Pub Rants

Category: agency agreements

Money Talk: Where Does Your Commission Go?

by Kristin Nelson

By Danielle Burby

In this column, we discuss everything authors should know when it comes to landing an agent and navigating the complexities of the publishing industry. You know how to query and what to ask when an agent offers you representation, but here’s a slightly more sensitive topic: commissions.

Agenting is a sales job, which means your agent doesn’t get paid for their work on your book until you get paid. An agent takes on a project and invests their time, energy, and resources with the hope that the project will sell to a publisher. If the project doesn’t sell, the agent doesn’t doesn’t get paid. (If an agent ever asks you to pay a fee for their services, walk away. They are not a real agent.) The industry standard commission rate is 15% for domestic sales (with slightly different rates for various ancillary rights). Once a book has sold and the contract is fully executed, the publisher schedules an EFT or writes a check to the agency, and the agency retains 15% and sends the author a check for the remaining 85%. It may never occur to an author to wonder what happens to the 15% commission they just paid.

There’s no true industry standard in the arrangement between agents and agencies surrounding that 15% commission. Every agency has a slightly different way of approaching this matter, but a general rule of thumb is that the agent gets some of the money and the agency gets some of the money. Essentially, you are paying the agent directly for his or her work and you are also paying the agency to continue growing, investing in support staff, and providing you with the proper services.

Possible splits:

  • A very typical split between agent and agency is 50% of the commission (or, in other words, 7.5% of the entire deal). For example, if your book sells for $50,000, the total 15% commission payment is $7,500. It is reasonable to expect that $3,750 of that will go to your agent.
  • Many agents have built-in escalators (much like authors), incentivizing them to hit certain sales goals by bumping up commission percentages.
  • Your agent may get a higher percentage of the split (60%-70%) if the agency he or she works for doesn’t provide office space or support staff.
  • It is rare, but not unheard of, for agencies to pay their employees below 50% of that 15% commission.

Different ways of paying agents:

  • Commission only. Agents on a commission-only arrangement are paid when their authors get paid. Payments here are intermittent. Many commission-only agents work side jobs until they are able to build their list to a point where they have a steady, comfortable income.
  • Salary for services to agency plus commission. Many agents build their client lists while simultaneously serving in salaried support-staff roles for an agency (assistant work, subsidiary rights work, etc.) until they are financially ready to switch over to commission only.
  • Draw. A draw is an advance on future earnings, much like publishing houses pay to authors. Agents on a draw are paid a fixed amount of money annually that they are then expected to match (and hopefully surpass) in sales. Once they have earned back the draw, they begin to receive commissions. This provides an agent with a level of financial security and stability, allowing them to agent full time, though some agents are hesitant to accept a draw because the stakes are higher if sales goals aren’t met.
  • Salary. Some agencies pay agents a salary in exchange for the entire commission. In this case, agents often make a very comfortable salary and receive an annual bonus if they hit very high sales goals.

Ultimately, it is an agent’s right to keep his or her financial agreement with an employer private, and I wouldn’t recommend asking about it on The Call or in conversation. That said, arming yourself with an awareness that these different arrangements are out there is important for you as an author. And, knowing them, you may be able to read between the lines to figure out how it works for your agent.

This is important because, the truth is, how your agent is paid does impact you. If your agent isn’t receiving appropriate commission percentages, he or she may change agencies. If an agency isn’t investing their own percentage in support staff and company growth (and therefore more services for you), it is something to be aware of because, chances are, your agent is doing extra work. In the first several years of agenting, the money comes in slowly, unpredictably, and often in small sums. If an agent is just starting out and is being paid commission only, it can be very difficult for that agent to pay the rent and bills. Publishing is a very tough business with a high burnout rate. The way agencies pay their agents absolutely contributes to an agent’s ability to stick it out.

Every agent has to build from somewhere, but some agencies offer their employees more support in that arena than others. While your agent has no control over this and shouldn’t be penalized for, say, not being in a position to work full time, it is something you want to think about. Consider it in the same way you’d weigh whether you want an editorial agent, a boutique agency, or an agent with a large vs. small client list. As always, the more you know about the way publishing works, the better!

5 Qs Authors Don’t Ask but Should When an Agent Offers Rep

by Kristin Nelson

In the last two weeks, we at NLA have offered representation to seven authors, most of whom received multiple offers. All agents are aggressively seeking new talent right now! It’s awesome to talk to savvy authors who have a list of good questions prepared for their initial conversations with prospective agents, questions like:

• What is your communication style?
• How would you describe your dream client?
• What is your editorial vision for my work?
• What would your submission strategy for this work be if you took it on?
• What happens if my project doesn’t sell?
• Are you open to me writing in different genres?
• Can I chat with a current client?

