Scott Waxman - literary agent, head of the Waxman Literary Agency, and now co-founder of eBook publisher Diversion Books – has witnessed a lot of changes since he started in publishing as an editor back in 1990, enough to know that not all of the shifts the industry has undergone in recent years can be pinned on the digital revolution.

“When I was at HarperCollins,” he remembers, ”we had an enormous number of editors, and it was just a huge number of books that was being published. Now the publishers are a lot more specific and focused and each book really counts. You’ve seen, especially the last few years, a sharpening of the editorial approach for each house and also a slimming down of the list.”

This is the kind of downsizing that can be difficult to navigate even for those watching from outside of the publishing houses, but Waxman is not one to get bogged down in trepidation. “It’s healthy and necessary. It’s painful for a lot of editors who have lost their jobs, and for agents who are having a hard time selling books, but I think it’s a natural progression.”

Slimmer lists and fewer editors has made the marketplace for submissions more competitive and agents have been forced to adapt as well. “The agents’ role has become much more hands-on,” says Waxman. “The agents have to take a very strong editorial hand in the shaping of proposals and making sure that what they submit is top quality.”

This is not a reflection on the editors’ craft, just the reality of a world where only the strongest submissions make it through the acquisitions process. Waxman elaborates: ”Editors edit as much as they ever did, but editors are not going to be interested in a submission if it’s not in excellent shape, because it will raise too many questions about the project for them to take a chance on it. If they can’t put a proposal in front of a supervisor with good comp books and with strong Bookscan numbers, then it’s very tough to make the case. They have to be sure that what they acquire has a really good chance of being successful, rather than just falling in love with that particular project for what it is.”

“That is a big difference” from the boom days when Waxman was an editor. In response, he draws on his past life: “I scrutinize every project I take on like an acquisitions editor. If I don’t think it’s going to sell copies I don’t take it on. I think the best thing an agent can do now is to be selective in what they submit, be very specific in a category that they can be an expert in, and then be savvy about the digital side so that they don’t miss what’s going on around them.”

Digital Diversion

Waxman was an early mover in the digital space with his 1999 start-up LiveREADS, which produced enhanced eBooks. Now that an actual eBook market has grown up, he didn’t hesitate to stake out a space for himself again, this time with Diversion Books, a straight eBook publisher.

“My personality is entrepreneurial and I see an opportunity for growth,” Waxman states simply. “I’m excited by the creative aspects of it as well, in terms of the kinds of books that we can do, reinventing what a book can be in terms of length and focus. And timing, doing books faster and shorter. Bringing back anthologies for authors in a way that can be monetized. It presents a lot of interesting opportunities for an author that I wanted to investigate. I don’t know where the business is going to end up going, exactly, but it’s certainly fun to be involved in it.”

Not everyone in the publishing sandbox is having so much fun at the moment. With the announcement of agent Andrew Wylie’s e-publishing start-up, Odyssey Editions, a small brouhaha erupted, and among the accusations leveled at Wylie was that a conflict of interest exists for any agent who gets into publishing, digital or otherwise. Waxman set up Diversion apart from his agency precisely to avoid this conflict.

“Diversion is a totally separate company, with different personnel, and Waxman Agency is not a shareholder,” he notes. “I’m a co-founder, but I’m certainly not running it. We’ve brought in someone to drive the business, her name is Jennifer Segal, who’s going to be the one spearheading the initiatives going forward.” 

As for the agency’s authors, Waxman says he’s heard nothing but positive responses, and a few of them have already chosen to publish eBooks with Diversion (which operates on a profit-sharing model): ”Any author who has a project they think would fit, we’re happy to talk about it, but we’re not soliciting it.”

Diversion is also unlike Odyssey in that it publishes almost all original titles rather than backlist books where the digital rights might be in contention with the publisher. “We’re not carving out any e-rights for this,” says Waxman. “A bunch of our authors have [worked with Diversion] for books that don’t fit with the big houses or books where they have the rights back.” And of course Waxman is not focusing only on his authors, he’s been in talks with other agencies as well, feeling out potential partnerships. 

No Magic Formula

It’s all potential in these early days for Diversion, which has only had books out for about two months. Waxman, a veteran in his second go-around at e-publishing, is not discouraged by the company’s so far modest beginnings. “I can tell you that most of the originals do not make a lot of money yet,” he admits.

And there have been a few speed bumps. “The production side has been a lot more time-consuming than we thought it would be. To get a book edited, formatted, and distributed everywhere has been extremely time-consuming and expensive, and it’s not an easy thing to do. But I think that with the right approach and the right books, it’s going to get there. You need to have a concerted effort on a book to sell it. There is no magic formula for selling books as eBooks.”

How long will it take for Diversion to come into its own? “I would hope within a year,” says Waxman, ”but it really depends on what kind of content we’re able to get and what we’re willing to spend, whether or not we want to go out and raise capital. The agency is very organic, you build it with the authors you have. Something like Diversion could probably get bigger faster if we want it to, so we’re exploring all those options right now. I want it to grow, I want it to be viable, I want it to be a great destination for authors.”

The Balance Between Old and New  

Like many publishing businesses trying to navigate the digital transition, the trickiest part for Waxman has turned out not to be the technical know-how. “The hardest part is balancing my time and knowing where to put my energy,” he explains. “Because on the one hand you need to sell books to make a living, but at the same time you want to make sure you are prepared for the future. And the future, in terms of digital publishing, is not profitable in a lot of cases yet. Realistically, you have to stick with the old media until the new media really takes root, in a financial way that makes sense.” 

Looking ahead, Waxman sees more change, more tough road, but also light on the horizon.

“The electronic disruption is going to be significant. There are a lot of things ahead of us that we just don’t know what they are yet, all you can do is try to hold on, ride the bronco.” But at the end it comes down to that steady gleam of optimism.

