The Business of Writing

Blip or New Reality?

12 July 2018

From Kristine Kathryn Rusch:

A lot of times on this blog, I deal with the problems in publishing. Bad problems, like agents embezzling, traditional publishers not paying royalties, income going down, or sales not up to expectations.

In the early days of indie publishing, I would also blog about the problems of success. In our workshops and classes, we call them problems you trade up for.

Just because a person is successful—in any business—doesn’t mean that the problems in their life have gone away. In fact, success brings its own share of problems.

And like all of you, whenever I look at the next rung on the success ladder, I don’t want to hear about the potential problems. I say, Bring ’em on! And I mean it.

But when those problems arrive hand in glove with success, you need to deal with the problems properly to make the success last.

In the past year, a number of writers have had the marvelous difficulty of “sudden” success. And they’ve contacted me about how to handle it.

As many of you know, I’ve been dealing with a lot of change in my life, and it wasn’t until things have settled down these past few weeks that I realized just how many times people have asked about a certain problem in indie publishing that doesn’t appear (in the same obvious way) in traditional publishing.

I got another such inquiry this week, put quite succinctly and clearly, and I realized that the problem the writer was dealing with wasn’t unique to that writer. It happens to a lot of indie writers, and they’ve been talking to me, and I just hadn’t put it together because my focus has been elsewhere.

A little background: the writers who’ve been contacting me listened to me and the other writers who’ve been around a while. These newer writers wrote and wrote and wrote. They wrote in series as well as standalones. They set up their websites and their newsletters, but didn’t do a lot of promotion until they’d had at least ten books published.

Then, something hit. For one person it was a Book Bub that goosed the sales in the entire series. Another writer experienced exponential growth from month to month to month, as more and more readers discovered the series. A third writer saw a huge bump in sales every time a new product (be it short story or novel) in one series got published.

There are a bunch of other variations on this, but you get the idea. These writers have a lot of product, and they’ve been watching sales increase. Then, something—and it varies—hits, and the writers see their sales increase massively.

In one writer’s case, the book sales went from pay-the-electric bill money to three-times-the-paycheck money. In another writer’s case, the book sales went from 10 per day to 100 in every book in the series.

In every single case, the change caused a life-changing increase in income—or it would, if the sales continued.

So after a month or two of these increased sales, the writers contacted me and asked:

Is this a blip or will the sales fall off a cliff?

. . . .

Well, essentially, all huge book sales are a blip. Stephen King’s books don’t sell on release what they did in the 1980s; J.K. Rowling’s non-Harry Potter book sales are lower on release than her Potter books which are, by the way, selling steadily, but not at the stratospheric numbers they sold at in the early part of this century.

That stupid old adage what comes up will come down applies here.

But if you think about sales bundled together as a ball tossed into the air, then extend the metaphor. Sometimes that ball catches the wind and goes at the high level for a long long time, only to land somewhere unexpected.

Sometimes the ball lands on a roof, and it takes forever for the ball to fall down (if it ever does).

Sometimes the ball goes straight up, and comes down into the thrower’s hands.

And on and on and on.

. . . .

  1. Realize that it will take months to know what kind of pattern your sales have hit.

Blip? Maybe. Your sales might plateau. Or grow. Or the increase might only last a few weeks. Or it might last a few months. There is no way to know in the moment.

  1. Plan as if this increase is a blip.

Bank the money. Spend only what you would have spent if this increase had not happened. Keep the money separate if you possibly can, so you know how much you’ve earned that’s additional.

I would bank the money for three months before spending any of it. That way, you’ll know a few more things than you knew when the blip started. You’ll know if the sales are increasing or decreasing or staying the same.

If the sales continue to increase, cautiously figure out what you want to do with the added money. Three months is not enough time to decide if you should quit your day job (unless the money is 3 times your annual salary), but it is enough time to cautiously invest the money in some things for your business—a new computer, say, or something that will make the day-to-day easier.

Or just keep banking the money, saving up for whatever is next on your writing bucket list (like quitting the day job).

If the sales have plateaued, then keep banking the money. You don’t know if this is the new normal yet or a long blip. Give it another three months.

And if the sales fell off that cliff, then you can be happy that you did not make any major life changes in response—and you now have some extra cash in the bank. Yay, you!

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

In ancient days when PG handled some consumer bankruptcies, more than one financial collapse happened in the aftermath of a client receiving a significant amount of unexpected money. It’s far more difficult to scale back financially after you’ve increased your spending than it would have been to continue to spend at the level that was sustaining you before.

The Mercedes people still want their monthly lease payment even if you’re back to Fiat income.

Author Income Surveys Are Misleading and Flawed—And Focus on the Wrong Message for Writers

7 July 2018

From Jane Friedman:

Reliably, every year or so, you’ll see headlines about new research that claims author incomes are on the decline. The most recent is from the Authors’ Licensing and Collecting Society (ALCS), a British nonprofit run by writers for writers.

. . . .

Before I continue with this epic-length post, here’s the short version: I don’t trust these surveys’ results and I question their usefulness in improving the fortunes of writers. Too often it feels like promotion of a self-interested narrative from writers’ organizations, with the outcome boring and predictable: There is media coverage that claims writers’ incomes are plummeting, a few big-name authors come out and try to shame publishers or even society for not valuing writers properly, debate ensues, then everyone gets back to work—until a new study emerges.

