Agents

How to Read a Book Contract – Somebody’s Gonna Die

12 October 2019

Per a request in the comments, from an earlier post on The Passive Voice

Let’s assume you are an author represented by a literary agent. If Passive Guy asks you who your agent is, you’ll respond with something like “Suzanne Jones” or “James Davis.”

Passive Guy is certain Suzanne and James are wonderful people, but they’re going to die.

This is not a threat, simply a statement of biological reality.

Who will your agent be after Suzanne dies? Will it be someone you choose or not?

You selected Suzanne because she had a great reputation for helping authors build good long-term careers. Your career isn’t built yet. Who’s going to help build your career if she’s gone?

These are not hypothetical questions. One of the comments to a recent essay about agents by Kristine Kathryn Rusch described the story of Ralph Vicinanza, a literary agent for Stephen King, the Dalai Lama and others, who died in September, 2010, at age 60.

Here’s a bullet-point description of what has happened since Mr. Vicinanza’s death, according to the comment (which fits with other accounts PG has found):

  • The other two agents in the Vicinanza agency quit their jobs
  • A letter was sent to all authors advising them to find other agents and promising to continue to pay royalty checks
  • The executor of the Vicinanza estate intends to keep receiving payments from publishers and collecting agency fees from the authors
  • Other agents are asking Vicinanza authors for more than 15% to handle titles the Vicinanza agency handled, presumably because the estate will claim the first 15%

Contracts with a large organization should differ from those with an individual or small organization. A large organization, like a big publisher, is not going to disappear. It may go bankrupt or be sold, but it will have enough value so someone is likely to keep it running in some form or fashion.

However, if somebody in a large publisher dies, another person will replace the dear departed and business will continue as usual. An author has a relationship with a big publisher because the publisher can jam a lot of books into bookstores, airports, Wal-Mart, etc. The jammers may change, but the jamming continues. (PG knows about author/editor relationships, but you can hire an editor without hiring Random House.)

In a small organization, like a literary agency, a death of an individual can result in the death of the agency. PG would suspect many of the clients of Mr. Vicinanza’s agency signed the agency contracts because of Mr. Vicinanza, and quite possibly, only because of Mr. Vicinanza. PG would have signed if Mr. Vicinanza promised to turn him into another Stephen King.

It appears the executor of Mr. Vicinanza’s estate is his sister, Louise Billie. Passive Guy did a quick Google search and couldn’t find any evidence that Ms. Billie is a literary agent or has any experience in that business. Yet, under the agency’s contracts with authors, Ms. Billie, acting on behalf of the estate, is handling royalties and, presumably, retaining 15% plus, perhaps, expenses.

What’s the contractual solution to problems like this? It’s much simpler than stating the problem.

If the services of a particular individual are a key value to you, include a provision in the contract that gives you the right to terminate the contract:

  • if that person dies,
  • becomes disabled and unable to perform his/her normal work, or
  • leaves the agency for any reason

As far as what happens to the agency percentage on book contracts the agent negotiated while alive or working at the original agency, PG would push for a provision that says those end when your agent goes.

A possible compromise would be that the agency percentage continues to be paid to the agency for one or two years after termination, but PG doesn’t like that because, at least according to the hypothetical value proposition of an agent, the agent’s services are continuing and overlap from book to book. The work an agent puts into your third book also enhances sales of books one an two.

The Vicinanza experience demonstrates that other agents are not willing to accept authors under standard compensation terms if they have to share compensation.

If agents boohoo about this, Passive Guy would simply point out that, if an attorney dies, the attorney is entitled to fees earned up until he takes his last breath and no more. A client is always free to hire another attorney at any time, whether the attorney is alive, partly dead or all the way dead.

Someone is bound to ask why the author should receive royalties forever while the agent who negotiated the publishing contract doesn’t receive agency fees forever.

The answer is that when the author wrote the book, she created an asset, recognized under copyright law, that will exist for a long time and is capable of generating income in a variety of different ways over its lifetime, some of which are recognized today and others of which won’t be conceivable for another 50 years.

