Paul Millerd: Profits in Publishing, Why Self-Publish, How Authors Make Big Money

 
 

Meet ​Paul Millerd​, a self-published author and escaped strategy consultant. He wrote ​The Pathless Path​ about his journey and encouraged readers to rethink work and success.

Paul just published his second book, ​Good Work​. Paul shares the history of the publishing industry, how profits move, which popular authors made big money, and how.

Here’s what we explored in the episode:

  • We dive deep into the quirky history of the publishing industry, tracing it all the way back to the 1400s.

  • In the 19th century, authors could increase their earnings by co-investing in fixed costs, like print plates and bookbinding.

  • Traditional Publishing has always seen hardcovers as “the real books” and sought to protect them and their profits.

  • Trade paperback was published only after a successful hardcover, with those rights often sold separately.

  • Self-publishing changed the game for authors, with Amazon enabling print-on-demand and much higher royalty percentages.

  • If you are an author signing with a traditional publisher, realize YOU ARE NOT THE CUSTOMER–book retailers are their customers.

  • Lots of authors who earned big money retained their rights.

  • Stephen King retained his paperback rights an early successful book. After the hardcover version succeeded, he sold those rights for $400,000

  • Harper Lee made significant earnings from To Kill a Mockingbird by retaining movie adaptation rights.

  • Tom Clancy held on to his film and international rights. This later became highly lucrative as his popularity grew and more of his books got adaptations.

  • Traditional Publishers often prioritize prestige, tradition, and their profits – which doesn’t always align with author’s goals.

  • Indie authors can now disregard tradition and experiment with pricing strategies to maximize reach, revenue, and their own personal results.

​​Scribe Media​ helps executives, entrepreneurs, and business leaders to write, edit, publish and market their books.

Scribe created a new category called "Professional Publishing" -- the best of both self-publishing and traditional publishing. With Professional Publishing, the author owns all rights and full creative freedom, so you can do anything with your book. You also keep 100% of your royalties.

You're getting the same level of professionalism as a traditional publisher—book design, interior design, and your own publishing imprint. All with maximum author freedom.

This is how I published The Almanack of Naval Ravikant, and what I believe is the future of publishing.

If you’re considering publishing a book, take 20 minutes to meet with someone from Scribe to learn more about the publishing landscape. To get in touch with Scribe, ​click here​ or email me to get started.

Learn more about Paul Millerd:

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Episode Transcript:

Eric Jorgenson: You said you got some heat. 

Paul Millerd: My name is Paul Millerd, and I am obsessed with the publishing industry as every first or second time author inevitably gets sucked into. And I reached out to Eric because I realized that if I had something on my calendar, I could then use it as motivation to go on an absurd deep dive about the history of the book publishing industry and talk about how we arrived at the current insanity. 

Eric Jorgenson: And you’re the right man for the job because not only are you now an indie author twice over, but also your background is what, consulting, banking, both? 

Paul Millerd: Yeah, so I worked in strategy consulting. I worked at places like McKinsey, BCG. I did the business school thing. And I really didn't like that path at all. It didn't suit me, but I still need to express like 5 to 10% of that every once in a while. So, a few times a year, I need to create an absurdly long slide deck or start doing some analysis. And that feeds the part of me and makes sure I don't go back. So yeah, this is part of that need. 

Eric Jorgenson: So, you have a very specific set of skills, and this time it's personal. And when you decide to tear apart an industry, you know how to tear apart an industry. Which is awesome, because now that I'm in that industry, I have like really wanted to do the deep dive into the full history and understand all the everything. But also, it's really hard to do that once you're like in the trenches of the day-to-day. So, I'm excited to see what you learned and talk through it. Because it's a fascinating industry, like up is down, sideways is purple, and there's all kinds of weird stuff going on in here. 

Paul Millerd: Yeah, so I pulled out some trends, and I'll start with like some high level conclusions, and then we can dive in as we go. So, one is books are a industry that has been around since the 1400s, and pretty much steadily since then, books have increased in production and how much they're read, how much they're printed over time. However, from… So that's high level. I'll start there. Another thing is the distribution of profit and how that breaks out in book publishing has shifted dramatically, especially since the 1800s. And so, the third thing is authors often got rich by retaining rights, not selling all their rights, which is going to vibe with the Scribe outlook. 

Eric Jorgenson: It's going to vibe with me, for sure. 

Paul Millerd: And then another theme I pulled out was that publishers consistently devalue new formats and options. I think they sort of have like prestige goggles on, and we can dive in to that. So, any initial reactions, if you want me to dive in? 

Eric Jorgenson: Only to feel incredibly vindicated, as one would expect. No, this feels like, that all feels right to me from my experience in the industry, and it feels like what is clearly happening because the whole context of the industry has shifted over the last like 20 years from the conditions that it had basically for the hundred years before that. This is awesome. No, I love this. I love this deep dive. I have no quarrels with any of these conclusions so far, other than that like very interesting that you started this far back, like 1400s. I think that's really interesting. And I want to hear what's shifted there. And then distribution of profit, also very fascinating. How has it shifted, amongst who, and what were the causes of that? 

Paul Millerd: Definitely. So Gutenberg style press, we're talking like, what, 1600s. But before that, book publishing and printing started in the 1400s and steadily over the centuries until the 1800s, it sort of got slowly faster, but it was mostly hand operated presses. And so, in 1800, they're doing about 480 pages per hour in a Stanhope press. But in the next 20 years, basically steam powered presses are invented, which this radically increases the speed of production. And so, by 1818, less than 20 years later, we have 2,400 pages per hour. So that's nearly 5X production, but these are also manufacturing equipment, so they can scale much more. So, if you look at book production in the 18th century, right before this happens, there's about a million, no, a billion books output. And I can share some of the sources and stuff. But after that, it basically just keeps increasing and increases even more. And so, throughout the 1800s, there's just a huge explosion of like spreading ideas through books. And a lot of what we think of book publishing now is like individual authors, but the start of book publishing is often through what's called trades. And we still have this word, like trade books, but back then, they really were trades. So, you'd have the engineering discipline and then organize around a trade to basically create and share like textbooks, standardized education among people, spread information among that discipline. Lawyers had similar things, education had similar things, et cetera. And so, a lot of the early days of book publishing is around this sort of need at an industry-wide level, less so sort of like individual author produces for mass audience. 

Eric Jorgenson: Is that closer to like a textbook or a magazine? 

Paul Millerd: Yeah, I think there is a mix of many things, but essentially, I think the thing worth taking away is that it was organized around trades. 

Eric Jorgenson: Super cool. So, what we would call like an industry rag today or something like that, like a periodical, or it's like a handbook of the trade’s wisdom and who was leading and what the innovations were and what the new tools were, like that kind of stuff. 

Paul Millerd: For sure, but like much higher value then. Because you couldn't- you were actually information scarce. Now we live in this information abundant world. So we sort of take these things for granted. 

Eric Jorgenson: Yeah, super cool. 

Paul Millerd: Awesome. So individual authors do start doing things. Throughout the 1800s, there's all sorts of examples. And basically, there's two models. One is author gets royalty of percent of book price. And those range from like 10 to 20% and/or there's profit sharing models. And so, one example, 1848, Edgar Allan Poe got 10% royalties for one of his poems, Eureka. Here's one example in the mid-1800s. Second example, 1856, Ticknor and Fields pays Henry Wadsworth Longfellow 20% of the retail price, but he got a higher royalty because he co-invested in the bookbinding plates. And so, this gets to some of the cost questions. We have data from 1872. Here's the breakdown. One dollar per copy. So how does that distribute? Most of that money in traditional book publishing today is split between the retailer and the publisher. But in 1872, most of it was involved in retail and printing. So 40%, 40 cents out of that dollar go to the retail book seller. And then 15% to paper, 15% to the bookbinder, and 10% to the printer and stereotyper. And so, a lot of what emerged in the original publishing industry is because the cost of goods sold was the highest cost. So retailers were able to extract margins because they owned distribution. But more expensive was actually the production costs, including paper, bookbinding, and literally like plates. So you had to like buy your own plates. So oftentimes authors would buy or produce the plates to get a higher share of revenue or profits. 

Eric Jorgenson: That's awesome. That's really super interesting. 