“The enthusiasm is still there for good books, that’s always the main currency in publishing,” says Waxman. “The enthusiasm is there for the potential that eBooks present to get new readers, and try new ways to present information. The question is going to come down to economics. I think it will change, I think it will be disruptive, but I think a lot of the big publishers are going to figure this out. I hope they will.”

Scott Waxman founded the Waxman Literary Agency in 1997, a mid-sized agency with a roster of more than 200 authors, including many national bestsellers in a variety of fiction and non-fiction categories. Always looking for new ways forward in the world of books, Waxman launched Diversion Books, a publisher of eBook originals that connects authors with the freedoms of digital publishing, earlier this year.

Emily Williams is co-chair of the BISG Rights Subcommittee and a former literary scout who currently works as an independent publishing consultant.

By Richard Curtis, President of Richard Curtis Associates, Inc.; founder of E-Reads

Revolutions produce unlikely heroes, and the Digital Revolution has produced a very unlikely one in the form of a man that many believe is so wanting in ethical principles that he is nicknamed The Jackal. Yet it is on literary agent Andrew Wylie’s fangs and claws that the populist dream of a fair e-book royalty rests as he dares the world’s highest profile trade book publisher to do something about the slap he has administered to its face.

The smart money is on The Jackal, and to understand why you have to think like a jackal. While pundits debate contract law and publishing ethics, the real war is being conducted on a less visible battlefield. But it is one on which Wylie holds the high ground.

To understand Random House’s reluctance to protect its rights from Wylie and other marauders you need to understand a number of not so obvious factors. The most salient of them is this: Publishers are loath to sue authors (or the widows and children of authors).

Let’s see how these factors play out in the power struggle unfolding before our eyes.

Random House not confident of its legal position

In 2001 Random House sued Rosetta, an e-book startup that acquired directly from authors the digital rights to books by such Random House lions as Kurt Vonnegut Jr., Robert B. Parker and William Styron, books that were still in print in paper format under Random House imprints. Random had published them before there was such a thing as e-books, but nevertheless considered a book is a book is a book whether in tangible or digital form. The courts however rejected Random’s position, denying their request for an injunction against Rosetta. Random filed an appeal and the court turned it down. A second appeal was rejected too, forcing Random to work out a settlement with Rosetta.

The critical issue – what is a book? – remained unlitigated and left Random uncertain about its legal position.

Random Backs off from Open Road Threat

When publishing superstar Jane Friedman launched her Open Road e-book venture she declared her intention to start with several works by Styron including Sophie’s Choice and the Pulitzer Prize-winning Confessions of Nat Turner. The problem was, Random House claimed it owned those rights (presumably having recovered them from Rosetta as part of the settlement) and it issued a stern warning to all “third parties” without naming Friedman specifically. Authors, stated CEO Marcus Dohle, are “precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained.” By drawing a line in the sand, Random expected Friedman and other potential interlopers to back off or face the full wrath of the publisher’s litigators. (see Random House Serves Notice on Would-Be E-Interlopers)

It is a fundamental business principle that you don’t make threats you aren’t prepared to act on. And that is why we were flabbergasted four months later to learn that Random House had released e-rights to the Styron estate (See Random Returns Sabre to Scabbard in Styron E-Book Standoff).

What was that about?

“The decision of the Styron estate is an exception,” Random executive Stuart Applebaum explained. “Our understanding is that this is a unique family situation.”

Why, after rattling its saber so truculently, did Random give in? In our estimation it’s because ultimately, to make good on their threat, they would have had to sue Styron’s widow and children. And that would be a public relations disaster.

Whether Styron was truly an exception or Random blinked, one thing was clear to publishing professionals: sooner or later there would be further tests of the publisher’s determination. How would Random react the next time?

We’re about to find out.

Don’t Bother Suing Agents

Claiming that he hates the low e-book royalties paid by traditional publishers (see Random House Changes E-Book Royalty Policy), agent Wylie, representing hundreds of distinguished authors such as Salman Rushdie, Martin Amis and the late John Updike, announced that he is starting his own e-book publishing venture and intends to launch it with books published by Random House and other trade book publishers.

"We will take our 700 clients, see what rights are not allocated to publishers, and establish a company on their behalf to license those e-book rights directly to someone like Google, Amazon.com, or Apple." - Fifteen Percent of Immortality, Harvard Magazine

Does he have the right to do that? Wylie says he does: “The fact remains that backlist digital rights were not conveyed to publishers, and so there’s an opportunity to do something with those rights,” he declares.

Despite what happened with Open Road, some industry observers expected Random House to threaten to sue Wylie’s ass into pebble-sized pieces. But Wylie knows they won’t, because, generally speaking, agents are not legally liable for breaches of contract committed by their clients. A lawsuit against Wylie would in all likelihood be thrown out of court, and the judge would tell Random that if they have a beef it’s with Wylie’s authors, they’ll have to sue Wylie’s authors.

Which brings us back to our thesis: Publishers are loath to sue authors (or the widows and children of authors).

So? How does Random intend to punish Wylie? “Regrettably,” Applebaum declared, “Random House on a worldwide basis will not be entering into any new English-language business agreements with the Wylie Agency until this situation is resolved.”

This is known as the We’ll Cut Off Our Nose to Spite Your Face ploy, and it will avail Random nothing. Wylie’s clients are so coveted by Random’s rivals that if Random made good on its threat you’d see the greatest migration since the Aleuts crossed the Bering Land Bridge. Jackals are standing by!

Buyer? Seller?

