Passive Guy

Hachette and Authors United are in a box

21 October 2014

PG is certain that someone has made the following observations, but he hasn’t seen them, so here they are.

The deal between Amazon and Simon & Schuster has put Hachette in a box.

The Amazon/Hachette agreement was critical to Big Publishing because Hachette’s was the first of the court-ordered Price-Fix Six contracts to expire. The new Hachette deal would set the pattern for the other miscreants when their Amazon contracts expired.

By making a deal with S&S two months before the S&S contract expired, the Amazon/S&S contract is the pattern contract for the other publishers. One does not assume that S&S has harmed its authors or itself with its Amazon contract.

Amazon has performed a switcheroo. Now the onus is on Hachette. What’s wrong with Hachette that it can’t get the same contract that S&S has?

Commentators not terminally afflicted with Amazon Derangement Syndrome must now surely conclude that Hachette’s intransigence is the cause of the loudly-trumpeted suffering of Hachette authors.

At some point, Hachette’s public problems with Amazon are going to influence authors’ and agents’ decisions when Hachette and S&S are bidding for the same book.

If another large publisher coming out of lockup signs a deal with Amazon, the game is completely over.

The great Amazon debate: A leading Amazon critic and a self-publishing rock star try to find common ground

21 October 2014

From Salon:

After I wrote a piece calling self-published authors who defend Amazon “no better than Ayn Rand libertarians,” I received a flood of social media high-fives from those within publishing, their frustration with the giant palpable. I also received fierce blowback from the self-published community. The most thorough and entertaining came from Joe Konrath, who has self-published 24 novels (three of them No. 1 Amazon sellers), hundreds of stories, and has sold over 3 million copies of his books.

He, in turn, received a flood of digital high-fives from the self-publishing community for his zingers, the pent-up frustration at what they believe is one-sided media coverage palpable.

I could have left the name-calling to the social media ether, but we rarely ever really engage with those with wildly differing opinions. I reached out to Konrath and we had the following exchange of ideas.

* * *

Hi Joe,

Your “Fisking Salon and Rob Spillman” was the most entertaining thing I’ve read in a long time. If only some of my authors and students had the same bite, humor and energy.

I wanted to engage in a conversation. I realize this may be impossible, but as you have already established that I am a 100 percent Idiot, I thought there would be nothing to lose.

. . . .

As an indie publisher, I have been on the receiving end of Amazon’s tactics.

I don’t want to split hairs, go through each other’s posts line-by-line. I do, however, want to apologize if it seemed like I was dismissing self-published authors or genre writers. That was not my intention, nor is it what I believe. My intention was to point out that Amazon has been a very good platform for a large number of self-published writers, which tend to be genre writers.

One thing I want to make clear: I believe that Jeff Bezos is a genius. He has single-handedly changed the way the world shops.

His hero, Sam Walton, was also a genius. Bezos’s bible is “Sam Walton: Made in America,” Walton’s autobiography. Walton’s legacy is the big box store where very cheap products, many made in China, are readily available. His other legacy is the destruction of small town America and family-owned businesses. When I drove back roads across the U.S. last summer, small town after small town had boarded-up downtowns with a Wal-Mart and perhaps a Costco on the periphery. Those people lucky enough to have jobs were working for half the wages they used to under dehumanizing conditions (you have to purchase a uniform, at your own cost, to begin with). According to your argument, this is just the free market at work. Efficiency. The Walton heirs are now worth more than $100 billion. The U.S. now ranks 93rd in the world in income inequality. The middle class has shrunk dramatically over the past 20 years, with average salaries stuck at 1994 levels while the S&P has more than doubled in value adjusted for inflation over the same time.

. . . .

I believe that Amazon is trying to do Walton one better. With traditional publishing, $10 million in sales required 47 employees. With Amazon, the same amount requires 1 employee. Was the old way inefficient? Perhaps. Maybe I work in an obsolete world of literary fiction, creative nonfiction, and journalism. In my world, editors, copyeditors, proofreaders, book reviewers and bookstores are necessary and vital. Book advances are what fund many book-length nonfiction projects. I am also concerned about local economies being squeezed out by massive, unchecked corporations that do everything legally possible to avoid paying local and national taxes. Again, they are doing nothing legally wrong, but I would argue that there is a greater moral issue at play here.

. . . .

I look forward to your thoughts.

Sincerely,

Rob Spillman

. . . .

