A new book publisher with an unusual business model, a small footprint and an outsize pedigree that includes some of the biggest names in publishing launched on Tuesday.
The executives behind the publisher, Authors Equity, have run some of the largest publishing companies in the United States: Madeline McIntosh, the former chief executive of Penguin Random House; Don Weisberg, the former chief executive of Macmillan; and Nina von Moltke, the former president of strategic development at Penguin Random House.
The new house is small, with just six employees, but its founders hope that their experience and approach to publishing will attract writers. Contrary to the usual practice, Authors Equity won’t offer authors money up front or guarantee them a payment — but it will give them “the lion’s share” of any profit that is made, according to Ms. McIntosh.
“As a financially conservative person, I would be very nervous asking people to invest in a new company that was dependent on beating other companies with the size of its checkbook,” Ms. McIntosh said. “I feel very confident about competing based on the experience that we can offer.”
Traditionally, when an author sells their book to a publisher, they receive what’s called an advance, which is a guaranteed payment. The money is usually paid out in thirds or quarters, generally when the deal is signed, when the final manuscript is accepted and when the book is published. An author will earn royalties on top of that only if the book sells above a certain threshold.
Many books, however, lose money. Publishers spread the risk they take on new books by publishing a number of titles in a given year and by supporting new books with the consistent revenue stream provided by successful older books. This structure is part of what makes it so difficult to start a new publishing house: There are no reliable older titles to support bets on new ones.
In addition to offering authors a share of profits, Authors Equity will also pay them monthly, instead of in advances that can be drawn out over years. Their books will be distributed by Simon & Schuster, where Ms. McIntosh serves as a board member and which is one of the country’s major publishers.
“It’s nice to be rewarded for your performance, and to feel like the better you do, the better it gets,” said James Clear, author of the enormously successful book “Atomic Habits” and an investor in Authors Equity. “I would summarize where it fits in the landscape as: more profits than legacy publishing and better distribution than self publishing.”
Ms. McIntosh said that five of the company’s investors are authors who have led the New York Times best-seller list, including Louise Penny and Tim Ferriss. The profit sharing model may particularly appeal to well-known authors who can forgo a guaranteed advance because they’re confident their books will sell.
Many publishers have occasional profit sharing deals with their authors, but Ms. McIntosh said that Authors Equity could offer more favorable terms than large houses, in part because it will have little overhead. The publishing team for each book, including editors, publicists and marketers, will be assembled from a growing pool of freelancers. Authors and their agents will help decide who gets hired.
Mr. Weisberg and Ms. McIntosh said that since the pandemic, many talented people have prioritized a better work-life balance with more flexibility, creating a robust world of freelancers.
“Today, something like what we’re doing is more feasible than it would have been maybe five years ago,” Mr. Weisberg said. “You have the combination of the industry changing and the world changing that opens up the door.”
While Authors Equity will offer another option in an industry that has seen tremendous consolidation in recent years, it is likely to remain fairly unique in the market. The industry star power and professional network of its principals will give the company access to authors and investors that another publisher going out on their own simply wouldn’t have.
Their model also won’t work for every author. Most need an upfront payment to live on while they write their books. But McIntosh said that despite the risks, this model is not only for authors who already have devoted readers.
“We love working with established authors, but we also get a real charge out of taking someone who is not known and making them known,” Ms. McIntosh said. “I look forward to talking to authors who are at lots of different stages of their career.”
Alexandra Alter contributed reporting.
