The Business Rusch: Agents (Surviving the Transition Part 3)

The Business Rusch: Agents

(Surviving The Transition Part Three)

Kristine Kathryn Rusch

I had a dream, as recently as six months ago, that agents would help writers through this transition in publishing.  I believed that agents would band together and fight to the death for the best possible terms in a contract for every writer.

If agents had done that, the e-rights clauses I talked about last week wouldn’t be in contracts.  If agents had been willing to convince their clients to walk from certain book deals, we would all be benefiting from new and improved contracts from traditional publishers.

Silly me.  I was thinking about agents as something that, perhaps, they never were.  I wasn’t thinking about their business model, but my own.

For the past several months, I’ve been discussing the transition in publishing on my Thursday blog.  A few weeks ago, I wrote a post that has garnered me a lot of attention and galvanized a lot of writers.  That post, Writing Like It’s 1999, was a wake-up call for a lot of established writers, to show them that the world has changed.

I’ve followed up that post with two posts on how to survive the transition.  Even though the posts are geared toward established writers, I also hope that newer writers will read them so that they’ll see the pitfalls and benefits ahead.  If you haven’t read those two posts, the first a general post on surviving this transition and the second on surviving the changes in publishing houses, please do so now.

In the second post, I discussed the way that contract terms are changing and how established writers can protect themselves from those clauses.  That post inspired several blog posts, including two very important blog posts on The Passive Voice, written by an attorney who no longer practices.  His second post, on For Avoidance of Doubt Clause, is extremely important. It’s a sensible solution to all of the contract problems I mentioned.  Please go and read both posts.

Now for my disclaimer.  I’ll be talking about contracts and agreements in this post, among other things.  I want you to realize that I am not a lawyer.  I did not go to law school.  I have no legal background whatsoever.

I am a small businesswoman who has made a point of educating herself about the legalities of her business, so that I can ask the right questions and know when to hire a lawyer to assist me—assist being the operative term—when I’m faced with legal matters.

What you’ll see in the contract stuff below is my opinion only. It is not in any way legal advice. Got that?

Okay, proceed.

Agents are a relatively new phenomenon in publishing.  Agents became important in the 1940s and 1950s when New York City became too expensive for the average writer to live in. Before that, writers had to live in or near New York to thrive in the publishing marketplace.  The writers actually had to go to the publishers offices themselves.

When writers moved to far-flung places, like Des Moines or Seattle, the writers needed an advocate, someone to contact the publisher for them.  Agents stepped in, and acted as the writer’s representative in exchange for 10% of each sale that the agent made.

Agents have always had a slightly shady reputation.  If you look at the movies of the 1930s and 1940s, you’ll see theatrical agents portrayed as sleazy and barely tolerable types.  In the movie Frost/Nixon, there’s a lovely scene in which Richard Nixon takes on the  most famous literary agent of them all, Swifty Lazar, and wins.  Nixon treated Lazar the way that most people treated agents in those days, as a necessary evil.

When publishing had a monopoly and business was conducted by telephone, lunch meetings, and the postal service, it was easy for an agent to make his name on his access to the publishing world.  A lot of agents, like the famous Swifty, had more access than any writer could ever dream of having.

Agents, in those days, were salesmen, hustlers, trying to sell as many projects as many times as possible. Because, agents at that time were more like real estate agents. The literary agent didn’t have a “relationship” with their client. The agent had a product to hawk—a single book—and the agent had to sell that.  If he didn’t, or if he didn’t do a very good job on the sale, then the writer went to another agent or did the work himself.

By the mid-1980s, however, this agent model was fading.  The boutique agency, where a handful of agents banded together to rent office space, became the thing. Some of this, again, happened because of the cost of doing business in New York. It became too expensive for the average agent to have his own office.

But the agents also learned that by banding together, they could act on behalf of all of their clients, expanding their clout. So now, Agent #1 wasn’t representing 3 bestsellers.  Instead, Number One Agency was representing 15 bestsellers, and by gum, Really Big Publishing House should acknowledge that by giving Number One Agency good contract terms.

