Killing the Sacred Cows of Publishing: You Must Give Your Money to an Agent First


The myth is simple: All your money must first go to an agent before you can have it.

Oh, wow, is this myth buried deep in this business, so deep that no writer thinks of questioning it, often even after having an agent take money from them.

I’m going to do what I often do in these chapters, and that’s build the history first of why this myth came about and why it is so strong, then build a solution. So hang on for the ride and try to hold the anger down until you have read all the way to the end.

SOME IMPORTANT HISTORY

In the beginning, meaning way back when agents started into publishing from the theater and movie industry, agents lived in New York City and writers sometimes didn’t. The writers who did live in New York would never think of having their agent paid first, and most didn’t need an agent and didn’t use one. But those writers outside of New York had their agent drop off manuscripts in editor’s offices and pick up the check, then the agent would mail part of the check to the client and keep the 10% fee. The agents knew the editors personally and it was a very small business.

All that was fine, a practice that started when agents picked up checks. Some writers questioned it and some didn’t right up into the late 1960s when publishers started bringing in the large computers to do payroll and keep track of checks. In the early 1970′s a few publishers starting noting that for some of the larger agencies they had to cut more than one check. They figured it would just be easier to write the agent one check and let the agent divide it between all of his clients.

(This no longer applies today with modern computers and internet banking.)

And thus in the early 1970s, about the point I was coming into the business, the practice became solid. But also remember in that time period, the standard belief was that you and your agent were “married” and trust me, you knew your agent. You had spent a lot of time with your agent and you were friends. So this system worked right up until the early 1990′s.

By that point the writers were hiring agents out of books, on a quick meeting at a writer’s conference, or simply because some person with a business card said they were an agent and the young writer got all excited. Scams and theft of writer’s money became almost the norm at this point and continues to this day.

And writers don’t know about most of it or care. 95% of all writers don’t even ask for rejections, or sign their own overseas contracts, or even see them, or bother to check royalty statements enough to even notice that for some odd reason the numbers don’t match up. Or the statements stopped coming. Agents know this about writers. Trust me. And the scam ones take advantage of it in every way they can.

Then things got even worse if that was possible. In the mid-to-late 1990′s writers started signing contracts with publishers that had inserted in it (by the agent without writer permission) an agency clause forcing the publisher to pay the agent first on all matters concerning the contracts. Did one writer’s group object? Of course not. And even though completely unenforceable, these agency clauses now try to hold the rights past the termination of the contract. And writers believe them.

And we all signed them, me included.

Now remember some facts:

1) Agents are not regulated or schooled or trained. Anyone can become an agent.

2) Writers are hiring strangers posing as agents to handle sometimes hundreds of thousands of dollars of their money without even a simple background check.

3) Most writers don’t bother to check the paperwork their agent sends them on any money payout.

4) Agents get all the paperwork FIRST before the writer on the money and thus don’t have to pass it along. Some writers are stupid enough to go so far as even give an agent power of attorney to sign documents. (That’s so far past stupid I gasp at the scale of ignorance.)

That’s the situation as it stands now.

Examples of How This Turns Ugly

Example: Writer has a nice selling book in North America, didn’t sell overseas rights. Agent phones one day and says “Sold German rights for 5,000 E.U..”

Actually the offer was 7,000, but somewhere along the way you were only told 5,000. Agents keep the rest plus 20% of the 5,000. How can this happen? More ways than you ever want to think about. And it happens all the time.

Example: Writers makes nice sale to Germany, royalties to be paid twice a year. No statements ever make it to the writer. Writer has no way of knowing if there was any more payments in Germany or not. And go ahead, demand those statements from your agent and see how far you get. And the excuses and “reasons” the agent doesn’t have them. Go ahead, I dare you.

Example: A book in the States is earning out and running royalties starting on the third statement, but you only saw the first two statements and don’t know it had checks attached to the third one because the agent kept the money and didn’t bother to tell you. And you don’t think to check because most writers are very, very bad at business and filing and don’t track the payments or book sales. Not all, just most writers. And if you have told the agent you want all the paperwork, and then demanded it, they won’t try this one on you.

I could go on, but the scams are far, far too numerous to list, often done by agents with top reputations and top clients.

For example, did you know a major agency with top clients holds everyone’s money as standard practice for seven days? Now, for those of you who understand accounting, this is called “the float” and this major agency as policy holds sometimes millions in this float account for a week, collecting the interest. Not much at the moment, but when interest was 10% it was a ton of money they earned off their client’s money. Again, a scam and major bestsellers let them get away with this. Not kidding.

SO WHAT IS THE ROOT CAUSE OF ALL THESE PROBLEMS?

Answer: Your agent gets all the paperwork and all statements and all money before you see it.

That’s the problem. Plain and simple.

