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This is the second part of a presentation I gave to the German Book Office directors last week. Earlier sections of the speech can be found here. And we’ll probably be posting bits and pieces of this for the next week or so.

Although it���Ĵ�ý�s a bit more complicated than this, the survival strategy of commercial publishers is the ���Ĵ�ý�a few big books float the boat���Ĵ�ý� model. This is the idea that most books published by a house will lose money, or at best breakeven, but that every year a few titles will explode, far outselling their costs and generating enough revenue to keep the house afloat. You often hear publishers say things like, ���Ĵ�ý�we publish those kind of books so that we can do more literary stuff.���Ĵ�ý� That���Ĵ�ý�s a friendly way of saying that they need some obvious money making books to sell well, otherwise the publishing house would be screwed.

Anecdotally, it often seems that these ���Ĵ�ý�break-thru���Ĵ�ý� books are completely accidental. Like Jonathan Franzen���Ĵ�ý�s The Corrections or most any book that Oprah ends up selecting for her book club. ���Ĵ�ý�Unexpected successes���Ĵ�ý� pop up every single year. Nevertheless, from the top CEOs on down everyone feels the pressure of acquiring, or marketing, or selling, this year���Ĵ�ý�s ���Ĵ�ý�big book���Ĵ�ý� and reaping the profits that come along with these sales.

As a result, huge amounts of money are bandied about on concepts and names. Many of which don���Ĵ�ý�t work out so well. A few recent examples are listed at the end of the New York article, including the $8 million advance to Charles Frazier for Thirteen Moons, a book that sold approx. 368.000 copies, leaving $5.5 million of the advance unrecouped. My personal favorite is Dewey: A Small-Town Library Cat Who Touched the World, which is described in typical movie-pitch comparison style as ���Ĵ�ý�_Marley & Me_ meets The Bridges of Madison County in this heartwarming true story.���Ĵ�ý� Advance? One and a quarter million dollars.

Having spent so much on books like these, publishers are then obligated to spend a vast amount of money marketing and publicizing these big acquisitions. Granted, a good deal of the advance money is made up by selling translations rights to countries all over the world (a one-way street as I���Ĵ�ý�m sure you already know), but these titles are also expected to sell really well.

It���Ĵ�ý�s worth taking a moment here to look at the math and explain a bit about how book sales work in America. I believe this is pretty similar to other countries, but not entirely. In the States the big publishers have their own sales force and warehouses, both of which cost a pretty penny, but are necessary to ensure that a publisher gets the largest market penetration possible. (More on this when we talk about independent publishers.) Each of the different outlets publishers sell to���Ĵ�ý�wholesalers, independent bookstores, chains, Amazon, Costco and Sam���Ĵ�ý�s Club, libraries, etc.���Ĵ�ý�receive a different discount, usually in the range of 45-50%.

Sticking with Thirteen Moons, the retail price on the hardcover edition is $26.95, so, for each sale, Random House can expect approx. $13.75 in revenue. Leaving all subrights sales aside, and using New York���Ĵ�ý�s sales figure of 368,000, Random House made approx. $5 million in sales of this book. A huge figure for a lot of presses, but a number that���Ĵ�ý�s less than the initial advance, and definitely less than the total costs that went into publishing and promoting the book. I���Ĵ�ý�ll assure you that this wasn���Ĵ�ý�t the book that allowed Random House to do all their ���Ĵ�ý�literary���Ĵ�ý� breakeven titles this year.

Nevertheless, this book sold exceptionally well compared to many others. I was recently talking with a former editor at one of the big six publishers, who said that titles he acquired usually sold in the 5-7,000 range, far less than the 15-20,000 copies his bosses expected his books to sell, sales levels that would���Ĵ�ý�ve allowed the book to breakeven. He also said that he always thought his sales were incredibly low (publishers always, always lie about print runs and sales, so the numbers you see in print are inflated) until someone from another big house shared privileged sales info leading both editors to realize that most literary titles just don���Ĵ�ý�t sell very well.