Wednesday, July 27, 2011

A warning when searching for an agent

I had a brief, but enlightening conversation on Twitter earlier today with the fantastic, Sara Megibow, literary agent with Nelson Literary Agency. I'm passing what I learned on to you because, if you are shopping around for an agent or know someone who is, this something you need to keep an eye out for.

The conversation began with a tweet Sara retweeted:
#dealbreaker RT @victoriastrauss Just saw agency contract language that imposes a $2,500 minimum commission fee, regardless of advance amt.
Essentially, this author's prospective agent would require at least $2500 in commission instead of using the standard % of an author's earnings. (ie, if Author gets a $15000 from the publisher, the agent would receive 15% of that [$2250])

So, I replied:
@SaraMegibow Woa. I've never heard of anything like that before. Does that show up in contracts often?
Here was Sara's response:
@SarahMEden no and it shouldn't. My realestate agent doesn't say "I'll shop your house, but if they pay <$200,00 I won't complete the sale"
Real estate agents, like literary agents, are paid a percentage of a sale. The sale price determines what their commission is.

If this agent who set a required minimum were earning off a regular percentage--we'll say 15% because that's relatively standard--they would have to sell their client's book for just over $16000 to earn that minimum. For some books, this would be an easy thing to do. But, not all books are going to get that advance--perhaps they are a better fit with a smaller publisher, or one that offers lower advance but better royalties, or the book is in a genre that doesn't sell in the big numbers that other genres do.

The agent may simply not close a smaller deal despite it being a better fit (or the only fit) because that commission is guaranteed them in the contract.

***Also: Please see Robin Week's excellent & insightful comment below for additional problems this scheme may create!!***

Minimum commission guarantees are not standard in agency contracts. If you see one in a contract, proceed with maximum caution!

4 comments:

Robin Weeks said...

From that language, it also appears that the agent would have less incentive to be a tough negotiator--their commission is guaranteed, either way, so if they can sell your book to their small-press buddy for a $2500 advance, no loss to the agent!

It could also create a circumstance where the author has to pay their agent money out of pocket, if the book is sold for no advance.

Agent: Well, Publisher X will buy the book, and they won't give you any advance, but they will give you a large royalty percentage.

Author: So if my book sells well, I could still make millions?

Agent: Sure, that's possible.

Author: Okay, let's do it.

Agent: That'll be $2500, please.

Incredible. And what's sad is that so many new writers don't take time to research industry standards, and will sign any contract someone puts in front of them.

Angie Cothran said...

Yikes! I'm a writer. I don't do math.

Terry W. Ervin II said...

Although not exactly the same, it appears to be along the same line as say a subsidy publisher, who makes money off of the author rather than sales of books. Skews the publisher's motivation and focus of effort with respect to the author.

Rachel Law said...

I'm with you Angie Cothran. That's why I married an Actuary :) (aka statistical number cruncher)

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