Friday, February 29, 2008

Did My Query Get There?

Often I will hear from writers who want to confirm that I got their query or submission. Since I don't log any of that and get so many a day I couldn't possibly remember them all, I generally wish authors would not call to confirm receipt. Besides, they don't have to, as there are plenty of ways to accomplish this without bothering the agent on the other end.

1. Use Delivery Confirmation. The US Postal Service offers different forms of this and one doesn't require a signature. Use this one for submissions of chapters or manuscripts and you can check online to see that your package was delivered. Granted, this likely means to the mailbox or front door and not the actual agent, but at least you know it got to the right location.

2. Use UPS or FedEx Ground, both of which let you track things online. Be sure your agent hasn't posted somewhere that they don't want you to use those services. I used to say online that I didn't want anyone sending me anything requiring a signature, especially Certified Mail. Not every agency is that large and sometimes everyone (or the one) is out to lunch when the delivery guy or mail carrier shows up. Nothing annoyed me more than those "Sorry We Missed You; Your Certified Mail is at the Post Office" slips. Schlepping to the PO and waiting in line to get a sample chapter is an annoying waste of time for any agent. Now I get my mail at one of those Postal Annex stores, so they sign for everything, rather than me. But I still think Certified Mail is a waste of money for a query or submission.

3. If you are doing a lot with the US Mail, you might want to consider a few things:

a. Do you know your actual address? I know, this seems like a bonehead question, but it's for real. Many, many publishers do not know their own addresses, at least the ones the US Postal Service uses. Go to USPS.com and the Find Zip Code page. Put in your street address and zip code. What will come back is the USPS-approved version of your address. Use that one as your address, always, to help ensure mail reaches you.

b. Are you mailing it to the right place? Many of these websites that steal info from agents' sites or guidebooks have outdated information. Many of the guidebooks may also have outdated information. It is a good idea to check addresses directly on the agent's website before mailing anything off. Then run that address through the USPS system also, as the agent may not know his or her correct USPS address.

c. If you are mailing A LOT, it may make sense to sign up for a service like Stamps.com, which checks each address to which you are mailing against the USPS system and corrects it. It also puts the correct USPS bar code on your mail, which results in your mail getting their faster, because the bar codes let it zip through the system.

d. Don't want to do any of that? TYPE YOUR LABELS OR ENVELOPES in all caps, in Arial or Courier typeface. The OCR software at the USPS will read the destination Zip Code more easily and your mail will get their faster.

Z

Thursday, February 28, 2008

Sometimes It's the Admin Stuff That's Hard

My intern has spent the better part of her week working on the firm's website. Now she's only in two days a week, so today she emailed me that she forgot to link a bunch of author pages to their title pages. Oops. I guess I can't be too harsh, as her English is still way better than my Dutch. Oh, did I not mention she's from the Netherlands? Getting quite international here, we are.

So if you noticed a glitch or two on the site recently, rest assured that those will be fixed next week.

Every time I get a new intern, the hardest part of getting them up-to-speed is often the administrative stuff. How many college kids or grad students actually know how to use Outlook? And if they have used it, they've used it for email alone. They don't know about Tasks or Journal entries.

Most, surprisingly, know little about how Microsoft Word works and its many features. I guess I shouldn't be that surprised, since most authors don't seem to know it, and one presumes an author is working with it a lot! Add in Microsoft Access, Excel, FrontPage or Adobe Dreamweaver and Acrobat, and you have an internship that swiftly becomes a software usage boot camp. Now I'm thinking of adding in Act!, because I think it might do something Outlook doesn't when it comes to tracking submissions, and we purchased Dreamweaver to work on the website late last year, so now I'm the one who has to go to boot camp. On top of everything else I have to do.... Oy.

What many authors don't seem to realize is that agents aren't just pitching books all day, going to three-martini lunches, and reading. The administrative workload is huge. Frankly, I'm not sure how most small agencies do it. I know how I do it, though: by working long hours and leveraging software to streamline the process. But having helped three or four agents learn QuickBooks or other software programs, I can tell that I'm a bit ahead of the average agent in the software usage department.