Though legal threats won’t faze Andrew Wylie, handling the challenge of being both an agent and an e-book publisher might. A number of knowledgeable people like Macmillan’s John Sargent have not only deplored Wylie’s decision to put all his authors’ eggs in Amazon’s basket but have questioned whether it’s in the best interests of his authors. There is arguably more money to be made selling not just to Amazon but to Sony, Barnes & Noble, Apple, Kobo, and other retailers.

Navigating the shoals of conflict of interest between buyer and seller is another daunting task. Even if he is able to build a “Chinese wall” insulating the two functions from short-circuiting each other, Wylie’s own clients will reasonably want to know how it’s going to work: “If my agent is now my publisher, who am I supposed hire to negotiate with him?”

Will Wylie’s stratagem succeed in forcing publishers to raise their royalty rate? Not a chance. E-book royalties will eventually go up, but it will be no thanks to Crusader Wylie. But we thank him for articulating the dissatisfaction of authors and agents with low royalty rates and for so fearlessly acting on his convictions.

This post was originally published at E-Reads.com and has been reprinted with Mr. Curtis’ permission.

Richard Curtis, president of Richard Curtis Associates, Inc., is a leading New York literary agent; founder of E-Reads, an electronic book publisher; and a well-known author advocate. He is also the author of numerous works of fiction and nonfiction including several books about the publishing industry and is a former president of the Association of Authors’ Representatives.

By Emily Williams, co-chair, BISG Rights Subcommittee

Traditionally, one of the serious advantages big publishers have offered authors is international reach. They have professional rights departments savvy in the ways of markets around the world, who can place any book to which the publisher controls world rights with a compatible house abroad. The foreign publisher buys the book on the same terms as the US publisher – advance plus royalties – and the US publisher collects its piece of the money and kicks the rest back to the author.

Smart agencies then figured out they could provide the same service and keep more of the money for their clients, and many of them developed their own rights-selling arm. This rights business is a specialized niche and requires not just familiarity with the book market in other countries, but a solid understanding of which publisher does what in each territory, as well as the kind of personal ties with foreign editors that it takes to place a book with the right person and persuade her to buy it.

If a publisher can’t sell rights to a book – as US publishers have been complaining about the UK in the past few years, and Canadians about the US – or can’t find a buyer at the level it wants, it still has the option of exporting copies directly, at least in those markets where readers speak the same language.  Traditionally, this too has required the heft of a big publisher, one with the capacity to work with large printers and send shipments of books across the ocean, with the packaging and pricing that meets local requirements, and get those books into the hands of booksellers and libraries in the target country.

But what if, instead of shipping hundreds of books over the ocean or trucking them across borders, you could instead just email a file?  Would you still want to sell rights and split the profits?

Would you still need a publisher?

Technology is creating new options for reaching international audiences with both the fast-growing eBook format and with the print books that still make up more than 90% of the market.  This in turn creates an alternative to the established business of rights sales: direct, disintermediated access to readers in other countries.

I first learned about Baker & Taylor’s TextStream service during a conversation with a librarian in California who was frustrated at the quality of some of the Spanish-language books he bought from Mexico.  Baker & Taylor, which happens to be exceptionally good at serving the Spanish-language book market here, floated the idea of working with the Mexican publisher to print editions for the US market using their TextStream POD service instead of shipping the Mexican edition across the border. This would not only take care of the librarian’s quality concerns (TextStream can print in the durable library format), but could potentially save the publisher lots of money in shipping costs.

The difference with using a self-serve POD supplier is that the book becomes part of the B&T catalog, which makes it available to over 40,000 retail and library customers in 120 countries.  Ingram’s Lightning Source has similar POD capabilities and can also print in different languages and reach wholesale, retail and bookstore customers in 100 countries.

"By the end of 2012, we’re saying half of all the sales potential can also be reached with the product without a local nexus: no requirement of local inventory or any shipping or revenue collection facility beyond your digital distribution and print-on-demand partner."

In a post earlier this year, Mike Shatzkin forecasted that with eBook sales rising so fast, half of US book sales (print and eBook) could take place online by 2012. In a later post he expanded on the opportunities this offers foreign publishers, who could potentially reach half of the US book market with no local nexus, via eBooks and – more importantly given how dominant print remains for now – via POD.

Selling direct sidesteps one of the most contentious issues in the English-language rights world.

The fight between US and UK publishers over who will control the rights to sell into the open market has only gotten more thorny with the arrival of eBooks, which cross borders with far greater ease than print books.  Shatzkin postulates that the ability to sell direct may end this dispute because UK publishers will no longer need to defend territoriality as a business strategy. I agree that it could put an end to some open market battles, but not because publishers will give up on territorial rights – rather because they won’t have to.

With Lightning Source and TextStream operating on both sides of the Atlantic (TextStream is currently US-only but they’ve hinted at expansion plans), UK and US houses could publish directly into each others’ markets without ceding control over their titles or making any concessions.

The big news may be not what flexibility digital publishing options offer to publishers, however, but rather the opportunities it opens up for authors and agents.

Agents on both sides of the Atlantic are under increasing pressure from publishers to sell World English rights to their books, ostensibly for all the joys corporate synergy has to offer, but also so the fight over open market and eBook rights can stay in-house.  An agent who is unconvinced by a local house’s ability to sell an author’s book abroad now has a third option beyond finding an overseas publisher or sitting on the rights.

With eBook publishing, the line between professional and self-publishing is already blurry.  As for the 90% of the market that remains print, the author now has the option of entering into a non-exclusive POD agreement that allows the book to be stocked by any interested bookseller or library while still leaving the door open for a future rights sale down the road.

Now, there are some big caveats here.

