Tag Archive for business

Shredding The History Of Old Manuscripts

Shredding Documents For RecyclingAs a teenager destined to write the next Great American Novel, I wrote for history and saved every single page (including pages I should have crumpled up and tossed into the waste basket). Generations of English majors would toil to trace my inspirations through the voluminous pages of my old manuscripts. And then the REAL WORLD™ intruded. Becoming a writer became a childish fantasy. All those old manuscripts from my teenage years were lost when I became an adult. The story ideas from that time continued to bang around in my head for years, which drove me crazy at times.

When I became serious about writing in my mid-thirties in 2006, I still wrote for history and saved every single page (except for those that I crumpled up and tossed into the wastebasket). I eventually wrote 80+ short stories, a 25,000-word novella, a 120,000-word unpublished first novel and several aborted novels. This filled out a four-drawer filing cabinet in my office and four storage boxes in the closet. I also have stacks of file folders with unfinished manuscripts on a back table in my office area.

Keeping paper manuscripts made sense back in the snail mail submission days when I had 50+ manuscripts circulating in the slush piles, spending $100 USD a month on office supplies and postage, and visiting the post office every six weeks. Drowning in paper came with the job. A successful writer would have numerous filing cabinets lining a long wall in his office.

When I stopped writing literary short stories and started writing speculative short stories in 2009, snail mail submissions gave way to email submissions. Soon I had 30+ short stories published in anthologies. Those published short stories later became ebooks. I slowly embraced the mythical paperless office as I used paper less often for editing my manuscripts.

After my father passed away from lung cancer this past May, I went through and tossed out 98.8% of his stuff. A sad reality when you consider that we go through life to accumulate stuff that our heirs will toss into the dumpster after we die. I brought a heavy-duty paper shredder to destroy his financial and medical paperwork.

I recently realized I was no longer writing for history but for business. As a small business owner, I have numerous problems with writing new content, publishing ebooks and maintaining websites that needed solutions now. Writing the next Great American Novel was no longer a practical business goal. History can sort itself out and generations of English majors can suffer without my help.

Besides, if my heirs will be tossing out 98.8% of what I owned at the end of my life, I might as well get a head start by shredding my old manuscripts. Before I shred a set of manuscripts, I made sure that I consolidated all the electronic files into my DropBox folder. I’m planning to move the file folders off the back table into the filing cabinet and destroy any working papers after a year. The mythical paperless office might become a reality in 2013.

 

A Fraudulent eBook Purchase At Smashwords

Fraudulent Credit Card Purchase At Smashwords

I get email notifications whenever someone purchases one of my ebook titles at the Smashwords website, which is less common than the sales I get from Amazon. About 99.98% of my sales on Smashwords come through the third-party premium catalog (i.e., Apple, Barnes & Noble, Sony, and many others). I was happy to have a sale. And then I read the notification email. Five copies of my newest flash stories ebook in a single transaction. This was a fraudulent ebook purchase.

How did I know that this particular transaction was fraudulent?

All my direct sales through the Smashwords website are single-copy orders for an ebook. Although it’s possible to purchase multiple copies of a single ebook to gift to other Smashwords readers, five copies in a single transaction was irregular. Even more so when I don’t have a large enough fan base to send copies flying off the virtual shelves. If I did, such a transaction would be buried—and perhaps undetectable—in a lengthy sales report.

If you’re a Smashwords author, you have to read the site updates on a regular basis. Reports of credit card fraud appears from time to time when such activity impacts numerous writers, usually after the sales reports gets updated and prior to the quarterly payments being paid out.

Why would someone use a stolen credit card to buy ebooks? The two most common reasons are:

  • Buying single copies of numerous ebooks to post on an illegal download website for others to read for free.
  • Testing the buying limits of the stolen credit card by purchasing multiple copies of a single ebook.

After I logged into the Smashwords website and clicked on the comments link at the top of the page, I reported the transaction as being suspicious. My sales report got updated forty-eight hours later to reflect that the original transaction voided due to a fraudulent credit card payment and the $4.05 USD I earned from the sale reversed.

