This post won’t be news to most of you. If you already know everything there is to know about the Consortium, you can skip it altogether.

But I got an email this morning from an old blogging buddy, checking in. He started the message off by asking, quite offhand, if I had any interesting projects I was working on these days.

I read that first line of the email and thought, “I am going to blow his mind!”

Then I read the rest of the email and realized he’s no stranger to “ambitious.” He’s participating in some stuff at least as big as my experiment in open-art neo-patronage. So I didn’t get to blow his mind, but at least I could give him something interesting.

Here’s what I had to say:

You’ve probably heard by now that I’ve got a bestselling fantasy novel at Amazon. Taming Fire is selling several hundred copies a day. I’ve sold 30,000 copies since its release at the end of June. I’ve got over 100 days on the Top 100 Best Sellers in Science Fiction and Fantasy, most of that somewhere in the top 20. I’m currently ranked around 160th most popular book across all books sold at Amazon.

That’s my big exciting news, but it’s nowhere close to my most ambitious project. My big project would be my company, the Consortium. One subset of the Consortium is Consortium Books, the publishing group that produced my novel. I’m the head publisher, but we’ve got several professional editors, a couple graphic designers, painters and photographers for cover art, and a marketer/sales guy all pitching in.

And that’s really the emphasis of the whole company: collaborative art. We’ve discovered the amazing things artists can accomplish in the new (digital) market with very little in the way of resources, if they’ll just work together to fill in the blanks. Writers need cover art, musicians need lyricists, photographers need websites, and programmers need everything. (It’s astonishing how many people it takes to make a videogame.)

Right now, we’re a cooperative of artists. Long-term, we want to be an employer. My goal is to create a new patronage–to pay artists a living salary with all the benefits of a “real job” with the sole expectations that they pursue mastery of their craft, and share that mastery with their fellow artists. We’re using an apprenticeship model, we’re paying our artists for the production of the art (not for the commoditization of it), and that will allow us to release finished products into the public domain.

We’ll be able to support artists better than the current lottery system that the “labels” provide (whether we’re talking about record labels or New York book publishers or Hollywood casting directors), and we’ll be able to do it entirely without the arcane and deeply problematic copyright laws.

The only thing we’re lacking now is time and money, and the current success of Taming Fire, while it’s not exactly funding our grand plans, does suggest a real potential that we’ll be able to get things off the ground in the next couple years. It’s hard to wait, but it’s incredibly exciting to see the things we’re accomplishing even now.

I felt like that a pretty effective snapshot of the exciting projects that are keeping me too busy to even breathe, and I felt it was probably worth sharing.

I posted yesterday to complain about how busy I was. It’ll probably take me weeks to show up and post again, but in the meantime I wanted to brag about a couple of those projects that did get finished:

A Consortium of Worlds

A Consortium of Worlds is the new quarterly speculative-fiction short story magazine by Consortium Writers.

Coordinated, edited, and published almost entirely by Courtney and Joshua, I still got to participate a little bit in the publishing part when I taught them how, and in the writing part when I wrote an exclusive fantasy story that’s included in the collection.

Check out “The Bloodshield Betrayal” and some fantastic stories by our other up-and-coming writers for just $2.99.

Shadows after Midnight

I don’t remember if I mentioned it (though I’m sure Courtney did), but we also published Shadows after Midnight a couple weeks back.

It’s the second book in Courtney’s Christian fantasy thriller trilogy, The Demons of Saltmarch, and I enjoyed it even more than the first. With the setting established and focusing on a new protagonist (Auguren Peter), it hits the fantasy notes a lot harder and jumps straight into the action.

Definitely check out Courtney’s books if you haven’t already. And while you’re at it, marvel at the masterpiece of formatting and layout that I achieved as head publisher.

Lately I’ve been talking the hard numbers of indie publishing. I shared a sales chart last week showing the rise and fall of my bestselling fantasy novel Taming Fire and discussing some of the factors that drove those trends.

Then on Tuesday I took a little pause to tell you about my charitable publishing contract. I was really just trying to lay the groundwork for today’s discussion, but that post proved surprisingly popular. That bodes well.

Price Points

Now I’ve got to lay a little more groundwork. If you’ve never looked too closely into publishing with Amazon, this bit might be a little complicated, but it shapes today’s story. The heart of the issue is that Amazon believes an e-Book ought to cost $2.99-$9.99.

