From Joe Konrath, a fisking of an agent’s blog post:

Recently Ann Voss Peterson wrote of her decision to never sign another contract with Harlequin. One major statistic from the article is that she sold 170,000 copies of a book but earned only $20,000.

Multiple clients sent me Peterson’s “Harlequin Fail” article and wanted my opinion. My first thought is that this was the typical “a publisher is ripping me off” fodder. But that would be a simplistic and knee-jerk reaction and unfair to both Peterson and Harlequin.

Joe sez: Hmm. What if I said this was typical “agents siding with publishers” fodder?

Well, I’d be right. More and more agents are siding with publishers. Because publishers are who pay them, and if all authors begin to self-publish then agents will be out of business. So, as much as it is a conflict of interest for an agent to side with a publisher, I can understand why agents are doing so, wrong as they may be.

If the plea of “a publisher is ripping me off” is fodder, I’d like to see links to those posts you’re alluding to so I may scrutinize their veracity. Because publishers ARE being very unfair to writers, as I’ve shown many times. 

As an agent, shouldn’t you care that this is happening? Why are so many authors saying this that it has become fodder you can casually dismiss?

Yes, Harlequin pays a modest royalty that is less than some publishers. Since when is that news? That has always been their business model because it is the only way to create and maintain an aggressive Direct-to-Consumer and Trade publishing program. Their publishing machine is huge and they are a “for profit” company. For Profit. If they are unprofitable, they go away.

Joe sez: See this? Everyone look closely! This is a rope! Everyone look at this rope that I’m holding up! Now watch what happens next! 

If an author is uncomfortable with the terms, then don’t sign the contract (which is Peterson’s decision going forward). I urge each of you to be careful not to sign a contract and then complain about it later. Unless you were completely hoodwinked you agreed to those terms and should abide by them.

Joe sez: I agree. Ann could have refused to sign the contract, and instead gone to work in a factory with unsafe conditions where employees have no benefits and are paid pennies.

This is called exploitation. It happens when companies try to make profits at the expense of another person’s labor without paying them adequate compensation.

I think we can all agree that exploitation is a bad thing, whether the person signed up to work in an unsafe factory, or promised to work off their passage to America from a foreign country, or got 2.4% royalties on a book that sold 180,000 copies. 

Understand that I am not being critical of this lady’s decision. It is her choice to do so.

Joe sez: This is called Blaming the Victim. It’s when people are partially blamed for their own maltreatment. Because you ARE being critical. That is the point of your blog post.

For the record, Ann didn’t complain. She simply expressed sadness. Like I can express sadness about the 600,000 homeless people in America. So, there are homeless! Since when is that news? Why should we try to change anything or do anything about it?

. . . .

But my issue is not with the money (although it is important) it is a larger question. She says she has sold 170,000 books but not made that much money. For the record Peterson has signed with Thomas Mercer which is one of the publishing divisions of Amazon.com…a traditional publisher of sorts, so she may still reach a 100,000 plus audience. So is it all about the money and not about number of readers? If Peterson had chosen to go Indie (solo) and published using the e-book option (like the Kindle Direct Program) and sold 10,000 copies she would make the same amount of money. BUT she would have 160,000 fewer readers! One Hundred and Sixty Thousand.

Joe sez: Everyone remember that rope from earlier? This is what happens when someone brings a noose to their own hanging. It’s funny, and sad, all at once.

Steve, you said earlier that Harlequin’s publishing machine is a huge “for profit” company. 

I may be wrong, but it’s my guess that many writers, Ann included, cite writing as their job. A job is “for profit” isn’t it? That’s why they list it as such on their income taxes, and have to pay the IRS. It certainly isn’t for altruism, or to help mankind, or to fulfill some hidden inner fetish to lick a piece of paper with her name on it.

Ann is in this for the same reason Harlequin is: to make money. That’s what professional writers do.

Are you a professional agent, Steve? I’ve never heard of you before, but a cursory surfing of your website shows you do accept queries. So here is a serious question: would you represent a writer for 2.4% commission?

Maybe you would. Maybe you wouldn’t. But what if every writer you repped demanded that you only accept 2.4%? What if the only writers you could work with were those you said, “You get 2.4%. If you’re uncomfortable with those terms, don’t sign with me.”

Then you’d have zero clients. Is that your fault? Or were you bullied out of the business because you couldn’t afford to make a living? Or would you accept it because you were forced to and had no one on your side to help you get better terms?

See how a choice isn’t really a choice?

Link to the rest at A Newbie’s Guide to Publishing

PG wonders if all the agents went to the same convention and caught something from the water.

From agent Rachelle Gardner:

The quickest way to lose the joy [in your writing] is to expect that your first book contract is going to solve some kind of financial problem in your life.

Lately with the economy being rough on so many people, I’ve noticed that some writers who’ve been working at this awhile and feel like they’re getting “close” to having something published are harboring unrealistic expectations about the financial end of being an author. Their entire process of writing and rewriting and preparing proposals (etc.) is overlaid with this pressure and this anxiety—this need to sell, and sell soon, because they really need the money.

. . . .

Nevertheless, I firmly believe that newer writers, especially those who don’t have a book published yet, need to keep a clean separation between their writing goals and their financial goals. At least in the short term, keep your writing life separate from your financial anxiety.

