Here’s how big shot literary agents make a compelling living.
A client brings an idea to the agent who advises the client about its commercial possibilities. It’s important to note that this advisement traditionally means whether or not the agent thinks he will be able to sell the project to a major publisher for a compelling advance against royalties. Not whether there are actual people out there willing to pay money to read such a book idea.
The way the best sale works (meaning to the best advantage of the writer and agent) with a major publisher is to make sure that the publisher’s advance guarantee exceeds the amount of royalty that the writer will actually earn.
For the life of the book.
. . . .
[After detailed calculations showing books sold and royalties earned]
So Ms. Bestselling Writer has earned $4,250,000 but has been guaranteed $5,000,000. So her book does not “earn out.” She’ll never get a royalty statement with a check in it.
So the publisher lost money on that one, right? Not by a long shot.
The publisher has made a major return on investment even though it has paid $750,000 more than the book earned. How did that happen?
. . . .
[After more detailed calculations showing how much the publisher earned]
So the bottom line for the publisher is gross revenue of $16,550,000 minus the $5,000,000 guarantee to Ms. Bestselling Writer, minus the $2,800,000 to print and ship the physical books. Or a total of $8,750,000 ($16,550,000 – $5,000,000 – $2,800,000) to their bottom line.
Even though the book never “earned out.”
. . . .
How far would a publisher be willing to dip into their pool of revenue to overpay for a book? This is the question literary agents enjoy contemplating.
. . . .
The big books from big name writers (who don’t bleed red ink, but don’t earn out either) are the coveted ones for agents. Although it may be apocryphal, agent Andrew Wylie has been credited with having once said, “If my client’s book earns out, I haven’t done my job.”
But here’s the thing…
When I began in publishing in the 1990s, there were at least 20 “major” houses to submit a book proposal or novel. Today there are only 5 major corporations that control the trade book market. Sure, you’ll hear that there are tens of different publishing imprints within the major corps that “compete” with each other for properties. But when the time comes to put money on the table in a book auction, only one of those imprints from each of the five will end up bidding. The most big bids you’ll ever get as an agent today are 5.
And you can never discount the power of negative commentary around a book on submission. Book publishing is so connected that if an editor at Random House didn’t care for a submission, you can count that an editor at HarperCollins who also received the submission will get that information before his having to make his own decision. No one likes being the only one to like something.
. . . .
If only there were a way for writers to do their work, find people who like it, and then offer the book to them directly through free distribution networks as well as their own… Instead of having to curry favor with a big shot literary agent, then hope the literary agent is able to drum up enough interest from the Big Five to make a good deal, and then wait 12 to 15 months for their work to reach the public and then another month to learn whether the book “worked” or not and then hope that their next book will be embraced by their publisher, all the while never knowing who actually bought their book or why…