Misc,  On Writing

Killing the Sacred Cows of Publishing: Agents Take Care Of Your Money

Would you e-mail a perfect stranger and offer to give them control over your money? Sound like an internet scam? Sure it does, yet this is what fiction writers do all the time.

I have touched on this in a number of different ways in the other agent chapters in this book, and had no intention of coming back to it in a stand-alone chapter. Then I started getting private e-mails about how I was wrong about agents, about how they were partners to writers, about how this agent or that agent had taken great care of the writer. Fine, except for one issue. With attitudes like those writers had, they are setting themselves up for a great financial fall.

Now, to be clear, I have no problem with the standard model of writers hiring agents when they need one, usually early on in a career, and usually to handle contracts and other details like that after the writer has gotten an offer from a publisher. All that is fine and dandy as long as the writer knows what they are doing, walks into the relationship with eyes open, and keeps the employer/employee relationship clear. Agent is the employee of the writer, not the other way around. (I give eight suggestions on how to hire and keep an agent at the end of this chapter.)

As I got the letters from published writers taking me to task for not being balanced, I wrote back and asked each writer if they had met their agent. And if the writer had done a financial check on their agent. And if the writer had even been in the agent’s office or in the agent’s home.

Most had met their agent only once, usually at a convention. None had done a financial check, and none had been in their agent’s home. But all backed their agent completely and believed in them completely.

In other words, they were trusting their entire income, which could add up to millions over a number of years if they started to hit, to a complete stranger, a person they really didn’t know, had spent little or no time with, and had done not one lick of checking out.

So I ask the question again: Would you e-mail a complete stranger and offer to let them handle all your money?

Again, of course you wouldn’t, yet by sending out query letters to agents you picked out of a market guide or heard about from a friend, you are doing EXACTLY the same thing.

Back to a few basics I have mentioned before, but want to stress once more to be clear about this money topic.

Basic #1: Agents are not trained or regulated in any way.

Now, in the real world, lawyers are often hired to handle money in one fashion or another for a client. Lawyers have seven years of college which includes three years of law school and State Bar Associations that watch them and handle complaints. They also must pass one nasty test to become a lawyer after finishing law school. Even then, any sane person would check out a lawyer first to handle money matters.

I got one young professional writer comparing their agent to a real estate agent. Now real estate agents are trained and take licensing tests and have organizations in each state to kill their licenses if problems arise. (Book agents, none of that.)

And nowhere in the sales process of a home does the buyer hand all the money to a real estate agent and say, “When you get around to it, send the seller his share.”

Nope, money goes directly through to the seller, with the real estate agent getting a check at closing for only their percentage fee. So not sure at all where book agents and real estate agents are alike. That comparison has always puzzled me, and just doesn’t fit at all on the money side.

Basic #2: Normally, all money is sent to the agent first under the agent’s name.

For those who do not have an agent yet, let me be clear here. In the standard agent/writer model, a publisher sends the agent ALL the money, and then when the agent gets around to it, the agent sends the writer the 85% share.

Why do I say when the agent gets around to it? Because, that’s how it works.

I had one agent who had this “policy” that I fought for seventeen years. If a check came in on Wednesday, I would have a check cut on the following FRIDAY and mailed to me. The agent sat on my money, and all the other writer’s money in that agency, for upwards of two weeks before I could cash a check.

Those of you who understand money just went “Wow!” That’s right, imagine millions running through that agency office every month because they have many NYT Bestsellers in their house. Now imagine earning interest on that money while it sat there. It’s called “the float” and it’s a normal business practice in many agency offices.

You can change this policy by asking in the contract negotiations that the checks be split. The publisher sends you directly the 85% and the agent her 15%. If all writers did this in all future contracts, a vast amount of the money issues with agents would just vanish completely. But agents will tell new writers that can’t be done. Why? Because they like the control and the float. But of course it can be done. Just put it in the contract with the publisher.

There are many, many agents out there folks, who live off of the float, who hold a writer’s royalty check to help with their rent. Writers who have trusted an agent like this won’t know when a royalty check comes in because, guess what, the royalty statement is sent to the agent with the check. Or overseas money. Or audio or electronic money. Or movie money. Agents will send you the money “when they get around to it” and can afford it.

