I run a solo agency practice, Lotus Lane Literary, which I established in 2013. I work from my home-office in New Jersey and employ a part-time intern throughout the year. I do business mostly in the US, the UK, India, and sometimes in other Asian and European countries via book scouts. My roster ranges from debut to well-established writers from all over the world. Lately, I have also started selling film/TV options to production houses in India, UK and the US.
In all these years, my life has been enriched in ways I could not have imagined. The camaraderie with authors and editors is special. It is gratifying to wake up each morning and look forward to reading a new manuscript, or working with an author on an edit, or brainstorming characters and their motivations. My authors often joke that they have graveyards full of characters I have suggested eliminating from their manuscripts. I love being immersed in narrative in any form, as books not only open us up to discovery, wonder and excitement, but also help us make sense of our volatile world.
While the joys of being a literary agent are deeply enmeshed with creativity, it is ultimately a business. In an industry that works at the dichotomous intersection of art and commerce, running a profitable business is always a challenge, especially in times of global pandemics and recessions.
The industry outlook
I recently participated in a webinar by the NPD Group Inc, in which industry analyst Kristen McLean offered a recap of the US book industry in 2020. She noted that the US market to date has been resilient despite the crisis. While brick and mortar stores have reported a plunge in sales in March and April, overall book sales are down only 0.5% since 2019. Despite the low point being the week immediately after Easter, sales had climbed back to flat growth when compared to 2019.
However, McLean foresees a substantial change in the workings of the publishing industry from hereon. The stability of supply and distribution channels within the US and overseas has taken a huge hit. That model will have to be reconfigured to sustain future unprecedented calamities. The health of pre-existing businesses in the traditional book industry has been put to test, and these businesses will have to explore new sustainable business models. Economic and civil unrest, and the duration of these crises, will also determine the stability of the industry.
The takeaway does not seem optimistic. However, Covid-19 or not, books will continue to be published. The publishing industry in the West has sustained itself for over 550 years, and while there is no doubt that the pandemic has caused serious disruptions in the business globally, it is of a temporary nature and will soon pass. The looming question is how soon it will pass, and when the economy will get back on track, so that publishers can continue to acquire books while people retain their jobs and have discretionary income to purchase books. I’m an optimist, and I do believe the publishing industry will witness better times.
So, what has changed for literary agents in these last three months since Covid19 seized the world?
The answer is, a lot.
The publishers’ prognosis
Many Indian publishers have deferred acquisition decisions. Advance and royalty payments have been delayed. While, thus far, publishers have kept silent about invoking the Force Majeure clause because of the pandemic, it remains a matter of great concern. The clause is worrisome since it could potentially allow publishers to cancel publishing agreements without incurring any penalties.
Contracts that had been negotiated with publishers just before they closed their offices and started working remotely have been slow-tracked. Release dates for books have also been pushed back, some indefinitely. Book sales have significantly dropped because of retail closures and because Amazon and other online retailers have been slow in acquiring books, as they were not deemed essential goods.
In the US and UK, publishers who haven’t suspended acquisitions and, in some cases, operations, are being very selective, putting every new submission through heightened scrutiny. The competition is even greater now because of the smaller number of acquisitions, especially in the last three months. The closure of retail stores has led to cancellations of book tours and events. Amazon has de-prioritised book shipping.
I spoke with a few mid-sized to small independent publishers here in the US. The news is bleak. They are bleeding financially since they primarily sell through Amazon as they seldom have the clout and financial muscle to get their books into brick and mortar stores. Thankfully, things are slowly resuming for online retail as the severity of the growth of Covid-19 seems to have lessened since early March.
To give you a better understanding about how the pandemic has impacted agents, here’s a breakdown:
The future of acquisitions
When publishers suspend acquisitions, an agent’s livelihood is directly impacted. An agent earns by way of a commission, usually between 10% and 20% of the advance on royalties received on the sale of a manuscript, and on future royalties earned from sales of the book. Publishers offer advances as an act of confidence in the book’s projected sales.
