July 17, 2007

News & Opinion: The business of the book business

By: Dylan Schleicher @ 2:00 PM – Filed under: Publishing Industry

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.

Paperback math:

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.

About Dylan Schleicher

Dylan Schleicher has been a part of the 800-CEO-READ claque since 2003. Even though he's stayed on at the company, he has not stayed put. After beginning in shipping & receiving, he joined customer service and accounting before moving into his current, highly elliptical orbit of duties overseeing the ChangeThis and In the Books websites, the company's annual review of books and in-house design. He lives with his wife and two children in the Washington Heights neighborhood on Milwaukee's West Side.