Don’t get me wrong, it’s perfectly legitimate to have long-term goals that include making some percentage of your income from writing books. You may even have the goal of being able to write books full time and quit your day job. But your short-term goal should never be “Get a contract for this book so we can get out of this financial jam we’re in.”

I’ve found that when the writing is all mixed up in your mind with a financial need, especially a need that’s fraught with anxiety, the writing suffers. Not only that, but the joy is diminished, because the goal has changed (maybe without your even knowing it) from “write a great book” to “pay off my MasterCard.” And when that fantastic day comes and you finally get your first book contract, instead of being able to experience the joy of attaining a long-held goal, you’ll be asking yourself if the advance is enough to pay off the MasterCard.

Link to the rest at Rachelle Gardner

From romance agent Scott Eagan:

I recently read an article about an author who was extremely upset with Harlequin and their contracts. Her whole post was a complaint about how she just couldn’t make a living off of the books she was selling at Harlequin in their series line. Needless to say, she is off to run and “self-publish” her books and be able to now essentially retire with the amount of money she will make on her own. This post was also a guest blog on an individual’s site that seems to be 100% against all established publishers and 100% behind only self-publishing. Hmmmm? This got me thinking.

. . . .

I found it interesting that these authors were implying that they were forced into the decision to contract with a publisher. That they were stuck with these advances and royalty rates. Along the same lines, they were adding in the fact that agents were just part of the whole scheme of things making their authors go along with these deals. Now, I am not sure what their relationship with their agent is like, but I honestly do not know of any agent out there that holds a gun to the head of their author and “make them” sign anything. The author-agent relationship is a teamwork affair and we all discuss with our clients where we are sending books. If the author doesn’t want their book at a particular house, we honor that request.

Secondly, if an author doesn’t have an agent and they are doing this on their own, which again is perfectly fine, they choose where to send the manuscript and they negotiate those details in the contract. If you don’t like the terms, then don’t sign the contract.

. . . .

When an author is not making money, it is NOT always the fault of the publisher. Maybe their writing has gone flat. Maybe they aren’t promoting enough. Maybe it is simply a matter of bad timing for when the book comes out. The point is, be careful blaming others for your lack of success in the business.

I for one am a firm believer in Harlequin. The editors work AMAZINGLY hard with the authors out there dedicated to their craft. The promotion departments do an amazing amount of work to get those books out to their readers. I would also add that all of the editors work amazingly well with me personally when I want to negotiate contracts. They are in it for the long haul with their writers and they don’t want to lose a great thing when they see it.

I would also add that there are far too many authors out there who are able to make a living with their writing and being able to publish with Harlequin. Why? Because they are great writers. They probably have a great team working with them including editors, agents and P.R. people.

Link to the rest at Babbles from Scott Eagan and thanks to Barbra for the tip.

The most frequent problem Passive Guy finds with publishing contracts negotiated by agents is that agents fail to inform their clients about contract clauses that have major negative effects on authors.

PG has lost count of the number of times he has analyzed a publishing contract for an author, pointed out one or more really nasty provisions and heard the response, “My agent never told me about that.”

Scott is correct that no one is forcing an author to sign a publishing contract. However, agents universally describe themselves as experts in the publishing business and one of their principle value-add activities is negotiating publishing contracts on behalf of the author.

When an agent presents a contract to an author, unless the agent explicitly warns the author about one or more aspects of the contract, the agent is implicitly recommending that the author sign the contract.

PG submits that representing an author involves explaining what the contract means or expressly advising the author to hire an attorney to tell them what the contract means before signing the contract. When an author says, “My agent never told me about that,” PG believes the agent has failed in one of his/her major responsibilities.

From Dean Wesley Smith:

When I was down in Las Vegas last week being a guest speaker at the SuperStars writing Seminar, they put me on a panel about agents. They expected me to bash agents, as it seems is my reputation. I didn’t. As I have said many times, in the old days of publishing, when agents were actually needed, I had three top agents and I liked them and they did as I asked them to do. (I repeated that on the panel as well.)

Mainly, I didn’t bash agents because it’s not an agent’s fault that writers hire them in this new world. It’s not an agent’s fault that writers give them all their money and all their paperwork and then wonder why they got ripped off. It’s not an agent’s fault that a writer signs an agency agreement giving the agent part of the copyright in a work. It’s not an agent’s fault that a writer lets a non-lawyer agent negotiate a contract with fifty lawyers on the other side.

And it’s not the agent’s fault that a writer didn’t notice the agent stopped working for writers and started working for publishers years ago.

. . . .

So I didn’t bash agents on the panel last week. But I did bash stupid writers.

And I have been doing that here for years now.

I guess that makes me anti-agent, but I am not. I am anti-bad-business. And anti-stupid-writer.

So now comes this week’s events and one more point in the proof how bad agents in general are for smart writers in this new world.  Just this week (yet again) the agents themselves gave us even more proof that they work for publishers, the very people they are supposed to represent writers against.

The AAR (a group of agents joining together to pretend to have more power when they have none) just put out a letter asking that all agents and writers and other publishing professionals write the Department of Justice and say that we all don’t like the suit filed against the major publishers on the agency agreement.

. . . .

And their organization did this with not one thought on how such a position will help or hurt their writers (at least the midlist writers and indie writers).

. . . .

