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You Just Signed with a Big Agent? Oh, I’m So Sorry.

2 June 2011

If you’ve recently signed an agency agreement, Kristine Kathryn Rusch will scare the pants off you.

Once again, she has written an important, detailed and well-documented essay about some agents turning into predators in the face of the many changes happening in publishing.

The full moon is out and some formerly pleasant people are beginning to howl and bare their fangs.

One of the many interesting parallels between contemporary publishing contracts and contemporary agency contracts is that each species tries to get a piece of an author forever. Rights for ten or fifteen years? Not nearly long enough. Publishers are going for 100 years or more.

As Kris documents with specific clauses, many “standard” agency contracts give your agent 15% of every part of everything you do forever, whether you fire the agent or not. In the immortal words of Buzz Lightyear, “To infinity and beyond!”

It strikes Passive Guy as a desperate survival strategy for agents and agencies – tie up as many authors as we can for as long as we can and maybe all those 15% pieces will aggregate into enough money to pay the rent and buy groceries. When crunch time comes, what’s good for the author, what’s traditional in author/agent relations, what’s ethical, what’s legal just go down the storm drain and end up in the Hudson somewhere.

It’s all about the agent as a barnacle, grabbing hold and never letting go regardless of whether the agent is doing anything for the author that’s worth paying for.

Kris’ simple and practical solution? Don’t sign an agreement with an agent.

PG can’t fault that approach. You won’t get screwed by a contract you don’t sign.

What PG would add to Kris’ analysis is an individual or organization that is trying to persuade clients to sign unconscionable contracts is unlikely to limit its unconscionable impulses only to contracts. The horrible contracts are just the part of the iceberg you see. There’s a lot more below the waterline where you can’t see it.

This is cynical recovering lawyer PG talking. The #1 rule of doing business with someone is to choose an honest business partner. You can make a lot of other mistakes and still come out OK if you deal with honest people.

If you do business with crooks, you’re going to lose money. You may lose it via an unfair contract or you may lose it via embezzlement or you may lose it via your partner selling you out for personal gain or you may lose it in a hundred other ways. You can have dozens of lawyers on call and you’ll still lose money.

You might believe you have so much talent and are such a nice person that you would be exempt from such consequences.

You’d be wrong.

Following are a few excerpts from Kris, but her’s is an essay you’re going to want to read carefully and save for future reference. To be on the safe side, your best bet might be to tattoo the following paragraphs somewhere on your body where you’ll always see them (tattoo them backwards if you’ll be reading them in the mirror):

Those agency agreements [of twenty years ago] weren’t that big a deal. They were breakable with a single phone call, and there would be no hard feelings. Also about this time, publishers realized they had a liability issue when they gave a writer’s check to the agent. So publishers requested an agency clause in the contract of any writer whose agent got the check first. All that clause would say was that the writer authorized Really Big Publishing House to issue the writer’s checks to Number One Agency, and that would be considered payment under terms of the contract.

. . . .

At the turn of the century [20th into 21st], Hollywood business practices infected the boutique and corporate literary agencies.  I have examples in my files from one former boutique agency (now a corporate agency) showing the evolution of the agent clause they put in a publishing contract.  It went from “send the check here” to this [emphasis mine]:

“The Author hereby irrevocably appoints [Agency]…to act in all matters pertaining to or arising out of this agreement and all other agreements, licensing, or otherwise dispersing of any rights in the Work in any form or media, and including any works for which there are options under this agreement…In consideration for services rendered, the Author irrevocably assigns and transfers to the Agent a sum equal to 15% of all monies due the Author under this Agreement and related agreements….”

It ends with this rather astonishing sentence: The provisions of this paragraph shall survive the termination of this Agreement.

Um, excuse me? Lawyers out there, tell me how this is possible.

That paragraph is a minefield of horribleness.  It irrevocably assigns at least 15% of earnings from the sale of any rights in the book to the agent, as well as the same amount in works that are covered under the option clause.  So if the agent negotiates a broad option like this one: “The publishing house has the option on the author’s next work,” then the agent will earn his 15%  in whatever that next work is…even if the publishing contract is terminated.

. . . .

This agent clause which goes into a publishing agreement has all the traditional stuff about payment.  And then it says [again, emphasis mine], “For services rendered and about to be rendered, the Author does hereby irrevocably assign and transfer to said agent and said agent shall retain, a sum equal to 15% as an agency coupled with an interest….”