As Kobo’s Michael Tamblyn pointed out during our WEBcast, Book Rights: Headed for a Borderless Future?, what is simplest from a rights standpoint is not always best for the book or the author.  Making a book available is not the same as selling it, and when it comes to marketing and promotion, having a local publisher on board with connections to retailers and media almost always trumps an international sales strategy.  There is also all the boring but essential stuff publishers usually take care of, not least of which are the identifiers (see ISBNs) and accurate metadata (BISAC codes, good flap copy) without which a book will disappear into the online ether, never to be found again.

Still, under some circumstances going direct clearly has its appeal.

Last week, the widow of Harold Robbins, an international bestseller at one time, announced she would reissue 12 of Robbins’ out-of-print novels through self-publishing services provider AuthorHouse, in a combination of digital, hardcover and paperback formats.  The release is mum on international markets, but AuthorHouse has a UK branch and distributes through both Ingram and Baker & Taylor.

"We will take our 700 clients, see what rights are not allocated to publishers, and establish a company on their behalf to license those e-book rights directly to someone like Google, Amazon.com, or Apple." - Fifteen Percent of Immortality, Harvard Magazine

Then, on Monday, an interview with uber agent Andrew Wylie revealed that he is unsatisfied with the terms publishers are offering for eBooks, and he is thinking about bypassing them altogether, instead creating a company of his own to publish and market eBook editions of his clients’ backlist titles.  Not even the extraordinarily shrewd and international Wylie can overcome all the challenges of selling books direct to international readers (I’ve heard funny stories of agents in his swank London office calling tiny bookstores in rural France trying to set up an author tour), but with 700 clients and a rich trove of backlist titles, he’d not want for interested partners, and tech giants like Google, Apple, and Amazon have the reach to connect his authors with readers (of English) around the world.

When it comes to other languages, even more eBook rights are up for grabs.

Foreign publishers in many territories did not start to buy eBook rights until quite recently, and book contracts with foreign publishers are generally of a much more limited duration (5 to 10 years vs. life of copyright in the US). There are some complications involving acquiring the rights to republish the translation of a book – translators have rights too! – in eBook or POD form, but there are also increasing numbers of non-traditional publishing partners around the world eager to leverage the new technologies and make a name for themselves.

Agents who teach themselves to make the most of the internet’s borderless potential not only to make their clients’ books available, but also to connect them with readers, will be in a position to bypass publishers – whatever the country – who are slow to make the digital transition, and to keep a bigger share of the money from sales flowing back to their authors.

Emily Williams is co-chair of the BISG Rights Subcommittee and a former literary scout who currently works as an independent publishing consultant.

In the past few years, across dozens of publishing and media conferences, each category along the publishing value chain has been interrogated—content development, product design, marketing, promotion, and (perhaps above all) distribution—and each has been found to be ripe for re-engineering.

The function of the agent has arrived late to that disruptive discussion, I suppose because the agent’s function has traditionally fallen outside the publishing value chain, a vaporous figure who hovers over the content at its acquisition and inconsistently emerges thereafter. After all, what value does an agent actually bring to a given property?

When one charts the path of a work of literature from ideation to incarnation in the marketplace, one hardly remembers who first matched the artist with her publisher. But recently, the agent has taken his turn in the spotlight, awaiting the judges’ critique. In a couple of thoughtful posts by Victoria Strauss and Jane Friedman, and in a particularly lively Twitter conversation initiated by Colleen Lindsay, the industry mused about the possible adjustment of an agent’s compensation, due to the possibility that in Publishing 2.0, an agent might bring quite a lot of value to a property after all.

With agents now in the conversation—as they were effectively during the Digital Book World conference earlier this year—it’s important that we state what really constitutes the agent’s problem: Though the agent’s function in the publishing value chain has changed considerably, the agent’s position in that value chain has remained the same.

I would suggest that before we can discuss how better to compensate an agent for his or her ever-expanding work, we must fundamentally alter our placement of the agent in that value chain. As long as the agent continues to be seen as taking primarily a sales position, there can be no more than a nominal adjustment of an agent’s compensation. And as long as there is no substantive adjustment of that compensation—whether in terms of increased commission percentage or openness to alternative means of payment for author services—there can be no wholesale, widespread augmentation of the agent’s activities to better match the industry’s needs.

And the industry is badly in need of what an agent—freed from the previous paradigm’s constraints—can offer.

Rather than resting, invisible, alongside the content in the acquisition category of the chain, the agent must evolve into the work’s inseparable acolyte, accompanying the work across subsequent categories in the chain—development, marketing, promotion, and branding. While publishing is grappling with the consequences of disintermediation in the value chain, I recommend an Agent’s role is one of radical mediation in that same chain.

To make my point, I’ll risk overstatement: the agent—more than the publisher, even more than the author—is best suited to stand alongside the work through a variety of categories along the value chain, to ensure the work’s proper development and shape, and to shepherd its arrival into the communities ready to appreciate its virtues.

• If due to the requirements of their job, editors are able to edit less, agents respond—either editing themselves or bringing in third-party consultants and co-writers.
• If due to the volume of a house’s list, a publicist is unable to discover, awaken, and motivate a title’s audience, agents respond—calling their own press contacts, designing author events, or bringing in outside publicists and media managers.
• If publishers are unable to spend the time and money to build long-term, audience-building, brand-growing strategies for their authors, agents respond—crafting multi-year, multi-book, transmedia programs for their authors, in partnership with app developers, gaming engineers, and community managers.
• And if the Bookscan numbers and a shrinking imprint destroy the chances of an author’s second or third or fourth or tenth book, agents respond—seeking out alternative means of producing work and engaging readers.

There is a lot of slack in publishing these days, and agents are picking up most of it.

And they should. Agents are uniquely positioned to focus on authors as a venture capitalist focuses on start-ups.