This latest gnashing of teeth has motivated me to finally write a comprehensive post about why these reports are so frustrating, in the hopes more people will ask critical questions and notice their flaws. In the long run, I hope organizations will either reassess how these studies get done, or focus on more useful support of professional authors. However, a brief side note for industry insiders: For the purposes of this article, I’m setting aside the fact this research may be done mainly to support arguments and legislation for strengthening and protecting of authors’ copyright and thus (presumably) their earnings potential. Frankly, I don’t think weak copyright law is the problem, and I believe such efforts have little effect on the average author. My thinking on copyright aligns with what you might hear from Cory Doctorow—but that’s a post for another day.

When considering author-income research, my concerns fall into these areas.

  1. How reliable is the research?
  2. What other data points do we have?
  3. If the data is directionally correct, then why are incomes declining?
  4. Does the research tell us something meaningful or useful about how writers earn a living?

Link to the rest at Jane Friedman

Back in the dawn of the modern era, PG graduated from college. His favorite professor told him he needed to find a real job and sent him to the university placement center. Lo and behold, a couple of weeks later, he had a real job. For more than minimum wage.

That job was as an economic and marketing research analyst for a large financial services company. Suffice to say, PG had a lot to learn as his formal education lacked any mention of economic and marketing research.

One of the things PG learned is that most surveys of this or that group are garbage. The reasons are simple. If you wish to learn something real about a large group of people, you have two choices:

  1. Query every single person in the group in a way that will result in an accurate answer.
  2. Carefully select a truly random sample that accurately represents the group and query them in a way that will result in an accurate answer.

Both approaches are expensive and require a lot of work – by people who know how to create questions that will result in accurate answers. Real random samples assume you understand the constituent qualities of the entire group very well and are able to obtain answers from respondents that include appropriate numbers of those with each of the constituent qualities. (If your group contains 50% women and 50% men, you may be in trouble if 80% of responses are from women. Ditto if your group contains 50% native English speakers and 50% non-native English speakers or if your group contains 50% who earn less than $10,000 per year and 50% who earn more than $10,000 per year.)

The surveying process can go wrong in many different ways. These ways include:

  1. Obtaining answers from people who aren’t part of the target group.
  2. Failing to obtain significant numbers of answers from people who are part of the group.
  3. Obtaining answers to ambiguous questions.
  4. Asking questions that are likely to generate answers that are guesses.
  5. Using the cheapest method of obtaining some sort of responses instead of the best method of obtaining accurate answers.

Quite often, it is useful to conduct some preparatory research (usually by talking to people) to understand how they view the subject of the research and to help map the types of responses people in the target demographic are likely to give when asked about the subject generally or specific sub-parts of the subject. If you create a multiple-choice question that doesn’t include all the meaningful alternative answers for the target audience, that’s one way the survey can fail and result in inaccurate results.

Here are a couple of example of bad multiple choice questions:

You indicated that you eat at Burger King less than once every month. Why don’t you eat at Burger King more often? (choose one answer):

  •  There are no Burger King restaurants near my house
  •  I became sick after eating at a Burger King
  •  I’ve never eaten at Burger King

What is your overall opinion of the Authors’ Licensing and Collecting Society?

  •  Pretty good
  •  Great
  •  Fantastic
  •  Incredible
  •  The Best Ever

The OP discusses other problems with 99.999% of surveys of author income. In short, poor surveys of author income are probably less useful than collecting anecdotal evidence of author income (in part because people are likely to be suspicious of anectodal evidence).

Licensing Opportunities

21 June 2018

From Kristine Kathryn Rusch:

I think the moment writers dream of being published, they have the same wish. They want to write the books of their heart. They want those books to reach a vast audience, and they want someone else to worry about doing all the things that turn a book from a rectangular object on a shelf into a vast global empire a la Harry Potter.

Most writers expect their agents to help with that. Some think the publishers will do it all. Even more writers believe that once they make a movie or TV deal, the magic will happen. Their heroine will become an action figure. Their hero’s face will decorate a throw rug. Even the feline sidekick will find images of herself for sale in the plush toys section of every toy store and bookstore on the planet.

Not to mention the new stuff—the apps, the games playable on every device, the YouTube channel, the Instagram feed, the Spotify playlist. The old-fashioned stuff too. Socks and t-shirts and posters. Tchotchkes that come directly from the book, like Bertie Bott’s Every Flavour Beans from Harry Potter. The first time I saw a packet of those, I laughed out loud with pleasure.

But it’s not that easy to have products made from your book. Most books don’t easily lend themselves to toy or product licensing. Most books aren’t popular enough, truth be told. And many don’t have the imagery or built-in products like Harry Potter did. (Rowling was simply showing how kids could get into a craze, so she invented a bunch of crazes, which then became actual crazes. Nifty cool, in my opinion.)

Most publishers barely have time to put out their monthly schedule of books. And most publishing houses don’t pay attention to subsidiary rights aside from translation rights and film/TV rights. Thinking about other types of marketing, licensing, and sales is simply impossible for them. They don’t have the staff, and they certainly can’t do it for each book they publish.

In fact, most publishers only respond to requests. So if some game company comes to them and asks to license the board game rights to The Handy Dandy Money-Making Novel, the publisher will figure out if they have those rights to license (chances are they do, these days) and if so, then they usually say yes, without any negotiation at all.

There is, as my poker-playing husband is wont to say, a lot of money left on the table each and every day.

. . . .