Oh, my God.  I wouldn’t have signed that as a twenty-one year old newly birthed nonfiction writer.  It sounds scary because it is.  It means that the writer has assigned his agent—irrevocably—15% of the book.  “An interest” is a legal term and (lawyers, you can correct me), it means that the agent now has a piece of that property.  15% worth to be exact.

. . . .

But let’s now move to the worst offender I’ve seen in the past few months. I’m not going to say it is the worst offender out there, because I haven’t seen all of them.  It’s just the worst of my little trio of horrors.

This big name agency has the same clause as the one above.  But coupled with the agency agreement—a five-page document that gives the agency the right to negotiate for the writer on any matters on the writer’s behalf.  It also gives the agency “commissions earned by, paid to or credited to” the Author “or any entity owned by or controlled by” the Author “in perpetuity.”

Seriously. In perpetuity.

And in case the writer missed that point, there’s this: “The Author understands and agrees that the provisions of this Agreement which by their very nature survive the expiration of the Term of this Agreement.” And then it goes on to list all the negotiation, money clauses, and interest in the work clauses as surviving the Term of the Agreement.

In other words, you can fire this agency, but you—and your heirs, and any corporation that you form or trust that you create—will owe that agency money forever.

Now, technically, forever isn’t an acceptable contract term.  Contracts need an end date to be valid.  But again, do you  (or your kids or your grandkids) want to be the one to go to court to win that fight?

This five-page agent agreement is so egregious, by the way, that even if you fire the agency, they can still negotiate a deal for you and undercut any new deal you might negotiate for yourself.  And you, if you signed this agreement, gave them permission to do so.

Link to the rest at Kristine Kathryn Rusch

 

 

 

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22 Comments to “You Just Signed with a Big Agent? Oh, I’m So Sorry.”

  1. Authors are desperate and willing to step right into the traps, not expecting them to really and truly snap shut – or expecting that somehow they will become the next big thing and they will then have enough power to wiggle out of the devil’s clutches. Not easy, especially because I’m guessing 98% of authors don’t make it big enough to matter a lick.
    Jacqvern, the debate really has little to do with fame, promotion and recognition, at least not from my perspective. It has to do with honest dealings versus taking advantage of people whose heads are filled with pie in the sky dreams.
    Snake oil salesmen. But, I guess when your way of life is threatened, you’ll do whatever is necessary to survive.

    • Julia – I think you have the new author mentality down cold. After being told “No” a million times, when an agent says, “Yes,” the author will sign anything because she’s afraid the agent might change her mind and say No again.

      There are always a lot of authors on the bubble as far as being able to continue their writing on a serious basis. The difference between making it, not fame, just making it and a return to the barrista business is very small for many.

  2. Um, Jacqvern, wonder no more: The fuss is all about making a living; if you don’t have to do that, more power to you, but some of do, and ways of making that *easier* are welcome in my house.

    Yes, it’s not always black or white, either/or, but some of those shades of gray get pretty dark.

    Somebody points out I am about to step on a rattlesnake, that’s something I’m likely to be glad to hear in time to avoid irritating the reptile in question. Might want to, you know, put my foot down elsewhere and save some possible grief, hey?

    If you are bored and tired of all this, you don’t *have* to read about it. (You telling us that you are bored and tired of it doesn’t really add much to the conversation, does it? It sounds, oh, I dunno, kind of snide. Maybe that’s just me.)

    • Steve – See my reply to Julia. The difference between being able to survive as a writer or not is often a very thin line.

  3. I think there’s an inherant fallacy here — there are some people who simply aren’t good at promoting themselves. I know for a fact that I am one of them.

    Personally, I’m perfectly happy with my agent, and my agency. Oh, I know, I could have sold the book myself… which is why I go to European book conferences regularly. I and could easily have negotiated the five way German bidding war which my agent enabled. And France, Russia, Brazil and the UK — I spend lots of time there, and I know all of those languages. And I really have a lot of contacts with Oprah and Will Smith and Stephen Speilburg and CBS producers. And there’s no way I’d put my foot it in while I’m trying not to tear out my hair over a flawed cover design or a fiery editorial mistake, so there’s no reason for me to use an agent to act as a buffer when I shouldn’t be offending anyone. After all, there’s nothing an agent could do that I can’t do myself….