Hi Rob –

Thanks for the kind, levelheaded email. I’m impressed by your tone, your willingness to engage, and the integrity it took to email a loudmouth jerk like me. Remember, I didn’t say you were a 100 percent idiot. Only that you were getting close to 100 percent in that Salon piece. :)

I read your email with an open mind, and agree with much of what you said, along with the sentiment behind it. I believe you’re sincere.

I also drove across country, signing at more than 1,200 bookstores in 42 states. This was only a few years ago, but I’d guess at least one-third, and possibly one-half, of those bookstores no longer exist. That saddens me. I love bookstores, and booksellers. In my novel “Dirty Martini” I thanked over 3,000 booksellers by name in the back matter.

. . . .

“I am also concerned about local economies being squeezed out by massive, unchecked corporations that do everything legally possible to avoid paying local and national taxes.”

This is where you begin to lose me. I know it isn’t your intent to dismiss self-published writers, but I think there’s a very good argument that Amazon has been a boon to tens (hundreds?) of thousands of authors that weren’t ever given a chance in your world, which you reference above.

. . . .

“But from my POV, it is hard to see how anyone can face off against a company willing to lose $100 million per year just to gain market share.”

A company doesn’t have to compete with Amazon. A company can instead innovate in sectors Amazon doesn’t presently care about. Have large publishers innovated anything? Did they create an online bookstore where people want to shop? Did they invent the e-reading device and app everyone wants to use?

“For me and most of my colleagues, we are being squeezed, and Amazon has massive power and endless resources.”

I actually do understand. But that doesn’t forgive all of the glaring errors and bad logic in your Salon piece. Being squeezed hurts. It’s human to want to lash out, fight back. The trick is to analyze what the best response is.

Sometimes the best response is to move on.

What you’re feeling is no doubt akin to what buggy whip manufacturers felt when Henry Ford came along. When a new tech replaces an old one, people are disintermediated. It sucks, but it’s life.

“What I can’t understand is why you would cheer for Amazon in its fight against traditional publishers. Here comes one of my analogies that you love to pull apart – -it seems like rooting for the lions against the Roman prisoners in the Coliseum.”

I was a Roman prisoner in the Coliseum, being feasted on by lions. Those lions were big publishers. After 20 years, a million written words, and nine rejected novels, I finally landed a book contract. And I worked my ass off and published eight novels with legacy publishers, dozens of short stories with respected magazines, and went above and beyond everything that was required of me, in order to succeed.

And I got eaten. One-sided contracts, broken promises, lousy money. But it was the only game in town. If I wanted to make a living as a writer, I had no choice.

Then Amazon invented the Kindle.

I first self-pubbed in May of 2009. That first month I made $1,500, publishing books that New York rejected.

Those same rejected books have earned me hundreds of thousands of dollars.

I cheer for Amazon because it saved me, and thousands of other authors, from the Coliseum. And I try to show others there is a way to make money from publishing where the terms are better, and the writer stays in control.

“My central argument is that if Amazon crushes us all, it will be able to dictate whatever terms to anyone using its massive platform. What if it suddenly decides to flip terms and only offer you 30 percent, or decide that your books really should be sold for 50 cents?”

Rob, that’s what the Big 5 already do. Except for an elite, tiny group of upper-tier authors, the Big 5 treat 99.9 percent of us badly. Keeping rights for term of copyright? Non-compete clauses? Twenty-five percent e-book royalty on net? I’ve had chapters cut by editors that I wanted to keep. I’ve had terrible cover art. I’ve had my titles forcibly changed. And my experience isn’t unique. I’m friends with hundreds of authors. A few were treated like kings. Most were screwed.

You worry that Amazon might someday offer 30 percent when publishers right now offer 17.5 percent? You must see how odd that is.

Link to the rest at Salon and thanks to Brandt for the tip.

PG will briefly comment on Salon’s point about Walmart because it’s so typical of what happens when big city folk drive through small towns on their way to other big cities. He believes it is also an example of how out of touch Big Publishing is with the lives of readers.

PG grew up on ranches and farms outside of small towns. Small towns were where he went for excitement. While he left the farm for the big city when he went to college, after several years in a couple of big cities, he moved back to a small town for 16 years. He’s lived in cities since then. When he visits his brother or sister, however, he visits small towns.

People from Manhattan vacation in Bar Harbor or Martha’s Vineyard or Carmel and think they’ve experienced the ideal small town. They haven’t. They’ve experienced small down Disneyland for rich people.