THE SIMPLE SOLUTION

From this moment on, with every contract, you do the following simple steps.

YOU replace the agency clause in your contract with a clause that does two things. The new clause needs to state clearly:

1) All payments will be split 15% to agent of record and 85% to you, listing the address of both.

2) All paperwork and royalty statements will be sent to both you and your agent, or if the publisher balks at the extra expense, the paperwork is sent to you and you forward a copy to your agent.

Problem solved.

A simple and easy solution. You sign your own contract, you simply talk with the editor and insert that clause instead of the agency clause. Do that with all overseas contracts as well. (The contracts must be in your own language, so don’t let an agent tell you otherwise. If the agent pushes that you must do it their way, that is a sure sign of a scam going on. Contracts under international copyright agreements are always in the language of the author. Get them and read them carefully.)

If your agent objects to this overall or say they can’t do it that way, you have someone who is invested in scamming you and taking your money so fire them instantly. And I do mean instantly. You are giving them their 15% directly from the publisher in the contract. They don’t need your money as well, do they? They have NO valid reason to handle your money.

(And agents, if you really are reputable, there’s no reason to continue this practice. You start changing it. If agents as a group start changing this, it will soon become clear which agents are the scams and which agents are solid and honest. But until agents start changing this for all of their clients, it will be up to the writers.)

Will any writer do this?

No. (Or very few.) Too simple. And all writers are too afraid of their agents, and thus the agents who have no regulations or training but all the writer’s money will keep scamming the writers. It is a sad fact of life.

And right now I can hear hundreds of writers with agents thinking, “Luckily my agent isn’t doing that to me.”

HOW DO YOU KNOW??????

You have given them all the paperwork that comes with your money from publishers and all the money FIRST. Do you really know what a royalty statement looks like exactly from Bantam? How simple is it for an agent to make up a false one? Duh..

And so many, many other ways of doing it.

The fact is that YOU DON’T KNOW as long as you are letting perfect strangers touch your money first and all the paperwork with that money. And you can’t know.

Wake up, writers!

This is one Sacred Cow of Publishing that needs to be killed about a million times and then buried as a deep, ugly part of the past of this business.

But sadly, it’s not going to happen. Why? Because agents want to keep the money they are skimming and scamming and writers are too afraid of agents to object.

With luck, this new publishing industry that is going to emerge in the next ten years won’t include many agents, and writers can start coming to their collective senses.

Until then, we writers should change our names to “marks” because that’s what con artists call those they take money from. And we are the best marks ever invented. We willingly in a contract agree to send the con artist all of our money and the paperwork with it.

Luckily Bernie Madoff didn’t know about this. He would have been the best agent ever and he’d still be working and out of jail.

————————————————

Copyright 2010 Dean Wesley Smith
————————————————–
Because of the new world and technology, my magic bakery got a lot more valuable lately. This is now part of my inventory in my bakery. (Confused on that, read the Killing the Sacred Cows of Publishing post about making money with writing.) I’m giving you this small slice as a sample. I’m giving you a taste, but not selling any of the pie.

If you feel this helped you in any way, toss a tip into the tip jar on the way out of the Magic Bakery.

And I would like to thank all the fine folks who have donated. Once this book is done, I will send you a copy. The donations and the comments both after the posts and privately are really keeping me going on this. Thanks!

If you can’t afford to donate, please feel free to pass this chapter along to others who might get some help from it. Every week or so I will be adding a new chapter on the myths and sacred cows of publishing. Stay tuned. Upcoming are chapters on bestsellers, losing control of your writing, having it made, speed equals making money, more on agents, and so much more. This business has a lot of myths. An entire book full.

Thanks, Dean


This entry was posted in Misc, On Writing, publishing and tagged , , , , . Bookmark the permalink.

98 Responses to Killing the Sacred Cows of Publishing: You Must Give Your Money to an Agent First

  1. Meloni Glaesemann says:

    Dean,

    I’ve really enjoyed reading this series and thank you for writing / publishing it.

    It always sounds like you’re preaching to the choir when I read the (very extensive) comments at the end of the article. But this weekend I attended a certain Writer’s Conference in Portland, OR, and I sat in on several authors’ lectures on Plot, Dialogue, etc., as well as one lawyer’s lecture on Understanding Publishing Contracts. I suppose I don’t have to tell you which one garnered the least attention. How sad that only ten of us were interested in such an important aspect of the business end of writing. Your series has taught me so much, but it really hit home on Friday when I essentially had the full attention of a very expensive lawyer (hehehe).

  2. “I suppose I don’t have to tell you which one garnered the least attention. How sad that only ten of us were interested in such an important aspect of the business end of writing.”

    Meloni, after all these years, I’m still always surprised by that, too… even though it’s so predictable that I should’ve ceased being surprised by it long ago.

