Short Paper #2: Crowdfunding: An Effective Business Model for the Publishing Industry

The publishing industry has become increasingly transformed by new digital technologies – this revolution not only changed the format of a book (from print to digital) and its distribution methods, but also enabled authors to secure funds without having to directly sell their content through traditional channels [e.g. via publishing houses]. Crowd funding, “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet” (Prive, 2012) has been a successful business model in which authors are able to make a living despite dropping wages in the field (Flood, 2014) and avid online piracy. This model has also been especially beneficial for new authors that would otherwise be filtered out from the “conservative and risk averse” (Bausells, 2015) gatekeepers of the traditional publishing industry.

With the advent of websites like Kickstarter and Indiegogo, authors have been able to use these platforms to pitch their ideas, generate publicity and raise the initial capital needed to fund their book directly from the general public. Since 2009, more than “$70 million [have been] pledged to projects in Kickstarter’s publishing category…[and] the number of successful book-related projects more than doubled, from 735 in 2011 to 2064 in 2014” (Bausells, 2015). This shows that crowd funding is indeed successful and that the general public was able to choose for themselves and be the deciding factor of what books would be available in the market for them to purchase. According to Alan Jacobson, the average royalty percentage paid by a New York publisher ranges from 8 – 15% for print copies and around 25% for e-book copies. This is a much lower percentage than what one would receive from a crowd funding campaign, as these websites only require a relatively low commission rate (see Kickstarter’s fee) for each successful project. Crowd funding removes the publishing houses as the sole middleman and gatekeeper of the publishing industry. To cater specifically towards readers, crowd-funding platforms like Unbound have been created where authors can submit their ideas and the audience can choose to fund the book that will then be “delivered to each person who pledged (plus any other rewards promised)” (Nightingale, 2014) in e-book, paperback or hardcover.

For individual authors without a track record as a traditionally published author (or some sort of symbolic capital), it is important to build their online presence to kick-start their book funding campaign. Using websites like Wattpad or FictionPress, aspiring authors can post their work and gain free exposure and even constructive feedback on their writing through comments from a large community of readers. As uploaded content on these site are free and easily accessible, the price and convenience barrier is removed and readers will be more liberal in giving new authors and their works a try. “[A]uthors who give their books away for free or at low costs frequently enjoy deeper customer relationships, more reviews, more sales of print books and increased sales of related books, products and services” (Collins, 2013). Authors can harness the benefits of giving away free content which can later ultimately bring in more funders for their future endeavors and perhaps even more print sales. Invested readers who really do want the authors they like to succeed will be more likely to do ‘genuine’ word of mouth marketing amongst their peers and take action monetarily which will be major keys to a book’s success. An implication of this, however, is that the author may need to spend more time digitally marketing him/herself personally. Here, the knowledge and know-how of a professional marketer from a publishing house may be sorely missed, as this may take away from the effort and attention needed to write their book.

“Online audiences are entirely willing to pay for content. Content creators simply must prove themselves first” (Collins, 2013). For authors that have already been published traditionally or have an existing fan base, the crowd funding model is also effective, as they have already developed a loyal readership and proven their abilities from their past works. This is seen with the example of Eric Ries, author of The Lean Startup, who was “previously published by Random House imprint Crown Business” (Bausells, 2015). Through the usage of Kickstarter, he was able to surpass his goal of raising $135,000 within a day and received over $500,000 into total from over 9,000 funders (Bausells, 2015). His project was immensely successful because of his past track record, social/online presence and valuable proposed content.

For many creative industries, a lack of funding seems to be the culprit in preventing great ideas from leaving the realm of the imaginary. Crowd funding can be beneficial to these industries because it can allow authors or entrepreneurs to “create a unique community of likeminded individuals” (Prive, 2012) that will back their aspirations and contribution to society that is based on creativity and shared interests, and not just for commercial reasons. Also, coming up with reasons that would attract a person non-related to the project to support monetarily requires the author/entrepreneur to be fully passionate and clear about the overarching purpose of the final product. The quality and variety of products that come out of crowd funding will increase as it gives even niche communities and opportunity to connect and have a say in what products will be produced as well as a level of accountability on the side of the producers to make their product “worthwhile [to their] backers” (Galley, 2014) as they are also ultimately their fan base.