Walmart  is one of the best things that has happened to every typical small town where it has built a store. Typical small town retailing isn’t like Carmel. Typical small town retailing is dead-end minimum wage jobs. Typical small town retailing is limited choice and high prices. Typical small town retailing is one of the reasons that graduates of small town high schools head elsewhere as soon as they can. Typical small town retailing is why families who live in small towns travel to the closest city for a better shopping experience..

When Walmart  takes applications to staff a new store, the line of people who want to work there extends way out into the parking lot. The line includes almost everyone who is an employee at the existing small town retailers. Small town Walmarts never have problems filling open jobs.

Why? Because Walmart offers a future. You can start at a cash register and become a store manager and then move up from there. Without being a college graduate. The manager of a Walmart is easily the highest paid retail employee in a small town. He/she makes more money than the owners of all but a couple of small-town retail establishments.

Walmart  is also the very best thing that happens to poor people in small towns. Why? Their minimum wage salary or welfare check buys them much, much more at Walmart than it does at any other retailer in town.

Visitors from Manhattan who venture into a Walmart are always grossed out by some of the customers they see there. Why? Because those customers are poor people trying to make their incomes stretch as far as possible. Even poor people like to have a nice selection of products they can afford in a clean store.

Green Gables

21 October 2014

The PG’s also visited Prince Edward Island during their recent trip.

PEI is the smallest province in Canada both by population and land area. The provincial population is about 140,000 and the island is mostly rural, relying upon farming, fishing and tourism for much of its economy. 25% of all potatoes grown in Canada originate here. The largest city, Charlottetown, has a population of about 33,000, while the second-largest city has a population of about 16,000. The size of municipalities drops off rapidly from there.

Prince Edward Island is the childhood home of one of Canada’s best-known authors, Lucy Maud Montgomery, who wrote Anne of Green Gables, set on a farm on PEI.

Ms. Montgomery was born on PEI. After her mother died during her infancy, Montgomery was sent to live with her grandparents’ on the island. While she was growing up, she frequently visited her cousins at nearby Green Gables Farm.

After she married, Montgomery moved with her husband to Ontario, but frequently returned to spend time on Prince Edward Island throughout her adulthood. She and her husband are buried a short distance from Green Gables.

Green Gables is a protected historical site and locations from the Anne books such as Haunted Woods, Balsam Hollow and Lovers Lane are well-preserved. (click on each photo for a larger version)

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House 4a-SM
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Green Gables
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Bedroom in Green Gables
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Green Gables

This last photo is taken at the beginning of the Haunted Wood trail looking back at the house.

Are Publisher Advances Truly Critical?

18 October 2014

From The Digital Reader:

The argument against Amazon seems to rest on the proposition that if trad-pubs aren’t awarded excess returns, over and above the actual free-market value of their products, then there will be no money to pay authors to write “serious literature,” irreparably harming our culture and society.

This is really a very dense proposition with all kinds of unstated and unanalyzed assumptions behind it. It would take a lengthy and complex essay to thoroughly deconstruct all these notions, and few would have the patience to read it. But it’s worthwhile to quickly review some of the main issues.

1. How much “serious literature” do advances truly subsidize?

There isn’t any comprehensive public accounting but from various sources we get a general impression of where advances actually go. A large portion is paid to popular novelists like James Patterson and John Grisham and popular nonfiction authors likeEdward Klein. Another big slice of the advance pie is served to entertainment and sports celebrities who put their names to various books that are supposedly nonfiction. And prominent politicians often get remarkably large advances for memoirs and ruminations. Calling any of this “serious literature” is stretching the term to the point of rupture.

. . . .

2. Why do the publishers have to act as investment banks for books anyway?

The publishers rig the game in such a way that in most cases authors can turn only to them for advance funding, even for books that clearly have major sales potential. They do this for bestseller-potential titles by setting royalty rates so low that there’s little chance that the nominal royalties will ever catch up with the advance. Thus if a bestselling author financed her book from another source she couldn’t make enough from royalties on sales to pay a good return on the investment; the publisher would simply appropriate most of the value of the book. (Big-name authors could push back on royalty terms, but most find it simpler and safer just to go for big advances.)

. . . .

 This is not of course what we hear from Foer or other attempts to justify trad-pub without actually understanding much about the business. It’s only the benign, benevolent publishers who would advance authors money against unwritten books, they claim. This is remarkable nonsense. Players in finance long ago learned how to make good profits by investing money in risky propositions. If the publishers ever paid economic royalty rates there would be no shortage of sources of advance funding for books that had even modest prospects for success. And the financial system would certainly do a better and more efficient job of it.

. . . .