You can license anything to anyone, if you know what you’re doing. And knowing what you’re doing is the key. Most book agents haven’t even been to a [large licensing] show like this, let alone have any idea what they’re doing when they get there.

The larger agencies, with movie and TV arms, have a licensing division, but even then, those agencies usually sell the rights for their clients to one organization—say a movie studio—and don’t worry about licensing the coffee cups on their own.

Money left on the table.

And I know why it happens. It happens for the very reason that writers want to hire someone else to handle everything for them.

Learning a new world—any new world—is a lot of work. And you need to be a bit forward to handle a licensing fair. Most writers aren’t. But that doesn’t mean they shouldn’t attend.

. . . .

But you’re going to need to give this part of your business some thought as well.

Most writers don’t, except to say that their agent handles this stuff. I was in the middle of writing this post, having just come off the rights fair, when the Donadio & Olson news broke, and I took time out to write that first blog post about the extreme problems with agents. I recommended that writers avoid agents at all costs, and got tremendous blowback, including comments like “I can’t hold an auction for foreign rights without an agent” and other myths.

(Ironically, I was Googling that particular tweet because I couldn’t remember how it was phrased, and saw that a German publisher contacted that same author on Twitter because the German publisher “emailed your literary agent and never got a response.” You cannot make this stuff up. Seriously.)

So, I wrote about the problems with agents and financial mismanagement, ignoring the actual rights licensing and other things they fail to do.

I did meet a few agents at the rights fair. Agents who specialize in licensing the rights to “properties” that are “bankable.” None of the agents I spoke to, briefly, handled books that weren’t already big gaming or big movie projects. (Yes, I spoke to the agents. Research, y’know.)

Here’s the thing:

Indie publishing has disrupted traditional publishing, yes. But indie publishers (and writers who consider themselves self-published) have pretty much built their businesses on the old traditional publishing model.

That model is based on innovations made in the early 1960s. Traditional publishers have not moved off that model at all. This is why James Patterson has his own division (which he runs) inside of Hachette, his U.S. publisher.  The article I’ve just linked to here, on that division inside Hachette does not mention licensing outside of the traditional publishing norms of TV/Movie and translation. Patterson has added a few things, like a literacy campaign, but I didn’t see much about other types of licensing.

He’s creative and innovative, but his creative innovations are very 1990s, partly because he’s working inside the traditional publishing industry—which he disrupted (and continues to disrupt) all by himself.

You can see the book industry’s disinterest in this licensing fair just by searching for the word “book” on the website. Chronicle Books and Sourcebooks were there, but not as the companies themselves. Rather, they were represented as part of someone else’s marketing campaign.

I found Penguin Random House’s booth in the armpit of the floor, back in the part with some exhibitors for whom English was not their first language, and some smaller exhibitors like quilters.

Penguin Random House has thousands of properties that could be exploited as brands and for licensing. You’ll note in the photo above that they only focused on three for some inexplicable reason.

The big comic book companies were all present. Marvel and DC were there, of course, and they were hard to miss.

. . . .

Why should you care? Because this is the part of the business that built LucasFilm. George Lucas retained his licensing rights when he made the tiny deal for the distribution of the original Star Wars movie. There’s a lot, lot, lot of money in marketing, branding, and licensing, if it’s done right.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

Morality clauses: are publishers right to police writers?

16 June 2018

From The Guardian:

When the American Libraries Association awards its Andrew Carnegie medals in New Orleans later this month, there will be no winner for excellence in non-fiction. Sherman Alexie, the poet and novelist who was due to receive it for a memoir, You Don’t Have to Say You Love Me, has declined the award following allegations of sexual harassment.

Last month, the novelist Junot Díaz withdrew from the Sydney writers’ festival and from chairing the Pulitzer prize board after being confronted by his own accusers. As the allegations swept through social media, another writer, Mary Karr, joined the fray, tweeting of her distress that her testimony to DT Max, the biographer of her one-time partner David Foster Wallace, about Foster Wallace’s abusive behaviour had been marginalised. “Deeply saddened by the allegations against #JunotDiaz & I support every woman brave enough to speak. The violence #DavidFosterWallace inflicted on me as a single mom was ignored by his biographer & @NewYorker as ‘alleged’ despite my having letters in his hand,” she wrote.

Such high profile cases are far from rare as the #MeToo movement spreads across the creative industries. They come at a time when writers are facing increasingly draconian attempts by publishers to police their behaviour, calling into question centuries old assumptions about the desirability – or even the possibility in today’s networked world – of separating writers’ lives from their work.

. . . .

Morality, or morals, contracts have existed in the film industry since 1921, when Universal Pictures introduced them in response to Fatty Arbuckle’s trial for manslaughter, but they are relatively new in the publishing industry. One such clause, introduced by HarperCollins in the US, stipulated that the publisher could terminate a contract in cases of “conduct [that] evidences a lack of due regard for public conventions and morals”, or in the case of a “crime or any other act that will tend to bring the Author into serious contempt, and such behaviour would materially damage the Work’s reputation or sales”. Caroline Michel, a leading literary agent, said this week that the use of morality clauses had doubled in the US over the past year. In a recent speech, Royal Society of Literature president Marina Warner warned that “being good” should not be conflated with “good writing”. But where is that line drawn?

