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Why agents collect your money for you

31 October 2012

From agent Janet Kobobel Grant at Books & Such:

Literary agencies handle authors’ advance payments and royalty payments one of two ways:

1. The money is split–generally 85% to you, 15% to your agent–at the publishing house.

2. One hundred percent of the money is sent to the agency, where it is split, and the author’s sum is sent to him or her.

From the outset of our agency’s existence, we selected option #2. If your agent isn’t doing this for you, he or she is taking the easy way out of providing you a service.

By having the money sent to the agency, that agency will:

  • Know that the money was sent to you. If the agency receives only its portion, it doesn’t know if you got yours. Since the bulk of the funds are the author’s, a publisher that’s having trouble finding the funds to pay could easily send the 15% to the agent but not the 85% to the  author. That agent would assume the rest had been sent to the author.
  • Check that the  amount sent was correct. Recently a client’s advance payment was sent to our office. But the publisher had failed to send the right amount. Instead, the publisher sent what they initially offered for the book not the increased amount I had negotiated. In all likelihood, someone in accounting looked at paperwork that indicated the initial amount offered but failed to check the contract, which stated the increased amount.  If the author’s money hadn’t been sent to me, it would have taken me some time to figure out why the agency’s portion was incorrect. But with the entire sum presented in one check, the error was obvious and quickly spotted. And the author didn’t happily skip off to the bank to deposit an incorrect check.
  • Double-check that royalty payments are correct. Reporting royalties and paying the correct amount is a complex business because the book is likely to be published in many formats, at varying discounts, with returns, reserves and licensed subsidiary rights added to the equation. I spend hours pouring over royalty statements to determine if the payment for a client is correct.. . . .

    Agencies that set up a system in which they receive payment directly from the publisher don’t have the same incentives to check that all is being handled appropriately for the author. And it’s much harder to spot the problems, even if the agency looks for them.

Link to the rest at Books & Such and thanks to Robert for the tip.

Passive Guy was going to comment, but decided visitors to The Passive Voice could probably do a better job. He will just say he always advises his clients to insist on a split-check provision in their publishing contracts so they receive their royalties and a copy of their royalty statement directly from the publisher

Agents

55 Comments to “Why agents collect your money for you”

  1. Double-check that royalty payments are correct. Reporting royalties and paying the correct amount is a complex business because the book is likely to be published in many formats, at varying discounts, with returns, reserves and licensed subsidiary rights added to the equation. I spend hours pouring over royalty statements to determine if the payment for a client is correct.. . . .

    Except you don’t need the check to go over the statement. You can do it WITHOUT the check, so long as the publisher provides you a statement, and it should.

    • This. The agent never stated why the actual money must go to her and sit with her while she crosses her Ts and dots her lower-case Js. She can make do with the statement. If something is amiss with the statement, alert all parties. But if not, everyone has what they need.

      Payments being routed through and held up by agents seems like an unnecessary delay that only complicates things.

      • It needs to go to her so it can accrue HER interest while she sits on it while supposedly going over those statements. Then comes the fun part for the writer to find out if the money is still sitting at the publisher or at the agency. Which one is late? Two levels to go through instead of one.

        It’s not for the writer’s benefit. In all ways, it’s for the agent’s benefit. PG is right. Get the split, and if the agency won’t accept it then start asking why while preparing to run for it.

  2. That’s ok. Go ahead and take the easy way out. You can solve most of these problems with a receipt or a stub. Seriously, payroll at my day job has no problem sending split deposits to the two banks I deal with. The check stub reveals what went where. Not complicated.

  3. HAHAHAHAHAHAHAHAHAHAAHAH!!

    I love Halloween jokes!

  4. PG, are you okay? I imagine it must really hurt to have to tie your tongue in double knots.

  5. I just posted a comment there:

    I wonder how long (and if) my comment will stay here…Just a link to a post by Kristine Kathryn Rusch :
    http://kriswrites.com/2012/08/08/the-business-rusch-the-agent-clause-deal-breakers-2012/
    If you wonder who that is, I’d suggest you go and check her credentials on Wikipedia. A,d if you feel the need to cross-check, of course please do

    • Why would passive guy remove that link? He bloged it on the 20th july, with the comment that it is very important.