3. Is Amazon threatening the excess profits publishers need?

Trad-pubs need to collect substantial economic rents — excess profits over and above their costs of operations and capital — so they can bestow generous largess on worthy authors. Or so they and their apologists would have us to believe. (Most of them no doubt believe it themselves, as they don’t seem to be very deeply knowledgeable or analytical.)

. . . .

 How does Amazon generate large cash flow? Not by pricing high, but by buying cheap and selling large volumes. The publishers, however, believe it serves their objectives to charge high unit prices. Amazon thinks the publishers lose more through reductions in the number of books sold than they gain by jacking up the price per book — and they know that Amazon does. In the end Amazon believes that both they and the publishers will make more by selling more books at lower price per book, and they have data from their immense volume of book sales to back this up. Data-schmata, the publishers say: they simply want higher net prices per book.

Link to the rest at The Digital Reader and thanks to SFR for the tip.

PG would suggest that Big Publishing is also trying to prop up its physical book store distribution channel which has been shrinking over many years. The Borders bankruptcy happened about three years ago and caused 399 large bookstores to disappear almost overnight. Barnes & Noble is closing about 20 large bookstores per year and another batch will disappear after Christmas.

Amazon-style pricing won’t support the high overhead of a physical bookstore.

For all intents and purposes, Big Publishing and some larger independent publishers have pretty close to a monopoly in distribution to large numbers of physical bookstores where discounting from list price tends to be more limited than in the online world. Smaller publishers often use the resources of larger publishers (for a price) to access sales and distribution channels to physical bookstores.

Big Publishing lacks a similar dominant position in online sales and authors understand that publishers don’t add any material distribution value with Amazon.

BPH-think says that prices have to be forced higher on Amazon so more people will go to physical bookstores.

PG is pretty certain that a great many of the smarter people in Big Publishing understand it is highly unlikely that the decline in the the number of physical bookstores can be stopped or reversed. The inherent economic advantages of ebooks and etailing are simply too compelling to save more than a relative handful of boutique bookstores in major metro areas.

However, as subsidiaries of large international media conglomerates, Big Publishers are servants to quarterly and annual sales and profit numbers. If BPH executives are judged on short-term results, they tend to develop short-term strategies.

If only enough pressure can be applied to Amazon, the decline of sales in physical bookstores can be deferred for a few more quarters and the Armageddon of a book business that is almost entirely online won’t happen quite so soon.

So Big Publishing trots out its pet 1% authors to decry Amazon as part of a marketing strategy to persuade a few more people to shop at Barnes & Noble for a few more months.

To save literary culture.

Oh Yeah.

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Peggy’s Cove

15 October 2014

Peggy’s Cove is a tiny fishing village on the West coast of Nova Scotia. It was one of the destinations for PG and Mrs. PG during their recent travels.

Here are some photos (click to see a larger size):

Peggy's Cove

Peggy's Cove

Peggy's Cove

Peggy's Cove

 

Blog Change

14 October 2014

PG has been receiving comments about problems with the CAPTCHA plugin that should show up for those who are registering for the first time.

He’s just tried a different plugin. Let him know if this one works or causes problems.

Thanks to the Vacation Bloggers

14 October 2014

PG is very grateful that a group of TPV regulars kept the blog going while he was away.

Much gratitude to:

Julia Rachel Barrett

Dan DeWitt

Bridget McKenna

Barb Morgenroth

Felix Torres

Randall Wood

The Opposite of Legacy

30 August 2014

From Joe Konrath:

So I just read the latest drivel from The Guardian which completely misrepresents self-publishing. There’s no need for me to fisk it–Howey, Eisler, Gaughran, and others already shredded the stupid in the comments. And there was a lot of stupid. It makes me ponder how the mainstream media keeps getting so much wrong.

It also makes me ponder why self-pubbed authors care.

As far as mainstream media, I can point to lazy reporting, willful ignorance, nepotism, and not-so-hidden agendas. This blog has a long history of pointing out why legacy publishers do what they do, and their priorities often coincide with those of the legacy media.

. . . .

Years ago, Eisler used “legacy” to describe traditional publishing, and I’ve played a small part in popularizing the term on this blog. Indeed, the paper publishing industry is a legacy system. There are now faster, cheaper, and less-restrictive ways to get words to consumers than the antiquated method of acquiring, printing, and shipping.

The legacy publishing world knows this, and they have been putting up a continuous, united front to preserve this status quo while doing their best to inhibit the widespread adoption of ebooks. They’re so single-minded in this pursuit, that they are missing opportunities to capitalize as much as they can on this new tech, instead trading potentially higher profits to retain a paper oligopoly.

