Killing the Sacred Cows of Publishing: Agents and Contracts

These last two weeks I have been watching a friend struggle with all the agent myths AFTER getting an offer from a major New York publisher for a multi-book deal that he marketed and sold himself. And watching this, I came to realize that there is still another agent myth that I haven’t covered in a chapter. This is a brand new myth because of the change in the industry and agents.

The myth is that you must have an agent or an attorney to negotiate a book contract. A myth that I have taught and believed up until things changed in the last few years.

Truth: Today, sometimes, under certain circumstances, you might be better served to not use an agent or an attorney to work on a contract with a New York publishing house. With a little learning on publishing contracts, you can know as much or more about contracts as a new agent in New York. (Remember, they have no training or license and often come from the editing side.)

But there are a BUNCH of factors with this, so read carefully ahead before flying off on your own with a major New York publisher.

And I am calling this a myth because it is something I have taught as a fact for years and just came to the conclusion over the last year that I have been teaching a myth. I have said, “Sell the book, get an agent to help you.” I taught that as almost a requirement. Sigh, in this new world, with this new breed of clueless agents who have a belief system damaging to their clients, I am now taking those words back. Heck, more than likely I’ll have to go back through some early chapters and comments and take those words out as well before I do the final version of this book. That’s how fast things are changing.

So, let me be clear. Right now, here in June of 2010, I am saying this:

1…Sell your own book.

2…Maybe find a top agent to help you with the negotiations and contract.

3…Maybe hire an attorney to help you with the negotiations and contract.

4…Maybe just do the negotiations and contract yourself with an attorney behind the scenes to answer your questions.

5…Maybe just do the negotiations and contract yourself.

I hope I am now clear on this. Sorry, former students. Sigh, things just keep on changing and this new world of agents has moved my belief system to this point now. Maybe, under some circumstances, you are just better served to negotiate and do the contract yourself.

Okay, stop screaming for a second about how you know nothing about contracts and just listen.

I want to take the five points one at a time.

1) Sell your own book. In other words, be responsible for your own career. If you are having an agent try to market your book, make sure you and your agent have talked about where the agent is sending the book and why. Know what is happening with your work at all times. If your agent gives up after a few rejections, you mail the book out to editors yourself. If you don’t have an agent, mail the book to editors yourself, not to agents. I did a very long chapter on this topic for this book under Agents Sell Books myth. Might want to read that now if you are having trouble with this concept

2…Maybe find a top agent to help you with the negotiations and contract.

Note I said “top agent” above. Top agents don’t believe in rewriting their clients. Top agents most of you have never heard of because they don’t blog. They just work for their clients, they don’t read slush, they understand their job. Top agents have been around a while and know contracts, mostly work at major agencies who have boilerplate already negotiated, and so on. If your choice is lower level agents who blog, you are going to run into problems.

3…Maybe hire an attorney to help you with the negotiations and contract.

In all the agent posts comments, Laura Resnick and I have talked about this and I am of the opinion right now that going to a publishing attorney is a top option and getting more logical by the day as all the younger agents kill their own careers. But note: A local attorney in your small town won’t help you, and might hurt you. Laura listed some vetted IP lawyers in one comment under an agent chapter and most writer’s organizations have lists. Not hard to find.

Going with an attorney has upsides and downsides. Downside is you must pay them up front. Upside is that they don’t take 15% of your book’s income for the rest of its life. I will talk about that 15% part in a moment.

4…Maybe just do the negotiations and contract yourself with an attorney behind the scenes to answer your questions.

Remember, an attorney only charges by the hour, so if you are fine talking with the editor about the contract, hire an attorney for an hour or two to look over the contract and answer your questions. Then you talk to the editor instead of having the attorney talk to the editor in the negotiations. Very simple. Again, make sure you have hired a good IP attorney and don’t be afraid to tell the editor you are working with that attorney. The editors often know the good attorneys because they have worked with them.

5…Maybe just do the negotiations and contract yourself.

Okay, now to the fun one.

An aside here: Next year Kris and I are talking about having a workshop titled “How to be your own literary agent.” Now understand, if we did that class and you took it, you would then have more formal training than any new agent in New York. Remember, they have none besides trial and error on you and other writers.

