“The Market for Lemons” is a classic economics paper by George Akerlof (I rarely get to use my graduate training in economics, so please forgive me). It deals with information asymmetry, the fact that sellers of used cars know more about the car’s defects than buyers. It concludes that owners of used good used cars will tend to avoid the used car market, because used cars are discounted by the knowledge than many of them will be lemons.
Or, looking at it another way, sellers of good used cars who have to sell in the marketplace will get a poor value, because they can’t differentiate their good cars from the many lemons hiding in the candosuccess.com marketplace.
One of BenBella’s unpublicized secrets (until now I suppose) is that our model – relatively low advances and high upside – helps us in a more subtle way. We evaluate proposals like every other publishing house, and make our best judgments on what projects are likely to be successful. From the proposal, and doing some research, and from speaking with the author, we can (I certainly hope) form some reasonable opinion about the project’s likelihood of success. (This doesn’t ignore the huge amount of uncertainty in any book project. See my post on that topic here: https://benbellabooks.com/publishing-and-the-black-swan/)
But the fact is that information is asymmetric. The author has information about the book’s likelihood of success that the publisher doesn’t. Keep in mind that a big part of evaluating a book is looking at the author’s platform. We can see their number of twitter followers and blog visitors, but there are many intangibles that only the author knows. So how do we get at this information?
We can’t, but we can get our authors to self-select. The authors that really believe that their books will sell are excited about profit-sharing. They want the upside. The biggest selling author we ever had told me he could care less about advances; he wanted higher royalties. At the time (ten years ago) I thought this was odd. Now I realize it was brilliant, and this stance earned this author a lot of money over the years.
Authors, like everyone else, can be self-deceiving, but I’ve found that our low advance, high-upside model has been a powerful tool for getting the authors we want to select us. Sometimes we wind up paying more for books we might have won anyway. But we win some great titles we never would have gotten otherwise. And we lose some titles that looked good on paper, but whose authors felt more comfortable taking the larger advance and lower royalties. Often as not, these books turned out to be projects we were happy to lose.
Note: I do feel the need to mention that in some cases, great authors with great projects just need a big advance. They are taking a few months off to write and they need the funds. These are a different case, and when we pay larger advances it’s typically to authors in this category.