And it's not just agencies. Publishers are software-challenged and admin-challenged also, though they may have more money to throw at some of these problems. Most editors I know have no idea how to do mail merge using Word. I once walked an editor I know through the process so she could move twenty rejections out of her office. She was stunned by how much easier it was.

A lot of what goes wrong in publishing is, of course, human error. UPS has called me more than once asking what my current address is because something was shipped to an old one. Now, I have moved twice in less than two years, once from New York to Solana Beach, CA, and then from Solana Beach to San Diego. And both times, letters went out to each publisher's Contracts and Royalties departments and emails to every editor in my contact list. And I had cross-over between the two California addresses for six months, so I could let folks know they still needed to update their records. So why are boxes of books still going to Solana Beach? It's simple human error.

A enormous part of what happens in any publishing house is accomplished by editorial assistants and assistant editors who, honestly, are not in my contact lists. So if their boss didn't update them on my address and Contracts didn't update the central database (if there is one!), then those assistants are probably just pulling out contracts and sending materials off to whatever address is on the contract. Heck, I wonder how much stuff has been sent to my old New York address?!

Good assistants are hard to find. They are even harder to keep, because the good ones have no interest in being assistants. They want to be editors. It takes about six months to learn everything you can learn as an assistant about the grunt part of the job: How to log submissions and rejections; how to transmit a manuscript to production; how to deal with a manuscript coming back from the author after he reviewed the copyediting job; how to request a check for acceptance of manuscript; where the cafeteria is; who the best agents submitting to your boss are; etc. After that first six months, the "This is what I went to Harvard/Yale/Columbia for?" dissatisfaction starts to settle in. At which point the assistant starts to lobby for a promotion or starts looking for a new job or starts applying to graduate school.

At Simon & Schuster, Random House, and Penguin Putnam, I'd hazard a guess that the average assistant has to stick it out for three years before getting promoted. (When I was at Penguin, there were three separate levels of editorial assistant.) Three years of being a glorified secretary and fighting the urge not to kill the CEO when you end up standing at the urinal next to his. After all, he has the power to make things better for the assistants, right? He has the power to pay them a living wage. He has the power to decide that editorial assistants from Ivy League schools are a waste of talent. Let's just hire secretaries, like I have and we have in Sales and Marketing and every other department, pay them a living wage, and keep them forever. Then, each year, let's bring in a half-dozen interns and work their tails off and let them know that the two that perform best will get hired as Assistant Editors at a living wage. Might this help stop the revolving door of assistants? Might this bring consistency and efficiency to the house? After all, the CEO has a secretary and he's had the same one for eighteen years. He drinks a soda and she burps. She's been doing the job for so long that she knows how to handle any contingency that comes across his desk. Why shouldn't editors have the same kind of assistant?

More than once, I have had to explain to editors and contracts people what their contract says and means. Why? Because I have read it more often than they have. Because I have negotiated it and discussed it more than they have.

Editors often never bother to read their contract. If you bring up something beyond basic deal points, they say, "Oh, that you'll have to discuss with Contracts." But how is an author or agent supposed to get to the point where they can accept the terms if one of the terms isn't up for discussion until there's actually a contract draft?

Contracts, by the way, will often tell you that they can't change something and if that was something of genuine concern, it should have been brought up in the original negotiation with the editor.

I once killed several entire afternoons exchanging emails and talking on the phone with an audio company over the question of whether or not the author would get his full royalty if the publisher chose to give his book away for free via download or if the publisher offered it as part of a "buy two, get one free" deal. This is not uncommon on Amazon.com. I suggested the easiest solution would be to not include the author in such promotions, if they didn't want to pay the royalty. Keep in mind that publishers create these programs and do not ask the author's permission. If, by chance, the net effect is that the publisher sells many more copies of various titles but the author gets little or no royalty for his or her copies, is that something in which the author really wants to be included?

Book-clubs used to offer the chance to get four books for a penny. Now it's five for a dollar. At one point, the authors whose books were included would get a royalty based on that book selling for twenty cents. Yes, twenty cents. And then they split that with the publisher. Obviously publishers wised up and told the clubs that they can offer it in that deal, but still have to pay a full royalty. So why shouldn't the publisher do the same now that they can offer books or audios as downloads for free as a part of various offers? Coming to a compromise took days, I kid you not, and the deal nearly died more than once because of it.

