Can you start a publishing house without cost?

The short answer is no. You can’t get owt for nowt – everything has an opportunity cost.

But supposing we took the question to mean, “Can you set up a book-publishing house without any financial outlay?’

I’ve tried to answer this question hypothetically. Here’s what I came up with.

1. You need a computer. You may have access to a library or other communal centre that provides online access free of charge. Obviously, though, it would be preferable to have your own computer.

2. You can obtain content free of charge – by generating it yourself, using out of copyright material, or not paying an advance. And you can use photographs published under the creative commons licence.

3. You can use open-source software for word-processing and text design – for example, Open Office and Latex. (See here for a guide to some open source possibilities).

4. You can use free e-book conversion software to prepare your publication.

5. You can distribute your e-books without a start-up fee through various services, including Amazon Kindle

6. You can market your publications using free social media sites such as WordPress, Twitter, and Facebook. You can create a website using wordpress.com.

7. You can archive text and data on the cloud, for example through Google.

8. You can accept payments through PayPal.

9. You could avoid company registration fees by setting up as a sole trader or partnership (though I wouldn’t recommend it, because your liability would be unlimited).

10. You can use a free online book-keeping service such as Brightbook.

So you can do a great deal, though some of the above actions (especially # 1 and 9) involve serious compromises. What can you not do adequately? I suggest:

1. Proofreading: if you’ve written or edited the text, you really need a fresh pair of eyes to do the proofreading.

2. Indexing: of course, your book might not need indexing – most fiction goes un-indexed – or you could try to do it yourself, perhaps aided by software – but unless you were a trained indexer, it wouldn’t be as good.

3. Obtaining an ISBN: you could do without by selling and distributing your publications only via your website, but that would be extremely limiting. To access industry distribution systems, one needs an ISBN.

4. Getting insurance – and I wouldn’t advise anyone to publish books – or indeed run any kind of business – without insurance.

5. Printing.

So one needs some capital. And the above assumes there is already a good deal of human capital (for example, technical skills and advanced literacy skills) already in place.

Still, the answers above demonstrate that one doesn’t need, strictly speaking, very much start-up capital. Think three figures or perhaps low four figures. And there is one business model that could overcome even the constraints listed here, namely open access – provided that one can at the start persuade sponsors of publications to pay upfront. To do this, however, before one had anything to show, would require a good deal of social capital – not least in the form of trustworthiness.

If anyone can suggest an even more parsimonious approach, do please feel free to do so!

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About Anthony Haynes

Director, Frontinus Ltd Communications Associate, FJWilson Talent Services

4 comments

  1. Venetia Ansell

    Good post, thanks Anthony

    Three more (connected) ideas:
    – if you use print on demand your up-front printing costs are minimised
    – if you create a group of interested potential readers for each book via a blog/website, you can ask them to pre-order their copy and that will give you the capital needed to do a print run or you can just use print on demand to do a limited run to meet the pre-order demand and thereafter just print a book each time someone orders one.
    – the extension of the pre-order concept is crowd-funding which is being successfully done for books by a UK company whose name I’ve temporarily forgotten

  2. Reply to “Can you start a publishing house without cost?” by Anthony Haynes (October 25, 2011)
    By: Anna Faktorovich

    I just published a book that describes all of the critical parts of my book publishing business, called “Book Production Guide,” and now available for purchase for $10 at http://www.createspace.com/3855269. In 2009, I published an article in D-Lib magazine called, “Pennsylvania Literary Journal: Google Websites as an Easy Publication Route.” It is true that there are several tools today that allow for free or nearly free publications of online and print journals and books. However, when one wants to move into creating a larger-scale publishing company, the costs in terms of time and money escalate rapidly, and you have to do your best to keep costs down as much as you can, while investing the necessary funds to make a future profit. Luxury fees like membership in the Association of American Publishers and the Independent Book Publishers Association only become feasible if one holds another job in addition to the new publishing venture. Employing anybody in paid labor is unrealistic and should not be attempted until a new publishing house reaches the $100,000 in annual income mark. Volunteers and bargain deals on the business costs are essential for survival in the first turbulent years.

    1. “You need a computer.” I agree, and some laptops cost $300.

    2. “You can obtain content free of charge – by generating it yourself, using out of copyright material, or not paying an advance. And you can use photographs published under the creative commons licence.” Some authors need an advance and some are happy making a higher profit per book sold instead of receiving money up-front. Copyrights-free material in cover art is a great idea.

    3. I disagree about the software – free software works more like a virus to crash the computer than a helpful design tool. I strongly recommend buying Adobe/ Microsoft design products.

    4. I think print on-demand books can also be set up with a printer for a low cost.

    5. It’s true that Amazon, Books-a-Million and several other distributors sell books for the 40% of the sale rather than for a start-up fee.

    6. It’s true that WordPress is the best (most flexible, fitting) tool for a publishing house’s website. But what I recently found out (after setting up a great website with them) is that they don’t really allow sales on the site by blocking purchase buttons, like PayPal’s or Flagship’s. You have to make links from the site to your shopping cart with an outside web service, like WebStarts (which costs at least $20 per month, with all associated fees, and if you don’t find a good deal processing electronic payments can cost hundreds per month in fees). PayPal is a more expensive option than a combination of Flagship, Authorize.Net + WebStarts = the 3 accounts’ monthly fees are less than PayPal’s $30/ month fee.