The author owns the asset, the agent does not. The agent was paid for a service provided. PG would argue if the ongoing services of a particular agent were the key value to the author, when those services are no longer provided for any reason, the author shouldn’t be required to make any additional service payments.

How to Read a Book Contract – Agency Coupled with an Interest

12 October 2019

A reprise of an earlier PG post about Agency Contracts per the request of a couple of visitors to TPV.

In an earlier post showing an Author/Agent agreement, the sample clause included a claim by the agent that the 15% fee was “an agency coupled with an interest.”

This term has rightly caused concern among many authors. Done right, an agency coupled with an interest could well give an agent a piece of the copyright to the author’s book or books and could make the agency agreement irrevocable.

However, we have an opinion from the Supreme Court of New York County, New York, on this very topic based upon an agency clause that appears to be very similar to the one we reviewed yesterday. (A quick explanation about New York state courts – unlike almost every other state and the federal court system, the “Supreme Courts” in New York are the trial courts. This decision is currently being appealed to the New York State Court of Appeals, but if PG were a betting man, he would bet the appellate court will confirm the trial court’s decision.)

Here are the facts:

  1. Beginning in 1996, the Peter Lampack Agency (PLA) represented Martha Grimes, mystery novelist supreme.
  2. Ms. Grimes earned over $12 million during the 12 years PLA represented her.
  3. PG assumes that PLA never had an Agency Contract with Ms. Grimes because they didn’t talk about it in the lawsuit they filed later.
  4. In 2005, PLA negotiated a four-book agreement with Penguin.
  5. The 2005 Penguin contract included an Agency Clause very similar to the one we discussed yesterday.
  6. The Penguin agreement included an “option” – basically a right to negotiate – for Ms. Grimes’ next book.
  7. In 2007, Ms. Grimes fired PLA and hired another agent.
  8. In 2009, Ms. Grimes’ attorney sent Penguin the manuscript for The Black Cat and later signed a publishing contract for that book.
  9. PLA sued Ms. Grimes, Penguin and a bunch of Penguin subsidiaries, claiming it was owed agency fees on The Black Cat and other books of Ms. Grimes published by Penguin, based on the 2005 option clause and the fact that other books of Ms. Grimes were published under “extensions” of contracts PLA had negotiated before it was fired which contained standard agency clauses.

Here’s the version of the PLA agency clause the court included in its opinion:

The Author hereby appoints [PLA] irrevocably as the Agent in all matters pertaining to or arising from this Agreement . . . . Such Agent is hereby fully empowered to act on behalf of the Author in all matters in any way arising out of this Agreement . . . . All sums of money due the Author under this Agreement shall be paid to and in the name of said Agent . . . . The Author does also irrevocably assign and transfer to [PLA], as an agency coupled with an interest, and [PLA] shall retain a sum equal to fifteen percent (15%) of all gross monies due and payable to the account of the Author under this Agreement.

Ms. Grimes’ attorneys argued that she owed nothing because she terminated the agency relationship with PLA in 2007 and contended that PLA did not have an agency coupled with an interest.

The Court ruled on a Motion to Dismiss and Ms. Grimes was a big winner. Winning on a Motion to Dismiss is the trial attorney’s equivalent of a slam dunk right in the face of opposing counsel. Essentially, it means the judge concluded PLA had no case on most of its claims.

The Court’s opinion first stated the general rule that an agency for no definite term is revocable at will. The court then stated the second rule that when an agency authority is coupled with an interest, it becomes irrevocable. PG will spare you a lot of legalese, but the following is from the opinion:

An agency is coupled with an interest where, as a part of the arrangement with the principal, the agent receives title to all or part of the subject matter of the agency. . . .

[t]o make the power irrevocable, there must be an interest in the subject of the agency itself, and not a mere interest in the result of the execution of the authority . . . .]). Words alone are not enough to establish an agency coupled with an interest.

What does this mean?

In order to have an “interest,” the agent probably has to have a claim on the copyright to the book itself, not a claim against the stream of income generated by licensing a publisher to publish the book. The words in the agency clause stating that PLA had “an agency coupled with an interest” were insufficient to give it such an interest.

The words in the agency clause stating, “The Author hereby appoints [PLA] irrevocably as the Agent in all matters pertaining to or arising from this Agreement,” did not create an irrevocable agency agreement.

