Royalties, mainly on the sale of paper based books, remain the primary source of author income. I’m going to explain the fundamental concepts you need to understand how they work and are calculated. The following is an outline, more like course notes, than a lecture. I want to keep this short and to the point, as my workshop will go into more depth about all these topics.

Let’s start with the basics. Royalties are wonderful. Royalties are the one thing that compensates you for all the difficult deals you have to accept in the course of your working lives as authors. Royalties are the safety net under the whole system.

Did you not get an advance? A $1 advance? A $4,000 advance? If the book succeeds and earns royalties, you can laugh about it. No matter how cheaply you sell a book, no matter how poor the prospects, no matter how pitiful the advance, as long as the royalty is strong, you do have a chance at realizing good income from that book. I’ll never forget the first time I held a six figure royalty check in my hand. It was the first royalty check I received for that book and it was 4 times the advance we got.

So what makes a strong royalty? Luckily, the royalty system, though under assault, is initially a good one for authors. The reason for this is that the basic royalty for commercial books is a percentage of the cover price of that book. If the cover price of a hardcover book is $20 and my royalty is 10% of the cover price, I am receiving $2 per book. That’s a full 10% of what the consumer pays.

Let me show you how good that really is. You may think the publisher is seeing 90% of that sale or $18, but that’s not so. The publisher does little direct selling, instead he must use bookstores and other distributors. To keep the numbers simple let’s assume he’s granting a 50% discount to everyone who will take the book, display it, and actually make the sale. This is not far off from the discounts many publishers do grant. So on our $20 book, he’s giving $10 to the bookstore and $2 to the author. That leaves $8, which per book isn’t bad. But then there’s the cost of being a publisher, which goes way beyond a good computer and a corner of the house. There’s rent, salaries, taxes, paper, print, binding, publicity, et cetera. Historically, publishers’ margins, the amount of money left over after expenses have been deducted, have been 10%. That’s about as small a margin as you can get in a relatively low volume business and still be in business.

So a percentage of the cover price of a book is a strong, fundamental position to be in. Authors and agents should do everything they can to perserve it. (More on that later.) Beyond showing you that the cover price royalty is so valuable, I want to contrast it with other royalty calculation systems.

There are large groups of publishers that do not pay a cover price royalty. In fact, a number of royalties in your commercial publishing contracts are not cover price based at all. They are based on the “amount received.” Structurally, this is a far less good royalty for authors.

An “amount received” royalty means that the author’s royalty is calculated on the monies that the publisher actually receives and not the cover price of the book. Academic publishers like university presses have traditionally paid on amount received. I’ve worked with a number of small and not so small publishers that only pay on the amount received.

Let’s go back to our $20 book. The publisher is once again granting a 50% discount to the bookseller. So the publisher is getting $10. Now my royalty is calculated based on the money the publisher is receiving. I’m now getting 10% of $10, not $20. So, now my royalty is $1 per book. This is half of my previous royalty. If the royalty system for commercial publishers ever shifted to this model, it would be a catastrophic disaster for authors.

I’ve used a very simple example to contrast cover price vs. amount received royalty. Of course, there are mitigating factors. The most important one is that academic presses do not grant 50% discounts, their upper limit is usually 30%. So, the amount received would be larger. There are other ways to also cope with the amount received royalty structure, which I routinely employ. I double the nominal royalty. So, if a publisher is unwilling to pay 10% of the cover price, I ask for 20% of the amount received. This isn’t a fantasy. I often get amount received royalties which are double the cover price royalty just to compensate my author for the different royalty structure.

Now that we’ve realized the value of the cover price royalty, we can better examine the full extent of royalties in a commercial publishing contract. The picture gets far more complex and troubling quickly. The cover price royalty usually only applies to sales of the book below a certain discount, in normal book channels. That means that many sales of the book are paid out under a different royalty structure, and that structure is usually on the amount received.

Let’s consider some of these.

All publishers sell their U.S. based books outside of the United States. As a general rule of thumb foreign sales–books exported to Canada and accounts all over the world that take English language books — account for 10% of sales. The average royalty here is often 5% of the amount received. That would equal a cover price royalty of 2 1/2% of cover price. That is a very small royalty.

There are other foreign or export royalties. Some publishers pay more than 5% of the amount received. Some publishers have special cover price royalties for large, overseas English speaking markets like Canada, the United Kingdom, Australia, New Zealand and South Africa. Large publishers that maintain full publishing operations in these large English speaking markets, plug their American books, which have multiple local cover prices actually printed on them, into their local distribution networks and pay cover price royalties in these markets. The local currency is converted and paid in U.S. dollars. These are attractive arrangements and attractive royalties, but only a few large publishers actually do this. So, the export royalty is a real problem. It’s true the freight costs of shipping overseas are higher. But that hardly accounts for the drastic royalty drop. Strong accounts in Canada, the Caribbean, etc., do well with English language books. I believe the export royalty is unnecessarily rich for the publishers.

