A new kind of “venture publisher” could profit from seeding author success

The economics of business book publishing are ill-suited to the needs of authors.

It’s time for a new kind of publisher: the venture publisher. A venture publisher is part investor, part publisher, and part business partner.

To understand how this new model would work, first consider the failings of current publishing models.

How business authors make money

How do authors succeed? We have solid research on that: the 2024 Business Book ROI study.

You may have heard that most authors don’t make the majority of their money from book sales. This is absolutely true.

According to the study, the median author with a book published at least six months had book related revenue of $25,000: one in four had book-related revenue of at least $126,000. The main sources of revenue for these authors included the following (medians shown for authors who had each type of revenue):

• Speaking fees (median $30K)
• Consulting (median $50K)
• Workshops (median $40K).
• Online courses (median $20K, but only 10% of business authors had these)

Book advances and royalties generated a median income of only $7,500.

Naturally, authors need to spend money to make money. The median author invested $7,000. Spending covered a variety of services including editing, public relations, and ghostwriting.

Crucially for this analysis, 64% of business books showed a gross profit (revenues exceeded expenses). Books generated an average of $1.24 in revenue per dollar spent. In other words, being an author can be profitable, but isn’t always.

The question I’m posing is this: Is being an author investable?

Two publishing models

There are three basic publishing models.

• Traditional (including large publishers and small presses): Publisher may pay a book advance, may not. Either way, the book needs to sell at least 10,000 copies to make this model work.
• Hybrid: Author pays publisher, typically at least $50,000, to have book published. Author then leverages the book into other sorts of revenues, such as speeches or consulting.
• Self-publishing: Author pays a less than $10,000 to self-publish the book. Because of lack of distribution and visibility, such a book is unlikely to generate breakout amounts of attention and ancillary revenue. (Runaway success is possible but rare; it requires a great deal of luck and an enormous investment in promotion.)

In the traditional model, the publisher’s only source of revenue is book sales. The publisher takes most of the financial risk, including the cost of the advance and the cost of producing, printing, and distributing the book. This model only works if the author can credibly prove they can sell a whole lot of books.

In the hybrid model, the publisher’s main source of revenue is a direct payment from the author. The author takes most of the financial risk. This model only works if the author can afford to invest a lot in the book and leverage that investment into other business.

In the self-publishing model, the upside is limited because the book will have low impact. It’s not the right model for people who think big.

Authors with great ideas and limited capital are ill-served by these models

Consider an author who has a powerful idea of intense interest to a limited audience. For example, imagine that they have a niche financial investment idea. Imagine that their book will sell 1,000 copies, but half of those readers will become clients generating $10,000 per year. That’s a $5 million revenue stream.

The traditional publisher won’t touch that author since they can’t make profit on a book that sells 1,000 copies.

The hybrid publisher would be happy to publish that book, but the author is going to have to come up with $50,000 to pay for publication and at least another $25,000 for promotion. If that author doesn’t have $75K ready to spend, they’re out of luck.

Self-publishing won’t work well because the potential clients are less likely to become aware of or trust the author of a self-published book.

Introducing the venture publisher

Consider an author with a modestly sized or specialized market, limited capital, and a fantastic, original, revenue-generating ideas. I encounter these authors all the time. They have enormous promise and no viable path to publication.

A venture publisher is a publisher willing to invest in such an author.

The venture publisher looks, not at book sales, and not at fees, but at the entire revenue stream that an author could generate.

This demands a very different kind of book proposal. A traditional book proposal describes what’s in the book, who will buy it, and how the author will promote it. A venture publisher book proposal also describes how the author will generate revenue and what it will take to turn the content of the book into revenue streams.

This formally turns the publisher into an investor. The publisher not only agrees to publish and distribute the book, but invests in promoting the book and the author. Instead of the author paying a hybrid publisher $50,000 and a PR firm $25,000, the venture publisher pays all the book production and distribution costs and invests in PR, social media marketing, building a website, and other costs associated with the author’s revenue launch.

To make this work, the publisher has to be a true partner in the author’s business. The publisher should get a revenue share of every dollar the author makes from speaking, consulting, workshops, book sales, workbooks, and just about anything else. The venture publisher becomes a part owner of “Author, Inc.”

This won’t be easy. Authors won’t want to give up part of their identity, or to keep close track of their hard-won client money. But for many authors, this could be the only path to publication and success. I don’t yet have an actual corporate structure in mind; I really don’t know how this partnership would be structured. I’m open to ideas from financial whizzes on how it ought to be structured.

But however it’s structured, this kind of arrangement would allow the venture publisher to profit, not from author up-front payments, and not just from book sales, but from the author’s actual success. Imagine the new businesses such publisher-investors could create and own shares of.

If you help launch the next Tony Robbins, Daniel Pink, or Dave Ramsey, you could own a piece of them. That sounds pretty exciting.

Who would do this?

Where would venture publishers come from?

Here are some possiblities:

• Private equity partnered with a speaker’s bureau, and affiliated with a preferred hybrid publisher.
• Private equity partnered with a PR or author promotion firm.
• A spinoff company from a publishing house, traditional or hybrid. Civica Media, the holding company for the hybrid publishers Amplify and Greenleaf, comes to mind.
• A company like Thought Leadership Leverage that’s in the business of helping authors create revenue streams.
• A ghostwriting agency seeking to build an additional business based on investing in authors, rather than on fees.

Maybe you think this is insane. Maybe it would never work. I’m sure there are all sorts of reasons it hasn’t happened yet.

But in a world of authors full of great ideas but limited capital, there’s clearly a demand for such a service.

Who wants to start one? Call me. Or steal my idea. Whatever works for you.