Clearly, reputation doesn’t matter to a controversialist in the way it does to literary authors such as Alexie or Díaz, who are facing serious damage to their careers. In the weeks since 10 women came forward with accusations against Alexie, the Native American author has been subjected to a cascade of punitive measures. His name has been stripped from a scholarship awarded by the Institute of American Indian Arts, all references to him have been “deleted or modified” in the blog Native Americans in Children’s Literature, bookshops and libraries are destocking his books and his US publisher has said that it will be postponing the paperback of his memoir (though his UK publisher, Penguin Random House, says it will continue to reprint his work as required).

. . . .

The high emotions surrounding the behaviour of writers are starkly exemplified by the case of Foster Wallace. Though Karr feels understandably aggrieved that her experience wasn’t taken more seriously by his biographer, she would be wrong to think it wasn’t noted. In a blog written at the time, Kristen Roupenian – who went on to write the New Yorker short story sensation “Cat Person” – described her dismay at discovering in Max’s book that the literary hero she worshipped as a student would probably have dismissed her as “audience pussy”.

She wasn’t looking for a boycott of his work, she wrote. “All I expect is a quiet, un-showy disqualification for the role of hero, mentor or saint. I would like the ‘statue’ (Wallace’s word) of his public image to be carefully dismantled, for the overblown ideas we have of him and what his life meant to slowly begin to deflate. I would like him to become just another writer, imbued with no moral authority beyond what is contained in his words on the page.”

. . . .

As the pressure has mounted, London-based authors’ agent Lizzy Kremer has taken pre-emptive action – drawing up a new, industry-wide code of conduct on behalf of a coalition of authors, booksellers, agents and publishers. The voluntary code was partly inspired by London’s Royal Court theatre, which constructed one in reaction to its own sexual misconduct scandal involving a former artistic director. Among the theatre’s first responses was a call out for testimony about sexual harassment to help it to identify “patterns and scenarios”. In a detail that chimes strongly with the publishing industry, the report drew attention to the dangers of a “blurred social context”: “13.3% of reported incidents happened at work parties … with alcohol.”

“Publishers feel an obligation to use their personal social media accounts to publicise books and to go out for drinks,” says Kremer. “People forget that these are not friendships, they are friendly business relationships. You have to understand what’s off limits.”

In a personal blog, she recalled meeting up with a younger woman who told her of several “small yet frightening liberties” that men in publishing had taken at parties and in offices over the years. “One of the things that interested me about the [Royal Court] report was its emphasis on the vulnerability of the creative person,” says Kremer. “Obviously it’s not the same in publishing – you don’t have to get changed in communal dressing-rooms – but it’s another industry with a culture of asking employees to give something personal of themselves.”

Link to the rest at The Guardian

An iconic literary agency is fleeced by its accountant

13 June 2018

From Melville House:

Usually, when sums of cash north of one million dollars are invoked on this blog, it is because a celebrity has just received a mega-advance to write a book, or because Amazon has avoided paying that much in taxes.

Today is different, though. We’ve got a real caper on our hands.

The New York-based literary agency Donadio & Olson represents some huge talent — such as Chuck Palahniuk.  Last fall, one of the agency’s clients was expecting a $200,000 advance payment that never arrived. The author tried to contact agency accountant Darin Webb, but still didn’t receive the check for months.

That’s because Webb had processed that payment, and many others like it, as a payment to himself. Crazier still, he’d been running this skim-scam since 2011.

. . . .

The agency now has a forensic accountant investigating nearly twenty years of financial records to determine the full extent of the theft, and to begin re-paying the authors unfortunately caught up in the con.

A lawyer for D&O has stated, “The agency’s singular focus at this time is ensuring that all of its impacted clients are made whole to the greatest extent possible, and the agency is cooperating in every possible way with the government’s efforts.”

Link to the rest at Melville House

PG realizes there is not much new information in the OP that hasn’t been included on prior posts on TPV.

However, he wants to provide as much information as possible about this matter because it should be thoroughly understood by authors.

The quote from the attorney for Donadio & Olson, “The agency’s singular focus at this time is ensuring that all of its impacted clients are made whole to the greatest extent possible,” is structured in a telling way.

“The agency’s singular focus”, “ensuring that all of its impacted clients”, “are made whole”, all sounds very reassuring for authors who have lost money for years.

Unfortunately, these statements are limited by, “the greatest extent possible”.

PG suspects the agency cupboard is bare or almost bare. One of the many questions that immediately come to mind is whether the agency principals received any of the embezzled funds. Were they victims or co-conspirators?

Either answer to that question should ruin the reputation of the agency principals. If they were victims, even preliminary evidence points to a conclusion that these people do not know how to properly operate a literary agency and carry the responsibility for safeguarding money that belongs to other people.

Did none of the agency’s clients contact the principals about low royalty payments over the many years of embezzlement? After presumably multiple queries by multiple authors did the agency principals ever question their accountant? Or have an outside accounting firm come in to look over the books?

If they are co-conspirators, then criminal punishment would seem very likely.

The press release announcing embezzlement charges against Donadio & Olson’s accountant from the US Attorney for the Southern District of New York does not mention the name of the agency, referring only to “a Manhattan-based literary agency”, “the Agency”, or “a firm in the book business”. PG doesn’t know whether this is part of a strategy by the US Attorney or the result of the persuasive abilities of Donadio & Olson’s lawyers.

While PG has visited New York on many occasions, mostly for business purposes, he is definitely not an expert on the city or state. However, his impression is that the New York state legislature is quite active in passing laws on a wide variety of subjects.