Traditional authors were often advised to go through their quarterly royalty statements with a fine-tooth comb and report any irregularities to their agent or publisher. Indie authors must do the same with the sales reports from the ebook retailers. Credit card fraud hurts everyone in this business.

The 99-Cent Business Model For SHORT eBooks

Everything 99 Cents Sign

Some writers on Twitter were discussing about other writers who priced their full-length ebooks at $0.99 USD, therefore ruining the market for ebooks priced at $2.99 USD or higher. I kept reading that pricing ebooks at $0.99 USD doesn’t work. Actually, it does work—for SHORT ebooks featuring short stories and essays. The $0.99 USD price point appeals to IMPULSIVE SHOPPERS who want a quick read for a buck.

I stumbled upon this pricing scheme by accident when I became frustrated that the short story reprint market was dead. My short stories saw print once and only once. Placing my reprints elsewhere became too much work. All the editors wanted new content. The few editors willing to consider reprints were so damn picky I’m not sure why they bothered. Unless you’re selling books like Stephen King, a traditional publisher won’t even look at a short story collection.

My reprints found new life as short story ebooks in late 2010. Due to the short length (my minimum word count is 1,000 words), these SHORT ebooks could only be priced at $0.99 USD. Since then I started adding more short story and essay ebooks to my catalog. My income from Amazon and Smashwords grew with every little sale to become a predictable income stream that was larger than my first serial right sales.

My current business model is to add a new SHORT ebook every other week. I should have 40 SHORT ebooks for sale by the end of this year. Most will be at $0.99 USD, some will be FREE, and the omnibus ebooks will be $1.99 USD or higher. The more SHORT ebooks I have for sale, the more sales I’ll have.

This business model isn’t risk free. I’m putting time and effort into a business model that is nothing more than throwing mud at the wall and seeing what sticks. I really don’t know what will work and what doesn’t work. From what I learned so far—reprint sells better than original content, essays sells better than short stories—I can make reasonable readjustments over time to gain more sales.

The serious downside of having too many ebooks available for sale is when the newest generation of ebook readers require high-resolution covers to take advantage of the high-definition displays. Updating the ebook covers over the summer put me into the hole for $300 to $400 USD (still working on this project), wiping out what little profit I had for this year. The uniform covers and formatting should spur an increase in sales.

What annoys me the most with having too many ebooks for sale are the whining reviews that the SHORT ebooks are TOO SHORT. Never mind that word count listed in the description. Never mind that the SHORT ebooks area available for FREE. (I have yet to see a whining review about a paid SHORT ebook.) This is almost as bad as writers complaining about how other writers are pricing their ebooks too low.

The Month-Long eBook Promotion That Wasn’t

Promotion and key concept

Smashwords had their July Summer/Winter Sale last month, where I offered a 50% off discount on three omnibus ebooks and a half-dozen ebooks were automatically enrolled as they were already FREE. (See the new free ebook page for list of titles.) The results are in—drumroll, please—it’s, meh.

That’s not surprising. Nearly all my ebook sales from Smashwords are through the third-party distribution network (i.e., Apple, Barnes & Noble, Sony, etc.). Sales through the website itself are very rare events. The 50% off discount went over like a lead balloon. The FREE ebooks, however, went flying off the virtual shelves. The Post-It note with the pre-sales numbers disappeared, so no breakdown of how well the FREE ebooks did for this promotion.

July was such a distracting month that I couldn’t do any active promoting.

I spent three weeks trying to get a small business checking for my intellectual property holding company (IPHC). US Bank didn’t like my anonymous limited liability company (LLC) from Wyoming, or the supporting documents provided by my registered agent to represent me in Wyoming, because my name wasn’t officially listed anywhere. After three trips to the branch office and several heated arguments, the manager denied my application.

This isn’t an uncommon problem in the post-9/11 era. The stricter banking standards are to thwart terrorists, organized crime and Wall Street from opening accounts for money laundering. Not that this actually prevents that from happening. The practical application is to prevent the little guy from getting a leg up on big business. I’ll have to shop around until I find a bank or credit union that will accept my out-of-state LLC.