To explain why sometimes this option is logical for some writers, I’m going to need to do a little explaining about book contracts from a writer’s perspective, about the skill of negotiating, and also do some math. And put out a warning as to who is the right type of person to do this.

CONTRACTS

Contracts in publishing are your only connection point between your book and your publisher. It lays out what your publisher will do and what you will do. For writers, contracts have the following critically important areas.

1) What rights are you licensing to them? And not licensing to them? And for how much?

2) When and under what circumstances can you get those rights back? (reversion clause)

3) What control over your future writing are you giving this publisher? (option clause)

Just about everything in the contract has something to do with those three areas. There are also warranty clauses which are boilerplate and used to define lawsuits and such with third parties. They can’t be changed and only come into play when something goes very, very bad with you stealing someone else’s work or someone thinking you have. There is a worthless bankruptcy clause that all publishers insist must be in there but that no bankruptcy court has or would ever follow. And some basic clauses about your schedules, rewrites, and what they will do if you don’t turn your book in on time.

All basic. Written by lawyers. In general, not rocket science.

General rules of thumb: License as little as possible for as much money as possible, make sure that when the sales of the book fall under a certain number per month, you can get the rights back, and make sure they only have rights to look at the next book in the same series and genre with the same characters. Basic. Tricky in the language at times, but basic. And if you start working on learning contracts early on, you will be stunned at how much you pick up and how fast.

And remember, if you negotiate it, or if an agent does it, or if an attorney does it, you still have to understand and sign it. So no matter what, you have to understand the contract you are signing. You can pay an agent 15% for the life of the book for help in understanding (if they are a top agent, not a lower level one), you can hire an IP attorney for the help, but either way, you have to learn it yourself. That is really what it boils down to.

Let me say that once more clearly. You MUST understand what you are signing, so get the agent to help or the lawyer to help. No matter what, you must learn it yourself.

Will you make mistakes and sign bad contracts? Yes. Writers with young agents have done it all the time. I’ve seen some book contracts over the last five years from some of my students that are fantastic, and others done by agents that are so bad, I wanted to fly to New York and slap the agent for pretending to know what they were doing and hurting a student of mine. Writers who are desperate sign bad contracts all the time. I’ve signed some pretty horrid ones, to be honest, a couple times knowing they were horrid. But I knew what I was signing.

A year or so ago I saw a contract that an agent had actually made worse for the writer. 100% worse. I couldn’t say a word to the writer because he thought his agent was the best, even though the guy worked for a scam agent and was brand new in the business. This myth is deep and hard to break.

If you believe your book is your baby, and your masterpiece, and the only thing of value you will ever write, the fear in this contract area will be off the charts. But if it’s just another book in a long line of books you are going to write in your career, you can be a little more open-minded about how to go about this contract stuff.

NEGOTIATIONS

This is the area that scares most writers to death. If you are the type of person who flat has trouble asking for a deal from a salesman, or flat doesn’t believe in your own work and think it’s a fluke the editor even wants to buy it, you will need help with negotiations. Maybe. (See the math section below. And to get a clear understanding of negotiations from a freelancer point of view, read Kristine Kathryn Rusch’s Freelancers Guide sections on negotiations.)

Hiring an attorney or an agent to help might be the best choice. But if you have gained some basic knowledge of publishing, are the type that doesn’t mind talking with your editor on the phone, then you might be all right in negotiations.

I am not going to pretend to give a class here on how to negotiate a contract. But again, it ain’t rocket science so let me lay out the basics that will apply in all cases.

1) Ask for more money. Be reasonable, maybe 20% more.

2) Ask for slightly better royalty rates. (Expect to not get them, but you can still ask)

3) Try to hold back all rights you don’t think they need. You won’t be able to hold back electronic, but lots of smaller rights you can hold back. And get as much as you can for your split on the rights that you give them. Also make sure that if a right isn’t used in a two year period, it automatically reverts to you. (Might not get that, but try. And never sell all rights unless you are working media or work-for-hire.)

