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How to Read a Book Contract – Somebody’s Gonna Die

6 June 2011

Let’s assume you are an author represented by a literary agent. If Passive Guy asks you who your agent is, you’ll respond with something like “Suzanne Jones” or “James Davis.”

Passive Guy is certain Suzanne and James are wonderful people, but they’re going to die.

This is not a threat, simply a statement of biological reality.

Who will your agent be after Suzanne dies? Will it be someone you choose or not?

You selected Suzanne because she had a great reputation for helping authors build good long-term careers. Your career isn’t built yet. Who’s going to help build your career if she’s gone?

These are not hypothetical questions. One of the comments to a recent essay about agents by Kristine Kathryn Rusch described the story of Ralph Vicinanza, a literary agent for Stephen King, the Dalai Lama and others, who died in September, 2010, at age 60.

Here’s a bullet-point description of what has happened since Mr. Vicinanza’s death, according to the comment (which fits with other accounts PG has found):

  • The other two agents in the Vicinanza agency quit their jobs
  • A letter was sent to all authors advising them to find other agents and promising to continue to pay royalty checks
  • The executor of the Vicinanza estate intends to keep receiving payments from publishers and collecting agency fees from the authors
  • Other agents are asking Vicinanza authors for more than 15% to handle titles the Vicinanza agency handled, presumably because the estate will claim the first 15%

Contracts with a large organization should differ from those with an individual or small organization. A large organization, like a big publisher, is not going to disappear. It may go bankrupt or be sold, but it will have enough value so someone is likely to keep it running in some form or fashion. See this post and this post for potential nasty surprises for authors under this circumstance.

However, if somebody in a large publisher dies, another person will replace the dear departed and business will continue as usual. An author has a relationship with a big publisher because the publisher can jam a lot of books into bookstores, airports, Wal-Mart, etc. The jammers may change, but the jamming continues. (PG knows about author/editor relationships, but you can hire an editor without hiring Random House.)

In a small organization, like a literary agency, a death of an individual can result in the death of the agency. PG would suspect many of the clients of Mr. Vicinanza’s agency signed the agency contracts because of Mr. Vicinanza, and quite possibly, only because of Mr. Vicinanza. PG would have signed if Mr. Vicinanza promised to turn him into another Stephen King.

It appears the executor of Mr. Vicinanza’s estate is his sister, Louise Billie. Passive Guy did a quick Google search and couldn’t find any evidence that Ms. Billie is a literary agent or has any experience in that business. Yet, under the agency’s contracts with authors, Ms. Billie, acting on behalf of the estate, is handling royalties and, presumably, retaining 15% plus, perhaps, expenses.

What’s the contractual solution to problems like this? It’s much simpler than stating the problem.

If the services of a particular individual are a key value to you, include a provision in the contract that gives you the right to terminate the contract:

  • if that person dies,
  • becomes disabled and unable to perform his/her normal work, or
  • leaves the agency for any reason

As far as what happens to the agency percentage on book contracts the agent negotiated while alive or working at the original agency, PG would push for a provision that says those end when your agent goes.

A possible compromise would be that the agency percentage continues to be paid to the agency for one or two years after termination, but PG doesn’t like that because, at least according to the hypothetical value proposition of an agent, the agent’s services are continuing and overlap from book to book. The work an agent puts into your third book also enhances sales of books one an two.

The Vicinanza experience demonstrates that other agents are not willing to accept authors under standard compensation terms if they have to share compensation.

If agents boohoo about this, Passive Guy would simply point out that, if an attorney dies, the attorney is entitled to fees earned up until he takes his last breath and no more. A client is always free to hire another attorney at any time, whether the attorney is alive, partly dead or all the way dead.

Someone is bound to ask why the author should receive royalties forever while the agent who negotiated the publishing contract doesn’t receive agency fees forever.

The answer is that when the author wrote the book, she created an asset, recognized under copyright law, that will exist for a long time and is capable of generating income in a variety of different ways over its lifetime, some of which are recognized today and others of which won’t be conceivable for another 50 years.