    I’m not saying there aren’t disreputable agencys out there, but do your homework and you should come out all right. If you’re e-publishing a po-dunk book of local history, of course, don’t waste your time. If you’re planning on a global career and a whole lifetime of books over many genres and mulitiple publishers? It might be better to let someone else handle the buisness side while you go and write more books.

    But after all, the more money you make, the more money the agent makes. Their job is to get you as much money as possible — and the best career possible. Your career feeds theirs. Their job is therefore to feed your career. Isn’t that the point?

    • Anna – Kris is definitely not saying that there are no more good agents, but she’s waving a warning flag that there are problems in agencies that formerly were totally reliable.

      She’s also saying the next ten years will look much different than the last ten years for writers and publishers.

    • Anna,
      If you have the chance to read Freakonomics by Levitt and Dubner, I would recommend reading the chapter on Real Estate agents.

      When an agent has a stable of writers, it isn’t about the biggest/best possible sale for you, it’s about an acceptable deal cut within an acceptable time frame. Taking the quickest path to a signed contract is often the most money for hours invested, while needling and dealing with an advance that’s say, 10% bigger, isn’t often “worth” the extra hours of negotiation it would take. Far better from an agent’s standpoint and time-management to close two quick deals in one week than one slightly larger one.

      I’m not saying your agent is bad or actively does this, I’m just saying, to assume that anyone cares as much about your career as you do is dangerous thinking. Yes, your success is their success, but at the same time, your mediocre success is their acceptable success. And your failures don’t hurt them near as bad as they hurt you.

  4. Jacqvern – I took Kris’ recommendation about an agency agreement as reflecting her preference for the older informal model of author/agent relationship.

    It’s also lowest-common-denominator advice. The next step up is “Don’t sign an agreement with an agent if it contains the following clauses: . . . . .”

  5. Anna clearly has not read Kris’s post.

    These days, for an agent at an agency, their job is NOT to get you as much money as possible, it is to get the AGENCY as much money as possible. Granted, one way to do that is to get a client a lot of money. Another way is to get a LOT of clients a so-so amount of money, and as many pieces of their property as possible. Makes the cash-flow more predictable, too.

    • Alastair – Agency strategies that worked fine while the money was flowing from publishers are different than those “necessary” when the financial flow slows down and threatens to slow down even further.

      Publishers are desperate, so they don’t pay authors the ebook royalties due. Agents are desperate, so they try to lock clients up so they can’t run away. Musical chairs is happening in that business and the number of chairs keeps getting smaller and smaller.

  6. Clearly, Alistair… you have no need for an agent. Good luck on your writing.

  7. As a non-author interested — no, fascinated by industries in flux (my virtual lawn-chair was out for the dot-com bust and Enron debacle, too), I’ve been riveted by the publishing industry for about ten years now. As a natural skeptic, and a bit of a bonehead, I’ve always doubted anything I read.

    That’s why it’s always seemed odd to me how certain sub-trades associated with the book biz were so darned good at monopolizing the discourse related to breaking into the author business — particularly agents. The party line propagated by successful, respected authors well represented by agents, as handed down from those agents themselves, has probably had an effect exactly the opposite of what was intended by established and generally well meaning authors: rather than representing sound sage advice to newbies, it’s condemned what could have been solid mid-listers to a merry-go-round of queries to agents interested only in the next big thing.

    From what I’ve seen on various authors’ and agents’ blogs and websites, and many of the websites of authors who also conduct workshops for writers who want to become published authors, there is an inability to discriminate between what is good for Major Author who broke into the trade fifteen or twenty years ago (as is the case with most of these folks) and what might work *now* for Unpublished Young Wannabe. As a subset of that problem, there’s often an inability to recognize that what will work for a writer who hopes to break into an established genre will only hinder one who writes in a related but distinct niche of that genre (e.g. erotic romance as opposed to the mainstream stuff).

    So many comments on blogs like this one represent people talking past each other because they’ve burrowed so deep into the peculiarities of *their* markets and *their* genres and their individual situations, yet at the same time take all advice offered up everywhere personally.

    • LP – Well said.

      I believe it was either Kris Rusch or Joe Konrath who wrote that what’s good or bad for Scott Turow is a world apart from what is good or bad for the large majority of published authors.

  8. In the discussions of this topic the last few days, I’ve been amazed keep seeing the word “promotion” come up in comments, as in “I need an agent because I can’t promote myself.” I’m not sure if this is part of the new model that agents are trying to spin for themselves, or a simple reflection of a lack of understanding about what agents have EVER done.