Another major area of concern is discount. The cover price royalty only prevails below certain discounts granted to the bookseller or distributor. For hardcover books, it’s usually below 48%. For trade paperback books, it’s often below 55%. For mass market paperback books, it’s often below 60%. But these discounts vary widely from publisher to publisher. The royalty paid when these discounts are exceeded also varies substantially.

Let’s return to our basic example and see what happens when the “high discount” royalty clause is invoked. The publisher’s standard cover price royalty is paid below discounts of 48% percent. But for a substantial number of sales in our example, the publisher is granting a 50% discount. For each additional point of discount granted, the publisher is deducting 1 point of royalty. So at a 50% discount, 2 royalty points are deducted. We are now receiving an 8% royalty. So our original $2 per book is now $1.60 per book ($20 x .08).

It can get a lot worse than that, very quickly. Some publishers immediately go to an amount received royalty of 10% of the amount received when the discount is exceeded. I have in my files royalty statements from one particular publisher where a full 80% of all sales are made at the special discount (49% of more). As you can clearly see, there are financial incentives for the publisher to exceed their traditional discounts. They may be giving their distributors a better break, which isn’t a bad thing for customer relations, but who’s really paying for this break? If the author’s royalty is cut in half when the discount shifts one point from 48% to 49%, it certainly isn’t the publisher. Authors may not have an opinion about to whom and what kind of discounts publishers should grant to nourish their businesses, but they better take a very active interest in how discounting impacts their royalties.

Another important area to consider is the whole area of special sales and sales outside the trade. A lot of different sales are covered here, far too many for me to explore in this handout. Let me just enumerate the issues that demand your attention.

First is the concept of “outside the book trade.” The concept here is that because the publisher is selling outside of his normal channels of distribution, some special effort or some unique customer is involved and the traditional royalties don’t apply. This is a very tricky area if amount received royalties are being paid. The “normal channels of distribution” have changed and are changing rapidly. I don’t believe this is a valid concept and I think publishing contracts need to be policed so that full royalty are paid on all these sales unless they exceed the normal discounts.

Other special sales include premium sales, which are bulk sales often to a single customer, often not for re-sale. They are also often non-returnable. Again a 5% of amount received royalty is paid. This is another very profitable area for publishers. Similarly there are mail order sales and direct response sales, which again command the 5% of amount received royalties. There are also publisher owned book clubs, which similarly pay a low royalty. We can debate the economics of these sales. From where I sit, the author is making a substantial, excessive contribution to their success by taking such a small royalty.

Finally, we have the whole new world of electronic publishing. This is an area that is still taking shape and there is no industry protocol. There are competing technologies and new players of various sorts. As I write this I can identify three main new formats that need to be considered. The three formats I see are print on demand copies, electronic copies for reading in a stand-alone device and electronic copies that are intended to be read over a personal computer. Print on demand copies may pose no change to the royalty system, since they can be treated just like a printed book. Or, perhaps a new royalty is needed here. Electronic versions are far more unprecedented from a royalty point of view. Established publishers are treating them like paper bound books for royalty purposes and paying “standard” royalties. Some start up electronic publishers are paying royalties of up to 50% of the monies received for each sale. Space forbids me from fully articulating my views here. Suffice it to say that we must be vigilant in making sure the new royalty protocols for electronic books are advantageous to authors.

There are two other areas I want to mention to round out the royalty issue. When we talk about royalties, we’re talking about money and when we’re talking about money we’re talking about the most basic business concept “cash flow.” This is not a hard concept to understand. You all innately understand it. It’s having the money you need when you need it. Not 3 months from now, not 6 months from now, NOW!

Cash flow is effected by when a publisher begins to pay royalties and how quickly they are actually paid out. Some publishers won’t pay royalties until they have at least 6 months of sale on a book, some don’t require that. Some account to authors within 60 days after the close of a royalty period, some enter into the 5th month after the close of a royalty period before they pay out. All these things do affect your income.

The final area I want to mention is returns and the reserve for returns. The publishers struggle with one very basic fact of their doing business: when they ship a book to an account, it is not a sale. It is essentially on consignment. Books are fully returnable, usually indefinitely. That means that if an account returns all 20 of the copies of our $20 book to the publisher, the publisher makes no money, and, in fact, has lost money on shipping it both ways, plus the loss of income from having no sale anyway. Because books are returnable, completely at the publisher’s expense, it has been traditionally very difficult to know exactly how a book has done. You may know where 80% of the copies are, or even 90%, but you certainly don’t know where 100% of the copies are. They may be sold or they may be returned one year or more after shipping. The reserve for returns, which literally means some “sold” copies are “reserved” or held back from being paid as royalties to the author because it’s not really known whether they have sold or not.

