The business of the book business

Random House (a piece of that German giant Bertelsmann) recently crunched their publishing numbers with New York magazine. The numbers:

There are 1,500 Random House employees in New York.
Every week they unveil 67 new books (around 3500 books/year).

Annual revenue: $2.3 billion ($230 million is profit).
2/3 of which comes from paperbacks.
80% of profit is driven by their backlist of 33,000 books.

Only one of every eight books is really profitable.
Understandably so, when author advances range from $7000 to up to $10 million.

Paperback math:
Customer buys a book for $10.

Retailer gets $5.
Random House covers their space and staff with $2.
The author is paid $1.50.
Printing costs are $1.

And the remaining 50 cents is profit.

*If RH was to generate profits solely on paperbacks, they'd have to sell 460 million books to earn $230 million in income. **Thanks to New York Magazine for giving us the breakdown.