Paul Millerd: And so, if we look at that, so we have the author and publisher capturing 20% and the retail capturing 40%. Yeah. And then basically the cost of goods sold capturing another 40%. But here's the current economics of let's say a traditional publisher $30 hardcover. Manufacturing cost of goods sold is about like 4.50. And these are estimates based on various sources I've used. And retail is 45%. And publisher gets about 28% of that $30, and the author gets 13%. So, the author gets the lowest margin, but because cost of goods sold, and so this basically shows like publishers are, since they're owning production, they're capturing more of the margin for lowering the production costs over time. And they still capture that. 

Eric Jorgenson: Like they are benefiting disproportionately from the decrease in cost of goods sold. 

Paul Millerd: Yeah, because they're closer to the distribution. That's what I would say is like they sort of own demand. 

Eric Jorgenson: Yeah, like the black box of COGS is inside the black box of publishing. And so, they're able to capture that margin. And authors largely don't necessarily know that it's happening. 

Paul Millerd: And so, if you cut out the publisher and go self pub on your own hardcover, it's still somewhat expensive. So, the cost of goods sold on a $30 hardcover, about $8.20, a book sort of like the size of the Pathless Path. The distributor, Amazon, gets about 40%. And then the author gets 32%. So, the author is closer to the distributor, but Amazon is still getting a pretty big cut for owning demand. So, the process is getting more efficient. And then, if you go to paperback, the author actually comes out ahead. Because paperback technology and the cost is much cheaper than hardcover. So, a self-published paperback, the author gets 42%, the distributor gets 40%, and the manufacturing is only 18%. 

Eric Jorgenson: We love that. We fucking love it. Like, that's what… I think people underestimate how much, how mind-blowing the technology of on-demand paperback printing is, like how good it is, how fast it is, the fact that not only is it cheaper on a per-copy basis, but also one of the big things that went into like when you hear people talk about manufacturing plates and like the paper, these are all upfront fixed costs you have to do in a batch. And it's probably like a tool and die system where it's expensive to even make the plates in the first place. And then you have to amortize the plates over however many books get printed. But now with like digital print on demand, it's trivially expensive to just publish one or a hundred or a thousand with no upfront costs. You just print them literally as they're sold. 

Paul Millerd: Yeah, and so I'm not sure if traditional publishers are doing that with paperbacks, but I know for sure they are not doing it with hardcovers. And I think there are reasons for that. And so when I think about the current publishing ecosystem, you can sort of break it down into like three different products through three different processes and three different channels. So you have hardcover, which is harder to do, but often higher margin for the traditional publisher because they have to manage this complex process. That sort of makes sense. Then you have paperback, which is somewhat easier. I think traditional publishers use a mix of print on demand and printing batches. Why they print batches, I'm not quite sure. It probably has some complicated things to do with wanting to extract more revenue and/or just they've always done it that way, which is a surprising explanation for most things. And then we have digital eBooks in which they make almost no sense to give up rights to a traditional publisher because the cost of goods sold is basically negligible. And so, if you look at the $10 eBook through Amazon, authors are able to capture 70% of that, the distributor, Amazon, is able to capture only 30% of that. And that makes sense. So, the closer you get to the means of production, the higher your leverage is going to be as an author. 

Eric Jorgenson: Yeah, and another, like an interesting note on that, I don't know if you mess with these settings at all, but this is somewhere that Amazon has such strong feelings. If you try to price your book between like $10 and $25, your eBook, they will take 70% instead of 30%. So, if you ever wonder why almost every eBook that you see is 9.99, it's because they more than double their rake if you try to price above that. So that's just like one way they try to exert control over, a strong suggestion over authors’ pricing. At least that's the way it was when I was setting my prices. 

Paul Millerd: So that's self-publishing. But do you know about the 2014 collusion? So Apple basically colluded with all the big publishers to set ebook prices at $14.99. And so Apple and all the big publishers basically got sued by the government for inciting collusion. At the time, there was tons of PR against Amazon because they were trying to blame Amazon for lowering the prices of eBooks, which they have steadily done. And there was a lot of popular sentiment against Amazon and a lot of really expensive PR that was paid for to sort of like channel anger at Amazon. I would argue Amazon's been net good for authors in the publishing industry, but still has some opportunities to grow. And so they were basically slapped with like a, hey, you can't collude anymore. Eric Holder put out this memo that said like, basically you can't collude anymore. That has since expired. So they now can technically collude on pricing. And so, if you log in and look at pricing on eBooks for traditional publishers, they are anywhere between $14.99 and $16.99. So I would argue they are artificially holding prices high, not to benefit the author or even to benefit themselves. I would argue they're doing this to continue to prioritize their true customer, which is retail bookstores who push through their hard covers. 

Eric Jorgenson: That is fucking fascinating. I always wondered why all these authors, like why… it is a directly, obviously a bad decision for an author to set an eBook price at $14.99 because you make literally less money per book than if you would just price it at $9.99 and it's worse for the customer. But this makes sense. So, publishers set those prices. Authors don't actually have control. 

Paul Millerd: Correct. So if you were an author with a struggling book that was not selling and the bookstores stopped stocking it, you can't actually lower your price. This is why bundling everything with a traditional publisher, I think, is a really bad decision for authors. They should at minimum be looking for a reversion of rights on the digital copy such that they can experiment with pricing and get it in the hands of more people. Physical books do cost money to produce and are complicated on a global supply chain, but digital products are not. So, it's sort of insane to entrust somebody who is getting paid for optimizing a global supply chain to distribute a literal file. 

Eric Jorgenson: Especially when they are demonstrably spitting in the face of their authors at an industry-wide scale, ensuring that they make less money to protect, as you point out. I don't know, like tell me why you think that's true, to protect the physical bookstore chains? Like, take me through that. 

Paul Millerd: Yeah, so one thing worth mentioning also is there were a ton of experiments on pricing on digital books in the mid 2010s. There was this whole movement of like self-publishing. Hugh Howey was a big writer during this era. And they actually did a bunch of tests, and this could be Amazon's algorithm, but people kept like experimenting with prices and actually found at 4.99, they sold more copies and made more money than they did at higher prices. And so, I suspect that eBook sales are incredibly low for traditional book authors. 

Eric Jorgenson: Yeah, because they're priced so high in part. 

Paul Millerd: Because they're priced so high because they're part of a bundle of offering for publishers who also ultimately don't care about an individual author. They care about their entire ecosystem of books. 

Eric Jorgenson: And if they make, let's just say, because of that pricing, they only make $4 per book on an eBook, but their margin on a hardcover is $10 or $8, they want actually to cannibalize those eBook sales because their agreement with the author is higher, they get a higher margin on the hardcover than the eBook? 

Paul Millerd: The publisher can get an increasing margin if they're able to hold down costs. If they're able to hold down printing costs and storage costs, like many of the books are printed in China now, so if they can do it even cheaper, they're going to capture more margin. 

Eric Jorgenson: And they hold down costs by keeping volume high in hardcover. 

Paul Millerd: Yeah. So they print a huge batch, but most of the money in hardcover is captured by retail. So, they get a 55% discount and then can sell the book at the retail price. So, on a $30 book, a retailer can make $13.50. And then a publisher would get the remaining $16.50, but then they have to pay for cost of goods sold. So, a retail, a traditional hardcover, they would end up with, what? I think, yeah, about $12. And then they have to pay the author. But the author's gross is controlled because it's basically just a percent of list. So, they can manage that pretty easily. 

Eric Jorgenson: That is fascinating. 

Paul Millerd: So, retailers and publishers capture 73% of a book's list price for hardcovers. For paperbacks, they capture about 74% and then publishers and distributors capture about 80% of the eBook. And so, publishers and retailers are highly optimized. The people that are not optimized – authors. And so even with Amazon, I would argue like there's still tons of opportunity for the ecosystem to be a lot better for authors. And this is why I sort of want to start a movement of more traditionally published authors understanding what's happening in the ecosystem such that they can push back, renegotiate deals, and put pressure on these big publishers who are basically just taking advantage of a really attractive status quo. 

Eric Jorgenson: Yeah, my line about that is like, they're pricing like gatekeepers, but there's no gate anymore. 