Since PLA did not have an agency coupled with an interest, its agency was revocable at will. PLA was not entitled to a commission from monies earned under publishing agreements made after its term as an agent had ended.

PLA argued that the language giving it the right to “fifteen percent (15%) of all gross monies due and payable to the account of the Author under this Agreement,” meant that, in addition to monies generated by the original four-book contract, it also had the right to monies generated under the option clause.

The Court found this language did not specify that PLA would receive a commission from the new publishing agreement made after the Agency’s termination. The option clause was not an agreement. The agreement for The Black Cat was separate from the original contract.

As to the claims that PLA was entitled to commission under other agreements that were “extensions” of those negotiated by PLA, the Court used the same reasoning to deny those claims.

PG will note that Penguin got dragged into this litigation because of the Agency Clause it permitted to be inserted into the publishing contract.

As mentioned, the case is under appeal and it will be awhile before the appellate court hands down its opinion.

We learn three things that one New York judge in one court believes about Agency Clauses:

  1. A contractual claim to commissions based on future publisher royalties is not the same as having an “interest” in the book, which is the subject matter of the agency.
  2. Stating an agency is “irrevocable” has no effect whatever in the absence of a specific interest in the book.
  3. Stating that the agent has an “agency coupled with an interest” does not prevent the author from terminating the agency at any time.
  4. Once the agency is terminated, the agent has no claim against royalties paid under later contracts absent a specific contractual clause to that effect.

Here’s a link to the court opinion.

Agency Clauses

11 October 2019

Based on some questions from clients, PG thought it might be a good idea to republish this earlier post he wrote and published here several years ago.

Agency Clauses

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

Here’s an example:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Arising in any way out of the Agreement is broad.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Contract Collection

If you have a publishing contract you would like to share with PG, he would appreciate you’re forwarding a copy to him. You can feel free to blackout/whiteout/cover up the names of any individuals or publishers involved in the contract prior to sending the copy of the contract.

PGContracts@thepassivevoice.com

First, You Have to Write the Damned Thing.

4 May 2019

From Medium:

I have a strategy for blogging that involves checking out Quora to see what questions people are asking.

I checked Quora this morning and saw this.

Good answer, Orson Scott Card. Good answer.

. . . .

It’s not even a chicken and an egg thing. You cannot publish what you haven’t written.

You can publish what you haven’t edited. You can publish what you haven’t tried to sell to a traditional publisher. You can publish long. You can publish short. You can publish poetry, blog posts, picture books, and 500,000-word tomes that would make literary agents insta-delete your query letter.

You can publish late — long after you should have just shipped that thing.

You can publish early — before your work is polished well enough to avoid being ripped apart in Amazon reviews.

You can publish pretty much anything.

But you cannot publish it until you’ve finished writing it.

. . . .

Let me say that another way. You cannot build a literary career out of files on your hard drive that you never let anyone read. Or out of half-finished stories that get abandoned every time a shiny new idea bites you in the ass. Or out of completed novels that you never feel are good enough for public consumption.

. . . .

If your goal is traditional publishing, then this isn’t actually a simple yes or no question. Being published is out of your hands. Or it will be, once you get brave enough to put your work out there into the hands that can get it done.

You’ll need to write a query letter and send it out to literary agents. Not one or two. Not a carefully selected list of ten. Once you know your letter is doing it’s job (it’s only job is to get an agent to request your work), then send that sucker out wide. To everyone.

Last summer I needed a new agent. Once my query letter was bringing in a ten percent positive response (one in ten agents asked to read the manuscript,) I sent it to more than 140 agents. I had seven offers to represent me. Which is mind-blowingly awesome. For a couple of weeks there, I felt like one of those movies that’s up for all the Academy Awards or something.

But the hard truth is that I had more than 130 rejections, too. I was getting rejections after the agent I went with sold my book.

. . . .

If you’re planning to go indie then you are the publisher. Publishing is 100% up to you. Which means you have the responsibility of creating the most professional work you can. It’s your job to hire an editor and a cover artist. It’s your job to position your book in the market place.