Yup, one day the agents and all publishers sort of “got together” and decided electronic couldn’t be 50% of cover anymore (as it was in all contracts before this magical agreement), but had to be 25% of net. It was “better for the business” that way.

Just as setting agency pricing “was better for the business” as the publisher’s said, and now the agents want us to support those publishers.

. . . .

Last week at the SuperStars writing seminar, all seven of us instructors (all bestsellers and long-term writers) were asked where publishing was going. There was a long, long, long moment of silence, then finally someone said, “As soon as we figure it out, we’ll let you know.”

That’s right, from a panel of “old” professional writers, most with over thirty years of experience and hundreds of books each. We don’t know.

But I do know one thing. Smart writers are running in droves from agents. And many young writers are not even going after agents at the moment, but instead going directly to editors and using IP lawyers to help with the contracts. Or indie publishing and letting the dust settle.

Link to the rest at Dean Wesley Smith

Passive Guy previously blogged about a letter that Simon Lipskar, agent and board member of the Association of Authors’ Representatives, sent to the Department of Justice regarding the antitrust suit filed by the DOJ against Apple and five large publishers alleging the group colluded to fix prices on ebooks.

Here’s a link to that post and check the comments for a discussion of Lipskar’s fuzzy math. Perhaps the defective math is a result of too much exposure to royalty accounting.

One wonders if the members of the AAR are doing any representation of authors at all these days. The president of AAR, supported by the whole board of directors sent a similarly deranged letter to the DOJ on the same day.

Joe Konrath does an excellent job of deconstructing this letter:

Dear Mr. Read,
I write to you as the President of the AAR, the largest organization of literary and dramatic agents in the United States, and on behalf of the unanimous AAR Board of Directors. Our more than four hundred seventy-five members represent writers who number in the tens of thousands. We want you to know in the strongest terms possible that we firmly oppose the proposed settlement between the Justice Department and three publishers with respect to e-book pricing.

Translation: We’re about to put our collective foot in our mouth. Stay tuned!

Joe sez: I count thirteen names on this letter. I don’t see the names of the other 462 AAR members, nor the names of the tens of thousands of authors they seem to be insinuating they speak for.

They DO NOT speak for me. And I hope the majority of the AAR who didn’t sign their name to this nonsense show some guts and leave an organization that erroneously claims to speak for them. Or at least fire the board members that sent this without getting a majority vote.

Readers, writers and the general public benefit when there is a healthy competitive literary marketplace. Two and a half years ago Amazon, with its proprietary Kindle devices and its willingness to discount e-book “bestsellers” to a level at which it sustained a significant loss on each copy sold, threatened the entire marketplace for books.

Translation: Amazon invented a device that consumers wanted. That’s BAD. Readers were getting cheap ebooks. That’s BAD. It may not seem bad on the surface, and we don’t back-up our claim with any actual evidence, but boy oh boy trust us it really is because we say so. 

. . . .

This was not healthy for competition or for authors or indeed for consumers in the long-term.

Translation: Trying to outsell your competition, or attract customers with lower prices and better service, is bad.

And it’s bad when authors get paid more for each copy sold and sell more copies because of lower prices. 

And lower prices are bad for consumers, because maybe one day Amazon will again raise prices, possibly even up to the lofty heights publishers have them raised to now under the current Agency Model.

Retailers shouldn’t be allowed to set their own prices. That’s bad. It’s much better for the wholesaler to set both the wholesale and the retail price, because THAT and THAT ALONE encourages healthy competition. ESPECIALLY when there are several wholesalers in lockstep. 

Nothing is better for consumers than a group of companies who set wholesale and retail. And even though they set the SAME prices, it really still is competition! Really!

. . . .

When Apple launched the iPad and offered to sell books at the “agency model” terms it was already using for other media sales, our members breathed a sigh of relief. This would create a fair playing field for Barnes & Noble, Apple and others to develop devices and join the e-book marketplace.

Translation: For healthy competition to exist we need to disregard consumer preference and put floundering competitors on life support. Because no one can ever start a company to compete with Amazon.

Which is odd, because Amazon started a company to compete with bookstores and did just fine. 

And soon Amazon will compete with publishers as its imprints begin to outsell theirs. 

Which is what we’re REALLY afraid of, because Amazon doesn’t return our calls. Or take us out to lunch all the time at posh Manhattan restaurants. 

. . . .

We cheered this development despite the fact that, as you no doubt know, under the agency model publishers were taking in less money per copy sold and therefore we and our clients were getting less in royalties and commissions. But we believe this sacrifice was in the best interests of the book landscape and therefore our clients long-term.

Translation: We’re in bed with Big Publishing, even though we allegedly work for authors. 

Joe sez: How noble of you guys to sacrifice your authors’ incomes by taking up this worthy cause, without consulting us.

How about changing your name to the Association of Book Landscape Protectors? Or the Champions of What We Call Healthy Competition Even if Authors Get Screwed?

Link to the rest at A Newbie’s Guide to Publishing

And here’s more in a separate post from Joe:

Joe sez: This is a letter I received from a mid-level legacy publishing insider who wishes to remain anonymous. I have his or her permission to post the letter here, and will add some thoughts of my own afterward. Let’s call her Guy Fawkes. So here’s Guy…

Guy sez: Writers House president Simon Lipskar has posted an open letter in response to the Justice Department’s suit alleging price-fixing among five of the Big Six publishers and Apple (there is also a similar suit brought by the Attorneys General of sixteen states).  In the letter, Lipskar argues that the DOJ is mistaken, and calls for “every one of us — publishers, agents, authors, retailers, wholesalers and device makers — impacted by the DoJ’s quite literally bizarre misunderstanding of the ebook, publishing and bookselling businesses… to stand up and make their voices heard.”

