Second installment in this new series. This series will be made up of short, sometimes very short questions and puzzlements about publishing.
Since I started yesterday with asking why anyone would let their agent be their publisher, I figured I might as well talk about the money for a moment. Because it is tight times in the agent business that is causing this shift to what I call “the publishing scam.”
Writers, as I said yesterday, as a class are the dumbest business people on the planet. With no group a close second. Even kids doing pretend businesses in middle grades are smarter. Not kidding.
1) Writers get excited about “getting an agent.” This “agent” is a total stranger who printed up a business card, said they were an agent, and that was it. Nothing more. Not one ounce of training needed, not one test to take, and no idea of agency law.
2) Do writers do any background checks at all on this stranger with a business card? Nope? No criminal history, no financial report, nothing. The writers hire this employee without even asking for the agent’s Social Security Number. You can’t get a job at McDonald’s without filling out forms and going through a background check.
3) Writers give this perfect stranger with no training the right to get all their money from major publishing contracts, the right to get all the paperwork on that money as well before the writer sees anything. This money often totals into the hundreds of thousands per year. Often a lot more.
Yup, without a doubt, writers are the dumbest business people ever to come down the pike.
So, with no background checks, giving all your money to a stranger, giving that stranger all the paperwork that tracks that money, wouldn’t you just EXPECT that stranger to keep some of your money that should go to you???
Let me think… that wouldn’t even make a good plot on a bad sitcom.
Have your ever read a mystery novel???
Or read the financial page of a newspaper??
The answer is “Of course!!!”
Don’t think it happens? You trust your agent? Yeah, and I got swamp land in Florida I want to sell. No, make that a bridge.
So, you ask, how can this happen? Well, besides the stupidity of hiring an untrained stranger, the ways agents pocket writer’s money are legion.
1) Writers never check royalty statements and agents know this. And if you get a big pile of statements from your agent with just one check, it’s easy for the agent to just accidentally keep some. Only about one in a hundred writers will check the statements and plug them into an adding machine. Kris and I do, but most never do. For a few years early on we found problems in royalty statements not matching payments, then never again because the agents knew we checked. And which way did the problem always go? I’ll give you one guess.
2) Overseas sales. Getting a royalty statement from an overseas publisher through the overseas agent your agent uses (a person you don’t even know their name) and your agent is mostly impossible. Knowing there is money even due you is even more impossible in many cases. Only way is to be talking with your overseas publishers and have them send you direct statements when any money is due. Otherwise you will never know and the agents know this and can just keep your money. (Yes, early on Kris and I got ripped off by this one. And stopped another one from one of our old agents overseas agent just last year. Honest.)
Often a writer will be off-the-charts stupid and give their agent (the stranger) power of attorney over contracts for overseas publishers. Meaning the agent (stranger) can sign the contracts and you wouldn’t even know you had sold something. If you have been that stupid, just walk away from your computer. You are in the running for the dumbest writer alive and should go work in McDonald’s to learn business. And yes, there are bestsellers who have done this. Their agents are very rich for some reason.
There are many other ways, but that’s enough for now. Just put on your mystery writer hat and you’ll come up with fifty in an hour. (A new song. “Fifty Ways Your Agent Can Steal From You” sung to the music of Fifty Ways to Leave Your Lover.)
But now to my biggest worry at the moment. “The Agent Ponzi play.”
Remember, agents have no training and do not know agency law which requires by law for all clients money to be held by itself in secure accounts until paid to the client. Instead, book agents just mingle YOUR money in with all the other clients.
And out of that fund they take their payments, including their rent and employee and grocery money.
Right now publishing contracts are way, way down. Sales are way, way down. Agents are dropping away like crazy and many are resorting to this “publishing scam” to try to get more money flowing. Things are tight and expenses high. Got it?
So here comes your money from your last advance or royalty statement into the pool and some of the agent’s bills need to be paid. So the agent, knowing there is more money from other contracts coming, just takes a little “extra” money from the pool to pay those bills. What can it hurt? Right?
And suddenly your check is late.
Agent is telling you the publisher is late paying you. Have you checked with the publisher, not your editor, but the financial department? More than likely not. Your check is just late, you trust the total stranger you hired, you have not split payments, so the agent has all your money and all your paperwork with that money.
(Note: For those who do not understand how this works, the publisher sends the agent a large check with paperwork. Often this is ganged with numbers of writers being paid in that one check from the same publisher. Agent then deposits the publisher check (you never see it) and takes your paperwork and sends you an agent check. You never see the original check or when it was mailed or printed or dated. And unless you have asked for royalty statements to be sent, you often won’t see those either.)
So agent doesn’t have enough money left in the pool to pay you until the next author’s check comes in. They used your money to pay a bill, or to pay an author ahead of you in line, and they tell you the check is late.
That folks is a Ponzi scheme. Dickens talked about it a long, long time ago in one of his books, actually, long before it was named.
And an interesting point. Lately, writer after writer after writer (writers with agents) have mentioned lately how checks are slow or very late.
Have you been to your agent’s home? How high on the financial scale do they live? How big is their office in New York? Of course you have never been to your agent’s home. Why should you? They just control all your money and your paperwork on that money and you trust them. Right?
Have you checked if they are near bankruptcy at the moment and behind on house and credit card payments? Are they about to be kicked out of their office? Of course you have not checked that because you never got your employee’s Social Security Number so you could have an agency do that. You just trust them with all your money and all your paperwork.
So my question stands. “Why Would You Not Think Your Agent Will Take Your Money?”
Of course they are going to do that. Not all of them, but in these tough times many more then before. And there were a lot before times got tough.
And why would nice agents do such a thing as run a Ponzi scheme to pay their bills with your money?
Because, as a class, writers let them.
Learn business, get away from all agents for the next few years until all this settles.
If you have an agent, make sure you are talking with the people at your publishing house. If you have sold overseas, check when royalty statements are due and make sure you get them. Do vanity searches overseas to find out if you have been published and don’t know it. Don’t be afraid to call your overseas publisher. Europe is going through tough times as well and agents over there are just as bad. The publishers want to keep their writer’s happy.
When a check is late, and your agent says it hasn’t arrived yet, call your publishing house and check with accounting. If they sent the check two weeks before you have troubles. Actually, you and your agent have troubles.
These are tight times. Trust no one, verify everything.
And for heaven’s sake, on all future contracts, SPLIT PAYMENTS. And get two sets of the paperwork. And if your agent says it’s too much trouble to split payments or the publisher won’t allow it, fire the agent quickly.
The last thing you need is all your money tied up in a criminal investigation on a Ponzi scheme.
Copyright © 2011 Dean Wesley Smith