Opinion

Felix Salmon

The caprice of publishers

By Felix Salmon
September 27, 2012

TSG and Edward Champion have found a flurry of lawsuits brought by Penguin various authors who never delivered the books they promised. The lawsuits are asking for the authors’ advances back — but they’re also asking for interest, at pretty high and arbitrary rates.

Going down the list, Penguin is asking for $2,000 in interest from Rebecca Mead, on a $20,000 advance: that’s 10%. Marguerite Kelly is being asked for $5,000 in interest on her $25,000 advance, which is 20%. Lucy Danielle Siegle, Bob Morris, and Deborah Branscum are also being asked for 20% in interest, Elizabeth Wurtzel is at 25%, Jamal Bryant is at 24%, Carol Guber is at 26%, Herman Rosenblat is at 33%, and the Reverend Conrad Tillard is being asked for 35% on the unrepaid portion of his advance. Meanwhile, John Dizard is being asked for 45% in interest, while Ana Marie Cox is being asked for a whopping $50,000 in interest, which is 61.5% of her $81,250 advance.

There are two ways I can think of to justify the enormous range here. The first is just that the contracts were written differently. But if you look at the contracts in the lawsuits (for instance, in the filings for Cox, Wurtzel, Mead, Rosenblat, and Tillard), there’s no mention of interest or interest rates at all.

The other potential justification is that the interest has been accruing over time, and that the authors being asked for the highest interest rates are those who are most behind on their obligations. But that doesn’t hold up either. Wurtzel, for instance, signed her contract in February 2003, and Penguin asked for its $33,000 back in October 2008. If you annualize the interest she’s being asked for, it comes to 2.4% per year if you date the obligation back to 2003, or, alternatively, to 5.8% if you date it back to 2008.

Cox, by contrast, signed her contract much later, in January 2006, and Penguin asked for its money back a little earlier, in August 2007. (Penguin’s clearly a lot less patient when it comes to Cox than when it comes to Wurtzel.) The interest Cox is being asked for works out at 9.2% per year using the earlier date, or 12.1% per year using the later date.

In other words, there’s really no rhyme or reason whatsoever to the interest rates being demanded from these authors. And there’s a reason for going through this exercise: it reveals just how capricious and arbitrary Penguin is being, here. One book agent, Robert Gottlieb, immediately responded on the record, commenting on TSG that “if Penguin did this to one of Trident’s authors we could cut them out of all our submissions” — and you can be quite sure that Penguin did consider the agents of the authors in question before taking this course of action.

Publishers have a lot of power: they can reject a book, and ask for the author’s advance back, just if they say they don’t like the way that it’s written. That $325,000 advance they gave to Ana Marie Cox is certainly a lot of money, but most of it was never paid out, and if Cox’s star waned between the time that the deal was signed and the time that the book was due, Penguin could and did quite quickly move to make it very clear that they didn’t want the book after all — and that they did want their $81,250 back. Regardless of how much work and time and money Cox had invested into the book up to that point.

So while on the one hand it’s reasonable for publishers to ask for their money back if they never got anything in return, on the other hand the incredibly arbitrary nature of these suits — who gets one, who doesn’t, who gets asked for a little interest on top, who gets asked for lots — only serves to underscore the sheer unpredictability inherent in the publishing industry. You might think that you’ve hit the jackpot when you score a massive-sounding book advance. But in fact you’re just embarking on the toughest and most volatile part of the entire process.

Comments
9 comments so far | RSS Comments RSS

At least according to the complaints, these are cases where a manuscript was never delivered, not manuscripts that are delivered but not accepted. If Cox had actually delivered a manuscript, it would probably be much more difficult for Penguin to win in court.

Would it be better if publishers sue every single author who’s late on a manuscript and always asked for the maximum interest they’re theoretically entitled to? Or, alternatively, never sue?

Pre- and post judgment interest in New York is 9%. Interest in the Cox case is probably based on the manuscript deadline of March 2007, which works out to about 9%.

Posted by guanix | Report as abusive
 

Forget interest. Just call it what it is: Penalty for breaking the contract.