An advance on royalties is unique to each book and is calculated with a set formula. A publisher will determine the retail price of the book and multiply the price of the book by the number of copies to be printed in the first print, and divide that by the royalty percentage offered to the author. This advance must earn out in sales before the author can receive royalties.
If the book does not sell out as projected in the first print run, then authors are not required to return the advance, which is of course a good thing! Most often, advances are modest, and I always advise my authors not to quit their regular jobs as it is impossible to sustain livelihoods on advances alone.
But until the time agents successfully sell their authors’ manuscripts, they remain unpaid. In other words, the author is not required to pay them any upfront fees, including for any substantive editorial work done by them on the manuscript, either before or after they sign with them. What this essentially means is that till such time a sale occurs, the agent is literally working for free.
Just to be very clear, this is not to blame authors; this is how the literary agency model works in mature western markets, and I abide by this mandate regardless of which territory in the world I conduct business.
At present, I have about eight works of fiction and six works of non-fiction either under submission or ready for submission over the next two to three months in the US. I remain optimistic about the seven manuscripts (four fiction and three non-fiction projects) under submission, but at the same time I am nervous and bracing my authors for rejections.
The future of advances (or none)
The commission on an advance against royalty is the agent’s lifeline. But this week, I received a zero-advance offer for a non-fiction project from a mid-sized US publisher. The publisher was apologetic and said that even though they had loved the work, they could not offer an advance because of the cash crunch and uncertainty caused by Covid-19.
In lieu of an advance, they were ready to offer a higher-than-normal royalty, which, incidentally, has been a pre-Covid19 practice among some of the more successful mid-sized US publishers. This is another instance of a direct loss of agent income.
I have worked on this book editorially for months with the author, but now I find myself not being compensated for the work I have put in. If we go ahead with this offer, I will have to ostensibly wait for at least a year and half to receive any remunerations, because royalties will become due only a few months after the book is out in the market, which normally takes anywhere between ten to twelve months from the signing of the contract.
But as an agent, I am bound by the fiduciary responsibility towards the author, so if the author is keen to pursue this offer, I will absolutely negotiate the best deal under these circumstances.
The future of royalties
While the commission earned on advances is an agent’s lifeline, commissions earned on royalty is their bread and butter. With books sales plummeting, royalties will significantly diminish, and this will directly impact the agent’s long-term income stream. Publishers Weekly, a US trade publication, reported that brick and mortar bookstore sales in the US plunged by 33.4% in March, and by 65.3% in April 2020.
Agents rely on commission on royalties since it promises a steady source of income through the year. However, there is no guarantee that every book will earn out its advance and earn royalties. In fact, the percentage of books earning a steady royalty in an agent’s stable is small. Here again, the money is most definitely not a windfall, because unless the book is a mega bestseller (at least 10,000 copies in a market like India) and has the capacity to sustain high-volume sales over a long period, the earnings are modest at best.
This is because of the prevailing royalty percentages and its calculations. For instance, an author usually earns between 7.5% and 10% royalties on either net proceeds or retail price of each book, and the agent receives say, 15% of that royalty. This means that if the author earns 10% royalty on a book with a retail price of INR 250, the author earns INR 25, while the agent earns INR 3.75 per book. Even in the best of times, literary agents work on very slim margins.
With setbacks like the ongoing pandemic, battered economies, and competition from streaming platforms, the agenting business will become even more untenable. Agents will have to evolve rapidly to keep their heads above water. In India, the problem is far worse, since agents not only have to contend with poor advances because of the conditions of the Indian marketplace, but also because some publishers continue to commission books directly from authors, effectively undercutting agents.
The Indian marketplace is fraught with both offline and online piracy, and the only way publishers can survive against pirated books is by lowballing the retail price of the book. This lowballing directly affects the advance against royalties. Because the advance against royalties is calculated on the price of the book, authors and agents stand to lose because of the reduced retail price.
