The Obamas' Memoirs Cost $65 Million. Can the Publisher Make It Back?

Where do publishing's blockbusters actually come from? Celebrity memoirs are the best case to study.

Last week, the publisher Penguin Random House announced it had won the rights to two new books by former U.S. President Barack Obama and his wife, Michelle Obama.

According to a report in the Financial Times, people involved in the bidding said Penguin Random House would pay more than $65 million in advances for the two books. Penguin Random House did not respond to that figure.

If it is true, this is the most expensive White House memoir deal ever, and possibly the highest advance ever paid for a single book anywhere in the world.

Penguin Random House is the world's largest publisher, formed by the 2013 merger of Penguin and Random House. The combined company holds more than 25% of the book business, with over 10,000 employees, 250 imprints, and about $3.9 billion in annual revenue.

In the United States, departing presidents have been writing books about their time in office since 1866, and the practice eventually became something of a tradition. Obama's White House memoir is all but certain to be a bestseller once it appears, but $65 million is still no small sum — it is 59% of Penguin Random House's entire 2015 profit.

How big a number is $65 million in publishing?

At $65 million, the Obamas become the most valuable celebrities in any publisher's eyes, and the deal sets a record for the largest advance ever paid for a single book.

Put it this way. The previous record for an American political memoir belonged to Bill Clinton, the 42nd president (1993-2001). He published My Life in 2004, and Random House's Knopf imprint paid a $15 million advance for it. Adjusted for inflation, that advance would be worth $19 million today — still nowhere near the Obamas' $65 million, or $32.5 million a book. Obama's predecessor, George W. Bush (president 2001-2009), got only $7 million for his memoir Decision Points, roughly a fifth of Clinton's figure. Set against the memoirs of politicians in other countries, $65 million is plainly a huge number too.

In The Guardian's roundup of the ten richest book deals of all time, the Obamas' contract ranks second. First is the American novelist James Patterson, who signed a 17-book deal with the Hachette Book Group in 2009 worth $100 million to $150 million in advances. The total is staggering, but per book the advance ($5.88 million to $8.82 million) is not actually that high.

Apart from the political memoirs, the rest of the list is mostly memoirs by entertainers and novels by novelists.

Among the entertainers, the highest advance — $10 million — went to Born to Run, the autobiography of the American rock star Bruce Springsteen, known as "The Boss." The others are Life, by Rolling Stones guitarist Keith Richards, and The Girl with the Lower Back Tattoo, the autobiography of the comedian Amy Schumer.

Among the writers, besides Patterson, the list includes British author Ken Follett's "Century Trilogy" and J.K. Rowling's The Casual Vacancy, with advances of $50 million and $8 million (some reports say £2 million) respectively.

Who negotiated this deal for the Obamas?

Unlike in China, American authors rarely deal with publishers directly. They work through agents, and a good agent is generally thought to bring an author better money and a better career. When Elaine Koster, the U.S. rights agent for the bestseller The Kite Runner, died in 2010, its author, Khaled Hosseini, said he owed his whole writing career to her.

Politicians are no exception. But Robert Barnett, the agent behind the Obamas this time, is an unusual case.

Barnett's main job is as a lawyer at Williams & Connolly in Washington; brokering books is a sideline. The Financial Times has put him alongside Clark Clifford, an earlier legend of the Washington establishment, and called him "Washington's most influential lawyer." The New York Times has called him the mastermind of Washington's book deals and the gatekeeper of the city's "revolving door" culture — the movement of people back and forth between the public and private sectors, working the interests of both.

His client list includes Obama, Tony Blair, Bill and Hillary Clinton, Laura Bush and her daughter Jenna, Dick and Lynne Cheney and their daughter Mary, Paul Wolfowitz, Karl Rove and Alan Greenspan.

In 1995, Obama was 34, teaching constitutional law at the University of Chicago Law School and not yet in politics. His name in legal circles was enough to get his memoir, Dreams from My Father, published. The publisher, Times Books, paid him an advance of just $40,000.

Nine years later, by then an Illinois state senator running for the U.S. Senate, Obama signed a three-book, $1.9 million deal with Random House's Crown imprint. Before that he had made Barnett his agent for life. A year earlier, on October 24, Barnett had closed a $6.25 million deal with Random House on behalf of the former British prime minister Tony Blair.

"Nobody plays this game better than Bob" — Barnett's nickname — said Peter Osnos, a former Washington Post reporter who ran Times Books when it bought Dreams from My Father.