All these are questions you should ask; you definitely want your agent to be a good personality match and share your vision for your career. But you also want that agent to be your best advocate and protect your business interests in the publishing industry. With that in mind, here are five key questions authors should also be asking, but in general I never hear:

1) What is the average duration of a contract negotiation at your agency? At NLA, average time is three or four months, as we’ll stand firm on key clauses until a compromise is reached. We don’t rush it. If a publishing house has recently revamped its boilerplate contract, then that timeframe can more than double, as we’ll have to negotiate the boilerplate contract first, and then negotiate your specific deal.

2) Will I be involved in seeing the original offer and then the final offer from the Publisher? NLA always shares with our clients the details of the first offer and what we negotiated to create the final offer. Clients are always invited to participate in the process and weigh in.

3) Will I have a chance to review the original contract from the publisher as well as all the requested changes documentation, and then the master redline of the final contract I’ll be signing? Can you walk me through any contract clause that I might not understand? At NLA, we share all this documentation, whether clients want to read it or not, so that clients are 100% confident that their deal and contract have been fully negotiated. And I’ve spent many an hour on the phone or Skype, combing through contract particulars with clients to make sure they’re completely comfortable with what they’re signing. Most agencies simply forward on the final contract for signatures, and that’s it.

4) Do you regularly audit royalty statements? How much money has the agency recovered by doing so? At NLA, we’ve recovered hundreds of thousands of dollars over the years for our authors because we regularly catch errors when auditing their royalty statements. And we catch errors in almost every accounting period—that’s how frequently it happens.

5) How many non-agent support staff are at your agency? This is important, as it’s very hard for an agent to do all of the above, and do it well, without significant assistance from non-agent support staff. At NLA, we have three agents and a team of six in-house non-agent support staff to protect our clients. Most agencies have a lot of agents and very little, if any, support staff. The agents are expected to be independent silos and handle all of the above plus all agenting duties. It’s not possible to juggle all that without letting stuff fall through the cracks.

Bonus question to ask if you are feeling bold: What percentage of your clients make their living solely from writing? If you ask me this question, I can truthfully say that 95% of my clients earn their living as authors—meaning they earn enough money to support themselves without a secondary job or support from a partner.

Back in the crazy days of the late 2000s, there was a popular agent, active on social media, who landed a lot of clients, posted some sexy six-figure deals, and then disappeared. I ended up taking on a former client of this now defunct agent/agency and realized, to my horror, that the author had been signing boilerplate contracts with no negotiated changes. The agent hadn’t negotiated a thing! The author was new to the business and had no way of knowing the agent wasn’t doing the job. Even though that agent looked hot from the outside, s/he had actually done very little to protect the client’s interests.

You can make sure that doesn’t happen to you. This is your career. Ask the above 5 Qs. After all, these aren’t the sexy tasks, but they do affect an author’s bottom line. Don’t feel uncomfortable or worry that you might insult the agent. If an agent becomes defensive when asked legitimate questions, then chances are that agent isn’t right for you.

Stay smart, savvy, and shrewd. Check out my “What Makes a Good Agent” article series on Pub Rants. You are your own best advocate.

Creative Commons Photo Credit: Chris Potter

Backspace’s Karen Dionne Tells You The Best Way to Leave Your Agent

by Kristin Nelson

For many authors, the thought of voluntarily ending their relationship with their literary agent can be heartbreaking—especially if their agent search was long and difficult, or if they genuinely like their agent. But like a marriage, sometimes what initially looked like an ideal pairing turns out otherwise.

Perhaps you’ve read Kristin’s “What Makes a Good Agent” article series in this newsletter and decided your agent doesn’t measure up. Or possibly you’ve known for some time that the relationship wasn’t working and have concluded it’s time to move on.

Assuming you’ve done everything you can to address the issues with your agent, what’s the next step?

How to Leave Your Agent

First, review your agency agreement. Most contracts specify that the relationship can be terminated by either party with 30 days’ notice.

Unless your agency agreement says otherwise, terminating your relationship by email is fine as long as the agent confirms receipt. If you choose to send your agent a letter via certified mail, it’s a good idea to email him or her in advance to let them know the letter is on the way.

