March 14, 2012
WHO'S FOR SALE?! AuthorHouse, Xlibris, iUniverse, Trafford, and WordClay are! Let's Dissect the Numbers, Shall We? By Angela Hoy | printable version
Over the years, we have received lots of complaints about POD publishers owned by Author Solutions. At BookLocker.com, we reject most manuscripts because of quality, salability, and, occasionally, legal issues. For example, we don't publish tell-all books written by spurned spouses. They're usually written just to harm the other party and we don't publish garbage like that. AuthorHouse, previously known as 1stBooks, lost a lawsuit after publishing a book by an ex-spouse, and was ordered to pay the victims (the ex-spouse and the ex-in-laws) $510K because the court said the publisher was informed that the book contained libelous content. But, they published it anyway.
At BookLocker.com, we also reject some manuscripts because we believe in doing the right thing. For example, we don't publish celebrity tell-all books because they're trash. We once rejected a book that included graphic descriptions about how some people had died (detailed, gruesome descriptions of scattered body parts) because the horrific details didn't enhance the book's quality at all. We were also certain the victims' families would have been devastated had they seen those words. Basically, we have quality standards and we have a heart. Not all POD publishers do. In fact, most POD publishers take the author's money before they ever review the manuscript in depth. Some POD publishers don't review the manuscripts at all and put anything and everything on the market.
We have even rejected manuscripts that were previously published by some of the Author Solutions' POD publishers because, quite frankly, they weren't up to our standards. I always feel guilty turning away authors who feel they have been wronged by one of our competitors but we don't publish junk.
Last week, Author Solutions announced they're for sale. Author Solutions, which is owned by Bertram Capital, has several publishing services companies, including AuthorHouse, Xlibris, iUniverse, Trafford and WordClay. They also have some lesser-known services like HollywoodPitch.com, AuthorHive.com and Palibrio.com. The announcement included some pretty revealing financial information about the company. It sure looks like Author Solutions has separated authors from a LOT of their own money! Let's dissect the numbers, shall we?
The information about the sale and financials was provided by Publisher's Weekly.
2011 WAS AUTHOR SOLUTIONS' FIRST PROFITABLE YEAR
The article states Author Solutions was losing money until 2011.
While reading the article, I disregarded future year "projections." Any company that's for sale is likely to list ambitious projections and there are many factors that could influence those numbers...most notably the growing acceptance by readers of ebooks.
2011 TOTAL REVENUES
Author Solutions' 2011 sales were $99.8 MILLION.
HIGHEST PERCENTAGE OF REVENUE IS FROM AUTHORS. NO SURPRISE THERE!!
According to the article, "63% of its revenue (was) from what it calls publishing and marketing services."
What does that mean? 99.8 million x .63 = $61,740,000. It appears that's the amount of money they got for services sold to authors.
The article states, "ASI estimates the 'lifetime value' of an author relationship to generate $5,000 for the company."
That means they expect to make around $5K from each author, total. Ouch! I wonder how many of their authors end up earning $5K or more in royalties? Not too many, I bet!
PERCENTAGE OF REVENUE FROM "DISTRIBUTION"?
There are two primary types of book sales processed by POD publishers - author book sales (those may or may not end up in the hands of readers) and public book sales (direct to the public or to a bookstore or distributor after receiving an order from a customer). Rarely, a bookstore stocks a POD book but bookstores don't stock most traditionally published books, either. With more than a million books being published each year now, there simply isn't enough shelf space anymore.
We assume "distribution" in the article means all book sales and, since book sales are not "publishing and marketing services", we believe this "distribution" number also includes books that Author Solutions authors bought themselves. So, the remaining $36,926,000 was for book sales...which, as I said, may very well include author book sales. But, wait! $15.6 million of that was from partnerships with traditional publishers. So, that drops book sales for their self-publishing authors down to $21,326,000, which is only 21% of their revenues. Even if that percentage does not include author book sales, it's still horrible.
As a comparison, at BookLocker.com, the highest percentage of our revenue comes from PUBLIC book sales - and always has.