This change was happening when I came into the business, and clearly I imprinted on it.  At this time, also, agents started charging 15% instead of 10% and some places began having their writers sign agency agreements which stated that the agent would represent the client (not the work) until either party terminated the agreement.

Those agency agreements weren’t that big a deal. They were breakable with a single phone call, and there would be no hard feelings. Also about this time, publishers realized they had a liability issue when they gave a writer’s check to the agent. So publishers requested an agency clause in the contract of any writer whose agent got the check first. All that clause would say was that the writer authorized Really Big Publishing House to issue the writer’s checks to Number One Agency, and that would be considered payment under terms of the contract.

Again, no big deal.  It covered the publisher’s ass in case Number One Agency ran off with the writer’s funds (as some agents did).  Without that clause, the publisher would have had to either issue another check to the writer or get sued for breach of contract.

Another ten years passed. Boutique agencies grew into major corporations, and those corporations realized they should branch out into Hollywood.  Things work differently in Hollywood. Contracts are draconian things that take money from the creative artist and give all of that money to hangers-on, if the creative artist isn’t careful.

At the turn of the century, Hollywood business practices infected the boutique and corporate literary agencies.  I have examples in my files from one former boutique agency (now a corporate agency) showing the evolution of the agent clause they put in a publishing contract.  It went from “send the check here” to this [emphasis mine]:

“The Author hereby irrevocably appoints [Agency]…to act in all matters pertaining to or arising out of this agreement and all other agreements, licensing, or otherwise dispersing of any rights in the Work in any form or media, and including any works for which there are options under this agreement…In consideration for services rendered, the Author irrevocably assigns and transfers to the Agent a sum equal to 15% of all monies due the Author under this Agreement and related agreements….”

It ends with this rather astonishing sentence: The provisions of this paragraph shall survive the termination of this Agreement.

Um, excuse me? Lawyers out there, tell me how this is possible.

That paragraph is a minefield of horribleness.  It irrevocably assigns at least 15% of earnings from the sale of any rights in the book to the agent, as well as the same amount in works that are covered under the option clause.  So if the agent negotiates a broad option like this one: “The publishing house has the option on the author’s next work,” then the agent will earn his 15%  in whatever that next work is…even if the publishing contract is terminated.

(Yeah, I know. I just said that last sentence probably isn’t valid. But what do I know? I’m not a lawyer. And besides, do you want to be the poor sap who has to spend years in court proving that particular clause is invalid?)

That agency clause is nowhere near the worst I’ve seen in the past few months.  Writers have been sharing some real doozies with me from corporate agencies.

Here’s the next big offender:

This agent clause which goes into a publishing agreement has all the traditional stuff about payment.  And then it says [again, emphasis mine], “For services rendered and about to be rendered, the Author does hereby irrevocably assign and transfer to said agent and said agent shall retain, a sum equal to 15% as an agency coupled with an interest….”

Oh, my God.  I wouldn’t have signed that as a twenty-one year old newly birthed nonfiction writer.  It sounds scary because it is.  It means that the writer has assigned his agent—irrevocably—15% of the book.  “An interest” is a legal term and (lawyers, you can correct me), it means that the agent now has a piece of that property.  15% worth to be exact.

We’ll talk about the implications of this in a minute.

But let’s now move to the worst offender I’ve seen in the past few months. I’m not going to say it is the worst offender out there, because I haven’t seen all of them.  It’s just the worst of my little trio of horrors.

This big name agency has the same clause as the one above.  But coupled with the agency agreement—a five-page document that gives the agency the right to negotiate for the writer on any matters on the writer’s behalf.  It also gives the agency “commissions earned by, paid to or credited to” the Author “or any entity owned by or controlled by” the Author “in perpetuity.”

Seriously. In perpetuity.

And in case the writer missed that point, there’s this: “The Author understands and agrees that the provisions of this Agreement which by their very nature survive the expiration of the Term of this Agreement.” And then it goes on to list all the negotiation, money clauses, and interest in the work clauses as surviving the Term of the Agreement.

In other words, you can fire this agency, but you—and your heirs, and any corporation that you form or trust that you create—will owe that agency money forever.

