Posts Tagged ‘advance’

My Stern Lecture to a Client

February 7, 2013

Sometimes I can’t sell a book to a publisher. Actually, a lot of times I can’t. Even after doing this job for 5 years and getting an estimated 5000 rejection letters explaining why the editor turned me down; even after my rigid filtering process where I reject at least 500 unsolicited author queries for every one that I decide to represent; even when I have become so smitten with a project that I am convinced the publisher will offer a seven figure advance and Spielberg will be on the phone next day begging me to make a movie deal; I still have projects I can’t sell. All agents do. Even the coveted celebrity New York agents who have daily lunches with the coveted celebrity executive editors. Whenever any agent is representing an unknown author, taking a risk, trying to sell a book based on the merits of the project, not just on the author’s celebrity status, there will be rejections.

And when I do sell a book, sometimes for a lot of money, it is usually after I have received 30 rejections from other editors saying: “it’s a really great book, but I just didn’t fall in love with it”, or “it’s competing with another one of our titles”, or “the author has too modest a platform”.

And authors can be even less realistic than I am. After all, they look at the bookstore shelves and see a lot of dreck. They read lots of literary novels that are all well crafted but have a feeling of being sort of the same. They see some really horrible exploitative celebrity memoirs. Really crappy social analysis by gas bag political pundits. And some of these book deals really are getting seven figure advances.

So now what I do just before I submit the project to the publisher is give my client this stern lecture:

“Today I am sending out your book. I believe in it. Otherwise I wouldn’t have worked with you for 4 months polishing the proposal, refining the concept, and (in my humble opinion) making it perfect.

“But you must be realistic. It’s hard to get books published these days. You should hope for the best but expect the worst. I have experience in these matters and will make sure that your book gets to the right editor at the right imprint. I don’t just send books to the same 10 editors and then give up on it. I will send it to all major and not so major publishers who would have an interest in your book. If I can’t sell this book, you can be assured that all avenues have been explored.

“If I can’t find a publisher, it doesn’t mean that your book isn’t good. Sometimes, most times, the decision to publish a book comes down to issues of marketing, not quality or aesthetics.

“But even though your book is good, there are also a lot of other good projects going around. Editors may look at 10 proposals a week or 300 fiction manuscripts a year. Most of them have been heavily vetted by agents. And most of them are publishable. In other words, there is lots of competition.

“You have asked me several times how much your advance will be. I won’t venture a guess on that because my estimates have been wrong so often. Sometimes I expect $20,000 and get an advance for $100,000. Sometimes I get an advance for $7,000, even from the big publishers. Times are tough for publishers just like for the rest of us. The big ones are owned by multimedia conglomerates who are putting a lot of pressure on the publishers to make a lot of money. So publishers have become skittish about big advances. As an agent, I probably can get a publisher to sweeten the deal a little. But publishers base advances on their calculation of sales. They always have a figure in their head of the maximum they will pay. My job is to find out what that figure is and try to find other ways of sweetening the deal when they won’t budge on the advance. I’m an agent, and I don’t have secret alchemical wisdom. I can’t turn lead into gold.

“Don’t expect your publisher to spend a lot of time and energy promoting your book. All those full page ads in The New York Times usually are focused on a very few name brand authors. The publisher really expects you to do the heavy lifting and to promote your own book. They used to send a lot of authors around on 7 city tours. They don’t any more. I have never met an author, no matter how successful, who was satisfied that their publisher promoted their book well. You might ask yourself what kind of added value you get from having a commercial publisher as opposed to self-publishing. It’s a reasonable question to ask. But the answer is complicated.

“I know you would give a great interview on Oprah, Fresh Air, or The Daily Show. And a lot of publishers will make contacts to these and other “A” list venues. But competition for this is fierce and these shows have their own criteria that are often hard to fathom. Again, hope for the best but expect the worst.

“And then there is the Big Enchilada, the Holy Grail. I mean the call from Spielberg. Even though your novel would make a great movie or a tv series, it might not happen. There are a lot of “option” deals for books. Most of them are for very little money, and most of them never go beyond the option. Just like Oprah, movie producers have their own calculations that are not easy to comprehend. Does the book have the kind of 3 act structure that producers want. Will the character in your novel fit with a star who could attract financing? Would the subject of the book require so much resources for production that the film couldn’t make money? Has the producer gone into drug rehab and become unavailable for an indeterminate amount of time? Hope for the best, expect the worst.

