Wednesday, April 14, 2010

How to Pay Writers When You're Broke

So, the inestimable Chuck Wendig managed to get a lot of panties in a bunch by suggesting that writers should get paid. Most of the responses were from people who were still entranced by the novelty of the power of free, and they made predictable arguments about promotion, brand building, making connections and so on. Sadly, very few of them read what Chuck actually wrote, which more or less boiled down to "your writing has value, treat it as such." I'm pretty comfortable with that position.

More impressively, the folks who Chuck raised the point to took it seriously, and are now considering ways to try to create a model that acknowledges the value of the writers. I'm not going to weigh in over there, partly because I'm not a writer, but more because my answer is TOTALLY CRAZY.

So, of course, I will share it here.

Ok, so say you want to publish a collection of writing. A magazine or small book. First, sit down and do the absolute basic business plan of "It will be X pages and cost me Y dollars to print and distribute Z units". Do it through Lulu or Amazon's service or some other POD shop.[1] You will need that much seed money, hopefully not to much. Scrape it up.[2]

Put out a call to writers and supporters through whatever channels you see fit and start getting things together, and as you do, be absolutely transparent about your anticipated costs and business plan. Put out a call for patrons and allow them to buy shares in the project for a fixed cost (how much? See below). At some point after the book has been released for, say, 4 months, you will buy back all shares at a price equal to the amount of money on hand after costs (which you have transparently revealed) are covered.[3] Pretty simple, and I expect anyone who invests in this fashion knows they'll lose some money, but they probably won't be doing it as an alternative to bonds.

Now, sit down and figure out a few things, notably how much writing you expect to get, and how much you would pay for it in a perfect world. You can be a little approximate onhe payment - if you want to price it per word, great, but if you just ballpark it to $x for flash fiction or poems, $y for stories, that's fine.[4]

With this information, it's time to price your shares. $x is an excellent starting point, but every project needs to decide for itself. A highish share price probably means fewer, more committed supporters. A low price means more shares but also more voices. If you're going to run things with shareholder input (you don't have to, but I'd suggest it) then the ultimate number of shareholder is an issue, and for reasons of bookeeping, fewer shareholders will probably make your life a little easier. Once you have the price, let the world know (and as I keep underscoring, do so as transparently as possible). Maybe you get some sales, maybe you don't.

See, the trick here is that once you've got a price, you pay the writers in shares in keeping with their contribution. No, it's not cash, and in the end the shares may not be worth a lot, but there is always a possibility of success (which is nice). More importantly you are acknowledging the *value* of the writing as concretely as you are cash contributions. The writer's shares will absolutely dilute the value of the purhased shares, and if the project makes very little money, everyone sees very little return, but so long as costs are covered, it's no worse than it you'd just done it as a lump in the first place.

Initially, this may seem like a lot of bookeeping, but it's really something that requires little more than a spreadsheet and a shared understanding that paypal (or whatever service you use) is going to take a small bite out of every transaction. The important thing is to pay everything out. There will be a temptation to allow people to roll investments forward into the next project, but that is how things explode in complexity. Keep it simple unless you're committed to getting all businessey about it. The simple solution is best.

Now, this leaves all manner of questions on the table regarding how to manage the project, and those are better answered by the individual. Personally, I think there's a lot to be said for opening up decisions to discussion by shareholders - people have a much different perspective on issues like paper vs. e-pub or how much to spend on a cover artist when they have money on the table. Since these shareholders will, naturally, be people of great intellect and discriminating taste, they probably have something worthwhile to say as well.[5]

Ultimately, this model may or may not work for any given project, but I want to float it out there specifically to broach the idea of allowing writers to 'buy in' with their writing. Obviously, it's a different model than paying them outright - but if you're not in a position to pay straight cash and you want to do something a little more concrete than straight profit sharing (which, I fully concede, this ends up looking like) then give an approach like this some thought.[6]

