Last year the Department of Justice won the anti-trust lawsuit against Penguin Random House when it had tried to acquire Simon & Schuster. The financial penalties led PRH to eliminate a good number of people from top executive positions. Not surprisingly, some of those great minds decided there might be a different business model for book publishing worth investing in and have started Authors Equity.

Madeline McIntosh (former chief executive of PRH) Don Weisberg (former chief executive of Macmillan) and Nina von Moltke (former president of strategic development at PRH) provide executive leadership for Authors Equity with investments from some big name authors including Louise Penny and Tim Ferriss. Their business model signals an inflection point in publishing.

Authors Equity won’t offer a contract with money upfront or guarantee payment, but it promises to provide authors with 70% of the profits in return for an initial investment. Successful authors recognize a better deal than 5% net profit on their books with traditional publishers. Subsidy publishing has gone mainstream.

Advances on copyright royalties have dropped so low in recent years that it is untenable for authors to spend a year or two writing a manuscript for a few thousand dollars. Increasingly, agents are unable to sell manuscripts to the top trade publishers who are only acquiring new projects from authors who have previously had blockbuster sales.

I now hear traditional publishers referred to as “legacy” publishers.

There is a fundamental shift of financial risk from the publisher to the author underway. Publishers seek authors who are invested in the success of their book, but I’ve never met one who wasn’t. We’ve already seen how publishers blame authors if their books do not sell well, falsely assuming social media marketing is what sells books.

This is more than a shift in financial risk. This raises an economic barrier for authors who do not have significant financial capital to enter the marketplace. An author is likely to invest a significant amount in writing conferences, workshops, editorial services, professional headshot, website design, subscriptions, and books before they query an agent or publisher. The subsidy model may work for those who aren’t already famous and a bestselling author, but for those who can’t afford the costs of subsidy publishing, more doors are closing.

Subsidy publishing, sometimes called indie or hybrid, is a business model based on the author’s investment in the production costs of manufacturing and distribution of their book for a higher royalty rate or return on investment.

The success of She Writes Press, a subsidy publisher who focuses on memoir and women’s fiction, demonstrates the business model is viable. So much so that She Writes Press titles will be distributed by Simon & Schuster starting in 2025. The publisher, Brooke Warner, is a leader in the field of indie publishers. The basic package starts at $10,000.

Of course, not all subsidy publishers are the same. If you are an author considering a subsidy publisher, it’s imperative you do your due diligence before you sign a contract for services. Make sure you understand what kind of distribution the publisher has to bookstores and libraries. See if the publisher is a member of the Independent Book Publishers Group.

This shift to a pay-to-play business model also fundamentally changes the relationship between the author and the publisher. The author is in a business partnership with the publisher, rather than working for the publisher. In this respect, the experience of birthing your book is supported by a team who are committed to elevating your work.

Given how little investment traditional publishers have made in authors’ books these past few years, it will be interesting to watch things unfold. If big name authors start moving to a more equitable financial situation with subsidy publishers, legacy publishers won’t change much I fear. They can hobble along on passive revenue from their backlists, and they can draw upon the rich and famous to “author” their books (with AI-assistance.)  They’ll continue to milk their midlist authors, until they, too, seek subsidy publishers.

Since subsidy publishing still requires an author meet editorial standards, the assistance of a developmental editor in preparing a manuscript and a book proposal may prove helpful to you. Helping you find the right publisher for your work is something I plan to continue to do for my clients. University presses, small and niche publishers, and regional and specialized publishers remain important paths to publishing for many projects. Let me help you find the right path for your project.