If agents do their job correctly, they will know their author and his or her work more intimately than any editor or publicist or publisher. They will know that author’s realized audience and potential audience better than the author will know it himself. They will see the uneven arc of a long career more clearly than anyone at a publishing company who may or may not be around 18 months from now.

They are the only player in the game who can radically mediate.

For many years, agents have been engaged in many of these activities on behalf of their clients, but now such work cannot be abberant or occasional or haphazard. It must be regular and required. Radical mediation must become an agenting methodology.

It will mean a better publishing world for everyone: for authors, it means representation that is not deal-centric, but career-centric; for editors, it means engagement with agents that is not antagonistic but collaborative; for publishers, it means less pressure to do what you’re not good at and more freedom to do what you are good at; and for readers, it means more publishing minds better focused on finding you and introducing you to a book they know you’ll love.

I don’t claim to know how best to adjust the payment schedule to better compensate an agent for his or her considerable efforts; that’s not what this post is about. An increase of commission to 20% sure seems like a start. An openness on the part of the trade organizations and keen watchdog groups to alternative modes of income seems a good beginning, too.

And we agents would certainly discover some ballast in our endeavors by embracing an entrepreunerial spirit less reliant on past conceptions of the agent. But before we can determine what should change about an agent’s compensation, we must interrogate our shared assumptions about an agent’s function and consider adjusting the limited—or non-existent—position an agent has held on the publishing value chain.

If this happens it will be because a number of agents are stretching farther than their compensation currently supports. Like a new hire anxious to win a promotion, we will do more than our current job title requires of us. But by doing so, we are gathering industry influence, and building brand equity for ourselves and for our clients, and developing audience loyalty.

For now, and for a while yet, that will have to be compensation enough.

Jason Allen Ashlock is the Founder of Movable Type Literary Group, a literary agency that seeks to meet the needs of an industry in transition by serving authors and publishers at each point on the creative continuum, that long line that leads from an inchoate idea to its incarnation in the marketplace.

Last year, I wrote a piece in Writer’s Digest (September 2009) about the future role of agents. I had three key points:

• Agents need to innovate on contracts to keep themselves, as well as their authors, alive through the transition. Richard Nash has the right thinking in this area.

• Agents need to partner and focus on the long-term goals of an author’s career rather than a specific book sale. (Though, as this post will discuss, the current agenting model does not support this.)

• Agents need to develop new business models for themselves because no one will be able to stay in business “the old way” given the greatest change in the history of media.

Victoria Strauss over at Writer Beware wrote a lengthy post (reprinted here) addressing the issue of whether agents are now underpaid at the 15% commission rate, given how much work they are expected to do aside from make a sale.

She ultimately recommends that agents could/should charge 20%, and allows that agencies may legitimately start offering fee-based services (for non-clients), as well as publishing arms.

The 20% commission rate isn’t going to solve a thing. It’s like putting a Band-aid on a gushing wound. It won’t save anyone whose business is at risk.

Regarding services and publishing operations: I couldn’t agree more, though I think the distinction between clients and non-clients is going to evaporate FAST.

The amount of money that’s floating to books (and to content in general) is diminishing. That’s because there’s a TON of supply, and not so much demand. There will be less money to go around for all, but probably just as many people will be interested in writing and authorship.

Publishing cannot possibly sustain the current status quo.

And that current status quo is: Agents can only get paid when they make a sale, and that is the only way they should get paid.

This has to change if the role of the agent is going to have any value or meaning in the future for authors (except for those bestselling authors, whose royalty checks will presumably continue to fund the old model).

Either agents provide a valuable service for non-bestselling authors, or they don’t.

I think they do. And as Strauss mentions, you can find agents now who are launching alternative models for serving authors outside of the traditional commission relationship. Check Keller Media or Diversion Books (Scott Waxman). You’re going to see more of this. A lot more.

Agents are ideally positioned to be career advisers/managers, or professional consultants. Their role will change, and how clients/authors pay them will change. And as long as transparency is maintained, agents need the leeway to run their business in new, innovative ways, without being unfairly labeled as an illegitimate operation, or as taking advantage of writers.

Undoubtedly there will be much confusion in the years ahead as things transform, and writers will need as much education as ever to form the right partnerships for their career. But agents need to be empowered and given room to innovate as much as the authors.

We can’t develop future business models around fear and protectionism.

This post was originally published at Writer’s Digest’s There Are No Rules blog, and has been reprinted here with Ms. Friedman’s permission.

Jane Friedman is the Director of Content & Community Development for the Writer’s Digest brand community, including Writer’s Digest magazine, Writer’s Digest Books, and the Writer’s Market series. She is the author of the Beginning Writer’s Answer Book and blogs on the industry as part of the Writer’s Digest community at There Are No Rules. She is a vegetarian, bourbon-drinking editor, at least mostly sane, living life forward, even though you can only understand it backward.

By Victoria Strauss, Co-founder, Writer Beware

A fascinating discussion started up on Twitter earlier this week (#agentpay), kicked off by agent Colleen Lindsay, who asked, “How would publishing change if agenting moved from commission-based payment to billable hours?”

Those in favor pointed out that agents’ job descriptions have expanded over the past couple of decades, and that they must now do much more for the same 15% they earned twenty years ago. They also get no payment at all for a good portion of what they do on a regular basis–reading queries and manuscripts, editing, submitting books that never sell. In a highly competitive environment, with shrinking advances (at the midlist level, anyway) and cautious publishers, it’s getting harder and harder to make a living.

Those against raised the specter of abuse (there are several questionable agents in Writer Beware’s files who soak their clients for billable hours while doing little or nothing to place manuscripts with reputable publishers), the loss of agents’ entrepreneurial edge if they got paid no matter what (the fact that the agent profits only when the writer does is at the heart of the traditional author-agent relationship); and, of course, the possibility that only wealthy writers could afford to have agents. Several lawyers participating in the discussion also pointed out that keeping timesheets for billing is a soul-sucking timesink that no one in their right mind would want to undertake.