Paul Millerd: Yeah, it's like this huge song and dance. So, we have all the breakdowns of the industry and that. The next interesting thing I thought was worth talking about is just like paperbacks. Do you know the history of paperbacks? 

Eric Jorgenson: No.

Paul Millerd: All right. So, paperbacks…

Eric Jorgenson: I'm literally… this is the first time I've been like taking notes during an interview. Like I know that you're reading a thing that you'll send me and I'm still just like writing all this down as though like I have to know all of this. 

Paul Millerd: It's okay. I'm only asking for 2% and a board seat. So, paperbacks started as sort of like this cheaper way of producing books. So, historically, traditional publishers were not interested in paperbacks. They would only sell the hardcover. Hardcovers were synonymous with prestige, literary culture. Like, this is a book. A paperback is not a book. Sound familiar? This is like what we considered eBooks in the early 2000s. So, basically, you have like mass market paperbacks, but they're often like these cheap novels, romance novels, smut novels, like fiction. Fiction was not seen as like, a lot of fiction was not seen as serious. And then you had what was called trade paperback. Now trade paperback was often published after a successful hardcover and such. But those rights were often sold separately. Because the trade publishers wanted nothing to do with like a paperback. So, a couple examples here. Well, one famous one is Stephen King. He had success in one of his early books with hardcover, but he only had like a $5,000 advance. His paperback rights were still his. And after the success of the hardcover, he sold his rights for the paperback version to a different publisher for four hundred thousand dollars. 

Eric Jorgenson: Oh, hell yeah. Stephen King, you rule. 

Paul Millerd: And so, this sort of went on for about like 15, 20 years from like the 1940s to the 1970s. I don't know when King's was, but could be even longer. Because basically the publishers were like, we don't do paperbacks. We're too cool. We're too fancy. We're prestigious. And so 1947, 95 million mass market paperbacks. By 1959, 12 years later, there were 286 million mass market paperbacks. And so that was the first time dollar sales of paperbacks exceeded hardcover trade books. And so, over the 1960s and 1970s, basically the traditional publishers either acquired these paperback producers or started their own lines to take advantage of this. 

Eric Jorgenson: Interesting, slowly, begrudgingly, which goes back to like the pattern of them just consistently undervaluing new formats, new ideas. 

Paul Millerd: Yeah. So, this is from the history of the book, volume five. Trade publishers were initially leery of paperback publication, fearing that it would cheapen authors' reputations and cut into revenues. So they didn't want to cannibalize their own sales. Both author, you notice the theme here, like they don't want to cannibalize sales. They're so obsessed with this fancy, sexy hardcover book. So they're basically willing to continue to compromise business, money, and opportunity and payouts to authors because they're so obsessed with this hardcover book. Both authors and hardcover publishers were reluctant to see their books between the lurid paperback covers in favor in the 1940s and 50s. So, they were worried about like reputation management. But by the 1950s, they started to include the right. So like hardcover publishers were not smart enough to say, hey, let's do paperbacks. They said, we get the right to approve or disprove your paperback cover. 

Eric Jorgenson: Oh, they want to control but not to do any of the work. 

Paul Millerd: Yeah, they just want to make sure it's not like a really crappy cover. I assume it was… I don't know. Let's do a Google search on 1950s fiction covers. Paperback. I think it was these… 

Eric Jorgenson: There's a he-man, like half-naked people, that kind of stuff… lurid, it seems to imply that.

Paul Millerd: Yeah, so we can link this up. You can do your own searching at home.

Eric Jorgenson: Oh, there's some good looking stuff here. Hank Jensen, Sent from Heaven. 

Paul Millerd: Yeah, so here's one I found. Yeah, I think there were a lot of like romance novels, and these are still dominant in the overall book market. 

Eric Jorgenson: I Prefer Girls by Jessie Dumont. Yeah, these would make some good posters. 

Paul Millerd: Exactly. Yeah, and so eventually they get smart enough to integrate this into the whole I'm going to publish your book package. And they probably benefited from that. But even still, book publishers do not put out paperbacks often with bigger books in the first print run. Penguin Portfolio, they put out hardcover first. Why are they doing that? Because they get more margin. However, I'm not sure this makes sense. 

Eric Jorgenson: It almost certainly does not, yeah. 

Paul Millerd: Because, yeah, like you would just sell more books if you had more pricing options. Price discrimination 101. You might cannibalize some, but I honestly don't understand why they're not putting out all the versions at once. 

Eric Jorgenson: Well, you definitely do. And it's because they're protecting their hardcover margins. 

Paul Millerd: But their paperback margins are pretty solid, too. So, like an 18.99 book, a publisher is still going to make 5.57 on that. 

Eric Jorgenson: But even if the margins are the same, the volume is different. Like I feel like they're working from a model of assuming that a book sale is going to be a book sale and that anybody who would spend $30 on a hardcover would do that instead of spending 10 on an eBook. Even if… like in my experience, there are certain types of readers. Some people just read on Kindles no matter what. That's just how they read. Some people only listen to audio books. That's just how they read. Maybe you could argue there's like a small discretion between somebody who's paying 15 for a paperback and 30 for hardcover, but that's kind of marginal. But I think you're totally right. If you just put out all formats from the very beginning, you will sell more copies. And you run into this issue where like, if it's not available on Audible, it just doesn't even exist to those people who are audio only people. And so, you're hampering that like word of mouth. And even if your book gets recommended to an audio person or a Kindle person, if it's not out, like they're not going to pick it up, they're not going to read it, and they're not going to recommend it. And that snowball of word of mouth isn't going to continue. 

Paul Millerd: Yeah, I don't know why I have a preference for paperbacks, but I basically just like try to avoid hardcovers like the plague unless they're like my friend's books. 

Eric Jorgenson: Interesting. 

Paul Millerd: I don't know. I just like the feel of paperbacks. Maybe I'm that lurid reader. But so, I think this ties back to earlier, that the self-publishing world is like a completely different universe that the traditional book publishers have not learned anything from. And so, the self-publishing world has done all sorts of testing and found like what are optimal prices, how do you position books, how do you get books into readers' hands. And so, there's a lot of experimentation that is like not actually flowing between the two different worlds. And I think one of my predictions for the future is like eventually those are going to bleed into each other. Because there's just too much money to be made and too much information that's not being collected. But I did spend nine years in strategy consulting, and organizations can stay dumber longer than you can ever imagine. 

Eric Jorgenson: Especially prestigious, slow moving institutions with long histories in particular. I think there's a lot of parallels between like education and publishing from my perspective. Just like there's dogma in there that's really tough to shake. 

Paul Millerd: Yeah, so one of my proxies for judging an industry or company is basically just organic growth rates. And so if you look at like Penguin, their organic growth rates are stagnant. They actually shrunk last year. And so, when you're in a stagnant industry, you don't attract top talent, there's a lot of infighting, and there's a lot of infighting for the existing profits to capture those. Political wars, et cetera. You're not going to get innovation. It's not because these companies have stopped thinking, it's that the ecosystem does not actually enable the incentives that drives growth, which is like basically organic growth that enables increasing pots of money to pay out talented people. And so, it's very simple. Like no one's being stupid. Everyone's being rational in the entire system. But like a lot of these companies are part of bigger holding companies. I think like Penguin is held by like Burlesman or something. And so there isn't as much incentive for these to be massive growth companies. Because the owners of those holding companies, they're getting paid, not only the profits from those divisions, but diversification and status payoffs. So, if you are a big company, you can basically launder reputation through your publishing arm, if you need to, and you can get payoffs to other places in the portfolio. So, I think that's why these companies often end up in larger conglomerates. 

Eric Jorgenson: Interesting. Yeah, you could probably make a strong case for synergy amongst a broader entertainment portfolio, if you're optioning books to turn them into movies or TV shows, which there was just like this crazy rush for IP ownership over the last like 20 years for the streaming wars. So that makes some sense. It's also like a pretty… my understanding, I haven't like dove deep into the financials, maybe you can dispute or confirm this, but like most of the money these publishers make are from the deep back catalog. Yeah. And so, it's like they're making money today from decisions that were made 20 years ago by probably an entirely different set of leadership and books that were born into an entirely different culture. Like how much money is somebody still making off of How to Win Friends and Influence People or Seven Habits of Highly Effective People? Like that back catalog is crazy. And they probably paid 10 grand for an asset that's now worth, what, half a million, a million dollars a year, 20 years later or 50 years later. 

