Digital Publishing and the Midlist Writer

The publishing midlist - books written by authors who aren't among the top tier, but who may be developed over time - was utterly destroyed after the 1970s by a small but incredibly significant accounting change forced by tax law.

Thor Power Tools -- and Publishing

In 1979, a small but important change in corporate tax code was made in the case of Thor Power Tools v. the IRS. Thor had been writing off old inventory, but not immediately destroying it. Instead, they were keeping it in stock, but depreciating its overall value because it sold more slowly. This was actually pretty sensible. If you had taxable inventory worth $200 on paper, but you knew you'd only sell about $100 of it, why on earth should you pay full tax?

The IRS did not agree, and the Supreme Court agreed with them. When the decision came down, the publishing industry took note. Previously, they'd been printing large runs. Unsold books were warehoused for future sales (usually called the "backlist"). They reduced the value of their overall inventory to account for what they thought they'd sell, just like Thor.

Now they had to change the model. They trimmed the number of books published to closely adhere to advance orders from booksellers. Those order forms in the backs of paperbacks some of us may remember vanished; there was nothing to sell. And while profit numbers for publishers stayed more or less the same, writers took a crippling blow; that previously-valuable backlist, provider of long-tail profits in the form of residuals, disappeared. Writers who sold well but slowly were cut, or offered pathetically-low advances. Slowly, the midlist writers were squeezed out.

The Present: 2010

This decade may bring the rebirth of the midlist writer - if he or she is ready to go the epublishing and print-on-demand route. Ebook sales are not just up - they're on fire. Dorchester Publishing announced in August 2010 that they are phasing out all regular publishing and going to an all-digital or POD model. And the fastest-growing market for ebooks is the forty-plus crowd; digital paper allows for easy conversion to large print or even text-to-speech.

Most traditional publishers seem to be ignoring this sudden surge, continuing to devalue the midlist writer and go after the celebrity tell-all. But an established midlist writer has an advantage: the backlist. Without the necessity for holding physical inventory to fill orders for older books, there is no tax liability, no storage issue, no booksellers to send back covers and trash the rest, no remainder table.

In fact, midlist writers can digitize their entire backlists and place them for sale on their own websites, or on the sites of a hundred small presses and book brokers. Amazon is happy to carry them, as is B&N Online.

But wait - there's more. With no production, storage, distribution, or tax costs outside the initial formatting and online setup, it becomes incredibly inexpensive to target tiny niche fiction audiences. Belgian dwarf pornography? Not a problem. Werewolf slipstream romance? Your audience is waiting.

The celebrity tell-alls will continue to dominate at Walmart and the grocery store. Online, however, electronic publishing will free writers to write the books of their hearts, and it will free publishers to take a chance on those books. Soon, it may once more be possible for a non-bestselling writer to make a decent living as a writer.

** See my previous article on this subject, Digital Fiction 101.