Posts Tagged ‘agency model’

(Cross-posted from Mad Genius Club)

That’s the first question that popped in my head the other day when reading Dean Wesley Smith’s post about agencies starting their own in-house publishing companies.  The second question was, “Are they crazy?  Don’t they realize what a conflict of interest that becomes?”

A little background.  For some time now, certain literary agencies have explored and started their own in-house publishing companies.  These have been few and far between.  But this past week, several agencies — well-known agencies — announced they were following the trend.  According to GalleyCat, “. . . two agencies have decided to follow in Ed Victor‘s footsteps: Curtis Brown, Ltd. and Blake Friedmann Literary, TV, and Film Agency.”  This is the sort of news that sets off all my internal alarms and has me wondering if I was somehow transported to the Twilight Zone during the night.

My problem with this sort of arrangement is that it sets itself up as a classic conflict of interest.  An agent is supposed to be an author’s advocate.  The agent’s job is to find a publisher and secure the best monetary arrangement possible for his client, the writer.  Yes, this is a simplified definition, but it is the heart of the agent-writer relationship.  When the agent suddenly becomes the prospective publisher and, therefore, has a financial stake in the process that goes beyond negotiated the best terms for the writer, there’s a conflict of interest.

Wanting to see what others had to say about the news, I quickly made my way to Dean Wesley Smith’s blog and wasn’t disappointed.  He has a series of posts about this and I highly recommend you take the time to read them all.  But what he says here pretty much sums up how I feel:  An agent, for any percentage, who crosses the line and becomes a publisher, is pulling a scam. An unethical one. And one that cannot work for the sheer accounting and work-load problems.  Avoid at all costs.

Let’s add into this the following information from The Bookseller:  (while this information is specific to Ed Victor, my guess is the other agencies will follow suit)

  • First, Victor will follow the Agency model of pricing.  That means no competitive pricing among outlets.  It also doesn’t bode well for prices being in the range that most e-book readers are comfortable paying.
  • By using Agency pricing, they will give up 30% of cover price, iirc AND they will then be paying out another percentage to the company they are contracting with to create and distribute the digital content.
  • They will then split the net receipts 50/50 with the authors ” once production costs have been recouped out of the first receipts”.


Victor claims this will result in their authors receiving more than the 25% they get from traditional publishers.

I repeat, “WHAT?!?”

Maybe Victor is going to limit their offerings to their authors’ backlists that have gone out of print.  Still, compare 50% net after unspecified production costs — production costs that include lining at least three entities’ pockets — to the 70% royalty the author can get by publishing directly to Kindle, the 65% from Barnes & Noble and similar percentages from Smashwords.

Let’s take an e-book priced at $9.99.  If an author publishes directly to Amazon using the KDP program, he will receive royalty payments of $6.99 per sale.  He’d receive $6.49 from Barnes & Noble.  Out of pocket expenses would include approximately $10 for an isbn, although you don’t have to have one for either platform, cover art (which can be found for free if you have the ability to do the editing and graphics yourself) and editing costs if you hire a professional editor.

That same $9.99 book from Victor would break down this way.  30% or $3 is taken off the top for the Agency model payment to the outlet.  So we are now down to $6.99.  From that production costs would be taken.  Let’s say, just for the sake of argument, that means an additional 10% (it very well could be more or less).  So another dollar is gone from the cover price, leaving $5.99.  What isn’t addressed in the Bookseller article is where editing fits into all this.  Even a backlist book will need editing and proofing during the conversion process.  So that may be an additional cost.  And remember, there’s a contract somewhere in the past stating that the agent will get a percentage of sales of the book.  No where have I seen where that clause will be waived and that is the crux of my concern about such ventures…but let’s put that aside for the moment.  So, at best, there is $5.99 left of the cover price.  Half of that is approximately $3.00.  That is less than half of what the author would receive if publishing the title himself. (It is also less than he’d get if he published that same title through an e-publisher like Naked Reader Press, but I won’t go there either as that is getting too close to the conflict of interest line for my comfort.)

The whole issue, to me, comes down to this:  Agents are supposed to act in the best interest of their clients.  If the agency becomes a publisher, it suddenly is in competition with the publishers it is supposed to be pitching a manuscript to.  Unless there are some very specific safeguards in place, the only winner in this will be the agency.  Check out this post from an attorney for what these safeguards need to be.

My advice is two-fold for any author faced with this situation.  First, ask yourself if you want to risk being aligned with this particular agency/agent forever because, whether you realize it or not, agents are starting to demand the same sort of long-term contracts that many publishers are.  Second, always remember the rule that money is supposed to flow to the author and this agency as publisher puts several dams in the way.  Just because the lines between agency and publisher are blurring, that doesn’t mean we, as writers, have to agree to it.  Remember that we supply the product and, without that product, there is no need for agents and no need for publishers.

So, be smart.  Read your contracts line by line.  Know what you are giving up before signing.  Keep track of your royalty payments and compare them to your bookscan numbers (if you haven’t signed up for your Author Central account at Amazon, do so.  The benefit is being able to see your bookscan numbers for free).  It is time for us to be proactive and not fall back on old relationships in an industry that is changing faster than we realize.  Most of all, explore all the possibilities and don’t be afraid to try something new — as long as money flows to you, the author, and not away from you.

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Back in January, I posed this question over on The Naked Truth. I thought it might be time to look at the question again, especially in light of Random House’s decision to go with the agency model, the inquiries into whether or not the agency model is legal — not only here but in Great Britain — and Australia’s decision that it is NOT legal (Way to, OZ!). So, with your indulgence, here’s the post from January, with a few additional comments or edits.