I hear you, Simon.  And here I am.  I hope other publishing insiders will follow suit, and particularly hope we’ll also hear from readers — the group we serve; the group most affected by the DOJ’s suit and the publishing practices at the heart of it; and the one group you neglect to mention in your call for greater public involvement.

Lipskar’s argument has two main premises.  First, that whatever publisher collusion might have been behind the simultaneous industry-wide imposition of the agency model on retailers, the collusion caused no harm to consumers because the collusion made only some books more expensive.  Second, and related to the first, consumers can’t be harmed by some books being priced higher because books are essentially fungible.  I’m not an antitrust lawyer, but I think I’m qualified by my position to examine these premises in turn.

1.  Publishing Collusion Caused No Harm.  This line of argument — that “there has been no discernable [sic] consumer harm from the advent of agency pricing” — is interesting because it functions as an implicit acknowledgement that collusion did indeed occur.  And unless the DOJ and sixteen states’ Attorneys General are fabricating the extensive allegations of collusion (including admonitions to “double delete” incriminating emails) in their complaints, it seems Lipskar’s lawyers are being tactically astute in steering clear of what would pretty clearly be a losing fight over collusion itself.  Their better bet is to essentially acknowledge collusion, instead arguing, “All right, fine, but nobody got hurt — so no harm, no foul.”

And how do they argue that nobody got hurt?  Well, because:

2.  One Book Is Pretty Much The Same As Any Other.  Lipskar acknowledges, as he must, that the prices of New York Times bestselling books went up following the simultaneous industry-wide imposition of agency pricing (“prices for a limited number of titles published by these publishers increased, i.e. those ebooks that were digital editions of newly released bestselling hardcover titles.  Amazon had quite explicitly promised its consumers that these titles would be available at $9.99, and with the switch to agency pricing, these titles did indeed increase in price, mostly to $12.99”).  But, he claims, these higher prices couldn’t hurt anyone because the prices of other books decreased (“No Price Increase for Non-Bestselling Titles”).

. . . .

Implicit in Lipskar’s argument is the notion that a reader will be as happy with one book as she would be with another.  Because if the notion is untrue — if, in fact, readers are drawn to certain titles more than they are to others, and if readers find some books are more attractive, more enriching, more life-changing than others — then it’s impossible to argue a reader would be unharmed if the books she found most worthwhile were made more expensive.

Now, I can’t really prove readers don’t find all books to be of equal attractiveness, equal importance, and equal worth.  It’s possible, as Lipskar suggests, that books are pretty much as fungible a commodity as a bunch of M&M’s in a glass bowl, none of which has any special merit a consumer might weigh in making a selection.  Can’t easily reach that one you want at the bottom?  No problem, there are a bunch of others just like it right at the top.

Still, you’d think that if readers were as indifferent about picking books as they are about picking M&M’s, different books wouldn’t have different titles.  Or different covers.  Or different prices.  You’d think publishers wouldn’t be so fixated on increasing the prices of certain titles — certain bestselling titles, as Lipskar himself is forced to acknowledge — that they would allegedly collude, and then allegedly “double delete” the evidence of their collusion, to do it.  You’d think, in fact, that there was barely a reason for publishers to exist at all.  What are we nurturing, and curating, and passionately presenting to the public, if in the end it’s all just a bunch of fungible widgets?

But again, I can’t really prove books aren’t like M&M’s.  I can only say that as a lifelong reader and lover of books, I know there are certain titles that I want more than others, that have added more meaning to and had a more profound impact on my life than others, and that cannot be replaced by others, even if those presumptive others might carry a lower price point.  And I can only solicit readers who share my passion for books to chime in with your own thoughts about Lipskar’s “all books are fungible” theory, and to share your thoughts with the DOJ directly at the address below (even though — no, make that because — Lipskar forgot to mention you when he was encouraging all those other people to act).

I have to add, on a personal note, that Lipskar’s argument makes me sad.  Not just because, in suggesting that books are fungible, Lipskar implicitly devalues them.  But also because Lipskar has made me aware of how hollow it is when the leading lights of my industry claim to value rich literary culture, and the special author-editor relationship, and the high-value, carefully vetted, professionally prepared books we curate and produce.  I believe all that — believe the raison d’etre of publishing is to select, nurture, and collaborate with authors to produce books of lasting value and substantial impact.  And yet here is a top literary agent arguing that one book is pretty much the same as another — traditionally published, self-published, genre, literary, whatever.  Obviously both these things cannot be true.  And yet publishing’s luminaries claim both, depending on which position suits them at any given moment.  Doing so isn’t just devaluing.  It’s dishonest.

Link to the rest at A Newbie’s Guide to Publishing

From author and publisher Bob Mayer via Digital Book World:

The AAR recently sent a letter to the DOJ unanimously supporting the Agency model.  I find it odd that the AAR has yet to send a collective letter to the Big 6 asking for higher, and fairer, royalty rates for their authors’ electronic rights.

. . . .