1- This does not demand that they will be your final printer, you're just establishing a baseline.
2 - If you CAN'T cover this minimal cost then doing a collection of other people's work may not be the best plan to pursue. Yes, you can gather contributions, kickstart or the like, but doing so depends that you have an actual product, which in turn depends on other people. If you can make it work, great, but it's going to be a juggling act.
3 - If you're really committed, use your seed money to buy shares. If you're conservative, treat your seed money as a debt to be paid back. Either approach works, but just don't be secretive about which it is.
4 - Life will be a lot easier if Y is divisible by X, for reasons that will be apparent.
5 - Encouraging participation also underscores the idea of ownership that comes of a share based model, which in turn underscores the value of the author's contributions.
6 - Chuck asked me a pretty reasonable question: "How is this better than the normal model of simply paying the writers up front?" My answer is this: Paying writers what they're worth up front can be more expensive than might be reasonable for a small project. That means the alternatives are often to pay them less than they're worth, or nothing at all. "Less than they're worth" is usually the necessary compromise, but this approach at least allows for the possibility that the writers might get their fair share.


  1. I find this whole debate kind of amazing since it's been solved -- largely in the way you describe here -- for a century or so. Invest in a framework, borrow some money, pay your writers, and sell your product.

    The problem with the whole "free" paradigm is if you start there then no one eats until you are "branded". And then, once branded, you are competing with established commercial interests on one hand and the new free guys on the other -- kind of a crappy place to be in a lot of ways.

    It seems to me as though people generally look at the lottery winners and then plan to be like them.

  2. I like this because it helps make the writers both valuable but also responsible for their fortunes a little (also why a profit-sharing model does the same thing) -- writers who pimp the work and sell it (both necessary skillsets for a real world, real-thinking writer) will earn out more for themselves and for the other writers. That's a true sense of community, by the way.

    That said, Brad says smart stuff, too.

    -- c.

  3. @brad No argument, and the simplest solution is really "Run your publishing gig like any other business" but whenever you suggest something like that, the deafening chorus of "It's ART, MAN!" gets overwhelming.

    Less cynically, a lot of these projects are started by well-intentioned people who find the prospect of a business to be mysterious, scary or evil. I'm not sure there's a way to change that directly, but I'm totally happy to try.

    -Rob D.

  4. What confuses me about "It's art!" is that it certainly shouldn't pair with "But we don't pay for it!"

    Art assumes a certain... quality, an elevation, of sorts, and in saying that "This is art, but I will not pay for it," you're making a bold and troubling declaration: "I do not think art has value."

    Which is why libraries are closing, and arts funding is way down, I guess.

    -- c.

  5. Well, I think the generous interpretation works something like this.

    I love writing and writers and my genre, but I also know that the publishing industry is screwed up, people aren't buying genre fiction, and a lot of great stuff *needs* to be shared.

    So I, by God, am going to do something about it. I can scrape together a little bit of cash out of pocket with no expectation that I will ever make any of it back because my 'business plan' is ultimately a variant on vanity publishing. That's OK though, because I'm not in it to make money, I just want to give people a chance to write this stuff I love. Not only would trying to follow a more involved path of publishing distract me from the passion that brought me to this project, it's scary, more expensive, and comes with much greater risks. No, I;m much better off sticking with it as a pure passion project because even if it tanks completely, I know what it will cost me, and I'm OK with that. I can MAKE that sacrifice. Because I LOVE this material.

    Now, having established this, surely there are others out there who, like me, are motivated by the same LOVE? I am taking the risks and cost on my own head here, and I'm doing all the work of getting it out the door. I'm paying for it out of my own pocket, with negligible hope of recouping my costs, even if I manage to sell any of these to someone besides the authors' families.

    Given my generosity and passion, isn't it entirely unreasonable for you to get *paid*? I mean, if you're one of those people who prioritizes those things, then that's fine, we won't hold it against you. We're actually happy because we only want people who LOVE this stuff as much as we do. if you can't even generate enough love to share your stuff with the world along with us, it's probably best you go your own way.

    In the end, no one's going to see any money for this. The best hope is that I won't go TOTALLY broke, and that I can afford to do another one. Meanwhile, all this beautiful writing, which would otherwise go unread, is out there and available, hopefully finding its way to a new audience, ripe to discover the JOY and WONDER that drives us. If even one reader is moved by this, it will all have been worth it. We will have made a difference, and that is worth more than any payday could ever be.


    Like I said. That's the generous interpretation.


  6. Yup. That's pretty much it, all right.

    And even still, it doesn't come out sounding too good, does it?

