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.

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Copyright 2010 Dean Wesley Smith
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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