Paul Millerd: Okay. So in 2020, 67% of all print units purchased were backlist. In 2021, 70% of print sales were backlist. And so 60 to 80%. And so, if you're an author and you're signing with a traditional publisher, you are not the customer. You are not the customer. Retail bookstores are and the backlist. And the backlist basically requires no maintenance. 

Eric Jorgenson: They're hoping you become a backlist. They can pay as little as possible for the long-term rights and that you somehow become a lottery ticket winner and they own control and royalties forever. When does it become, what's the margin where it becomes a backlist title? Is it just the year before or is it like five years? I don't know if that's an obvious answer. 

Paul Millerd: I'm asking Perplexity, AI assisted podcast. And so, let's see, when does a title become backlist? Six to 12 months after release. Or after a season, three to six months. Often, this is a good way of thinking about how a publisher would think. They're basically going to put effort in for three to six months. And then it either has potential to stay on as back list, or they're just going to ignore it. So your book could literally be dead in six months. However, if you're self-published, you have incentive to keep selling. I have two titles right now, Pathless Path. You buy this book right now, I get seven or eight dollars. And so I'm incentivized to talk about it all the time. And so, yeah, that's sort of some of the incentives that I think are worth talking about. So, one more trend, and then I think we can probably pivot to like riffing about where does the future go, and I have a few ideas on that. So, I think one thing that was interesting that came up is a lot of authors made their break or made it big by selling rights that they had retained. So, Stephen King retained his paperback rights and that launched his career because he was able to capture his resonance in the market. Harper Lee, To Kill a Mockingbird. How do you think he made it big? His book deal or something else? 

Eric Jorgenson: Something else. 

Paul Millerd: His movie rights. So they didn't acquire film adaptation rights at that time. So he retained those and became rich. Tom Clancy, similar thing. He retained film and international rights, which later earned him millions. So here are a bunch of examples. The other one, Hugh Howey. Hugh Howey self-publishes first, retains his rights, and then options print books to big publishers. Now, he has huge resonance, and that's easier for him to pull off. But I think what's shifted in that, like I would encourage a lot of people, especially if they own their audience, to think about negotiating for retaining rights upfront. Retaining some rights. 

Eric Jorgenson: Yeah, as many as you can. Like, remember the counterparty, their goal is to get as much rights as they can for as cheaply, as little as they can pay you up front. That's their goal. And I think it's also worth mentioning the dynamics of the agent in this conversation are not what they appear. To your point earlier of if you're an author signing with a publisher, you are not the customer. Think about it. When you go as a single author and you go hire an agent to go negotiate a good deal for you with that publisher, that agent's entire livelihood is based on having good relationships with the three to five publishers that make their career. That publisher pays the agent hundreds of thousands of dollars or millions of dollars over the course of their lifetime. They are not going to burn bridges and fight to the death to get you a good deal. They are going to preserve their relationship with that publisher. They are the sherpa to lead you into the maw and get you to accept the deal that the traditional publisher is offering. They are not there to maximize your outcome in the way that you are. It's really, really important to understand that. 

Paul Millerd: Yeah, and I think an agent can be a good partner. There's nothing stopping them from making that decision on their own to add a lot of value to their clients. But the incentives in the system do not require that. 

Eric Jorgenson: Yeah, I think they're all wonderfully good people. And I think these deals are really complicated to navigate, and it does help to have someone who understands all of what's happening, but it doesn't have to be complicated. 

Paul Millerd: And so, I have an agent now for foreign rights. I'm using DropCap and that's just an impossibly hard space to navigate. I tried to do it on my own and basically just like, because of legacy reasons in the industry and the complexity of so many different countries, it was just too hard. And so I made like $2,000 doing it on my own for like a year, and now I've made $14,500 optioning rights to multiple countries in the last six months. So, it's like I think there is value, but I think agents are mostly gatekeepers. And I found this out by trying to negotiate a deal with Portfolio myself for the rights to my book. So, they tried to- 

Eric Jorgenson: Dude, I want that story. 

Paul Millerd: So, they tried to acquire The Pathless Path. Somebody reached out about a year after my book was published. I think I had sold about 10,000 copies, but it was starting to take off. It was accelerating. And so they reached out after that started to happen and said, hey, would you be interested in publishing a book with us? I had a conversation with them. They're like, we really love The Pathless Path. We have ideas to reprint it. And we want you to write a second book. And so, they offered me $70,000 for The Pathless Path, lifetime rights plus 85 years after death, which is how a copyright works. That's how copyrights work, you didn't know that? 

Eric Jorgenson: It still blows my mind, dude. That's so long. 

Paul Millerd: And then 130 grand for 70 years after the author's death. There are some differences, but yeah, 70 years after the author. And so then they were offering me 130 grand for a second book, which is interesting, but it's paid out over four payments. It's a really slow publishing process, and I had already just figured everything out on my own. So I did some math and said like, okay, if I sell 10,000 copies again in the second year of the Pathless Path, I'll make $50,000. And so I'm going to like earn out the publishing deal. But if I went with a publisher and continued the pace of those sales, I would actually need to sell about three times as many copies because I'd be earning less per book. And so that would require a huge effort on my behalf, which I didn't want to do. I was like, I'd rather just write another book than putting in this huge marketing relaunch effort. Not to mention, they were going to take my book out of print and then put a new cover on it. That was their big idea for reinventing my book. And so I think I said, okay, I'm not doing a second book with you. I'd consider something around like 600 grand for The Pathless Path. I just made up a big number. And honestly, that probably, that might turn out to be a good deal for the publisher because my book is continuing to sell. It's never had a day without a sale. 

Eric Jorgenson: What did they say to the 600K offer? 

Paul Millerd: They said, get an agent. And so this basically taught me that agents are the gatekeepers. They're the people that keep the authors in line. The agent was like, oh, that's too much. Nobody ever gets that much. You can't get that. The max you could get is like 250, 300. And so I was like, all right, screw this. All in on self-publishing. And so, yeah, I just like doubled down on what I was doing. And I actually got a bit bolder and more ambitious after that. And I mean, obviously with some help from my friend Ali Abdaal, who's turned into my part-time marketing assistant for the book. But he shared the book right after that, and I ended up selling 35,000 books over the next year. So they offered me 70 grand for lifetime rights for 70 years, so let's say 110 years in a conservative estimate of my life. And I earned, what was it, 155 grand, 175 grand over the next 12 months from my book. And so if your book is succeeding and resonating with the market, a lot of times these deals just don't quite make sense. Now, I am fair here in that they would hit distribution channels I can't hit. Could they have expanded the audience for my book? Probably. Would they have done it? I couldn't guarantee that. I can't guarantee they're literally going to do anything. And for a 70 grand deal, for a book that's already in market, they literally can't promise, they're probably not going to put a lot of effort behind that. Compared to this is like my baby, and I love my book. Not as much as my actual baby, but I do, I love the book. And so I want to keep talking about it. And so, yeah, that's my experience turning down a big publisher. 

Eric Jorgenson: I love that. And I love, you've got a Twitter thread where you keep updating. You're like, it's been 18 months since Penguin offered me 70 grand for my book, and I've since earned $250,000 on it. 

Paul Millerd: Yeah, it's over 200 now, I think, because with the foreign rights deals and such. And that's the crazy thing too, is there's this, if your book does reach this audience that resonates with it and keeps recommending it, I just had my book published two weeks ago with a big publisher in India. So now my book is in the largest English-speaking market in the world, which is like crazy to think about. And I don't even know what the long tail of that is. But my rights revert on that. Four and a half years from now, I own Indian publishing rights again, and I can resell them. If I've turned into India's biggest nonfiction writer, I now have an opportunity to capture some of that. 

Eric Jorgenson: You ended up… is this different? Your first attempt was to sort of publish, print, and distribute directly in India. 