    I’m so puzzled by this, I’ve even gone to look up dictionary definitions of the word looking for something that applies to authors and their dealings with publishers, and I still don’t get it. Are writers actually expecting that agent will puff up their professional reputations in some way that causes publishers to come to them? “Oh, please, PLEASE Mr./Ms. Unpublished writer, do us the HONOR of writing us a book! We’ve not seen a word you’ve written, and we have no idea what kind of book it will be, but that hardly matters! Only that we be allowed to baste ourselves in the cast-off sweat of your unproven genius!”

    Uh, no. Admittedly, for a major publishing deal, the publisher is often as interested in the author as in the book, but in any case, it’s a package, and if the agent is involved in creating the deal at all (and it seems that often they aren’t these days), what they’re doing is SALES, not promotion.

    Nor is it their business to promote your work to the public or to your potential audience.

    So how the word “promotion” enters the picture at all, other than as one more aspect of the Agent Myth, I still haven’t a clue.

    • Steven – The promotion discussion is also interesting in light of nearly every publisher’s suggestion/requirement that the author do a lot of self-promotion via blogs, Twitter, etc.

  9. Yo’ PG, enjoyed the post, as always, but I’m starting to worry that you, Dean, Mike, Jon are all reading each other’s posts too much and agreeing with each other a little too much in a giant lovefest bordering on incest.

    For writers that have been around for a long time, you all seem surprised that your agents are running a business. They are not doctors who took an oath to do no harm, they’re business people who make money on commission. How that commission is calculated changes their profits — the size of the pie determines the size of their slice.

    Why would an agent put in a non-termination clause? Maybe because for every story that an author can trot out about an agent who didn’t behave as perfectly as they would like them to, I’m sure agents can point out lots of examples of how they negotiated a sweetheart deal, busted their butts, etc., and then just when they went to take their slice of the pie, the author terminated the contract. Or the publisher switched pies for a smaller one.

    For a mid-list author, they probably had short-tail revenue streams under legacy print publishing. So, everyone probably got all their money in the first two years after release. Now, with long-tail ebooks, the agent is saying “Wait, I want a longer deal so that I get the 15% of that book”. Because even after the agent, the author and the publisher have stopped doing anything to promote it, that ebook may still be generating a long-tail revenue stream.

    The agent is doing what s/he SHOULD do as a business person — looking at the old revenue stream (where they got 15%) and the new revenue stream (where they’re getting 15% of just the paper stuff which is going down and missing out on the long-tail e-stream if/once the contract terminates) and trying to figure out how to protect their share. The author is still going to get their piece of the long-term; the publisher is still going to get their share. Why would the agent want to get cut out of the deal simply because it’s digital now?

    I like Eisler’s description of his new Amazon contract, and it would be nice if all contracts were that simple. But it is only that simple because it’s two parties splitting the pot with both parties knowing the pot, not three parties initially splitting the pot but with two getting to decide when the third doesn’t get to share anymore.

    PolyWogg

    • Paul – You raise some good points. Thanks for taking the time to elucidate them.

      I agree it’s dangerous to listen to and read only those with whom you agree and the creation of an online lynch mob mentality doesn’t result in intelligent discourse. I don’t think Dean, Mike, Jon and I are near that point, but recognize the danger.

      I also agree that it’s perfectly appropriate for agents to act in their commercial interest and take steps to avoid a situation in which they have expended significant effort to obtain a contract for their client only to have the client pull out at the last minute, depriving the agent of fair compensation for his/her labor.

      Where our opinions may diverge is over the concept of agency. From the dusty recesses of ancient British common law to the present, when one person (or organization) acts as an agent for another, a fiduciary duty falls upon the agent to act in the best interests of the principal, the author in this case. The agent is permitted to receive agreed-upon compensation for the work performed but, once the agency relationship is in place, the agent is not permitted to act against the interest of the principal.

      The agency/principal relationship gives rise to the potential for a conflict of interest for the agent between what is in the agent’s best interest and the principal’s best interest.

      Under present U.S. law, the attorney/client relationship, a sub-species of agent/principal relationship, is probably the one where conflict of interest issues have been most thoroughly explored. Without going into excruciating detail, where the possibility or even appearance of a conflict of interest arises, an attorney must immediately inform the client of the actual or potential conflict and take substantial steps to avoid harming the client and remedy the conflict, including, if necessary withdrawing from representation of the client. One of the fundamental steps an attorney must always take is to advise the client to seek independent legal advice on the matter and, in some cases, insist the client consult independent counsel before continuing with representation of that client.