“So now I’m sending out the book. Let’s cross our fingers and hope for that seven figure deal. But….remember my #1 rule: be realistic.”

More Misconceptions About Literary Agents

September 7, 2011

Last week we did a blog post on writers’ misconceptions about the literary agents. Here are a few more.

1) I went with the agent who promised me the six figure deal. Most of the agents I know won’t do this, but I still hear about it from writers. It’s pretty hard to predict what kind of publisher advance a project will draw these days. What I can predict is that the advance offers will be a whole lot lower than they were several years ago. It’s important to have an agent whom you can trust. Anyone who employs this kind of enticement is pretty suspect.

2) A good agent can get me a lot more money.  This is a little complicated. An agent can work with you to develop a concept that is more attractive (and valuable) to a publisher and can help you compose a book proposal that will  generate excitement from an acquiring editor. If there is competition for your book from several publishers, an agent can employ some sophisticated  bargaining strategies to help improve a deal offer. And an agent can negotiate contract terms that may address issues affecting future royalties. But if you are in a situation with only a single publisher making an offer, one must assume that the publisher knows in advance how much she is willing to pay for a project. The job of the agent is to find out what that number is. In spite of what they may tell you, agents are not in possession of alchemical powers that will turn lead into gold.  An agent can’t make a silk purse out of a sow’s ear.

3) A good agent can help me find a prestigious editor. This might or might not be true, but the real misconception is whether or not the writer will be better off with a “prestigious” editor. I believe that the best editor for a project is the editor who understands and believes in that project. This might be the editorial director of a large imprint, but it might also be a young assistant editor hungry for building a list. Recently I spoke to an author whose editor was one of these legendary guys in publishing. The author was unhappy, because he felt the editor didn’t give him the time he needed. I believe that.  I had one client who insisted that I only send his work to the most prestigious editors working at the most prestigious imprints, regardless of whether those editors had any interest in the subject being written about. One of the most common causes for rejection is: “this book doesn’t really fit my list.” A good agent will find you an editor who believes in your book. That is more important than having a superstar.

4) Never work with an inexperienced agent. Since I was an inexperienced agent not too long ago, I fully understand the downside of working with one. There are lots of things in book publishing that a person can only learn from experience. Fortunately I had been in the book business for 35 years when I became an agent and came onto the job knowing quite a bit, but there were still lots of holes in my knowledge. A lot of agents, many in the big agencies, can be pretty young and inexperienced. But this is not always such a bad thing. Some of these agents are pretty sharp and have a good eye for a project. And they are more likely to take a chance on a new writer. In the book business, developing new talent is a thankless but important job and it usually falls to the agents who have not yet built their lists.

Andy Ross Interview Part 2

December 26, 2010

  This is a continuation of  John Marlow’s  interview with me for his Self Editing blog. John is a novelist and script writer and editor. His blog focuses on people writing for movies.

JRM: A number of agents and agencies are now rebranding themselves as “literary management” companies. Does this, in your opinion, represent a fundamental change in the representation business-a shift, perhaps, toward the Hollywood model where writers often retain both agent and manager?

Andy Ross: In the book trade, so far, distinguishing between “agent” and “literary management” is like distinguishing between “used car” and “preowned car.” Different words for the same thing. The real distinction is between agents who do manage client’s careers and those who just flip contracts. The former are preferable to the latter.

JRM: You’ve just described the difference between managers and agents in Hollywood, though there are of course exceptions. But in the book trade-so far-they’re all still “agents?”

Andy Ross: Yes. I guess my simple answer is that, in the book world, good literary agents manage their clients’ careers as well as get them contracts. Bad agents just flip contracts.

JRM: What’s the industry-wide average or typical advance for a book by a first-time writer, and how is that paid out? Feel free to break that down into categories, or to qualify it any way you like.

Andy Ross: I can’t make any generalization about typical advances. But I can say that advances have dramatically decreased in the last few years. It is not unusual to get an offer of a $50,000 advance from a major publisher, for a book that may very well be a lead title.

Any agent will tell you that today, $50,000 is a very good advance. Five years ago, that same book might have garnered three times that amount. You read about seven-figure advances, but really these are for the big celebrities.

Advances get split into payments. Two, three, and even four. Smaller advances are often paid in two parts, one on signing and one on delivery and acceptance of the manuscript. Larger advances will have an additional payment at the time of publication.

