Lightning Source, CreateSpace, royalties, POD, and profits…

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Pete Masterson kindly agreed to my sharing a blog discussion response he sent (on 3/29) to the Linkedin Independent Book Publishers Association-IBPA group, to this question:

“Does Lightning Source pay royalties to independent publishers who use their print services in the same way that CreateSpace does?”

Pete is the author of a definitive guide on book design, Book Design and Production, which Dan Poynter describes as “A masterful work…. The industry has needed a book like this for years.”

Says Pete, author of the following (For more information, see www.aeonix.com):

Lightning Source (LSI) is a printer with a link to Ingram Book Group for distribution. LSI does not pay royalties. Books are sold either directly from LSI or through Ingram, revenue is collected, printing costs are deducted along with the discount rate you select (between 20% and 55%) and you (as the publisher) are paid the difference.

”The ‘downside’ of working with Lightning Source is that you must be a publisher, not simply an author. That requires setting up a publishing entity (that is owned by the author) to handle the publishing duties. I have many clients who have done exactly this.

CreateSpace (owned by Amazon.com) operates in dual modes. In one case, CS is a subsidy publisher and they offer the full range of author services, including typesetting, editorial work, and cover design. (These services may not be of the highest quality, so do careful research and consider your exact goals for your project. CS tends to be a lower cost subsidy publisher and may be a good choice for the “right” projects.)

“CS also operates as a printer. If an author-publisher provides an ISBN (instead of obtaining one from CS), then CS will print books at a reasonable cost. You can release CS books for sale via Amazon.com with a 40% discount from list price. If you use a CS-provided ISBN, you can get “extended distribution” (beyond Amazon) with a 60% discount from list. However, the ‘extended distribution’ is achieved by CS signing your book up with Lightning Source (with a 20% discount), so it’s very hard to justify using CS in that mode.

”Indeed, if you sign up with Lightning Source, and put your book out with a 20% discount, non returnable, you are likely to make more NET revenue than if you provided the 55% discount, fully returnable terms that are the normal trade book standard.

“Books sold with the short discount are very unlikely to ever be purchased by a physical (bricks and mortar) bookstore, but all such books are ‘automatically’ listed by Amazon and almost all other online booksellers. But guess what? For most titles, the physical bookstores are unlikely to stock a small/self-published title in any event.

“For more information on this short discount approach, see Aaron Shepherd’s POD for Profit.”

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