      I’m going to say that IMHO even if the agent is honest it is always bad to comingle funds in this way because in the event of bankruptcy you are just an unsecured creditor.

  6. “I spend hours pouring over royalty statements to determine if the payment for a client is correct.” Yeah, right. And tonight the Great Pumpkin will rise from the pumpkin patch. More like payment for yourself is correct.

    Based on the content of this article, when agents go the way of the dinosaur, Janet will have an excellent future ahead of her as a political speech writer.

    • I wasn’t exactly certain what she was “pouring” over the royalty statements.

      Iced tea? Maple syrup? Ketchup (yummy Heinz!)…

      But whatever it is, I suspect it makes the royalty statements even messier!

  7. Shorter Janet Kobobel Grant: “Don’t worry your pretty little heads about those AWFUL business things. We’ll take care of them for you.”

  8. Didn’t someone once say something about “Money Changers”?

    • yes Christian, and as I recall he cast them OUT many tables were overturned. Maybe writers need to start doing the same.

  9. This was in the comments section;

    “Thanks so much for this information, Janet. It does make me think of a question, though. Should an author create a corporation? What benefits does that bring?”

    Janet Grant says:

    “Ann, that’s a very complicated question and depends on lots of factors. The simple answer is,no, you shouldn’t unless you are making regular, significant amounts of money. Forming a corporation requires an attorney and all the fees associated with that, plus more forms at tax time. For most authors, insufficient income makes this just a complication.”

    No, no ,no, you don’t need all those nice tax breaks. That’s just money you don’t need, trust me.

    Next she will be saying you don’t need an IP lawyer to negotiate your contract because she can do it for you. This lady is a joke.

    I feel bad for all the people actually buying into this BS on her blog.

  10. “And the author didn’t happily skip off to the bank to deposit an incorrect check.”

    Once again, agents assume that authors are stupid children. No author would “skip off,” happily or unhappily, with a check that was incorrect. She would check her own math against her own royalty statements and then email the publisher and her agent demanding to be paid the correct amount.

    This patronizing stuff is getting old.

  11. Wow. Just . . . wow.

    What makes me sad is that so many writers fall for illogical reasoning like this and fawn over the agents in the comments when the posts have a general demeaning voice toward the writers themselves. I know not all agents and/or agencies are like this one, but agencies like this leave a really nasty taste in my mouth.

    As stated in comments above, a really simple solution would be to have the agent look at the statement and make sure it’s accurate. If they wanted to be extra careful, they could have the author verify that that’s the amount they received.

    It’s interesting that the agent didn’t discuss the problems some authors have had with having the agency collect the money on their behalf–like when their agent dies, becomes incapacitated, is fired, retires, etc. It’s also interesting that nowhere in the post was the assurance how they handled the money–like making sure (am probably going to mangle the terms) each author has a separate fiduciary account rather than a single, simple agency account.

    • The trouble is, in Ms. Grant’s primary market, there just aren’t that many houses you can sub to without an agent. There were once two, but Harlequin Love Inspired just ate up Barbour this past summer, bringing the total down to one. Why wonder why the authors dote and suck up? For those writers who don’t want to sub to smaller presses or go indie, these patronizing folks are the only game in town. The non-client orientation is part of the reason I no longer bother with an agent. It takes a while of being “there, there’d” before you catch on, sometimes.

      • Actually, many of those houses that say they only look at manuscripts from agents, will look a them directly from authors, according to more than one author who’s been in the business for several years. See Laura’s post a few down from this one. It is simply one way the publishing houses keep the flow of manuscripts to a “manageable” level.

  12. I agee that it is way past time for writers to stop being infantalized. Unless they are minors, they should handle their own finances. And if they are minors, their guardian should handle their finances, not an agency.

    But what also bothered me in the article was this:

    a. The idea that an agent wouldn’t care as much, or be as vigilant, if they weren’t receiving the check directly. ??????

    b. Publishers have to be watched like a hawk so they don’t mess up their client’s statements.