They believe it so much that, for a long time there, they were buying those books from publishers at up to $14.99 per copy and still selling them for $9.99. They were taking the loss to sell Kindles and get the public to really buy in to the whole e-Book phenomenon.

Then early last year Apple and the Big 6 Publishers went to war with Amazon and forced them to stop that–they forced a business arrangement called the “agency model” that allows publishers to set the final sales price. Amazon can’t discount below it, can’t take a loss even if they want to. And publishers have used that to keep e-Book prices artificially high.

Still, even after losing that war, Amazon certainly has some muscle to flex. They decided to do that in the form of financial incentives. Prior to agency pricing, the industry standard royalty rate for digital distributors was 35% of list price. After the change, Amazon announced that they would begin paying 70% royalties on any e-Books listed at $2.99-$9.99.

By pricing our books under $10, I automatically give Consortium Books a competitive advantage (price) over the major players in the industry. As Konrath loves to point out, lower prices mean more sales, and quite often they also mean more money. Many of the biggest success stories of Kindle Publishing have gotten their breaks by selling ’em cheap and picking up tons of readers.

The cheapest Amazon will allow a book to be published is $0.99. And that creates a really interesting strategic decision. Lower prices mean more sales. But the bottom end of the 70% royalties is $2.99. That means I can sell a book at $0.99 and take home $0.35, or I can sell it at $2.99 and take home $2.07. I triple the price, and I make six times as much money.

That fact forces a publisher to evaluate (at least) two major questions:

• What’s more important: Gaining readers, or making money?
• What’s the actual difference in sales between $0.99 and $2.99?

Those are two questions I’ve been thinking about very hard for three months now. I made a general policy decision last spring to price all “entry point” novels (the first book by an author or the first book in a series) at $0.99, and all full-length sequels at $2.99–that way we can capture a hung chunk of readers with the lower price, and then make our money off the ones who like the book enough to keep reading.

The Value of a Dollar

And I saw the benefits of that decision with Taming Fire. With no promotion at all, it took off. I think the low price played a major part in that. It’s a great novel, but indie books are generally considered risky, so I lowered the “risk” factor as much as possible by selling it cheap, and that paid off. For several months it was selling more copies every day than it had the day before.

That was exciting. And as I’ve mentioned before, seeing significant numbers finally gave me a chance to start looking for trends and testing hypotheses. I was really excited about that, and one big hypothesis I wanted to test was the price one.

The things was…I couldn’t bring myself to test it. As long as Taming Fire‘s sales kept climbing, I had no interest in messing that up. My daily sales went up and up, and my sales rank dropped and dropped, until at one point I was within 8 spots of being on the Top 100 bestseller list for all books on Kindle. I spent three days hovering under 110, and desperately wanted to break that milestone.

I didn’t. I got a 1-star review and my sales rank shot up into the 200s. That’s the story I told last week. When that happened, it really shattered my hopes of getting into the Top 100. But that also freed me up to finally try an experiment I’d been waiting three months to try. I raised the price on Taming Fire from $0.99 to $2.99.

And my daily sales dropped. The change went into effect on late in the day on September 14th, and I immediately fell from an average of 240 sales a day down to 175. If you look at the chart I posted last week, you’ll see a big square dip just to the right of the middle. That’s after I got my 4.5-star rating back. That dip wasn’t from reviews, it was from my price change.

Maximizing Profits

I left the book at $2.99 for one week. Late in the day on the 21st it went back to $0.99 and the daily sales recovered almost immediately. I’d lost the momentum from that initial, exhilarating rush, and I’ve never gotten anywhere close to the Top 100 again. Mostly I’m bouncing right around 200, but owning the 200th most popular book among all Kindle titles is still pretty satisfying.

Anyway! The point is that I got a full week of data at the $2.99 price, and as I said, I averaged a pretty steady 175 sales/day at that price. That means that even looking at my worst week of sales since early July, I made more than three times as much money as I had on my best week ever. In that one week I earned almost $2,400.

If I left the book at that price and it maintained that number of sales, we’d be talking about $130,000 a year from just that one title. Doing 240 sales a day at $0.99, it’s only earning $30,000. Yet I changed it back (and left it there). Why?

Cross-Promoting

It goes right back to those two questions I mentioned before:

• What’s more important: Gaining readers, or making money?
• What’s the actual difference in sales between $0.99 and $2.99?

The difference in sales wasn’t as much as I’d expected, honestly, but it was still a significant one (given the loss of 70 new readers per day). But, really, the deciding factor for me was the first question. Because without a doubt, gaining readers is more important to us than making money.