    Eh well.

    -- c.

  7. I think the thing that makes it sound bad (to me) is that publishing is not mysterious to me anymore. But me of 10 years ago? This is exactly the sort of shit he'd pull (and justification he'd use) because going with something you know works (even if it's sub-optimal) seems like a better choice than risking failure (especially big failure) on an unknown.

    One of the big advantages of this model is that it has no failure scenario. Because the priority is the creation, even if no one ever buys it, it's still a success, because (and we come back to it) it's art. That is a warm, comfortable and reassuring place to be. I completely and totally understand its appeal.

    I understand it so well that at times it takes conscious effort to reject it. Opening up the real risk of failure is *terrifying*, especially the first few times, and for all that I think it's necessary, I genuinely cannot be upset at people who are unwilling to make that leap of faith. I understand their fear all too well.

    So sure, I disagree, but I can't condemn. Instead, I can just say my bit, and hope maybe it helps something.

    -Rob D.

  8. Your solution sounds very similar to Wolfgang Baur's Open Design patronage model. There are a number of companies out there trying similar models as well. Though that model boils down more to a required level of patronage before the project is greenlighted. Once the level of funding to break even and pay all art and writing is met the project goes ahead. If the funding exceeds the projected requirements then the extra goes into more money for art, maps, etc.

    A related model is the ransom model that an author creates a work, drives hype, then holds the product for ransom until commission is met. Only then will the author put it up for sale to a wider audience. It doesn't really achieve your goals of paying for the writing in cash or shares though. Though I believe that it is possible to use this model to drive commissions based on the elevator pitch and outline and leave off writing until the ransom goal is met.

  9. Rob,

    I'd love to see you run a hypothetical example sometime with actual numbers, just to see how it shakes out and make my impressions more concrete.


  10. Glad to see this post, as I've been chewing on a concept for a project and had a few core ideas from this as well. Though I wonder about the wrinkles when talking about purely electronic media vs. PoD.

  11. @Lenny Example Pt 1:

    So, this model is much easier to implement with something like a fiction collection, where the contributions are more discrete than they would be for a game product, so it's a little outside of my purview, but let me take a swing.

    Suppose I wanted to do an RPG essay collection, published like a lit mag. So, 64 pages, black and white. Assuming 8.5x11, I'm going to make the educated guess that I can run these for $4 apiece. I might be wrong, but roll with it. My target rollout is, say, 200 issues, so we're looking at $800 seed money.

    Now, I want to pay generously, and 10 cents a word is pretty generous for RPGs, so I'll use that at my baseline. Assuming 500 words per page for 64 pages, that's 32,000 words.* So, I break the project down into a dozen 4 page/2000 word essays, and a dozen single page/500 word essays, leaving 4 pages for index, credits page and so on. The smallest unit of this is 1 page/500 words, with a payout of $50, so I'm going to set the price of 1 share at $50. Short essays earn 1 share, long ones earn 4. I also now open this up to the public and announce the $50 share price, and I open the door.

    Now, let's say I'm deeply invested in this, and I turn my seed money into shares. That $800 becomes 16 shares, plus the 60 shares I give the authors and, say, 4 shares I give the editor, that's 80 shares outstanding, currently valued at $0 each (since the only money we have, that $800, is already 'sunk' into printing).

    This has an interesting impact on decision making that I may or may not be comfortable with. This is MY project, but even if I have a strong vision (like, I love the smell of books and won't publish electronically) I only have 16 of the 80 possible votes, even before we start selling shares.** However, I now have a stack of writers who may abruptly be far more interested in how this product will be produced. They may vote for an e-book, or decide we spend any money we gain in a certain way. Say, for example, we find a cover artist who we like, but is unwilling to be paid in shares. The shareholders collectively decide if its worth paying him, knowing that their bottom line is going to be impacted by this decision.

    There will also be the non-artist shareholders. Most of them probably view this as a donation, so their investment in decisions will be idiosyncratic. For them, there is slim chance of a profit, and it's really a question of how much they'll get back.

