Writing Success, Thanks to Mr. Pareto

All things being equal, no two things really are equal, are they? That strange little fact, along with a rule thought up by an Italian economist, could improve your fiction writing, or at least allow you to manage your fiction-writing time and other resources better.

220px-Vilfredo_ParetoVilfredo Pareto came up with a principle now named for him—the Pareto Principle. It’s also called the “80-20 Rule” and the “Law of the Vital Few.” Pareto noted the following inequalities, or uneven distributions: only 20% of the Italian people owned 80% of the land, and in his garden, 20% of the peapods contained 80% of the peas.

It’s surprising how often this rule applies in everyday life, and it could even apply to your writing. Let’s say you’ve written ten stories and had them published, and over a given period, here were the number of sales:

Title Sales
The Wind-Sphere Ship 12
Within Victorian Mists 40
Alexander’s Odyssey 8
Leonardo’s Lion 4
A Steampunk Carol 9
The Six Hundred Dollar Man 6
A Tale More True 1
Rallying Cry / Last Vessel of Atlantis 2
To Be First/Wheels of Heaven 1
Time’s Deforméd Hand 4

If I sort the data in order from most to least, make a bar chart, and add a line representing the cumulative percentage, I get a Pareto Chart, like this:

Pareto chart

If these really were my sales numbers, I’d note it’s not quite true that 20% of my stories were getting 80% of the sales, but this graph still illustrates the concept of the vital few.

Seeing this data, you might be tempted to shift all your marketing efforts to the three or four books currently selling well. Not a bad idea, but I’d caution you to continue monitoring the books out at the ‘tail’ of the curve. Watch for a book that’s trending leftward and increasing in popularity.

If you had enough data on your (and others’) writing efforts, you might find:

  • 80% of your writing time is spent on 20% of your writing product. Thanks to Bob Parnell for this one, and the next two.
  • 20% of all writers achieve 80% of the sales income.
  • 20% of writers are sending 80% of the submissions to publishers.
  • 20% of your science fiction world-building will be enough to satisfy 80% of your story’s needs. Thanks to Veronica Sicoe for that.
  • 80% of your sales come from 20% of your marketing efforts.
  • 20% of your blog posts get 80% of the hits.
  • 80% of all fiction book sales occur in 20% of the genres.

I’d caution you not to take a strict interpretation of the Pareto Principle. It’s just a guide to show you the outputs of your efforts are not uniform, and give you ideas about where to focus. There’s a good critique of the Pareto Principle written in a guest post by author Debbi Mack.

For now, I think we’d all agree that 80% of the best fiction out there is written by 20% of the authors, especially that one who calls himself—

Poseidon’s Scribe

Writing and the Black Swan

My question is, once you understand how the Black Swan relates to writing fiction, will you be so dejected that you’ll abandon any idea of becoming an author?

black swanNassim Nicholas Taleb wrote The Black Swan: The Impact of the Highly Improbable and it was published in 2007. A statistician, the author was trying to get readers to think about low-probability events and our estimation of their risk.

He defined a black swan event as having three properties: (1) it is very rare, to the point of being almost impossible; (2) it has a huge impact on people, either positively or negatively; and (3) people do not (or cannot) predict it in advance, but after it occurs, everyone sees that it should have been predicted since it was obvious all the time.

By the way, Taleb chose the metaphor of a black swan because most swans are white, and black ones are very rare. In fact, people were convinced that all swans were white, until proven wrong. That’s part of Taleb’s point. If a rare event hasn’t occurred today, or yesterday, or for your entire life, you come to believe it cannot happen. Since black swans have a massive impact when they do occur, there is a huge difference between impossible and improbable.

I read the book about two and a half years ago, but I recall Taleb discussing success in writing as a black swan event. For our purposes, let us define success by the amount of money earned from writing. Success in writing, therefore, is rare, has a huge impact on a few writers, and is difficult to predict in advance but obvious afterward.

Taleb would conclude that if we could compile the relevant accurate statistics, the resulting graph would look like this:

black swan and writingThe vast majority of authors earn very little money, while very few earn a large income from writing.

