Tuesday, October 30, 2007

How to Make the Publishing Business a Good Business

When I bought my house, I was required to put down a deposit or “good faith” money. This was even before we signed the contract of sale! Nothing happened with this money. In fact, they didn’t even deposit the check (which I admit was unique to our situation), but in most home sales, the deposit is nonrefundable if the buyer bails.

And, of course, the day we closed on the house, I had to deposit the down-payment with the escrow company. Thousand and thousands of dollars. In fact, that had to be deposited not later than the day before closing.

You see, in the real world, when you buy something like a house, or a car, for thousands of dollars, you pay when you sign on the dotted line.

Then there’s the publishing world, where you get emails like this:

Unfortunately, it takes us up to 60 days to process payments. I hope that will not be a problem.

Keep in mind, please, that this payment is the “on signing” payment.

Publishers routinely pay the “on signing” payment thirty days or longer after the signed contract shows up on my desk. And honestly, I do not understand this.

Once upon a time, I had a friend who was free-lancing on a video project at Viacom. I was bitching (there’s no other word) at her that Simon & Schuster, a division of Viacom, owed my clients money and I was still waiting for a check. She looked at me and said, “I can get a check hand-cut any day.” Same company, just a different division. Trying to get a hand-cut check out of a publisher is like trying to get a cub away from momma bear without a stun gun.

Publishers have said for years that they are “in business.” That they can’t publish that next book by an author because the first one didn’t hit its numbers. Or that they had to lay off all that staff because it’s a business, after all, and lay-offs happen. You pick the topic. As long as it relates to money, they will come up with some form of, “Well, we have to keep the business issues in focus.”

Well, here’s a business issue to keep in focus: When you draft a contract that says the payment is due “on signature,” the check or wire should be sent to arrive the same day as the signed contract. And if you draft that contract and sign after the author has signed, there is no excuse not to immediately execute that contract upon return of it from the author and to issue the payment. That’s business.

Can you imagine what my escrow company would have done if I’d said it would take me sixty days from closing to pay the down-payment?

From an agent’s perspective, it seems that editors and publishers—our publishing colleagues; people we often consider friends—don’t seem to understand that their foot-dragging on payments is the equivalent of their company telling them that their paycheck will be delayed a week, or thirty days, or sixty days(!). I’d like to see the reaction when an editor making six figures a year, with a two or three thousand dollar mortgage payment (or rent!) is told that his paycheck will be delayed for thirty days.

I see authors’ groups get up in arms about a lot of things. Be it reading fees, or contract terms such as the royalty rates on eBook editions. And those are important things to consider. But if the Authors’ Guild, RWA, SFWA, HWA, and MWA really wanted to make a stink about something, it should be the length of time publishers take to draft contracts, negotiate contracts, sign fully negotiated contracts, and pay the on-signing advance. Because their members are losing thousands of dollars—if not millions—every year because of these delays.

"Playing the float" is common enough in business, but when it comes to publishing contracts, there's no excuse. it's simply arrogance. Publishers know that no author is going to sue them because they didn't pay the on-signing advance when the signed contract was delivered. Plus, as many a contracts person will tell you, no court is going to call it a breech of contract if the payment is less than thirty days late. And a publisher can always get off the hook by actually making the payment due.

Maybe what we need in this business is a good-faith deposit and escrow service. Ebay has it. Elance has it. It's a simple concept. We create a standard "offer" document for use in the business, or each publisher can create one of their own, I really don't care. With every offer, the publisher has to send along that form and a check for 10% down. If the deal falls through because of the publisher, then the author keeps the deposit. If the author won't go forward, the publisher gets back the money. Once that form is agreed-upon and the deposit made, the parties negotiate the contract. The day that contracts are being sent for signature to the author, the publisher must deposit the signing advance, less the deposit, in an escrow account. When the author signs and returns the contract, the escrow company releases the funds. Simple as that. No more chasing advances. No more waiting for the Business Affairs VP to get back from vacation to sign off on the check request. It's simple, clean, and it's good business.

Z

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