Now, I have to admit: Part of the reason I could make that big-picture decision and pass up all that instant cash is because I wouldn’t get all that instant cash. Like I told you Tuesday, I’d only get the first $30,000. I would get that $30,000 sooner that way, but I’ll be getting it either way.

But the real decision for me is more concrete, and it’s rooted in the wording in that statement up above: “we’d be talking about $130,000 a year from just that one title.” But we’re not talking about just that one title. Want to see another sales chart?

That’s for Gods Tomorrow.  The orange line is July. It started somewhere between 0 and 1 sales per day, which is where Gods Tomorrow had lived since October of last year.

But in the three months Taming Fire has been soaring, Gods Tomorrow has been steadily climbing, too. Right up until Taming Fire faltered, anyway. You can see August’s red line on the top chart start to dive right around the end of the month, and September’s blue line sagging all month long.

Gods Tomorrow is only making me about $100 a month, even after that big increase in sales. But Gods Tomorrow has two sequels already out, both priced at $2.99, and both of them are selling in proportion to Gods Tomorrow. So, all told, that series is earning me more than $1,000 a month. And there are going to be lots more books in that series, so anything I can do to increase its sales will pay dividends.

But that’s not the end of the conversation, because that extra $1,000 doesn’t come close to making up for the difference in money Taming Fire could generate. The thing is, Taming Fire is part of a series, too.

Come December, it will have a sequel out at $2.99, and based on the retention rate I’ve seen with the Ghost Targets series, I expect The Dragonswarm to do right at 50% of Taming Fire‘s daily sales. That means 120 sales a day from the moment I release it. Probably more, because the buzz around that book’s release will probably drive more new sales of Taming Fire.

But even without that boost, I can reasonably expect The Dragonswarm to earn me $90,000 in its first year. That means it’ll be “fully funded” before The Dragonprince comes out in June next year, and that one’ll do about $90,000 per year, too. And there there are my short stories. And my Ghost Targets novels. And the standalone books. And the non-fiction how-tos I’m putting together.

And let’s not forget Courtney’s books. Let’s not forget Joshua’s and Jessie’s and Becca’s and Bailey’s. I’m running a publishing company here, and if I can use the success of one book to cross-promote and get other books selling, I can build an empire. And suddenly it becomes pretty clear that those readers are worth way more than those extra dollars.

It just takes a mountain of patience and an iron-hard self-discipline and a single-minded obsession with getting my story to as many readers as possible. But, y’know, that’s what it takes to write a book in the first place, so I’m pretty well situated to make the right choice here.

See you next week.

Over the last two weeks I’ve pulled aside the curtain and given you a peek into the nuts and bolts of my nascent publishing empire. I know it’s considered uncouth to talk about money. (Sometimes it’s considered dangerous, too, especially to talk about it on the internet.)

But I also know where that particular bit of etiquette came from. It’s a handy method used by the Haves to keep the Have-Nots from figuring out just how much they don’t have. Management traditionally hates it when employees talk openly about their salaries. They say it engenders ill-will and low morale, but what it really engenders is legitimate requests for raises.

Traditional publishing has been playing the same game with writers for most of a century. They keep royalty statements deliberately vague, they keep their own numbers as close to the chest as possible, and they discourage writers from discussing earnings.

And as I mentioned last week, it’s largely because of the courage of other indie writers to break that convention and share their numbers openly (on the internet, even) that I had the courage to try it at all, and that I had the information I needed to make smart business decisions along the way.

I’m going to do some of that this week. I’m not going to get into detail about all the money I’ve made so far because that’s not really an interesting story yet. But I am going to get back into the numbers on my sales chart from last week, and discuss how those sales impacted my earnings (and projections), and some of what I expect for the future.

Before I can really get into that, though, I need to take a minor diversion. That’s because, unlike Konrath and Eisler and Hocking and anyone else from the indie revolution whose numbers you might stumble across…my situation is kind of weird.

Eighteen months ago I started talking about a business plan I was toying with. I called it The Consortium. If you know me personally, you already know about the Consortium. If you’ve bought one of my books, you might have seen the name before (the listed publisher is Consortium Books). If this is the first time you’ve heard it mentioned, you should probably at least take a look at the company’s website.

Here’s the company’s mission statement:

The Consortium is a nonprofit organization based out of Oklahoma City, OK, that supports the arts by encouraging the development of local talent and generating high-quality works of art that directly benefit the community.

