I went looking for the new issue of Electric Literature, and couldn’t find it. EL launched late last summer to a ton of fanfare, its editors saying they’d publish every other month. The first came out in August, the second in October, and the third… the third… Well, in place of the third, I found various mentions, on the EL site, of the mag being a quarterly. No mention of this being a change, though it is – and no mention either of the pub date of the next issue, or of whose work will be in it.
Putting out a literary publication is a lot of work – I know because I’ve been doing just that, with several friends, for ten years now. So I can empathize with EL‘s editors if they’re feeling overwhelmed by the task they’ve taken on, and I don’t mean to make light of their publishing hiccup. Especially because they, like we at failbetter, are doing it all for fun, i.e. not making a dime or expecting ever to be able to. And in the process, they’ve made a good start at making a great contribution to the literary landscape.
Has EL gone belly-up? I wouldn’t be surprised, if they were telling the truth when they claimed to have paid $1000 to each of the ten contributors to their first two issues. These payments are beyond extravagant, by the standards of literary magazines, very few of which pay contributors anything. But they were money well-spent, at least from a PR point of view – they brought EL‘s founders a ton of publicity, by enabling them to claim that their publication would “save literature,” breaking even or perhaps making a bit of cash, while paying fees that would enable its writers to live by writing alone. No one had done this before, they said, because no one had grasped the new economics of literary publishing. They would keep initial outlays to an absolute minimum, by not taking salaries, and publishing EL in various formats that entail little by way of upfront outlay, and no warehousing costs. As to distribution and print-production costs, EL would incur them only once a copy was sold, generating enough revenue to cover those costs and then some. Once EL had shown this model could work, other publications would follow its lead. The upshot would be a forest of profitable – or at least not not-profitable – litmags, and a bunch of happy, well-paid authors.
I don’t know anything about why EL‘s being so slow with Issue 3, but I’m guessing money has already become a big problem. We can see why if we look a little closer at its business model, plugging in a few numbers as we go.
EL sells in several formats, but I’m guessing only the Kindle and paper editions sell in any kind of bulk. So let’s consider only revenue from Kindle and print sales, and whether it’s enough to keep EL afloat.
Making and selling a Kindle book doesn’t entail incurring traditional warehousing or distribution costs, but Amazon takes a cut of sales revenue. When EL launched, that cut was 70%. Its first two issues sold for $9.95 price, meaning EL netted $2.99 on each sale. (Note that the price of both issues 1 and 2 has since dropped to $4.95. I don’t know when EL made this change, but I’m assuming it did so quite recently, to qualify for Amazon’s new 70% royalty rate. If this is the case, the price chop’s unlikely to make an appreciable impact on the sales of either issue.)
EL‘s print edition also sells for $9.95, a price that, I’m presuming, covers printing and shipping, and nets EL a little chunk of cash to pay honoraria. How much? I’m not sure, but to my understanding, it’s hard to make more than a couple bucks a copy off sales of POD books. Let’s give EL‘s editors credit for being savvy negotiators, and assume they’ve found a printer that gives them a full $2 on each sale.
Not so many people have Kindles, so let’s assume that sales run, say, four-to-one paper-to-print. Let’s assume too that EL‘s first issue did unbelievably well for a literary magazine, selling 800 print copies, and 200 Kindle books, each at the full retail price. Issue 2 sales, of course, were probably lower – Issue 1 got all the fancy publicity. If everything went well, perhaps EL sold 600 copies of Issue 2 in paper, and 150 in Kindle, all, again, at $9.95 apiece.
Gross revenue, for Issue 1 and 2, assuming all the above figures? $17,412.50 – $13,930 from print sales, and $3482.50 from Kindle sales.
Net revenue? $3844.75 – $2800 from print, and $1044.75 from Kindle.
Net shortfall, assuming honoraria costs of $10,000? $6155.25!
Perhaps my numbers are wrong – indeed, they’re almost certainly wrong, what with being guesses. But EL likely isn’t doing any better than this. Indeed, it’s probably in worse shape, because it probably sold fewer copies, and made less money from each print sale.
When EL launched, I did a back-of-the-envelope calculation that looked a lot like the one I just ran through. I concluded that the boasts about being able to break even were just for show – meant to get publicity of the sort the NYT article provides – and that EL would rely on regular cash infusions from a friend, family trust fund, or patron who prefers to keep his name out of the papers. (Should I note in this context that in the photo accompanying the NYT piece, EL co-founder Scott Lindenbaum appears to be wearing a shirt that retails for $330? Hmm…)
Now that EL has cut back its publication schedule, without saying when its next issue will be out, I realize that I might have been wrong. EL‘s founders might well have believed they could do what they said they could do. In that case, they need to rethink their strategy, right now, to avoid going under.
First off, they should adjust retail prices. Not up, because sales would fall too much, and this would be lousy PR, but down. A price cut would probably have a positive effect on revenues, if it’s done right – why else would Amazon be pushing print publishers, so relentlessly, to cut the Amazon.com retail prices of both their paper and electronic books? Though in the case of the print edition, unfortunately, a price cut might not be possible, because of the fixed costs of printing and shipping each copy. So let’s assume EL‘s limited to cutting the price of its Kindle books, to, say, $3.95 apiece. How many more copies of each will sell? Who knows? Let’s be wildly optimistic, and say Kindle sales would double, to 300 per issue. At the 70% royalty rate, EL would make $829.50 off each Kindle edition. Assuming print sales stay at 600 per issue, netting $1200 each time, net revenue, on each issue, would be $2029.50.
Which brings us to the need for a much bigger strategy shift: radically cutting author honoraria. EL could do this and still get very good content. After all, as I’ve pointed out before, most of the better US literary authors don’t need to make money off their writing. They make a living – and not a bad one – by teaching writing.
I suspect EL‘s editors will hesitate to take this step, because they staked their credibility on their ability to pay authors at a specific, very high rate. If they cut back as much as they need to on honoraria, without having a credible excuse, they’re going to look like fools. Still, the numbers suggest that they’re going to have to do so, and soon. Let’s say they figure out some way to spin this – perhaps they’ll blame the recession, and promise to raise payments once the economy picks up, hoping no one will call them on this. More than likely, they’ll get away with it – the MSM, and the literary community, desperately wants to love EL, and will forgive them having been extravagant in their initial claims. (Note in this context that no one at the New York Times seems to have done anything by way of making a realistic assessment of those claims, when EL‘s editors made them.)
Where will EL be then? It will be able to pay each contributor $400 per story, assuming it sticks with publishing five stories per issue. Even if we adjust all the above numbers, to reflect a less optimistic view of EL‘s sales, perhaps it can still pay authors a hundred or two a story. That’s still pretty good – again, very few litmags pay contributors at all.
Will EL‘s editors make these changes? If they can’t find a patron, they’ll have to. And I hope they do, because I enjoyed the first two issues, and hope EL won’t go the way of other well-done, and sadly now moribund journals like Swink and Land Grant College Review.