For authors who at this point are feeling their blood pressure rising, I should point out that this is a hypothetical discussion; none of the participating agents are advocating an immediate switch.

Colleen’s question does, however, highlight an important issue: agents’ job descriptions really have expanded over the past twenty years, while their commission percentage has remained the same. Just as writers are now routinely expected to take an active role in promoting their books (two decades ago, self-promotion was still very much optional), many agents now feel obliged to take an active role in promoting their writers. Selling books is also much more work than it used to be, especially in the hyper-competitive and risk-averse environment produced by the recent economic downturn.

I also think that the droves of laid-off editors who’ve transitioned to agenting–not just recently but during the height of the publisher consolidation frenzy in the 1990’s–have contributed to the problem, with more agents than ever vying for the time of fewer editors than ever.

So it’s not surprising that some agents feel they are underpaid. In my opinion, though, billing hours is not the way to go. It’s too open to abuse. It shuts too many writers out of the picture. It also might have a backlash effect–if only well-heeled writers could afford agents, there would be less need for agents, putting a lot of agents out of business. (Which might in turn limit publishers’ choices. Could that spell the end of big publishers’ agented-submissions-only policies?)

Compromise measures–charging commission until the first sale and billable hours thereafter, flat per-project fees, fees charged for adjunct services such as editing, even reading fees–create the same concerns. Would agents select clients on the basis of their ability to pay? Would they drop clients who took a long time between books and didn’t use enough billable services?

As for reading and editing fees, that battle was fought years ago. Most agents’ trade groups prohibit them for members.

So what’s the answer, for agents and others who think the current system should change? A commission hike is the most obvious solution.

During the 1980s and 1990s, US agents raised their commissions from 10% to 15%; it seems to me that an increase to 20% could be undertaken with relatively minimal pain on all sides. This would acknowledge the ways in which agenting has changed and expanded, but wouldn’t unfairly burden writers.

Another idea might be for agents to sell their expertise. Branches of an agency could be established for fee-based editing, marketing, publicity, packaging, consulting to self-publishers, and the like. These services wouldn’t be sold to clients, however–that would be a conflict of interest (if an agent can make money from a service s/he is urging you to buy, how can you be sure that buying it is really to your benefit?) and could easily be misused. The agency would need to erect an impenetrable wall between the agenting and the fee-charging sides of its business–for instance, no client would ever be sold editing services, and no one who bought editing services would be eligible to become a client. This would be made clear on the agency’s website and in its literature.

Agents can also become publishers. Of course, that’s even more fraught with ambiguity than selling editing or marketing services.

If an agent can publish a client’s book herself, how driven will she be to sell the book to another publisher? If an agent is selling a client’s book to himself, how can he adequately represent both parties’ interests? (See the blogs of authors Stacia Kane and Courtney Milan for a more detailed examination of these potential conflicts of interest.) There are very good reasons why the AAR and the ALAA prohibit members from representing both buyer and seller in the same transaction (the AAA allows it, but only if the client is first informed in writing). Again, to ensure ethical practice, there would need to be an impenetrable wall between the agency and the publisher.

All of these things are already happening. A number of established US agents charge 20%. There are agencies with editing and consulting businesses; there are even agencies that own or co-own publishers.

In coming years, I think this blurring of lines will become commonplace, as authors, agents, and publishers all struggle to survive in the digital age. As agencies expand their capabilities, it’s essential that they consider the importance of ethical practice, and take the time and trouble to establish rules and customs that ensure that their clients are protected, and their potential clients are fairly dealt with.

This post was originally published on the Writer Beware blog, and has been reprinted with Ms. Strauss’ permission.

Victoria Strauss is the author of seven novels for adults and young adults, including The Burning Land and The Awakened City, and co-founder, with Ann Crispin, of Writer Beware, a publishing industry watchdog group sponsored by the Science Fiction & Fantasy Writers of America with additional support from the Mystery Writers of America. She maintains the popular Writer Beware website and blog, both of which provide information and warnings about the many schemes and scams that threaten writers.

By Jane Friedman, Publisher & Editorial Director, Writer’s Digest

If contracts between publishers and authors are changing—and if there are far fewer traditional deals to go around—then what does the future look like for agents? What kind of business models can they adopt while still acting ethically?

Former Publishers Weekly editor Sara Nelson moderated this conversation among four agents at the 2010 Digital Book World Conference, some of whom run their business the same way they did 20 or 30 years ago, while others have adopted new methods of partnering with authors.

The panel addressed the most sensitive and timely issues that are constantly debated across writers’ communities.

[NOTE: DBW Members can access the full audio of this session here.]

Should Agents Charge?

Agent Brian DeFiore was the first to speak up and say he thought this was one thing that really should not change. The Association of Authors’ Representatives (AAR) Canon of Ethics prohibits charging reading fees and taking any kind of side deal from a buyer—or any kind of income that flows to an agent but does not also flow to the client. He argued that the only way to keep trust is if the agents’ and authors’ interests are completely in tandem.

DeFiore said, “There are people with more hope than talent, and those people are ripe for exploitation. It’s probably a really good business model to charge them a lot of money to give them a little bit of our expertise. … It’s just not appropriate to confuse the job of what an agent does—sell legitimate authors’ rights—and people whose work cannot be sold.”

The panel briefly touched on whether it’s kosher for agents to take a higher cut of the advance on low-advance deals. Small-time deals might not be worth the agents’ time unless they get more upfront, but some authors might not mind giving the agent an initial larger cut if it means a traditional book deal.