If your agent has submitted your book to publishers, you’ll need to ask for a list of every publishing house he or she submitted your book to. Your agent owes you this information, as well as the status of each of those submissions if any are still pending. Understand that according to most agency agreements, your previous agent will be entitled to receive compensation for sales they made while you were under contract with them, even though you are no longer working together.

As with any professional relationship, take the high road. Feelings and emotions are involved, but don’t get caught up in the emotional aspects of the situation. You may have legitimate grievances. Your agent may be understandably upset. It’s important to stay calm and professional. Be polite and amicable. Thank your agent for all the hard work they did reading and submitting your work without compensation, and move on.

When to Start Looking for a New Agent

Most agents advise terminating your current relationship before looking for another agent. Some authors are understandably nervous about breaking up with their agent before they have another. However, keep in mind that publishing is a small world. If you decide to send out feelers before ending your relationship with your agent, odds are good your current agent will find out.

True story: Agent X and Agent Y, who worked at a different agency, were friends and often referred potential clients to one another. One day, an author looking for a new agent wrote to Agent X. Agent X read the pitch letter and went online to learn more about the author’s book deals—which is how Agent X learned that Agent Y was the author’s agent.

Assuming Agent Y had referred the client, Agent X wrote a quick note to thank him for the referral. Half an hour later, Agent X got an angry email from the author saying he hadn’t yet spoken to Agent Y, and now that agent had fired him. Naturally Agent X was no longer interested in working with this author either.

Once you and your agent have parted ways, your next objective is to find an agent who will be a better fit. It helps to write down what you feel you need in an agent. One you have a list of prospective agents, try to talk to some of their clients if at all possible to ask about the agent’s management and communication style as well as your other concerns. There’s no point in leaving one agent only to fall into the same kind of relationship with the next.

Above all, don’t feel guilty for ending a partnership that isn’t working. This may be difficult if you and your agent are on good terms, but remember: In the publishing world, enthusiasm is incredibly important. Authors need an agent who loves their work, and who believes the author might be the next big thing. If this isn’t the case for you, leaving your agent might be the best decision you ever make.

*****

Karen Dionne is an internationally published thriller author, co-founder of the online writers discussion forum Backspace, and organizer of the Salt Cay Writers Retreat and the Neverending Online Backspace Writers Conference. She is represented by Jeff Kleinman of Folio Literary Management. 

Photo Credit: woodleywonderworks

Where “In Perpetuity” Might Come Back…

by Kristin Nelson

STATUS: It’s Friday! This would be more exciting if I didn’t have plans to work all weekend. Need to catch up from being away the week prior.

What’s playing on the XM or iPod right now? JEALOUS OF THE MOON by Nickel Creek

And bite you in the a**.

Not to be a downer on the Friday but a lot of authors are super excited about getting their rights reverted and then being able to digitally publish those titles themselves.

By all means, I’m certainly not opposed but you might want to check that agency agreement you signed before you run out and do that.

For the record, Nelson Literary Agency does not hold author rights into perpetuity but I know of a lot of agencies that do.

At NLA, our client agreement clearly states that if we sell the author’s book, it’s for the full term of the publishing agreement. When the book is out of print, publishing contract ends, all rights revert to the author with no further obligation to us.

But we are the minority. I know a lot of agencies that have “in perpetuity” language that they will be the agency of record for life of the property—regardless of whether that title is currently under a publication contract or not.

In short, what this means is that even if all rights to a title has reverted to you from the publisher, and even if you are no longer with that agent or agency, if you signed an agency agreement separate from the publication contract that has an “in perpetuity” clause and that agreement is still in force, you owe the agency of record monies for your self-pubbed digital sales.

Yep, that would suck. So, review any and all agency agreements you signed and if necessary, consult an attorney if it is in question before posting to digital distribution sites.

Authors Behaving Badly

by Kristin Nelson

STATUS: Just finished watching the Walsh-May recent set domination in Women’s Beach volleyball.

What’s playing on the iPod right now? TV is on and will probably be for the next week.

Something must be in the water but I’ve heard three stories just this week of authors behaving badly. Gee whiz.

Obviously it’s time for me to blog about this topic again. If you are an established author looking to change agents (for whatever reason), there is a professional way to do this. There is an etiquette that should be followed or you are in danger of burning some bridges and if there’s anything I’ve learned in this biz, burning bridges, in general, does not help your career.

There is a way of severing a relationship professionally and there are many authors I’m hearing about lately who should have kept this in mind.