Returns dramatically add an element of complexity, uncertainty and controversy to royalty accounting. There have been abuses. When a royalty accountant looks at some basic numbers, it’s often a matter of interpretation to determine how many books have actually been sold. Because thousands of dollars of the publisher’s money is at stake, any royalty clerk who wants to keep their job is bound to be conservative. But that can savage author incomes. If a book is selling well, continues to be reprinted and averages a total return of 10% over the first year of sale, how can an industry average of a 30% reserve be justified? It can’t. But I’ve seen it. A few years back there was a legal settlement that revealed that one publisher was essentially keeping a permanent reserve of 30% on all their books, regardless of their real sales history.

There is an antidote to the issue of excessive reserves, though it’s difficult to apply. Authors should maintain accurate records and aggressively seek sales information on their books. Royalty statements must be carefully examined to catch mistakes and to track the actual sales experience of a book. I routinely write letters of query to publishers when I find anomalies in royalty statements or when a statement does not conform to my sense of how a book did. Two years back one such letter resulted in a check for $7,000. Stay on top of your royalty income and potential.

I hope this basic background information gives you a better sense of how important royalties are and how they operate. This will continue to be a dynamic, complex, fundamentally important area of author concern. Protect your income by advocating for practices that preserve and increase author royalty income where appropriate.

For the career writer, “artist” or “entertainer” remains a perennial problem.

I use the term “artist” to distinguish the most personal, creative goals of a writer. The “artist” wants to tell the stories that the writer wants to tell, regardless of their commercial viability or any other external value. Every writer has an “artist” inside them.

The “entertainer” distinguishes the writer’s need to cater to her audience. The “entertainer” wants to be loved, respected, valued and compensated. The “entertainer” wants to know how her stories are being received by the audience, it’s the ear that’s turned outward, listening for every laugh, titter, clap, sigh and boo from beyond the footlights. Every writer has an “entertainer” inside them.

The conflict between “artist” and “entertainer” represents a serious, ongoing emotional challenge for the writer. I don’t want to address this because it’s too personal, every writer is on his or her own journey and I’m not sure I could say anything valuable.

I do want to address the concrete, practical dilemmas that writers face around this issue.

First, let me sketch for you the gospel of commercial publishing. I believe that what I’m about to write plays into the goals of all the major publishers. I’ve heard it from their lips many times and in my own analysis I see it in their behavior.

The chief goal of all fiction publishers is what I would call “franchise publishing.” They do not want to publish one book by a writer. They do not want to publish a number of very different books by a writer. Their ideal writer originates a character, a voice or a fictional world so compelling that they create a fan base for this entity. With this valuable entity now established, they want the author to ride it as long and as deeply as possible. As a practical matter, they are not interested in the artist, but the entertainer. Give ’em what they want is the motto here. Create a “franchise.”

This worldview permeates the philosophy of all genre publishing and reaches into the literary world as well. Mystery publishing is a pristine example. Mysteries editors more often buy series than “books.” They believe it’s so hard to establish a writer, the initial shipments of the first book are so small, that they must spread their risk and the authors chance, over a number of books. It is a sound publishing philosophy. It’s the single most important philosophy out there. All writers must live with it, understand it, and even exploit it for their own good. I am not writing to criticize this philosophy, but to point out the conflicts it creates for the writer.

Franchise publishing conflicts with the goals of the writer as artist. Let me share two specific instances that brought this home for me for writers that I represent.

One writer is an up and coming writer in a certain genre. She delivered a manuscript on spec to her present publisher because the publisher wasn’t happy with the original outline and the publisher did have enough of her books accepted so that they did not have to commission a book at that juncture. The writer went forward with the book because it was important to her and felt creatively that this was the book she needed to write. When completed, the publisher wasn’t really taken with the finished book.

This writer had previously originated a fictional world that was quite successful. As it rejected the spec manuscript, the publisher requested more books set in this world and had been doing so for some time, making it clear they believed this was the best way the author could advance her career. The author had already sold them a few other books not set in this world, but remained convinced that these books were the way to go. The author did have ready an outline set in this fictional world and we did conclude a deal to write one additional book in that universe. The advance we got was a substantial increase on her previous advance and that increase did represent the publisher’s belief that books set in this universe were worth more than any other book the author could write. The book that was rejected is being shopped elsewhere and the author’s dilemma remains in place. She wants to write the stories she finds compelling, she also wants to succeed.

Another writer I represent faced a similar dilemma recently, at a much earlier stage of his career. He sold a first thriller for a modest advance to a good house that is publishing it in hardcover. The opportunity is a good one. He delivered a new outline for his second book, using different characters than the first book. Before replying to the new outline, the editor asked us why the 2nd book did not utilize the same characters from book one and was not set in the same universe. The editor articulated the franchise publishing philosophy almost exactly as I’ve described it in this article.