For too long some agents and many publishers mistakenly believed they actually created the PRODUCT that readers consumed:  i.e. the book.  Even with print, that’s not true.  The PRODUCT is the story, the words.  The printed book was the medium by which those words reached the reader.  Thus agents and publishers and bookstores were, and still are, facilitators.  Not creators.  As an author I create content.  As a publisher I facilitate getting content to readers.  I literally have two different offices in my house for the two different jobs.

. . . .

The subtle arrogance built from years of having their own form of monopoly on publishing is now costing many in the industry and it makes the AAR letter to the DOJ regarding Amazon somewhat ironic.  As I’ve pointed out:  Amazon didn’t exist except in one man’s mind in 1994.  How much have agents, publishers and bookstores changed and adapted in the past 18 years?  In 2011 I had to radically change my approach to publishing.  My old approach had served me very well for 20 years, but projecting forward and studying other parts of the entertainment business as they encountered the digital wave, it was apparent a radical overhaul was needed in my career.

. . . .

The medium is shifting from print to digital much faster than most still understand and 99% of the pundits (who are still punditting and being believed even though they have been wrong over and over) predicted.  Thus agents, publishers, bookstores, and everyone else between the author and the reader have to adapt.  We have to prove our value as a facilitator in that connection.  Instead, what we’re seeing is an entrenchment to hold to being the “gatekeepers”; the “curators”; whatever you want to call it.  Even some authors have jumped on the bandwagon, such as Scott Turow; but those on the bandwagon, are those who’ve been on the top 5% bandwagon. Of course they want to see the established system stay in place.  It works quite well for them.

. . . .

The issue now for agents, publishers and bookstores is not fighting a futile battle against Amazon and the inevitable digital world, but rather this:  how to adapt to become a worthwhile facilitator between author and reader?  What value do I add to this process?  The standard answers are quality control, editorial, print distribution (not dead yet! To quote Monty Python), etc.  But readers are making the ultimate quality control decisions now with the buy button.  Editorial can be outsourced to freelancers (many of them fleeing the sinking Titanic in NYC).

. . . .

Perhaps the AAR, and others, might better spend their time writing letters about how they can change and help readers connect with good authors and authors connect with readers?

Link to the rest at Digital Book World

From the comments to Kris’s Post – Spread the Word, a classic letter to The Author Guild from 70-year-old author Suzanne White:

It’s unfortunate that an entity which professes to be an “Authors Guild” doesn’t work for authors. It works instead for the publishing industry. It works to try to protect what is obsolete.

Authors today can go to Amazon with books they have written, post them on Kindle or develop paperbacks with Createspace or seek to actually be published by Amazon… and get a 70% royalty on their sales. Do you encourage them? Do you help them to understand how they can gain their freedom? Do you applaud those courageous authors who self publish, sell on Kindle and make a living? No you do not. Instead, you warble on, lamenting the fact Bezos is taking over the crusty publishing industry. DUH!

Shame.

Where in the traditional publishing industry can an author command 70%? Where can an author have utter dominion over cover art? Formatting? Content? Illustrations? Impact? Marketing? The answer is Amazon. And a little bit Pubit and sometimes Smashwords or Apple as well. Where in the standard publishing industry can an author revive a book that he or she wrote in 1982, sold to a publisher who printed it, didn’t sell very many and took it right off the market? Amazon, that’s where. Author gets rights back, re-formats the book, slams it up for sale on Kindle and in six months is making money with that book.

Where? Tell me. Where can an author do better?

Why does a Guild for Authors rail on about monopolies and decry the demise of old-fashioned publishing as we knew it? Dinosaurs still prowling the streets of Manhattan want their good old boy industry back. Give it up already.

I have been an author for 37 years. I have had agents and publishers up to here. Most authors are, like myself, fed up with the good old boys. Publishers pay gigantic overhead for prime real estate offices and switchboards and secretaries and senior editors and junior editors and cafeterias and fancy seduction lunches for unsuspecting newbie authors and deign give 10 lousy % to an author? Agents? They don’t work for authors either. They flog your book, take their % and when you get into a dispute with a publisher, agents crawl under the couch.

Is our Authors Guild really just an arm of the Publishers Guild? We authors who want to retain digital rights so we can sell our books directly are discouraged from even trying. “Don’t self-publish. You might explode.” You warn. “Get an industry standard, agency acceptable royalty.”

You guys! Help authors reach their potential. Stop going to bat for the big guys. It’s over boys. Move on out. Don’t blame Bezos. Blame history. Ebooks are the future. Young people today grew up on screens. They don’t know any other way. Can you really imagine you might convince the young to return to paper? It’s Farenheit 451 in reverse. We are burning the books — not because they contain information deleterious to society, but because they are unwieldy and wasteful. Yes, you can spill coffee on a paper book and it won’t lose battery power. But if I pour my coffee on my Kindle and it seizes up, I call Amazon and they tell me how to restore it to its spiffy old self and they return all my books to me presto because they have stored them for me on their computers. I cannot take my coffee-stained copy of War and Peace back to the bookstore and ask for it to be replaced. No way.

I, for one, am content to have rigorously retained all my electronic rights. From the beginning in 1975. Thanks to digital rights, I now make a living from my books – which is more than I can say for all the years I was indentured to Simon and Shoestring.

Ciao Publishers. Ciao Agents. Ciao slavery.