I have a six-figure advance that has yet an additional payment at the time of paperback publication. So the final payment is likely to come over two years after the contract is signed. One questions whether this should even be called an “advance.”

 JRM: Moving more toward the classic Hollywood step deal.

While we’re talking left coast—any thoughts on books with film or other crossover potential, and how that potential affects the likelihood or ultimate price of a sale?

Andy Ross: Most good agents will try to reserve the rights for movie/tv/performance for the author. So a publisher won’t get a piece of that action. But in general, a movie helps the sale of a book. There are a lot of deals for “options” for movies, which give the production company the right to exercise an exclusive option for a given period of time. A lot of these deals aren’t worth much money. There are very few options that end up getting made into movies.

JRM: For readers who may not know the score, I feel compelled to say here that, while this is absolutely true of most options–typically those by lesser-known companies and individuals—it’s also true that many options pay more than a typical book advance, even if the film is never made. In which case, the author gets to keep the money-and option the work again, or sell it.

Also, some options involve the optioning party doing a significant amount of work to develop, improve, or adapt the work being optioned.

Andy Ross: That is certainly true. Options, like advances, come in all shapes and sizes.

JRM: What industry trends do you think writers should be aware of right now—what’s changing, and where is it taking us?

Andy Ross: The big topic of conversation right now is electronic publishing. It is growing exponentially, and will continue to do so as more consumers buy reading devices.

The reading experience with e-books has become pretty good now. I believe that this is the future of book publishing, as far as anyone can really predict the future in this fast-changing world. I think this will have tragic consequences for community-based bookstores and for the communities they serve.

I don’t think online bookselling is ever going to be able to recreate the ineffable joy and excitement of shopping at a real bookstore. I don’t think that e-books will necessarily change the way people write or the content of what they write. It is a neutral medium, just as a blank piece of paper is a neutral medium.

Of course the more substantial and, to my mind, more troubling trend is the reduction of reader attention span due to the Internet. Reading requires patience and time, and a kind of commitment from the reader that is missing when one is simply surfing the net.

And, of course, the culture of celebrity is driving bigger and bigger sales to fewer and fewer titles. These are very troubling trends, indeed.

JRM: Going back to your comment about the pleasures of shopping at brick-and-mortar stores, I have to agree. But there’s another issue in play here.

Once upon a time, the big chains drove the little independents out of business. Now the online behemoths are putting the hurt on the chains. Amazon has driven Barnes & Noble to the auction block, Borders has already gone under in Britain and was teetering on the brink last year in the U.S. The same thing is happening with dvd rentals: Netflix has driven Blockbuster into bankruptcy.

This would seem to bode well for indies, particularly small or niche stores with lower overhead—where the people working there actually know and care about the books they’re selling. But will customers be willing to pay more for that superior service and personal connection, when they can in most cases order the same thing online, for less?

Andy Ross: That is a very good point. My wife works at an independent store, Book Passage in Marin County, north of San Francisco. I used to be an independent bookseller, and I have a lot of friends who own independent stores. People in publishing and book lovers everywhere think of indies as the heart and soul of the book business.

Barnes & Noble is still a very robust company. It sells about the same number of books as Amazon. But they are closing a lot of stores and using more space for non-book items. In other words, they are having to make very significant adjustments to accommodate the brave new world of publishing.

Borders is a corporate basket case. They seem to be trying to shrink their way into profitability. Not a good sign.

And yes, you are right that smaller independents have some important advantages. They have low overhead and provide the kind of bookstore experience that is matchless. But unless they can find a way to adapt to the e-book revolution, their future will be in doubt.

JRM: What does your experience at Cody’s tell you?

Andy Ross: Cody’s was a large independent store and was probably a victim of history. The heyday of independent stores was in the 1980′s, before the chains started opening up superstores everywhere. Business began declining in the ’90s. And at the end of that decade we began facing extremely robust competition from Amazon.com. Cody’s had a very high overhead and faced eroding sales.

JRM: What do you like most about working with writers?

Andy Ross: I have enormous admiration for the vocation as well as the profession of writing. I think a lot about what Anne Lamott said in Bird by Bird. She advised the writer to stop worrying about getting published. Writing opens you to the world and makes you a better and wiser person. Getting published does none of this. And seldom brings wealth or fame.