The author owns the asset, the agent does not. The agent was paid for a service provided. PG would argue if the ongoing services of a particular agent were the key value to the author, when those services are no longer provided for any reason, the author shouldn’t be required to make any additional service payments.

Passive Guy has recently received several very nice donations to his Contract Collection (Thank You!) and will be writing additional posts on the wordy treasures and devious gotchas he discovers there. But, of course, a man can never have too many contracts, so please keep them coming.

Agents, Kristine Kathryn Rusch

18 Comments to “How to Read a Book Contract – Somebody’s Gonna Die”

  1. Any plans to put this whole series up as a checklist?

    • LP – Good idea. Let me think about how that might be done.

      • A checklist would work great as a stand-alone page which would be hyperlinked index of your contracts posts (but with descriptors longer than the ones the blogging software does automatically). If some of the individual posts cover more than one checklist item, you might have to go back and edit the posts to insert some #s (I forget the proper term for # in HTML…anchors?). But I still haven’t figured out how to do that in Blogger, so no idea if it’s possible in WordPress. 😀

        I’ve actually downloaded one Kindle ebook where the index works as it should, i.e. it’s a proper hyperlinked index. Just think of the possibilities…

        • LP – That’s a much simpler method than I thought might be necessary for a checklist. I’m all for reuse rather than rewriting.

          Thanks for the idea.

  2. Oh… checklist sounds like a great idea!

  3. The author created and owns the asset. The Agent does not.

    Such a simple concept, and how quickly it is lost in all the “but’s”, “however’s”, and “except’s” of the discussions going on out there. I see many attempts to make it more complicated than the above, but it really isn’t.

    Even sadder, it’s amazing how many authors even forget it.

  4. I like the “creation of an asset” idea, but it unfortunately doesn’t hold as well as it first appears.

    Assuming the agent did something for their 15% (shopped it, got a book deal, helped advise on contract, blah blah blah), that wonderful asset was enhanced by their work — it’s why they get a %age, and not a flat fee. Otherwise, you have (under legacy publishing) a wonderful asset sitting in your bottom drawer collecting dust.

    If you say, “Well, I can kill it as soon as the agent dies”, why couldn’t you kill it and all royalties as soon as the book deal is signed and before the books roll out? Or after a mini-tour? And if you are a household name with the success of your first book, you can upgrade to a better agent. So why not cut them out as soon as possible?

    Because they earned their 15%. Not in perpetuity, perhaps, but a year or two after in legacy publishing is not out of line, not sure about millennial publishing (I hate the estributor term). What’s an appropriate time to kill a contract and still pay some of what they already earned?

    P.

    • Paul – For a typical book, the advance is all the payment the author will ever get. Most books don’t earn out their advances these days. If the agent negotiates a contract offer that includes an advance, the agent has certainly earned his/her 15% of the advance.

      I’m not advocating avoidance of payment to an agent for valuable services rendered and any agency agreement is going to cover that contingency.

      Where I have problems is the situation in which the agent provides no further services, yet still holds onto an interest in the book.

      If I own a house and I hire someone to landscape it for me, I pay them the fair value of their work, but they don’t have a claim on a percentage of my house for the next twenty years.

  5. If you’re counting votes, please add mine to checklist wishlist. Thanks for the great information, P.G.

  6. I’m not saying I agree with giving an agent a percentage, but. If you look at it as a sort of retainer it works (up until the point you fire them that is.) After all, five years down the road, say your book magically becomes a hot commodity and the publisher decides to put togther tours to promote it again (yes, yes, utterly unrealistic. Work with me.) But you have issues with this. As part of your contract with this agent doesn’t he then have to deal with the publisher for you? That’s his end of the deal. Doing all the book managy stuff so you can write your pretty head off.

    Having not seen the contracts mr vicinanza had people signing this is only my guess but, could it not be argued that by explicitly directing his authors to find other representation the estate is in violation of contract? It’s one thing for the author to fire the agency. That’s covered in the contract I’m sure. But what happens if the agency doesn’t just stop returning calls but actively states they have no more interest in handling your property? Is that ever even covered in a typical agency contract? Could that be a weak point that mr. King et all could use to put this estate over a barrel in court?

    • Jean – I would love to see a copy of a standard Vicinanza contract.