    Let's say for example that we get 30 shareholders. At $50 apiece, that's $1500. Not enough to cover all of our $4000 costs, but still, it's money. We now have 110 shares outstanding, and $1500 in assets, so if we cashed out now, each share is worth ~$13.63. That's a big hit for me (I recoup a little over $200 on my $800) and the purchased shareholders, but for the writers, $13.63 per 500 words is almost 3 cents a word (closer to 2.7). While this is not a great figure, it's not terrible by RPG standards.

    Ok, so we finish up the project, and collectively decide to sell the book for $12 (Maybe I set it at $10, but the shareholders argued for a bump). Note that because we're treating the printing costs as sunk, every sale goes directly to the bottom line.

    So, of the 200 we print, we give away 30 to reviewers and shareholders, and we try to sell the remaining 180. Over a 6 month period, let's say we get about 1/3rd penetration, and sell 60 at full cover price ($12) and by remaindering or reselling or some other sleight of hand, we manage to sell another 100 for half cover price ($6). That's a total of $720 + $600, or $1320.

    So now our total assets are $2820, and divided among 110 shares, that's $25.63 per share. Again, the shareholders and I are taking a hit, but the writers are up past 5 cents a word, which is respectable.

  12. Example Pt 2:

    Net result, 6 months later, our shareholders (and I) get some of their money back, the authors are decently paid, and the book is out there. This may not seem fantastic, but compare this to a model where I paid the author's NOTHING and offered no return to the contributors. I'd be sitting on $2000 profits for my $800 investment. Great for me, maybe not for everyone else.

    This projection also suggests where things can fail (notably, setting the target at 200 more or less guaranteed failure). For example, what if this was more ambitious? Suppose I could print 1000 of these for $1 apiece and the shareholders decide that's what we'll do. They allocate $200 of the $1500, add it to my $800 and run off 1000 copies (and we now have $1300 in assets).

    Pricing is the same, and while sales maybe don't scale up quite as much, they still scale. Say %50 gets resold and we see $6 per unit, and 25% got at face value, while the rest go nowhere. Now we're talking about clearing $6000, bringing our total assets to $7300, or just over $66 per share! Not only have the writers been paid well (more than 13 cents a word), the investors (and me) will see some profit on this.

    This change reveals two important things: First - remember to keep printing costs in perspective with the other costs. If you pay writers a cheap, flat rate then printing tends to be the elephant in the room, but on this model, printing is the servant, not the master.

    Second, have some realistic goals about how many copies you can (and need to) sell. Paying authors well for something that's never going to sell more than a few dozen copies is never going to be a winning proposition.

    Nothing guarantees any given product will see one scenario or the other, but what is (I think) important is that you will hopefully engage the writers by demonstrating their value to you. Notice that even in the WORST outcomes here, the writers do better than anyone else (that is to say, they may be undervalued, but they never LOSE money) and they benefit enough from a good outcome that they will hopefully be a vanguard for this book, getting out there and driving excitement because they've got money riding on it.

    * At ten cents a word, that's $3200, four times my seed money for printing, and that's for a fairly small product. This underscores an important point in all this: it's easy to think that printing is the expensive part of the equation, but that's just a habit that comes of commoditizing writing. If you pay writers well, it gets expensive fast. This is a reason that e-publishing doesn't magically fix everything. If this were an e-project, the $800 for printing would be gone, but the $3200 would still be in play.

    ** If you worry too much about this, you can issue yourself some "Preferred shares" worth votes but no money, but don't be sneaky about it. In the open, it's OK. In the dark, it's a dick move.

  13. Example addendum: This doesn't even touch on the cost of art. While artists do let themselves get exploited too, they don't seem to be nearly as bad about it as writers.

    -Rob D.

  14. Just thought I'd mention that in some places (California for one, I believe [or at least this was the case about a decade ago]) your scheme might run afoul of public investment oversight laws.

    When you start talking share-holding in a project in a public arena you tend to attract bureaucratic interference that wants to make sure that the i's are crossed and the t's are dotted.

    I've known a couple of similar schemes that have run afoul of this sort of thing.

  15. @Rev Point. That's a good reason to look into it locally and perhaps even more importantly, call it something else entirely.

    Or if that doesn't work, say to hell with it and just set up decent profit-sharing.