    Why can’t Publishers be trusted to pay the author as per contract, on time and in the amount that was agreed upon? This article makes it sound like these types of errors are common, yet it also acts as though that is acceptable behavior. It is not. Publishers should be paying their clients as agreed upon, or agents should be raising holy hell, not asking to have the checks sent to them so they can double-check.

    I wonder if agents realize just how much extra work Publishers foist off onto them. Agents work seven day a week schedules, work themselves to the bone, and yet excuse the Publishers for giving them even more work to do. An agent’s energy should be focused toward career development for the writer, not in running around after the Publisher, who doesn’t respect the writer enough to make sure they pay the writer appropriately.

  13. Unbelievable. I was expecting the article to end in a paean to tuna and much purring. And the way everyone was petting Sydney there was a little frightening.

    (For those who haven’t encountered Sydney: http://badagentsydney.blogspot.com/)

  14. It’s not the tone of the agent that bothers me. I’ve come to expect this kind of condescension from them. What bothers me is the bowing and scraping done by the folks in the comments section. Most have the tone of, “I think you’re awesome – please consider signing me.”

    One guy actually said that it relieved him of “the headache of the business side.” Assuming the guy has any talent at all, a lot of agents and publishers are rubbing their hands together in glee over him.

    The agent also said that neither her agency nor the publisher would take out the state and federal taxes. If all they’re doing is checking that the amount of money is accurate, why can’t they make due with a statement? Are they actually sitting down and counting pennies?

    This sounds to me like little more than an agent who is trying to ensure she remains employed rather than her client. By inserting herself in the process, she maintains control and keeps her clients from discovering that there might be some aspects they could control themselves.

    • The comments to this blog aren’t uncommon. It puzzles me that on a lot of agent blogs the comments are uniformly this fawning & obsequious. Not one dissenting opinion to this piece, either in part or whole.

      Either a great many writers are mindless & clueless about the business side of things, or maybe the blogger has (directly or indirectly) created all of these comments. (It strains my credulity & my experience as a former blogger that — even after all of the critical comments were moderated out — there could be so many naively positive comments to any blog entry. Post anything on the Internet, & if it gets read someone will disagree with you in part or whole.)

      • I don’t agree with that.

        No. Wait…

      • Actually, my comment over there was worded to imply a dissenting voice. I asked if she checked these statements because of a concern of fraud or incompetence. I also asked how often she really found errors in statements and if those errors were typically due to fraud or incompetence. She did didn’t answer the second question, and basically fell back on incompetence in answer to the first question.

        If anything, her answer said, Publishing contracts are lousey, because the publisher can interpret what your royalties are differntly than you interpret them, therefore the royalty statements need to be checked to make sure the publisher is interpreting the contract correctly.

      • People commenting on an agent’s blog are often trying to connect with the agent for representation. They are hoping their query will get more attention if the agent already knows them from the comments.

        It’s actually getting better, thank goodness. The comments are positive, but aren’t as obsequieus (sp?). There are also significantly less comments. A blog post like this used to get over a hundred comments. Try going back a year or two.

        • Can I take your word for, Mira? After 5 of those obsequious comments my sugar levels put me in risk of diabetes & I have to stop reading.

          BTW, have these people not learned that the easiest & best way to get representation is to write a good book? I know it doesn’t always work, but it does have a better track record than sucking up & — speaking for myself — one can respect oneself in the morning.

          • Stephen, actually, they have learned that writing a good book, despite what common sense would tell you, is NOT the best way to get representation.

            The world of publishing is very much still a game of ‘who you know’. Knowing the right people is much, much, much, much, much (and a few more muches) more likely to get you a publishing contract, than writing a good book. The odds of getting through on a query alone is about 11,000 to 1.

  15. There’s more of the same throughout the website. Check out the post titled “The Cause and Effect of Self-Publishing on Your Career”

    There’s a thousand-gallon cooler of kool-aid somewhere in the building and everyone has their cup full.

    Self-publishing is the debal!

  16. There’s also the little matter of interest-as in the money the bank pays for the deposit in your account. Oh, wait! The agent gets that too.

  17. Agents have (by and large, pretty much, not all of them, is that disclaimer enough) become another one of the vanity scamster subtypes that have preyed on writers from the beginning.

