Book Startup Pitches a Novel Deal to Authors

 

"James Clear's first book, "Atomic Habits," was so successful it has been a New York Times bestseller for more than four years. This had him wondering if he could earn more on his next one.

"I'm not saying I wasn't satisfied," Clear said. "But there are a lot of options out there."

Clear recently signed a deal with Authors Equity, a startup primarily financed by writers that promises authors the lion's share of profits but won't pay them any advance. 

Clear also invested in the venture, but declined to say how much.

The startup's approach contrasts with that of the country's largest traditional publishers, which pay author advances and don't offer them the opportunity to own a stake in the business. It also runs counter to a trend seen in the streaming industry, where companies seek to attract talent with ever-larger upfront payments at the expense of back-end royalties.

Authors Equity co-founder Madeline McIntosh, the former chief executive of Penguin Random House U.S., said the startup is adjusting to the changing dynamics of the book market, in which some writers have more power than publishers.

Authors are now instrumental in the successful promotion of their books, from television to TikTok, McIntosh said. In the traditional model, writers essentially relied on their publishers for publicity.

U.S. book sales fell 2.6% last year to 767.3 million copies, according to Circana Bookscan, whose numbers don't include ebooks or audiobooks.

McIntosh said Authors Equity hasn't set a limit on how many titles it will eventually release annually but expects it to be in the realm of 25 -- far fewer than traditional publishers. "It's more important to focus on the individual author than getting big," she said.

Authors Equity will pay 60% to 70% of a book's profit to its authors, people familiar with the royalty payout said, a significantly larger slice than traditional publishers pay.

McIntosh and co-founders Don Weisberg and Nina von Moltke also have invested in the business, as have self-help writer Tim Ferriss and crime novelist Louise Penny. The size of their investments couldn't be learned.

Weisberg is the former chief executive of Macmillan Publishers and von Moltke previously served as Penguin Random House's president and director of strategic development.

Ferriss, the author of such bestselling titles as "The 4-Hour Body" and "The 4-Hour Workweek," said he had discussed profit-sharing with some large publishers but that their suggested offerings contained additional fees that made the contracts unappealing. 

He said the Authors Equity contracts are more straightforward -- and because the company will publish fewer titles, the amount of attention "to each author will be more concentrated."

Simon & Schuster, acquired by private-equity firm KKR last year, will ensure that the books published by Authors Equity are distributed to bookstores. McIntosh sits on the Simon & Schuster board.

"Atomic Habits," Clear's debut book, was published in 2018 by Avery, an imprint of Penguin Random House. Clear said his decision to switch didn't reflect dissatisfaction with Avery but rather his interest in exploring his options.

What attracted him, said Clear, is that "you make more money per copy and you get better distribution than via self-publishing."

A Penguin Random House spokeswoman declined to comment. In recent years, several other former Penguin Random House veteran executives also have launched imprints." [1]

1. Book Startup Pitches a Novel Deal to Authors. Trachtenberg, Jeffrey A.  Wall Street Journal, Eastern edition; New York, N.Y.. 06 Mar 2024: B.1.