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Do agent-publishers carry a conflict of interest?

How agent-publishers came to be, and what they mean for the publishing world.

The shift in the digital publishing landscape is changing more than formats and production processes — it’s bringing new positions with it, too. One of the most noteworthy new jobs — and perhaps most controversial and contentious — is the emerging agent-publisher role.

To find out more about what agent-publishers mean for established publishers, authors, and agents, I turned to Booksquare’s Kassia Krozser (@booksquare). She says the agent-publisher position rose out of the refusal of traditional publishers to adjust their business models. “Traditional publishers need to not only rethink how they sell their value to authors and agents,” Krozser says, “but they also need to rethink the economic structure of their deals.”

The agent-publisher isn’t a squeaky-clean solution for authors, however. Krozser is concerned the position might come with an inherent conflict of interest.

Our interview follows.

What is an agent-publisher, and why is this new position emerging?

Kassia_KrozserKassia Krozser: The first part of the question is fairly simple: an agent-publisher is someone who fulfills both roles. The second is even easier. Agent-publishers are emerging because, well, traditional publishers couldn’t or wouldn’t twist their business models to meet the market realities. Agents, smartly, saw a business opportunity in the desire of authors to make reasonably good money from self-publishing. Agents also recognized that authors do not necessarily possess — nor necessarily want to assume — the functions publishers fulfill.

Traditional publishers try to coax these same authors into their existing structures. This, I think, is a mistake on the part of traditional publishers because they’re having a difficult time articulating the value proposition to these authors. Think about the choice authors are making: 70% royalty for self-publishing, 25% royalty for going with a traditional publisher. Then add in agents who realize they can offer a suite of services while still allowing authors to do better than they would with a traditional publishing house, for a 15% fee.

I should note that this phenomenon is mostly geared toward backlist titles, though some digital originals are emerging. And because it’s backlist, the economics weighed by the authors — and the benefits — are very much skewed toward self-publishing or going agent-publisher.

It’s not like the distribution and marketing are all that different.

How are agent-publishers disruptive to the publishing ecosystem?

Kassia Krozser: It’s disruptive because backlist is incredibly lucrative, and backlist for digital means additive sales, in the sense that readers are buying favorites from their existing print libraries in digital. Publishers don’t want to lose control of the digital backlist. These are titles that have (likely) earned out, so the investment in converting to digital, for a traditional publisher, is peanuts. The potential profitability of the book is quite nice because, in digital, books remain on the shelf forever — which isn’t great for the authors if the royalties are low.

So, if authors or their agents take these properties and exploit them, then there goes a steady, predictable, and profitable revenue stream for publishers. As readers shift from print to digital, the shift of these sales from publisher to author/agent — I am using some terms interchangeably — is profound.

This will increase a prime tension: publishers want to acquire as many rights as possible, for as long as possible; agents want to retain as many rights as possible while licensing other rights for as short as possible. What to watch for in the near future is how the balance of power shifts.

In my opinion, traditional publishers need to not only rethink how they sell their value to authors and agents, but they also need to rethink the economic structure of their deals.

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Is the agent-publisher arrangement a viable service model?

Kassia Krozser: I’m torn on this point. I completely understand why agents are moving into this marketplace. I am also concerned about conflicts of interest. If I’m an author and my agent is selling to traditional publishers while also creating a profit center around digital publishing, can I be certain my best interests are being considered?

On the other hand, it is currently the case that traditional publishers are not willing or able to pay market value for these backlist books. And it is very hard for authors/agents/innocent bystanders to discern what value is added by these publishers. The quality of ebooks from traditional publishers is sub-par — oh yes, I can point you to examples — marketing is negligible, and cost of conversion is minor (I am assuming the books the traditional publishers care about have earned out and then some).

So, authors have three choices: DIY, agent-publisher, or traditional publishers. DIY means the author has to employ a lot of new/uncomfortable skills (please authors, you are not as good at conversion as you think you are). Agent-publisher means you have someone doing those jobs for you at a 15% rate, plus, possibly, expenses. Traditional means you have someone doing that work at a 75% rate.