US Bank, however, had no problems opening a business checking for my writing business with a California LLC as my name was on all the documents. Providing a copy of my DBA statement also proved that my writing business had existed since 2006. Opening a new account still took two more trips to the branch office to get it done. The manager became shocked—shocked!—to find out that I wasn’t kidding when I told her that I was operating a “small business” with lowercase letters. I hope that will change next year.

The Economics of New eBook Covers

Increasing Costs

This week I started updating my ebook covers to meet the new requirements by buying newer stock graphics at a larger size since the smaller stock graphics don’t scale up well. Since I’m also restructuring my writing business, I’m also thinking about the economics of the new ebook covers in terms of breaking even and making a profit.

With the average price per stock graphic going from $1.67 USD to $8.35 USD for each ebook cover, I’ll need to sell more short story and essay ebooks at $0.99 USD each to offset the increased cost. Unfortunately, I’m not able to raise prices on my ebooks since I specialized in the shorter and less expensive end of the ebook market. If the price per ebook can’t change, I need to change something else to become profitable.

I was recently followed by Bibliocracy on Twitter and invited to submit my ebooks for sale at Bibliocracy. Since I’m already on Amazon and Smashwords, and in the process of abandoning Scribd for nonexistent sales, I’m reluctant to put time and effort into another market with uncertain prospects. But I did check out Bibliocracy and found one unusual requirement. The minimum word count is 2,500 words (ten pages), which disqualified most of my short story ebooks (the average length is over 1,000 words).

The more I thought about this market, the only suitable ebooks I have for Bibliocracy  are the omnibus ebooks (i.e., multiple ebooks collected into a single ebook) at $1.99 USD each. With two omnibus ebooks available, I can try out this market with very little effort. Unlike Amazon and Smashwords with a vast ocean of titles, Bibliocracy is a small pond with a growing list of titles. My omnibus ebooks should sell well here than elsewhere. A new market for higher priced ebooks will help decrease overall costs.

With Bibliocracy’s 2,500-word minimum requirement, and if Bibliocracy becomes a viable market for my titles, can I really afford to publish a short story ebook with less than 2,500 words? Maybe, maybe not. Like my 500-word flash stories, I might be bundling a handful of short stories into an ebook. Perhaps these short story bundles will sell better together than as individual ebooks at $0.99 USD.

Looking at my ebook publishing calendar for the next 18 months, I decided not to publish a new ebook per week. I’m still working at a full-time, non-writing job to pay the everyday bills. With blogging four times a week, building up the ebook buffer, and writing new material in between, I need more slack time in the schedule to keep everything on track. With each ebook cover costing $8.35 USD, I can only afford to do three ebook covers per month. I’m returning to my previous schedule of publishing an essay and short story ebook every month, with a free blog posting ebook tossed in.

Like my early days of being an over-the-transom short story writer, my carefree days of being an ebook publisher are gone.

Setting Up An Intellectual Property Holding Company (IPHC) For A Writing Business

Copyright Lock

After establishing a living trust and a limited liability company (LLC), I decided to set up an intellectual property holding company (IPHC) with a Wyoming LLC to further protect my copyrights from any potential personal and/or business liabilities.

Since I live in California, I have to take additional steps to avoid paying the minimum $800 USD annual tax to the Franchise Tax Board (FTB). The trick is to make sure that the IPHC does no “work” in California, therefore sidestepping the requirement to register with the California secretary of state and paying the franchise tax.

Here’s my workflow for using a Wyoming LLC as an IPHC:

  • As the writer, I transfer all my literary copyrights and other business-related intellectual properties (i.e., domain names and artwork) to the IPHC (Wyoming LLC).
  • As the IPHC owner, I sell first serial and reprint rights to third parties (i.e., anthology and magazine publishers), and licensed the ebook business (California LLC) to further monetize the copyrights.
  • The ebook business (California LLC) turns the licensed copyrights into ebooks and hosts the related websites, paying a 25% royalty rate to IPHC on all related income.

Under this particular arrangement, I no longer get paid as a writer and everything I write is out of love for the craft. (Some things never change.) With both the IPHC and the ebook business being taxed as corporations, all the monies from writing are staying in the businesses for now.