I have said elsewhere in my blog [link]  that the work of the writer reminds me of the final magnificent sentences of Albert Camus’ Myth of Sisyphus. Something to the effect that: “the journey itself is enough to fill a man’s heart.” Nothing to my mind is a more eloquent expression about the courage it takes to be a writer.

 

Sarah Palin Book Income Update

March 23, 2010

Why is Sarah Smiling?

Publishers Weekly just came out with its list of the best selling books of 2009.

For all of you readers out there who thought that Going Rogue by Sarah Palin was a joke, the joke is on you.  Sarah’s publisher, HarperCollins is laughing all the way to the bank. And so is Sarah.  Yes. Going Rogue was the #1 non-fiction best-seller of the year. It sold 2,674,684 copies. Nobody else came close.

Ask The Agent made an educated guess that Palin received a $6,000,000 advance for the book.  Truthfully, we were blowing smoke. We have no idea what that advance really was. But for comparison, it was reported that Senator Edward Kennedy’s received  an $8,000,000 advance for his autobiography, True Compass. It was  #5 on the non-fiction best seller list selling 855,843, about a third of Palin’s sales.

Now that the sales are in, it is a lot easier to calculate how much Palin actually made on the book and how well her publisher did.

Whatever Palin’s advance was, it was an “advance” against royalties. Royalties are based on actual sales of a book. An author doesn’t receive royalties until the advance is “earned out”, i.e. royalties exceed the advance that was paid. Typically the royalty rate is 15% of the list price, which, in the case of Going Rogue, was $28.99. So Palin made $4.34 on each book or a total of $11,608,128.56. Not bad for a book she didn’t even write.   She may have paid some of this out to her hack ghost writer. We don’t know how much, but $1,000,000 would be a lot for this kind of work. And shabby work it was!

But  wait! It gets even better. The numbers we are talking about are for US sales of the hardback version only. It doesn’t include the following: world English sales, translations, e-book sales, electronic apps, movie options, audio books, condensations, serializations, and merchandise (calendars, t-shirts, mugs, video games, and posters). And let’s not forget book club sales. And the Conservative Book Club is a huge driver of sales, frequently in the seven figures. We don’t know these numbers and probably never will.

But wait! It gets even better. Those numbers are only for sales in 2009.  Going Rogue is still a best seller juggernaut. Her Amazon ranking is (as of today) #266 and her Kindle ranking is #573. Trade and Mass Market paperbacks will be rolling out sometime this year. By comparison, the best-selling non-fiction trade paperback in 2009 was Glen Beck’s Common Sense selling over a million copies.  Assume 8% royalty on a $16.00 paperback (that is conservative), Palin stands to reap another  $1,250,000 plus change on these sales.

Feel sorry for the publisher, HarperCollins, for shelling out all that dough for royalties? It’s ok. Don’t worry. Let’s look at publisher costs. Typically a publisher will receive about half of the retail price of a book which would be for this book $14.47. HarperCollins out of pocket costs would be approximately $3.00 for preproduction (editing and the like), $2.50 for manufacturing, and $2.00 for marketing. Add to this Palin’s $4.34 royalty. The publisher’s profit  should net out at $12,383,786. (This does not account for publishers fixed overhead costs). And they also stand to make lots of money on continuing sales, paperback sales and other subsidiary sales.

I wish I was Palin’s agent. Let’s see….15% of author’s net income. That’s $1,741,219 and counting.  Sweeet!

Laurie McLean on Genre Fiction

February 25, 2010

Laurie McLean

Laurie McLean is a literary agent specializing in genre fiction. That is a term of art for such categories as: romance, thrillers, mysteries, fantasy, horror, westerns, science fiction, etc.. Laurie has been a literary agent for 5 years and works at the Larsen Pomada Agency in San Francisco. The agency’s website is at: http://www.larsen-pomada.com/lp/pages.cfm?ID=15. She has a fantastic blog, Agent Savant at: http://www.agentsavant.com/as/, which is a good place to start learning about genre fiction.

Today I’d like to talk to Laurie about genre fiction.

Andy: Laurie, can you give us a definition of genre fiction? I mean, don’t all book subjects fit into a genre?