    And, yes, the upside is that, with only 10 of you present, you get a lot more time for your own questions, instead of having to share the Q&A time with dozens of other people.

    This is also a good example for the question that arises often here: “How/where do you learn this stuff?”

    One of the ways I learn is by being, like you, the sort of person who attends sessions like that. Yay, us! (g)

  3. Pati Nagle says:

    “How do we establish relationships with those NY editors? ”

    You establish relationships with editors by selling your work to them.

    What Laura said.

    I use a spreadsheet to track every query and proposal I send out. When I get a nice comment from an editor, especially if they’re encouraging me to send more work, I make a note of it. Then the next time I send them something, I thank them again for their previous encouragement in my cover letter.

  4. R. L. Copple says:

    In my day job, I’m a financial officer for a city, and have done bookkeeping for years (since 1996).

    I can vouch that the work for publishers would be minimal to track and create split payments and 1099s in this age. And with electronic payments to a PayPal or some other system, checks could be easily automated as well. There would be some additional work for the accounting department, but not that significant.

    But, after all, the contract would be with me, not my agent. So it would make super logical sense that if anyone gets the payment and paperwork, it would be me, not my employee. But it would be minimal extra work for the publisher, and save the agent a lot of work not having to deal with it at all. The publisher has to do this anyway in the current scheme, so having the agent do that is duplicating work in the long run.

    I don’t know, but it makes zero cents why an agent would even want to handle the author’s money. Aside from wanting to make money off the author’s money in one form or another, or wanting “control” over their employer, I would think an agent would love to dump that work and liability off their laps.

    Almost anyway I look at this, it makes no sense at all. No sense for anyone involved, except the scam artists. And this system encourages scam artist, maybe even ends up growing some who didn’t start out that way, because the temptation is too great. Without accountability, transparency, and checks and balances, that will not change.

    • dwsmith says:

      Can’t agree more, R.L, but alas, as many letters from very smart people in publishing have come in this weekend, it is clear to me that this trend will not change. When I wrote this chapter, I knew this was deep and old and firm, but the solution seems so simple to my legal mind. Just start changing this in new contracts.

      But alas, today, a good friend told me about a new sale with a new book going through a major agency. I warned him to not try to change this because his agency wouldn’t allow it I was sure. I told him it wasn’t worth the fight. Overseas rights, reversion clause, option clause was far more important to him at this point in modern publishing.

      So, folks, if you hate the idea of a stranger getting all your money and all the paperwork with your money first, use a IP lawyer or do the contract yourself. That way the money and paperwork has to come to you. This will not change in agents because not even the honest agents will change it. And thus the door for the hundreds and hundreds of scam agents will remain open. And trust me, you will be better served to get a poor contract on your own and not get scammed than get a slightly better contract with a scam agent and have to fight them for your money, if you even know you are owed the money in the first place.

  5. Dean said, “And trust me, you will be better served to get a poor contract on your own and not get scammed than get a slightly better contract with a scam agent and have to fight them for your money, if you even know you are owed the money in the first place.”

    That is the exclamation point on your entire series, I think, Dean. It’s a sort of different way of saying, “I’d like to receive 100% of something than 85% (or less) of nothing.”

    Or rather, “A bird in the hand is worth two in the bush.”

    This is especially true considering the results that many have given in which their agents actually ended up costing them money, even when on the up-and-up.

    I feel like an idiot thinking this, but I can see no reason to have a literary agent, because I can ultimately learn to handle all the tasks on my own. Sure, I’ll make mistakes, but I’ll learn.

    I don’t like to deal with untrustworthy people, and that arm of the industry is just far too much of a question mark for me.

    • dwsmith says:

      Jeremy, the reason you are feeling that way isn’t so much these posts, but because you are the kind of person who takes charge of your own life and your own business and can’t see much reason in taking unreasonable risks. You are unusual in writers I’m afraid, but that is also the trait that will make you a long term writer if you can keep standing back up when something knocks you down.

      The problem with what Laura and I have been saying is that neither of us have an issue with a writer using agents and using them correctly. We have issues with just letting agents take control, not using sound business practices to deal with your own business and your own employee. It sounds like we have really been beating on agents in general and we have been, because writers have let this just go too far.

      But the ultimate problem here is with the writers. A writer like you, looking at this mess and being a person who wants to keep control, says “Why bother?” I agree, I will never bother again either. But there are ways to have a top agent and still retain control of your career. It might be a fight at times, but for many writers worth the fight. But for many no longer worth the fight.

      However, the vast majority of writers (and I do mean the VAST MAJORITY) believe these myths and don’t have a desire to change, even after reading all this. They find it comfortable to be taken care of, and don’t want to know if they are being scammed. And when their career dies, which is always will either early or after two to ten books, depending on luck, they don’t have to blame themselves. It will always be someone else’s fault, their evil publisher, their evil editor, their evil agent. Never their own.

