Economic Interests in Publishing

Your dream has finally come true! An agent has handed you an agency agreement or, better yet, a publisher has offered you a publishing contract. What now? Navigating your rights and obligations under these agreements can be confusing and scary, and your agent’s interests may not always be aligned with yours. This post tackles some of the competing economic interests at play that you, as the author, may not even be aware of.

Economics of Traditional Publishing

A traditional publishing arrangement expects an author to query agents until the author succeeds in finding an agent that “falls in love” with their work which translates to “I can sell this and make a living.” That agent then convinces a publisher to work with the author and takes 10–15% of the royalties during the life of the book for their efforts. The traditional publisher takes on the economic risk that the book will not be profitable when they agree to publish the book, so they offer contract terms that mitigate that risk and shift as much of it as possible to the author. At the end of the day, both the publisher and the agent need to make money off of the author, and this need influences how they interact with each other and the author. It’s not a criticism, just an economic reality. And the author, terrified that their book won’t get published, will often be in placed in the position where they are willing to accept terms they may not be comfortable with or may not be strategically what they want for themselves. Worse yet, the author may not understand the nuances of the rights that they are selling.

How Interests and Goals Diverge Among Authors, Agents, and Publishers

Translating Competing Interests

Understanding these diverging interests is critical to understanding why authors, agents, and publishers act the way they do. An author is incentivized to maximize the value of his or her effort spent writing books and often wants to minimize the time spent engaging in non-writing activities. An agent is incentivized to minimize the time that he or she spends with authors to further develop the property and the time needed to shop the property to publishers because this frees up time to shop the book and other books in their portfolio. Publishers are incentivized to minimize the spend on properties and maximize their return on investment. As broad generalizations, these are basic economic assumptions. There are plenty of authors that are marketing mavens, and plenty of agents spend a significant time helping the author develop the property further before shopping it. At the end of the day, however, the publishing industry isn’t a charity. It’s a business, and so authors need to keep in mind that among the team of people they work with, all of these people want to maximize their return for the time and money invested in each project, but this looks different for each of them.

Takeaway

We have other articles that break down the publishing agreement in detail and go over things like granting rights, subsidiary rights, reversion rights, and legal obligations, but the takeaway here is more fundamental than that. Every party in the complex dance of traditional publishing has the same intrinsic goal of maximizing return for effort, but the balance and composition of return on investment looks vastly different depending on whether you are the author, the agent, or the publisher. So, author’s should seriously consider evaluating all agent and publisher relationships through the lens of what his or her individual goals are and how goals align with the agent and publisher they are looking at working with. The closer those goals align conceptually, the easier it will be to get to a fair publishing agreement. Remember, knowledge is power!