Barnett charges differently from traditional agents, who take a commission of around 15%. He bills by the hour, as he does for legal work, at $750 to $1,000 an hour. "[I can] help offer advice, choose the right publisher, decide whether to negotiate privately or hold a public auction. Most agents aren't lawyers. I do the contract, organize the book launch, and sometimes I edit a little if the client wants it," Barnett told the Financial Times. He is reckoned an expert at every one of those stages, which helps close the big deals and sell the books. Even James Patterson dropped his third agent and went to Barnett.

Barnett also runs every part of an author's publicity. Take Hillary Clinton's memoir, Living History: "Our plan filled 60 pages of notes — which national radio shows, which CNN programs, which newspapers, which magazines. I handle all of it, and most agents won't touch any of it," Barnett said. Living History set an $8 million record for an advance at the time and sold more than 1.1 million copies. In publishing, 50,000 copies in a year is already a decent number.

Before the Obamas' two books, how did Penguin Random House sell books?

"There is no formula for a bestseller, so every year we invest in a few thousand different books, and each book is its own startup — I always say we're the Silicon Valley of the media industry. Every year we place a few thousand bets in the U.S. and 15,000 worldwide, and only a handful reach the top of the bestseller lists. It's a very modern business model. It keeps this industry diverse in content and in viewpoint, and it gives important voices a platform and an audience," Penguin Random House CEO Markus Dohle told an interviewer.

But among the 15,000 new books Penguin Random House publishes a year, projects the size of the Obama memoirs are rare. Before a book comes out, a publisher usually grades it — A, B, C, D — and the grade determines the staffing, the marketing money and the rest. A project like an Obama White House memoir gets the highest grade there is. Penguin Random House also has more practice at this than its rivals: half of the ten richest book deals in history were its own.

Clinton's My Life is one of the successes. Clinton was among the most divisive presidents in American history. In office, his sex scandal with the White House intern Monica Lewinsky shocked the world and ended in impeachment proceedings in Congress — only the third such case in American history, after Andrew Johnson and Richard Nixon. At the same time, the economy did well on his watch.

Back then a great many people were curious about the story behind the scandal and wanted to know how Clinton remembered it and how he saw it. Random House built its marketing on exactly that. "The fullest, most intimate account," "covers every detail," "a candid memoir" — that was the language used to sell My Life.

A year earlier, when Hillary Clinton's Living History came out, Simon & Schuster had used the same strategy, making the Clinton sex scandal the book's biggest selling point, and it sold. Many outlets reviewed the book well and covered it heavily, which lifted sales further.

Clinton telling the story himself, as the man at the center of it, was bound to draw more attention still. In August 1998, on the night he told his wife the truth about Lewinsky, Hillary felt "as if she'd been punched in the stomach," and banished him to the couch for two months. "I moved to the couch in the little sitting room next to the bedroom, and I slept on that old couch for two months or more. I read, thought and worked on that couch. It was comfortable enough, but I sure didn't want to sleep there for the rest of my life…" Clinton wrote in the book.

My Life went well beyond the scandal. It dealt with the Kosovo war, the Middle East peace talks, Osama bin Laden's al-Qaeda, North Korea and U.S.-China relations, and it told the story of Clinton's life before the presidency. The book was rich in material and ran past 1,000 pages.

It is worth noting that publication was timed deliberately for just before the 2004 election, and the book included Clinton's views on that election. That brought it more attention still: supporters and opponents alike were impatient to read it.

Publication day was June 22. That day, Barnett and the publisher put Clinton on The Oprah Winfrey Show, hosted by the queen of talk, Oprah Winfrey, a program that drew an average of 33 million viewers a week and carried enormous influence. Two days before, Clinton had appeared on CBS's "60 Minutes." He also gave a speech promoting the book at that year's BookExpo America in Chicago, did signings at Rockefeller Center and elsewhere, and recorded an audiobook CD that sold for $35. The publicity was dense and wide, and it captured the public's attention as fast and as fully as it could be captured.

In the end My Life sold more than 2.25 million copies that year and topped every major bestseller list — and topping the lists sells more books in turn. Clinton made about $24 million from it.

In the U.S., publishers generally take about 30% of a book's profit. That also means a bigger advance brings bigger marketing and distribution resources with it. Consider a book like the Obamas', with an advance of more than $65 million: even if marketing is budgeted at just 1% of a book's value, the publisher has more than $3.6 million to spend.