Now, technically, forever isn’t an acceptable contract term.  Contracts need an end date to be valid.  But again, do you  (or your kids or your grandkids) want to be the one to go to court to win that fight?

This five-page agent agreement is so egregious, by the way, that even if you fire the agency, they can still negotiate a deal for you and undercut any new deal you might negotiate for yourself.  And you, if you signed this agreement, gave them permission to do so.

I read this thing and wanted to go screaming into the night. Because I know dozens of people who have signed it.

(Okay, Kris. Breathe. Breathe.)

So let’s look at the implications of all this stuff, in relation to our agent history lesson, above.

These egregious clauses started showing up in book contracts and agency agreements around the turn of this century.  Big agencies had become the norm and they worked on the Hollywood model.

It’s clear from these clauses that the important entity in these agreements isn’t the author.  It’s the agency.  In the case of two of these clauses, the agency is making an actual rights grab on an author’s work—and the authors who signed this stuff allowed that rights grab, probably without understanding what they were signing.

Here’s how it works in practice.  Author A gets pissed at Number One Agency and wants to hire The Grass Is Greener Agency. The Grass Is Greener Agency sells Author A’s next book, and the day after the sale is announced, The Grass Is Greener Agency gets a phone call from Number One Agency that says, “You didn’t have the right to sell that book (see egregious clause #2).  But you did, so give us our percentage.”

Author A has a choice: either go to court or pay a 30% commission on the new book (15% to the new agent, and 15% to the old one). Court will take years and Author A could lose the case. The 30% is the best option here.   And that 30% will continue on all projects related to that book, and maybe on all future projects.

An even worse case? That last agreement, in which The Grass Is Greener Agency gets the phone call informing them that they had no right to make this deal and the deal is invalid because Number One Agency negotiated a different deal on the author’s behalf with a different publishing house.  Author A, after all, had signed away the rights to negotiate for himself in that horrible five-page agent agreement.

You think things like this don’t happen? In the past month, I’ve heard two separate stories of big deals gone awry because of this very thing.

And let me give you a parenthetical scare: if you signed some of those egregious agent clauses, you might owe your agent 15% of that book, even if it’s out of print from its original publisher, even if you e-publish the book yourself.  You gave your very smart agent 15% of your property. Just sayin’

So let’s back up to the beginning of this blog post.  My own little dream that agents would defend writers against publishers.

What the hell was I thinking?

I was operating not like it was 1999, but like it was 1989.  And I was believing the myth of agent as author advocate.  Agents have always been in this game for themselves.

Don’t believe me? Then look at this little parenthetical aside about the Scott Meredith Literary Agency from the great Lawrence Block in Mystery Scene Magazine #118.  In a column about Evan Hunter, Block writes about the porn fiction market of the late 1950s (and stresses that what was called “porn” back then is what we call “erotica” now).

“The foremost publisher of this erotica,” he writes, “was Bill Hamling, whose imprints included Nightstand Books and Midnight Reader, and Scott Meredith had an exclusive deal to feed Hamling a steady supply of manuscripts. (Scott got 10% of what his writers were paid, of course, and we’ve since learned that he also got a packaging fee of $1000 a book.  So when I wrote a book for $1000, I received $900 and my agent pocketed $1100.  What a guy!)”

See why my dream was silly? Most agents have always been in this business to act in their own best interest.  I say “most” because I do know a few agents who are really ethical folk, who are really trying to do the best by their authors, who really believe that they are the authors’ advocate.  If you have an agent like that, count yourself lucky.

Before you pat yourself on the back, however, check your agency clause in your most recent publishing contract.  If it looks like any of the above, you have trouble.  Your agent might be ethical, but he might work for a big corporate agency which isn’t ethical at all.  And the agency is named in that clause, not your individual agent.

Checking your agency clause in your most recent publishing contract is the best way to see who your agent is working for—himself or you. If any of the egregious clauses I mentioned above are in the agency  clause of your latest publishing contract, your agent does not work for you. He works for the agency.

The second way to see who your agent is working for is to look at your agency agreement.  If you have one that lasts past that phone call in which you want to terminate (without cause) your “relationship” with your agent, then your agent doesn’t work for you. He works for himself or his agency.