I call self-publishing a shadow industry because the mainstream has steadfastly refused to understand its scope and power. Self-publishing is the most serious threat that legacy publishers must face, but legacy publishers don’t realize it is a threat. They don’t see the money being generated. They don’t see the scale of authors adopting it. They haven’t been hurt enough to acknowledge that a revolution is even taking place.

. . . .

If the mainstream news is just as antiquated, biased, self-interested, and increasingly obsolete as mainstream publishing, isn’t it also a legacy system? Hachette isn’t reading my posts and admitting I’m right, then following my advice. Why would The Guardian or the NYT or PW listen to me or any other self-pubbed author? The legacy media are facing the same problems as legacy publishing; digital replacing paper, readers going elsewhere for information and entertainment, talent creating content without them and building their own followings and fanbases.

As a writer, I once craved the validation that came with a legacy publishing contract. I felt it legitimized me. Once I was accepted, I experienced a sense of fulfillment. Getting a PW starred review was a victory. Seeing my book on a library shelf was its own reward.

Now I realize how empty those feelings were. Getting paid well and being treated fairly is much more fulfilling that the approval of a clique. Having power and control over my career trumps seeing my book in Wal-Mart. I don’t care what the legacy publishing industry thinks of me, or of self-publishing. We’re going to outlast them.

. . . .

What is happening is an echo chamber on both sides. Legacy authors, and those who want a chance to be legacy authors, continue to defend the status quo. Indie authors continue to point out the stupidity exhibited by legacy authors, publishers, and media. The only time anyone will change their mind is when they have direct experience of one, the other, or both.

. . . .

Evolution isn’t about choosing sides. It’s about slowly adapting to new environments. The Guardian doesn’t want to adapt? They’ll be forced to deal with the consequences of their actions. Click bait and concern trolling isn’t going to pay their shareholders. Like the Big 5, the days of Big Media in its current form are numbered. There is still some money to be squeezed out of it, but status quo bias is an indicator of desperation, not growth.

Self-publishing may always be a shadow industry. The media may not ever discuss it. The Big 5 will continue to ignore it. And that’s okay.

As writers, we can continue to inform one another, share data, and point out stupidity. This is helpful.

But it isn’t vital. Change will come even if we all remain silent.

Link to the rest at Joe Konrath

Here’s a link to Joe Konrath’s books

As usual, Joe makes some excellent points.

It doesn’t matter what the Guardian or the Times say. It doesn’t matter what a group of rich tradpub authors say. The PR strategies of Hachette and other large publishers will have no effect on the ultimate outcome of the disruptive change that is taking place in the way books are created and consumed.

Technology disruption is based upon some iron laws, some of which are relevant to the book business:

1. Cheap beats expensive.

2. Even if cheap isn’t as good as expensive at the beginning, it will catch up.

3. Bits always beat atoms for the dissemination and consumption of information.

The contents of books are information. Bits – the basis of digital representations of information – are virtually free. Yes, the infrastructure required to distribute and consume bits isn’t free, but once it’s in place, sending trillions of additional bits through that infrastructure is virtually costless.

Nobody charges you any more money when you download hundreds of ebooks from Project Gutenberg instead of just one book. It costs Amazon almost nothing to make and distribute 100 copies of an ebook file to sell to 100 different customers. Credit cart fees are probably the largest per-ebook cost for each incremental sale.

Traditional publishers are primarily focused on the atoms business – hard copy books. Traditional bookstores require a lot of atoms – bricks, bookshelves, etc. – to remain in business. Atoms cost money. The atoms for two bookstores cost more than the atoms for one bookstore.

The value-add of traditional publishers is all on the atoms side. Creation of physical books is an industrial-age process involving paper mills and printing presses and ships and trains and trucks moving boxes of books around, ultimately delivering them to those big stacks of atoms called bookstores.

Success in the industrial, mass-production world of atoms requires scale. Huge publishers dealing with millions of physical books have a substantial financial advantage over individual authors in a world where mass quantities of atoms are cheaper to create and deal with on a per-atom basis than smaller quantities of atoms.

Life is much different in the post-industrial world of bits. An author sitting at a personal computer can create all the bits necessary for an ebook without any assistance from any third party or any incremental cost. A personal computer costs as much if you use it for surfing the web as it does if you use it for writing a book.

Once an author creates the bits for an ebook, the author can send those bits to a dozen ebookstores for no additional incremental cost. An internet connection costs as much if you use it for surfing the web, etc., etc.

