So far we’ve discussed self-publishing and royalty publishing, and why you might choose one over the other. There is, however, a third option: subsidy publishing.  Easily confused with both royalty and self-publishing, subsidy publishing can be a minefield for unsuspecting authors.

Subsidy Publisher: A company that makes money both from charging authors for production costs and from keeping a portion of sales revenue.

If you find yourself wondering if your “publisher” may in fact be using the subsidy model, here are a few defining characteristics:

• Authors are issued an ISBN that identifies the subsidy publisher—not the author—as the publisher of record.
• Authors are asked to pay for design, layout, and printing.
• Authors may also be asked to pay fees for marketing, advertising, or other expenses.
• Despite paying for their own production costs, authors are only paid royalties, rather than earning full sales revenue.
• Sometimes the subsidy publisher retains the rights to the material.

Another area of confusion is Print On Demand (POD). If you assume POD is a publishing model, we’re here to burst the bubble. POD is simply a method of printing. It’s an alternative to a full off-set press run where many copies need to be printed at once for cost-effectiveness. Some royalty publishers use POD on occasion. Self-publishers can also use POD and still be truly self-published. Keep in mind that if a company tells you they are a POD publisher, you know only what technology will be used to print your book and nothing about their publishing model.

Download An Author’s Guide to Publishing Options, a free report that includes details on each of the three publishing models plus a 10-question quiz to help you identify the model best suited to your goals.

Ready to learn more about subsidy publishing? Let’s look at the pros and cons around money, creative control, credibility, and the chances of being published.

Money
For a fee, a subsidy publisher lays out your book and designs a cover. These services are generally sold for a price lower than the cost of contracting directly with a designer (as you would do if self-publishing). However, the templates you’re offered are limited, and are also shown to other authors. You’re not getting a custom design that helps you stand out from the crowd.

Royalty payments from a subsidy press are generally 25-50% of the book’s full retail price when sold through internet sales channels. If a customer buys through one of these online stores, you receive your royalty payment. The catch comes when you try to sell your book to other outlets, such as bricks-and-mortar bookstores. First, you have to buy your books from your subsidy publisher, which could easily cost $7 or $8 per copy. Say your retail price is $14.95 — bookstores usually want a 40% discount on the retail price to stock your book. A distributor or wholesaler will take another 10-15%. That means you need to sell your books to the distributor at a cost of $6.73 each—but you can’t because it costs more than that for you to buy them.

With subsidy publishing, you can’t give the bookstores and distributors the discounts they need, so you effectively lock yourself out of those markets. And forget about book clubs, catalogs, corporate sales and other bulk selling opportunities, because the discounts they receive are typically even higher.

Creative Control
Subsidy publishers often acquire the print rights to your work in their contract with you. That means you cannot self-publish or submit the book to a royalty publisher until the contract is finished or broken.

Credibility
Remember that a subsidy publisher is the publisher of record for your book. That might not be such a problem except that many subsidy publishers have horrible reputations with the mainstream book trade. Come out with a book under the label of a well-known subsidy publisher, and many people won’t touch your book with a ten-foot pole. While there are gems printed through subsidy publishers, there’s also a lot of junk. Reviewers and other book trade professionals don’t have time to dig through the dump for a treasure, so they ignore everything.

Chances of Getting Published
As with self-publishing, chance doesn’t factor into it. If you pay the fees, you’ll get a book.

If you want to publish simply for the sake of having a book in print, and you aren’t worried about selling through bookstores, subsidy publishing can be a fine choice. For example, if you have a family cookbook you’d like to print for 50 of your closest relatives, a subsidy publisher would be a great fit. However, if you’re serious about selling a lot of books, getting mainstream reviews, or building credibility in the publishing world, consider another route.

Subsidy Publishing: Pros

• Good for limited run books that won’t be sold through traditional channels
• Guaranteed to be published

Subsidy Publishing: Cons

• Poor credibility in the industry
• Poor pricing model locks you out of many sales channels
• You are not the publisher of record
• You may sign away ownership of your own material
• Limited design and layout options

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Tags: an author's guide to publishing options, book publishing, royalty publishing, self-publishing, subsidy publishing

This entry was posted on Sunday, October 31st, 2010 at 3:45 pm and is filed under Books. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.