Show Me The Money!

Often times at conferences and seminars agents and editors speak ad nausem about the craft, query letters, and what they want to see in their slush. Seldom do they talk numbers and negotiations. But at the SCBWI OC Agent Day this May, Agent Brenda Bowen (previously an editor) gave a rare insight into the agent/editor negotiation process. With the help of fellow agent, Rebecca Sherman, the following mock negotiation was presented:

The agents would like to note that this mock negotiation is meant to give an idea of the process, but is indeed a simplification. Specific details and time-line are made up, and some steps have possibly been skipped.

Mock Negotiation:

MONDAY:

The Agent: Submits a client’s book to a variety of appropriate editors around town.

The Editor: Is excited to see a submission from this agent in her mail box. She’s a good agent and often sends great work! She decides to read it as soon as she can.

WEDNESDAY:

The Editor: Reads the book and gets very excited about it. She’s so excited about it that she calls the agent and lets her know that she is putting together an offer!

The Agent: Calls all of the other editors she’s submitted the manuscript to and lets them know that she has an offer coming in on said book, but she would still like to give the other editors a chance to take a look at the work and see if they are interested.

The Editor: Takes the book to an editorial meeting and shares it with the team. They discuss the viability of the book. This is a first time author, but she thinks they should put together a competitive but modest offer for the book. The editor then runs a profit and loss statement on the book to find out the numbers. In the profit and loss statement they estimate that the book will  sell between 2000 and 5000 hard cover copies, and 5000 to 8000 paperback copies. With those kind of numbers the editor knows that the highest advance she could offer is about $17,500, but she’d rather start low – somewhere around $12,000, hoping after they negotiate they will land in the ball park of $15,000.

The Editor: Calls up the agent, and lets her know how much she likes the book. It’s a nice sweet book, something she could probably take to ALA (American Library Association). She would be delighted to make an offer of: $12,500 advance, 10% royalty on hardcover, 6% royalty on paperback, and she would like to have the world rights and e-book rights. She will also offer 25% of net for e-rights.

The Agent: Thanks the editor and says she needs to speak with some other editors, as well as her colleagues. At this point it is all together possible the agent has had other editors drop like flies. Sometimes they don’t want to take the time if there is already an offer on the table. Other times they will read it and not be interested. But she’s still waiting to hear from some people.

The Editor: Notes from the conversation that the agent didn’t say that she had any other offers at this time. This may cause her question why others are passing. This could also mean that she doesn’t have to go to her maximum offer number, and sometimes it can make her reconsider her max number all together. Either way, she still loves the book.

The Agent: Calls the author to let them know that their is an offer on the table, and no matter what they are going to be a published author!! The agent knows that a first offer is always – just that – a first offer. There’s room for negotiation. Right now she doesn’t think the offer is strong enough to accept.

THURSDAY:

The Agent: Contacts the other editors, but it turns out that no one else is interested. (A negotiation can always be done differently if there is someone else interested because then there is leverage. But let’s say, for this scenario, the agent doesn’t have any leverage.) Now the agent goes back through the offer, and knows their are choices to be made. She discusses the offer with her colleagues. She knows that since this is a debut author and their are no other offers on the table that asking for as much as  a $25,000 advance is really out of the question. Now she needs to look at the rights and what she wants to let them keep or take away. She considers how the book will sell. Lets say the book is very American, so it will probably be hard to sell it in foreign markets. What about audio book rights, etc.? These are all elements she needs to consider.

The Agent: Calls up the editor and says she’s talked to her children’s subsidiary division and she needs to retain the world rights. She also needs to retain audio rights, and would like an escalation in royalties. The editor can have e-rights. The agent makes a counter offer of a $20,000 advance with the rights conditions mentioned.

The Editor: Thinks to herself – $20,000! Is she crazy! I’m the one who has to put everything on the line! What the agent also doesn’t know is that the editor has also just been to a big corporate meeting and they stressed how important it is to keep performance rights, and she’s simply going to have to have world English rights as well.

The Editor: Mentions she must have these rights (mentioned above) and will offer and escalation at 30,000 copies (after royalty paid). And she will offer an advance of $15,000. She’ll also throw in escalation royalties of 10% to 12% at 12,000 copies (hard cover) and 6% to 8% at 20,000 copies (paperback).

The Agent: Asks about bonuses.

The Editor: Offers a Newbery Bonus of $15,000 if it’s an honor book, and a $25,000 bonus if it’s the winner. (Sometimes they offer additional bonuses for other awards as well).

FRIDAY

The Agent: Closes the deal! (This is the simplified short version). The Agent calls the author! He/She is going to be published! The agent also keeps the client in the loop throughout this process.

OTHER NOTES:

• There is usually a lot of things to negotiate including additional rights of dramatic rights, merchandising rights, cover approval, etc. etc. etc.
• If there are competitive offers then the agent may have the author speak to the different editors to get a sense of who the author would like to work with.
• As an Agent, Brenda Bowen does do some P n’ L’s (profit and loss statements) in her head so she has an idea of what the numbers would be for a book in order to negotiate with an editor.
• A profit and loss statement is meant to figure out what the proper ratio is so that the publisher and the author make equal amounts of money on the book.
• In regards to promotion it is the publisher’s job to promote your book. But you as an author can help, but it is not your obligation. An agent should try to exploit marketing for the author.

Brenda Bowen has held a variety of positions during her twenty five-plus years in children’s publishing. She has been editorial director of Henry Holt & Co., Disney/Hyperion, Schoolastic Press, and Simon & Schuster Children’s Publishing. Books Brenda has edited have been #1 New York Times bestsellers, and have won the National Book Award, The Newbery Medal, the Coretta Scott King Award, The Caldecott Honor, The Printz Honor, and the Eisner Award. She is now a literary agent with Stanford J. Greenburger and  Associates, and continues to work closely with clients on the editorial direction of their projects.

Check out these other great posts with Brenda Bowen: Quote of the Week

Rebecca Sherman is an agent for Writers House. For over 30 years, Writers House has played a critical role in developing novelists and non-fiction authors. They have one of the industry’s finest lists of juvenile and young adult authors. Rebecca continues to build her own list of middle grade and young adult novelists, she’s looking for books with something to say, books that make her laugh, and characters that truly remind her of how confounding and wonderful (ridiculous! frightening! glorious!) adolescence can be. She is also looking for picture books by author/illustrators that can hold up to readings night after night.

Check out these other great posts with Rebecca Sherman: 8 Myths about Literary Agents and Query Letter Do’s and Don’ts

Tags: Agents, Editors, Money, Negotiations