What is a Book?

According to Jeffrey Matthews (vp for corporate strategy for Scholastic), “That’s the $64 million question.”

It is also a question the publishing industry — publishers and authors alike — can’t seem to agree upon. Ten years ago, it was easy to answer that question. A book was, well, a book. It was something you could walk into a bookstore or your public library and hold, take home and read. You bought a book you liked and read it, sometimes many times. You loaned it to your friends and family — often with threats of violence if they didn’t return it. You could sell it to used bookstores for a bit of pocket cash (of course, if you did and then someone else bought the book, the author didn’t get any more money from it).

Now it’s not quite so simple to answer that question. A number of publishers feel a book is still a book — that physical incarnation of an author’s words into print. Print being the operative word. E-books have thrown a wrench into the works and the industry simply hasn’t figured out how to respond. This includes publishers, agents and writers.

That’s one of the reasons we find so many publishers applying DRM to their e-books. Not understanding that doing so is like telling a recalcitrant child “no”, publishers say they have to apply DRM to their e-books to protect them from piracy. They don’t stop to think that that merely waves a red flag saying, “I bet you can’t find a way to break our code.” Guess what, that’s a challenge and what happens when you issue a challenge? It’s usually taken up. Don’t believe me, simply google “how to break DRM” and see how many hits you get and how many verified codes using Python and other programs there are.

DRM does something else. It adds to the cost of e-books. And, honestly, there will always be people out there who will post digital versions of books online for free. Their reasons vary. Some do it because, in their countries, the books may not be available in digital — and sometimes even in print — formats. Some do it because, as noted above, it’s a challenge and they hate being told they can’t do something. But digital piracy isn’t limited to books released in digital formats. If I remember correctly, the last Harry Potter book — none of which have been legitimately released as e-books — was online as a PDF e-book before the book hit the shelves. So, how did applying DRM to a digital file help prevent piracy?

But there is another reason people break DRM on e-books. A book that is “protected” by DRM is tied to a certain type of device. For example, if you by a DRM’d e-book through Amazon, it is tied to the kindle or kindle apps. It’s the same with B&N and the nook, etc. But worse, there is a limit on how many compatible devices the e-book can be downloaded to. Say you have a family of three. Every one of them have a kindle and they have the kindle app for their laptops or smart phones, etc. That’s at least 6 potential forms of tech that e-book can be read on. But, wait. There’s a hitch. The publisher has limited the number of devices to 4. So Junior can’t read that book on his smart phone because it is already registered to the maximum number of devices. That’s like telling me I can only read a physical book in four of six rooms in my house. Sorry, but I bought it, I should be able to read it when and where I want — and on whatever device I have with me at the time.

And this brings me to the question posed in the title of this post. What is a book?

This is a question those of us involved with Naked Reader Press asked ourselves long before we opened our digital doors. We’d seen interviews with publishers who hold that a book is only the physical incarnation of an author’s work. Under this definition, those of us who buy e-books aren’t buying the book. Instead, we are only buying a license to read the author’s work in a certain digital format. DRM is their way of enforcing this by preventing us from doing with digital books what we can with physical ones — loan them, sell them, donate them. Even so, these same publishers who are so adamant about limiting our access to these e-books — and if you don’t believe me, buy an e-book using Adobe Digital Editions and try to read it on a machine that isn’t tied to that specific Adobe account — are more than willing to charge us as much or more for the digital version than we’d pay for the paperback copy of the book.

Still, not all publishers feel this way. There are some like Baen Books who believe that, once you buy an e-book, it’s yours. They don’t apply DRM and don’t limit the number of e-readers or computers you can view the e-book on. To them, and to me, a book is made up of the words an author writes. A book can take many forms — physical paper versions, electronic, audio, enhanced, etc. A book is something meant to be enjoyed by readers in whatever form they are most comfortable with.

This divide in thinking may be narrowing. The Nook, and now the Kindle, allow lending of e-books (with publisher approval). Mind you, it’s limited to only being able to lend a book one time, for a period of two weeks. During that two week period, the original purchaser of the e-book cannot access it. There is the option being offered through these sellers for authors and small publishers to bring out their books DRM-free. Guess what, most of them choose no DRM. Why? Because they are selling BOOKS, not licenses.

But publishers are still trying to throw kinks in the works when it comes to e-books. Not too long ago, Harper Collins announced it was going to limit the number of times an e-book can be checked out by a library. According to HC, the magic number is 26. After that time, the title will no longer be available unless the library buys it again. Of course, HC says that it will be at a discounted price, but I’m not holding my breath. Besides, I have a several problems with HC’s reasoning here. First, they say they came up with this magic number because this is the average number of checkouts a physical book goes through before it is pulled from the shelves. This ignores the fact that, if this is true, the library simply cleans and repairs the book and then puts it back into circulation. It’s not removed unless it is lost or destroyed or beyond repair. My next issue is that I can just imagine how ticked I’d be if I happened to be number 27 on the wait list for that e-book, only to be told I couldn’t check it out. Finally, publishers don’t put a limit on the number of times a physical book can be checked out. All they are doing by limited e-books in this manner is once more saying they don’t look at e-books as real books. (For more on this, check out this post and this one.)

So, what is a book? To me, a book is the collection of words, written by an author for readers to read in whatever format they like: hard cover, trade paperback, mass market paperback, digital or enhanced. After all, why should it make a difference if the book is printed on paper or on your computer screen or smart phone? A book is a book is a book and it’s time the industry’s definition caught up with technology.

So, what is a book to you?


(Cross-posted from Mad Genius Club)

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