Presumably, it is of some financial and social benefit for the city and state of New York to be the headquarters of the traditional publishing industry in the United States.

While he is certain members of New York’s political class do not pay any attention to him, PG proposes some legislation to maintain the reputation and status of the publishing biz. The principal elements of the proposed legislation follow.

  1. No one may act as a literary agent in the State of New York without being properly licensed as such by the State of New York.
    1. The State may establish minimum qualifications for persons seeking to be licensed as literary agents, including the requirement that a prospective agent take and pass an examination covering an agent’s duties and obligations under New York law.
    2. A person located outside of the State of New York will be deemed to be acting as a literary agent within the State and be subject to the State’s regulations respecting literary agents if such person is representing authors in the negotiation of publishing or licensing agreements with any company whose primary business is located within the State and has successfully concluded more than one such negotiation on behalf of an author during a given calendar year.
  2. A literary agent is obligated in his/her fiduciary capacity to safeguard the funds of each client represented.
    1. Failure to do so may result in revocation of the agent’s license and/or additional penalties.
    2. An agent may be held personally liable for damages resulting from a breach of the agent’s fiduciary obligations to an author.
    3. Each agent working in a literary agency has an obligation to promptly report any improprieties of which he/she becomes aware involving the safeguarding of client funds to appropriate state authorities.
  3. Each literary agent must maintain a separate trust account with a New York bank or similar financial institution for the purpose of depositing and disbursing all client funds.
    1. All client funds must be deposited into the trust account as soon as possible after their receipt.
    2. All payments from the trust account must be paid to the agency’s clients within 15 days of receipt by the agency.
    3. On at least an annual basis, an agent will provide each client with a full and complete written accounting of trust account activity involving the client’s funds.
    4. Commingling client funds with agency funds is prohibited.
    5. On at least an annual basis, each agent will retain an independent outside accountant to conduct an audit of the agency’s trust accounts and provide a written report of his/her/its findings. Any client may request and shall promptly receive a copy of the accountant’s report for any year during which the agent was representing the client.
    6. The State of New York may audit an agency’s trust account for purposes of ensuring compliance with the law at any time.
    7. The agency’s trust account obligations shall not apply to any funds paid directly to its clients by publishers or other third parties with which the client/author has a written contract.
  4. The Attorney General of the State of New York is authorized to receive compaints from any person respecting a violation or potential violation of these laws by an agent or literary agency. Within 90 days of receipt of such a complaint, the Attorney General shall make the contents of the complaint available online to the public.

PG welcomes any additions, changes, etc., to his proposed Literary Agent Licensure Code.

He notes that, as a general proposition, he does not support widespread occupational licensure requirements (hair braiding, etc.), but, given his experience with authors and agents generally and the latest from Donadio & Olson, he thinks the time for licensing agents or imposing some type of effective regulation on their actions and practices has arrived.

An Agent Nightmare Revealed

6 June 2018

Some thoughts from Kris Rusch on the literary agency bookkeeper who is charged with embezzling $3.4 million from the authors represented by the agency. PG first mentioned it here.

From Kristine Kathryn Rusch:

The news broke publicly over the holiday weekend. If you blinked, you missed it.

The bookkeeper for a prestigious New York literary agency pled guilty to embezzling millions from the agency, leaving the agency “on the brink of bankruptcy.”

Donadio & Olson has existed for 49 years. Started by legendary agent Candida Donadio, the agency has represented some of the biggest names in fiction for decades.

. . . .

The actual criminal charges against the bookkeeper, Darin Webb, were filed on May 15 in federal court. Webb was charged with wire fraud for embezzling $3.4 million. A forensic audit is now occurring at Donadio & Olson, and there is speculation that the amount of money Webb stole will go much, much, much higher.

Here are the facts of the case as reported in the press. $200,000 that an unnamed writer represented by Donadio & Olson expected last year never arrived. The writer kept contacting Webb, who lied about what was going on with the money. Finally, fed up with the delay, the writer contacted someone else at Donadio & Olson. (That person isn’t named either.)

. . . .

The panic is clear in the calm language of Donadio & Olson’s attorney on the civil case. He said, the agency is focused on “ensuring that all of its impacted clients are made whole to the greatest extent possible.”

To the greatest extent possible.

. . . .

Even if the agency is insured against this kind of disaster, it would take years for the insurance to pay out, because the court cases have to go through first. And really, there are other questions here that an insurance company would want answered.

How much of this problem inside Donadio & Olson was caused by negligence on the part of the agency? Webb apparently worked alone, with no back-up. He handled the finances for the agency, received the money and the paperwork from publishers/movie studios/game companies, and then (in theory) passed that money onto the clients, retaining Donadio & Olson’s 15% commission. Did Donadio & Olson require this bookkeeper, who was hired at the tender age of 28, to be bonded? What level of degree did he have? Was this his first job?

How come no one backed him up? Did Donadio & Olson hire a CPA to review their books every year? Did Webb fudge those books before they went to the CPA?

How much of this could have been prevented with average due diligence, the kind of stuff you expect someone who has a fiduciary responsibility to clients to have?

All of those questions and more need to be answered before any insurance settlement would be considered, let alone paid.

To the greatest extent possible.

In other words, my friends, Donadio & Olson does not have the financial resources to make up for a theft of $3.4 million, let alone any more potential losses that the forensic accountant might turn up.

. . . .