Laurie: The term, genre fiction, is used by marketing folks inside publishing and bookstores to help book buyers, also called readers, find the type of books they like to read. If one is a reader of mysteries, then it makes sense that a bookstore would shelve all mysteries together to increase overall sales. That’s really why the term genre fiction was coined—to differentiate these specific genres from general commercial or literary fiction.  It’s also similar to the way non-fiction is shelved by interest rather than author.

Andy: I’d like to go through each of the genres and have you describe them and tell me what publishers are looking for now.

Laurie: Science Fiction: It seems that the UK is the biggest audience for hard science fiction, while US readers prefer space opera and softer speculative fiction. There is also cyberpunk, where man has integrated with computers; time travel; alternate history; military SF; and the newest craze, post-apocalyptic or dystopian speculative fiction.  Think Cormac McCarthy’s The Road

Fantasy: Epic fantasy, also called sword-and-sorcery or high fantasy, is the coming of age quest tale like the Lord of the Rings or the Sword of Shannara books. It has gone down in popularity today by what is called urban fantasy, stories that revolve around the conceit that supernatural creatures, mainly vampires, werewolves or other shapeshifters, ghosts, demons, etc., have lived among us forever but are now recognized by humanity and begrudgingly accepted—until a rogue creature starts wreaking havoc and humans and preternaturals must team up to put things back in balance.  It features a lot of ass kicking but no quests.  There is also interest currently in steampunk, where everything from appliances to weaponry to transportation runs on steam and the devices and clothing are very Jules Verne-esque; futuristic fantasy; superhero fantasy, etc.  Fantasy and Science Fiction can sometimes genre blend or bend and are often located in the same section of the bookstore.

Romance: When you have a hero and heroine who meet, with sparks flying, then internal and external conflicts keep them apart despite their mutual attraction until the end of the book when a happy ever after ensues, you know you are talking about the largest genre in fiction by far: romance. More than 50 percent of mass market [pocket size paperbacks] fiction sales in the United States each year are genre romance.  The biggest trend in genre romance lately is paranormal romance, but there are also contemporary, historical, comedies, romantic suspense, inspirational and erotic subgenres.

Mysteries/Suspense/Thrillers: I’ve lumped all these together, although they are all different. In mysteries you have a murder in the first scene and the remainder of the book is spent trying to figure out who dunnit.  In Thrillers, the fate of the world is at stake and the clock is ticking.  Suspense novels are somewhere in between where a family could be in jeopardy, or a town or group of friends and the protagonist(s) must save them with, again, time against them.  You’ve also got subgenres within these categories such as cozy or detective mysteries; legal, crime, action, disaster, conspiracy and religious thrillers; and more.

Horror: While horror, now sometimes called Dark Fantasy, is more popular on the movie screen than in books, you have everything from serial killers to splatterpunk (think the Saw movie series) to dark fantasy, to more psychological horror.

Young adult: This is not a genre, per se, but one of the healthiest and fastest growing categories in fiction. The young adult, or YA, category was created by a savvy bookseller who observed families coming into the bookstore, the young children going to the children’s section, the parents going to the adult stacks and the teens going to the coffee shop. The young adult section was created and all of a sudden teens had a comfortable place to shop for books about subjects ranging from chick lit and teen fantasy to more contemporary realistic gritty fare about teen suicide, pregnancy, drugs, sexuality preferences and more. Urban fantasy and post-apocalyptic fantasy are currently big trends for teens.

Andy: In the greatest works, doesn’t genre fiction cross over into literary fiction? Isn’t the greatest romance novel ever Wuthering Heights? Can you give us some examples of contemporary works in the genre that are also literary masterpieces?

 Laurie: When a genre book is superbly written and an instant classic, it rises out of the genre shelves and migrates over to the general fiction or bestseller stacks.  Think anything from Jane Austen or Georgette Heyer for romance—or modern names like Nora Roberts and Jayne Anne Krentz; Stephen King or Dean Koontz for horror; Terry Brooks, Neil Gaiman or J.K. Rowling for fantasy; John Grisham, Dan Brown and Tom Clancy for thrillers; William Gibson, Neal Stephenson, and Orson Scott Card for science fiction; Janet Evanovich or Sue Grafton for mysteries; Stephenie Meyer and Scott Westerfeld for young adult.

Andy: Which of these categories are hot and which of them are not?

Laurie: Hot: Young adult, steampunk, paranormal romance, urban fantasy, political thrillers, apocalyptic fiction.

Not hot: Chick lit, contemporary and inspirational romance, epic fantasy, quaint cozy mysteries.