Gail Hochman, president of the AAR, didn’t think it was problematic as long as the agent is upfront and fair about terms. She added: “But where it can get weird is when you change it, on a case-by-case basis.” So the key seems to be consistency and a clear policy.

Should Agents Offer Additional Services?

It has long been a red flag for writers when agents offer additional fee-based services not connected to representation, especially editing or publishing. The conventional thinking is: If the agent makes money on the side from such services, what motivation do they have to make legitimate sales?

Hochman broke into the conversation in a surprising and refreshing way, and acknowledged the industry is in a transition period. She theorized how agents might be able to run a business that was not solely commission based.

“If I were to charge a special fee, other than by commission, it could be by hour or by task. It would have to be a fair price. The agent would have to have the experience to offer the service knowledgeably; the facts have to be clearly laid out. … I don’t think an alternative payment model is unfair. We have this commission model, but if I am offering a fair service for a fair price, fine. But most traditional agents are meeting traditional authors who want a traditional advance.”

Scott Waxman agreed with Hochman that if authors want a service, and you’re transparent about what you’re offering, it might be done in a way that is appropriate. He felt like the rules aren’t really the rules any more.

But DeFiore continued to argue that agents should make money in the traditional manner: “An agent’s job is helping to maneuver a client’s way through this business—to help them figure everything out about their career, not just the agent who makes a phone call and makes a deal. I don’t think that really changes the financial picture, which is that the agent can and should be able to make a living on a percentage of earnings.”

It’s Not Just About Editing Services

Wendy Keller has powerful motivations for assisting her clients for a fee: marketing and promotion of a work that’s been sold to a traditional publisher. All of the agents agreed that their authors don’t often receive the marketing support and education required for a successful book launch. So Keller helps provide it: “Agents seem to think it’s enough to tell an author these are the things you need to do. I teach them in my office, and yes I charge them, but they can go to another vendor. I’d rather have my authors spending their time building their platform.”

Waxman said that he saw the agent performing in more of a “manager” role. A manager role means closer attention to authors, and focusing on categories the agent is best at. Waxman said, “That’s going to affect the business model for an agent. You put those two things together and you have more things you’re doing besides making book deals.”

In that vein, Waxman has formed a business that complements his literary agency, Diversion Books. It is not a fee model or service, but rather a partnership with authors on different kinds of deals. He said, “You’re giving your authors other ways to publish their material that the traditional publishers don’t want. … We want to help our authors get that work out there, and if the traditional publishers don’t want it, then there needs to be a place and a way to publish that work.”

Are Agents Ready for a New Era in Publishing?

The closing of the panel revealed that agents may not be quite ready to leave the old model behind. Waxman said, “I want publishers to keep writing checks. They fund the whole business. They allow the author to work, they allow the agent to get paid, they take all the risk.”

For agents who are already established and have a full client roster, perhaps change isn’t critical. But for new and hungry agents trying to establish themselves in the industry, all options are being put on the table.

Jane Friedman is the publisher and editorial director of the Writer’s Digest brand community, where she oversees Writer’s Digest magazine, Writer’s Digest Books, and the Writer’s Market series.

By Jane Friedman, Publisher & Editorial Director, Writer’s Digest

Agents were breaking out their calculators at the 2010 Digital Book World Conference, discussing the nitty-gritty of future book deals during the very nuts-and-bolts panel, “Tomorrow’s Book Contracts,” moderated by agent Richard Curtis.

[NOTE: DBW Members can access the full audio of this session here.]

Curtis organized the panel by asking each agent to propose a provision or revision to future book contracts. Here’s what the agents presented:

Territories

A longtime bramble bush for agents and publishers, territory rights is once again rearing its ugly and thorny head as e-book devices and digital formats raise many territorial questions that come with few answers.

Agent Devereux Chatillon led a discussion of the territories problem, and conceded that, first and foremost, “You have to give the consumer what the consumer wants in the format they want it in and when they want it. If you don’t, you run into risks of lost sales, piracy, and also losing the consumer not just to other books but to other entertainment.”

But territory rights issues can get in the way of serving readers. (And it already is!) There was no clear solution to this problem, but Chatillon recommended globally coordinated publication dates. Simon Lipskar mentioned that one of the proposals is that all open market rights for digital editions go to the U.S.—though “that would make UK publishers vomit up their breakfasts.”

E-book Rights

What form is an e-book going to take in the future? How far do the edges of that idea extend? Publishers are now looking to keep rights to digital adaptations, which is broad and raises a lot of questions—does this include dramatic rights too? Video game rights? Right now, no one really knows what form e-book adaptations might take, or what they are worth.

Agent Miriam Kriss recommended that agents allow for digital verbatim rights, but always strike through digital adaptations to the material. Kriss said, “As innocent as it might sound, it could kill a movie deal or conflict with other deals.” For instance, what happens when a book trailer becomes very close to something that is like a movie or a movie trailer?

Bottom line, there are many gray areas as books become “enhanced.”

Royalties for Kindle

Simon Lipskar presented a series of royalty calculations in an attempt to identify a fair e-book royalty percentage for authors, especially for books on Amazon’s Kindle, since that will likely be the No. 1 retailer of e-books for the foreseeable future.

A major factor in his scenarios hinged on whether publishers switch to an agency model rather than keeping the current pricing and distribution model.

Lipskar recommended basing e-book royalties on the publisher’s price before commission, but had to acknowledge, “At the end of the day, we all need to accept, all of us, is that we don’t know. Google is coming, Apple is coming. We don’t know what these economics look like.”

The Difficulty of Today’s Book P/L

There’s been significant speculation industry-wide about whether publishers will sign a book without having e-book rights. The general feeling of the agents on the panel was that publishers don’t want to give up e-book rights because no one can run a book P/L accurately if they can’t predict or control the e-book price or measure its impact on print book sales.

