In preparation for a panel on fiction writing/blogging/the death of the publishing industry/the death of newspaper book reviews that I’m participating in this Saturday, I’m trying to gather as many different perspectives on the current state of the publishing industry as I can. It’s not my bailiwick, but Twitter has been great at pointing me in a few interesting directions (@sarahw, @RonHogan, and @R_Nash being just three of many especially helpful people there worth following). Everybody agrees that the current situation is destructive, but it’s interesting to see the optimism of younger writers with little to lose set against the handwringing of the old guard that’s losing plenty.
In an interview with the Urban Elitist, Tao Lin discusses how he’s successfully financed his forthcoming novel by selling six $2,000 shares in it. Lin is somewhat infamous for his hustling for attention; I haven’t read a word of his fiction, so I have no clue if it’s worth that kind of investment. But going the Tao Lin route, however attention grabbing, still means lots of mac and cheese, at least for a while:
I have had part-time jobs almost continuously since college (I am 25), I think, except for maybe one year when I shoplifted batteries and Moleskine journals to sell on eBay. I stopped working at my last part-time job last August when I sold 60% of the royalties to my next novel, RICHARD YATES (Melville House, 2010), for $12,000. Since then my money (other than the $12,000) has come from selling pre-orders and lifetime subscriptions to books that a press I started called Muumuu House is publishing; Christmas and Chinese New Year’s money from my parents and brother; and selling drawings, drafts of things, and various “piles of shit” from my room on eBay.
Still, he’s hopeful: “I feel that within 2-4 years I will have steady cash flow from royalties from my books, foreign sales of my books, foreign royalties from my books, and other writing-related things,” he writes. Keeping authors going until steady cash flow arrives is also much on the mind of agent Amanda “Binky” Urban, who works with a host of A-list fiction writers. In an interview with Haaretz, Urban—who was in Israel as one of her clients, Haruki Murakami, picked up the Jerusalem Prize—argues that agents like herself, along with major houses, played critical roles in bringing Cormac McCarthy and Richard Ford to wider audiences. Her biggest fear in the midst of the reshaping of the publishing industry is that younger fiction writers no longer get the time to find a foothold:
“So fewer books will be published, and those whom we call midlist writers will no longer get published. The major writers will keep publishing, debut books will always be published, and the ones in the middle will have a problem…. The question is really how you keep authors alive until they break through and garner a large readership. That’s what I stay awake at night and worry about.”
It’s a legitimate concern, especially if a writer doesn’t have the temperament to perform all the duties that a publishing house traditionally has—it’s certainly hard to see the reclusive Cormac McCarthy starting out by going the Tao Lin route. The risk, perhaps, is that the fiction writers who survive this transformation are the ones who do the best job at self-promotion. Even McCarthy now has to give in a little, as he did by appearing on Oprah. Urban explains:
“I told him that before he says no, an Oprah Book Club pick means sales of between 750,000 and 1.2 million copies.” There was a long pause, and McCarthy replied that he knows he owes a lot of people, and maybe he should consider it. She asked him whom he owed, and he replied that he owed her and his publisher (Knopf). “I said, well don’t do that for us, and he said no, I think I should.”
markathitakis.com 
Tao projects sales of the book at 13,000 at the Publishers Weekly website.
For argument’s sake, say the book is priced at $20 and Tao is getting a royalty of 20%.
That would mean he’d get $4 in royalties for every book sold.
Four dollars times 13,000 copies is $52,000.
If 60% is 3/5 and Tao’s royalties are roughly $52,000, then he’s sold $31,200 of his future earnings for $12,000. He loses almost $20,000 in income, a big gain for the shareholders.
Let’s say the book is priced at $15 and his royalties are 15%. In that case, he’d be getting $2.25 in royalties for each copy sold. That would mean that assuming Tao would sell 13,000 copies, his total royalties would be $29,250.
His shareholders would have 3/5 of that, or $17,550. He would lose $5550 in income.
But if the book sells only 10,000 copies, Tao would do better.
He’s given himself a financial incentive to sell fewer books, based on whatever break-even point the book price and his royalty rate are.
Of course, he may be in dire need of the cash now, but it seems like the more successful the book is, the worse Tao will end up financially.
your logic seems weird
kimmy
Kimmy tagged my place, too. In the Muumuu House post. Creating a new branch of economics perhaps?
OK, then explain why my math is wrong, Tao.
Obviously you will lose money if your shareholders make money.
They paid $12,000 for 60% of something, right?
That would mean that the whole is $20,000.
If you make more than $20,000 in royalties from you’re book, your shareholders will gain and you lose money you otherwise would have had as income.
As I said, the immediate need for cash, plus the possibility of inflation, and the publicity value, might help you out.
Cash-wise, though, it’s a bad deal for you the better your book does.
Maybe you priced the shares too low?
Instead of “screwing the system,” Tao Lin screwed himself. Whoever was his adviser in his scheme, if it was a financial planner, gave him terrible advice that will cost him thousands of dollars.
As long as Tao writes a decent book, and enough people buy it, no one seems to be getting “screwed.” Rather investors are being rewarded for this the risk they took on and Tao is trading a significant share of future royalties for upfront cash.
Perhaps a better deal for Tao for similar investment would be self-publishing the book on http://www.iuniverse.com/ and paying each investor pack their initial $2,000 + 15% over a given period of time (not a bad return these days, though Tao may need to increase that return). This would completely cut the old-line publishers out of the loop and yield Tao a bigger share of sales over time than his current offer.