1. An established, already agented author should not be shopping for a new agent without formally ending the current representation.

Folks, publishing is a small world and no matter how discreet you think you are being, word often filters back to the agent in one way or another.

2. If an author is planning to leave and has already made that decision but has not told the current agent, he/she should not be career planning with the agent he/she is planning to leave nor should that author be availing him/herself of the current agent’s hospitality by attending agency functions at RWA or Worldcon. That’s just bad behavior.

3. If an author is planning to leave his or her agent, expect to be held to the letter of the agency agreement the author originally signed—especially if you behave badly before severing the relationship.

Most agents I know aren’t interested in standing in the way of an author’s career. Most are reasonable and would probably come to some sort of agreement or compromise on certain points (such as projects currently on submission) if the author behaved ethically in the severing of the relationship. If you didn’t, well, what can I say. An agent is not going to be in the mind frame to be conciliatory. Nor do they have to be legally if an agency agreement is in place.

And my last point is just something I want y’all to keep in mind. Whenever an already agented author comes to me looking for new representation, I always ask the question, “Does your current agent know you are looking?” My second question is always “have you had a conversation with your agent about your desire to leave? If you haven’t, you should.”

Now I realize that sometimes an agent/author relationship has gone so far south that any communication isn’t possible and this is not an option. Fine. Then your path is clear to sever that relationship before seeking new representation.

So make that clean break. Make sure your behavior is beyond reproach. At the very least, that gives you the ability to say you held the moral high ground regardless of anybody else’s behavior.

In the end, that strikes me as the most important aspect.

Know Your Options

by Kristin Nelson

STATUS: Foiled by technical difficulties on my home wireless last night. Serves me right for saving the blog until late…

What’s playing on the iPod right now? GET THE PARTY STARTED by Pink

Here’s a memo for authors who are looking for a new agent after being previously represented (or are currently represented).

You need to know your options—literally.

What do I mean? You need to know where your current/former agent stands on your option material for your current contracts. Per your agency agreement, do they have the right to shop your next project regardless of whether you have formally severed the relationship?

I think it’s important to have the answer to this question before you start looking for a new agent. It is going to be one of the questions you’re going to be asked and you might as well have all your ducks in a row.

Although why one would need to put ducks in a row is a mystery to me but it’s a great phrase and I assume it has something to do with the Mama duck leading her chicks but I digress.

Once you’ve got that understanding, pull your current contract(s) and make a copy of your option clause(s) for any new possible representative as well as creating an outline of where you are in the process. As in, still in option, must submit proposal soon. Out of option, feel free to shop anew. Previously shopped, here is who saw it. Here is what else I have.

The whole shebang as an agent will want that info as well. You’ll come across as prepared and professional which can only make you a better prospective client to anyone who is considering taking you on.

It will allow you to answer questions in a knowledgeable way and make you ready for a good and productive conversation when that time comes.

TGIF! Have a great weekend.

A Tale Of Reimbursed Expenses

by Kristin Nelson

STATUS: This week has been about meeting with editors and my authors who have come to town so no “this is what editors are looking for” stories to regale you with. Although I did have coffee with a children’s editor who is looking for anything multicultural. What a refreshing change as I love multicultural stories as well. And rumor has it that Grand Central is going to be starting a Latino/Latina line over there.

What’s playing on the iPod right now? SELF CONTROL by Laura Brannigan

I’m not sure why people think that agenting is a way to get rich quick.

Snort. I can barely type that with a straight face but there seems to be this misperception.

I opened my own agency in August of 2002. I had a small business loan and a five-year plan in place when I embarked on what is a risky proposition. (Actually, starting any small business is risky not just agenting).

When I launched, I truly believed it would take 5 years for the agency to be profitable (and if it weren’t by then, I was in trouble). I hit profitable (as in not operating in the red—salary plus all expenses) in year three by a slim margin. Still, I was quite proud. I was definitely ahead of schedule.

So in those early years, I tracked reimbursable expenses (such as photocopies, postage, the basic stuff) and was reimbursed by the client. But here’s the kicker. The reimbursement ALWAYS happened after the sale of the project to a publisher. If the project didn’t sell, I ate the cost. I repeat. The author was not responsible for anything if the project didn’t sell. Was not recuperating those costs hard to swing in those early years? You betcha but I was unwilling to do otherwise despite my red bottom line.