Link to the rest at Medium

When PG read the OP, he wondered how much time the author spent selecting 140 agents, preparing at least semi-personalized packages for each and reviewing responses which, hopefully, involved careful vetting of the agents who were interested in seeing her manuscript.

PG has received more than one agent horror story recently, so he’s particularly sensitive to that potential problem. Without going into detail, agents and literary agencies can and do change over time. An excellent agent from ten years ago can be a far less than satisfactory agent today. If the agent is receiving checks that include money the agent should be promptly forwarding to the author, “less than satisfactory” can make the author’s life extremely difficult.

At the Request of Their Union, Screenwriters Are Firing Their Agents

14 April 2019

From The Digital Reader

An ongoing contract dispute is sending shockwaves through Hollywood, and it’s going to have an interesting effect on what stories get told on your favorite show.

Variety reported on Friday that the Writers Guild of America has called on its members to fire their agents. A months-long negotiation between the WGA and the ATA (Association of Talent Agents), the union representing agents, over revising a 43-year-old franchise agreement had broken down after the two organizations had failed to come to terms.

Over the past decade a number of the larger talent agencies had developed the practice of negotiating their own contracts with studios that created conflicts of interest between the agents and their putative clients.

. . . .

“In this situation there are two actions required of all members:  First, do not allow a non-franchised agent to represent you with respect to any future WGA-covered work.  Second, notify your agency in a written form letter that they cannot represent you until they sign the Code of Conduct.”

. . . .

The reason the WGA walked out of the negotiations is that the major talent agencies no longer serve the best interests of their writer clients. In some cases they have launched or invested in production companies, and in others cases they have negotiated production deals with studios. This means that when a writer’s agent sits down to negotiate a deal with a studio, the agent’s boss is effectively sitting on the other side of the table.

. . . .

In the book publishing industry, there is a strong sentiment that agents’ interests are more aligned with publishers than with authors. Robin Sullivan, Kris Rusch, and others have argued that agents won’t push for the best deal for an author because the agent values the long-term relationship with the publisher more.

Link to the rest at The Digital Reader

With respect to agents for authors in the traditional publishing business or the movie business, the point Nate makes in his last paragraph is absolutely true. An agent needs a good long-term relationship with a publisher/film studio more than an agent needs the same type of relationship with an author.

There are an essentially unlimited number of authors (although top-selling authors are a different matter) while the number of publishers willing and able to sign a book deal with a six-figure advance is much smaller and, thus, far more valuable because of its rarity.

A publisher (or more specifically, a senior editor who makes book acquisition decisions) with which an agent can sign 3-5 large contracts  per year is a highly-valued resource. If an agent can continue to do that for several years, he/she will be in an excellent financial position (absent substance abuse problems or a bad divorce).

On the other hand, a single author who is not a consistent multi-title top-10 NYT bestseller won’t make an agent nearly as much money over a 5-10 year period as an acquisition editor who likes the agent’s taste in book projects.

“But I’m Not a Lawyer. I’m an Agent.”

4 April 2019

From The Audacity of Despair:

Just over a quarter century ago, when I was a young scribbler traipsing around the metro desk of the Baltimore Sun, I had an early opportunity to learn a lesson about money, about ethics, about capitalism and, in particular, about the American entertainment industry. And Dorothy Simon, she raised no fools. I only needed to learn it once.

I learned about something called “packaging.”

And now, finally, my apostasy from newspapering having delivered me from Baltimore realities to film-set make-believe, I am suprised and delighted that many of the fellow scribblers with whom I share a labor union have at last acquired the same hard, ugly lesson:

Packaging is a lie. It is theft. It is fraud. In the hands of the right U.S. Attorney, it might even be prima facie evidence of decades of racketeering. It’s that fucking ugly.

For those of you not in the film and television world, there is no shame in tuning out right now because at its core, the argument over packaging now ongoing between film and television writers and their agents is effectively an argument over an embarrassment of riches. The American entertainment industry is seemingly recession-proof and television writing, specifically, is such a growth industry nowadays that even good and great novelists must be ordered back to their prose manuscripts by book editors for whom the term “showrunner” has become an affront. A lot of people are making good money writing television drama. And so, this fresh argument is about who is making more of that money, and above all, where the greatest benefits accrue.

