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 comment section remains open, as always.

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.

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 Findyourpublisher.com, 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.


44 Replies to “Penguin’s New Business Model: Exploiting Writers”

  1. Have you at any time had a really unforgettable glass of wine?
    What about a unforgettable bottle? Which was extra critical to the experience,
    the corporation or the wine alone?

  2. I inquired about the services of AuthorHouse and they were pretty persistent about reeling me in as a client, even after I told them I preferred to do it alone. Borderline aggressive acquisition. In the end I requested information via email and send them a reply that I wouldn’t use their services. Haven’t heard from them since.

  3. I think the picture with the two pigeons is accurate overall. Self publishing is the way to go if you can do it. A lot of the greats–Dickens, A. Dumas, Dostoeyvsky, etc.–were publishing their work serially on newspapers. The blog is a similar medium. If you can build a huge following, well then, who knows. Great information!

  4. Informative piece. Sad that even publishing had to go this low. Although I kind of like the Penguin classics. They probably shelf out the cheapest Das Capital out there.

  5. A couple of points. As writers learn about self-publishing, the profitabilty of these vanity publishers/ author service providers could decline. As you mentioned Dave their authors mostly get caught once. Secondly, Penguin is damaging its brand with this purchase ( as per the disappointed comments of Penguin consumers.) All it all, it looks like a bad deal for Penguin and possibly a sign of desperation. .I noticed an ad for a pretty dodgy looking author service on the other site where you blogged. This has always been a tactic of the shonks, advertise on legitimate writers’s sites or in legitimate magazines.. If any of us see evidence of this, we should contact the legitimate medium.

  6. Reblogged this on Stealing Shade and commented:
    Definitely worth a look if you’ve ever considered self-publishing. Much information I’m glad to have. Thanks for the article, David!

    1. Yeah, it’s the illusion of choice. In short, Author Solutions bought up many of their competitors in succession. Those with formerly good service rapidly deteriorated under their control. Given Penguin’s first foray into the author/self-publisher services arena (Book Country), I don’t hold out much hope for a reversal.

  7. Yeah I tend to agree after reading that one of their subsidiary companies was Authorhouse, I was burned with them for my first novel The Boston Slasher. Slick marketing, I have to hand it to the salesman who spent an hour with me over the phone. But…at the end of the day I earned more money buying fifty copies and selling them for cash in hand rather than buying their overpriced products. As you mentioned I won’t be using them again. Thanks for the heads up with Penguin as well.

  8. I think I would agree that author and former CEO of Thomas Nelson, Michael Hyatt might say that these author were rally victims of their own lack of a real platform before publishing with this company that was acquired by Penguin.

  9. Absolutely self promote your article, because that’s the point isn’t it? If it wasn’t worth reading no one would bother getting to the end of it, and if you hadn’t put it in your blog I for one would not have come across it. In response, it seems to me that unfortunately today’s ‘reader’ is also part of the problem, perpetuating the devaluing of quality writing by only opening their wallets (or should that be purses!?) for 50 Shades Of Crap. If that’s not an obvious example of zero editing versus the latest popular fad I don’t know what is. If the response of musicians to a competitive market full of dross was to use MySpace etc as a platform for self promotion, (given that books are also increasingly electronic mediums), social networks and YouTube could seriously be the future for establishing a market/audience. I know it’s arguable that performers are more naturally suited to just putting themselves out there, but; many, many great writers, Dickens included, were self publishers first, using the hook of publishing chapters in serial form, periodically, leaving readers wanting more, before they were ever popular enough to beable to publish a complete book. Vanity or just canny self marketing?

    1. I don’t know what to think about 50 Shades. I haven’t read it, and probably won’t, so I can’t comment on whether it’s any good or not. I hear from people who tell me it’s crap, and then I hear of people reading it who haven’t picked up a book in years. As long as they pick something else up afterwards…

      As for social media, it’s extremely important. The only thing that has ever really sold books is word-of-mouth. The difference today is that word of your book can spread at the speed of light. It’s never been easier to share your opinions with people that care about them and trust them, and will act on them. For writers, I think it’s important both to join the conversation, and to give your readers the tools to spread word of your book. For example, at the back of all my e-books is a sign-up to my new release mailing list (which has all sorts of sharing buttons embedded), blurbs for all my other titles (and clickable links), links to my social media, and a review request (with clickable links).