Author Solutions has never denied the fact that the majority of their income comes from authors, not from public book sales.
AUTHOR ROYALTIES? WHERE???
Author Solutions claimed they paid out $1.7 million in royalties to TRADITIONAL PUBLISHERS. Those are the deals they've made with traditional publishing houses. The published information did not include the amount of royalties they paid to Author Solutions' self-published authors. Why?
MADE IN AMERICA? NOT QUITE!!
Author Solutions has 1,565 full-time employees, but 1,215 of those (78%) are located in the Philippines! Why is Author Solutions exporting work to other countries when there is such a great need for jobs here in the United States?! Don't they read the news about how angry Americans are about companies that export much-needed jobs overseas? Author Solutions is located in Indiana, which currently has a 9% unemployment rate.
The article states the company only has a 90% satisfaction rate. So, if they published 27,500 new books in 2011, and 10% of those were dissatisfied, that makes 2,750 upset authors - FOR THAT YEAR ALONE. If their dissatisfaction rate has always been 10%, and they've published 140,000 authors since inception, that means they've disappointed 14,000 of them. If that's the case, those numbers are deplorable!
Those are very poor numbers but, since Author Solutions doesn't seem to respond to most complaints posted online, it doesn't appear they're doing much to fix their own reputation. But, heck, if they have 20K+ new authors coming in each year, maybe they just don't care?! If they did, wouldn't they be responding to all or at least most of those complaints online?
NEW AUTHOR 'LEADS TO SALES' RATIO
According to the article, for authors who contacted Author Solutions' companies for information, they only converted 5% to contracts. Perhaps part of the reason they're not turning more author leads into "sales" is because smart authors are checking for complaints about the Author Solutions companies online (AuthorHouse, Xlibris, iUniverse, Trafford and WordClay)...and some of them are not liking what they're seeing.
Complaints about AuthorHouse at PissedConsumer.com.
Complaints about AuthorHouse at Self Publishing Review - (read the comments under that article).
Complaints about AuthorHouse at ComplaintsBoard.com.
Complaints about AuthorHouse at RipOffReport.com.
Complaints about Xlibris at ComplaintNow.com.
Complaints about Xlibris at PissedConsumer.com.
Complaints about Xlibris at RipOffReport.com.
Complaints about Xlibris at ComplaintsBoard.com.
Complaints about iUniverse at PissedConsumer.com.
Complaints about iUniverse at ComplaintsBoard.com.
Complaints about iUniverse at RipOffReport.com.
Complaints about Trafford at ComplaintsBoard.com.
Complaints about Trafford at RipOffReport.com.
Complaints about WordClay at ComplaintsBoard.com.
SO, IF THEY'RE FINALLY "PROFITABLE", WHY IS AUTHOR SOLUTIONS FOR SALE?
The Publisher's Weekly article states Bertram Capitol "is interesting in 'pursuing a liquidity event as part of the normal investment cycle.'"
That may be the case but, ever since Bertram invested in Author Solutions, some unhappy authors have been using Bertram's name when posting complaints about Author Solutions' companies. In fact, the Bertram name appears in some of the links above. They can't be too happy about that.
In regards to them finding a buyer, I, personally, am not sure what company would want to buy a firm that has so many complaints posted about it online. You are what you eat, right?
Angela Hoy is the Publisher of WritersWeekly.com and co-owner of the POD firm BookLocker.com. WritersWeekly.com is the free marketing ezine for writers, which features new paying markets and freelance job listings every Wednesday. According to attorney Mark Levine, author of The Fine Print, BookLocker is: "As close to perfection as you're going to find in the world of ebook and POD publishing. The ebook royalties are the highest I've ever seen, and the print royalties are better than average. BookLocker understands what new authors experience, and have put together a package that is the best in the business. You can't go wrong here. Plus, they're selective and won't publish any manuscript just because it's accompanied by a check. Also, the web site is well trafficked. If you can find a POD or epublisher with as much integrity and dedication to selling authors' books, but with lower POD publishing fees, please let me know."
Angela's P.O.D. Secrets Revealed Series can be found HERE.
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