Suzanne White

A reprise of an earlier post:

An agency clause may be inserted into a publishing contract between an author and a publisher. In essence, a typical agency clause provides that the agent may receive royalty payments on behalf of the author and has authority to act in the name of the author with respect to the contract.

Here’s an example:

All sums of money due to the Author under this Agreement shall be paid to the Author’s agent, Annie Agent, of 321 Applesauce Avenue, New York, NY 10023, U.S.A. (hereinafter called “the Agent”) and receipt by the Agent shall be a good and valid discharge of all such indebtedness and the Agent is hereby empowered by the Author to act on the Author’s behalf in all matters arising in any way out of this Agreement.   For services rendered and to be rendered the Author does hereby irrevocably assign and transfer to the Agent the sum of 15% (fifteen percent) as an agency coupled with an interest out of all monies due and coming due to and for the account of the Author under this Agreement.

To understand this beast, you need a teensy bit of legal background info. (I promise this won’t hurt too much.)

Since the agent doesn’t usually sign the publishing contract, the agent is a Third Party Beneficiary of the contract.

The classic Third Party Beneficiary example is a life insurance policy. Grandpa George buys a life insurance policy for $100,000 from Cornpone Mutual when he’s only Pa George. He names his three chillun, Bo, Lucille and Little George, as the beneficiaries. (Hint)

Grandpa George pays all the premiums on time, but gets careless around the hay baler one day and goes to meet his Maker. In pieces. The chillun tell Cornpone Mutual it’s time to pay up, but Cornpone says its policies do not cover hay baler accidents.

The parties to the life insurance policy are Grandpa George and Cornpone Mutual. The chillun never signed anything. Indeed, if they were under 18 at the time the policy was purchased, they were legally unable to enter into contracts.

The usual rule is that only parties to a contract can sue for enforcement or damages. This raises a problem. Grandpa George was a good man, so there are very few lawyers in the place where he has gone. There is also no email and Fedex guys who take packages there never return.

The children were named in the insurance policy, however. Although they didn’t sign, they are Third Party Beneficiaries so they can sue Cornpone Mutual in their own names.

Outside of a few clearly-defined fields, Third Party Beneficiaries are quite rare in the business world. When Passive Guy was practicing law, he would negotiate dozens of contracts with nary a Third Party Beneficiary in sight. The standard practice was to have everybody sign the contract if they had any rights under the contract.

However, in the wild and wacky world of publishing, agents are Third-Party Beneficiaries to a lot of publishing contracts. As will become clear during our discussion, Passive Guy thinks Agency Clauses only benefit the agent and can cause problems for both the author (obviously) and the publisher (don’t know if they’ve thought much about this).

So, in general terms, what does the presence of an agent as third-party beneficiary to a publishing contract mean? This is a weird area of the law, filled with lovely Latin phrases, serving primarily to fill out the semester in a Contracts Law class (which is one reason to have everybody sign the contract). PG will boil it down into fundamentals as they relate to an Agency Clause.

1. If one or both of the parties to a contract violate the terms of the contract to the detriment of the Agent, the Agent can sue to enforce the contract.
2. The Agent’s rights are subject to the terms of the contract.
3. The Author and Publisher have obligations to the Agent to perform under the terms of the contract.

Isn’t this fun? Don’t you wish you could be a Third Party Beneficiary too?

Before we go further, let me make clear that Passive Guy is not anybody’s lawyer anymore. As much as he may love and admire you, PG is not your lawyer. Most publishing contracts will have a clause saying New York law applies to the interpretation of the contract. PG is not a New York lawyer either. Any legal discussions will be general in nature and New York or other state or federal laws may conflict with PG’s generalities. Hire your own lawyer if you want legal advice.

So, let’s start dissecting the Agency Clause so see where we have some wiggle room. Some agents just use an Agency Clause without a separate Agency Agreement between the Author and Agent. Our analysis will assume this is the case. If there’s a separate Agency Agreement, things can become much more complicated.

Passive Guy wants you to see this clause through PG’s magic contract vision glasses.

What does Passive Guy’s super-power vision see here?

1. Purple highlights – Unsurprisingly, the Agency Clause is about money only. Potential benefits or compensation other than money are not covered by this clause. Something that could be easily converted to money or is a money equivalent – a Visa gift card, for example – might be covered. PG is assuming “money” is not a defined term in the Publishing Contract. (For you persnickety types, super-power vision is not perfect. The purple “an” is a mistake.)

2. Blue highlights – Only money payable to the Author is covered. Money payable to other people or entities is not covered. The assignment clause, if any, in the Publishing Contract would make for interesting reading.

3. Yellow highlights – The Agent is authorized to act on Author’s behalf. In the oh-so-ever-humble opinion of PG, this gives rise to the classic obligations that an agent owes to a principal. These include always acting in the principal’s best interests, disclosing conflicts of interest, etc., etc.

Arising in any way out of the Agreement is broad.

For services rendered and to be rendered is interesting in light of the Ralph Vicinanza agency matter discussed previously. This implies an ongoing stream of services and is specifically worded as consideration for the ongoing 15% agency fee. If no more services will be rendered, there’s an argument no more agency fee should be paid.

4. Green highlights – PG never likes irrevocable agreements where one party is providing services to the other. The services may start out just fine, but if they go bad, you want to be able to stop paying for them.