There’s some high phrases in there (“encouraging the development of local talent” and “works of art that directly benefit the community”), but within the larger business plan those phrases have a very specific and targeted meaning.

The company’s primary goals are twofold:

• To provide a desirable and reliable career path for working artists
• To produce new, good art into the public domain

And those two goals go hand-in-hand. The aim of the Consortium is to create a new patronage and demonstrate how we, as a society, could support the arts without the incredibly broken and abusive concepts of copyright and intellectual property.

We do that by separating the value of an artist from the immediate commercial value of a discrete work product. The claim of copyright is that it will encourage the creation of new works of art by providing a (potential, future) commercial incentive tied to the individual work. We provide the commercial incentive in advance, and we make it real instead of potential.

We pay our artists enough, the whole time they’re creating a work, that they don’t need to make another dime after it’s released. The work has already been paid for. And that allows us to release it into the public domain instead of expending vast amounts of sales, marketing, and legal muscle to squeeze every last drop of profit out of it as a commercial product.

Those last two paragraphs are beautiful. They bring a tear to my eye. They’re also completely untrue. Or, rather, they’re not yet true. That’s the company’s business model, but before it’ll actually work, we need the capitol to start paying those salaries. Right now, everyone working for the Consortium is working on a volunteer basis. We’re working to create that beautiful future. And sometime in the last three months, I realized with a bit of a shock that we’re actually succeeding.

That’s where my book’s sales figures come into it. That’s where things get complicated. See, in a traditional publishing contract, the writer gives the publisher permission to produce the book (usually one version of the book, in one sales market), and the publisher agrees to pay the writer a certain percentage of the profits on every sale made.

It’s a very small percentage.

But if the book does really well, the royalty rate often increases. And, of course, if the book does really well, then even a small percentage can become a huge sum of money.

In the self-publishing world, the writer gets to keep a much larger percentage. (We’re talking about the difference between, say, 6% of paperback sales, and 70% of a self-published author’s digital sales). They might pay for some of the publishing services (editing, layout, cover design), but usually those are flat fees and one-time payments, and once a book has earned that money back, the writer gets 70% of profits forever.

But my books don’t fit either of those models. All my books that are currently available are produced under the Consortium Public Works Book Contract. At the heart of it, that contract is a way for me to turn my my creative work into a charitable contribution to the Consortium. A donation. Here’s how it works:

• The Consortium pays all initial publishing costs.
• The writer receives 100% of all proceeds generated by the book–so if Amazon pays us 70% of the list price for a purchase of Taming Fire, every penny of it would go to me, the writer. Okay, let me start over: The writer receives 100% of all proceeds generated by the book until the writer receives $30,000. At that point, the book is considered “fully funded.” At that point, the writer (me) agrees he has been adequately compensated for the effort that went into creating the work.
• Once the book is fully funded:
• The Consortium will release it into the public domain.
• The Consortium keeps all proceeds generated by their sales of the book.
• The writer promises not to self-publish the same work in competition with the Consortium.

From a business perspective, that’s a terrible publishing contract for a writer. $30,000 might sound like a lot of money. It is a lot of money. I designed that contract as the President of the Consortium, but I was careful to design a contract I’d be happy signing as a Consortium Writer.

Still, it’s a terrible contract. If Taming Fire makes a million dollars, I get $30,000 and the Consortium gets to keep the rest. If Taming Fire becomes the next Harry Potter and earns $200,000,000 dollars for the Consortium, I get $30,000. Those are the terms of my publishing contract, and they’re legally binding.

But as I said above, the contract isn’t designed to make me rich. It’s designed to compensate me for the work I put into writing this particular project, and turn the work’s commercial value into a charitable contribution to a grand social experiment I believe in deeply.

And as it turns out, I’m going to be putting my money where my mouth is. Unless something changes drastically, Taming Fire will be fully funded in less than a year. Its sequel, The Dragonswarm, might well be fully funded within the first three months.

(And I’m not the least bit alarmed. On the contrary: I’m thrilled at the thought of my little company having some actual operating funds.)

But those were some very specific projections up there, and some kind of weird ones (what with Taming Fire needing another year to outsell a book that won’t even be published for another three months yet). And, of course, there’s a story behind how that happens. And another chart, too. Come back Thursday, and I’ll tell you about the complicated mysteries of making money in indie publishing.