Once the bits arrive at the ebookstore, those bits can be offered for sale at an infinitesimally small incremental cost to the ebookstore.

The ebook monetization process includes no industrial-era components and no industrial-era advantages for Big Publishing. Not only is the author is the most important part of ebook commerce, the author is the only necessary part of that process other than an ebookstore.

At the moment, the atoms-world publishers are leeching off the bits-world of ebooks and ecommerce, but their ability to continue to do so is entirely dependent upon the willingness of authors to be hosts to which the leeches attach.

As Joe implies, the enthusiasm tradpub authors express for the legacy publishing business is in direct proportion to their ignorance of what is happening in self-publishing. To put it very directly, the dumber the author is about self-publishing, the more likely he/she is to be an ardent supporter of Big Publishing.

On Agency Clauses

29 August 2014

From Adventures in Agentland:

A typical agency clause will read something like:

Author authorizes Agent, located at (ADDRESS), to collect all gross sums of money due under this Agreement. Any receipt of such sums shall be a good and valid discharge of Publisher’s obligations to make payments to Author. Agent is empowered to act on behalf of Author in any and all matters arising out of this Agreement.

In the article, the author addresses why this is problematic, and recommends either not having this clause, and having all money go directly to you, or modifying it to be revocable at any time.

For the record, I HIGHLY respect SCBWI, and I HIGHLY respect the author of the article. The intention behind it is very good, and authors SHOULD think about what they’re agreeing to; it IS problematic if you’ve signed with a “schmagent” – someone who disappears, along with your statements and royalty checks, leaving you high and dry.

I shared my post with Sara Rutenberg, the author of the SCBWI article, who pointed out: “Unfortunately, there are so many agents out there who are unscrupulous. The column was written in response to a number of people who found themselves in [the position of being with an agent who is not remitting timely or disappears]. It is critical to [discuss the agency clause] up front, or people will not feel comfortable taking actions needed to protect themselves.”

. . . .

I think it would be a mistake to feel that you are getting a bad deal from, or not sign with, an agent or agency that insists on this language.

Why?

There are several issues with direct payments. If you have your royalty statements and payments coming to you, instead of your agency, you would be responsible for remitting your agency’s commission and, at the end of the year, also remitting a 1099 to that agency for what you paid them. I actually can’t imagine that any foreign publisher would be ok sending payment to the author, instead of the foreign co-agent who brokered the deal – but, in that case, you’d be responsible for remitting payment to your agent, your co-agent, and dealing with any tax withholdings applicable to the specific country’s laws when you pay your co-agent (and then have to remit a tax form to them, too, at the end of the year).

You would also be responsible for sharing statements with your agent(s). Why? We need to check them! Think mistakes never happen? Think again!! It is part of my job to monitor any statements that come in, to be sure everything is calculated and reported correctly.

. . . .

You can absolutely discuss the split payment option with your agent upfront. However, keep in mind that not all publishers will agree to this (particularly in the case of subsidiary rights), which is why an agent may not agree to contractually be obligated to secure split payments for you.

. . . .

But, as I said, this isn’t something every agent will agree to, even if discussed upfront. And that doesn’t have to mean the agent is a schmagent, or that you’re getting screwed. The agency clause is VERY common. At the end of the day, if you have doubts about whether or not you can trust your agent to handle funds or statements – why are you signing with this person?! I think the true warning, and really, what Sara was after too, should go against schmagents, rather than the agency clause. You sure as heck should have done your research to make sure the agent offering rep is legit.

The agent-author relationship should be one of trust. If you’re worried your agent is going to, or currently is, screwing you over…you’ve got issues that need to be addressed immediately, either in conversation with your agent, or by parting ways/not signing with that agent.

Link to the rest at Adventures in Agentland and thanks to Sandra for the tip.

The original post is incoherent in spots, so allow PG to clarify a few points:

1. The agreement between author and agent as well as an agency clause in a publishing agreement should always provide for split payments with 85% going directly from the publisher to the author and 15% paid to the agent. Each payment should be accompanied by a royalty report delivered to both the author and the agent.

There are no benefits and many potential downsides for an author to have the entire royalty check sent to the agent. At a minimum, there will be an unnecessary delay of a few days or a few weeks between the time the royalties are paid to the agent and the time the author receives his/her share of the royalties.

