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Estimating Somebody Else's Income

There's a bit of a brew-ha-ha caused by Kristine Rusch (KKR) with her most recent blog post on gaming the publishing system. She, along with her husband Dean Wesley Smith (DWS) own their own publishing company which handles their back catalog and and publish some of their projects. What I'm going to do here is to estimate the minimum income of their publishing company, WMG Publishing, based on public information. I've heard indies discount them because they aren't making any money and that they aren't successful. Let's test what the numbers have to say.

Disclaimer: This is a back-of-the-envelope calculation based on public sources. I have no privileged information.

Over the last few years, both KKR and DWS said that they have nine employees in WMG. That number has held steady, so I can reasonably conclude that WMG is earning enough to make payroll.

According to CSI Market, the print industry average $24k in profit per employee. Using that as an estimate, WMG would be pulling in about $240k profit.

CSI market estimates a $300k average gross income per employee in the publishing biz, which multiplies out to $2.7 million in gross income for 9 employees.

Put it together, and I can postulate that WMG grosses $2.7 million in business, netting $240k per year in profit. In addition, KKR and DWS gain additional income in royalties. Not a bad deal.

Are those numbers right? Certainly not. But the numbers are plausible enough to demostrate that critics overstate their cases.

What's interesting to me is that DWS and KKR have certaily given themselves good publishing contracts with WMG. When they sell the publisher (old age happens), they pocket $X million for the sale and they still get all their favorable royalties. Nice deal, that.