If this is the only written description of the Agent’s agreement with the Author, then no term – time period – for the agency exists. It’s not one year or five years or a hundred years. Generally speaking, an agency agreement that doesn’t have a term is revocable at will by the principal.

Agency coupled with an interest is an agency in which the agent has an interest in the property regarding which he or she is acting on the principal’s behalf. PG has another post on this ominous-sounding term coming out tomorrow, but, for our discussion today, essentially, it means the same thing as irrevocable. It’s a belt-and-suspenders approach to try to keep the Author from revoking the agency agreement. Absent a separate document actually describing the interest of the agent, it probably doesn’t add much.

5. Red highlights – Payments to the Author under other agreements, even other agreements with this particular Publisher, are not covered by the Agency clause.

So, putting all this together, what do we have?

Following are a few (but not nearly all) possibilities:

1. The Agent is empowered to act on the Author’s behalf respecting this Agreement, but nothing prohibits the Author or someone else – an attorney or agent – from also acting on behalf of the Author. The Agent doesn’t have an exclusive right.

2. All the Agent’s rights are tied to this specific Publishing Contract. New or separate agreements are not included. If the original agreement includes options for additional books in a series, PG thinks there is a good argument that if the Author insists on a separate agreement for subsequent books, the Agency Clause in the first agreement would not necessarily give the Agent a commission on subsequent books. (Again, we’re not dealing with situations in which there is a separate Agency Agreement.)

3. Since everybody is bound by the Publishing Contract, if that Contract has an out-of-print clause, the Publisher can declare the book out of print and enter into a separate agreement with the Author for something like an enhanced and revised version of the original book. There will likely be many other clauses in the Publishing Contract that allow the Publisher to effectively terminate the commercial life of a particular book.

4. If the Author receives an ebook amendment or rider to the original contract, and the Author no longer desires to use the Agent’s services, the Author might want to insist on a separate Publishing Contract for the ebook. Under the terms of the Agency Clause, the ebook contract might not be commissionable.

5. PG is sure the attorney who first came up with the for services rendered and to be rendered language thought he/she had done a cool thing in providing for future consideration from the agent for future commissions. However, if future services by the Agent are not satisfactory to the Author and the Author terminates the relationship for that reason, this contract language strengthens Author’s argument that the Agent’s commissions should end.

6. If the Author gives the Agent specific instructions, preferably in writing, about what the Author wants the Agent to do or not to do respecting the Publishing Contract, PG believes the Agent cannot act contrary to the Author’s instructions unless the Author asks the Agent to do something illegal or totally ridiculous.

7. If there is a fight between the Agent and the Author based on the Agency Clause, PG thinks it quite likely the Publisher would be dragged into ensuing litigation, particularly if the fight was about a separate contract between the Author and the Publisher for which no commissions were payable. PG wonders why a Publisher would open itself up to this possibility when the Agency Clause provides no discernable (at least to PG) benefit to the Publisher.

Passive Guy will close this very lengthy post by admitting puzzlement and worry.

When PG heard these Agency Clauses described before he saw one, he expected to find a serious lock-down legal provision. Instead, there appear to be lots of holes in the one used to illustrate this post. Others PG has received for his Contract Collection (Thank You!) are almost identical.

The reason PG worries is whenever it appears too easy to get out of what’s supposed to be a tight contract, PG fears he has missed something big or obvious.

Since we have a large number of informed publishing veterans visiting The Passive Voice, let me know if I’m really off-base in my analysis.

From Publishers Weekly:

Hugh Howey has not quite broken out in the way recent self-publishing superstars like Amanda Hocking and John Locke have, but his sales record has made New York publishing houses take notice. Best known among his avid fan base for Wool, his five-part science fiction series, Howey estimates that this year alone he has sold nearly 140,000 copies of his work. Now, with an agent, he’s been entertaining offers from traditional houses. The problem, he told PW, is the digital royalty rate he’s being offered.

The first title in the Wool series, called Wool, began as a short story, which Howey self-published through multiple platforms in July 2011.

. . . .

Howey is very active with his fans: readers who buy print editions of his books through his Web site receive signed copies, and he regularly responds to e-mail. But he believes that word-of-mouth ignited his sales more than any outreach he did via Twitter or other social networking platforms. With the Wool series, he said, there was something of a slow build and, for the most part, his sales have seen a major uptick in the past few months; he made $19,000 from his fiction in January, $50,000 in February, and $70,000 in March. Each installment of Wool is priced at 99 cents.

. . . .

Certainly Howey doesn’t view the terms from the traditional houses very favorably. “It’s hard to think about giving up a 70% royalty for an 18% royalty,” he said, referring to Amazon’s digital royalty rate, compared to the rate many large publishers offer. “The transaction has changed when it comes to successful independent authors,” Howey said. “I’d be giving up existing sales [with a traditional deal]. I’d be giving up the freedom to write what I want. To publish as quickly as I want. But publishers don’t seem to realize this.” However, Howey said he would still love to partner with a publisher and reach more readers “if the right offer came along.”

For now, [agent] Nelson and Howey are focusing on selling dramatic rights and foreign rights to Wool. Kassie Evashevski at United Talent Agency is shopping the book in Los Angeles, while Jenny Meyer, at Jenny Meyer Literary, is handling the bulk of foreign sales.

Link to the rest at Publishers Weekly and thanks to Scott for the tip.