    They are nearly useless when they’re not outright blocking your attempts to write. They don’t read, they don’t edit, they don’t offer valuable/actionable opinions, they side with editors against their clients, they misappropriate funds…I would continue but I must go make an Italian chocolate cake. Anyone who wants the recipe, email me.

  18. When I think I want to focus solely on being an “artist” and then contemplate pursuing an agent or a traditional publisher, y’know, so I don’t have to bother with any of that annoying “business stuff”, because of how uber artsy I am…all I need do is go back and re-read any one of the many, many posts by K.K. Rusch on the subject, where the seemingly endless frustration and agony of dealing with them is adeptly illustrated.

    Agents saying I don’t need my own IP attorney and to solely trust them? Phew! One last stupid business call I have have to make. Good!

    Sadly, reading through the replies of the original blogger (and she’s only one of MANY agents blogging about why they’re still needed) and yes…people are still lining up in droves to be “taken care of” and “nurtured”.

    • Again, people need to get it out of their heads that dealing with a traditional publisher means dealing with an agent. I’ve dealt with traditional publishers for 24 years as a full-time self-supporting novelist. Only a tiny handful of those deals involved agents (and in only one of those instances did I not waste my money on the agent’s commission). I didn’t have an agent for my first 9 sales to publishers, I haven’t had an agent for my most-recent 10 offers from publishers, and I didn’t have an agent for most of the sales in between.

      Moreover, as someone who deals full-time with publishers, I mostly certainly Do think about the business end of my profession–precisely because this is my PROFESSION, not my hobby, and writing novels is how I pay my mortgage and all my other bills.

  19. What’s an agent and why does it want my money?

  20. Clare K. R. Miller

    I notice there’s nothing here about, oh, communication between agent and author.

  21. “By having the money sent to the agency, that agency will:

    * Know that the money was sent to you. If the agency receives only its portion, it doesn’t know if you got yours. ”

    There are easier, less complicated, and less controlling ways of ensuring I got paid than the agent receiving MY money. Such as: Asking me if I received it. Or sending me a one-sentence email saying the agent received their 15% for D&A of book #1. Taking 30 seconds to keep in touch over money matters is not an urneasonable expectation for someone receiving 15% of the author’s earnings, and it certainly makes more sense than controlling the author’s 85% as a way of “monitoring” payment to the author.

    “Check that the amount sent was correct.”

    Mistakes do occur. Last year, a check of mine was short by $5,000. As it happens, though, I am a functioning adult who was perfectly capable of noticing this myself. The check didn’t need to pass through the hands of an agent for the deficit to be noticeable.

    “If the author’s money hadn’t been sent to me, it would have taken me some time to figure out why the agency’s portion was incorrect.”

    Unless it occurred to you to ASK THE AUTHOR how much her check is for. These arguments read as if controlling the author’s money makes more sense than COMMUNICATING with the author.

    Speaking as an author, um, no, it does NOT make more sense for my money to be controlled by a ltierary agent than for that agent communicate with me.

    MOREOVER, checks are accompanied by paperwork. This should give the agent some Handy Clues about what’s wrong even before calling the author.

    “Double-check that royalty payments are correct.”

    Speaking as someone who’s been a full-time writer for over 20 years and who has worked with 4 agents, most agents don’t actually do this (at least not for their midlist clients). But for the sake of argument, assuming the agent does this… control of MY money is not necessary for the agent to read the fiscal paperwork associated with the transaction.

    “Agencies that set up a system in which they receive payment directly from the publisher don’t have the same incentives to check that all is being handled appropriately for the author. ”

    In fact, my own longtime experience of agents, and the experience of far too many writers I know, is that too many agents don’t have incentive to do much besides pocket their commission. But I would seriously recommend that an author consider why receiving 15% of your income isn’t sufficient motivation for the agent to “check that all is being handled appropriately” and why the agent feels that only CONTROLLING YOUR MONEY is sufficient incentive for “checking” on that. I mean… really? THAT’S why you want to handle all of MY income? Because controling MY money “incentivizes” you to do your job? There’s no OTHER possible reason you want MY 85% of the $ to be sent to YOU rather than to ME?…

  22. 1) I’ve set up an entire corporation myself, without a lawyer, for less than $200 in filing fees and how-to books. It was a non-profit, too, which is allegedly more difficult.

