Penguin’s New Business Model: Exploiting Writers

Penguin’s parent company Pearson has announced the purchase of Author Solutions for $116m – news which has shocked writers, especially given Author Solutions’ long history of providing questionable services at staggering prices.

This post is from 20 July 2012. It has not been updated except to clean up broken links, but it’s important to preserve these older posts on author exploitation and the comments remain open.

Author Solutions are the dominant player in the self-publishing services market – via their subsidiaries such as Author House, Xlibris, iUniverse, and Trafford – and had been looking for a buyer for several months. According to the press release, Author Solutions will be folded into Penguin, but will continue to operate as a separate company. Penguin’s CEO John Makinson stated:

This acquisition will allow Penguin to participate fully in perhaps the fastest-growing area of the publishing economy and gain skills in customer acquisition and data analytics that will be vital to our future.

What does Author Solutions bring to the table? Well, for starters, around $100m in annual revenue. Roughly two-thirds of that money comes from the sale of services to writers, and only one-third from the royalties generated by the sale of their books.

Pause for a moment and consider that statistic. Penguin isn’t purchasing a company which provides real value to writers. They are purchasing an operation skilled at milking writers.

author solutions
How The Author Solutions Scam Works – a detailed breakdown.

This is not a new accusation against Author Solutions. Industry watchdogs such as Writer Beware have received a litany of complaints about Author Solutions and their subsidiaries over the last few years: misleading marketing, hard-selling of over-priced services, questionable value of products provided, awful customer service, and, after all that, problems with writers being paid.

For example, Author House will provide you with a “web-optimized press release” for the bargain price of $1,199. In case it isn’t obvious, you would likely receive greater promotional value from setting fire to that money on YouTube.

How do writers fall into the trap of such an awful company? In short, disingenuous marketing. According to Victoria Strauss at Writer Beware, “marketing efforts include maintaining sites like, which purport to be utilities to help writers choose a publishing company.” That site, of course, will only give you the false “choice” of various Author Solutions subsidiaries – all of which have similarly awful services.

After falling for this marketing guff, writers don’t tend to make the same mistake twice. According to the above-mentioned press release from their new owners Penguin, 150,000 writers have used the services of Author Solutions, but they have only published a combined total of 190,000 books.

Before they leave the clutches of Author Solutions, however, writers are subjected to never-ending phone calls hawking a string of overpriced, useless services, including the press releases described above. As such, the average customer spends around $5,000 over their “lifetime” with the company, but only sells 150 books.

The performance of Author Solutions is so poor that the press release announcing the purchase by Penguin can’t even tout their own customers’ success, and instead lists self-publishing stars such as “John Locke, Darcie Chan, Amanda Hocking, Bronnie Ware and E.L. James” – none of whom used Author Solutions to publish their work.

This kind of disingenuity is standard for Author Solutions. Tireless blogger Emily Seuss has been watching the company, and has provided a handy catalogue of recent complaints. I should note that this is just the beginning where Author Solutions is concerned.

The last time I wrote about Author Solutions subsidiary iUniverse, I highlighted a typical marketing move. Just before Christmas last year, iUniverse mailed their existing customers with a very special “deal” where they offered to turn their print books into e-books and upload them to the various retailers for free.

The catch was that customers would then have to fork over 50% of their royalties from every single sale to iUniverse. Needless to say, formatting and uploading is a trivial task. For those unable to do it themselves, that service can be purchased for a nominal up-front fee, leaving a writer’s royalties intact.

After I blogged about this severe over-charging, two iUniverse customers complained in the comments that after they didn’t respond to that offer, iUniverse published their e-books anyway – without their permission. One of those writers is still trying to get her unauthorized edition removed, several months later.

As I mentioned already, this is just the tip of the iceberg. Following all the links above, and reading the comments to those pieces, will reveal hundreds of such complaints regarding Author Solutions and their subsidiaries.

None of this should come as any surprise to Penguin. I think it’s safe to presume that basic due diligence was undertaken before purchasing a company for $116m.

Defenders may point out that none of the above occurred on Penguin’s watch, and that they should be given an opportunity to turn the company around. But let’s not forget that Penguin have a little history here. Last year, Penguin unveiled their own self-publishing service, Book Country, which over-charges for basic services, and then puts its hand in the writers’ wallet a second time by taking an indefensible portion of their royalties.

penguin book country self-publishing service vanity press

In any event, no inference is needed regarding Penguin’s opinion of Author Solutions’ business practices. We only need to look at Penguin’s own press release to read CEO John Makinson’s thoughts:

No-one has captured this opportunity as successfully as Author Solutions, which has rapidly built a position of world leadership on a platform of outstanding customer support and tailor-made publishing services.

Welcome to Penguin’s new business model: exploiting writers.

David Gaughran

David Gaughran

Born in Ireland, he now lives in a little fishing village in Portugal, although this hasn’t increased the time spent outside. He writes novels under another name, has helped thousands of authors build a readership with his books, blogs, workshops, and courses, and has created marketing campaigns for some of the biggest self-publishers on the planet. Friend to all dogs.