So why am I writing about all this today? Well, because I see so much online from authors complaining that agents aren't "responsive" and take too long to get back to prospective authors. I wanted to give you all a taste of why they might not be getting back so quickly. Not to mention letting you know what you may be in for if you ever decide to get a job as an editorial assistant!

Z

Wednesday, February 13, 2008

The Monthly Round-up...Better Late than Never

Okay, so I'm running a bit behind and I apologize to those who have been checking here, waiting to find out the status of their material.

Here's the round up for January:
  • 47 queries received; 31 rejected
  • 12 requested sample chapters received; 5 rejected
  • 9 sample chapters requested
  • 1 proposal requested
  • 1 manuscript requested
  • 1 requested manuscript received
Currently we are waiting on 7 requested sample chapters, 4 requested full manuscripts, and 2 requested proposals.

Our policy is to wait for 30 days after we requested material and then to follow-up once. After that, we discard your materials.

Please note that if you sent us material at any time in the last year and sent it to the Solana Beach address and have not heard from us, that is because we have moved. Please view our website for updated contact information.

Thanks.

Z

Is there a Lawyer in the House?

So, our friend in the UK is apparently upset with me for posting his emails to me on this site. He is claiming copyright infringement. I just received the following from my ISP:

-------- Original Message --------
Dear Sir / Madam,

I am contacting you regarding a breach of copyright law being hosted on a website for which you are the registered domain name owner.

The breach is occurring at http://www.zackcompany.com/_dropbox/firstwriter.pdf where private correspondence has been publicly reproduced without permission. The emails I sent are covered by copyright and to reproduce them in this way without my permission is illegal.

By publishing this material without consent your user has breached their agreement with you:

"If it comes to DBP's attention that You are using DBP's services for purposes of engaging in, participating in, sponsoring or hiding Your involvement in, illegal or morally objectionable activities, including but not limited to, activities which are designed, intended to or otherwise: ... (ii) defame, embarrass, harm, abuse, threaten, or harass third parties; (iii) violate state or federal laws of the United States and/or foreign territories;..."

This is a demand that the unauthorised publication of emails sent from editor@firstwriter.com to [deleted, but is a generic address used by TZC] be removed from the domain name registered to you immediately. Please ensure that this is done within 48 hours and that confirmation is sent when it has been done in order to avoid formal legal proceedings.

Kind regards,
J. Paul Dyson

--------------------------------------------------------------
J. Paul Dyson
Managing Editor, firstwriter.com
editor@firstwriter.com

Now, forgive me for being dense, but can a user sending email to a generic mailbox expect privacy? Or expect to retain copyright? More importantly, wouldn't you think this guy would find it easier to just respect my desire to not be listed on his site than complain to my ISP? And this guy wants you to pay him for his services?

Oy.

If there's a lawyer out there reading this who wants to chime in on whether or not he has a case, I'd love to hear from you.

Z

And the War of Words Goes On

After posting yesterday regarding my run-in with J. Paul Dyson, who runs firstwriter.com, I continued to receive emails from him, even after I asked him to cease and desist from writing me.

In one of his emails, Mr. Dyson claimed that I had committed copyright violation by publishing our email exchange on this website. However, he did not ask me to remove it, so I have not removed it. Further, Mr. Dyson has threatened to publish negative comments in his newsletter, stating that I put copyrighted material on my site, i.e., his letters. Oy. Can you believe this guy? All I asked was that he remove me from his website where he charges people for the same information I provide for free. Plus my information is up-to-date and current.

Some notes on what he had:

  • His site said I was closed to new queries, but I have not been for months.
  • His site listed a mailing address I have not used for a year.
  • His site listed simplified categories where I have highly detailed categories.
  • His site stated I was a member of the AAR. As of today, he was threatening to complain to the AAR because I stated I would reject every writer who came to me through his site. I have not been a member of the AAR for over two years and it has been in the FAQ on my site since I decided not to renew my membership in 2005.
And yet this site charges writers for this out-of-date and incorrect information.

Folks, if you want to spend some money trying to find an agent, I recommend you buy Jeff Herman's book on agents, editors, and publishers. Just click on this link:
Jeff Herman's Guide.

Here why I like Jeff's book.