Paul Millerd: Yeah, so I did a few experiments. I used Pothi, which is really easy. You can print your book locally. And so if you print on demand with KDP, you can't sell your books in India really because they're too expensive, but you can print locally. Pothi I used and they self-publish and then stock them in Amazon and Flipkart, which are the two biggest e-publishers. The next thing I tried was a hybrid publisher in India. And I basically… my hypothesis with this is like, I want to write a lot of books. So I want to just try stuff. I want to learn and become really good at this. And this scratches that like former strategy consultant. So it's fun too. And then I went with Think Tank Books, and they did another print run of my book, about a thousand of them, and then sent them to like a hundred plus bookstores around the country. And then like six months after that, I then signed with a foreign rights agent, and she recommended just to stop that because she thought I could get a pretty big deal. And so, I got 6,500 for English reprint only in India and then all the other languages as well, Hindi, a couple other languages, I forget what they were. 

Eric Jorgenson: Yeah, Marathi and Tamil, I think. Yeah, it's a really interesting thing. The other point that I think is really important and worth making that you've like dance around a few times is like when you self-publish and when you know that you're going to make seven or eight bucks per book, you can invest in the growth of that book. Like you can go buy ads for two, three, four or five dollars per book per cost of acquisition and still have a profitable way to grow your book. Whereas if you're only making a dollar a book or two dollars a book from the traditional publisher and they're not doing any work and you can't make them do any work, you have no margin to experiment with. You can't offer a bounty, you can't offer a referral program, you can't, it's more expensive to gift books to people, you can't do paid ads, you can't… There's just an infinite number of things that open up to you when you have full control over the reinvestment and growth of your book. And a lot of strategies become possible that aren't otherwise. 

Paul Millerd: Yeah, so I have 200 copies of Good Work sitting over there, my second book. They cost $3.50 to print plus shipping through Amazon. So it comes out to like $4.25 a book. And so I mostly just gift those. Because what I found with the first book is that if people like it, they refer it to others. And I want the book to spread. So every time I'm gifting a book, it's basically just like placing these serendipitous bets out into the world. Traditional publishers do not understand generosity. They are like a cost-cutting machine. They're focused on the backlist. They're trying to extract profits from that backlist. And they do not understand that more books out there in the world gives more chances for the book to spread. They do do this through retailers, and they do a good job of that. We as self-publishers can't really do that well. But they make authors, they'll give an author like 20, 30 copies of their book, and then the author has to buy them at 50% of list. 

Eric Jorgenson: So, the author is still paying the publisher basically their full retail price, the full anything, the same price that anybody else would pay for their own book. So yeah, to give away your own book costs $15 or more. 

Paul Millerd: If I was an author, I would illegally print my book. No, really, like they should illegally print their book in paperback. I don't know why they're not doing this. Because okay, if you're a $30 hardcover, you get to buy your own book for $15. What's the cost of goods sold for a hardcover for a traditional publisher? $4.50. So, you’re contributing $11, 10.50 to a publisher's margin. And so this might be a good pivot to talk about the future. So basically, all this money in the system, retail and publishers, we're paying for labor in a system which like a lot of it has been automated and improved. Now one of the challenges is a lot of the distributed printers, especially for paperbacks, are in Amazon fulfillment facilities. And the publishers just have like not built that out. Because I don't know, they don't need to because they're just collecting rents from the backlist. 

Eric Jorgenson: Yeah, that should, the cost of all of those things should continue to squeeze, but it's still inside this black box of publishers, quote unquote, like doing the distribution. I've had a bunch of authors approach me and be like, how hard is it to like do all of the logistics and the fulfillment and the managing of the file, and I was like, zero, like it is zero work. 

Paul Millerd: It's a PDF. 

Eric Jorgenson: You put, yeah, it's a PDF, you put it up in print on demand and Amazon does literally everything. They take the orders, they manage returns, they print the books, they ship it. 

Paul Millerd: Were you shocked the first time you did this? 

Eric Jorgenson: Yeah, I was expecting it to be a lot more work. But seeing that people are paying… they have this fear of the unknown of like, oh my God, it's so much work to manage my book. It's literally no different than a digital product because Amazon abstracts away all of that effort. It's just so easy. It's zero overhead. And I do not know what people are paying these publishers for, for like, quote unquote, managing the back. I know there's more logistics around these hardcovers, but again, like only because they force there to be because they do these offset print runs to create higher margins, to create the management piece. Like if you just do print on demand for everything, it's really, really, really easy. 

Paul Millerd: Yeah, and the quality has come a long way. So I think people are a bit shocked when I show them my book and show them it's self-published. So I think you do the same thing as me. I was very selective about the designs and the quality and the feel of the book. So I designed it such that it was like a width I like holding. I also do matte covers because glossy just looks cheap on paperbacks. I do the cream paper because I just think it's sexy. And people are like, oh, wow, this is really nice. And like sometimes, the printing is not perfect. But I have traditionally published books. They're printing these super cheap, especially paperbacks that are like crooked. They have like typos in it that they can't fix. I can fix typos instantly. And yeah, it's a weird industry because I think a lot of people thinking about writing a book too need to realize that like the value isn't in the printing this. It's actually what you do at Scribe well, which is like raising the quality bar. And I think this is something worth paying for because a lot of people are not good at this. It's like getting the cover design right, making sure the themes flow through the book. Its making sure you are being thoughtful about subtitle, even what you’re putting on the cover, the layout of the book. Because ultimately, if you're putting out your own book, you want to be delighted by it such that you keep talking about it because you are the book's best marketing representative. 

Eric Jorgenson: Yeah, you want to be fully paid for the work that you're going to do. You want to be proud to be associated with it. This book is going to outlive you. It will. And if it's going to be a representative out in the world, you want to be proud of it. That's what I tell people all the time. If you put all this time and effort into a book, because it does take a lot of time and it takes a lot of effort and it takes a lot of investment, if you are not proud to send that book to your most high value persnickety client or family friend or the person who you admire who intimidates you the most with their judgment, if you're not proud to send that book to them, then you went awry somewhere in that process. And this whole publishing world is such a power law thing. Like a book needs to be sufficiently well designed, well organized, well written in order to kind of break through into that place where it's selling a few hundred, a few thousand copies and people are continuing to talk about it and pick it up and have it feel good. Like that quality matters so much. 

Paul Millerd: Yeah, and I think this is something I take incredibly serious. I think about my energy and excitement and enthusiasm for my work. Like, I do not want to sacrifice that. And I have multiple friends who had to compromise on the book title, the book cover design, or like the book subtitle, such that they became less interested in the book. It sort of like made them a little disappointed about it. And so I think one of the biggest risks to modern creators is compounding disinterest. And so, if you're 98% excited about something, that's going to be 97 the next year, 94 the next year, 90 the next year, 80 the next year, 30 the next year, then zero. And so that is the riskiest thing if you're somebody that cares about sharing ideas and doing it over a long term. 

Eric Jorgenson: I love that. That's a great frame. 

Paul Millerd: Yeah. And so, I think like there's nothing wrong with traditional publishing. I think like, not Eliason. Me and him have talked a lot about books. I actually think his book Crypto Confidential made a lot of sense with a traditional publisher. And because it's not something he wants to talk about for the rest of his life. But I think it's a good bet. And he was able to get sizable advance such that he de-risked and took some gains off the board. Whereas if he just put that out and wasn't excited to talk about it in self-publishing, like it might have been a worse outcome. 

Eric Jorgenson: Yeah, it'll be interesting to see what the long tail of that book is, like if it has a huge swell on the next crypto wave or something, but yeah. 

Paul Millerd: But he's a good example of like it doesn't matter what game you do, he really cares about the quality of his books. And so he put his heart into the story and narrative. He pushed really aggressively for like a different kind of cover. And he was aggressive about getting the publisher to give him a lot more gift copies to gift out. And so, I think no matter what game you're doing, and I think this is a mistake of many people that go traditional, like you need to be the owner of your book. And to quote the famous David Senra of Smart Friends, if you are a writer and you are an entrepreneur, and the book is your product. And so, Uber did not outsource, did not license an app to the New York cab companies. Like you want to own your product, or at least own the direction and creation of that product. And I think there's a… I'm not like for or against traditional or self-publishing, and there's many examples of like great partners that can really blow up a book. Like it probably makes sense for James Clear to be with a traditional publisher. But I think the quality of partners in the book publishing ecosystem are not great right now, including for self-published authors. Like, I don't think Amazon is competing aggressively to like add new features, make it better for self-published authors, etc. I think they're basically stuck in this status quo where like they can't do too much because they pissed off the traditional publishers. And there's actually a lawsuit now against Amazon. It was against Amazon and the big publishers, but the big publishers got their name stripped from the lawsuit against illegal price fixing. And so it'll be interesting to see how that plays out. But I think for authors, we should be rooting for more competition in the market. 

