showed me the big number, I was stoked (as im fairly certain they will never see this, it was around 45000). I found out that they were gunna charge around 10 times as much as it would cost on recording at the in house studio than at any other recording studio in the city (Vancouver Canada). I would need to sell 4500 copies before i would even see a cent.
So when I said that I was both excited and depressed by this article, it is to say that yes big labels with squeeze every cent out of you. But the small man can screw you over too. What excites me is that there are people like you who are able to coordinate, operate, and distribute while giving the artists what they rightfully deserve. You guys truely dont forget to be awesome.
I’ve heard a lot of writers make more in the commission for referring someone to amazon (and earning amazon sales commissions) than for the royalties on their books!
Especially now with the viable e-book saturation/options, a “known” online personality (Ala John/Hank Green) have a real shot at making a real living without a big house publisher/distributor, much the way Ani DiFranco did some years back herself in music. Imagine how well Ani would do if she was coming up now with the tools available!
Thanks for the interesting post. As a similar reference point, I know my father’s book is the “bible” in his technical field (and used in universities) and doing his taxes I see he only earns hundreds of dollars a year in royalties.