      1. “I hear from people who tell me it’s crap, and then I hear of people reading it who haven’t picked up a book in years. As long as they pick something else up afterwards…”
        Worth emphasis. I do not care what people read (within a broad reasonable range) as long as they keep reading.

        Not just so authors have an income. But as reading stimulates thought more than TV. I personally read a lot of fun ‘crap.’ But some of that ‘crap’ is well written and thought provoking, it just isn’t for everyone. 😉 So I talk about more high brow books and recommend the fun to those looking for similar books.

        I hope the popularity of these new(ish) sub-genres sell quite a few more ereaders. For growing the industry would be a great thing.

        Neil

  10. I quarrel with the assertion that vanity publishing is the same as self-publishing. Vanity publishers charge money to publish a book, and therefore encourage the publication of unready material that won’t sell, so they should be avoided. True self-publishing doesn’t cost money in itself; you can publish on KDP or Smashwords without spending a penny on the actual publishing. Yes, you often do have to find contractors you can pay for certain services, but all told it shouldn’t cost anywhere near as much as vanity publishers charge for a component of self-publishing that is totally free.

    1. I don’t think vanity publishing is the same as self-publishing, but I do think the lines are blurring – which makes it doubly important to call out exploitative models like the Penguin-owned Author Solutions. Yes, I pay for editing. But when I send a book to my editor that’s half-cooked, she tells me to rewrite, not to publish.

      We probably need a new set of definitions to avoid arguments about, well, definitions. Personally, I would classify Author Solutions as a “self-publishing service company” or an “author service company” – but I’m open to suggestions.

      1. Fair enough, David. The key, however, is what you say about your editor: she doesn’t push you to publish unready work because she can make money off your very act of publishing. The vanity publishing category, to me, is those who make money off the very act of publishing and therefore have incentive to arrange for publication of substandard work. If you are simply free to publish at will without being charged anything for that alone, then it’s not vanity publishing. Sorry if I seem a bit anal about these things, but it’s definitely possible to self-publish high-quality work if the author puts in the effort to make his book ready, which includes getting professional help with things like editing, proofing and cover design. Your article seemed to perpetuate the stigma against self-publishing by naming a company that calls itself a self-publisher and rips people off.

      2. Are you familiar with this blog? It would be pretty hard to make the argument that I’m perpetuating any stigma against self-publishing. I think we are arguing about terms, rather than actually being on opposite sides of the fence.

        That said, I would argue that “self-publishing service company” or “author service company” is a more accurate term. They sell all sorts of services to authors/self-publishers that don’t involve publishing your book (and I believe, but am open to being corrected, that you can purchase these services even if you don’t actually publish your book with Author Solutions).

        Finally, I am more than aware that it’s possible to self-publish work of the highest quality – as good, if not better, than what’s coming out of the major publishers. It’s what I strive for, and encourage.

      3. Hi, David. Please scroll up. in truth, this is my first exposure to your blog and, because I need 60 hours in my day the way every other writer does, I hadn’t done the legwork to research your blog. For that I apologize. You’ve made things very clear and I thank you–and my commitment to quality self-publishing and giving the reader good value for her money and a good reading experience is also strong.

  11. It’s so sad (or infuriating, depending on my mood) that some publishers are now setting their sights on authors and their wallets when they should focus all of their energy on nurturing writing great talent and keeping their sights on the wallets of readers, who will only be too eager to part with their money for a great read. I had a very sobering experience this week. I had contacted Charisma House, a large Christian traditional publishing house, to see if they’d be interested in publishing my novel. Less than a month later, I received an offer to “co-publish” through the vanity side of their house. I’ve just uploaded a long blog post about it (took me two days to write, mostly because I had to stop whenever I was getting too worked up!) on my website if anyone wants more information about my experience.

    1. Great article David, and thank you for warning everyone of the dangers of this company. No sooner do self-publishing writers dive into the ocean of freedom than they they are circled by sharks gathering all around. You are rapidly making a name for yourself as a journalist as well as an author – keep up the good work! Incidentally I tried to comment directly under the actaul article but the site rejected my words as invalid; is this my incopetence (probably) or censorship (scarey)?

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