And if an agent runs into financial troubles or develops a drug habit . . . . Stories of agents stealing from authors are legion. PG believes most agents are honest, but everyone is better off to avoid the possibility of temptation. An old Mark Twain (PG thinks) saying applies here, “Many a man has been saved from sin by the lack of opportunity.” Mark Twain spoke before gender language equity, but the saying would also apply to many a woman.

2. PG usually doesn’t play  the lawyer card, but the advice to check out your agent and go on trust (instead of a proper contract) is typical of the way non-lawyers think about business relationships. And very few agents are lawyers.

How long does the contract last? While PG strongly objects to their length, a typical publishing contract lasts for the life of the author plus 70 years in the US and for a similarly long time in most other industrialized nations.

Under a standard agency contract, how long will the agent be collecting royalties when an author signs a typical publishing contract? You guessed it, the life of the author plus 70 years.

Agents die. Agents go out of business. Agents sell their businesses to other agents. Agents merge their businesses with other agencies. The probability that the agent who sells a book to a typical publisher will still be around when the publishing contract finally ends is very close to zero. The probability that, at some time during the life of the publishing contract, a total stranger will take over administration of the contract in place of the original agent is close to 100%.

Your original agent could be the Mother Teresa of the agent world, someone who would never, ever do anything to harm an author under any circumstances. But, when Mother Agent goes to her heavenly reward, she could be succeeded by Mother Devil. You don’t want Mother Devil’s hands on your money.

3. PG could mumble on about other problems with the original post, but he won’t. Like many other fields of human endeavor, some agents are wonderful and capable, other agents are terrible and incompetent and most are somewhere in the middle.

Some of the problems with agents are a result of the fact that anybody can call themselves a literary agent regardless of qualifications or the lack thereof. Cathy Convict could walk out of a twenty-year stretch in Folsom Prison on Monday afternoon and set herself up as Cathy Agent on Tuesday morning.

For all their shortcomings, lawyers must hold a valid license to practice law. For all their shortcomings, bar associations can and do cause lawyers’ licenses to be yanked if the lawyers don’t follow the rules. Clients can file complaints with bar associations without hiring a lawyer to assist them. For all its shortcomings, the threat of losing a license helps keep lawyers in line.

If a lawyer does what virtually all agents do – receives all the royalties payable under a publishing contract, then pays the author 85% of the proceeds – the lawyer would be required to maintain a trust account separate from any other bank accounts for the purpose of holding client funds. The lawyer would have to deposit the publisher’s check into the trust account and pay the author directly from that account. The trust account is subject to audit by the bar association to make sure client money is handled properly.

Trust account mismanagement is one of the quickest ways to lose a law license. A complaint from a client to a bar association about trust account problems may be the best way to fast-track a bar association investigation of that lawyer. A lot of lawyers (including PG) strive to avoid receiving client funds in order to stay clear of potential trust account issues.

None of these safeguards apply to a literary agent. There is no agent’s license to yank. The agent may have a trust account, but nothing requires the agent to put all client funds in the trust account. If a client has a complaint about improper behavior by an agent, there is no agents’ bar association where the client can lodge a complaint. An author has no way to resolve a large problem with an agent short of hiring an attorney and, if that doesn’t work, filing suit against the agent.

Disruptive Innovation Theory Revisited

26 August 2014

From Off White Papers:

Perhaps it was on the limb-strewn battlefields during the Franco-Prussian war in the 1870s that one disruptive innovation gained great favor with a whole generation of adherents. Young doctors on the frontlines readily embraced Dr. Joseph Lister’s new and rather simple technique for combat triage using anti-septic surgery for life-saving amputations and skin piercing compound bone fractures. Previously almost any large incision resulted in death from infection caused by unsanitary conditions.

Lister’s carbolic acid concoction was easy to use and quite effective at getting the job done even in the field of battle. It prevented infection from what turned out to be airborne microbes. Unfortunately the U.S. medical establishment did not embrace Lister’s radical idea of germ theory even when presented with incontrovertible evidence. They defended the long-standing medical wisdom that bad air or miasma were the source of infection, and not invisible microbes. Germ theory was outright rejected. While there was ample documentation and statistics provided by Lister to the AMA and the establishment, it would take a public outcry after the assassination attempt and the unfortunate, and probably avoidable, death of U. S. President James Garfield to create a serious enough crisis to challenge the entrenched thinking of the old guard. A paradigm shift was at hand.