After some real soul searching and even writing a second outline set in the original world, the author decided to stick with the new outline with the new characters. We received a modest offer for the second book and as of this writing, the author has decided not to go under contract, choosing to write the second book on spec. With publication a few months away and his own very serious marketing plan in place, this author would rather wait and see if he can establish himself at a level where he may have the freedom to write a second book more of his own choosing or get a substantial advance based on the success of the first book. He is also writing the new book, so when the first book is published, he will be ready to contract for the second immediately and be published one year later, not missing a turn. Authors are sometimes given the advice to never write on spec. Here are two instances where it seems to me, writing on spec was the right decision.

These are just two examples in the real world of the real dilemmas writer’s face. I wouldn’t suggest any hard and fast rules here. Franchise publishing is a legitimate goal for any writer. Know yourself and think about your choices. Apprenticeships are common in many businesses, accept the fact that you may have to write a number of books as an entertainer to earn your shot as an artist. Don’t be afraid to dig in your heels either. You may have to switch or add a publishing house or work under a pseudonym or find some other way to have certain of your books published. I would encourage writers to be flexible enough to work for love and money. Each demand sacrifice. Each has rewards. I never advise writers to drop their favorite projects regardless of market conditions. But if market conditions are unfavorable, you may have to live with an unpublished manuscript.

I don’t predict the future. In fact, I’m sick of hearing predictions about the future. It’s almost the only thing you ever read anymore. As an agent, I try to predict the present. To do so, I’ve done a lot of work lately researching the impact the Internet is having on writing and publishing. And, in doing so, I see a trend that could hurt the nonfiction writer’s income. I don’t have a lot of hard data to back up what I’m going to say here, but I think for many authors it may have the sting of recognition.

The free availability of information on the Internet may dilute the earning potential of nonfiction books. The Internet itself has become a competitor.

Nonfiction authors earn their money by creating new proprietary information. They create something unique, for sale. They are paid for their “product.” That is the fundamental avenue of income for the individual nonfiction writer. Whatever formats this unique product appears — printed book, audio book, movie adaptation, etc. -? he/she is still selling the same “product.” Any of the companies that the author sells to, who in turn offer the “product” to the consumer, are selling the product and receiving direct compensation for it. The author’s earnings are tied to this very sale.

The Internet presents a different business model. It is, for the most part, a free medium when it comes to access to information. Most people don’t pay to read things off the web. Most companies on the Internet are not in the business of selling an author’s unique product to the public; they give it away. These companies make money by selling advertising space and other — often non-book related products. Other “companies” aren’t companies at all; they are government agencies, universities, charities and hobbyists who also freely give out. They aren’t interested in making money at all in the conventional sense. So, the product, which the nonfiction author has worked so hard to originate, research and write and for which he/she is the proprietor of, is competing against an entity that is doing comparable work and not selling it at all, but giving it away for free to support its other income streams.

Do you write nutrition books? There are websites offering free nutrition information in return for third party advertising and product sales. Do you write health books about serious illnesses? Literally hundreds of expertly prepared websites and databases offer information for free. Do you write cookbooks? There are plenty of websites giving out recipes and cooking instructions.

The point is, with all these sources of free information, why would a consumer pay for it? With these “publishers” unconcerned with selling the product, since they make money from advertising and non?related product sales, the nonfiction writer’s income is almost certain to be reduced. The Internet threat goes beyond the free access culture that surrounds it. Because it is so easy and ubiquitous and because information is available from so many sources in such small pieces, it threatens the raison d’etre for many book purchases. If you need questions answered about health, cooking, finance, etc., you don’t have to buy a book, you can pull it off the web.

Initially, nonfiction writers may find that websites are good customers. They are commissioning original material. But, unlike traditional publishers, websites won’t pay royalties or share income in any other fashion. (Their business model makes income almost impossible to share.) Furthermore, as their area of expertise is being overrun by no?cost competitors online, it’s likely that nonfiction writers will find that it’s simply harder and harder to land book and other deals that have good income potential. The demand for information may grow but entry and profitability may become very serious questions for non?fiction book authors (not like they haven’t been). Depth, insight and presentation may become of even greater virtue as nonfiction authors compete against websites giving away loads of free information.

The Internet has the potential to help nonfiction book authors. I don’t want to slight that here. Buying books online is a big business that must be adding additional sales. Online book promotion has great potential. Research is easier. In all, if I had to judge the pluses and minuses, I’d have to consider the Internet a plus. But that doesn’t lessen the challenge I’ve diagnosed in this short essay.

