Making a living as a book author is as rare as being a billionaire

Cultural billionaires vs. actual billionaires

Art for The Intrinsic Perspective is by Alexander Naughton

Imagine that in every business school students were told, in all seriousness, that they were in training for being a billionaire. Imagine it was heavily implied that the natural conclusion of their careers—what “making it” in business meant—was legit billionaire-status. Judged from the outside, such a situation would appear the enactment of a collective pathological delusion.

And yet an equivalent, at least of a kind, occurs every year in the arts, in writing, and in music. Functionally, at least. For when it comes to certain creative fields, while there are other tangential options than simply becoming very famous (like working for a non-profit, or teaching creative writing at a university) there is an incredibly steep, punishingly steep, impossibly steep, beyond-Pareto-distribution-steep curve wherein only a vanishingly small fraction of people make a living via their artistic efforts alone. Now, I wouldn’t want people to stop majoring in English Literature, Dance, or Fine Arts, just because of this—that’s not the point of an education. But youthful aspirants deserve to know that what makes the situation in many creative fields unusual is that only the very tippy top count as having “made it” in the most baseline practical sense of being able to do the thing for a living. This is different than almost any other field or career, where you can make a living without reaching the absolute peak of human accomplishment and accolade.

Occasionally, this asymmetry is thrown into stark relief, to great consternation and debate. A recent example of this was the viral article “No one buys books” by Substacker Elle Griffin (a previous guest on The Intrinsic Podcast) going through the unforgiving sales statistics of book publishing. Much of her post was a synthesis of a 700,000 word book, The Trial, which contains the court transcripts following the antitrust case that occurred when two of the biggest publishing companies tried to combine in 2022. Hidden in the transcripts are a lot of publishing industry secrets, said by the CEOs of the companies themselves, like:

It would be just a couple of books in every hundred are driving that degree of profit… twoish books account for the lion’s share of profitability.

— Madeline Mcintosh, CEO, Penguin Random House US

Or:

Q. Do you know approximately how many authors there are across the industry with 500,000 units or more during this four-year period?

A. My understanding is that it was about 50.

Q. 50 authors across the publishing industry who during this four-year period sold more than 500,000 units in a single year?

A. Yes.

—Madeline Mcintosh, CEO, Penguin Random House.

In this, as Elle has pointed out before, the economics of publishing are a lot like venture capital investment: most books, the overwhelming majority, don’t sell. Companies make many mini-bets. Very occasionally, a bet in their portfolios goes absolutely wild and they finally make a profit entirely on the success of just a handful, or at most a couple dozen, books a year, despite officially publishing hundreds or even thousands. To publish a book (which is hard enough as it is, and requires a good deal of luck) is merely to enter this further grand lottery.

To truly understand the bleak reality requires a comparison. The analogy I think best is that the few who can make a living solely by writing books are cultural billionaires. And I think it’s arguable that becoming a cultural billionaire is just as rare as becoming an actual billionaire (under an admittedly broad calculation of equivalency).

Can we actually get some numbers to support this analogy of real billionaires to “cultural billionaires” who can merely make a living in some creative field—here, book publishing? Actually, yes. Even though it’s sketchy napkin math, a rough guesstimate is doable. Specifically, we can compare how many people earn a living wage through their book writing alone vs. how many billionaires there are (confining ourselves to America and the American publishing industry).

First, how many billionaires are there even? Since we’re looking at it from the perspective of “becoming a billionaire” we don’t want to count any billionaires who inherited their wealth. Luckily, Forbes tracks how many billionaires in their Forbes 400 are “self-made” on a scale of 1-10, with 10 being the most self-made (growing up in poverty) whereas 8 is growing up middle-class or upper-middle-class (but not rich).

source

Forbes counts anyone above 5 as being “self-made,” so let’s go along with that, which they say is ~70% of the total number (in the 1980s it used to be only around 50% self-made). The Forbes 400 cut-off is not actually one billion, but 2.9 billion, so this statistic is leaving out some tail of “minor” billionaires. According to Forbes itself, there were 735 total billionaires in the US in 2023. Let’s assume that the 70% self-made number still applies to this larger sample, which gives us about 515 self-made billionaires in America where they didn’t just inherit their wealth (but this still includes, e.g., kids who benefitted from tiger parenting getting them into Harvard; I’m not saying this is a perfect measure of self-made, but it’s what we have).

So 515 self-made billionaires, give or take.

When it comes to authors, revealed facts allow for at least some estimations. For instance, we know that most authors are not out-earning their advances (the amount an author gets paid when the publisher buys the book; authors only get more money via royalties if they sell enough books to pay back the advance).

The single most important contract term is the advance…Because in a large number of cases, it may be the only compensation that the author will receive for their work.

— Ayesha Pande, President, Ayesha Pande Literary

Personally, I know several authors and have discussed finances with them: none of them have significantly out-earned their advances via sales (including myself). Just focusing on advances narrows it down considerably, since we can do some back-of-the-napkin calculations on those rather than actual book sales. In “No one buys books” this quote is pulled from The Trial:

Top-selling authors were defined as those receiving advances (i.e., guaranteed money) in excess of $250,000. Far fewer than 1 percent of authors receive advances over that mark; Publishers Marketplace, which tracks these things, recorded 233 such deals in all of 2022.