[I]magine what’s going on with estates like [the estate of the author of The Godfather, Mario] Puzo’s, which includes all of the monies still coming in from the movies, from licensing, from the books (which are still in print). These are multimillion dollar ventures, handled every year by Donadio & Olson, with no one overseeing the day to day running of the finances.

Oh, my. The money was simply there for the taking.

The thing is, Donadio & Olson is a “reputable” agency. The New York Post used the word “prestigious” in describing the agency. Donadio & Olson was, until last week, a gold-standard agency, one that most young writers might have aspired to have as representatives.

. . . .

According to The Post, Webb confessed to “company executives and their attorneys” in March. A videotaped confession, mind you. Donadio & Olson was still blogging about writing and such on its site in April, acting as if nothing was wrong.

And then…and then…

Well, here’s The Post:

Some writers represented by the agency told The Post they had not been contacted about the theft, and did not know if it affected their royalties.

“This is the first I heard of it,” said McKay Jenkins, a nonfiction author.

Bert Fields, a lawyer representing the Puzo estate, said he learned of the arrest from The Post.

In other words, Donadio & Olson has not informed its clients—to whom it has a fiduciary responsibility—that their one and only bookkeeper confessed to massive embezzlement. The agency has known about this since last fall.

Sadly, I am not surprised by any of this. As I have blogged about before, literary agencies are not regulated. Prestigious agencies embezzle. I’ve personally had one of the biggest boutique agencies in the world embezzle from me. (And I suspect they still are, although I can’t prove it. But there are licensed properties—tie-ins—that I wrote whose royalty statements I cannot get my hands on because no one at the licensor will cooperate with me. The books have been in print for 25-30 years and I have never seen a dime in royalties. Ever.) I’ve also had one of the biggest fraudsters in the industry steal from me. I speak from hard-earned life lessons here.

. . . .

I understand how someone could notice the missing $200,000 payment that they knew was coming. But what about the subsidiary rights sales that no one bothered to tell them about? The royalties on already sold foreign books? The licensing payments from movie-related merchandise? The reprint fees?

I keep imagining those Donadio & Olson writers who have big book deals still working a day job because “there’s no money in writing.” There’s no money in writing when your agent is stealing it from you, that’s for damn sure. In fact, if you want to read a very sad illustration of what happens when an agent embezzles from a big name writer who only has a few properties (not hundreds like, say, Nora Roberts), read this about Chuck Palahniuk from The Guardian.

. . . .

If writers have literary agents—and no writer should—but if a writer for some reason feels they need an agent, then that writer needs to make sure the publisher/game company/film company splits payments. The company pays the writer her 85% and the agent his 15% directly. No money ever ever ever goes through the agent’s hand, except the money he earned.

Better yet to pay 100% to the author, and have the author pay the agent the 15%, just like you’d pay the housekeeper. But agents complain about that. Seems agents think the writers won’t pay them in a timely fashion.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books

PG has done a little online research.

  • Here is the website of Donadio & Olson. PG couldn’t see any indication of the tiniest cloud on the horizon when he checked the site.
  • Here’s a Tweet on the first page of the agency’s website:

 @DonadioandOlson 

Who’s excited to pick up a copy of @chuckpalahniuk new book?! It’s already made it to number seven on the @nytimes bestseller’s list! pic.twitter.com/Q1eEtQNDOP
#7 on the NYT bestseller list and Palahniuk is not receiving any royalties.

The Guardian article which Kris mentions in the OP quotes Chuck Palahniuk saying he’s “close to broke” because his  royalties have evaporated.

The agency website lists two agents:

Neil Olson has been with the agency since 1987 and became a partner in 1996.  He represents most of the agency’s estates, as well as mainstream literary and commercial fiction, and nonfiction in the areas of history, biography, science, travel, and nature.  His clients have won the National Book Award, the Edgar Allen Poe Award, and the William Dean Howells Medal, among other prizes.  Neil can be reached at neil@donadio.com.

Edward Hibbert began working at the agency in 1989.  His clients include bestseller Chuck Palahniuk, Christopher Bram, and the biographers Ed Sikov and Brian Kellow.  Additionally, he sold the film rights on such titles as the cult classic Fight Club, Choke, Oscar Wilde(based on the Richard Ellmann biography) and Gods and Monsters, winner of the Academy Award for Best Adapted Screenplay.  He represents literary and commercial fiction, and non-fiction in the area of biography and the performing arts. Edward can be reached at edward@donadio.com.

This has apparently not been a large agency, at least in the  last few years. PG checked the agency website via the Wayback Machine on some random dates from about 2012 on forward and the largest number of  agents listed were four. Most of  the time, there were three agents – the two listed above plus Carrie Howland.

PG mentions the small number  of agents because he would suspect that the scale of embezzlement listed in the OP would be less likely to be noticed in a larger agency with a couple dozen agents and several hundred authors.

If there were two agents and Chuck Palahniuk phoned one of them to ask about his royalties, PG would think that agent might ask to  see some recent royalty reports from the client’s publishers.

At least one and likely both agents would seem likely to have a reasonable idea about how  much income the agency was  generating and, almost certainly, how much money the agent took home each year. But perhaps there were more important concerns than whether the  agency was paying its authors in full and on time.