  16. @Rob - Currently I am in the thought process of how to approach this type of project. I have an idea, it’s in playtest now, but I know that once done I do not have the chops to handle ALL of the text (or any of the art) myself.

    My original thought was first, tap relative unknown writers at my local college and offer a chance to participate with a pay off in profits based on word contributed. Very similar to what you have described... then I hit a snag of editing some of the work and realized that I was cutting an awful lot verbiage.

    The question is then, do you agree to the word count sight unseen or do you pay for words used? I am dealing with people hungry for publication at any level and I am sure that I was stepping on toes, what happens at the more professional level?

  17. So, the implication here is that at some finite point in time, the shareholders are all going to cash in on the investment and take what they take.

    On the other hand, especially if you go digital, it's possible the work could be evergreen.

    How do you imagine handling that in your model? I recognize there are some obvious answers available, I'm just interested in hearing yours.

  18. @Dave This probably merits its own post sometime, but I'll try to give it a fair answer.

    First, your experience editing is far from uncommon, but despite that the practice is to put in a request for some number of words and pay for that many words on delivery. If you end up cutting it (either for quality or because of something else) then that's your business, but you're paying for the work.

    However, that definitely exposes you to dangers of people with more words than talent (who are common enough to keep RPG writing fees low), and so a lot of shops will test people out first. For big companies like WOTC or White Wolf, they can use their magazines of SAS products (respectively) as a 'farm league' of sorts. See who can produce solid work and meet deadlines, and then see about putting work in fro tof those folks.

    Sadly, most of us don't have that option, so the next best thing is to start with small assignments, just one or two thousand words. Make a request, make your formatting needs clear to them, set a deadline and give any other guidelines you need, set a price and then let them go at it.

    (It is important here that you set a price, not so much for them, but for _you_. When someone does work for you out of enthusiasm, it is very hard to say "no" to it because that's an emotional connection. When you pay them, you are also buying the right to say "No Thank You." You can offer as little as 1 or 2 cents a word with a clear conscience - that's merely sub-par for gamine, not highway robbery - and even if you want to do a different funding method for the project as a whole, pay for these "tryouts" out of pocket. It's cleaner that way.)

    A lot of folks will drop the ball at this point. They will have every good reason in the world, but the bottom line is they will blow the deadline or ignore what you requested. Don't get annoyed. Thank them for their work, Pay them if need be, but more likely tell them why you can't pay them and end the matter. If you need to be a nice guy and concede a few bucks to save yourself hassle, then do it now when it's cheap.

    A few folks won't quite make it. They'll turn it in on time, but they won't quite have gotten the idea or their writing will have problems. This is not so bad. Pay them, and tell those people what you liked about their work and how you'd like to see more of it, and hand it back to them requesting changes. The real test here is if you get edited text back in a timely fashion, with the changes you needed. Judge these people on this second round effort, but make a note to self about what you'll need to communicate to them.

    If you're very lucky, some folks will nail it format he getgo, or at least require minimal edits. if so, awesome.

    Take the work you've collected, salvage what you can, and look over the Rolodex of talent you now have. Keep the rock stars, dump the flakes, and make judgment calls on the middle folks. For the middle folks especially, if they can do a specific *kind* of writing well, that can be useful. With that final list in hand, *now* you approach those people with the bigger assignments, knowing that you're less likely to waste your money. If you want to try an alternate model, like profit sharing, discuss it with _these_ people, not with all interested parties.

    Now, things will still go wrong. One of your rock stars will flake. Someone's appendix will burst. You'll still need to edit stuff. Just go forward knowing this. Ask for more words than you'd going to need (because it's easier to cut than to fill). Stay in touch with your writers and if they have too much on their plate, offer to move it around to someone else.

    The first time you do this will be a TOTAL clusterfuck. You will do so many more things wrong than right that it may feel disastrous. That's normal. And the people who then pick up, take what they've learned and start the next project? They're the ones who succeed.

  19. @lenny I pretty much would insist on a fixed timeline for a buyout because keeping track of anything like this over time is just not practical. If I, in all good conscience, thought the product would be truly evergreen, I'd forgo my shares to "Buy out" everyone else, or delay the payout date if everyone agreed to it. But the bottom line is that it is important to keep this simple enough that there's no question of shenanigans.

    -Rob D.


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