Lipskar commented, “Splitting the rights sounds tasty, but that would push down the e-book price since that rights holder has no stake in the print version of the book. There are economic consequences to these decisions (rights splitting). Publishers aren’t objecting simply because they want the rights.”

The Water’s Just Fine—Come On In!

If agent John Schline had a contract provision to propose, it was overshadowed by the many other things he had to say, which were contrary to the industry’s prevailing sky-is-falling attitude. He feels the current models are doing exactly what they were intended to do: Foster the creation of new works.

Schline said, “Publishing is fine. The books are great. There might be a crisis in retailing. There might be a short attention span. But I think that the books that are being published are great. We should keep in mind that it’s in all of our interests to protect the ability of someone spending 3, 5, 10 years to write a book.”

Jane Friedman is the publisher and editorial director of the Writer’s Digest brand community, where she oversees Writer’s Digest magazine, Writer’s Digest Books, and the Writer’s Market series.

By Jane Friedman, Publisher & Editorial Director, Writer’s Digest

Industry optimism may have been witnessed at its most profound during the “Back-Loaded Book Deals” panel at the 2010 Digital Book World Conference, featuring two publishers and two agents—a combination that could’ve resulted in tremendous verbal duels, but rather conveyed a spirit of collaboration, innovative thinking, and true partnership between authors, agents, and publishers. The idealistic tone reached such heights that moderator Lorraine Shanley of Publishing Trends sardonically remarked that she might cry.

But it was indeed a moment of remarkable insight into what the engine of publishing is, and what valuable purpose publishers serve.

The two publishers on the panel, Robert Miller of HarperStudio and Roger Cooper of Vanguard, opened up by explaining their motivations to find a new publishing model: to avoid unearned advances, huge returns, and little return on big investment. Both wanted to focus more on quality. Cooper said of the old model, “There were a huge number of books being printed and shipped, but very few books being published.”

[NOTE: DBW Members can access the full audio of this session here.]

Their new models summarized:

• HarperStudio offers its authors a 50-50 profit share and low advance—though one might question if $100,000 (the max advance amount) might be considered low. They have the back-end resources of HarperCollins, but only six people dedicated to acquisitions, editorial, marketing, and publicity. They limit their publication schedule to 2 titles per month.
• Vanguard offers no advance, but high royalties, and also publishes 2 books per month. They guarantee a substantial marketing budget in the contract, and Cooper emphasized that they have a unique SWAT team for executing each title, built of experts who may come from outside the company. Because there is no advance, Vanguard pays royalties 90 days after publication and then on a monthly basis.

Originally, Miller intended HarperStudio to go solely nonreturnable with their business. While several large accounts have gone along with that deal, they had to offer returnable as well, since most retailers would not take their titles otherwise.

The Secret: Transparency and Collaboration With Authors

But what really drew everyone’s attention and created the Kum Ba Yah moment was the focus on transparency, collaboration, and communication between publisher and author. While at one time it was unthinkable to ever share a book P/L with an author, Miller says that HarperStudio reviews financials with authors so they can come to mutual decisions on how much money to invest in a title’s print run, marketing, publicity—and anything else that might impact the bottom line.

Miller said, “This is a collaboration, and let’s decide every bit of it together. What money can we spend that will make money? It’s much easier, I find, than obfuscation and pretending you don’t know what co-op is. … It’s amazing how often you come to a consensus when you have the same information in front of you.”

Cooper agreed: “The idea is to learn from others, to learn from an agent, to learn from an author, to learn from another member of the team. You can come up with extraordinary ideas.”

The Agents’ Perspective

So what about agents’ take on this innovation?

Ira Silverberg of Sterling Lord Literistic said, “As an agent, I’m the first person who will say, ‘The writer’s always getting screwed.’ We’re now trying to figure out how everyone can make a little bit of money, and also how we can keep everyone in business.”

The most important point from the agents’ side was that low-advance and no-advance models can tremendously benefit authors at the top of their game. The ones who have the most to lose are the mid-list authors, who can make a book-to-book living on the advances that publishers still pay.

However, Ira added that, in the future, he doesn’t think many authors will have paper-based books—that maybe print-on-demand or e-books would be the standard for most authors.

Mary Ann Naples of Creative Culture pointed out that—far from being fans of traditional publishing—most authors are now disillusioned and eager to find new models. Or, Naples said, she might have a savvy author who says, “I’m not interested in the traditional model because I’m in self-publishing and I’m into other businesses, and unless I can make more money doing it, I don’t want to do it the traditional way.”

A Little Tender Loving Care Goes a Long Way

Even though HarperStudio and Vanguard have small staffs and arguably limited resources, they have time to concentrate and focus on each book’s release, and can give each title and author the time and dedication it needs to succeed. Miller said, “No book goes unnoticed. A book gets a real opportunity to get distributed and marketed in a real, strategic way. I prefer that to 2 books out of 10 that get that attention.”

This line of conversation provoked the most Twitter praise and favorable commentary after the session. But it also made sense from a business perspective and emphasized what makes publishers special in a time of many DIY options.

Silverberg said, “There will be very high-end authors and very low-end authors who will go direct to Amazon and Google because they can make more money. But what’s not in these platforms is a group of knowledgeable people to get these works out into the world, and help the author with networking with a group of informed readers.”

The big-picture takeaway? Publishing is much more collaborative and transparent now than it was even 10 years ago, and will have to remain so if the business is to successfully transition into the digital age. The importance of meaningful connections—and trust—between editors and authors is of the highest value in facing publishing’s greatest challenges.

Jane Friedman is the publisher and editorial director of the Writer’s Digest brand community, where she oversees Writer’s Digest magazine, Writer’s Digest Books, and the Writer’s Market series.