The crowd-funding model can be a very viable model for authors; as mentioned above, the earnings of a project is near pure profit as most crowd funding platforms charge a low commission fee. However, the process of writing and creative direction of the author may have to be compromised to suit the input of the backers. A crowd funded book is much more collaborative in regards to the writing process because you need to update your backers with the writing process and may need to appease to their desires in order to retain funders. For publishers, the crowd-funding model may be detrimental if they do not adapt by giving larger advances, or harnessing the crowd to fund their authors. An average advance for a first time author is $10,000 a book (Kozlowski, 2014), and if the royalties of the book do not cover that, the publisher has to bear the losses. However, if a book it published through crowd funding, all funds a secured before it goes into production, there will be less financial risk and the readership is also built as they are simultaneously the backers of the project.

For the readers, crowd funding may gave them more power to support genres that are more catered to their tastes, that would otherwise be eliminated by the gatekeepers of traditional publishing. Stories and books that are not mainstream (therefore deemed ‘unprofitable’) now have a chance to be written, produced and distributed to those that have an appreciation for the. This will diversify and expand the book market, allowing for more conversation and different niches to open up. However, crowd funding does pose a risk for the readers, one cannot return a book or preview a book before paying to fund it. There is always an uncertainty about the quality of the story as the reader is paying for something that has not yet been written. If the book ends up poorly, the monetary losses are born by the reader(s) alone.

For publishing as a whole, crowd funding is beneficial as it makes the entire process of publishing more democratic and collaborative. Authors come up with an idea, shares it and consumers will pay for it if they want to read it. According to Gartland, this business model is “widely adoptable, scalable, social and fair”. However, he thinks that this model is still evolving: in the future, concepts and ideas may spawn from the readers themselves, and authors will then be commissioned to write it. This may drastically change the traditional definition of what roles of authors and readers play, but with the collaborative nature of the Internet and increasingly active netizens, this may be a possible direction for crowd funded books.

Sometimes, the public may be the biggest barrier to bringing new genres and books into the market. If an author’s pitch does not fit the market’s needs at the time, valuable literature and ideas may be lost if no one decides to back it monetarily. There are reasons as to why book agents and publishers existed (and still do exist) within the publishing industry. The eye of a book agent, the judgment and discernment of publishers and their ability to foresee what may has been valuable in introducing quality literature and ideas to the greater public. Perhaps publishing houses need to look towards a hybrid model of crowd funding along with providing traditional publishing wisdom for a small fee. Pubslush, dubbed “the Kickstarter of Publishing” (Lamoreaux, 2014) is a crowd funding platform that is “tailored to the needs of authors, agents, self-publishers and small presses” (Charman-Anderson, 2013). They are highly involved in the entire process of the campaign, as they offer conventional publishing and marketing wisdom for the author, which will give them higher chances to get visibility and funding to get their book into publication, all “for a small fee of $25” (Charman-Anderson, 2013). This also lowers the risk of the book delivering badly and ensures a level of quality for the readers. Though the platform had closed down in August for unclear reasons, this synergy between crowd funding and publishing support has been well received by authors and readers. The publishing industry needs to take note of how the digital technologies have enabled a deeper connection between individual readers and authors, and how it can be used to not only raise needed funding, but to foster a readership and include them in within the publishing process as well.


Bausells, M. (2015, June 5). Kickstarting a books revolution: The literary crowdfunding boom. Retrieved November 9, 2015, from
Charman-Anderson, S. (2013, December 10). Retrieved November 9, 2015, from
Collins, S. (2013, October 17). Why Successful Authors Are Giving Their Books Away for Free. Retrieved November 9, 2015, from
Flood, A. (2014, July 8). Authors’ incomes collapse to ‘abject’ levels. Retrieved November 9, 2015, from
Galley, B. (2014, September 13). Top Tips on Crowd Funding. Retrieved November 9, 2015, from
Gartland, M. (n.d.). Will Crowdfunding Books Replace Author Advances and Further Empower Readers? Retrieved November 9, 2015, from
Jacobson, A. (n.d.). The Business of Publishing. Retrieved November 9, 2015, from
Kozlowski, M. (2014, January 16). First Time Authors Normally Get a $10,000 Advance from a Major Publishing Company. Retrieved November 9, 2015, from
Lamoreaux, S. (2014, December 19). Pubslush is the Kickstarter of Publishing. Retrieved November 9, 2015, from
Nightingale, R. (2014, March 24). 5 Crowdfunding Sites Where You Can Raise Money For Your Next Book. Retrieved November 9, 2015, from
Prive, T. (2012, November 27). What is Crowdfunding And How Does It Benefit the Economy. Retrieved November 9, 2015, from
Short Paper #2: Crowdfunding: An Effective Business Model for the Publishing Industry