Chinese publishers run many studios, each with its own marketing team. Penguin Random House works the other way: its 250 imprints do editorial work only, while marketing and sales draw on the resources of the whole group. Random House vice president and sales director Lane Jantzen argues that this lifts overall efficiency, lets each imprint play to its strength in making content, and makes it easier for the marketing and sales teams to pitch and sell every kind of book on behalf of the group.

Penguin Random House is nonetheless under enormous pressure. Price the two books at $35 each and apply the 18% royalty rate that the noted publishing figure Chen Yingqing estimated for Hillary Clinton in his book 《老猫学出版》, and the arithmetic says the Obamas' two books must sell at least 10.32 million copies together before Penguin Random House breaks even. That is a punishing number. Selling a million copies of a single book is hard enough — it makes you a super-bestseller.

What may leave Penguin Random House optimistic is that Obama is already a fairly successful bestselling author. His three earlier books (Dreams from My Father, The Audacity of Hope and Of Thee I Sing: A Letter to My Daughters) have sold more than 4 million copies between them and earned him over $10 million. Some commentators predict that, given Obama's speaking and writing gifts, his memoir could stand beside the famous Personal Memoirs of Ulysses S. Grant, by the 18th president.

More important, as the well-known columnist Joshua Robinson has said, a president writes a book in order to steer how people understand his political legacy. American presidents' White House memoirs tend to speak pointedly to the moment they appear in.

As we all know, some people read 2016 as a turning point in history — the end of the liberal Western order that had held for 70 years after the Second World War. A central part of that turn was the arrival of President Donald Trump. America is split along social, economic and cultural lines; its democracy is in crisis and seems to be closing in on itself and sliding toward populism. When the present is hard, more people are likely to feel nostalgic for the Obama years. His book will ride that wind to strong sales. That may be the publisher's biggest selling point of all.

To see how celebrity biographies sell, look at Steve Jobs and its 3 million copies in China

My Life, Decision Points and the rest each sold more than a million copies at home in the U.S. and joined the ranks of super-bestsellers. But once these foreign hits reach China, their fates diverge — some sell 30,000 copies, some sell more than a million.

Steve Jobs is something close to a miracle. The book sold far better in China than in the United States, 3 million copies in all. In its first week it sold 379,000 copies in the U.S. and more than 670,000 in mainland China, nearly twice as many. For its publisher, a company 29 years old, Steve Jobs was also one of the best-selling books it had ever had, worth $40 million in profit.

Much of the credit goes to how CITIC Press ran it.

On October 24, 2010, CITIC Press emailed Amanda Urban, the agent for Walter Isaacson, to ask about the rights to Steve Jobs. Urban replied the same day from her BlackBerry that she could not discuss details. Five months later she began looking for publishers for the book around the world.

Pan Yue, CITIC Press's editor-in-chief, recalls that the agent's description of the book was a single sentence: "This is the only biography of Steve Jobs authorized by him." "Beyond that, we knew nothing," Pan said. No synopsis, no excerpt, no publication date. CITIC Press bought the rights as a gamble, and set its own record for a rights fee doing it.

Before Steve Jobs, the rights to Jack: Straight from the Gut, to Warren Buffett's biography The Snowball and to a biography of Henry Kissinger had cost $30,000, $200,000 and $500,000. Some reports put the fee for Steve Jobs above $1 million. CITIC Press did not respond to that figure.

Amanda Urban is a well-known agent at ICM. Besides Isaacson, she represents Haruki Murakami, Cormac McCarthy and Toni Morrison, among others, and she has a great deal of experience. With the publishers she drew up a plan to release Steve Jobs simultaneously through 35 publishers worldwide — it had the feel of an Apple launch event. Normally a simplified Chinese edition follows the foreign original by about a year; even in a rush, two or three months is the fastest it goes (as with My Life and Living History). For Chinese readers a simultaneous global release was a small delight. For publishers in every country it made scheduling and coordination much harder.

"The publication timing of this project was closely tied to Jobs's illness. The global licensing and simultaneous publication followed a strict and decisive process and set of standards. You could say it was exactly the same strategy and method as developing and launching an Apple product," Pan Yue told an interviewer.