Really, honestly, truthfully, if you signed an agency agreement at all even if it’s a simple one, your agent probably doesn’t work for you.  The best agents still work on a handshake and don’t put an agency clause in your publishing contract past the instructions on dispersal of funds.  And yes, there are a few who still work that way.  (And no, I won’t tell you who they are for two reasons: 1) They don’t want to get inundated; and 2) I haven’t worked with most of them, so I only know about them through friends. In fact, some of them are friends.  So don’t email me and ask.)

The biggest red flag in 2011 that your agent doesn’t give a damn about you is a really simple one: Your agent has started an e-publishing business for the backlist of all of his clients.

The agent who starts an e-publishing business is no longer an agent.  He’s a publisher.  And he is now competition to publishers out there.  I’m not the only one who sees it that way. Look at the publishers’ comments in a recent Bookseller article.

Let me tell you two separate stories, both true.

1. A friend of mine has a bestselling series with a well known traditional publisher.  Her agent has recently started a backlist e-publishing company.  The friend got an offer from her traditional publisher for the same terms as her previous books. That includes e-rights.

The agent tried to negotiate away the e-rights, and when that didn’t happen, stalled the negotiation, refusing to budge on these terms.  The author had no idea what was going on until she was talking to her editor on the phone. The editor asked what was going on, and told the writer about the stalled negotiation.

Until this point, the author had thought the stall was coming from the publisher. In fact, that was what the agent had told this author.

I wish I could tell you that the author fired the agent and continued the negotiations on her own. She didn’t.  But she forced the issue, at least, and the traditional publisher has the e-rights just like in the previous contracts.

I also wish I could tell you this is an isolated case, but I have heard this story in different forms from about six writers now, some of whom had something similar happen to them and some of whom were screaming at their writer friends in the same situation to fire the damn agent now.  This isn’t just one agent, by the way, but several–all of whom are now e-publishers.

2. A major agent is offering to buy the backlist of old-time writers, many of whom no longer have books in print, for a flat fee of $25,000.  A publisher recently offered an advance and royalties for one of these writer’s backlists, and the agent refused to present the deal to the writer, whom the agent theoretically represented.

This too is happening a lot.  To an impoverished writer, $25,000 seems like a lot of money for something that’s in a drawer gathering dust. But if the writer puts the backlist up himself, he’ll make more than that over time.  And even if that writer doesn’t listen to sensible old me and do it himself, and instead hires an e-stributor for 15% of the take to put up the backlist, that writer would still make more money than if he sold his backlist for that flat $25,000.

So…

You look at your contract and see an egregious agency clause. You realize you signed a bad agent agreement. Or you discover that your agent has set himself up as an e-publisher.

What do you do?

In cases one and two, you’d better figure out what you signed and what it means before you take any action at all.  I’d hire an IP attorney and ask them to vet your contracts and documents so you know what your risks and liabilities are before you take action.

Then take action.  The action might be as simple as never ever ever allowing that agency clause in your publishing contract again.  Or it might require you to get rid of that particular agent.  If you do get rid of the agent, do not jump back into the frying pan with another agent. Don’t sign an agency agreement, and don’t agree to any  more of those horrible clauses.

If your agent has become an e-publisher, fire that agent now.  That agent is not working in your best interest and never will again (if they ever did).  Your agent has left the agenting business and has become a publisher, so your agent now has a conflict of interest.

If you feel you need an agent, find one who does not do e-publishing.  And don’t sign an agency agreement.

Earlier, I mentioned the agent’s business model.  Here’s the key point: with publishing changing, the old 10-15% of each sale will not give an agent enough money to continue running his business—unless all of his clients are bestsellers. (This is why so many agents started chasing that bestseller-only dream a few years back.)

Agents are smart about business. They saw the handwriting on the wall before publishers and writers did. However, agents have no idea how to thrive in this new environment. Their old business model doesn’t work, and if a writer indie or self-publishes, then the agent can’t get a percentage of that either.