Andy: Do you think that the rise of the e-book offers opportunities or challenges for genre fiction? It seems to me that these titles are perfect for the new electronic formats.

Laurie: Erotic romance was one of the first genres to do well in the eBook format and some credit this subgenre for the rise of eBooks today. Ellora’s Cave was a pioneer in racy romance. But really all genres do well in eBook format. They are perfect for this digital format in terms of storage (you can fit a lot of vacations reads on your eReader but not in your suitcase) and anonymity (no one can see that you’re reading a “bodice ripper”, the disparaging term for romance novels).

Andy: You ran a public relations agency for 20 years in Silicon Valley. Why did you get out? How do you like being an agent?

Laurie: I got out of high tech public relations when the lucrative nature of the business could no longer hold my interest as the challenges declined and ethics began to get compromised.  Being a literary agent, to me, combined the best of both halves of my brain, similar to the way being a publicist allowed me to be creative and strategic simultaneously. I love the publishing industry because it really is about the writing. They money’s not the greatest unless you’re a bestseller or handle a stable of bestselling authors, but every day is different, the pace is often bracing and exhilarating, and the people I deal with on a daily basis are wonderful. I think I’ve found my calling!

Andy: How has your experience in public relations been helpful in your second career?

Laurie: All the facets of what made me successful in PR—time management, marketing savvy, the ability to think on my feet, contract negotiations, interpersonal skills, a diligent hard work ethic, attention to details, the ability to think outside the box—all come in handy for a literary agent.

Andy: When we had lunch the other day, you astonished me by saying  that you receive 1200 unsolicited queries a month. How do you manage to address this ocean of pitches?

Laurie: Well, this is kind of like the frog in boiling water analogy. If you put a frog in boiling water, it jumps out immediately. But if you put a frog in cold water and turn on the heat, that frog will boil to death because of the gradual nature of the temperature rise. I started off with a small number of queries each day and could easily give personal suggestions for improvement and reasons for rejections. When I got busier, I switched to a form rejection letter where I could add a few sentences of advice in many cases.  But by the end of 2009 I was receiving more than 1200 queries a month. I was boiling. So, I’ve had to change my submission process. Now I have a separate email address for queries only (query@agentsavant.com) where I have an automated reply that informs the writer that I’ve received his or her submission, but they will not hear from me again unless I want to read more of their work. It’s not something I ever thought I’d do, but once I’d given up my spare time, some of my sleep and meal time, and it still wasn’t enough, something had to give. Now I don’t have the monkey on my back screaming and clawing at me. I can read queries on the weekend, as many as I can fit in the hours I have, and ask for more from those that interest me.

The Book Deal: Territorial Rights

November 9, 2009

The Book Deal: Territorial Rights

Most people think of book deals as just that: a author gets paid by a publisher to publish his/her book. But it is a little more complicated than that. The book deal is a  negotiation that includes, not just how much the author will get paid, but  also what “subsidiary rights” will be granted to the publisher for exploitation. There are numerous revenue generating opportunities when you write a book. They include: right to license in the English Language in the UK and other English speaking countries, translation rights, audio rights, e-book rights, sale of abridgements, magazine excerpts,  movie/tv/performance rights, merchandise spin-off rights, and many more. All book deals include negotiations of  which of these sub-rights are being granted to the publisher and what will be the revenue split between publisher and author.

Today we will talk about territory rights. These are important deal points and are always negotiated along with advances and royalties. These rights are typically the right to sell a license to a foreign publisher to publish  in another country or another language. Sometimes publishers merely export the existing book and have it distributed in foreign markets. No licensing rights are involved in this situation, but there is still an opportunity to negotiate the royalty on books for export.

In a book deal, territorial rights are always split into at least 3 categories.  These are:

  1) North American English (which includes US, Canada, and usually The Philippines). I’m not sure why the Philippines usually gets thrown in, but it almost always does.

2) English language rights in the remainder of the world, which includes UK, Commonwealth countries or former Commonwealth Countries (Australia, New Zealand, South Africa, sometimes India, etc).

3) Translation rights. Obviously all languages other than English. One of my clients has books translated into 29 languages, some of them he has never heard of.

