World Rights: Agents Hold Firm
To my fellow literary agents, gathered this week at the London Book Fair: let's take this opportunity to consider why it is in the author's interest for the Halls for one year to go quiet, to shrink and go small. For the noise from the IRC to roar above - for the agents to take over Olympia.
Agents are under increasing pressure from the big corporates to make world rights deals - not because those publishers are suddenly more expert or passionate than we in rights selling - but because the corporate strategy is to spread their risk and to aggregate their profits and losses across multiple territories and activities. Publishers are able to make such deals very attractive and there will always be times when an agent simply can't turn down a huge amount of money on behalf of their client. But in terms of the author community as a whole, outside of highly illustrated books with their high origination and printing costs, this developing tendency to sell world rights to international conglomerates is not generally in the author's interest, and so it should be of little interest to us.
Publishers buy and sell books. Agents represent and protect authors. And so it is with rights selling. Yes, most publishers' rights executives can sell the books on their lists effectively. Some of them are even great at their jobs! (Some of my best friends are Rights Directors...) But even when selling the books well, their job is not to take care of your author in those deals. They work for the publishing house, not for your client, and as we all know (even if we are too courteous to speak of it out loud), the interests of author and publisher are not always aligned.
Every time a publisher makes a subsidiary rights deal for an author and takes a percentage commission, a conflict of interest arises. When the rights deal is with a publishing imprint within the same international corporation, that conflict can be on the War of the Roses scale. Because there are then four interests to balance: the interests of the domestic publisher; the interests of their sister publisher abroad; the general corporate interest; and the interests of the author, which are generally lost along the way, necessitating the most interfering of agent representation.
The rather unsecret corporate policy is for publisher's rights teams to offer books to corporate sisters first. What then often happens is that rights are sold internally for less than the anticipated market value, either by corporate policy, at some companies, or through lack of competition from the wider marketplace. So far so disappointing, you might say, but at least there is a decent chance of a deal abroad! Well no, actually, because what happens when those corporate sisters don't want to buy? Often, the ideal licensee is outside the group, maybe even hiding somewhere rather difficult to find. When none of the sister companies wants to buy a book, some rights execs grow understandably less confident in their product. As agents, we are used to hearing that disappointedly weary tone: “None of them have decided to go for it... I have to go outside the group.” And when they do turn to publishers outside the group, the message is: ‘Our sister companies didn't want these books....do you?’ Is that the best way to generate enthusiasm for the prospects of the book? Or to maximize the value of the deal?
Even when it does work out, contract terms between sister publishing houses are not excellent, they are ordinary. They have to be, in order to protect the interests of the two sister publishers involved. As increasing numbers of WEL and World rights deals are made by US agents in particular, increasing numbers of books are being sold into the UK by US-based publishing houses as opposed to UK-based agents. The fact is that UK contractual terms will be quickly eroded and certainly never improved by these deals. Do we think a US publisher will pressurise their UK sister to offer the very best high discount royalties? Do we think a British publisher will pressurise their US sister to escalate the ebook royalty, or even to agree to renegotiate it up at a later date, in line with market changes? Is it in the licensing publisher's interest to negotiate good rights reversion terms on term of copyright contracts with licensees, when their stake in those licences expires when the licence expires? Will a US publisher insist on approval of inclusion of a book in subscription platforms, when their own corporate policy is not to permit this language in their own contracts? Only agencies are expert in – charged with - protecting the author's interest in their individual markets and in general and unless agencies continue to make the majority of English language deals, author contracts will reflect decreasing levels of protection for authors.
Although it is the author's work which is the subject of the rights agreements made by publishers, the author is not a signatory to the contract and their rights and interests are in effect 'agented' by their publisher. We have had many instances, however, of a publisher not passing on the wishes of an author's foreign publishers to the author because those wishes do not coincide with their own: for example, regarding the subject matter of a new book, or a publication schedule. Each publishing territory should enjoy a direct relationship with the author, not one filtered through another publisher. And what good is an 'agent' who does not consult the author on all contractual terms, or chase the sublicencee for publication plans, or pressurise them to spend marketing money and fight tooth and nail to build a career for the author in each territory in the long term, rather than moving on to the next hot editorial acquisition? The agent never stops working every angle for their author. The publisher cannot stand loyally and doggedly at every author's side in the same way, beyond publication and into the next year or decade - most Rights Execs haven't even met the authors whose books they're selling.
When the deal is not a subsidiary rights deal, but instead consists of one advance for WEL rights, with home royalties from all territories set against it, the publisher successfully spreads their risk but the author loses the opportunity to negotiate the best terms in each territory. Although publishers sometimes offer large advances in exchange for world rights, the author's income is disadvantaged by having only one advance against which multiple sets of royalties are aggregated: several territories will probably have to perform well before the author can benefit from her own success. Whereas, if the author's agent has negotiated multiple advances for her author, the author has multiple opportunities to earn royalties. Lots of small pots overflow more quickly than one big pot.
And, with publishers often taking approximately 25% of translation deals (sometimes even plus sub-agents commissions, which is wholly unjustifiable and not something DHA allows), once you have taken your 15% of net on top, if your client's large advance does in fact ever earn out, your author is effectively receiving only 64% of the value of the advances and royalties in their book as opposed to the 80% they would receive on rights deals made by their agents.
Rights-selling is the agent's main activity; it is our area of expertise in the same way that publishers specialise in, yes, publishing, correctly labelling rights as 'subsidiary' to their core business. Once your author's publishers become her agent, their role becomes confused: at a cost to your author and, ultimately, to your business, that of the professional agent.
An edited version of this article was first published in the PW/Bookbrunch LBF Daily on Tuesday 12 April 2016.
The illustration is of a good number of eggs, all in one basket.