This post, from Mike Shatzkin, originally appeared on his The Idea Logical Blog on 6/29/09.
Because of a couple of panels I spoke on last spring and because of the development of FiledBy, I have had more and more conversations lately with agents. They are part of the General Trade Publishing ecosystem. So their lives are getting more difficult and more complicated, like everybody else’s in Book Valley.
The agents’ concern is frequently expressed as “what do I tell my authors?” Publishers are increasingly insistent that a prospective author have an internet platform to build on before they sign a book. Editors always wanted credentials to back up a writer’s authority on any subject; now they’d like to see that the writer has a following on that subject as well.
But agents are also concerned about themselves. The two most innovative imprint initiatives in recent memory — Bob Miller’s HarperStudio inside HarperCollins and Roger Cooper’s Vanguard inside Perseus — are built on the idea of reducing risk, paying the author a lower advance. Yes, they also promise a higher reward (higher royalty), but experienced agents know most books don’t earn anything beyond the advance.
Miller and Cooper are smart guys and it could well be that their imprints will have a higher percentage of earnouts than most. But, as smart guys, they wouldn’t be willing to pay more on the high side if they didn’t believe they were saving at least that much on the risk side.
The advance pool is probably shrinking. John Sargent, Macmillan’s CEO, said as much at a gathering of agents a couple of months ago when he explained that the de-leveraging that is taking place throughout the economy is also taking place in publishing. Big houses just won’t have the cash available to them that they used to, and that means less money for advances, less money for printing, and less money for promoting.
But in addition to shrinking, publishing advances are taking on much more of a power law configuration, with concentration at the top and a long tail of books getting less and less (and extended by mushrooming self-publishing where the “advance” is actually negative; it’s a cost!)
This is already having an effect. I have heard from people who know that larger agencies are now shopping among the smaller ones to buy them out. It takes more agents working to pay the same rent than it used to. And the smaller agents are finding it harder and harder to make a living so they’re ready to sell out a bit of their upside to get some stability. The small number of agents that have clients at the power end of a power law distribution are doing great; those who have traditionally made a living on making lots of second level deals are really suffering.
Compounding the problem for agents is the changing nature of publishing opportunity. While the sales and royalty potential of the book through the publisher is declining, other opportunities are opening up. There is a multiplicity of ebook channels that in the aggregate do not replace the revenue that print used to provide and doesn’t anymore. Chunks of books and material too short to be published as a book can be sold through them. Agents have for years been trying to split off audio rights to sell to Audible or Brilliance or Tantor Media. The opportunity to sell content to web sites seems to be emerging. But all of these deals require conceiving, pitching, closing, negotiating, and contract reviewing. For fifteen percent of what?