  1. If you don't want to be in it, you don't have to be in it. It's "opt-in" not "opt-out."
  2. You can answer as little or as much of his questionnaire as you choose.
  3. You get to put your listing in your own words and he doesn't edit aggressively.

He's a publishing professional who respects other publishing professionals.

So, if you are going to spend your money in your search for an agent, buy his book. Don't waste it on sites like firstwriter.com.

Z

Tuesday, February 12, 2008

This Site Will Earn You an Immediate Rejection

If you follow this blog, you may be aware that I am vehemently opposed to these websites that go onto my site or other sites and take the information they find there, boil it down to useless categories, and then publish it on their own site, often charging authors to find out information they can get for free. The latest I have run into is firstwriter.com and I have to urge you to stay away from this site. If you found my site through that site, go ask for a refund. Because I will not be accepting any queries or submissions that come from authors who are clients of firstwriter.com. Mentioning them will get you an automatic rejection.

I have repeatedly asked to have my firm removed from this site and they have refused. Click here to read it all in a PDF. Judge their behavior for themselves and if you agree with me, kindly let Mr. Dyson know.

Thank you.

Z




Friday, February 08, 2008

To Audit or Not to Audit? That is the Question.

Another day, another royalty statement. February is one of those months when I get quite a few statements, which is great from an income perspective, but terrible from an administrative perspective. It's a lot of work to sort through all of those statements!

Back in my days as chairperson of the AAR's Royalty Committee, I used to attend meetings with various CFOs and Directors of Royalties at the major publishers. Our goal, consistently, was to push publishers for better statements that showed gross sales, returns, and net sales, both for the period and cumulatively. Further, we wanted them to show the reserve for returns, preferably showing the reserves released in the period and the reserves taken. And sometimes we were successful, but some publishers were resistant. One didn't want to show the reserves, but agreed that if any agent asked, they would disclose it. To me, this seemed as though the CFO knew that if they put the reserves on the statements, they would get many more requests for reconciliations to print and they didn't want that.

A reconciliation to print operates on the assumption that a publisher should be able to account for every single copy it printed, e.g.,

Printed 100,000 copies
Shipped 85,000 copies
Free 421 copies
Inventory 14,579 copies

However, in reality, that doesn't happen. Printing presses don't stop and start on a dime. If a publisher orders 100,000 copies, it may get 100,102 copies. Or it may get 99,826. Either way, it pays for 100,000. Presumably it all works out over time with some titles going long and some being short. Plus I'm sure their contract with the printer allows for such tolerances. That said, if you ask the editor what was printed, he is likely going to quote the number ordered and not the number actually received.

Further, every publisher experiences a certain amount of "shrinkage." No, this has nothing to do with the water being cold. "Shrinkage" is the terms many businesses use to describe theft. In this case, the theft usually takes place at the bindery, where the books are bound up, before they are boxed. It may also happen at the warehouse, where an entire box of books may disappear. Where do you think all of those brand new, very cheap hardcover books that are being sold on Broadway and 83rd St come from? They are stolen, pure and simple. And publishers aren't unaware of this. There's just a limit to what any business can do to control theft. And the value of what's being stolen simply isn't enough to warrant strip searches.

Then there are damaged books. A pallet is lifted wrong and a case of books tumbles to the ground eight feet below and bursts open. Even if not even one of those books was damaged, the entire carton is likely going to be dumped in the remainder bin. Because it's not cost effective to repack all the books in a new box.

And there's real damage that can take place when a box is dropped and broken and those books are going to just be destroyed.

Thus, some statements also have entries for copies that were "destroyed" and for "inventory adjustments," the latter being the aforementioned "shrinkage," or maybe just books they lost or miscounted along the way.

Because, let's not forget that the system is prone to human error. We had a meeting with a software company that developed royalty systems for at least two major publishing houses. The rep told us that when a clerk in the order center mistypes an order for 10,000 copies as 100,000 copies, she may just enter a return for 90,000 copies to balance it out. She might not just go back and correct the order. So it now looks like the author has a 10% sell-through before one copy of that order has been sold.