So, yeah, agent-publisher is a viable business model. But it’s also an opportunity for others to move into the space — non-agent publishers who can offer rates and services on par with agents. For example, I am seeing small, and growing, author collectives springing up. In these, each author is his/her own entity, handling conversion, formatting, and proofing on his/her own. But the group markets collectively and has a single point of sale, with, presumably, someone managing the distribution of monies. While this creates work for these authors, they also don’t have to pay the agent a fee. More of these sorts of arrangements would help me get past my conflict of interest issues.

This interview was edited and condensed.

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  • http://www.carolynjewel.comp Carolyn Jewel

    Publishers don’t want to lose control of the digital backlist. These are titles that have (likely) earned out, so the investment in converting to digital, for a traditional publisher, is peanuts.

    I disagree with this. I think there’s ample proof that publishers have completely failed to take control of their backlists. Instead, they’ve allowed those sales to go unmade. This is particularly true with genre fiction where the business model is based on the (now provably false) assumption that these titles are only profitable as front list.

    Authors have been able to get rights reverted to their backlists ecause their publishers have failed to keep the books in the stream of commerce. These same authors often make a tidy sum self-pubbing those books. When reverted backlist titles make the NYT (see Barbara Freethy) I think that’s good evidence that publishers have a business model based on incorrect beliefs about their product.

    Readers and authors both know that publishers have failed to meet consumer demands in this respect and authors self-pubbing their reverted backlist titles are now meeting that need and doing very well.

    As to Agents as publishers, yes. It’s a conflict of interest. I’d refer you to lawyer and author Courtney Milan’s blogs on exactly WHY this is a conflict of interest.

    While it may be true that most authors do not possess technical skills, it’s also true that neither do agents. There are sad and ample examples of truly horrific results.

  • https://www.smashwords.com/ Mark Coker

    Lots of great points here, Kassia.

    No doubt, the power is shifting to authors and their agents.

    I think the “agent-publisher” label is limiting, though.

    It might be useful to separate out the agents who are providing publishing services from the agents who are creating publishers (both have an important role in the future of publishing, and both are very different).

    Most of the agents we’re working with at Smashwords are opting to act as service provider rather than publisher.

    They’re developing e-publishing practices that opens up new opportunities for their clients, but the agent doesn’t necessary become the publisher. In fact, most make it very clear that they’re merely facilitating the digital publishing by providing formatting, cover design, distribution and marketing services, but they are not the publisher. They consider the author as the publisher.

    In such cases where the agent’s investing their own effort on spec, there’s no conflict of interest. One could argue that a true conflict of interest might occur if an agent encouraged their client to accept a low ball advance on the basis of bird in hand, rather than taking a risk with the author to publish independently. Good agents have always taken risks on behalf of their clients, so kudos to those who take the risk to join the author on an indie adventure.

    I see multiple opportunities for agents to help their clients:

    1. Exploit the backlist – Agents can facilitate the rights-reversion, assert and claw back the rights when in question, and then assist the re-release of the books as ebooks. As you noted, this is probably the biggest opportunity, especially for agencies that have been in business more than 10 years.

    2. First releases of unsold works – If publishers say no and refuse to acquire a work the author and agent believe in, or if the publisher offers an insufficient advance or package, the author and agent now have the freedom to get the works out now.

    3. Negotiating leverage – If an author already has a strong platform, and the publisher’s advance and package are insufficient, the indie ebook option gives the agent more negotiating leverage either to up the advance or up the royalty rate.

    4. Time-sensitive releases – Some projects simply can’t wait 12-18 months for release, so the indie ebook option enables instant publishing

    5. Interstitials – Authors, working with their agents and in consultation with their publishers, can release shorter works, or works not feasible for traditional publication, as indie ebooks in between or in concert with major traditional releases. In this case, if orchestrated properly, the indie and traditional efforts can catalyze one another, help reach new readers and build the author’s platform.

    If anyone’s interested for more on this, I’ve got an online presentation titled, The Literary Agent’s Indie Ebook Roadmap here – http://blog.smashwords.com/2011/08/literary-agents-indie-ebook-roadmap.html – where I examine how agents can leverage indie ebooks for their authors’ benefit.

  • http://writeitforward.wordpress.com/ Bob Mayer

    If publishers valued backlist they’d be selling it. I sell more of my Area 51 titles in eBook in one day than Random House could in six months. They just threw it out there hoping to make a little change. I put it out there making my living. I had an editor tell me: We can barely promote our frontlist, never mind our backlist.
    Big mistake.