Publishers usually try to negotiate “world rights”. This is the right to publish or license the publication of books throughout the world. Publishers will usually offer the author 50% split on the income from these rights. That is a good deal for the publisher, but not such a good deal for authors. The work involved in selling these rights is minimal. The income is substantial. If I am negotiating with the publisher, and we have determined to sell them world rights, I try to get the percentages up to 75-80% for the author.

Usually it is more advantageous to reserve as many world rights as possible for the author and have the author (or his agent)  sell them himself.  In this situation, the author gives the right to the publisher only to publish in North America. The remainder of the  rights are retained and sold by the author  throughout the world  with no split going to the US publisher.

As in all aspects of the book deal, the ability to hang on to the foreign rights is dependent on how much leverage you have in negotiation. If you have multiple suitors or are conducting an auction, you can simply make the rule that the only rights being offered are for North America. If you only have a single offer, you may not have a strong say in the matter. Also a publisher may make an offer so generous that it is worth giving them world rights in exchange. And frequently, because of the subject of the book, world rights might be insignificant, and should not play a critical factor in the book deal.

Let’s try to calculate the value of retaining the territorial rights versus selling them to a publisher. In this example, let’s say we have an offer from a UK publisher for $10,000. If your publisher controls the rights to the book, and your contract calls for 50-50 split on the revenue, here is how it breaks out:

UK advance $10,000

 Publisher’s agent commission: $1500

Less publisher’s 50% cut on the right $4250

Author’s Revenue $4250

Less commission to author’s agent $ 637

Net to author $ 3613

This isn’t such a great deal. The author ends up with 36% of the income gained from the sale of the rights. And there will also be a substantial amount withheld for taxes from the foreign government. Another disadvantage is that the income that is due the author by the US publisher will not be paid upon receipt but will be deducted from your advance. You will not see this income (if ever) until far down the road.

Now let’s look at the same situation when you retain your rights.  As an agent, when I negotiate retention of these rights, I receive a slightly higher commission of 20%. The reason for that is that I will have to split my commission with a foreign agent. Most agents do the same, although the amount varies.

.

UK advance                                           $10,000

Revenue due author                             $10,000

Less author agent commission           $2,000

Net to author                                         $8,000

Definitely a much sweeter deal for the author. Don’t forget, you still have the tax withholding to a foreign government. But these tax payments will be credits against your US taxes. So it should be a wash. The other advantage in this situation is that the money will come to you up-front and not be deducted from advances. As we said in a previous blog entry, it is always better to get money sooner rather than later.

There are some other advantages and disadvantages to these respective deals. The advantage of selling world rights to the publisher is simplicity. But also it is possible that the publisher has resources and connections that are not available to you. Perhaps you can make an effort to sell the rights yourself. If unsuccessful, you can always turn them over to the publisher.

But the opposite is also true. It is possible that a small publisher doesn’t have resources to sell the book. And won’t devote the resources that they have to aggressively sell the rights. With a large publisher that has offices world-wide, they might make an inside deal with one of their own subsidiaries with an advance below what the market would offer.

Regardless of who controls the territorial rights, this is an important part of the book deal and potentially a very lucrative source of income for the author.

The Book Deal: Royalties

November 2, 2009

.Almost all publisher contracts pay authors through a system of royalties, a certain defined percentage of revenue based upon sales of the contracted book. The concept is simple, but it can get quite complicated in practice. Let’s talk about the different formulas that publishers use in calculating royalties and how these translate in income for the author.

At the outset, it is worth noting that for the majority of authors who get published by trade publishers, royalties don’t really matter. Most books never earn out their advance, and authors never receive a royalty check.  Big time celebrity agents often like to brag that if a book “earns out” the advance, they haven’t been doing their job. And there is certainly something to be said for this argument. It means that the agent negotiated a sweet deal, and the author ended up with more money than she would have otherwise earned.

We discussed advances last week. We mentioned that advances are just that: advances against royalties. An author will never see a royalty check until the net earnings from royalties exceeds the advances paid. We also had a little fun trying to estimate he total advance on Sarah Palin’s book some hypothetical assumptions.

