Accounting for Authors, Publishing’s Forgotten Customers

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

authors customers direct-to-consumer ebook publishersOne issue I hear talked about a lot lately among publishers is the need to figure out who their customers are. It was a major theme at the recent Digital Book World conference in January, where Seth Godin mentioned it in his keynote address. Godin is in a unique position, being a marketer, an author (a very successful one) and also a publisher, and his views have been shaped by having worn all three hats.

The customers publishers typically identify first are their readers, the individuals who buy their books. And rightfully so, as those are the people who drive a huge share of revenue in the publishing business. (As I’ve discussed previously, I believe that the way most publishers think about their readers has to change, but more about that in future blog posts.)

Other customers that publishers tend to keep well in view are organizations like libraries and traditional or smaller online book stores. These, too, have been and remain major customers for most publishers.

A third category of customer includes the distributors and large online retailers that in today’s world often drive a major portion of publishers’ revenue as well, especially those that are both distributors and retailers (you all know who I’m talking about here).

But there’s yet another customer few publishers usually identify when prompted.

When I ask our publishing clients here at Biztegra to list their customers, they will usually include all the parties I’ve mentioned and maybe one or two more depending on how they categorize their revenue. And when I then ask to them quantify each one, I can usually get a monetary value quoted directly from a revenue spreadsheet.

By mapping all this out and developing marketing programs (and costs) associated with each customer category, we can get a pretty good idea of where the revenue is coming from and how much is being spent to acquire that revenue, the profitability of each and the potential to improve either the top or bottom line for each customer type. Ultimately, this lets us come up with programs to maximize both the associated spend and the revenue.

It’s only then that I ask the question, “What about your authors?”

And I usually get a blank stare.

I will then ask something along the lines of, “How much is an author worth to your business?”

The stare usually gets blanker.

The truth is that authors are one of publishers’ most important customers, but I’ve only once heard a publisher actually list them as one.

That particular publisher was also the only one that could put a dollar figure to its authors. When I asked the CEO how he had arrived at it, he told me:

It’s fairly simple. You take the back-list revenue and divide it by the number of back-list authors. That gives you an average value over the long term. And then you take the expected front-list revenue and divide it by the number of front-list authors for the first year. That gives you what a new author is worth to the organization. Add the two together and you have what a new author is worth to us over the short and long terms. If that number is getting higher, we are doing a good job.

(To be a little more accurate, you’d probably need to throw in a time-value-of-money/cash-flow-discounting calculation, but this was probably close enough.)

Authors are a major component in determining publishers’ success when building out a direct-to-consumer program. They provide not only the content that you sell to all your other channels but also the content that you use to help drive your direct marketing endeavors, not to mention the audiences they generate and sustain. If each author can bring 1,000 followers to a publisher’s program, the audience numbers get really big, really fast.

In today’s world, authors have more options than ever for how, where, when and with whom to publish their books. As Digital Book World and Writer’s Digest have found in each of the past three years they’ve conducted their Author Survey, the need for publishers to bolster their value to authors, such that authors would never consider self-publishing or publishing with someone else, is real and mounting.

Simon & Schuster nodded explicitly to this need when it launched its new North Star Way imprint a few weeks ago, which it says is designed to “offer authors an expanded suite of . . . services that extend beyond the boundaries of traditional publishing.

Are you treating your authors as the customers that they are? Are you creating programs and platforms to help them help you sell their books? Are you integrating their social programs into yours? Do you have programs in place to help your authors generate content you can both use over the entire lifecycle of a book? Are you helping them become better writers and better marketers? Are you finding authors that truly want to partner with you and providing the same partnership back to them?

It comes down to this: How much is an author worth to your business? And what are you doing to maximize your investment in each one?

The publishers that will be most successful in the future can answer these questions. Can you?

4 thoughts on “Accounting for Authors, Publishing’s Forgotten Customers

  1. Scott Walker

    Authors are publishers’ vendors, not customers. They supply raw goods to publishers, who then package them up for their customers (distributors, retailers, etc.). And readers are not publishers’ customers unless publishers are selling direct to readers.

    Traditionally, publishers existed in the middle of the supply chain.

    Yes, publishers need to view authors as valuable resources, but calling them \customers\ muddies the waters and leads to some incorrect assumptions about the true nature of the relationship between authors and publishers.

    Reply
    1. Murray Izenwasser

      Hi Scott,

      Thanks for the comment, bu I’m going to agree to disagree. I think that the way things are changing (and have already changed) if Publishers don’t start ‘selling’ to authors, the authors are going to be going somewhere else. And, yes, traditionally, publishers did exist in the middle of the value-chain, but can no longer sit in the middle if they are looking to continue to have thriving businesses. Publishers need to be selling to both sides – authors and readers – to not do so will lead to a slow spiral down. And maybe not so slow.

      Reply
    1. Murray Izenwasser

      Thanks for the comment Travis. Yes, using profit is definitely a way to value the author as one of your customers. As long as you can answer that question, track it over time, and then create programs to continuously improve it, you will be more successful than if you had not done so.

      Reply

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