The only work that the IPHC does is responding to emails and signing licensing agreements. If a short story needs a revision before being submitted, the manuscript get sent back to the unpaid writer in California. Since the IPHC derives passive income from licensing to third parties and the ebook LLC, the business isn’t subject to California tax laws.

The ebook business still pays for the annual $800 USD franchise tax since a substantial amount of work and income is taking place in California.

Why go through the trouble of setting up an IPHC? With the copyrights and other intellectual properties in a separate business entity (the Wyoming LLC), the opposing attorney who sues me personally and/or the ebook LLC will have to hire a Wyoming attorney and the charging order will prevent the IPHC from being liquidated. If the ebook LLC implode from a lawsuit, I can start a new business entity and resume business with the licensed intellectual properties.

If you’re interested in setting up an IPHC, do your homework and consult with an IP attorney (if necessary). This isn’t something that you should rush into. An IPHC is like any other business. You need a business plan to outline your goals, establish a clear workflow and maintain a well-documented paper trail. Failure to do any of this correctly will result in an expensive mess if you’re sued and everything unravels.

Taking Summer Break To Restructure The Writing Business

Tropical BeachAfter writing a three-part blog post about forming a revocable living trust for my personal life, converting my writing business into a limited liability company (LLC), and using the two together, I felt it was time to take a break for the summer. With my father’s death from lung cancer and starting a new non-writing tech job last month, writing short stories, four 500-word blog posts every week, and a new short story or essay ebook every other week have left me stretched thin. I’m halting the publication of ebooks to work on several projects for the next three months.

Writing A Business Plan

One of the reasons why I converted my writing business from a sole proprietorship to a LLC was to impose structure. I’m no longer a writer sending out short stories into a cruel world of rejections in the slush piles, but a business owner with copyrights, ebooks and websites. All these areas require my attention to make the new structure successful. Writing a business plan will put everything into focus.

Re-branding Existing eBooks

When your business becomes a LLC, you need to let the entire world know that you have a LLC. I’ll be adding “Published by C.D. Reimer & Associates, LLC.” to the title page of existing and future ebooks. This will also be a good time to update each ebook with a new cover, navigation structure and content changes.

Filling Up The eBook Buffer

Although I have 24-month publishing calendar for my ebooks, I don’t have a four-month buffer with ebook titles ready for publication. Every other week becomes crunch time to put together a new ebook. Unlike reprint short stories ebooks, original short stories and essay ebooks require additional work. I can fill up the buffer before I resume ebook publication in September.

If this summer break works out well, I’m hoping to take every summer off to work on longer writing projects (i.e., my unfinished first novel that’s been gathering dust since 2009). As a writer, I want to write without worry about the business side. As a business owner, I need to make the business run well enough to make that happen.

A Revocable Living Trust And A LLC For This Writer (Part 3)

This is the third part of a three-part blog post. Read Part 2 – A Limited Liability Company.

Using Living Trust & LLC Together

Business Running Against TIme

Here’s how everything ties together between the revocable living trust and a limited liability company (LLC). As the writer, I assign my economic interests in the copyrights and the LLC to the living trust while maintaining full ownership. As the trustee of the living trust, I provide the LLC with a revocable license to publish the copyrights in any format. As the owner of the LLC, I’m publishing the licensed copyrights to make money.

If someone wins a lawsuit against the LLC, I (the trustee) can revoke the license for the copyrights to force the LLC to halt business. That leaves only the bank accounts, office supplies and furniture for liquidation under a court order. Without the copyrights, the LLC has nothing to sell. Meanwhile, after the court drama is over, I can start a new business all over again.

If a judge decides I haven’t maintained the LLC properly and declares the “corporate veil” pierced, all my personal assets—including the copyrights—are at risk. I could further protect my copyrights by putting them into an intellectual property holding company (IPHC). As with the living trust, the IPHC issues a revocable licensing agreement to the LLC for publishing the copyrights. This creates another legal layer that an opposing attorney will have to overcome to get at the copyrights.