. . . .

Here is the story of how as a novice to this industry, I was grifted by my agents and how I learned everything I ever needed to know about packaging.  And here is why I am a solid yes-vote on anything my union puts before me that attacks the incredible ethical affront of this paradigm. Packaging is a racket. It’s corrupt. It is without any basis in either integrity or honor. This little narrative will make that clear.

. . . .

To begin, I wrote a book. It was a non-fiction account of a year I spent with a shift of homicide detectives in Baltimore, a city ripe with violence and miscalculation. Published in 1991, “Homicide: A Year on the Killing Streets” was repped by my literary agent at the time, an independent attorney who I found because his other clients included some other ink-stained newspaper reporters. Late in 1987, the Baltimore Police Department agreed to let me into its homicide unit for a year beginning that January, so I needed to quickly acquire an agent to sell the project to a publishing house and secure an advance on which to live while I took a leave-of-absence from my newspaper. This agent — and damn, I wish I could name the goniff, but I later signed a cash settlement that said I wouldn’t — was the first name that came to me. I did not shop around; I was in a hurry.  My bad.

Three years later, with the book ready to publish, this shyster suggested to me that he was entirely capable of going to Hollywood with it for a sale of the dramatic rights. And knowing less than a bag of taters about Hollywood, I was ready to agree until my book editor, the worthy John Sterling, then helming the Houghton Mifflin publishing house, told me in no uncertain terms that this was a mistake.

It was customary, John explained, for even the best literary agents to pair with a colleague at one of the bigger entertainment agencies and split the commission.  My literary agent would give up half of his 15 percent to the other agency, but he would gain the expertise of an organization with the connections to move the property around and find the right eyeballs in the film and television industry. So I called my agent back and insisted.

With some initial reluctance, he eventually chose to go with Creative Artists Agency — one of the Big Four, as they call the largest entertainment entities repping talent, and an agent in CAA’s literary division by the name of Matt Snyder.  After making the deal with CAA, my literary agent called me back and said it was customary for me to give up a larger percentage commission as I now had two agents working on my behalf.  How much more? He suggested that he should keep his 15 percent and I should pay CAA an additional 10 percent. So a quarter of the profits from the sale of book would now be siphoned to agency commissions.

I called back John Sterling and asked:  Is this right?

John nearly dropped the phone. No, that is not how it works. Again, he explained that my literary agent was supposed to split the existing 15 percent commission on the book with CAA. The literary agent was supposed to keep 7.5 percent and give the other half to CAA, which in no way was entitled to any cash above and beyond that split.

I called my agent back. No, you split the existing 15 points, I told him. He threw a few chunks of pouty guilt at me, but I shrugged him off. This first attempt at a grift should have warned me, but hey, I was young.

. . . .

Then the contract comes back from Baltimore Pictures and while it’s all found money for a police reporter and rewrite man who’s working for union scale at The Sun, I check with some other authors who have sold stuff to Hollywood and they all acknowledge it’s on the low-end of where such offers usually reside.  Fine for the option money, a little light on the contingent pilot, pick-up and episodic payments and, of course, farce on the definition of net profits.  So I call Matt Snyder back and say so: This seems a little light and it’s a first offer. Let’s go back to Levinson with a counter.

And Matt Snyder of CAA acts as if his client, me, has just thrown a dead, rancid dog on the table. This is my first book sale to Hollywood and Barry Levinson is an A-lister; I should be grateful for this offer and worried that if I nickel-and-dime, Levinson may develop something else for his first television series. Reluctantly, as if he is being asked to traverse a vale of danger and uncertainty, Snyder eventually agrees to go back and see if he can’t get, maybe, a bump in the per-episode royalty, maybe $250 an hour. He’ll fight for me. He’ll see what gives. And sure enough, the per-episode fee goes up by 10 percent after Snyder, relentless carnivore that he is, returns to his client with pride and some pocket change.

. . . .