      In the business world (as opposed to the publishing world), contracts normally talk about what each party will do, their responsibilities.

      If the Vicinanza contract described what is implied in an agency relationship – actively work to find a publisher, help promote sales, license movie rights – the death of Mr. Vicinanza and implosion of the agency might constitute what lawyers call a failure of consideration. Failure of consideration means that one party is unable or unwilling to provide what was promised under the contract.

  7. Hmmm…two of my books went through Vicinanza’s agency, but I never received the letter mentioned here and I haven’t seen royalty statements in a very long time. Any idea how to reach Ralph’s sister? I didn’t even know the agency closed.

    • Patricia – SFScope posted the following letter, which I have no reason to believe is anything other than accurate:

      Dear Clients:

      On May 9, 2011 the two agents employed by Ralph Vicinanza Literary Agency quit their jobs without giving any notice. As a result the agency is no longer able to accept any new business. At this time you should retain a new literary agent. We will of course promptly pay you all royalty checks as they are received from publishers. The office address and telephone number is unchanged and the office support staff is available to help you.

      Please contact:
      Michael Billie (e-mail: michael dot billie at vicinanzaltd dot com)
      303 West 18th Street
      New York, NY 10011
      212-924-7090

      I want to thank you for your loyalty to my brother Ralph Vicinanza. He was deeply devoted to each and every one of you. We will do our best to help you go through this period of transition.

      Yours,
      Louise Billie, Executor
      Estate of Ralph M. Vicinanza

      Here’s the link to the SFScope post – http://sfscope.com/2011/05/ralph-vicinanza-literary-agenc.html

  8. The situation with Ralph Vicinanza strikes me as one that’s probably more complex than those of us outside it can guess. If for no other reason that it’s likely he had representation language that differed from one client – say ol’ Steve King – and another, like a newly minted author.

    The issue of the estate keeping his 15% is made more complex by the arguments of what is “earned”. To wit, it’s fairly easy to say that an agent earns his or her 15% on a day-to-day basis for a variety of services, and that when that agent dies, those earnings should be eliminated. If this logic were to be applied to an author, the shouting could be heard from the rooftops, i.e., since an author is dead and no longer able to promote and support the work actively, his/her estate shouldn’t collect any more royalties.

    I admit that I’m suggesting something here that I don’t PERSONALLY agree with, but when all of this goes to court (as it very well may), I wouldn’t be surprised to see the logic I just described argued.

    • Russell – You’re correct that it’s a complex issue. However, I still think the property/service division works for me as a basis for dealing with what’s fair with author/agent rights.

      In business-to-business contracts, it was very hard to persuade me that a contract term of more than five years was justified. Three years was much more common. Over a long term, too many things can change to cause the contract to stop providing mutual benefits and become one-sided. I think the Vicinanza situation exemplifies the ultimate in that development – no agent or agency exists any more, yet authors who want the services of an agent for their published books are financially unable to get one because they would have to pay 30% in agency fees.

      That says nothing about the possibility that the Vicinanza estate might start negotiating new publishing contracts for authors at some point in the future under the terms of the existing agency agreements. Let’s take a hypothetical case if the Vicinanza agency agreement gave it rights to enter into contracts respecting Stephen King’s published books. Would an existing publisher of a collection of King books be interested in a new contract that paid a large advance in return for a 1% royalty rate for hardback and paperback books? That would benefit the Vicinanza heirs with quick cash to the possible long-term detriment of Mr. King. What about a fire sale on movie rights?

      Essentially, the apparently very long terms and lack of an easy exit from the Vicinanza contracts are substantially restricting the authors’ rights to enjoy the fruits of their creativity under the copyright law.

      On the other hand, I also feel copyright terms are way too long – life of the author plus 70 years in the US and similar lengths in other Western countries. This undercuts the public policy under which copyright law is established. Basically, my feeling is that an author should have a reasonable period of exclusive ownership. The pre-Mickey Mouse term of 28 years sounds reasonable to me. After that, the work goes into the public domain for the public good. A shorter copyright term would obviate some, but not all of the problems with excessively long publishing and agency terms.

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