For the past century, large publishing houses come to mind when one thinks of publishing. The "Big Five" publishers are known to all readers: Penguin Random House, HarperCollins, Macmillan, Simon & Schuster, and Hachette. Dozens, if not hundreds, of imprints exist within each of these houses. An imprint is a group within the house that focuses on a specific type or genre of books, such as the Harlequin romance imprint within HarperCollins.
The recent boom of e-books has led to a paradigm shift in publishing, wherein small, independent publishing houses have found greater opportunities for success than ever. These houses operate much like the Big Five but produce far fewer books per year, often focusing on niche genres.
Benefits
Publishers build their reputation by producing quality books and investing in an author's career. They are selective of which stories to buy—stories not only need to be good but also a fit with the publishing house's area of focus in terms of story themes and reader demographics.
Publishers commonly pay an advance against royalties, or advance, for any story they buy, though the smallest houses—especially ones that publish only e-books and Print on Demand (POD) paperbacks—may not provide any advance. An advance is an up-front payment made to an author that is deducted from future royalties. For example, a house may offer a $5,000 advance to a writer for a book. The writer may receive $1,500 upon signing the contract, another $1,500 upon submitting the manuscript, and the final $2,000 upon publication. Once enough royalties have come in to cover the $5,000 advance, the book has "earned out" its advance, and the writer will begin to receive royalties on all future sales. Advances are largely handled in multiple payments to help the writer by providing some income up front while protecting the publisher from not having an outlay of too much cash months or years before a book is published.
Up-front income and no publishing costs are a significant benefit of working with a publisher. The publisher absorbs all publishing costs in exchange for a percentage of royalties. This model makes the publisher financially vested in the book's success.
The publisher guides the writer through the process, which can reduce the writer's stress and workload and allow the writer to remain focused on being a writer. Having a full team of professionals—editors, cover designers, and publicists—is very attractive to writers who don't want to bear the full load of publishing a book.
A benefit to working with a larger house is that you are more likely to see your book on bookstore and library shelves across the country. This visibility, coupled with visibility through the publisher's standard marketing channels, will expose your book to readers who may not see it otherwise, which in turn can open it to greater word-of-mouth promotion, reviews by major news sites, and submissions for traditional awards.
Challenges
Publishing houses ease the publishing process and bring a wealth of knowledge and experience, but that comes at a lower revenue rate for writers, which means you need to sell more copies of a traditionally published book than of a self-published book to make the same revenue. Publishers pay a royalty, which is a percentage of a book's net revenue, such as twenty-five percent of net revenue of each sale. Self-publishers receive the full net revenue provided by each retailer, i.e., there's no "middleman" to take a cut. However, self-publishers incur publishing costs, so the comparison of royalty rates and revenue rates is not an even comparison.
A publishing contract once meant a writer would see his or her books on bookstore shelves. In the digital age, many publishers release books as e-books and POD paperbacks, releasing fewer books widely to physical stores and libraries. A traditional publishing contract no longer guarantees you'll see your book in bookstores and libraries.
Another challenge writers face with publishers is that it can take a long time from submitting the manuscript to seeing the published book. Querying agents and editors and then publishing can each take anywhere from a few months to years. The delay in a world moving at an ever-increasing pace has led some writers to self-publish.