Are there rules against co-mingling funds? Nope. Again, back to no rules, no training, nothing. Often an agent or small agency will just have one checking account, won’t even keep a separate author funds account. They will pay the writer out of that account right along with their rent and power bill and their own paycheck. And we all know what happens when things get slow on income in that situation. What gets paid first, the rent or the author’s British royalty payment?

Basic #3: Agents will sometimes ask for power of attorney.

Yeah, I said that. Agents will often ask writers for various reasons to give them power of attorney. That means without the writer knowing anything about it or even reading a contract, the agent can sign it for you and transfer your copyrights.

I had no idea that this happened until about ten years ago a friend of mine told me he had signed over power of attorney to his agent to make it easier to handle overseas sales. I started laughing, thinking at first he was joking, and when I discovered he wasn’t joking, I wanted to slap him to wake him up.

Then I started asking around and discovered this is common practice in many agencies.

Back to basics #1. Agents are not regulated or trained in any way.

So now my question is this: Would you give someone you don’t know control over all your money and also power of attorney to sign contracts for you to sell all your stuff?

Is there any wonder that writer’s organizations warn writers against the worst of the scams against beginning writers? When it comes to business and writing, normally sane people just flat lose any business sense they have. As a group, fiction writers are the dumbest business people on the face of the planet. Period.

I was no exception to this problem. Now understand, I have owned many, many businesses over the years, went to almost three years of law school, and know how to handle money for the most part. Yet I hired an agent without knowing her, without checking out the fairly new agency she worked for, and gave her control over my entire income for a very long time.

And then when I switched to another agent, I DID THE SAME THING YET AGAIN.

As I say, writers, me included, when it comes to our writing, are the dumbest business people in the world. Period.

Solutions? There are many, actually. I have a good friend who is a private detective who has a fairly large firm (again licensed by the state) whose main job it is to research possible employees for corporations and small businesses. I’m going to ask him what it would take, what he might charge, to do the same for writers when they are hiring an agent. I think this needs to be a part of the future landscape of agents.

How do you know if the agent you are about to hire and put in control of your money doesn’t have two hundred past fraud cases against him in New York? (I know of one major agent in New York that has been sued for taking clients funds over a dozen times that I know about, yet he still has major clients and a ton of writers on his list. Why? He always settles the suits with a gag order on the writers.)

One more time: I am not against the standard writer/agent business model in publishing. I feel writers need good agents to help them through much of the early years. But for heaven’s sake, think like a business person when hiring an agent.

Basic BUSINESS rules for hiring and working with an agent:

1… Never hire an agent before you have an offer on a book. Old cliche that has been around for a long, long time. The agent you can hire before you have sold a book is not the agent you are going to want after you have sold a book.

2… Research, research, research the agent and agency. Talk to their other clients, both past and present, check into their finances, ask about how their firm handles money. (This is not counting all the questions about rewriting and such covered in other chapters.)

3… Talk to the agent on the phone a couple of times before hiring them. Never hire someone through an e-mail or the internet. Yikes, you do that, I know a bank in Russia who would like to send you an e-mail.

4… Always split all money in contracts. Never allow any agent to handle your money. Period.

5… If you are having an agent submit books for you (see other chapters for reasons to do and not do this), have the agent copy you on ALL letters to editors and ALL rejections.

6… Never let the agent make a decision or accept or turn down a deal without talking to you first. Of course, if they ask for a power of attorney, either laugh and ask them if they are kidding or fire them.

7… Remain in control of your speed, the subject matter of your books, and all other creative aspects of your career. Never let an agent tell you to slow down or write to order.

8… Never think of the agent as anything but an employee. They are not your partner and you do not work for them. They work for you. Period.

Now, under all that above, it is very possible to have a wonderful working relationship with an agent. You and a good agent can go places and both can make a lot of money and I promise that if you follow the above eight pieces of advice, you will have far, far fewer problems with your employee than you would otherwise.

Just keep repeating over and over the topic question of this chapter.

Would you offer a perfect stranger control over all your money and your future as a writer?

If the answer is no, then you and I are on the same page.


Copyright 2010 Dean Wesley Smith
This is part of my inventory in my bakery now. (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, research, rejections, and so much more. This business has a lot of myths. An entire book full.

Thanks, Dean