I have heard of perfectly legitimate agencies (with trackable sales) billing their clients for reimbursable costs at the end of each year regardless of whether a project has sold or not. It’s not against AAR regulations. It’s certainly not sketchy per se but for me personally, I don’t agree with that practice.

For me, the billing for “costs” before any sale has the potential of being abused by agents and agencies that are either ineffectual or operating pretty close to the margin of actually not being legitimate. For my agency, I wanted to make sure the boundaries where absolutely clear.

Now I’m in year five and enjoying solid success, so what did I decide to do (and I actually did this two Januaries ago when I was becoming profitable in year three). I did away with reimbursed expenses.

Yep, you heard that right. I don’t track expenses and expect the client to reimburse—before or after a sale now. The agency foots the bill as the cost of doing business.

There are two exceptions though. The agency does track costs associated with International postage or wire transfers (as those are unusual) and we also do track book purchases used in selling subsidiary rights (because that can get expensive very quickly). We always email the clients first to find out if they want to provide the copies and if not, to check if the cost incurred is okay with them before we proceed.

Perhaps we’re crazy but I find that ultimately it’s not worth the time and effort to track it.

Why do I bring this up? Well, I haven’t talked about fees or reimbursable costs in a long time and I think it’s wise to keep talking about this issue. As I mentioned, legitimate agencies might have this practice and as long as they have a long list of documented sales (where it’s obvious their reputation is impeccable), it’s probably not a worry.

However, I would ALWAYS approach it with caution as there are many marginal agents/agencies that are happy to be reimbursed for submission expenses but don’t have the corresponding sales. And if you are going to be billed for those expenses, it should ALWAYS be accompanied and documented by receipts.

Anatomy Of An Agency Agreement—Part Ten

by Kristin Nelson

STATUS: TGIF and it’s a half day for me as I head up into the mountains to attend a wedding this weekend.

What’s playing on the iPod right now? MY CHERIE AMOUR by Stevie Wonder

And now we have reached the exciting conclusion of agency agreements. I’m sure you’ve been on the edge of your seats.

That last two clauses officially wrap it up.

There is an arbitration clause—that states if there is an issue we both agree to have it settled by arbitration and last but not least, the entire agreement and assignment clause.

This clause states that this is our entire agreement (hence why it’s at the end). There is also an assignment clause, which both parties would need to get written permission to do–except in the event that my agency merges with another agency and then the assignment simply happens.

Then it’s time for signatures etc. and the final form that all clients have to fill out in lieu of a W9 (which we have to have on file by law).

That’s all folks.

Have a great weekend.

Anatomy Of An Agency Agreement—Part Nine

by Kristin Nelson

STATUS: It’s been a busy day and now I have drinks with a client who is in town and then later with an editor from New York who is also in town. I like to think they come all the way just to see me.

What’s playing on the iPod right now? ROXANNE by The Police

We are pretty close to tackling all the clauses–in my agreement anyway.

The next clause is Risk In All Negotiations. Basically, I say I can’t guarantee that I can sell the book or get the client an acceptable offer and a client can’t sue me for it.

I’m an agent, not a miracle worker and although it doesn’t happen often, I sometimes can’t sell a project. Shocked gasps I know. There is no agent on this planet who sells 100% of what he/she takes on.

The next clause talks about governing law. Since my agency is based in Denver, then the agreement adheres to the laws of Colorado.

The last two clauses tomorrow and then on to Jamie Ford’s query.

Anatomy Of An Agency Agreement—Part Eight

by Kristin Nelson

STATUS: Oops. I almost forgot to blog today. Seriously, I was all proud of getting just about everything done that I had hoped to. It slipped my mind until now.

What’s playing on the iPod right now? THE CRYING GAME by Culture Club

We haven’t talked about agency agreements in a while so let me jump back in with clause 10 which is entitled Term of Agreement.

I’m not one to have a client stay with me if they aren’t happy with the representation (and vice versa) so in my agency agreement, either party can terminate the relationship with a thirty day written notice.

However, the clause also states that my agency remains the agency of record for all contracts negotiated while the agreement was in force. We also get to continue to pursue any secondary rights sales for material on which we sold the primary rights (for the life of that primary agreement.)

I also have a clause that doesn’t allow a client to do a bait and switch by having me do all the work to land a publishing contract only to have a client terminate the agreement (yet accept the publishing contract) so as not to pay my 15% commission. Not cool. So there is language in this clause to protect the agency from unethical authors.

And yes, folks, unethical authors do exist. I have many stories I could share on that score but I won’t. I may rant but I do try to stay mostly positive.