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.