A reprise of an earlier post.

Given all the recent uproar about agents getting into the publishing business plus the constant drumbeat about successful indie authors being solicited by agents for representation, it’s time to look at an Agency Contract.

Before diving into the details of this contract, let’s review some basic legal principles that govern the relationship of a principal – the author in this case – and an agent. These principles are old and universally applied in the United States and probably in the UK. Search for “duties of an agent” in Google and you’ll see a million different versions of the following items. PG will generally use “author” instead of “principal” for clarity.

The three pillars of agency law are Obedience, the obligation of the agent to use Reasonable Care, Skill and Diligence and the requirement that the agent act in the Best Interests of the Author.

1. Obedience. The agent is retained by the author to perform particular duties – find a publisher – and the agent is obligated to carry out the author’s reasonable instructions in doing so.

• Some of the author’s instructions will be implied – the agent should use her skill, knowledge and experience in the publishing industry to locate a willing publisher and help negotiate a publishing contract. This is expected and assumed on both sides.

• Other instructions from the author are likely a combination of what is written in the Agency Agreement and verbal instructions – “Let’s accept the $50,000 advance.”

• To be clear, a principal/agent agreement isn’t master/slave or master/servant relationship. Obedience is just a way of saying the author is in charge and the agent is obligated to help the author accomplish the author’s objectives, not the agent’s.

2. Use Reasonable Care, Skill and Diligence. As the agent carries out his responsibilities to the author, he is obligated to do a high quality job. The agent isn’t required to be superman, but he’s supposed to perform his duties at the skill level expected of professional agents. For example, if one of the express or implied duties of the agent is to check royalty statements for accuracy, the agent is obligated to be diligent and careful in doing so.

3. Act in the Best Interests of the Author. The agent is acting in a trusted capacity to assist the author and is not permitted to do anything that will harm the interests of the author. The agent can and will use her business judgment in representing an author, but she must do so in a way that protects the author and is for the author’s short term and long-term benefit.

• After the agent has had a detailed and honest consultation with the author, if the author makes a decision against the advice of the agent, the agent won’t be violating her obligation to act in the author’s best interests if she acts to carry out the author’s decision. In fact, she is honoring her obligation of Obedience.

• An agent must not have any personal interests that conflict with the author’s best interests. For example, if an author were considering contract proposals from two publishers, and one of those publishers offered the agent a separate payment if she was successful in persuading the author to accept that publisher’s proposal, the agent would have a conflict of interest. The agent’s own financial interest might conflict with the author’s best interests. The bribe might influence how the agent advised the author respecting the two competing proposals.

I’ve described root principles. They split, branch and rebranch into more complex areas. As described in the short Best Interests vs. Obedience discussion, obligations can conflict with one another. Agency is worth a couple of classes in law school that teach enough so you can be a baby lawyer supervised by an experienced attorney and learn more.

These principles apply to all sorts of agents – attorneys, real estate agents, stockbrokers, etc. Special rules may govern particular types of agents, but such rules typically expand upon the basic duties of an agent or prescribe how the agent is to deal with specific situations unique to a particular profession. I can’t think of any that violate the core principles of agency described above.

Against this backdrop of duties, we overlay the law of contracts. Generally speaking, two competent adults are free to arrange their business affairs in any legal manner and memorialize those arrangements in a written contract.

If a contract specifically and directly contradicts some aspect of an agent’s general duties summarized above, the contract will probably govern that aspect of the agent/author relationship. However, in interpreting the contract as a whole, a judge will work to fit such non-conforming provisions within the general legal principles of agent duties to an author. If one person is acting on behalf of another, it will be hard to persuade a judge that agency law does not apply.

Some types of contractual terms will not be enforced. For example, if an attorney only represents a client after the client signs a contract that says the attorney will not be liable for legal malpractice under any circumstances, that portion of the contract will not be enforced regardless of how well-drafted. Courts and legislatures have decided such contract terms are unconscionable and/or a violation of public policy.

Why has PG spent time discussing these basic legal principles?

Many observers of the current publishing and indie publishing scene use wild west and frontier metaphors to describe the chaos caused by rapidly-changing technology and its impact on markets, sales channels, pricing and profitability.

One of Passive Guy’s purposes for discussing basic principles of agency law is to make clear that the wild west does not operate in this sphere. Agents may be living in a wild west business climate, but their fundamental obligations to authors have not changed between 1975 and today. Indeed, their obligations have not changed between 1875 and today.

Some parts of some of the literary agency agreements Passive Guy has read turn basic tenets of principal/agent relationships upside down.

In particular, the obligation of a literary agent to follow reasonable instructions of the author is substantially undercut to the point where, in some cases, the agency contract purportedly allows an agent to act contrary to the author’s instructions, violating the fundamental principle of Obedience.

Some agreements between author and agent make it possible, even likely, that the agent will act in ways that will harm the best interests of the author to the agent’s profit instead of protecting the best interests of the author.

During settlement negotiations between another attorney (who was also a friend) and PG several years ago, after PG cited some recent changes the state legislature had made in statutes governing our case, his friend said, “I always work under the philosophy that the old laws are the best laws.”

While PG can find reasons to dislike many old laws, in the case of author/agent relationships, the old laws are the best laws and the old laws are still in force.

The next installment of this series will begin an examination of some clauses in a particularly egregious agency contract.