    7. Yes, a sole proprietorship and not printing the books yourself means that the printer pays state sales taxes and you don’t have to register the company (hundreds of dollars). Registration of a corporation might only be required if you want to set up a non-profit.

    8. I use Outright for bookkeeping. I tried keeping track of my accounts with an Excel spreadsheet, but with over 35 titles this can become impossible.

    Here are some replies to the points on what one should pay for:

    1. Proofreading – I’ve had an offer for an extremely light discount proofread from a semi-professional editor for $600. To buy a professional editor to do a close proofread/ edit, I’ve heard quotes near $6,000. In fact, I’ve charged around $500 myself before for dissertation proofreading. If the person that wants to start a publishing house can’t do the initial proofreading themselves – they probably can’t afford entering the publishing business… I’ve recently started hiring 10+ interns per semester to help with the proofreading load – but a lot of works goes into hiring/ training 10 interns.

    2. If by book-indexing the writer means – entering information on the title into Bowker, Ingram, Library of Congress, and the other databases, once again the publisher should be able to do this themselves. I’ve had dozens of indexers contacting me about employment, and I still don’t understand what they want to be paid for…

    3. Yes, the ISBN numbers should be bought – the cost per ISBN goes down to around $5 when you buy 250/500+ of them at one time.

    4. The printers have insurance. I do my best to avoid risk by not “investing” money into projects and watching my accounts. I don’t think it would protect a business against any real problems. If I was renting an office building or had significant physical assets I could lose in a fire or if I had employees working from my home – the coverage would be in case somebody slipped and fell or if the office building burned down. If my rented apartment with my old printer burns down… well, the manager of the property would suffer a loss. I don’t think it’s a good idea to invest money into something that is not likely to give any refund on the investment. A million dollars is a minimum loss-coverage for a business – before my business is worth at least a million, this coverage does not make sense.

    The commenters on the Association of American Publisher’s LinkedIn account made a few other comments, which I’d like to address:

    A. Attorneys’ advice – don’t do it. In my experience, a good attorney will not do hourly work at even $200/ hour. You have to pay a minimum of $400/ hour for sound advice. And even then, they might give you bad advice that goes against your better interests. I’ve tried sending a string of questions to a lawyer, asking them to spend an hour pondering them and email the answer to me at the hourly rate – no takers. Somebody that starts a publishing house should be able to file lawsuits pro se without attorney assistance. I’ve had writers say that they are asking attorneys for advice on a contract – they come back with pretty much the same 3 possible replies/ objections – ½ of which I counter, and we usually go with my initial contract. From this it’s clear that a business only needs a full-time lawyer that’s on your payroll, not a for-hire lawyer that can cost thousands for a couple days of work. If anybody knows a lawyer that can give good advice for a reasonable fee, send him/ her my way.

    B. Accountants:  I interned for Bank of America (Bank of Boston back then) for the international accounting department in the summer I graduated from high school, 1999. Well, I won’t go into the details, but I’m laughing at this point. I’ll try this – have you heard of Nicholas Cage’s accounting problems? He tried blaming his accountant for the losses by suing him (but I guess he had to use a lawyer to sue the accountant )… But, seriously – I recommend keeping track of your own accounts.

    C. Business structure – if you don’t have employees and you make less than $100,000 in profits… you have a sole proprietorship – free advice.

    D. Design – do your own or pay $1,000+ per book between the cover and interior.

    E. Distribution – some printers distribute the books they print for free, but the better printers will probably charge you $70-$120 for very basic distribution options.

    F. Marketing: in my experience social media doesn’t work unless you have “friends” in your area that attend all of your events anyway. Some writers hire publicists, but their sales are only slightly higher than those who don’t. Some writers buy ads. You should know how to make a press release and letter in order to help your writers do some online press and send some copies of the book for review.

    How much money did I spend on starting my publishing company? A lot. I didn’t need outside capitol because I work full-time as an English professor and do other jobs, like the workshop I’m giving in LA this weekend at the Mt. San Antonio College on the publishing process. For those who need to make money on the publishing business – starting their own publishing company is not a viable route. Finding employment doing one of the above mentioned highly priced tasks is more likely to give you a steady income. The initial investment needed to set up a business is enormous in terms of time and money, and it’s a game that has to be played with decades and not immediate profits in mind.

    • Thank you, Anna, for your thoughtful and detailed response. I appreciate your careful reading and willingness to develop this theme.

      A few responses in return. I agree with much of what you say but differ on these points:

      – Although I said little about professional services in my original post (and don’t know about Cage’s case at all), I do find that money spent on lawyers and accountants can be money well spent. As with procurement of any service, it’s important to select your advisers carefully. But, if you do, they can save you money in the long run: their advice can act as a kind of lever.

      – In particular, I strongly disagree with your view on insurance. To be frank, it makes my hair stand on end! Without insurance, I wouldn’t sleep at night. Why make your business vulnerable?

      -By ‘indexer’ I in fact meant the person who compiles the list of terms (usually alphabetically arranged and usually at the back of the book) that helps readers locate and retrieve information in the text. In our press, we do pay indexers because a good index adds value to a product and indexes compiled by non-specialists (typically authors) are usually not nearly so good.

      – I have mixed views about open source software. Increasingly I’m discovering open source software that works very effectively and, if I was starting from scratch, I might build a new business entirely on that basis.

      Thank you again,
      Anthony

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