The living trust comes into play when you die and your heirs inherit your estate without having to go through a very expensive and time-consuming probate process before a judge, where everything becomes public. Most people who accumulated a lifetime of assets, spend very little time thinking about—much less planning for—their eventual demise. A properly structured living will and LLC can keep your assets from being liquidated to pay estate taxes.

Conclusion

The living trust and a LLC are powerful tools—if done right. I’m doing this without any professional advice because I’m confident from my research that I’m doing this correctly. After being a sole proprietor for the last six years, I’m ready to take my personal life and writing business to the next level. If everything goes well over the next few years, I’ll do a full review with an attorney and make whatever changes as needed.

A Revocable Living Trust And A LLC For This Writer (Part 1)

Living Trust & Estate PlanningThis past month was somewhat difficult with my 77-year-old father’s illness and death from lung cancer. As I unwound his estate and disposed of his personal belongings, I started thinking about my mortality and how my copyrights would survive my passing. This prompted two major changes in my life: a living trust to organize my personal finances and converting my writing business into a limited liability company (LLC).

A Revocable Living Trust

As a single, unmarried and childless 42-year-old man with another 35 years to live, do I need to have a revocable living trust?

Not really. However, since I declared bankruptcy last year after being unemployed for two years and underemployed (working 20 hours per month) for six months, I’m rebuilding my finances from the ground up. Nothing focuses your mind on planning for the future than putting your assets into living trust.

I used Nolo’s Online Living Trust to create the initial documents for the living trust, designating my nephew as the successor trustee, and leaving my estate in equal shares to my nephew and niece. This arrangement may change in the future as I continue to live my life and grow my writing business. I can add amendments to reflect the changes or re-do the living trust as often as needed. If I become incapacitated, my successor trustee can follow the instructions in the living trust to unwind my estate to provide for my care. If I die, my estate can avoid going through the probate process.

My credit union notarized the living trust documents for free, and re-titled my checking and savings accounts into the name of the trust. Once the assets are in the trust, I no longer personally own those assets. As the grantor trustee, I still have full control over those assets. Although a revocable living trust provides no form of asset protection, and an opposing attorney can still go after the trust assets in a personal lawsuit, I need to keep this separateness in mind at all times.

Like a jigsaw puzzle, I’ll be adding additional financial accounts and assets to the living trust over the next few months to build a complete financial picture. I still need to create a “pour over” will to cover everything that isn’t in the trust yet. As my finances and writing business grows over the next few years, I’ll need the advice of an estate planning attorney to ensure I’m doing this right and taking advantage of any changes in the law.

Next: A Limited Liability Company (LLC) (Part 2)

Reprint Sells Better Than Original For Short Story eBooks

eBook Reader On Dead Tree BooksAfter selling short story ebooks for over a year-and-a-half, I can say that reprint content (i.e., published manuscripts) sells better than original content (i.e., unpublished manuscripts). This may surprise some writers. Although the ebook publishing revolution is the great equalizer for content, some content are more equal than other content (to paraphrase George Orwell’s “Animal Farm”). Knowing the difference can increase your ebook sales.

Depending on the content, I include one of the following two lines in the description and on the title page for the ebook.

For reprint content: “This 1,029-word short story was first published in The MacGuffin (Fall 2009).”

For original content: “This 1,155-word short story is being published for the first time.”

Readers looking for something new to read—especially from a writer they haven’t read before—would probably purchase the reprint ebook because an editor thought the original manuscript was good enough for their publication. (Assuming that the editor wasn’t an utter moron, which I have encountered a few during my snail mail submission days.) Readers can independently verify most publication credits on the Internet or at the local library, if the reader wants to go one step further before buying the ebook. Reprint content inspires trust, whereas original content requires a leap of faith, from the reader.

My goal as a short story writer is to publish my manuscripts elsewhere first. After the exclusive period is over (i.e., 90 days for web publication to 365 days for print publication), I can re-publish my short story as a reprint ebook. My goal as an ebook publisher is to fill the pipeline with reprint content as much as possible and use original content to fill out the publication calendar (two ebooks per month). Reprint content takes very little time to turn into an ebook. If I can get enough reprint content into the pipeline, I’ll have enough free time to write and publish an original novel ebook.