Penguin Group’s self-publishing service, Author Solutions, is being sued, Courthouse News Service reported earlier this week. The complaint by three authors states that Author Solutions cheated them out of royalties and charged them for typos that were inserted by the company.

There was an interesting passage in the Courthouse News Service article that gave financial and statistical information about Author Solutions.

“Author Solutions’ revenues are estimated at $100 million per year,” the complaint states. “Of the $100 million Author Solutions earns as revenue, approximately one third of that amount, or millions annually, comes from book sales. The rest of its revenue is derived from the services it offers, such as editorial services, formatting and design services, production services, and marketing services (‘services’).”

This type of information isn’t always available from the big publishing companies, and to see it broken down in such simple terms makes it easy to see how the self-publishing companies are making money.

At The Passive Voice blog, commenter Donald Wells did just that.

“So, one third of 100 million, or $33,333,333÷200,000 books comes out to about $208 per book, per year.

Meanwhile, the 160,000 writers they work with pay for “Services” valued at $66,666,666.
$66,666,666÷160,000 writers = about $416.

I see. You pay them $416 a year to earn $208 a year.”

Ouch. Is that really what’s going on with the self-publishing companies run by the big houses? It seems like a cheap (and I don’t mean financially cheap) way to make money off people’s dreams. Take a few hundred here and a few hundred there and suddenly these companies have millions of dollars.

Some authors who have gone this route probably enjoyed the idea that their work was looked at by companies that are under the umbrella of one of the larger publishing houses. But of course, they’re not getting anywhere near the same treatment as authors who have traditional contracts.

This is intriguing to say the least; it’ll be interesting to see where it goes from here. Many of the other self-publishing companies are probably going to be watching this case very closely.

In addition, this isn’t the first bit of negative news to be disclosed about Author Solutions. A quick Web search on the company yields plenty—and I mean plenty—of customers complaining about the service.