The other problem in the Indian marketplace is that of low demand for books. One would think that because books are priced so low, the demand would be high. Unfortunately, India is not a readers’ market, and the readership is dismal. The struggle is real, and, pandemic or not, surviving in this industry is tough.
In order to supplement their dwindling incomes, boutique and solo literary agencies such as my own have had to become more proactive and inventive and expand their business to include sale of dramatisation rights to OTT/streaming platforms as well as mainstream studios in Bollywood and Hollywood. While this seems promising and lucrative on the face of it, successfully concluding an option and purchase deal is a long drawn-out process in India, where the book-to-screen business is still very nascent.
Because of this, negotiating a good option and purchase deal for the author is often frustrating. While I have had the good fortune of working with some excellent people in the industry and have successfully negotiated option deals for my authors, I have from time to time encountered producers who do not see value in an author’s Intellectual Property. In these instances, I have walked away from offers that substantially de-valued the author’s Intellectual Property.
One might wonder if it is indeed all gloom and doom, why do my fellow agents, and I, persist in this industry fraught with low returns, delays and, now, more uncertainty than ever before? The answer is simple, at least for me: the excitement of discovering a great book and convincing publishers it absolutely needs to be published and shared with the world. While it is always thrilling to receive an offer, it is the prospect of discovering another literary gem that keeps me interested in this business.
While most news during this protracted lockdown has been disheartening, I’ve negotiated several contracts during this time. For instance, Simon and Schuster India acquired a definitive biography by a debut author, NS Vinodh, on a little known but significant Indian freedom fighter who not only fought for India’s independence, but also for the rights of South and East Asian immigrants in the late 1930s and early 1940s in the US.
Similarly, HarperCollins India acquired two works of narrative non-fiction by Avik Chanda, author of the bestselling biography Dara Shukoh. I also sold a collection of short stories by Bridport prize winner V Sanjay Kumar to Bloomsbury, and have just concluded negotiations for a four-volume poetry collection, After, by the poet Vivek Narayanan in the US and am currently negotiating rights with a publisher in India. This has been immensely gratifying, since short story collections and poetry are incredibly tough to place even at the best of times.
What will publishers ask for?
Speculation is rife amongst US agents about which genre in fiction and non-fiction will garner the most interest in the post-Covid19 world. In the adult fiction market, I hear it is going to be literary fiction, escapist crossover, and fantasy, sci-fi but not very dystopian, upbeat happily ever after, backlist literary fiction titles, and even novels on pandemics. In the adult non-fiction market, books that address our current needs – economically and psychologically – will be in demand.
In the young readers’ market, there will be greater demand for children’s non-fiction with a focus on education and school preparation, already a large market in the US. Activity books, study aids, drawing books for kids, and kids’ cookbooks have shown tremendous increase in sales and will continue to sell in high numbers.
In India, I believe, non-fiction such as historical biographies, political narratives, management books and books on spirituality by famous spiritual gurus will continue to have the most traction. The sales of works of fiction by Indian authors in both adult and children’s sectors will continue to be dismal, and I do not see Indian publishers changing their existing patterns of acquiring minimally in the literary or commercial fiction genre. However, international bestselling fiction authors in the adult and children’s sectors will continue to sell robustly in India.
Regardless of all these projections, the book industry will continue to exist, but like all other industries, it will undergo changes to adapt to post-Covid19 realities. This makes me optimistic about the future of publishing.
While this piece discusses hardships faced in the publishing industry, the abject hardships of people suffering across the world because of Covid-19, including daily wagers and migrant workers, is far greater. Keeping news about them front and centre at all times will ensure relief aid. Additionally, people on the front lines, such as doctors, nurses, hospital workers, and law enforcement and essential services workers, must always be front and centre too, and never forgotten.
This series of articles on the impact of the coronavirus pandemic on publishing is curated by Kanishka Gupta.