I’m not a pessimist and I hope I’m not being an alarmist. I can’t point to a single sales statistic that bears out my views. Yet. But I see the way I “buy” information and I have heard hundreds of similar stories. More and more people are turning to the Internet for information about health, nutrition, cooking, vacations, etc., and not the bookstore. Nonfiction authors must re-evaluate their opportunities as this trend grows.

Here, I’d like to offer a different perspective on the relentlessly optimistic pronouncements regarding the electronic publishing of full-length books.

It’s too big a subject to really tackle at length in so short a piece. I’m going to approach it like a large ball of yarn, just pulling at the largest and most obvious threads, the ones that stick out the most. The threads I’m going to consider are readability, availability and pricing.

Readability

Whether we are talking about electronic books readable on personal computers or dedicated reading devices or reading directly off the net, all models touting the benefits of electronic publishing have one fundamental assumption in common. People will read as easily off of computer screens as they do the printed page for their pleasure reading. It’s not clear how true this fundamental assumption is presently and it’s not clear how true it’s going to be, but it’s important to keep this assumption in mind at all times when one considers electronic book publishing.

If it’s not true that people enjoy or will come to enjoy reading off of computer screens, than an important element of consumer appeal is lost. If electronic reading will always be work reading or information gathering and pleasure reading will predominantly remain the paper book than far less of the electronic book revolution makes sense.

Sampling the currently available electronic devices and software programs and sifting through the claims of enhanced functionality that electronic publishers make, when it comes to pleasure reading at least, the electronic publishing industry is intent on offering a far inferior product (books that are less enjoyable to read) to the public. The book electronic book publishers talk about is not the book you enjoy reading or owning. For other forms of reading and for certain consumers, it may well be a superior product but for pleasure reading, it’s not currently true. If the electronic book is an inherently inferior product, it will have limited appeal. And, in order to survive as a business, it will have to compete against printed books in other areas.

Availability

Beyond the readability question, let’s look at another fundamental assumption behind electronic books. A great deal is made out of their availability. Because they are available as some form of download, they are theoretically available over any Internet connection, anytime, anywhere in the world. That does make electronic books far more available than any traditional book.

Yet, how great an advantage is it in practical terms? Would anyone’s chief criticism of the publishing industry be that books are unavailable? This needs to be considered.

Books are one of the chief beneficiaries of the Internet revolution. Amazon allows online ordering 24 hours a day and books can arrive as early as a day later. Amazon has become a gold mine of information about books, generating many more sales. Nothing remotely like it has ever existed before. For those who like to shop in an actual store, mega-stores have enormous inventories, and it’s less likely now to go home from such a store without the particular book you are looking for. So, over the last decade there have been some positive developments in book availability that mitigate the availability argument.

There have also been some very negative events regarding book availability. The consolidation of the wholesaling industry and the closing of mall bookstores has reduced the availability of books in the marketplaces we all frequent. More and more locations that display and sell books are a fundamental need of the whole industry. If electronic books are available in everyone’s home, school and place of business, you could make the case that they represent a solution to the problem of book availability.

Yet, I’d like to make the following distinction–the difference between being available for sale electronically and being available for sale physically. Having millions of books available for sale over the Internet in the form of downloads won’t necessarily lead to increased sales. Book sales, like all other sales, need to be promoted. One of the key components of most sales has been the physical presence of the item for sale. The Internet has changed that, but it hasn’t eliminated it. The theoretical availability the Internet provides without a concomitant sales promotion apparatus in place, may not lead to many additional sales.

This is something I can’t stress enough. Internet availability will not correct the lack of books available for sale offline. Online availability vastly increases the potential for sale and delivery, but it doesn’t necessarily close those sales. There’s another issue that needs consideration. If electronic book publishing is so inexpensive, then thousands and thousands of new and old books are going to crowd the information and sales systems that are offering books to the public electronically. If there isn’t concomitant growth in some selling and intermediating presence to handle the growth in books for sale, the very volume of electronic books could undercut the entire enterprise.

There is a difference between 50,000 new books reaching the public each year and 500,000. In any other business, creating more product doesn’t necessarily create more demand. It can even have the opposite effect. This is something the electronic model must look at far more closely. We also can’t forget that unlike Amazon, which sells and delivers the paper book, the electronic book delivered is an electronic file: an item it’s not clear the public will accept for pleasure reading.

Price

Price is another area where the electronic book is expected to revolutionize publishing. I would agree that theoretically, here is where its greatest advantages lie. If the book is downloaded from a server, its hard costs across the board are greatly reduced. The old paper, print and binding have become bits of electronic code whose cost is minimal. If we are going to compare the cost of maintaining a server, checking a credit card and downloading an electronic file to the system of having books delivered to book stores and often returned, here again we have staggering price advantages. If the consumer does want this form of book on paper, they can print it on their own printer, thereby transferring the cost of printing from the producer to the consumer.