      That is the vast majority of writers who come and go through this business. Only long term writers have learned that the secret is to take control, but as Laura and I have pointed out, usually after getting hit a few times and standing back up and saying “Not again.” Because none of us are immune to these myths. Me included.

  6. My final thought on this is that if authors were paying agents, rather than agents taking their payment out of the author’s money and then FWDing the rest, there might be less automatic (and often unfounded, unsupported) assumption that the agent is (a) necessary to the author and/or (b) -earning- that commission.

    If a writer signs a deal for $60K and gets (for example) $20 on signing, what the agented writer ACTUALLY gets, is USED to getting, and will be ACCUSTOMED to seeing on signing is $17,000.

    If writers paid their agents, instead of letting agents pay their clients, that writer would instead receive a check for $20,000 and then have to write a check for $3,000 to the agent. Over the course of receiving the subsequent $40,000 in advance payments, she’d have to write $6,000 in checks to her agent ($9,000 is the total 15% commission on $60K).

    And imagine if, while you’re writing these checks, your agent is (to take use some of my own experiences as an example) unavailable for a month each year; declining to read any of your work, including the work for which the agent is earning this $9,000 as its “representative;” isn’t even aware of the tone or style of the books for which he’s collecting $9,000 in checks from you (are they comedy? are they dark serial killer tales? the agent has no idea); throwing tantrums at you; declining to send out your new work; slow to respond to your emails; accidentally disconnects your call, doesn’t call you back, doesn’t answer when you call back, and never acknowledges the incident when you leave phone and email messages about it; disinclined to discuss your career or your future with you when sales of the first book are disappointing… even though, with one more book to deliver, you’ve still got to write and send checks to this agent for another $3,000 or so. And so on.

    Paying my lawyer by check (and on the basis of an itemized bill) reminds me to use her services wisely–and to consider hiring someone else if I’m not satisfied with the results I’ve gotten for the sums I’m paying.

    By contrast, being PAID by the agent, and never physically handling the money which (in reality) the writer is paying in commission TO the agent… puts a lot of writers in a frame of mind where they don’t really see =themselves= as, in fact, paying that money to their agents. Which eliminiates the most businesslike means of evaluating the association: Am I getting services that are worth these sums I’m paying out?

  7. Joe Cron says:

    Sorry if this feels like I’m just piling on, because it’s been said so many ways, but it’s just so important for writers.

    1. The current writer-agent business model is insane.

    2. Writers produce the product. Agents can do nothing without writers. Writers can still do everything without agents.

    3. It is possible your agent is providing many thousands of dollars of value to your career, but evaluate it intelligently and, if they aren’t, get them to or fire them.

    4. The writer is the employer. DON’T LET YOUR EMPLOYEE TOUCH YOUR MONEY FIRST. That’s just…crazy. In every conceivable analogy that does not include an insecure, “helpless” artist needing to be guided like a child through the business (and therefore preyed upon by those who recognize that situation) the idea that any money due you would go through them first – along with the accounting of how much you should get(!) – is laughable. You wouldn’t do it with anyone else. Don’t do it with your agent.

    The more I think about this, the more I want to shake people.

  8. Lauren says:

    Another great article, Dean. I wish I had something more to contribute to the discussion, but I’m still a beginner in the publishing industry. However, I’m learning everything I can get my hands on about how it works, because I want to stay afloat. It just doesn’t make sense to try and get into an industry and not even attempt to learn about what makes it work.

    My book is a product of me.

    I should be willing to do the legwork to sell my product including the paperwork that comes with it. No small business owner would try to start a business by hiring someone else to do the work for him and in small business world, they definitely don’t hire strangers to take your money and have power of attorney!!! Especially someone who’s unlicensed and unregulated with no power checks whatsoever. That’s just ludicrous.

    Many thanks also for answering my questions in e-mails and taking time out to do that for a new writer. :)

  9. Dean – I wanted to bring your attention to this blog post from a writer who just sold to Sourcebooks and his recent attempt at getting an agent and why he said no to one particular agent.
    http://www.matthewlieberbuchman.com/?p=12

    • dwsmith says:

      Yup, Matt’s been a writer who has come to workshops here, including the master class. He’s very sharp and a great writer. I was talking with him along his adventure and to be honest was as shocked at the agent reactions as he was. Wow, have agents lost it these days. And if anyone doubts that, read that blog from Matt. He had a four book offer that all he wanted was help with and agents would not take him on or even get back to him. Guess they didn’t want all the free money he was offering. The way it ended up, he kept a lot more of his money that is for sure.

      Thanks, Angelia.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>