Cultural Change And The Traditional Writer

3 May 2018

From Kristine Kathryn Rusch:

It’s been a heck of a year. Or two years. Or three. So much has been happening—not just in my life, but in the world—that it’s almost impossible to keep up. And here, in the United States, the news cycle moves so fast that a short story I wrote and sold as science fiction almost a decade ago about updating news features every thirty minutes or so seems remarkably quaint. Every thirty minutes? Some days, the breaking news stories pile on top of each other in the space of minutes.

We cannot keep up, and a lot gets lost in the noise. The rapidity of change is part of that noise. We’re getting used to this frenetic pace, and forgetting how things were as recently as five years ago.

Yet, because we’re human beings and because we have lives, we sometimes miss the memo. Or the piece of news that puts everything together. Or we forget the initial assumption that makes the change visible.

And…we don’t always change either. Not right away. We get stuck in something we were told by professors or by our best friend or by our parents. We get stuck in dreams and hopes and desires, and we don’t realize that those things might no longer be possible in the world of 2018.

Or we think that the dream we formed in our twenties is still attainable twenty years later. That dream might not be attainable, and that’s not because we’re older and somewhat different. It’s because the world in which that dream was formed is no longer the world of today.

I’m as susceptible to this as the next person. It took me until I reached my fifties to realize what nostalgia actually is. It’s not a rosy-eyed longing for what used to be; it’s a sad and somewhat hopeless wish for a world we thought we understood. If you actually look beneath the surface of that nostalgia, you’ll find that old world was as complex as this one, and what we thought we understood was only the superficial surface of that world.

That superficial surface is getting scraped off. Sometimes visibly and rapidly scraped. The whole appalling Harvey Weinstein mess scraped a lot of lies off the surface of some actress’s careers in Hollywood.

. . . .

It’s the suits’ job to guess what will make a profit in the entertainment industry. But those profitability decisions shouldn’t be based on skin color or gender or a whisper campaign. Even “positive” things aren’t always positive in the eye of the artist.

I’ll never forget the day my brand-new editor called me to tell me good news about my very first novel. He was relieved, he said, to discover that I was pretty. So many female fantasy writers weren’t, according to him. And because I was pretty, they were going to promote me and my book heavily, so could I send him a stunning photograph to make his job easier?

I didn’t want to. I was heartbroken, to tell the truth. I wanted the money behind my book because the book was good, not because I hit some physical cultural ideal. I actually said that to him (because I’m not the quiet sort.) Oh, I said as politely as I could, I thought you wanted the book because it’s a strong novel.

It is, he replied. The fact that you’re pretty just means we can market it properly.

I didn’t send a cheesecake photo, although I sent an okay photo. I didn’t let a photographer take a cheesecake photo of me for a major photography book on fantasy authors either, even though that had been her orders from her editor. (The exact orders? Kris is pretty, so make sure the photo of her is sexy—even though I was a major editor and award-winning, bestselling writer at the time, jobs that had nothing to do with my looks.)

That was how decisions were made than, and often how they’re still made now. The Deciders, to use a term that I find somewhat laughable, make hideous horrible mistakes based on all of the wrong things—or worse, based on some kind of whisper campaign, something the person who is being whispered about might not even know is going on.

And yet…and yet…

Here’s what I don’t understand.

As more and more of these stories are coming out, not just in the entertainment industry, but in every industry, writers aren’t applying what they’ve learned across to their own careers.

So many writers still want that traditional “validation.” They want someone else to take control of their career. They want someone else to praise their book and make it a bestseller.

They want to put their entire artistic and creative future into a machine that’s designed to chew people up and spit them out—even if those people aren’t on some blacklist.

I see writer after writer after writer who wants to sell their books to traditional publishers or who want to go into Hollywood with a “free” option or who willingly give away the rights to something just for “the opportunity” to play in this shark tank.

. . . .

The film industry hasn’t yet gone through the full-fledged transition that book publishing and comics are going through right now. It’s not easy to make a film without big money backing and get it distributed worldwide. It is possible to write a book and get it distributed worldwide now.

That self-published book just won’t get the attention that a handful of books got thirty and forty years ago. But that 2018 book will stay on the virtual shelves while the older books rarely stayed on any shelf.

There’s a lot of upside to indie. A bit of downside too, which we’ll be discussing in the next few weeks. But the biggest upside to me is that we are not subject to the whims of someone who will only spend money to market a book on a writer because she’s pretty or because she meets the current cultural norm.

(I just got offered a big quick turn-around tie-in novel this past month, for which I would have been paid in the low six-figures. When I said I wasn’t interested and offered to give the person a list of writers who might have the time to write this project, she asked if any of them were female. I said no, none of them were. [I wasn’t looking at gender; I was looking at availability for a rush job.] Well, to be honest, she said, we only picked you because you were the most visible female tie-in author we could find. We don’t want men at all. Again, that flash of disappointment rose in me. I was chosen, not because my work is good, but because I’m female. I understand the corrective urge in the marketplace, but jeez, that comment felt as insulting as having my book marketed because I was considered pretty 25 years ago.)

Writers who choose to take their novels and their nonfiction books into traditional publishing are choosing to give their careers to the “tastemakers” who sometimes make their decisions based on their prejudices, their “understanding” of a marketplace that (in reality) does not exist, and who will do their best to destroy anyone who questions them.

Think I’m exaggerating? I’m not. I’ve been through my share of whisper campaigns too, including one that went on for nearly thirty years—from the moment that guy lost a big prestigious job to me until the day he died.

. . . .