At a publishing forum in 2013, CITIC Press vice president Jiang Lei recalled that Steve Jobs was the first book CITIC ran as a "major project" — meaning several divisions and business units worked on it together, rather than the usual one division per book. Editor-in-chief Pan Yue was the project manager, and the work was split into three teams: product, channel and marketing. More than 130 people across the company took part.

On September 20, 2011, with only 62 days left before publication, CITIC finally received the English manuscript. The date had originally been March 6, 2012, but after Jobs stepped down as Apple's CEO to become chairman, the publisher moved it up to November 21, 2011.

On October 5, 2011, Jobs died of his illness at home. Mourning followed around the world. Obama delivered a eulogy saying Jobs had changed the way we see the world; major outlets put his photograph on their front pages or in special issues; Apple employees, reporters and people across the tech industry all voiced their grief.

To the publishers, this was the perfect moment to sell the book. The worldwide publication date for Steve Jobs moved up again, to October 24. That also left far less time to take delivery of the manuscript, translate it, print it and get it into stores.

To move faster, CITIC skipped its usual search for professional translators and ran an open worldwide call for translators online with the translation site Dongxi.net. From about 500 applicants it picked four, then added a fifth, for a team of five. Steve Jobs ran to 560,000 Chinese characters, so each translator had to deliver more than 100,000 characters in 34 days. In the end they finished in under 30 days — thanks, Pan Yue reckoned, to the high pay and to Jobs's own pull.

The book was ready. What remained was selling it. The American edition of Steve Jobs made much of the reporting behind it: the author had interviewed Jobs himself more than 40 times over two years and spoken with more than a hundred of his relatives, friends, rivals and colleagues. The simplified Chinese edition had a much simpler pitch — the only biography Jobs authorized — and the marketing pushed that exclusivity and authority.

On October 24, publication day, CITIC joined with 30 bookstores in 21 cities to unveil stacked displays of the book and run promotions. Each store got 200 T-shirts, launch commemorative cards, the author's signature stamp and more. The events drew crowds and produced 160 pieces of press coverage.

Through that golden month of publicity, CITIC also staged events and forums of every kind to keep the book in the air. By an incomplete count, Jiang Lei said, there were as many as 500 original pieces of coverage, not counting reprints. "So in all of this, what we think we did was simply manufacture the event, and then use the leverage of the media to move the whole market," Jiang said.

To protect physical bookstores, CITIC also barred any channel from discounting the book below 75% of list price, which gave it more say with distributors and protected its margin. Instead of the usual two-week pre-sale, CITIC opened pre-orders at the major online stores three months ahead. By publication day, pre-orders had passed 100,000 copies. CITIC also set up a Weibo account for the official Jobs biography, built an official Jobs site on Tencent's portal, made a Steve Jobs video with Youku and ran various other campaigns. In major cities across the country it bought heavy advertising in subways, at airports, at bus stops and on billboards — 580 of them.

As for channels, alongside the traditional Xinhua Bookstore, private bookshops and online stores, even Suning's electronics stores and Vancl's website joined in. Compared with other books, Steve Jobs got more display space and more promotion everywhere it was sold. "The company takes this book very seriously; right now 80% of our work has to do with Steve Jobs," an employee of Dangdang.com told reporters. For three days, Kuaishubao stopped selling every other book and sold only Steve Jobs. Vancl had more than 100 billboards in over ten cities at the time, plus ads in subways and on buses. Every one of these moves had a single aim: to make sure you saw the book and knew it existed. Pan Yue told reporters that marketing for Steve Jobs ran into the millions of yuan.

In 2011 Walter Isaacson's Chinese royalty income passed 5 million yuan, putting him third on the rich list of foreign authors in China. J.K. Rowling was first with 15 million yuan, Gabriel García Márquez second with 6 million. It was Isaacson's first appearance on the list.

Over the past decade the rise of the internet has battered traditional publishing again and again. The 2013 merger of Penguin and Random House was an answer to that challenge, and to Amazon in particular. With more clout and deeper pockets, Penguin Random House has done reasonably well: sales rose from 2.7 billion euros in 2013 to 3.7 billion euros in 2015, on the strength of fast-growing markets such as India and a lift from several bestsellers, among them Paula Hawkins's thriller The Girl on the Train and E.L. James's Fifty Shades of Grey series.

How much the Obamas' new books will add to those profits is not yet knowable. But as every deal gets bigger and the hunger for a blockbuster never lets up, that may not be a good thing for an industry known for its steadiness.

Graphics: Feng Xiuxia

Cover image: Wikimedia