Eric Jorgenson: Yeah, Amazon is very powerful and not quite benevolent, I think. There's one, Goggins actually filed a lawsuit against them for basically refusing to crack down on or eliminate pirated copies. Like they sell a lot of pirated copies and his contention is like, you know this. It is a very easy thing to like know what's an authorized or unauthorized version of this book, and Amazon's doing nothing because basically they make money no matter who's selling the book. And that is a frustrating thing to deal with. 

Paul Millerd: Is it the used copies that get sold, like at lower prices? 

Eric Jorgenson: Or just somebody will register as a bookseller as a new thing and print illegally, even though they don't have the copyright, and sell them. Or they'll import them from other markets that were printed outside the country. Yeah, it's a really tough thing to crack down on, if Amazon will do anything about it, which they won't. 

Paul Millerd: Yeah, it's really hard to figure that out because, yeah, people sent me pictures of my book in a bookstore in Korea and in Singapore. And I have no way of knowing if that's like from IngramSpark. Like IngramSpark does not tell you where your books end up. And I have no idea if it's like any of that money's coming back to me. It may or may not. 

Eric Jorgenson: Same, yeah. Very tough. But also like, I don't think that that's fixed through a traditional publisher. I could be wrong. I would love to find out if they have some magical tool for this that I'm not aware of… I think that's just a part of the industry. 

Paul Millerd: Yeah, I think it's part of the industry. I'm sure they're like cracking down selectively in some of the bigger titles. If they see their sales of Atomic Habits go to zero in an entire country, they're going to notice. But like they're not going to notice some random book that gets sold 10 times a month or 10 times a year or something. 

Eric Jorgenson: Yeah, exactly. Dude, this is so fascinating. I think the authors retaining rights thing is magic because also it pattern matches with what you see happen in entertainment. And there's always an undervalued piece of like IP. Like George Lucas famously made a bunch of money on his merchandising rights because the studios didn't think there was any value in that. And then the next time he came back and financed his own sequel and like made a bunch of money by retaining a higher percentage of his rights there. Like this is… 

Paul Millerd: Yeah, it'll be interesting to see. Yeah, like in music, Taylor Swift re-recorded her entire things and put them out on Spotify as her own. It'll be interesting to see if something similar like that happens in book publishing. 

Eric Jorgenson: Yeah, I know some authors are trying to buy back their rights from their publisher, which if you're not selling very much but you feel like you could if you got your rights back and had full control of your royalties, like we talked about, that could be a reasonable path. And it may be cheap to just be like, can I just have this back? You're not doing anything with it. Like I'll pay you two years’ worth of what you're earning now and I get to do it. And then, you're the CEO of your book again and you can control your destiny. 

Paul Millerd: Yeah, I think there's a lot of things that will emerge. I think this is why I want to retain my rights is because there's just so many things that are changing. The self-publishing industry is still very new. What does it look like 50 years from now? I don't know, but my daughter will still be collecting royalties, even if I passed away, which is pretty wild. 

Eric Jorgenson: And dude, it's incredible how, like you and I, I think, both are relatively strategic long-term thinkers, like the value of a book royalty, just call it passive income, let's say it's 10,000 a year or 50,000 a year, whatever you're earning on the Pathless Path, the value of that, if it's consistent over the next 20 years, what would someone have to pay you knowing what you know now to take over, to give that all up? Knowing that your daughter might be still making money from this book in 25 years or 50. That's incredible. Like why would you sell that? 

Paul Millerd: Yeah, I mean, it's pretty crazy. So I don't know how much time you have left, but do you want to like just brainstorm some crazy ideas about the future of publishing? 

Eric Jorgenson: Yeah, man, let's do it. 

Paul Millerd: So, I think one of them, building on your previous one, is like a marketplace for traditionally published books that have not earned out their advance. And so this is one thing that just makes me angry on behalf of authors. If they don't earn out their advance, they basically like give up promoting the book, which I think is negative for the gross domestic soul of our world. Like we should have creative people championing their work and sharing it with the world. And so at least like how could they get the eBook rights such that they could lower the price to like 99 cents or 4.99, increase demand, and people will be like, oh, this is cool. Let's revive this book. Like, I think that is a no-brainer for authors to get back those rights. 

Eric Jorgenson: Yeah, I agree with that. 

Paul Millerd: Another idea is like, thinking about the supply chain, I suspect something will shift in the manufacturing of books. So, if you look at manufacturing across the board, things have been increasingly decentralized and gotten cheaper over time. So, I suspect there are learning curves and economies of scale that can happen if you're able to like do these things at scale. Not to mention just like AI translation with Chinese companies that are doing book printing. And so, if you could opt in via API to a decentralized network of book printers all around the world, suddenly that gets really interesting. Like, I think that is a fascinating leverage point. Maybe it's 10 years, maybe it's 15. But that completely changes the incentives and dynamics in the system. 

Eric Jorgenson: So, that hits on a theme that I am thinking about and exploring. So, there's a guy named Keith who started a company called Perfect Bound, perfectbound.io that is maybe this at the earliest stages. It's basically a marketplace where you as an indie author or an indie publisher can go and source a ton of quotes from a ton of different publishers, printers, I'm sorry, from all over the world. And so, you get a much more competitive thing and you can kind of navigate this world of printers, which again, historically has just lived in this black box of the publisher's offerings. But you can decide if this is a big print run, you can get it real cheap from China. If it's a medium-sized print run, maybe it makes more sense to have it printed locally and minimize the shipping. If it's speed-oriented, small batch, there's printers who are specialized in that. So, I think this definitely works towards that kind of more perfectly liquid marketplace you're describing. And I think the same, build on kind of the thing that you suggested there with language, I think the language barriers are disappearing quickly. There's crazy tools for audiobook narration, translation. They're not there yet. It still takes a lot of post-production, even if it's an AI-generated script, to get it good. And it's actually, in our experiments, not yet cheaper to do a good one with AI than it is with a human. But I think that could change in the next few years. And we'll keep working on it. But if you can instantly translate between all the languages, then it really becomes, the chief barrier between accessing all these different countries, different languages, different cultures becomes distribution. And both of our experiences proved out like that's hard. Like it makes sense to go get a local distributor, a local publisher to give them your translation rights and have them print and distribute because I don't know how the local bookstore retail landscape of Iceland looks. I don't know how to get it distributed there. But if those barriers start to fall first with language, then maybe someone resourceful can figure out how to just push especially digital stuff through all of those distributors worldwide. 

Paul Millerd: Well, I also think there's a leverage point at the actual readers, so eBook readers. eBook sales continue to go up. Like people just call them books now because we've gotten over the aversion to e. And if you have like a Kindle, it should be negligible cost-wise to translate a book instantly to your language with like maybe three different style settings within five years. And so maybe that becomes another leverage point. If that becomes a leverage point, publishers will lose their freaking minds. So, I really think this whole space is going to get like really dramatic, and there's going to be so much PR driven propaganda and nonsense, which is why come back to this podcast, you might be listening in 2029, but we laid it out right here.

Eric Jorgenson: I love that. I love that we started so deep into history because it shows that as technology changes, the structure of the industry changes, and as the structure of the industry changes, where the profits accrue move around. And ultimately, the author’s share should be expanding over time as everything else gets commoditized, the digital distribution gets commoditized, as point of sale gets commoditized. Amazon is still really like an 800 pound gorilla at this moment of like having all the bookstore demand. But I think that that's not necessarily likely to continue permanently. But to your point, like retaining your rights is the high optionality move, especially not letting your rights get controlled by the slowest moving, most dogmatic actor in the industry is an important thing for navigating these periods of change. 

