The entertainment business is kind of crazy. You might have already gotten that impression, what with the La La Land fiasco at the Oscars last Sunday and the ability of the Kardashians to prosper in television work. But make no mistake: that special kind of boogaloo applies in spades to the book publishing world, where editors are hired and fired on seeming whims and everybody is looking for the Next Big Thing. It’s how sparkly vampires and BDSM fanfic end up on the best seller lists, and ungodly sums of money get thrown at projects that never see the light of day. The truth is, like in Hollywood, nobody really knows what’s going to work–and in a fickle market, where traditional publishers are struggling to find their way, any tentpole book can be a huge gamble that can quickly turn into a disaster. Just ask Simon & Schuster after they published Hillary Clinton’s last tome.
That’s why I nearly shot coffee through my nose when I heard that Penguin Random House is shelling out north of $60 million to Barack and Michelle Obama for a combined two-book deal:
“We are absolutely thrilled to continue our publishing partnership with President and Mrs. Obama,” Penguin CEO Markus Dohle said in a statement, according to The Associated Press.
“With their words and their leadership, they changed the world, and every day, with the books we publish at Penguin Random House, we strive to do the same.”
Okay, I get it–the Obamas are superstars, particularly amongst the New York glitterati, and I’m quite certain that they’ll sell truckloads of books to their adoring fans. But $60 million bucks worth? That requires a pretty heavy suspension of disbelief, and here’s why.
For those not familiar with how a publishing contract works, it goes something like this: A publisher wants to buy your book, so they offer you what’s called an advance against royalties. Basically, the publisher thinks it can sell enough copies of your book so that eventually your share of the cover price of each book sold will equal or exceed that advance. This is important, because the author gets to keep that advance whether or not the publisher sells enough books to cover it. That’s why big advances are harder and harder to come by these days, especially for newer authors.
Royalties are calculated as a percentage of the cover price of the book. Using the Obama example, let’s just assume that they have a hell of an agent and they negotiated a 15% royalty for each copy sold. Let’s also assume that each book sells for around $20 per hardcover copy. That means Obamas will take home $3 for every book they sell. Divide that $3 into $60 million, and they’ll need to sell 20 million books just to earn their advance.
But it’s the Obamas, you say. Surely they’ll be able to manage that, right? Well, it turns out that Barack Obama already has a publishing history with his books Dreams From My Father and The Audacity of Hope (whether or not he actually wrote them–but that’s another story). Both of those books sold a combined 4.650,000 copies–far short of our 20,000,000 figure. So what on earth makes Penguin Random House think they’ll ever be able to make that money back?
Oh, sure–there’s book club sales, e-book sales, foreign sales, what have you. But those only reduce the price per copy of each book, and with Amazon and the other deep-discounters selling the book way below $20 per copy we used as an example above, that’s only going to make it even harder to earn back that $60 million. In short, the likelihood of the publisher making a profit on this deal is extremely small.
So why do it? Maybe the people running the show think the prestige of having the Obamas in their stable of authors will help with the sales of their other books. Maybe they just want to write off the loss. Who knows? But it’s probably going to make it a lot harder for lesser-known authors to make money off their work with all of the cash for acquisitions going to the former president and first lady. That’s the price of doing business with celebrities, I guess.
The thing is, I firmly believe that the Obamas already know this. You know how? Because if they really thought they could sell that many books, they’d bypass a traditional publisher entirely and just distribute the books themselves. Think about it: they could cut the price in half to $10 per copy, and if they sold 20,000,000 copies they could still pocket $200 million! But they know there’s no way that’s ever going to happen. That’s why they’re going to take the $60 million and run.
On the bright side, we can only imagine how much this is annoying the Clintons.