Dear Wags,

In 2022, Madeline McIntosh, then CEO of Penguin Random House, took the stand in an antitrust suit against her company. The Department of Justice sought to block PRH, America’s biggest book publisher, from swallowing Simon & Schuster, the fourth largest. The government held the sale would give the conglomerate far too much control over the book business. A judge agreed.

Back then, McIntosh argued that the government was overly focused on major players who fork out advances of $250,000 or more for a handful of bestsellers. Big money deals are a tiny sliver of an industry that funds countless humble projects; regulator meddling would ostensibly make it harder to pay for them. Or, as McIntosh put it: “These are not widgets we’re producing.”

Publishers, not as efficient as widget-makers, typically pay writers incrementally after a book contract is signed, well before a title is available for sale. After publication, authors earn a percentage on copies sold, or royalties. That’s mostly the way the book business still works, but there is no shortage of people eager to upend that.

Count McIntosh—who left PRH in 2023—among them. On March 5, she joined former top publishing execs Don Weisberg (former CEO of Macmillan) and Nina von Moltke (former president and director of strategic development at PRH) to form a new house called Authors Equity. The firm’s investors include bestselling authors Louise Penny, Tim Ferriss and James Clear. (Clear says he’ll be publishing with AE; the other two writers remain committed to traditional publishers).

The hallmark of this startup? No advances. Instead, authors who sign with Actors Equity will receive a significantly larger share of profits—perhaps as much as 70 percent—from book sales.

Maybe McIntosh had an epiphany while being grilled by D.C. circuit judge Florence Pan. During the PRH trial, Pan shredded the company’s arguments for grabbing more of the book market. She was particularly withering when it came to how big publishers spent money and fixed payouts to their advantage. In essence, she called it a game rigged against authors. Wouldn’t you know, authors tend to agree.

Here’s some basic math: Say an author receives an advance of $10,000. The finished book is priced at $28.00, and the author gets 10% of each sale, or $2.80. Because of the advance money, the author won’t start making that $2.80 until nearly 400 copies have been sold (that’s known as “earning out” your advance). The average book today sells fewer than 5,000 copies. Let’s say our hypothetical author sells 3,000. In total, they’ll make about $18,000. (Minus the agent’s cut, of course.)

In the Authors Equity model, the same author, with the same sales, might make $50,000. (Minus the agent’s cut, of course.) You can use a calculator, too; the point is it’s a considerable raise. For an established writer with a finished manuscript, profit-sharing could be a dream come true. It’s a back end arrangement more typical of Hollywood. The founders also say the company will also devote more time to authors, which publishers in a less rapacious age used to do.

That’s nice, but what about an untested author with nothing in the bank who needs funds for research trips, interviews, and other materials? For many writers, getting payments up front and at regular intervals can make the difference between publication and disaster. Not everybody is Louise Penny. In any case, nobody starts out that way. As with most things, what really pays is to start out rich and famous.

The traditional publishing business badly needs reform. Hybrid models promise ingenious solutions, and pose new complexities. Next week, I’ll take a deeper look at how they may disrupt the old industry for better—and worse.

Yours Ever,

BKP

Finding Margaret Fuller by Allison Pataki

Historical fiction about women tends to showcase the hugely famous (queens, trailblazers, icons) or the totally disrespected (chambermaids, sex workers, assistants).