Paul Millerd: Yeah, let's see. What percent of books are online versus bookstores, US. We are waiting, firing up some data centers somewhere. Online book sales represented 71% of the publishing industry’s total revenue. And so, retail is already a tiny player. And this will get me to my next prediction in the future. But like this entire industry is built on the idea that the hardcover is the golden child. And that is prioritized. That matters. All the people that work in book publishing care about this. They work in New York, they care about the literary culture, they care about the bookstores, they care about what their high status peers in the writing and literary worlds care about. But economics don't care about what your opinions are over the long term. And so, one of my ideas is that there's going to be a flippity. So traditional publishers go hardcover first in terms of status and leading with that, with the pre-sales, then paperback, released often later, and then ebook in terms of caring about the eBook. I think there's going to be a flippity. I think people are going to put eBooks out or at least retain status, so it's number one in their portfolio. Then it's going to be paperback, driven by decentralized printing and manufacturing, cheaper cost of printing. And then people are going to look at hard covers as actually high-end collectors items. So I'm actually betting on this. I will be releasing next spring a super high-end version of the Pathless Path. It's going to be beautiful. I'm working with Otterpine. 

Eric Jorgenson: And that's a cool- they do good work. 

Paul Millerd: She cares about books. We're going to do something beautiful. And so my idea is I'm going to compete with what traditional publishers say is their strategic advantage. We are the best at hardcovers. I'm going to compete directly with them, but do something much sexier and nicer. It's going to be color, it's going to be lay flat, beautiful designs, cloth linen cover. And so that's sort of my idea, which is like, okay, if I have a hit in my portfolio, then I'm going to put out the high-end hardcover collector edition. And we see people like Ryan Holiday do this with his books, Brandon Sanderson, et cetera. And I think that's going to become a lot bigger trend. 

Eric Jorgenson: I love that. I see that actually, I think the most internet native writers are actually doing this already. Like we see, like Balaji basically just launched an ebook himself for the Network State. Tim Urban just launched digital for What's Our Problem? And just gets it out. If you're a blogger, it's so easy to ship a digital only book. It's relatively, I mean, you could do it in a weekend basically. You just want good design. And then you see what the response is and then you come to somebody like Scribe to do the design and the page layout and the images and everything to turn it into a physical book and go paperback, go hardcover, expand Audible. I think that's the right way to think about it. And there's a lot of people who are publishing super high volume that way, actually. Like, if you're just publishing eBooks, some of these romance novelists are cranking. They publish a book every month, but they do digital only. And that's just how their audience reads. And that's like a whole different breed of author, really. 

Paul Millerd: And so, I think looking to romance is really smart because that's the same thing that happened with paperbacks. So, be like the romance author. So, my next version, my next book is probably going to be like a sexy man on the front of a cover, real… But yeah, I think this is- 

Eric Jorgenson: That one will be called Hard Work. 

Paul Millerd: Exactly. That's great. But yeah, I think like, I sort of like die a little inside when I see these authors that complete their book, the book is literally done, and then they wait nine to 10 months to launch it. And they're spending all this time doing pre-sales. They're basically working for the publisher and retailers to create hype in their system, to sell the book to retailers and publishers. Now they're not getting the book in the hands of literally anyone. And so, what happens when you get your actual book in the hands of people? They read it, they talk about it, and they start handing it off to friends. A pre-sale is not viral. So why are viral content writers on the internet, who understand virality, memes, et cetera, not taking advantage of the spreadability of their own content? It doesn't make any sense. It'd be better for publishers and retailers if there was an actual book out there to drive hype and excitement, even if it's like a month before. Like put out the eBook a month before, launch the books in a bookstore, a month to two months later, you have this excitement, people are quoting it, highlighting it, sharing ideas from it, and then like take advantage of it. 

Eric Jorgenson: I think part of that virality comes from, like a thing I've noticed is that there's a huge headwind if you only do digital for a long period of time because it's so much less inherently about… people don't take photos of their digital, like of their Kindle and share it. They may share highlights, but they won't share like photos of the cover or get shared in those beautiful like images that people create. They won't get gifted the book to each other. Like you need a physical copy out there. 

Paul Millerd: Look at that. How beautiful. Show your books, too. 

Eric Jorgenson: Yeah, I got mine. All right. Well, I want to hype you up. 

Paul Millerd: I finished this book in September and then I put it out. So literally, look at that, if I had finished it with a traditional publisher, I wouldn't even have my own book to share until like next summer. 

Eric Jorgenson: It's so slow. 

Paul Millerd: And so, there's all these inefficiencies in the market right now. So honestly, I think my book, The Pathless Path, is like very spreadable. It's sort of shocking that no publisher has reached out to do a print only deal because I think it would do really well, and it's something I would consider. Now, I haven't pursued it, maybe I should pursue it more aggressively, but I think it would actually do really well with the mass market, and it's already validated. But to them, it doesn't excite them. What they do is like these three to six month cycles of new books. It's like this shiny new object, but they know like 80% of those are going to fail. 

Eric Jorgenson: Well, the other interesting thing is like, yeah, they're trying to… they don't want to pay a fair price for a good product. They want to get an option on like a potentially 100X or 50X back catalog title, really, right? 

Paul Millerd: Yeah, it's more exciting to root for like the huge potential VC outcome versus the proven profitable company. 

Eric Jorgenson: Well, I don't think they want to negotiate with you. Maybe that's what it is. Somebody get this man an agent to lower his expectations. 

Paul Millerd: Yeah, basically. No, but I think there's actually money to be made for everyone. Which is like- and that's why foreign rights people are willing to do deals with me. 

Eric Jorgenson: Yeah, I have a great foreign rights agent. I love her. She's made wonderful decisions and got me through a very complex thing. And there's definitely value to add there for sure. Yeah, it's a big industry. I think the frustration or the pattern of the frustrations that you and I have is when the author or even the reader is penalized or deprioritized while being given lip service that they're being served. And that's a really tough thing that the industry needs to overcome and figure out how to really take a step back and make good decisions for all the parties involved, even if it's... Just respect the changing structure of the industry. Like don't just try to hold back the tide and hurt a lot of people while you're doing it. 

Paul Millerd: Yeah, I think there was something from Brandon Sanderson where he put out that he was selling bundles of his books, like the print and the digital. And he was basically just like capturing more value because people wanted the bundle. But there's no way to buy a bundle right now. You can't buy the digital combined with the paperback at like a slightly lower cost. 

Eric Jorgenson: And Brandon Sanderson is doing so much innovative stuff. For people who don't know, I think the biggest Kickstarter of all time, or at least one of them, was Brandon Sanderson launching his new series direct to his fans. I want to say it was $40 million raised or something. 

Paul Millerd: I think it was higher. 

Eric Jorgenson: We both furiously Google. Let's see. 42 million. 

Paul Millerd: Oh, nice. Yeah, I try to listen to my audience. One thing I've heard for years is that readers want to get an eBook with a print book bundled together. He talked to the CEO of Macmillan arguing whether he could do this. He felt that bundling an eBook with a print book would devalue the eBook. Yeah, I argued that it's the text, not the format that people are paying for. An eBook is worthless. It's the text that is worth something. So he tried it on his own. My kickstarter proved this. 52% of people, when given the option of a free eBook with their print copy, have chosen to get the print copy. Meaning he's able to sell the higher priced item if you give the ebook away for free. Compare this with 25% or 17% of the recent New York publisher releases. So, in his segment, buying the eBook for fantasy, it seems like a lot higher. And so, by giving the ebook away for free, he's able to charge a higher price for a printed book and move about 30% of his readers to a bundle. 

Eric Jorgenson: Which means he's earning more from each individual reader, increasing his total volume of copies sold, and making himself more accessible and spread wider through a variety of formats. Like I think he's brilliant. And he's gone on to start his own, he basically self publishes now by starting his own publishing company. But he did his first couple… it took him 10 books I want to say, he wrote 10 books to even get his first deal with Tor and then his first series took off. And then he's like, whoa, I'm going to start my own publishing company now. And now does all of his own. It's kind of like high value self-publishing kind of thing. A bunch of the same services that Scribe gives. He just employs the people full time. 

Paul Millerd: Awesome. Do you have any predictions or half-baked ideas? 