Then I asked another question: “Jake, do you have any written consent from me on file in which I authorize you to rep both sides of the sale of my book? I will answer that for you: You do not. I never authorized this. Not to CAA. Not to my book agent. I never gave informed consent. I couldn’t. Because I was never informed.”

Had CAA, in fact, returned the 7.5 percent of my commission?

They had — to my book agent, who pocketed it. Quietly.

. . . .

“Matt — absent any evidence of informed consent by me — that you and CAA proceeded to negotiate with Barry Levinson, whom you also represented, is a prima facie conflict-of-interest and a breach of fiduciary duty. If you were a realtor secretly representing both sides of a house sale, your license would be torn up. If you were a lawyer, you’d be disbarred.”

There was only a small pause before he explained himself:

“But I’m not a lawyer. I’m an agent.”

Link to the rest at The Audacity of Despair

2019 Publishing Predictions from Agent Laurie McLean

31 December 2018

From Anne Allen’s Blog:

By Laurie McLean, Founding Partner of Fuse Literary Agency

. . . .

Diversity Continues its Dominance

One of the unforeseen yet marvelous results of the democratization of publishing is the emergence of #ownvoices authors and the increasing desire for marginalized voices to be heard and read. Top Ten and Best Books of the Year lists are crammed with nearly unpronounceable author names and stories about people and places foreign to most readers.

Publishing is slowly becoming more reflective of our society as a whole and that is a very good thing. We Need Diverse Books. In 2017 only 9% of children’s books featured African or African-America characters. We obviously have a large upside to explore.

Editors and agents are hungry for well-written books written by non-Caucasian authors. And I think that trend will accelerate in 2019.

Resurgence of Indie Bookstores as Destinations

When Borders Books went bankrupt and consumers began buying more and more of their books (and everything) from Amazon, things looked bleak for publishing’s beloved retail channel.

But something wonderful has happened. Indie bookstores, whose demise has often been predicted but has not happened, began to flourish. They added complementary items to their stores. They added cafes or partnered with good ones. Some added the capability to print books instantly through technology.

But the heart of indie bookstores was what really saved them. They are filled with book lovers as staff who can help you find the exact book you want for yourself or as a gift. Bookstores, with their bestselling author visits, workshops and conferences, classes, parties and other events, have finally become the destination book lovers craved.

Through smart expense management, good solid marketing, and really knowing their customers, indie bookstores are thriving across America. Let’s hope this trend continues (and it will if you buy books there!)

. . . .

Audiobooks and Podcasts are More Popular Than Ever

The sales numbers continue to accelerate. More people are listening to podcasts and books in commute traffic, at home while relaxing, pretty much anywhere they have a mobile phone or mp3 audio system. And it doesn’t look like they’re going to put the brakes on anytime soon.

Because they’re so popular (and profitable) audiobooks have joined ebooks and print books as “must have” rights traditional publishers won’t do a deal without. Audible continues to innovate in this space with subscription-based services, original audio stories, and “all you can absorb” genre titles (romance for now) for a monthly fee.

Podcasts are getting more and more professional and interesting. If you haven’t listened to a podcast ever, there’s a new year’s resolution you’ll be happy you made.

Link to the rest at Anne Allen’s Blog

With due respect to the author of the OP, if Barnes & Noble goes under during 2019 (PG says that’s a 90% certainty), indie bookstores will experience increased sales from people who formerly shopped at BN and Amazon will experience increased book sales from the same source.

However, after this false economic dawn, indie bookstores will continue their long decline.

For one thing, with BN gone, big publishers will not order printed books in quantities that allow book printers to put their presses on cruise control whenever a big new book is released. Printing costs will increase. Some printers will get out of the book business to focus on more profitable printing markets.

Will traditional publishers eat the increased production costs of printed books to help keep sales up?

As PG has mentioned here before, in a former life, he had extensive business dealings with large European publishers (which own all but one of the big US trade publishers). Based upon that and some other experiences, PG predicts the European publishers will increase prices for printed books in order to maintain profitability. There is also a possibility that large publishers will squeeze advances and author royalties to help make ends meet.

If PG is correct, Big Publishing will bestow yet another growth stimulus upon Amazon.