Agents, more than anyone else in publishing, are running scared. That’s why they’re trying to get ownership in a writer’s property. That’s why some are calling themselves “managers” now. That’s why so many agents are experimenting with their business model.

Some agents see e-publishing as the only way to keep their own business alive.  You don’t have to support their new business.  You have your own business to run.

Right now, while all of publishing is in flux, I’m advising new writers to avoid agents.  Down the road, once the agents have a good business model again, my advice may change.

Things are dicier for the established writer. Established writers are used to having agents and for some reason are unwilling to learn how to do business without those agents.

(Let me give you a hint, folks.  Most foreign deals come because someone got their hands on a book—not through an agent, but through a bookstore.  Then the foreign publisher contacts the U.S publisher and asks who has the foreign rights.  That publisher can as easily point to the writer as to the writer’s agent.  The same goes for Hollywood.  It’s that simple.  There’s a thing called the internet now. The world has gotten small.  As long as you have a static website with a contact button, anyone—including a foreign publisher—can find you.)

So, established writer, your agent has become an e-publisher.  You have fired that agent. What do you do now? I give you the same advice I give to new writers. Wait before you hire a  new agent.  Give the industry time to settle into its new pattern.

During the next two years, if you have a book deal to negotiate, hire an intellectual property attorney.  If you’re like most established writers, you probably have a book deal that will take you through these next two years. You won’t have to negotiate anything.

So stay put, watch the trends, and make your decision when the time comes.  If your agent has become a publisher, fire him at your leisure.  Have a plan before you let that agent go.

Oh—and one other thing.  These clauses I’m citing come from very reputable established agencies. When I first red-flagged them several months ago, many of my established writer friends said they hadn’t signed an agency agreement. These writers have been with their big reputable agencies since the 1980s, before this practice became common.

If you’re one of those writers, find out what your agency’s practice is with new clients. If some of your friends have signed on, ask if they had to sign an agency agreement. Ask to see that agreement.

If you’re with one of these agencies, you’ll be shocked.

I would advise you to leave any agency that has an agreement like that even if you never signed one. Why? Because that’s the way the agency operates now.  It doesn’t operate in the client’s interest; it operates in the agency’s interest.

(I ran into this almost a decade ago as my once-good literary agency changed. I asked my agent to overnight a check.  I live in the boonies, and I don’t want checks greater than $1000 to sit in my mailbox down the hill and out of sight of my house. I  wanted checks of that size or greater to come through a tracking service like Fed Ex that hand me the package directly. My then-agent said, “It’s no longer company policy to send checks smaller than $10,000 through a private service.” I said, “I’m the client. You work for me.” My then-agent said, “Um, sorry.  But I’m afraid I still can’t do that.” And didn’t budge.

(Guess what happened to my relationship with that agent? Well, we’re still friends…but we don’t do business any longer. Not because of the agent.  But because of changes in the agency.)

Your agent has to work for you. If any of the red flags I listed above apply to  your agent now (not to the person that agent was five years ago), then you need to part ways with that agent before you negotiate another book contract.  Many of you have years to make that decision.  Many of you need to make that decision now.

But be cautious about what you jump to.  Every agent I know is in flux.  One of the best said to me a few months ago that he was considering retirement: he doesn’t recognize the industry any longer and sees no place for himself in it.  I wouldn’t be surprised if several of the ethical agents go that route.

Time to start the research. Time to figure out if you’re going to continue working with an agent or if you’re going to hire an IP attorney to negotiate contracts for you.  I recommend the IP attorney, but I am not you and I don’t know your circumstances.

Be warned, however, that this business is changing—and the agency business model that existed since the 1950s is effectively gone.  Don’t keep your agent because you’ve always had an agent.

Be proactive. Figure out what’s best for you—even if you end up with the status quo.  Do the research, and be informed.

Otherwise, you may end up losing a 15% (or higher!) interest in your book because you blindly signed a contract that you didn’t understand or because you made an agreement with someone you thought was trustworthy who is trustworthy no longer.

Good luck.

“The Business Rusch: Agents (Surviving the Transition Part 3)” copyright 2011 by Kristine Kathryn Rusch.