Feo Takahari
Auror
Disclaimer: So far, I've taken less than a year of economics. It's entirely possible I'm seriously wrong about something.
I'm currently taking microeconomics, and I've been learning about the different types of markets. In general, if it's difficult to enter an industry, and there are few companies in it, ("oligopoly"), those companies that successfully establish themselves can make a good profit, assuming there's at least some demand for their goods (no one wants a monopoly on the sale of slide rules.) On the other hand, if it's easy to enter an industry, and the products sold are virtually indistinguishable ("perfect competition"), long-run economic profit* will tend towards zero--if it gets higher, people will enter the industry and drive prices down, and if it gets lower, people will leave the industry and drive prices up.
The sale of books fits neither of these models, instead being closer to "monopolistic competition" (only John Grisham can write John Grisham novels, but anyone can theoretically become as famous as John Grisham.) But in an industry that's easy to enter, monopolistic competition is functionally equivalent to perfect competition for the vast majority of sellers--brand recognition means little when you're trying to decide between a book by Mickey Zucker Reichert and one by Lawrence Watt-Evans**. And self-publishing and e-publishing have made writing easier to enter than ever before.
From this, it would seem to follow that at best, writing will level out to zero economic profit for any writer who doesn't successfully establish a brand. At worst, if hobbyist writers compete with writers who seek profits, and if the number of hobbyist writers is greater than the number of profit-seeking writers the industry could support, average economic profit should be negative, and writers who seek a profit are betting against the odds.
Now, there are at least two factors I'm not figuring in here. The first is the time and skill required to become a good writer. It may be that the time investment is sufficiently long, or the skill is sufficiently rare, as to make the number of good writers less than the market can support. However, I think it likely that many people with the potential to be good writers have additional skillsets that make more money, such that an expansion of the market and the potential for profit would entice them to enter the industry until it reached zero economic profit again. I'm also not convinced the market can easily reward good writers, particularly if they're difficult to find amongst the crowd. The second factor is that some people (most obviously the writer of Fifty Shades of Grey) can analyze the patterns by which branding succeeds, and use those patterns to create a powerful brand irregardless of writing quality. However, this is a sufficiently rare and valuable skill that it's not applicable to most writers.
With all this in mind, can the average writer reasonably expect to make more money from writing than from another career that requires as much time and effort?
* Profit greater than what sellers could receive by selling in another industry. Zero economic profit is still positive accounting profit, assuming that sellers could make greater than 0$ in another industry.
** Major kudos if you've actually read a book by either, since they're very good writers, but my point still stands for the average reader.
I'm currently taking microeconomics, and I've been learning about the different types of markets. In general, if it's difficult to enter an industry, and there are few companies in it, ("oligopoly"), those companies that successfully establish themselves can make a good profit, assuming there's at least some demand for their goods (no one wants a monopoly on the sale of slide rules.) On the other hand, if it's easy to enter an industry, and the products sold are virtually indistinguishable ("perfect competition"), long-run economic profit* will tend towards zero--if it gets higher, people will enter the industry and drive prices down, and if it gets lower, people will leave the industry and drive prices up.
The sale of books fits neither of these models, instead being closer to "monopolistic competition" (only John Grisham can write John Grisham novels, but anyone can theoretically become as famous as John Grisham.) But in an industry that's easy to enter, monopolistic competition is functionally equivalent to perfect competition for the vast majority of sellers--brand recognition means little when you're trying to decide between a book by Mickey Zucker Reichert and one by Lawrence Watt-Evans**. And self-publishing and e-publishing have made writing easier to enter than ever before.
From this, it would seem to follow that at best, writing will level out to zero economic profit for any writer who doesn't successfully establish a brand. At worst, if hobbyist writers compete with writers who seek profits, and if the number of hobbyist writers is greater than the number of profit-seeking writers the industry could support, average economic profit should be negative, and writers who seek a profit are betting against the odds.
Now, there are at least two factors I'm not figuring in here. The first is the time and skill required to become a good writer. It may be that the time investment is sufficiently long, or the skill is sufficiently rare, as to make the number of good writers less than the market can support. However, I think it likely that many people with the potential to be good writers have additional skillsets that make more money, such that an expansion of the market and the potential for profit would entice them to enter the industry until it reached zero economic profit again. I'm also not convinced the market can easily reward good writers, particularly if they're difficult to find amongst the crowd. The second factor is that some people (most obviously the writer of Fifty Shades of Grey) can analyze the patterns by which branding succeeds, and use those patterns to create a powerful brand irregardless of writing quality. However, this is a sufficiently rare and valuable skill that it's not applicable to most writers.
With all this in mind, can the average writer reasonably expect to make more money from writing than from another career that requires as much time and effort?
* Profit greater than what sellers could receive by selling in another industry. Zero economic profit is still positive accounting profit, assuming that sellers could make greater than 0$ in another industry.
** Major kudos if you've actually read a book by either, since they're very good writers, but my point still stands for the average reader.