And sometimes a bookstore orders ten copies of one book and gets ten copies of a different book, despite what the packing list says. If those books are paperbacks, the bookstore will likely just strip the covers off and send them back, not the whole book, so that poor author, whose book was never ordered, now has a ten-copy return on his account. And my guess is those returns will get accounted for and deducted on his royalty statement, even though there was no accounting for a payment of royalties for the sale of those copies.

One of the biggest weaknesses in the publishing industry is authors' not auditing publishers. Sure, agents look at the statements, but we don't get the order information. Only an audit is going to let you see what you really need to see to make this a "zero sum" game that shows what you really should be getting paid. For example:

  • You want to see the invoice from the printer and the bindery to know exactly how many books were printed and bound and paid for by the publisher. This will also let you figure out the unit price of your book.
  • If there is receiving paperwork at the publisher's warehouse showing how many they received, you want to see that.
  • You want to see the print-outs of the actual orders by accounts to figure out how many books were shipped, and the records of the returns to know how many came back. Compare account numbers. Did any account return more than they ordered? Did any account get a different discount on the return than on the sale? Yes, some accounts profit by having two account numbers (say one for each store and one for a central warehouse). They may order them shipped to the warehouse and get a 55% discount (paying $4.50 for a $10.00 book) and return them from the store at a 50% discount (getting a credit of $5.00 for the same book for which they only paid $4.50).
  • Were books shipped to Canada accounted for at the Export royalty, even though there is a separate, higher Canadian royalty?
  • Were books shipped in the US accounted for at an Export royalty? Some of the books sold at US military bases overseas are actually sold to distributors located in the US. One could argue you should not be charged an Export royalty on those sales. Publishers will say the shipping costs warrant it. So how come sales to Alaska and Hawaii accounts are at the regular discount and royalty?
  • Was a very large number of books given away for free? A few hundred review copies is normal. Thousands is not. Ask questions.
The book business is definitely not a finely oiled machine and plenty of games are played. I worked at one publishing house that offered a major distributor extra discount points on all books ordered during the year if they kept their return percentage below a certain number, e.g., We normally give you a discount of 50% on the $10,000,000 worth of books you order every year. If you keep returns below 48%, we will give you an extra 2% discount at the end of the year on all those orders. But in January of the following year, after they got their two extra points, they returned thousands and thousands of books they had simply been warehousing to keep their return rate in the prior year below 48%. Slimey, huh?

So if authors really wanted to keep publishers and booksellers honest, they really need to conduct audits and look hard at the numbers.

Surprisingly, a lot of authors don't do this for two reasons:

First, they worry that they will damage their relationship with the publisher and that the publisher will stop licensing rights to their works if they audit. I have never seen any evidence of cause and effect in that manner.

Second, they don't want to pay for the audit.

Some publishers require that a CPA conduct the audit, but most actually do not. The authors themselves can go in and do the audit. Read your contract. There are some CPAs that will perform audits on a contingency basis, like a lawyer taking a case on contingency. The downside is that you owe them 1/3 for whatever errors they find in your favor, regardless of whether or not that error leads to income. For example, say you sold your novel for $100,000 and show $50,000 in earnings. You send in these guys and they find that you really have $80,000 in earnings. They've found $30,000 in your favor. Now you owe them $10,000. But you aren't actually getting that $30,000, because the book is still unearned by $20,000. But they need to be paid. So you have to pay them out-of-pocket and your book still may never earn out completely.

Further, these CPAs will review your statements before taking on the audit. If they don't think they can make some money off it, they won't do it.

You can pay a CPA by the hour to do an audit also. But, again, the CPA may cost more than he finds.

My personal opinion is that if your book has earned out, paying a CPA to audit your publisher once a year is as reasonable as paying your CPA to do your taxes once a year. If your book is earning thousands and thousands in royalties every year and your contract will allow it, I'd audit after each and every statement.

One other thing: Most contracts say the publisher will pay for the audit if an error of 5% or greater in the author's favor is found. So you might not have to pay at all.

On the downside, if your accountant finds an error in the publisher's favor, it will likely have to be disclosed. So it may be damned if you don't and damned if you do.

In the end, it all becomes a business decision. Are you writing as a hobby or as a business? If a business, then the answer is, audit.

Z

Thursday, February 07, 2008

How Publisher's Make Money When the Advance Doesn't Earn Out

A little while ago, I mentioned in a blog that publishers can make money even when an author’s advance doesn’t earn out. I promised to explain that.