Posted by MarkWolfinger | Report as abusive
 

The authors need better lawyers to write their contracts for them, and better agents to explain to them that they can’t prudently spend the advance-money until they deliver an acceptable product.

Posted by MrRFox | Report as abusive
 

But the contract was not broken.

The advance paid to Ms. Cox was 1/4 of the contractual advance. The rest of the advance, per the contract, would be paid at later points in the process, such as when the manuscript was delivered or accepted.

Those payments were never made. The contract has not been broken, and remains in force. That is, Ms. Cox may not sell a book simillar to that for which she contracted with Penguin to another publisher–that’s why she got the portion of the advance up front. (She might be able to sell a cook book, for instance, if she contracted for a novel; she might not.* The pre-manuscript portion of the advance is for exclusive rights to the work, not the work itself.)

If advances were refundable in full four months after the contractual deadline, there wouldn’t be a publishing industry. Similarly, no publisher will pay an author who delivers a manuscript early–or even on time, when the publisher then later delays release of the book–interest.

There’s good reason no interest rates are listed; no one would ever pay interest without there being an asset, and there is no asset until the manuscript is delivered, at which point the path is clear.

*Wurtzel, for instance, (per Wikipedia) has a contract for a book (it was due in 2011, so clearly not the same contract TSG is discussing) called Creatocracy. Presumably, it is different enough that it would not fill the Penguin contract, though she may–rightly, it appears–believe that Penguin does not intend to honor the next phases of its contract with her.

Posted by klhoughton | Report as abusive
 

klhoughton: Of course the contract was broken. Cox agreed in section 3(a) to deliver a manuscript on March 1, 2007, and didn’t (Penguin alleges). That gave Penguin the option to terminate the contract. Section 3(b) says that any sums paid to the author must be paid if the contract is terminated for non-delivery. Section 3(c) says that the non-compete clause applies for 9 months after termination, so she could sell the same book or a similar book to someone else now.

(If a manuscript is delivered but is deemed unacceptable, the advance still has to be repaid, but only from the proceeds of selling the book to another publisher.)

Posted by guanix | Report as abusive
 

+1 to guanix, who seems to understand this issue better than Felix or any of the other commenters.

I have a tough time seeing why Felix or anyone cares about the interest amount. These are civil suits, and a plaintiff can in theory ask for whatever they want in terms of consequential damages, interest (subject to state usury laws), etc. If the amount of interest can’t be supported, then no judge would include it in a judgement, and similarly any decent attorney for one of these authors would disregard it in negotiating a settlement.

Posted by realist50 | Report as abusive
 

If I recall correctly, Elizabeth Wurtzel, one of the original ’80′s “celebutards” put herself through an ivy league law school on her various advances, as well as nursing a pretty unhealthy drug habit along the way. That spot could have gone to a serious student who intended to so something with it other than engorge the ego of a jewish american princess.

I know it wouldn’t hold up in court, but the publisher should get their advance back just on the basis of that alone: I haven’t read her contract but I hope, if there is any justice in the world, there was a mortal turpitude clause that allowed her advance to be clawed back even if she DID turn in a manuscript.

Spare us, Felix. We shouldn’t care at all about these lawsuits, unless “we” are part of the so-called “creative class” living in whatever borough of Manhattan (the upper east side?) is fashionable nowadays.

Posted by Strych09 | Report as abusive
 

Here’s what happens. Someone, a bureaucrat in the accounting or contracts department, is looking at a list of contracts signed, advances paid, and needs to make some accounting decision about this. Is it a writeoff, or collectable, or will the book ever actually show up? Perhaps they query the editor (yes, I am speaking from direct experience): are you still hoping to get this? Good possibility the original signing editor isn’t even there any more. Possibly no one cares if they see this book. If they do, they might be able to hold off the lawyers for a while. Probably in the majority of cases (it would be hard to make statistics) it never actually goes to court; some settlement is reached before it gets there. Many book contracts are for small amounts that would be barely worth a lawyer’s time for a phone call. But really, the whole process is driven by accountants and lawyers.

Posted by Moopheus | Report as abusive
 

Oh, and I want to add, I don’t have a lot of sympathy for authors who sign big-money contracts and don’t deliver.

Posted by Moopheus | Report as abusive
 

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