Profit Engine: The Author Solutions Markup

Posted by Victoria Strauss for Writer Beware

As most of you already know, Penguin Random House dumped Author Solutions at the end of 2015, selling it to a private equity firm for an undisclosed amount. ("A Penguin Random House Company" has already vanished from Author Solutions' logo.)

The sale received quite a bit of media coverage, at least some of which acknowledged AS's troubled reputation--something else that won't be new to you if you're a regular reader of this blog.

One of the areas that I and others have often criticized is AS's huge range of marketing services, which are aggressively pitched to authors who sign up for publishing packages. Most of these services are dubiously useful (email blasts), jawdroppingly expensive (book signings at book fairs), or both (cinema advertising). Basically, they're the equivalent of liquor at a restaurant: relatively inexpensive to deliver, but extremely profitable because of the enormous markup at which they can be sold. (AS executives have actually admitted, in depositions related to class action lawsuits brought against AS, that selling books is not one of the goals of AS's marketing services.)

What's the actual markup, though? How much difference is there between the price for which AS sells a service, and AS's cost to deliver it?

Here's an example. One of my readers drew my attention to this recent ad on Craigslist, in which Author Solutions seeks "freelance coverage writers" to "read self-published books and provide detailed, coherent coverage on the work's potential for film/television/digital adaptation."

The basic pay rate is $110. What does AS charge the idealistic author with Hollywood stars in his or her eyes? $859. Even assuming that pay rates may go higher for some freelancers, and that there's some level of administrative cost involved in getting the coverage from the freelancer to the customer, that's a hell of a markup.

I could go on--AS's genre-specific advertising packages, for instance, some of which are marked up more than 300%, or its Trifecta Review service, which offers three pay-to-play reviews for well over double what you'd shell out if you bought them on your own--but you get the picture. Author and blogger David Gaughran has also looked into the huge profit AS makes from its marketing services.

Now that AS has been sold, might its new owner (which hasn't as yet made any statements about its intentions for AS, apart from continued expansion) take a hard look at these practices? We can hope, but I fear there won't be a lot of incentive to tamper with such a major profit engine.

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