In this way, Tao might demonstrate a kind of publishing Tao for aspiring and entrepreneurial writers (sorry, couldn’t help it).
Well, I don’t mean “screwed” but was riffing on the title of this post.
But, John, you’re right. Melville House being the middle man is the problem. Tao would be better off financially without them, by publishing the book with his own Muumuu House.
Someone suggested to me that I could be wrong if the shares were like shares in a stock that fluctuate, go up and down as people perceive their value differently.
That way people could trade the shares for more or less than what they paid for it, depending on whether their belief on how the book would sell.
But the basic premise as the deal is structured now is this: Tao makes out best, gets the most return on his $12,000 upfront, if he sells the least amount of books.
If the book is the biggest bestseller of all time and the royalties are a million dollars, he would be losing more than half a million dollars for the sake of getting $12,000 now.
I can’t understand why no one mentioned this before. It’s like Bernard Madoff or real estate, I guess; if it’s too good to be true, people want to believe it.
But it’s not a model for writers to follow if they want to make money. It makes Tao look, at the very least, like he’s ignorant of basic arithmetic.
(I assume here that he is honest in his dealings, unlike Madoff, that he actually got this money and honestly plans to pay his investors back. If the whole $12,000 is a joke or a fiction, then it doesn’t matter. Likewise if he plans to stiff his investors out of their royalties.
But everyone seems to think Tao is honest, and I have no reason to believe otherwise.)
Small point, but sheez, we’ve come this far…
True, if Tao’s book became a bestseller, his investors would get 60% of the returns. But Tao himself would retain 40%. And it’s very possible that he never would have earned that 40% without the $12,000 investment. It’s called opportunity cost and it happens every day (well, not as much these days as 10 years ago).
If Tao has the chops to write a killer novel, then maybe you want to get in on the action, Kimmy?
BTW, Mark I enjoyed your review of the Stones book in the Post and thank you for keeping this blog going. I really enjoy it.
How could he have not earned the 40%. The novel was already written and accepted when he sold the shares of the royalties. Opportunity cost is the cost of passing up the next best choice when making a decision. I don’t understand how he might not have earned the 40%.
Now he might not have been able to eat, pay his rent, etc., and thus died (to consider an extreme) and would not be around to collect the 40% but his estate would have.
His estate is his parents, I assume – the same couple indicted by the SEC as “serial securities fraudsters” in the Surgilight scandal (http://www.sec.gov/litigation/complaints/complr17469.htm) when Tao’s father claimed his company had a cure for presbyopia (adult farsightedness) which turned out to be a lie. (See http://orlando.bizjournals.com/orlando/stories/2002/12/16/daily53.html for confirmation; Tao has confirmed this and referred in his blog to his father’s prison sentence for securities fraud.)
Give up, Kimmy. Just forget about it. That guy Harry Markopolos: the Securities and Exchange Commission ignored his warnings about financier Bernard Madoff for years. The people who said “JT Leroy” was a fraud were totally ignored for years.
Anyone who questions Tao Lin (did he violate securities law in offering shares on the internet? who are his investors? what exactly is the legal relationship between him, them and Melville House? are his royalties even assignable? ) will be met with derision by his many fans who love him.
But he has made himself into a celebrity, a public figure – see the recent speculation as to whether Lin is really the Hipster Runoff blogger, the “Lit Boy” piece in New York Magazine, etc., and he won’t escape scrutiny forever.
True, people will believe everything he says for now. People will buy “lifetime subscriptions” whatever they are for his press which currently has published one book and send him money.
Lots of people sent a lot of people money in the last decade and by wanting to believe the impossible – Madoff’s investments never lost money but were completely safe, housing prices would go up forever, obviously insolvent banks and businesses were financially sound.
The innumeracy of even a college professor like Mark who says he can’t figure out simple arithmetic shows why, as Tao Lin would say, our society is f–ked.
Thanks, John, and thanks to everybody else who’s weighed in here. I’ve tried to steer away from any of the controversy that Tao Lin seems to generate—as I’ve said, I haven’t read a single sentence of his fiction and only have a general sense of how polarizing a figure he is. But this has made for some interesting reading.
You’re most welcome, Mark, and on behalf of Tao, Felix and our friends, we do appreciate your letting us appropriate this blog to stir up a little controversy on behalf of Tao Lin and his new venture, Muumuu House, whose first book by Ellen Kennedy, “Sometimes My Heart Pushes My Ribs,” is available now.
And while “Richard Yates,” Tao’s second novel whose financing I was questioning in the above blog comments is not yet available, you can currently pre-order his novella, “Shoplifting at American Apparel,” to be published by Melville House this spring.
As you may have figured out, Mark, not only myself but Felix are fictional characters made up by interns who work for Tao Lin. Our job is to generate controversy by attacking and questioning him. It’s a kind of fiction of the 21st century kind, something we know you appreciate.
Thanks again for letting all of us “use” you.
Good show, guys!
John might be a real person, but who knows?
And, Mark, to fill the gap in your knowledge of this giant of contemporary American lit, free copies of Tao’s short story collection “Bed” and his award-winning first novel “Eeeee Eee Eeee” are on its way to your mailbox.
Learn something, will you.
Tao Lin is a one-trick pony, whose one trick is publicity. The writing is weak. Which is why he doesn’t have a publisher who pays him.
But, Amy, he has investors who pay him $12,000!
And, Amy, the word “phony” is spelled with an H in it.