If you’re going traditional, you need to be made of alligator skin. You need a hide so thick that nothing can pierce it, or if something does, you need to have a system to deal with the pain so you can get up and move forward again.

. . . .

Is becoming a traditionally published author so important to you that you’re willing to succeed on any terms? Is becoming a traditionally published author so important to you that you’re willing to put your career (and your copyrights) in the hands of people who still haven’t figured out that diversity means more than publishing a few books about discrimination?

. . . .

Because, as a friend of mine once said, becoming a professional writer is easy (relatively speaking). Remaining one is hard.

Your job is to have a writing career, not to publish a single book. So be careful who you partner with over the years. Make sure that person, that company, the conglomerate is trustworthy.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

PG doesn’t usually excerpt as much from a blog post as he has done with this one.

Kris is talking about some very important issues for authors, so he took the liberty.

PG would like to add a couple of additional thoughts.

As Kris implied, no conglomerate is trustworthy, including publishing conglomerates or conglomerates that own publishers. These are organizations made up of people who come and go. Sometimes they come out of desperation because it’s the only job they can find. At other times, they leave unwillingly because management changed or prior raises had made them too expensive and they were fired. Or the publisher was sold off to another conglomerate which was focused on financials and didn’t understand the book business very well.

The traditional publishing business is a sinking ship. If you’re a smart graduate with a degree from Wharton or Harvard’s Business School, do you go to work for a publisher? How about Barnes & Noble? Of course not. PG would bet serious money that a recruiter from a major publisher has not been seen at any hiring event at a top-tier university professional school in years.

Are there any talented people left at large traditional publishers? Yes, but they’re getting old and their salaries are expensive. They’re wishing they had taken that alternate path several years ago, but it’s too late now.

Somebody higher up in the corporate structure who needs to cut costs because profits are trending down will send instructions to bring personnel expenses in line with reduced sales forecasts. The big book deals that experienced staff pulled off in the 1980’s and 1990’s don’t count anymore. Ready or not, it’s time for them to leave publishing.

After those firings, anybody with a brain who is still working at that publisher will start sending out résumés and burning up the job boards. When they leave, someone less-qualified will replace them.

U.S. subsidiaries of European publishing conglomerates have the additional problem of explaining to Günter that, unlike German book buyers, U.S. consumers think ebooks are great and there are no restrictions to prevent online bookstores from selling books below their suggested retail prices. And, although Günter thinks it’s an obvious solution, unfortunately, it’s illegal for all the US publishers to meet for a drink and agree on mandatory minimum retail prices. A year later, the same explanation will be required for Katarina, who replaced Günter when he got a big promotion.

If it’s a terrible time to be an employee at a traditional publisher, PG suggests it’s also a terrible time to sign a publishing contract with a traditional publisher, a contract that will last for years and years and years and years with no way out. Günter says all contracts will be enforced according to their terms.

 

Revenue Canada demotes Halifax sculptor to ‘hobby artist’ and gives him $14K tax bill

1 May 2018

From the CBC:

An established Halifax sculptor says he was shocked and insulted by a Canada Revenue Agency ruling demoting him to the status of “hobby artist” and giving him a $14,500 tax bill.

Installation artist Steve Higgins, also a part-time instructor at the Nova Scotia College of Art and Design, was notified his expense claims from a 2013 art project were rejected because the work was funded by public grants and not sold for profit.

. . . .

“When I received the declaration that I was a hobbyist, I was at first disgusted by that and insulted by it. It just seemed like a slap in the face after how many decades of exhibiting that I’ve been involved with,” Higgins said.

“To have to pay the government $14,500 on my limited income is indeed a terrible hardship.”

. . . .

The artist’s troubles started with a CRA audit of his 2013 tax return.

At the time, he was not worried.

Higgins said his deductions were routine expenses.

“I’ve been exhibiting since 1974 in North America, South America, Europe, Japan, Australia. And all of the grant money I received to sponsor those exhibitions are considered income and when I declare expenses against that, then it cancels out the amount of money I received.”

. . . .

In 2013, Higgins received more than $20,000 in public grants for a large sculptural installation called Beyond the Terminating Vista, which he exhibited at the Mount Saint Vincent University Art Gallery in the spring of 2013.

The lion’s share of the grant money came from the Canada Council for the Arts, which gave Higgins $13,600.

. . . .

The installation work was recognized later that year when Higgins won a $25,000 Lieutenant Governor of Nova Scotia Masterworks Arts Award in recognition of “outstanding artistic contribution.”

. . . .

However, the CRA rejected his claim that the grant money was business income and denied his claim for expenses against the grants.

“It is the determination of this audit that the taxpayer operates as a personal endeavour (a hobby), not a business,” CRA said in its Jan. 26, 2018, reassessment letter to Higgins.

. . . .

“Most of the income generated is from grants, honorariums and awards, and not the sales of artwork. Therefore, all income and expenses related to the business has been removed.”

. . . .

Some observers say the Higgins reassessment reveals a profound misunderstanding about contemporary art in Canada.

“For me, that definition of sale as a key to artwork misses the vast majority of artistic practice in the country, particularly contemporary art, media art, performance art where people rent works,” said Ben Donoghue, executive director of the Media Arts Network of Ontario.

“Works are shown in public centres, in artist-run centres and theatres. Artists are paid a contracted fee for that time. That’s actually where we see professional arts in Canada.”

Link to the rest at CBC and thanks to Tudor for the tip.

Next Page »