The royalty rate is negotiated in the “deal points” phase of contract negotiations, before the contract language is worked out.  A typical royalty arrangement for cloth bound books from a major publisher is: 10% (of retail price) on the first 5,000 sold; 12.5% on the next 5000; 15% thereafter. More important authors might be able to sweeten this deal some. But it is unusual. Royalties on trade paperbacks are less and usually start at around 7.5%. They can increase on volume sales.  Remember that these percentages are based on “list price” or “retail price” or “cover price”. All of these terms refer to the price marked on the cover of the book. Thus, if  retailers discount the price of the book to the consumer (as they frequently do), it has no impact on the author’s earned royalty. The recent price wars amongst Amazon, Walmart and Target, in which books are being sold far below their cost as loss leaders, have no impact on the royalties being paid to the authors. 

Some publishers, mostly smaller publishers,  calculate the royalty as a percentage of  the publisher’s net revenue. This is quite a different accounting method than one based on  the retail price. Net revenue will vary from publisher to publisher. But in general, publishers sell books to vendors for 50% less than retail. If your contract calls for royalties based on “net”, then you should be seeing royalty percentages that are double those of those based on retail price.” If you aren’t seeing that, than it is not a very good book deal.

The calculations can get murkier when you consider that almost all publishers have provisions in the contract to reduce author royalties on sales where the publisher has offered unusually large discounts to the retailer. Typical deep discounting language in a contract might be the following:  “When the publisher grants discounts in excess of 50%, author’s royalties shall be half of the royalties otherwise due.”

Hmm. Interesting. So this means that if a publisher sells a book for 51% discount, and receives 1% less than otherwise, the author will have his royalty reduced by 5%. This  doesn’t seem fair—at least, not fair to authors.

A lot of these deep discount deals are for bulk sales to big box stores or special sales to corporations and institutions. The discounts can be as high as 55-60%. So it is probably fair that the author should make some kind of sacrifice.  But wait!  Maybe not. Consider that these high volume sales are shipped to a single location,  packed on skids,  a single invoice to account for, no returns permitted. The publisher is making considerable profit on these bulk sales.

In my humble opinion, these deep discount provisions are entirely one-sided and have the effect of reducing author royalties on transactions that are actually more profitable to publishers. Unfortunately, these provisions are frequently difficult to change in negotiation. I try to define exactly what classes of vendors they apply to and put into the contract that the provision will only apply to sales outside of normal book trade distribution channels. Otherwise, one could find that most of one’s royalties are going to be based on rates offered in the deep discount provisions, not on the negotiated standard royalty rates.

If you ask anyone in publishing, they will tell you that all thought about the future is centered around the role of e-books. The royalty on e-books has moved to the fore and is now an element of the deal point negotiation. As of now, there is not a firm rule of thumb for e-book royalties. I have seen royalties offered anywhere between 15% – 50% of publisher revenue. Random House, the largest trade publisher, has been offering 25%. I suppose that is as good an indicator as anything else of a prevailing practice.

At the moment, e-books account for less than 2% of book sales. But this could change dramatically and quickly in the coming years. Thus a bad royalty on e-books might not mean much money now. But could be substantial as the e-book takes hold of the marketplace.

It seems to me that an author should be entitled to a much larger portion of an e-book sale than of a physical book. After all, publishers have considerably lower costs in manufacturing, distribution, and returns. But the royalties   being offered to authors on e-book sales don’t seem to account for these savings by the publisher.

What Was Sarah Palin’s Advance?

October 28, 2009

palinEveryone in America is asking today what was Sarah Palin’s advance for her book, Going Rogue. We can’t say for sure, but we can calculate a range by applying some reasonable assumptions. Alaska reported that during the final six months of Palin’s governorship she received a “retainer” of $1,250,000 for her book from Harper Collins, her publisher. Let us assume that this was simply the first payment of an advance to be paid in several parts. Typically an advance is determined by the projected royalties on the first printing of a book. In the case of Palin’s, the print run was 1,500,000. Royalties on hardback books vary from 10-15% of list price. They can be even higher for some blockbusters. Let’s assume that her per book royalty is 15% or $4.35 per book. This would give us an expected advance of $6,525,000.

Another metric that we could use is the estimated number of equal payments that are made for any advance. Typically an advance is divided into a number of equal payments which are made at certain benchmark times. Smaller advances are usually in two parts. Larger ones can be in three. Very large advances can  be made in four parts. Since Palin’s advance is clearly very large, we assume that the reported advance was the first of four payments. This would give us an estimated advance of $5,000,000, similar to the previous estimate.

Of course, the normal economics of publishing don’t really apply to deals of this size. So my calculations would have considerable uncertainty.  The rumored amount on the street when the deal came down was $7,000,000.


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