Sunset, April 6, 2011

Hope yours today is just as pretty.

Revenue Streams 2010

In my continuing quest to demystify things related to the business of writing, at least inasmuch as they relate to me, today I am going to talk revenue streams. As many of you know, I am a huge proponent of writers having multiple revenue streams, so that when one of them cuts out on you — and it will cut out on you — you still have money coming in while you look for something to replace the income you’ve lost. I am also a huge proponent of recognizing that even within an individual stream of income, there can and will be substantial variation from year to year.

To make these points, I’m going to lay out to you my own revenue streams for 2010, and point out what I currently expect from each of these in the coming year. Note that for this exercise I will be discussing only my income from writing and writing-related activities, not my overall household income. I am not noting the specific dollar amount of my income last year (because I’ve been told not to by the Scalzi Family CFO, i.e., my wife), but you may assume that when Congress and the President chose to extend the Bush era tax cuts on the top income earners in the US for the next two years, one of the people who didn’t see his top marginal federal tax rate go up was me.

So, to begin. Here is a handy dandy pie chart of where my income came from in 2010:

My income profile has changed significantly over the years; it’s only been in the last couple of years that the majority of my income has come from books. Prior to that the largest chunk of my writing income came from corporate consulting work and writing non-fiction and journalism. The change has happened primarily because a) I now have a body of work that remains in print and generates royalties and b) I now generally get paid more per book.

However, if I am smart what I won’t do is look at this chart and think, well, this is the way it’s going to be from now on. It won’t be, either in the distribution of income or indeed, in the size of pie in a general sense. To explain why, let me discuss the individual slices of this pie.

Books (new, royalties, foreign sales): This category breaks down as roughly 40% new sales, 40% royalty payments on existing books, and 20% foreign, both sales and royalties. 2010 was a very good year for me in this area, but there are reasons not to count on this remaining as large a pie slice in 2011. Why?

1. Tor paid me a nice amount for Fuzzy Nation, which drove the chunk of income here devoted to new sales. However, the next novel I have with Tor is being slotted in to fulfill an outstanding contract I’ve had with my publisher for some time; it was originally part of a two-book series I never wrote, for reasons I’ve mentioned before. That contract’s price is substantially below what I’m being paid for Fuzzy, and I had already taken receipt of the first installment of that advance several years ago. Basically Tor will be getting my next novel at a discount. I’m fine with this, and I’ll almost certainly make it up on the back end, in terms of royalties. But depending on sales and reserves against returns, those royalties will take between 12 and 24 months to get to me. So for 2011, it’s almost entirely certain that my “new book” income will go down.

2. My royalty payments have been good over the last few years, but Fuzzy Nation is also my first new novel in three years (the last was Zoe’s Tale in 2008) and while that gap was filled with various editions of METAtropolis and Your Hate Mail Will Be Graded, there’s been a natural decline in backlist sales over time. Now, the announcement of the movie deal for Old Man’s War has given the backlist a boost, as likely will the release of Fuzzy. But thanks to the way royalties move through the system, I’m unlikely to see that benefit for a year or so. Also given the advance for Fuzzy, depending on sales it might be a while before it earns out its advance. So for 2011, I’m likely to see my royalty income either stay stable or go down a bit.

3. Foreign sales and royalties have been healthy but again the lack of new novels between 2008 and now has had an impact. The good news is that Fuzzy is selling well overseas and that the movie announcement for OMW has spurred interest in markets it’s not already in, so that helps. I expect foreign book income in 2011 to remain about the same overall.

So, overall, for 2011, my book income will probably be down from 2010. Where it goes from there depends on a number of factors, including, of course, whether I continue to get out a new novel about once a year, and how well those novels do, both at debut and then as back list. This sort of thing is impossible to predict with any certainty.

Film Option: The film option is in a category I like to think of as “extraordinary income” — that is, income which sort of falls into one’s lap and may not ever be repeated again. The option is due to be renewed later this year, at which time one of two things will happen: either it’s renewed, in which case I get another nice chunk of income, and the possibility of further income down the line, or it’s not renewed, in which case I get nothing (unless we sell the option to someone else). Naturally I hope for the first but would be foolish to assume it’s a given. Another wrinkle: the next option step has an 18-month window, which means no film option income in 2012, unless the start of production on this film in that timeframe. So no matter what my film option income will be down, either this year or next.

TV Consulting: This was the money I made being the Creative Consultant on Stargate: Universe. The show was canceled, alas; this income stream has gone away, and in the short term, at least, is unlikely to be replicated. So for 2011, the income from this category will be zero.

Film Column: This is the column I first wrote for the site and now for the site (which is owned by AMC). I enjoy doing it and they seem to enjoy having me do it and as far as I know they’re going to keep having me do it. So I expect income in this category to stay the same for 2011.

Corporate Consulting: Primarily for a single client; who it is and what I’m doing I can’t divulge due to a non-disclosure agreement. I can say it’s been fun and interesting. Because the bulk of my payment so far has been in 2011, I can say income in this category will be going up this year. Where this category goes from there is anyone’s guess.

Miscellaneous: This includes income from various small freelancing gigs, teaching, and other odd bits, like performing at w00tstock. I have no idea what to expect from this category this year; that’s one reason why it’s called “miscellaneous.” Before any of you ask, no, so far I’m not doing any w00tstock 3.0 events. But who knows?

Short Stories: The smallest category of my writing income and likely to stay that way in 2011, seeing as it’s already April and I’ve only written and sold one short story. But I’ll probably write at least a couple more between now and the end of the year, which means that I can reasonably expect this category to stay about the same, income-wise.

In all, while I expect 2011 to work out just fine for me — Neither I nor my family will be coming anywhere close to financial instability, for which I am immensely grateful — I also expect to make less than I did in 2010, and possibly much less, and to have the relative percentages of the categories from which I make money to change, sometimes quite dramatically.

This is the way of the writing life. Year to year, some income categories will go up, some will go down, some will remain static and some will go away completely. And, also, possibly, some new ones might emerge. I might get to do more newspaper or magazine freelancing, for example, or I might get an offer to do a speaking engagement or two, or I might do some editing. Maybe I’ll get another consulting gig with a TV or a movie. Maybe I’ll have the opportunity to write a comic book — or maybe I’ll write a movie script and sell it (ha!). Or maybe none of that will happen, my books will fall out of print and no one will be interested in what I’m currently writing. Some of this will be about me, but a lot of it won’t be; some of it will be about factors completely out of my control. What you can expect is that I will continue to seek out a variety of writing revenue streams, rather than keep all my financial eggs in a single basket. I will find a way to work, one way or another.

What I do expect — and if you are a writer or hope to be, what you should also expect — is that no matter what, year in and year out, writing income will be volatile. It is not a field in which you can expect anything to stay the same for any length of time, nor can you expect your fortunes to be sunny every step of the way. I am thankfully fortunate today. I hope to remain fortunate tomorrow. I work to allow continued good fortune a place to happen in my life. I plan financially with the expectation I will not be so fortunate. This means keeping a sharp eye on expenses, living within (and when possible, below) my means, and saving and investing the majority of what I have come in so that when (not if) less fortunate times come we have a margin that allows us to maneuver and prepare and plan for more fortunate times.

One reason I’m airing my revenue pie to you is to make the point that the next time I do it, it will probably look nothing like it does today. That’s not unusual. What would be unusual is that if it did look the same, year in and year out.