Posts Tagged ‘Dean Wesley Smith’

(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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This past weekend was one of those rare weekends when I didn’t write, didn’t edit, didn’t do anything with regard to the publishing industry other than re-reading one of Dave Freer’s books for fun.  I didn’t even read the blogs I normally do.  Instead, I enjoyed spending the weekend at university with my son — always a reason to celebrate.

So, imagine my reaction when I got home last night and started going through my regular blog reading and found some of my concerns now being voiced by names bigger and more knowledgeable than I.

A little background first.  I may be a very small fish in a huge pond when it comes to being a published author, but I keep my ear to the ground and I talk to a number of others who have been in the business a lot longer than I.  One thread has seemed to be consistent of late — the concern that royalty statements aren’t accurately reflecting the number of sales any given author is making.  Now, this concern isn’t anything new.  Writers have had issues with Bookscan numbers for quite awhile simply because Bookscan doesn’t report all sales.  It simply reports sales from selected markets and then extrapolates from there.  Okay, it might be easier for a a publisher to simply pay a third party to do this, but come on, guys, the publisher surely knows how many books are printed, how many are shipped, how many are sitting in a warehouse somewhere and how many have been returned.  A simple in-house computing program could track that.

So, Bookscan had been an issue of concern.  Then Amazon did something the publishers hated.  They made Bookscan numbers available to authors who take part in their Author Central program.  Oooops.  Now writers can track their own numbers for printed books without breaking the bank.

That then focused attention on e-book sales and gets back to my conversations with some of my writer friends.  More than one talked about how they were getting royalty statements saying they had sold a very small number of e-books — far less than what their fan mail and in-person conversations with readers led them to believe — and, very suspiciously, they sold the exact same number of copies of multiple titles.  Okay, I’m a pretty trusting person, but when a royalty statement says Author A sold 8 copies each of three books and this is exactly what they sold the previous royalty period as well…well, I start getting suspicious.

Seems I’m not alone.  One of those I respect a great deal in the business is Kristine Kathryn Rusch.  I’ve never had the pleasure of meeting Ms. Rusch, but I have followed her posts in “The Business Rusch” for some time now.  Her post on the 13th about royalty statements is something every writer needs to read, digest, read again and then act on.  Remember, the publishing industry is changing very rapidly right now and publishers are struggling to figure out how to adapt — I hope they are at least — and I think Ms. Rusch is right when she says that adopting a new accounting method that accurately tracks e-book sales is not high on publishers’ priority lists right now.

Maybe Bookscan will soon start tracking e-book sales as well.  It won’t be perfect, far from it.  But it will be one more weapon in a writer’s arsenal to protect himself.

(As an aside, another blog every writer should be following is Dean Wesley Smith‘s.  Between him and Ms. Rusch, the business of publishing is made much more understandable for writers at all stages of their careers.)

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