      To bring the attorney’s obligations down the the specific domain we’re discussing, an attorney specializing in negotiating and drafting agency or publishing contracts would have identical obligations to an author-client regarding conflicts of interest as a criminal attorney would have to a criminal defendant.

      I see serious conflict of interest issues where agents present new, more restrictive agency contracts to existing clients or propose becoming publishers for their clients. Search this blog using the term “conflict of interest” for more detail.

      I also have substantial philosophical and legal concerns about contracts that last for the life of the copyright or some other similarly extended period of time. I believe every business contract should have a specific and reasonable length with an identified termination date. If both parties are satisfied with the relationship as the termination date approaches, they can agree to extend the contract on the same or modified terms.

      I’m happy to hear why it’s not a good idea, but I can’t understand why an agency contract would require an initial term of more than ten years. So you know I’m consistent, I’ve suggested the same term for a publishing contract.

      Anticipating one response to my ten year initial term, I am aware of a handful of books that continue to generate large royalties for more than ten years. However, I believe this group constitutes only a tiny minority of all books published by traditional publishers. Setting the contractual term for agency and publishing contracts to capture extreme outliers ends up being unfair to the large majority of authors whose works do not have such happy financial results. I would add an additional question as to whether, considering the effort expended, the publisher and agent of a blockbuster book would have received more than adequate compensation during the ten year period.

      Thanks again for your comments and keep participating in the discussion.

  10. Hi PG,

    The statement in Paul’s second paragraph is the one that clouds this issue: “…they’re business people who make money on commission.”

    No. They’re not. The 15% is NOT a commission.

    (Those people who hear themselves shouting, “Yes, it is,” need to take a big breath, clear their minds, and read objectively. I’m not bashing. I’m just talking finance. Former Fortune 500 VP Finance. We talk shop, too.)

    My simple definition: Commission = “I sell your stuff and take a small percentage off the top for my trouble.” Okay?

    If we can agree with that definition, here’s a VERY simple example of why signing an agent to 15% of e-rights is not a commission.

    Upstanding Agency works a deal to help Eager Author put his one book on Kindle and Nook. Upstanding Agency receives 15% of the monies flowing from these two cash streams for its work.

    Two years later, Curious Author contacts Upstanding Agency to find out why the same one book is not offered at Apple, Kobo, Diesel, and the 147 other e-tailers that have popped up since the book went to Kindle and Nook. Upstanding Agency (for any one of a variety of reasons) replies, “We don’t think those markets would be prudent for your product at this time.”

    Frustrated Author pays someone else to put the book up at those other 150 places.

    Upstanding Agency finds out and demands immediate payment from Stunned Author for its 15% of the e-book royalties generated at those 150 places, per the contract.

    Commission = huh?

    Upstanding Agency not only took the 15% from the two income streams it helped “negotiate,” but from the other 150 income streams, as well. It got paid for work that it not only didn’t do, but for work that it refused to do.

    (And for work that it will continue to refuse to do as new markets open up in the future… 200 income streams, 500 income streams, 1,000 income streams. Upstanding Agency will still get “its 15% cut.” Not a bad payoff for the twenty minutes it took to post the book to those two income streams — Kindle and Nook — back in 2011.)

    That’s not a commission. It’s co-ownership. Understanding the difference is the first step in understanding the larger problems that you and Kris are discussing. Keep up the good work.

    Rick

    • Rick – Good analysis of the way some agency contracts work.

      Being legalistic, I’d dispute the co-ownership characterization unless the author explicitly transfers a fractional interest in the copyright to the agent. It’s really an interest in an income stream the copyright generates.

      What you’re describing is the “agency with an interest” that Kris Rusch warns about, something different than traditional literary agency contracts.

      PG believes two people, two organizations, etc., are and should be free to enter into any contractual relationship they wish, within very broad parameters governing what’s legal and illegal for contracts. However, he also believes each party should be fully informed concerning what the contract means and obscuring or hiding important contract rights when dealing with a legally unsophisticated and unrepresented contracting party is not right. The longer the contract and the more money involved, the more problem PG has with taking advantage of someone’s ignorance concerning the true meaning of the agreement.

      This is why, as a general proposition, in all business contracts PG negotiated, he insisted on a firm termination date that didn’t rely on anything other than the passage of time.

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