    2) For the one project where I have an agent, the client pays me directly, and I send the 15% to the agent.

    3) I check amounts, royalty statements, sales figures myself. I even tie my own shoes!

  23. P.T. Barnum nailed it.

  24. I saw the title and said to myself, “Oh …. this will be good.”

    10/10, would laugh again.

  25. Well, all I can say is this post gave me more reasons why I don’t want an agent should I decide to get a traditional publishing contract. As Laura pointed out well enough, none of those reasons make any sense to anyone other than authors who want to be taken care of. And they will be taken care of, unfortunately, in many cases.

    • I hear rumors that there are these handy dandy things called IP attorneys who don’t even demand a percentage cut. A wild rumor but possibly worth checking out if publishers come around with large amounts of money and a contract. 😉

  26. If an agent is so incapable of basic math that she can’t figure out if her 15% was accurate to the contractually defined total…and so lacking in communication savvy that she can’t send an email, make a phone call, or, hell, even text me to make sure I was paid and in the proper amount…then I would for sure not trust her to represent me. Not that I would anyway, but if I were inclined that way this attitude would be such a red flag. On behalf of all english majors who didnt need to retake math courses in order to pass…go hang

  27. I appreciate everyone’s comments. As an unagented, unpublished writer who is very new to the business of publishing, though, I don’t quite get the venom. Is it wrong to hire someone to perform a service if you don’t have the time or inclination to do it yourself? I know how to change the oil in my car, but for me personally it’s worth the $20 for someone else to do it. Isn’t hiring an agent sort of the same thing?

    (Please, no flames! This is an honest question, not rhetorical.)

    • Rachel,

      Admittedly, some have more emotional investment in this than someone new coming into it. A lot of the problems come from agents who abuse their relationship with the authors. There are honest and good agents, but the system nowdays has developed inherent conflict of interest. Originally by becoming in essence, “employees” of the publishers instead of the authors. In theory, they are employed by the author. But you wouldn’t know it they way many talk. And the pressure on them to keep the publisher happy so their doors to submit manuscripts of all their authors is a conflict of interest in dealing with any one author’s work. They won’t be as protective as they would be if they didn’t have any interest in staying on the publisher’s good side.

      Add in that many are also becoming “publishers” of ebooks, and you have a much bigger conflict of interest.

      Add to that an agent doesn’t have to be certified, they are negotiating contracts but have no law degree in most cases, and as mentioned in the article, many tend to take on a fiduciary role without the accountability and proper rules governing fiduciary officials.

      Let’s take your example of getting your oil changed. I can relate to that, as I to could do it myself, but would rather pay someone to do it so I can use my time on other tasks. But, would you give the person who changes your oil a 15% slice of the vehicle’s price upon selling it or trading it in? Or would you pay them a flat fee? Obviously the second.

      Would you have the payment for the car go to the oil change business so they could take their share out and then send you the rest? Not likely even if you did the first for some strange reason.

      That is why you hear if you want a contract negotiated with a publisher, you’re better off using an IP lawyer who you pay once, instead of an agent who gets 15% for the life of the book’s income. Then you have someone with no interest in the publisher’s happiness, has training on looking for “gotchas” in contracts, and you pay them once and it is done. Just like the person who changes your oil.

      • Thank you so much for your thoughtful, well-reasoned approach. Your explanation was insightful and helpful. Thanks!

  28. Just to temper this slightly:

    My agent receives all of my money before passing on the 85% to me. Thus far this has been a trouble free experience. I have received all payments in a timely fashion, and within a fortnight of deadlines passing. I have a breakdown of how much and when I receive money from the publisher via the agent, and so far all amounts have been correct. Rest assured that if any weren’t, I would be in communication with my agent very swiftly.

    My agency is large, well respected and carries high profile clients. They have thus far negotiated deals for me that are well into six figures and beyond anything I could have negotiated myself, especially in foreign markets.

    I post this just to point out that not all agents are bad… far from it in fact, I’d say.

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