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5 Functional Author Business Models

Not every author follows the same path to success – here are 5 valid business models.

When you’ve been writing and hanging out with other authors for a while, you eventually succumb to the curse of knowledge. That’s the assumption that the inner workings of publishing is common knowledge when, in fact, the average member of the public doesn’t have a clue. Veteran authors discuss page reads, BookBub Featured Deals and intellectual property (IP) rights every day. Meanwhile, readers and many new authors still talk in terms of submitting snail mail to publishers and hoping to “get picked up” one day. If you’re still at the stage where you believe that’s how successful authors operate, don’t worry. A tiny minority still live that experience.

The only issue is that the world has changed for the majority. Gone are the days when authors exclusively sent double-line spaced manuscripts to publishers who bound the work into paperback form and distributed it one territory at a time. Nowadays, the publishing industry is global from day one. You don’t license to a UK publisher, then a US one, then a third. Using online portals, you distribute a book in 5+ formats to 200+ countries at once — and re-purpose your IP into a hundred other income streams. You can create a podcast, use print-on-demand technology to sell merch through an online store and drive traffic to all your sales pages using paid ads.

At one point, organisations like the Author’s Guild and Data Guy’s reports tracked authors’ earnings based on ISBN data and Amazon rankings, deeming them good gauges of authors’ incomes. However, it’s a slippery subject these days because, thanks to technological advancements, authors cannow make money in more ways than just selling books. You might disagree on what counts as “author work” but anything can count as long as books are at the work’s heart. And books can generate money in unexpected ways. Today, we’ll explore a few functional business models modern authors use to help you understand the possibilities and choose a favourite.

The Traditional Route

Once considered the only path that mattered, authors who follow the traditional publishing model write books and submit them to traditional publishers. If a publisher thinks they can profit from publishing the work then they offer a contract and, in theory, that author will live off a series of advances and royalties. Historically, this route was fraught with trip hazards — unfair contracts, minimal profit cuts, ineffective publishers — and it was a bit of a lottery because authors lacked control in that ecosystem. That said, a few did — and do — hit the jackpot, either through luck or a tight contract that enables them to exploit their intellectual property (IP) to the full.

While some “trad” authors opt for this route because they don’t want to learn publishing, many become frustrated once they’ve licensed their work because they can’t access marketing data, make creative calls or control their ebook prices. Forced to work without having access to data, many conduct a lot of in-person activities. They speak, feature on podcasts, talk to journalists and sign books. They hand-sell copies. Is this scalable? No. But it can lead to a full-time author lifestyle that’s close to how average readers imagine authors live if you become a publisher’s priority author. Just beware: the trad business model is a precarious one.

Digital-First Self-Publishing

If you’ve absorbed ideas in the SPF community for a while then you’ll probably be familiar with this modern approach to authorship. A decade ago, it was rare to see authors self-publishing ebooks. However, many now practice this business model to great effect, leading with ebooks and digital audiobooks. Do they also sell the other formats? Sure, but they focus mainly on promoting virtual copies. Why? Quite simply because the market is huge and, depending on how you publish, you can make a lot of money, either with straight sales or page reads if you’ve enrolled your books in a subscription reading programme like Amazon’s Kindle Unlimited.

Not limited by a publisher’s schedule, many authors follow this business model, publishing frequently and scaling their income. They achieve this feat by racking up a mixture of micropayments, from firm sales to page reads to pay-per-checkout library fees to pay-as-you-read chapter payments as you’d get via Kindle Vella. It’s a lucrative business if you write high-quality books in a genre with a hungry audience. That said, many surveys report that a hybrid model is best. This is where authors start with a digital-first self-publishing model but also opt for traditional publishing deals, licensing rights to fully exploit any formats they couldn’t maximise on their own.

The All-Round Creator

Books are big business if you can stimulate the right search engine algorithms. However, they aren’t the only IP game, and making money as an author is way easier if you also offer big ticket items or re-purpose your content into other cash-generating streams. What streams? Yours might come in the form of limited-edition book copies, yes, but also online courses, YouTube channels, podcasts, NFT projects, subscriptions and crowdfunding campaigns. The possibilities are endless. As an all-round creator, you control your IP and you can monetise it in as many ways as you want to the point where you can run a giant business off the back of your work.

Consider it; on top of creating a fantasy book in five formats and ten languages, you could also re-purpose it to:

  • Film linked YouTube content that generates ad revenue
  • Record a podcast for it that attracts corporate sponsors
  • Mint collectible NFTs that sell for four figures a pop
  • Hook readers into a related subscription-box service
  • Launch a game based on your fantasy world on Kickstarter to hit a wider, non-reading audience

Welcome to the creator economy — a place where you can monetise an idea in hundreds of ways to generate a multi-seven-figure business. Does all this count as author work? If it stems from your books then yes!

Micro-Publishing

After publishing their own books, some authors find they’re good at it but they don’t like to churn out passion projects as fast as their audience likes to read. Hence, instead of forcing themselves to write to market and burn out, many leverage their publishing skills for others and write their own books for fun. As long as they stick to their primary genre, they can satisfy their readers, make money and enjoy their craft. This model removes the pressure of having to write to market to pay your bills. Plus, it enables you to handle the production and marketing for others who dislike those tasks. As long as your terms are fair, this arrangement is a win-win.

The key to being ethical is to pay for only the rights you can exploit and then fully exploit them for your authors. Say you’ve mastered launching romance ebooks and have a large mailing list of readers for that genre. In that case, do a 50/50 split on ebook profits, create some well-targeted ads and promote them to that list. The trade is simple; you get to launch books on a regular basis without having to write quickly and your authors get propelled onto an ebook bestseller list faster than they could get there on their own. This route won’t be drama-free — even friendly authors and publishers disagree — but the ride should be relatively smooth if you’re fair.

Licensing for AI

Admittedly, this last business model is still in its infancy — and will likely only work for authors who already have strong brand recognition — but it’s worth noting as an emerging option because you might be in a position to try it one day. This is looking increasingly likely for members of our community, given the rapid adoption of the technologies that make it viable. So, what exactly is licensing for AI in this context? In short, it’s a model in which you license IP to natural-language-processing artificial intelligence models. Only, rather than signing a contract for one book like a traditionally published author, in this case you’d license your ideas, voice and style en masse.

Many famous creators have tried similar arrangements in the past. Consider Amazon’s deceased Kindle Worlds programme, for example, or how, in 2019, Samuel L. Jackson licensed his voice as an Alexa option. Using AI, authors will soon do the same but at infinite scale. Anybody can already ask ChatGPT to write a story about “topic X” in the style of “Author Y.” Right now, doing so risks infringing copyrights. In the future, though, you could license your authorial voice to the system. Users could request to write in your style and you could get royalties from whatever they publish, the blockchain tracking all output and distributing a pre-determined cut.

If you read media headlines, you’ll be forgiven for thinking that authors can’t make a living anymore from books. In reality, many can. It’s just that the average author’s day rarely matches the chocolate box vision of yesteryear. Don’t scorn technology, though. While it’s saturated markets with one hand, it’s created entirely new ones with the other, opening doors for authors that once never existed. Make no mistake, author business models aren’t going extinct. They’re simply adapting inside a fast-moving ecosystem. This is the evolution of publishing.

Daniel Parsons

Daniel Parsons

Dan Parsons is the bestselling author of multiple series. His Creative Business books for authors and other entrepreneurs contains several international bestsellers. Meanwhile, his fantasy and horror series, published under Daniel Parsons, have topped charts around the world and been used to promote a major Hollywood movie. For more information on writing, networking, and building your creative business, check out all of Dan’s non-fiction books here.