Amazon can afford to cut book prices to maintain or increase sales volume and gross revenues much, much more easily than any indie bookstore can. Amazon will need to be careful about violating U.S. antitrust laws because of its increasing market power, but, in another of PG’s personal experiences, Amazon employs some very smart and savvy lawyers. So long as management listens to legal counsel, Amazon should be able to avoid any encounters with the Antitrust Division of the U.S. Department of Justice.

Is smart money going into the bookstore business any more? Is a big investment in a chain of bookstores going to generate a better return than buying and holding yet more Amazon stock or buying Facebook or Apple stock on the dip?

Donadio & Olson Files for Bankruptcy

20 December 2018

From Publishers Weekly:

The Donadio & Olson literary agency filed for Chapter 7 bankruptcy December 3 following years of embezzlement by its former bookkeeper, Darin Webb, who was sentenced December 17 to two years in jail for his crimes.

The agency filed for Chapter 7 in the U.S. Bankruptcy Court for the Southern District of New York, listing assets of $47,241.90 and liabilities of $186,613.90. The agency’s authors are owed a total of $2.7 million in royalty payments. The firm has already begun liquidation proceedings.

The two principals in the firm, Edward Hibbert and Neil Olson, explained how the embezzlement led to the downfall of D&O in separate letters to the judge made public at the time of Webb’s sentencing. Olson provided the more complete explanation of what took place, saying that Webb had been the agency’s bookkeeper for about 20 years and, during that time, had taken over most of the agency’s back office functions. What looked like dedication to the job, Olson wrote, was really part of Webb’s scheme to steal $3.4 million.

According to Olson, Webb, over time, stole an “ever larger portion of our and our client’s money. His means of doing this were complex—hidden bank accounts, fraudulent reports, gently squeezing out a part-time assistant who asked too many questions.”

When Webb confessed to the theft, it became clear, Olson wrote, that he did not “have the means to repair what he has ruined, and we do not have the means to continue.” As a result, Olson wrote, the agency “will cease to exist within weeks.” (The letter was dated October 21, 2018.)

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

PG wonders how much money the principals of the agency, including Edward Hibbert and Neil Olson, have received from the agency during the last year or so.

He asks because US bankruptcy laws include what are sometimes called “clawback” rights of creditors for any Preferential Transfers by the bankrupt entity or person.

Here’s one description of preferential transfers:

A preferential transfer occurs when a debtor, prior to filing for Chapter 7 bankruptcy, pays off a particular creditor or group of creditors and by doing so, causes other creditors to get less in the bankruptcy. For example, a debtor may wish to repay a debt to a friend or family member, to make sure that person gets paid in full (and shield the money used to repay the debt, which would instead be divided among all of the debtor’s creditors).

. . . .

Only transfers made within a certain amount of time before you file for bankruptcy count as preferences. The rules depend on your relationship to the creditor:

  • During the year before you file for bankruptcy, any payment of more than $600 to an “insider” creditor — typically, a friend, family member, or business associate — counts as a preference, subject to the clawback.
  • During the 90-day days before you file, any aggregate payment of more than $600 to a regular creditor (someone other than an insider).

The problem with preferential transfers (also called preferences) is that it benefits one creditor at the expense of the rest. Rather than having their debts tossed into the bankruptcy hopper and receiving pennies on the dollar from the bankruptcy trustee (if that), creditors who receive preference payments are paid in full (which leaves that much less money to be distributed to other creditors).

If the agency is a corporation (the Donadio & Olson website identifies the entity as “Donadio & Olson, Inc.”) and the corporation has filed the Chapter 7 petition, it is possible that payments to corporate officers, directors, shareholders or other insiders during the year prior to the bankruptcy filing date or during the 90 days prior to the filing date could be subject to clawback proceedings as described above.

It has been a very long time since PG has worked on any bankruptcy matters, so he’s not current on bankruptcy law, but authors who haven’t received royalty payments the agency collected and spent on salaries and bonuses (if any) for corporate insiders may wish to consult competent bankruptcy counsel to see if they might be able to collect at least some of that money.

It would not be unusual for a single attorney or law firm to represent a class of creditors who are similarly situated rather than each creditor hiring his/her own counsel.

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