It would seem that here is where the full potential of electronic books is realized. If the publisher retains all the cost savings itself, all other things being equal, this would be a bonanza for publishers, the same revenue, at perhaps half the cost if we focus on production and distribution expenses. However, there is one fundamental hidden assumption here. That assumption is that e-books will simply be an additional revenue stream, like audio books. If e-books represent no more than an additional revenue stream and they can support the same cover prices as p-books with a far lower cost structure for the publisher, they will obviously be a publisher’s dream.

But is this likely? I think it’s hard to credit this model for the long term. There is a profound difference between the e-book and the p-book in value for most people. They won’t feel they are getting the same item when they buy the e-book and if they are being asked to pay the same price they are going to feel cheated. If there is no saving by buying the e-book instead of the p-book, it’s hard to see many people buying the e-book. In this scenario, they will most likely ignore the e-book. The consumer is very aware of the difference between a hardcover book and an electronic file, I don’t believe you can justify this model for publishers that publish both.

This would mean that if e-books were to work the real calling card of the electronic book would be a greatly reduced cover price. What would the impact of large price differentials be on both the e-book and p-book markets?

If there’s a 50% price differential between the p-book and e-book, the publisher would run the risk of siphoning off readers from the p-book to the e-book. The e-book might not be as much fun to read, but at half price, you may find some takers.

It seems to me this is a dangerous strategy. Publishers who publish both p-books and e-books can’t simply shed the whole infrastructure and sales distribution systems that make this possible. They will have to have all the same overhead necessary to print and ship books even as they create the infrastructure to sell e-books. If they begin to convert $20 hardcover sales into $10 e-book sales, it’s not clear the cost savings on individual e-books will make up the revenue loss. It seems at best it will be a zero sum game. We also have to consider the fate of the trade paperback and mass market paperback formats, which command smaller cover prices than hardcover books. What will be their fate in the face of inexpensive e-books?

A secret assumption of e-book publishing seems to be that the increased potential availability in the form of downloads and the lower prices will per force lead to more unit sales. I don’t believe this can be counted on in numbers great enough to shift the whole economics of book publishing to the e-book model. If e-books lead to significantly less revenue per unit and the savings from manufacture and distribution cannot make up this loss, publishers will simply be losing revenue.

Only by selling considerably more new units of e-books will they be able to make up their revenue losses from the sale of e-books if e-books undercut their p-book sales. If e-book sales represent new, unduplicatable sales that never would have occurred in the p-book, the publisher has a new income stream with its own economic pluses and minuses. That would be great. Like the audio book, it would just be an add-on. But the danger would be that the e-book is too close to the p-book not to cannibalize it and so the e-book will undercut the publisher’s other, primary business, the p-book.

If the economic forces I’ve described play out this way, it would mean that one sound publishing strategy would be for a publisher to only publish e-books. Some already exist. Yet they’re a small, untested minority. They don’t provide an answers to fundamental questions: can e-book publishing succeed on its own merits and can mainstream publishers who must maintain their core businesses of paper book publishing successfully integrate e-publishing into their financial structures?

Conclusion

Boosters of the electronic book hail it as the wave of the future. I believe the landscape is much more problematic than that. I believe that for pleasure reading, the e-book is inherently an inferior product compared to the paperbound book and that concerns me. It will most likely have its place but it’s not clear how appealing it will be to the large public that enjoys reading books for pleasure.

The great potential availability of electronic books seems to have triggered in some minds the fantasy that this alone will automatically create new sales. It will in some cases. But it’s not a cure all. Demand is the key to new sales and availability alone does not create demand. If electronic book publishing is limited to making thousands of books available for download and nothing else, it will add little to publishing revenue for publisher or author.

Price may well be the most perilous part of the integration of electronic book publishing into the present landscape. If e-books are marginal, their impact will be small. If they are to be successful, they may have to be much cheaper than printed books. If they are much cheaper, they could well undercut both publisher and author incomes. Only a substantial increase in additional unit sales will pay for what e-books may well do to p-books.

Are we really going to be winners if the new Grisham can be had for $10 instead of $20?

I know many writers believe that their submissions are routinely discarded without being considered by many agents. Based on my knowledge of the business, this isn’t true. Though I am a busy literary agent with an active list of more than 80 writers I still consider everything that arrives in my office. As I sit down to write this in May of 2000, I see five important new sales from my agency this year with first time writers who we took from the slush pile — including one from our first email query letter. It’s true the overwhelming majority of submissions are returned with a form rejection, but we are looking for books that excite us and when we find them, we pursue their authors vigorously. We’re not the only ones.

A lot of things go into finding an agent. Nothing is more important than the level of talent and accomplishment that are displayed in the actual book you are selling. Beyond that, however, you are trying to connect with another human being, a professional who earns his or her living selling manuscripts. How can you better your odds of finding that person? You must carefully target the agents who are most likely to respond to your work.