The medical establishment’s resistance to Lister’s technique is an instructive narrative in trying to better understand innovations that, on the face of things, should catch on and spread rapidly. Yet in certain domains, where entrenched worldviews, attitudes and values are deeply woven into the societal architecture, innovation can come to a grinding halt. This is particularly noticeable in those domains with multiple stakeholders whose identities and livelihoods are being challenged by the threat of innovation. In those situations where simply getting well-defined jobs done a product or service’s utility is the main driver. But in those domains where stakeholders’ identities are being challenged the identity function can often overwhelm the more straightforward utility of the innovation. In turn, the predictive power of disruptive innovation theory is diminished.

. . . .

Inherent in every product or service is both a utility function and an identity function. Understanding each of these functions and the interaction between the two might shed light on some of the anomalies observed in the original theory. It appears that in utility-centric products and services such as mini-mills, semi-conductors, disk drives, MP3 files, Wikipedia, Amazon and the like, the original theory does keep its predictive potency. Consumers and non-consumers with no vested interest in anything other than “getting the job done” will change behaviors quickly and readily with little anxiety. They are simply focused on the product or service’s utility—and the incumbent will be disrupted. All you need to think about is how quickly we “consumers” (or the new “non-consumers” as the case may be) migrated from vinyl to cartridge to cassette to CDs to MP3s on our iPods; from Encyclopedia Britannica to Wikipedia; from Borders to Amazon.

In utility-centric innovations water runs downhill; there seems to be very little consumer resistance to successful adoption and diffusion. Resistance to change, however, does often come from within from industry incumbents whose jobs are dependent on maintaining the existing business model and power dynamics. As Upton Sinclair said “never expect someone to understand change when their livelihood depends on not understanding it.”

. . . .

ITunes successfully introduced modularity to the consumer who could now buy singles rather than an entire album to the dismay of most record industry executives and to the occasional artist protestation. The interdependence created by having to buy 16 songs when you only really wanted four might have been highly profitable for the record companies but over-served the consumer at a cost substantially higher than purchasing the four singles. No wonder, as the original theory neatly predicted, disruption in the music industry was fast and ugly.

In high-identity domains, however, products and services are almost always highly interdependent and successful modular architecture is elusive. Even when the consumer is over-served and the price too expensive, and modular solutions are “good enough” resistance is still encountered.

Link to the rest at Off White Papers

“in certain domains, where entrenched worldviews, attitudes and values are deeply woven into the societal architecture, innovation can come to a grinding halt. ”

Sounds like traditional publishing.

For PG, understanding the difference in disruptive innovation for products that present a utility function vs. those that present an identity function was useful.

He would suggest that for most readers, books serve a utility function. Whoever can provide the reader with a book that pleases the reader most efficiently will get the reader’s business.

On the other hand, for publishers and agents and booksellers and many traditionally-published authors, books are definitely the basis of identity and serve an identity function. “Literary culture” is a pure identity construct.

Clearly, the value of the identity as an author whose books are the product of a well-known publisher outweighs the increased monetary value that self-publishing presents to a significant number of traditionally-published authors. Hence, some tradpubbed authors feel impelled to vociferously trash indie authors to protect the value of their identity. Indie authors are breaking the rules that underlie that identity.

The identity function is also prominent in the rapturous descriptions of the joys of purchasing physical books in an physical bookstore. For a reader who finds a basis for identity in being a “book person,” as well as for booksellers and producers of physical books, the physical-bookstores-for-physical-books meme, complete with deep conversations concerning the merits of one book over another, Amazon is anathema. Clicking “Add to Cart”  just doesn’t bring on the rapture for these people.

However, pursuing the book-person identity as a reader requires access to a bookstore and a decision to devote time to the browsing/discussion/purchasing pursuits instead of competing pursuits like making a living, family life, GOT or actually reading books.

PG suggests that the Amazon vs. the rest of the world battle will be fought and won with readers and that, for the vast majority of readers, books serve a utility function. For utility-focused readers, the combination of ebooks and Amazon’s convenience and pricing are the clear winner, disrupting and replacing the traditional world of books.

The book identity group is simply unable to impose its will on the online Amazon market at least in the United States. We do see organized attempts by book identity people to hamstring Amazon with pricing, taxation and other impediments in some non-US jurisdictions, but PG believes any success in these attempts would be a Pyrrhic victory because interfering with the tremendous reader benefits of ecommerce coupled with ebooks with lower prices would result in fewer readers buying fewer books.

No one has compared Jeff Bezos to Joseph Lister, but PG suggests Amazon’s efforts to make books cheap and easy to purchase is, in its own way, just as life-saving for literature and reading in the 21st century as carbolic acid was for the wounded combatants in the Franco-Prussian War.

And ebooks smell a lot better than carbolic acid does.

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