Why is that? I believe Taleb would say that an author’s income is related to the popularity of his or her books. That popularity is determined by readers when they hear about the book, learn that their friends like it, and when they read it and recommend it to others.

People hear about books from various media outlets, so the media plays into book popularity. Luck has a role too, since poorly written books sometimes become bestsellers despite the writing quality.

Let’s say you’re an aspiring author, and let’s assume all the above is true. Does it depress you to know how much the odds are stacked against your success? Does it make you want to give up on your dream?

If you truly are writing for the money, there are things you can do to position yourself for the black swan. You can become really good at marketing; you can seek out (or pay for) media attention. You can practice your writing until you become more skilled at it.

No guarantees come with any of that, but your odds of success will improve a bit. The trouble is, you could strive for years, doing everything right, and still not achieve success because that intangible luck eludes you. That’s disheartening.

Alternatively, you could redefine what success means for you. You could decide you’re not after money, but seeking the pure enjoyment of writing, or the thrill of seeing your name in print. That’s a much more probable event, not a black swan at all.

Still, it’s my hope that the black swan of financial success from writing pays a visit soon, to both you and—

Poseidon’s Scribe

What Should Your E-Book Cost?

Most authors (including me) are not experts in economics.  Many of them might have a vague idea that if their book was priced high, they’d make more money.  But this ignores the relationship between price and quantity sold.  The author should be seeking to maximize income over all, not income per book sold.

Caveat:  I’m no economist, so this is my best guess at the economics of e-book pricing. The thousands of economists who read my blog should comment and correct any errors I make.

Supply-and-demandThe relationship between price and quantity, from the consumer’s (or reader’s) view, is what economists call the demand curve.  Price something high and few people will buy it, and vice versa.  In classic economic theory, the demand curve gets paired with a supply curve and the intersection of the curves yields the equilibrium price.  The theory behind the supply curve is that high prices compel suppliers to produce more, and vice versa.

How does this apply to your electronic book?  The demand curve indicates you’ll sell more books at a lower price and fewer at a higher price.

But you can throw the supply curve out the window when it comes to e-books.  Why?  The supply curve is based on some assumptions, which are true for most products:

1.  If you’ve produced x  items so far, there is some measureable effort expended and resources used to produce the x + 1 item.

2.  Since resources are needed to produce the x + 1 item, it is possible to have shortages or surpluses of the item.

3.  The market is competitive.

None of those assumptions is true for e-books.  After the first book is produced, there is zero effort and zero resources expended for all the books that follow.  Therefore there can be no shortages or surpluses.  Also, the market is not competitive; there is only one source for your book.  Whoever publishes it has exclusive rights, though they may license competitive distributors to get the book to readers.

So it’s impossible to draw a supply curve for an e-book.  Quantity is irrelevant, so no supply curve, and no equilibrium price.

If you’re an author wondering whether your e-book is priced right, the lack of a supply curve and equilibrium price doesn’t leave you any more lost than you would be otherwise, though.  That’s because those curves represent a reasonable theory of how most markets work.  In practice, things get difficult.

Here’s a thought experiment:  Say you want to plot the demand curve for your just-published e-book using real data.  You set the price at $10,000 and nobody buys it.  You gradually lower the price each week and plot the sales data.  Eventually your book is priced at $0.01, demand is very high, and you’ve got your complete curve drawn.

The problems are: (1) many decades have elapsed, and (2) you haven’t ended up with the real demand curve after all, but pieces of many curves.  That’s because the curve changes with time too.  Economists say demand curves shift right or left depending on consumer tastes and preferences, the prices of related goods, and other factors which change with time.  What you really wanted at the launch of your e-book was the complete curve at that time, but there’s no practical way to determine it.

Sadly, e-book pricing involves guesswork.  If you’re self-publishing, you can set the price near that of similar books, and alter that price as circumstances warrant.  If you engaged a publisher, you have to trust their guesswork.

They call economics the dismal science, and we’ve arrived at a dismal conclusion.  Don’t blame me.  I’m no economist; I’m—

                                                                  Poseidon’s Scribe

January 26, 2014Permalink