Let’s take some basic terms and apply them:

  • Standard hardcover royalties for most trade publishers (meaning non-academic, e.g., Simon & Schuster, Random House, Penguin Putnam, HBG, etc.) are 10% of the retail price on the first 5,000 copies sold; 12.5% on the next 5,000 copies sold; and 15% on all copies sold thereafter.
  • The average discount granted to booksellers is 50%.
  • Penguin Putnam, one of the largest publishers in the world, says a book sold at greater than an 85% discount has effectively been sold “at cost” and no royalties will be paid. By “cost,” I mean the cost of paper, printing, and binding. From this we can extrapolate the following: a $25 book costs $3.75 to manufacture, or 15% of $25. Now, I don’t actually agree that a hardcover book costs that much to manufacture, particularly if you are printing tens of thousands. But it’s a deal-breaker to change in the contract, so let’s assume that’s correct for now.

Thus, if the publisher sells the $25 hardcover to the bookseller at a 50% discount, it pockets $12.50. Assuming that this sale is in the first 5,000 copies, the royalty is $2.50 to the author, in the second 5,000 copies it’s $3.125, and after that it’s $3.75.
$12.50 less $2.50 is $10.00. Now, we aren’t factoring in a lot of things, like paying the editors, or the sales guys, or the copyeditors, the electric bill, etc. One rule of thumb is that 1/3 the cost of any product goes to “keeping the lights on” and paying general overhead. So let’s round up and say $4.00 of every copy sold goes to that. The net is still $6.00 in the publisher’s pocket. And, remember, it was only $2.50 in the author’s pocket. So the simple answer is that for every copy sold, the publisher makes more than twice per copy than the author, so if the advance wasn’t huge, one can intuit that a publisher could make a profit without the advance earning out.

Sure, these are all rough numbers, but they should make the point, even if looked at in more detail.

If a publisher ships 10,000 copies of a $25.00 hardcover for which it paid a $20,000 advance, the math should roughly work out as such:

  • $25.00 retail price
  • 50% discount
  • $12.50 wholesale price
  • Sell-through of 50% equals 5,000 copies sold x $12.50=$76,000.00
  • Royalty on each of those 5,000 copies is $2.50 for a total of $12,500.00 in earned royalties
    Write-off on the 5,000 copies that were returned is cost of manufacturing x 5,000=$18,750.00.
  • No royalties are paid on copies that are returned and remaindered. If returns are then remaindered for $2.00 each, publisher gets back $10,000.00 of the $18,750.00 for a net loss of $8,750.00.
  • Contribution to overhead for each copy sold is $4.00 x 5,000=$20,000.
  • Unearned advance that has to be written off is $20,000-$12,500=$7,500.

Ready?

$76,000-$12,500-$8,750-$20,000-$7,500=$27,250.00

Even if you are stickler and say that the cost of overhead for each of the unsold copies has to be factored in—another $20,000—you're still leaving $7,250.00 in the publisher's pocket.

So, even though the advance never earned out, the publisher made money selling only half of the books it manufactured and shipped.

Again, these are very rough numbers and certainly do not include every cost a publisher may incur, but I think they demonstrate sufficiently how it works.

So how do books lose money? Well, it’s pretty simple: Publishers anticipate a book will be big and pay a very large advance. They encourage booksellers to order large numbers of copies and maybe even offer incentives to get them to do it. These incentives are called “co-op,” and may include paying Barnes & Noble to feature the book on a table in the front of the store or paying Amazon.com to send out an email to every customer who ever bought one of the author’s earlier books. Factor in overprinting, overselling, and a large advance on a book that turns out to not be as big as the publisher expected and the book will lose money. Kind of like if you opened a new store, ran big ads, hired a clown, and then a blizzard hit on opening day and no one shows up.

Oops.

The thing to keep in mind, dear reader, is that 99% of books are not bought for huge advances. And according to one CFO I met with while I was chairperson of the AAR's Royalty Committee, 90% of the books his house publishes do not earn out their advances. Yet this house grows and grows. So, obviously, books can be profitable while not earning out their advances.

I know, I know. If I had led with that, I could have saved both of us a lot of math. Deal with it.

Z