Working For Royalties

I just got a quote for printing my next book.  These will land at about $2.00, amazon sells for $16...  they take 55%, so $8.80 to them...  $7.20 gross to me, less $2.00 cost... is $5.20 gross profit.  Out of the $5.20 comes the expenses of running the business of selling the book. Self-employed,  it takes my time and creativity to sell the book.  It takes technology to do so, mine.  It takes travel and entertainment, etc.  Mine.  How much net profit is up to me. What the tax rate is, is up to the politicians.  Like Senator Reid said, taxes are voluntary.

People who rely on royalties may earn say 5%.  Say they get a check for $10,000 and the tax rate is 30%, so they net $7000.  

$10,000 is 5% of $200,000. So for an author to earn the $10,000 royalty, a publisher has to move 12,500 copies. For an author to earn the same $10,000 in the perish your publisher method, the author need only sell 1923 copies.

If I sold $200,000 worth of this book on Amazon.com, that would be 12,500 copies.  At $5.20 each gross, that would yield $65,000 for me.  I can spend that money on things I think need to be done.  Develop a business website in which you put the zip code of your best customers, and a program spits out other zip codes in USA with similar demographics, so you can keep finding where to prospect for your best customers.  I can develop white board technology for editing books that allows for 50 pages to be shown and edited at once.  I can spend a month in Hong Kong and London researching a book on free trade. All of this takes my time, creativity and the income from the sale of the books, but it is what I love to do.  It is all business related.  What is left over is taxed.

Now, a person earning royalties can also spend his $10,000 on whatever he wants as a business expense as well.  In both instances there is the subtle point that the money being spent is pretax.  (If you needed $65,000 to develop a new whiteboard, but if you had no business, and you were an employee, you would start with your own money, after tax dollars, so you'd have to earn say $100,000 at your job to net the $65,000 after taxes to finance your project.)

More: if I sold 12,500 in a year, I'd be buying at least at the 5000 copy level, so my landed drops to $1.00, and so my gross profit jumps from $5.20 to $6.20, from $65,000 to $77,500, that I must spend or have taxed, my choice.  Someone earning royalties still gets only $10,000.  (How do you think publishers afford those swank offices in New York?)

Why anyone would do all the work to create a book out and then leave all the profits to someone else, I do not know.  Authors mount lawsuits against Amazon.com and Google over copyright violations, when Amazon.com and Google.com can assist you in sextupling your income, or more, as a writer.  Authors desperately work to keep their incomes as low as possible, slavishly demanding that copyright laws be enforced.  Not only is there no basis for copyrights in theory or practice,  it is just plain nuts to write for royalties.