Eric Jorgenson: I think a lot more people are going to do these really lightweight publishing houses basically. I think they're going to start their own imprints. I think it's going to be kind of like in music what you saw where people just realize how much power the labels or the publishers have and start realizing that that's where the margin is in the industry. But from a consumer's point of view, they just really want to buy from Taylor Swift or Eminem or whatever. The artist, ultimately, that brand is what has the power, and they just need to figure out how to disintermediate the middlemen and go direct. It's really hard to disintermediate Amazon. You can do it, but you're not going to be able to do a huge volume of it. You can get people to buy direct from you like Brandon Sanderson did. So, I think Brandon Sanderson's leading the way. Some of these romance novelists are leading the way. I think we will see more people basically start their own imprint. And then the most successful of those authors of the previous generation will sort of widen their umbrella and say, hey, you're a talented young author. Let me finance your first book. Let me be the publisher on friendly terms to help you get your first book or two out there. And then maybe you can thrive, you can earn your own money, you can go back. And so, I think we'll see new types of deals get made because it's so cheap and easy to actually spin up a publishing house and use Scribe or DIY, the way you do, to get a really high quality entrant book out into the world. 

Paul Millerd: Yeah, I think a couple of things on that. One is I've already had multiple people come to me and say, can I publish under Pathless Publishing? And so there is some value I've created in terms of a brand and how I do books and like what I write about. And so that's something I'm thinking a lot about. I think for me, it's how do I protect that prestige? But if it's like, oh, I could get a friend to write like a very personal narrative style nonfiction around a topic, that might be something where it makes a lot of sense to partner with me on and then all the people that have read my stuff and trust me are like, okay, I'll take a chance on this. Yeah, and I think one thing holding that back is basically infrastructure, like technology and payments infrastructure. It is non-trivial to actually like share royalties and collect royalties. Basically now there's systems like PublishDrive in which you can like upload spreadsheets and it will like manually calculate this. But yeah, if it's just this like, okay, I'm throwing my name behind this and I'll get 10% of the royalties up to X amount, like you can get so… there's so much potential for creativity. But we only have like two types of contracts. One is the standard traditional publishing contract or the profit sharing contract. And so, there's all these opportunities. I've even thought like, okay, Tim Ferriss, I will give you 10% of the equity in my book for free. And if he loved it and felt compelled to mention it, I would give him 10% of that ownership of my book. 

Eric Jorgenson: And it would be worth it, yeah. 

Paul Millerd: If he started mentioning it, it would change my life. So, Tim, if you are listening, if you are one of Eric's smart friends, please reach out, pmillerd@gmail.com. But yeah, there's so many opportunities like that. I've even mentioned, Ali is like, hey, if you love my stuff, like maybe we could do something creative. Like if you mention the book, I'll just give you like a dollar per book for the next 30 days. 

Eric Jorgenson: That's clever. I like that. I mean, I think we see, I think there's also adjacent value to the book. Like you and I have been talking very much about books here, but what we haven't talked about, and which is probably a whole nother can of worms, but I think it's worth at least hinting at for the sequel, is adjacent rights. So, let's talk about movie rights. You could also look at people who are speaking, where a lot of authors don't actually make that much money from their book, but they do make money either by selling their book directly through their speaking gigs or by using their book to become a more well-known higher paid speaker. So, two examples there, like Reese Witherspoon does an amazing job of like going to authors saying I have this book club, I can bring millions of people into your book. I'm not going to take your royalties, but I do want to option your movie rights before I do it. So, she options movie rights to a book, then takes the book out to her book club. Dude, she is crushing with this. I don't know the numbers, but they are in the nine figures, man. She is absolutely crushing with this playbook. So, another interesting deal.... 

Paul Millerd: It's a no-brainer, yeah. 

Eric Jorgenson: It's absolutely a no-brainer. Every author is excited to do it. They're like, oh my God, you're going to make my book into a movie? Like, maybe. Reese helps them sell a lot of books. It's an incredible thing. 

Paul Millerd: Yeah, I think this is where I want to keep... I'm just me, and I'm clearly not optimizing for the maximum value of my books, but this is why I want to keep the options. So I'm always thinking about this and the upside is there. But yeah, I'm clearly under optimizing these. 

Eric Jorgenson: But at least you got the optionality. Speaking, I think, is an interesting opportunity where like what kind of deal would you get if you gave up equity, not just in your book to a financier, but also in your speaking fees of like… 

Paul Millerd: That'd be a terrible deal for investing in me. I'm too lazy to do speaking. 

Eric Jorgenson: Well, yeah, no, no one would give it to you. 

Paul Millerd: Paul won't work. What is this? No, I think, yeah, I think this is the great thing about books. There's hundreds of different kinds of books and hundreds of different reasons to publish a book. For me, I love the art and craft of the word. And like, I really can't wait to see what emerges in like the tenth book I write because for me it's about the sentence, the prose, like I just love it. 

Eric Jorgenson: Dude, you texted me the funniest thing that I wanted you to explain which is, now that I've written my second book, I feel like I can really sit down and learn how to write. 

Paul Millerd: Well, it’s like I think… maybe you experienced this, but writing a book is really hard. But since it's such a long cycle, it takes years to write multiple books. And so starting in 2020 in December, it's now almost four years later. I have two books done, and it's like, okay, I learned some moves. I learned how to think about it. Now I can like go into my third book with better preparation and a better understanding of my writing process and what it takes. And my writing has evolved a lot from the first book to the second book. And it's like I'm starting to get a picture of the future books I want to write. And I think getting better at the writing is a huge motivation for me. So, yeah, it's just this long game I can opt into. It's the hard journey that I care about. And that's basically what good work is about, is find your hard game that you care about. Hard games that you don't care about lead to cynicism and disillusionment and disconnection. And so, writing a book is an insane thing to do, but if you actually enjoy it, it's one of the best things you can ever do. 

Eric Jorgenson: I love it. That's Good Work by Paul Millerd, Reclaiming Your Inner Ambition on digital bookshelves now. I feel the same way, dude. I absolutely love the craft. I find so much joy in creating these things that are so, so Lindy and so accessible to so many people. And I know both of us have gotten really heartwarming messages for our work over the years and how it's helped people kind of find their way forward and give them reassurance about the path that they're on. It's an incredible thing. It's very fulfilling and it's great flow state work and same thing. My list of books to write just keeps getting longer and I keep getting more excited for what the next one will be. 

Paul Millerd: I know, it's like once you write one or two books, everything appears in book-shaped form in your head. 

Eric Jorgenson: Yes. Yeah, it's hard to shake, but I wouldn't want to try. So yeah, dude, this has been incredible, man. What a download. As promised, you brought the heat, brought the wisdom. I've learned a ton. I took a ton of notes. I seriously will be revisiting this and continue to explore this. And we can recap and see how our predictions do over the years and keep pushing this industry forward. 

Paul Millerd: I’m excited to continue to explore this. I think for me, I think I have way more questions than answers, which just makes this space fascinating. And I think it's going to continue to change and I think it's going to get really exciting. And I hope one day I can come back here and one of my books has retired me such that I can just talk and think about this all the time. 

Eric Jorgenson: I love that. Yeah, I mean, I think we're both on the frontier of this thing with like similar but different hats on and different perspectives. And you're totally right, I can feel the winds changing quickly. And I think this industry is going to be totally upended over the next like 10 or 20 years. And I think to quote another David Senra-ism, like those are the margins that will come to control the center. And it'll be very interesting. 

Paul Millerd: I love it. If you can't do this for 10 years, what are you doing? 

Eric Jorgenson: True, true facts. 

Paul Millerd: That's him too. 

Eric Jorgenson: Yes, yeah. You can't go wrong. You can't go an episode without quoting David Senra. 

Paul Millerd: I love it. That quote, if you can't do this for 10 years, what are you doing? It really like motivated me to start doing my book, the second book. It was like, yeah, let's just write books. 

Eric Jorgenson: And I love the way you- I mean, the framework that you did too, the compounding disinterest and the risks associated with it. The Naval version is, if you're not going to do it for 10 years, don't do it for a day, whether it's working with someone or thinking about something or writing about a topic. It's an incredibly liberating feeling to just truly focus on what's most important. I think you're definitely carrying a torch in that direction and a huge inspiration to people to embrace what's really important to them and push out the bullshit. 

Paul Millerd: I love it, awesome. This was so fun. I really needed this. 

Eric Jorgenson: This is fantastic. Paul Millerd Unleashed will be the title of this one. No, incredible stuff, dude. Thank you so much. This is fantastic. I'm so excited to get to take this history and run with it, try to write some of our own. 

Paul Millerd: Hell yeah.

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