A fair amount of information is available on literary agents, including the information in this book. If you do your homework — and you must do your homework — you will better your chances of finding an agent and hopefully a good one. How can you best target an agent? Here are some of my recommendations:

Shares your interest

This is obvious, but fundamental. Target an agent who actively sells the kind of book you are shopping. Read the listings carefully. Don’t send a novel to an agent who specializes in nonfiction. Don’t send a children’s book to an agent that never represents them. Be thoughtful about it. An agent who has sold a children’s book for a celebrity author is not necessarily a children’s book agent — that agent may only represent celebrities. Sometimes there are subtle elements you have to consider. If you’ve written a Civil War novel does the agent of the top selling Civil War novelist really make the best match for you? There’s a good chance that agent won’t be interested. They need to concentrate on their top writer in this particular micro-niche.

If an agent doesn’t list or seem to have a specialty, try to discover some actual sales and see if you think they’re a match for your work. If other elements of the agent’s profile suit you, you may want to try a query. There are a number of guides to literary agents you can consult, including the industry “bible” Literary Market Place. There are also sites on the web that can be consulted. If you are querying one of the larger agencies which has multiple agents, you may need to call them first and ask which agent does such and such. Hopefully, you’ll get a name in this fashion. If whoever answers the phone isn’t willing to divulge any information, that may be a sign the agency really isn’t interested in unsolicited work.

Years in the business

This is an important indicator of a number of things. You really have to use your judgment here. Someone just entering the business may be hungry for clients, but they may lack contacts, experience and knowledge. Our industry has been plagued with a number of fraudulent agents, so you have to be doubly careful. A long established agent may have great cache, but may be taking very few clients, if any. Try to size up the whole picture of an agents current situation — can you locate news of recent sales and new clients, are their listings welcoming, do they have associates who might be looking for new clients, do they write articles for any writing magazines, do they attend conventions, etc.? Get a feel for exactly where this agent is in his or her career. I think membership in writers organizations (Mystery Writer’s of America, Romance Writer’s of America, Novelists, Inc., etc.) are important indicators of commitment. I also think membership in the Association of Author’s Representatives, a trade association that has an ethics code, is significant. I think convention attendance and article writing are also indicators that this agent is working full time at building their agency and selling books. All of these small, but important things are indicators of who you are really contacting.

Another fundamental indicator is the actual sales the agent has made. Make a serious appraisal of the sales they list. Are they sales to major publishers? Agents who are only selling e-books or to small publishers you haven’t heard of, may well not be actively selling books. Are they all for one or two clients or do they cover a number of clients? If a single client dominates all the sales information you have, it may be that this agent isn’t selling a lot of new talent. See if you can see how many sales are for brand new clients. This would be an important indicator that this agent takes unsolicited work and sells it. Quantity is a factor as well. An agent who only lists one or two sales may not be active enough or successful enough. At my agency, we’re making more than a hundred sales a year (books, audio, movie, etc.) It is not a challenge to list 6 or 7 new book sales for established or new clients. All of the good agencies I know could easily provide similar credits.

Responsiveness

This comes into play once you’ve begun to actively approach agents. Whatever an agent’s reputation or credentials, you are most concerned with how this agent is going to treat you. When you solicit an agent, how long does it take for that agent to get back to you? A quick response is usually a sign that the agent is excited about your work. It also means this agent has available hours to work for you. How personal and intelligent is the response? Is the agent really focused on your work? Have they a thorough understanding of your manuscript? It’s very important that they do. This is a tough business and an agent’s personal commitment to the work and you the client, is often the only thing you have going for you early on. They must believe in the book and you. If they don’t, it’s very likely they’ll lose heart after a few submissions. Is the agent willing to answer your questions and spend some time with you over the phone? This is also an indicator of how available the agent is and how committed.

One thing that always strikes me is that there’s a huge gulf of knowledge between author and agent. There has to be, one is a specialist immersed in the business and the other a newcomer who is entering the business as “talent,” not as a business person. Being a doctor, lawyer or entrepreneur doesn’t give you any knowledge of publishing. So most clients want to have their comfort level raised. They need to ask questions, however so called “obvious”. If the agent doesn’t comfortably answer them or claim that they’re too busy or unimportant, that agent may not be willing to do the hard work necessary to maintain the relationship.

If the agent wants to represent your book, does he or she have a game plan? A lot of the exact marketing plans will come later, but I rarely take a book without considering who I can send it to and how many truly viable submissions I can make. There’s no reason why an agent should say never mind about that, I like your book. This is your business; you don’t want a fan, but a business representative.

