July 17, 2007
News & Opinion: The business of the book business
Random House (a piece of that German giant Bertelsmann) recently crunched their publishing numbers with New York magazine. The numbers:
There are 1,500 Random House employees in New York.
Every week they unveil 67 new books (around 3500 books/year).
Annual revenue: $2.3 billion ($230 million is profit).
2/3 of which comes from paperbacks.
80% of profit is driven by their backlist of 33,000 books.
Only one of every eight books is really profitable.
Understandably so, when author advances range from $7000 to up to $10 million.
Customer buys a book for $10.
Retailer gets $5.
Random House covers their space and staff with $2.
The author is paid $1.50.
Printing costs are $1.
And the remaining 50 cents is profit.
*If RH was to generate profits solely on paperbacks, they'd have to sell 460 million books to earn $230 million in income.
**Thanks to New York Magazine for giving us the breakdown.