4) Make sure the number of books sold per month or period in the reversion clause is high enough to trigger when you can ask for your rights back. This is the definition of “out of print” and is critical.

5) Make sure your option clause for your next book is very limited to only the genre and the characters in the book you are selling, not all of your work in all genres.

Then, when you get your contract, maybe have a couple of writer friends who have sold a number of books read it to make sure nothing is hidden. Or hire an attorney for two hours to read it for any hidden clauses you want removed. And to help you understand the boilerplate.

But, again, if you can’t speak reasonably on the phone, have intense fear for one reason or another, don’t try this. Hire an agent or an attorney to do the negotiations.

MATH

Okay, to some simple math that I am convinced will get people screaming at me saying I am being too simple, but until this simple math is looked at, most writers don’t really understand what is at stake.

Book Offer Details: $10,000 Advance. World English Rights. 10&12% Hard, 8&10% Trade, 6&8% Mass Market. Books is planned as a trade. Reversion and option clauses are fine, acceptable.

OPTION #1: Get a Top Agent:

Agent gets advance to $12,000, fixes some boilerplate to agency standards, saves audio and another minor right, gets you ten more free copies that what was offered. Amount to author $10,200 after agency fees and ten more copies of the book. But agent gets 15% of all further earnings from the book.

OPTION #2: Get a Top IP Lawyer:

Lawyer gets advance to $12,000, fixes some boilerplate to standards, saves audio and another minor right, gets you ten more free copies that what was offered. Amount to author $12,000 but $1,500 to lawyer in one time payment. Author gets all money from book forever. No more fees.

OPTION #3: Do negotiations yourself with lawyer checking contract:

You get the advance to $12,000, fix some boilerplate to agency standards after lawyer suggests as a final touch, you save audio and another minor right, get yourself ten more free copies that what was offered. Amount to author $12,000, but pay lawyer one time fee of $500. Author gets all money into the future.

OPTION #4: Do it completely yourself:

You get the advance to $12,000, save audio and another minor right, live with company boilerplate, get yourself ten more free copies that what was offered. Amount to author $12,000. And all money into the future.

Now, to finish the math, let’s say the book earns out and makes another $20,000 more over rights sales and great sales over the next five years. For a $32,000 earning for the book.

OPTION #1: Author earns $27,200 after agent fees of $4,800.

OPTION #2: Author earns $30,500 after one time lawyer costs of $1,500.

OPTION #3: Author earns $31,500 after one time lawyer costs of $500.

OPTION #4: Author earns $32,000.

Did the agent do anything extra to earn the huge amount extra? Nope. In fact, agent got to hold your checks for a while and earn interest on the money before passing it through.

Now, to be clear here, many authors need agents “to take care of them.” If you are of this type of writer, and want nothing to do with learning about the contracts you are signing, instead just trusting your agent, please don’t come to me complaining about something your publisher did. Chances are you signed a contract allowing them to do it and don’t even know it because you trusted your agent.

As I said at the start of all this, I taught this myth myself up until just recently. But publishing is changing so fast at the moment, that the writers who see the changes and stay on top of the wave will be the ones that survive. And one big area of change is agents. Do I think agents will be important in the future? No. Do I think some agents will survive this change? Yes.

Publishers are starting to jump on change as well. At this moment in time, it’s still a tight market, but new writers all over are selling first novels on their own all the time. Sometimes an agent can earn their 15%. But sometimes all you might need is an attorney. Or you might be able to do it yourself.

Every writer is different. Each of us know where we are strong and where we are weak. But remember the days of “marrying” an agent for your writing life are long gone. They don’t help you with careers, they can’t help you stay ahead of markets, and they can’t write so don’t let them touch your work in rewrite. But sometimes they can help you get a lot more money and better terms. Sometimes.

But not always. Start learning contracts, start believing in your own work.

And then on a case-by-case, book-by-book, offer-by-offer basis, decide which way is best to go for you and who you are and the offer being made. Kill the myth that you always need an agent or a lawyer for every book deal.

You might.

But you might not.

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Copyright 2010 Dean Wesley Smith
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Yup, I’m going to go running to an agent to try to sell this book when I am finished. Not! But no matter what happens to this book when finished, 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