How does the agent handle some of the important fundamentals of the author/agent relationship, e.g., does he or she offer a contract, are there any fees, how soon will your book be offered for sale and to how many houses? As I said previously, our business has had a problem with fraudulent agents. These are agents who have no real intention of selling any books, but live on “reading” or “marketing” or “editing” fees. I charge none of these fees, I never have. I don’t believe they are legitimate. If you have to pay an agent, I take this as a bad sign, period. I would avoid agents that request payment. They’ll get paid, when they sell your book.

I also offer a contract to all clients, a simple agreement that spells out our mutual rights and obligations. I think it’s wise to enter into an agency agreement, so you know more where you stand legally. Written documents are often very revealing of a person’s sense of fair play. For instance, I offer contracts as short as 6 months. If I can’t sell your book by then, you have the option of terminating the agreement and finding another agent. My contract obligates me to pay all monies received promptly, no later than 10 days after receipt. These are just examples of what I consider important indicators of fair play. All the good agencies follow these practices and I’ve seen similar provisions in their agreements.

Another final, very compelling factor is speed. Does the agent feel your book is ready to go? Are they ready to put it on sale? Are they willing to multiple submit the book or do they insist on sending it to one house at a time? We often hear from people who claim their current agent has made 3 submissions in two years. This would not be acceptable behavior to me.

Additional Strengths

Though the basics may well decide things, let me mention a few other things to consider. Most agents and agencies have certain strengths. You may want to ascertain what a particular agent’s strengths are, because they may be what you specifically need. For instance, some agents consider themselves “editorial” oriented agents, they like to work with authors to improve their work and direct their careers. Others see themselves as sales people, people who will find the deal. Still others see themselves as primarily deal makers, people who will maximize an opportunity for a writer, but aren’t particularly interested in starting someone out. I put a great deal of emphasis on my editorial skills, I like coaching storytellers; I believe this has been a key to my success.

If you are fairly along in your career or you believe you have a “big book” you may want to find an agency with a strong subsidiary rights department. By subsidiary rights, I mean the rights that are sold off the book–movie rights, audio rights, translations in foreign countries, etc. If you feel you need a lot of attention, you may want to target agents with small lists or agents who advertise their desire to concentrate on only a few people. Perhaps you believe your book especially needs promotion and publicity and you may want to try and locate an agent whose background is in these areas.

All of these small, important facts can help determine your search.

If you follow this basic course of action you will soon have a number of names of agents that fit these criteria in one way or another. Prior to the submissions process, how should you proceed?

I recommend you organize your list and start at the top — the agents that you would most want to have regardless of the odds. It’s very hard for a writer to know the value of their work, so there’s no reason to undersell yourself. Let’s say you have 30 names. Choose the top ten — the agents you think have the skills, reputation and track record to successfully market your book. Don’t assume they are too busy for you or that your book isn’t good enough. Approach these top 10 following the protocols they ask for and see what happens. If one or more of them is interested in you and you’re impressed with their willingness to work with you, you’ve found the opportunity you were looking for. If your book is rejected by this first ten, analyze what might have gone wrong. Did you get any personal responses or were the only responses form letters? If you did get a personal response is there any way you can learn from it and incorporate what you learned in your next batch of submissions? After you consider that, re-read your work, your introductory letter and consider the whole package of material you are sending. If you are happy with it, it’s simply time to try again.

Re-consider your list of targets. If you think that you were rejected because you simply approached too many agents who were too busy, construct your next list from people who have smaller client loads and fewer years in the business. Let’s say your first list included only agents with 50 or more clients, who’ve been in business 10 years or more. Now maybe it’s time to try agents who have 20-40 clients and have been in business 3-7 years. You may also want to try an agent with a strong professional background, for example, someone who was a successful book editor, who has just begun their business. You should get the idea by now, continue this process until you’ve landed an agent or until you realize it may be pre-mature to look for one.

At the beginning of this article, I sounded an optimistic note. Agents need good writers. Many agents are still growing their businesses and many agents treasure the joy of discovering a new talent, as I do. With the right targeting and the right property, even though it’s a long, arduous process, you can find the agent who will help you. That said, I also want to add a cautionary note.

A bad agent is worse than no agent at all. These are my thoughts on what makes a bad agent. First, you should never pay a reading fee or marketing fee or any other kind of fee to a literary agent. You should only pay the direct cost of the expenses to market your book when you are signed with an agent who is actively marketing it. You should never work with an agent who directs you to a vanity press or an editor who you must pay to “fix” your book. It’s true some professional editors can make a huge difference and these people do charge, so there are situations where this is legitimate. Unfortunately, the large amount of abuses in this situation have forced me to warn against this practice unless you are certain you know exactly what you’re getting into. Finally, make certain you and the agent agree on exactly how many submissions and to whom they are going, and in what length of time. An agent who makes no submissions and performs no work is much worse than no agent at all.

Good luck in your search.