—Ken White, Publisher at Sutherland House.

Since Publisher’s Marketplace supposedly tracks the majority of book deals, this number is likely close to the real one, and seems roughly in line with what the publishers self-report as well (although there is a discrepancy over precise numbers). Still, something like 233 authors getting an advance worth more than $250,000 each year is reasonable to start with.

Unfortunately, it turns out that most big book deals are reserved for celebrities. In a way, celebrities getting book deals are like the billionaires who inherited their wealth—they shouldn’t be counted, it’s always ghost written, etc. According to the excerpts from The Trial, celebrity authors are sometimes the majority of a house’s large acquisitions:

75 percent [of our] acquisitions come from approaching celebrities, politicians, athletes, the “celebrity adjacent,” etc. That way, we can control the content…. We are approaching authors and celebrities and politicians and athletes for ideas…

— Jennifer Bergstrom, SVP, Gallery Books Group

While I can’t find the numbers for all the major publishing houses, I think it’s reasonable to say that something like 50% of the major $250,000 plus book deals go to celebrities. Maybe this is really 27% or 43% or 68%, but as we’ll see, it won’t really matter for the final numbers, since the comparison is going to end up being about orders-of-magnitude equivalence (and if the percent is smaller than 50%, it may be balanced by the likelihood that the larger an advance is, the more likely it is celebrity-based). This fits the statistical distribution with other reported numbers: e.g., an old article from Publisher’s Weekly, published in late March of 2020, said there had only been 12 deals with advances above $500,000 so far in the entire three full months of 2020 listed on Publisher’s Marketplace.

Assuming a flat 50% are celebrity deals, of 233 authors getting an advance of at least $250,000 there are therefore only about 117 spots for non-celebrity authors each year listed in Publisher’s Marketplace. Of course, that’s just each year, as there’s likely a significantly different set of authors getting such deals the next year (most books take years to write). So the pool of people receiving such deals across several years is actually larger. But even if we cap it merely to getting a book deal of above $250,000 every five years, and we assume no authors double-dip across that period, that’s still just 585 unique non-celebrity author slots available over a five-year period. This crew are the set of writers making a minimum of $50,000 on average a year through their book deals alone as a lower bound (if selling once every five years).

That’s 585 non-celebrity authors making a living vs. 515 self-made billionaires.

A bunch of caveats are in order, since as I said, this isn’t exactly a scientific comparison (a disclaimer that’s understating it). E.g., there’s the question about the unknown frequency by which such authors sell books and what that looks like (the above calculation is a simplicity). The 585 unique non-celebrity author slots available across a five year period making a living wage might involve a lot of double-dipping, shrinking it further. Additionally, there might be a large drop-out factor for this cohort, where authors pop in to get a $250,000 advance but then never get anything like that again, and so the total of authors is much lower across a 10 or 20 year horizon. On the other hand, perhaps there are authors who cobble together an advance that’s still significant but below $250,000 every three years and make it work. Also, literary agents take 15% of advances to start with, and we don’t know the true percentage of celebrity deals, nor how skewed it is as a function of the size of advance (it’s very possible that 90% of deals significantly larger than $250,000 are reserved for celebrities).

Then there’s the question of how big such deals actually are on average: $250,000 is just the lower bound, but only rarely does a book advance clear $1,000,000—as was reported, only ~4 are even above $500,000 each month. Then there’s the question of whether Publisher’s Marketplace is underestimating deals of that size. My understanding is that it tracks all domestic book deals as a third party, but the number that publishers themselves give at certain points looks to be higher (e.g., Penguin Random House, which is so big it gives out the majority of the huge deals, says it gives significantly more advances a year of that size than Publisher’s Marketplace lists). Publisher’s Marketplace underestimating could add on a couple hundred mystery authors. But it might not be underestimating at all, perhaps it just varies year-by-year and people are referring to different years, or perhaps the discrepancy is national vs. international, in which case Publisher’s Marketplace is the correct number for domestic authors.

Advances also aren’t equal to sales; in some cases, an author might get a small advance but make a lot of money via a surprise bestseller (although this, again, is rare, and we know advances constitute most of the real pay). Authors can make money in other ways not tracked, like foreign rights deals or speaking appearances or film rights. Nor does this number include self-published authors.

Finally, each of these numbers, of non-celebrity book authors receiving large advances vs. self-made billionaires, is just the numerator. There’s no denominator. Settling on one requires making assumptions. Do you go with how many people directly set out to enter both groups? When do we start to count that? College majors? And so on.

But even with all those caveats, the numbers I’ve given here arguably aren’t off by orders of magnitude. It’s roughly in line with the semi-annual surveys from the Author’s Guild, which finds statistics like that:

When looking at full-time authors whose books are in commercial markets (i.e, excluding academic, scholarly, and educational books), the median book income was $15,000...

Which reveals that even among authors who identify as “full-time” they are mostly supported by parents or spouses and bring in only supplemental or partial income. Overall, I think we can indeed conclude that the group size of self-made billionaires and non-celebrity authors making a living (enough to decently support their family or at least themselves) are surprisingly close in number; basically, each looks like a pool of just hundreds of people across the nation.

Meaning that if we eyeball it using our thumbs for comparison, we can say that for people born in America there are about as many slots available to be self-made billionaires as there are for being writers who merely make a living via their books.