Agent Andrew Wylie, whose business practices have been described as so unprincipled he has been nicknamed “The Jackal”, has been skewered in a wicked comic strip illustrated by Dan Goldman.  Wylie recently met his comeuppance in a failed challenge to Random House (see Did Jackal Screw Amazon?)

The pictures are worth a thousand words and we’ll spend no more of them other than to invite you to view The Life of Wylie by Boris Kachka here.

Literary agent Andrew Wylie’s reputation as a shrewd, relentless businessman has earned him the sobriquet “The Jackal” but in the recent debacle of his failed raid on Random House he looked more like a chimp in a clown costume.

Sarah Weinman, writing in DailyFinance.com, wonders whether he “ever intended to be a digital publisher, or even fully understood what it meant. The origins of Odyssey Editions [the firm Wylie created for his e-book venture] seemed scatter-shot and unfocused at best, starting with a May 11 incorporation filing in the the state of Delaware, and a website domain registration six days later, on May 17, through the Wylie Agency, not Odyssey.”  Was Odyssey “a real business”, Weinman wonders, “or a publicity stunt?”

If the latter, not too many folks found it funny. Some of his authors must have been pretty shook up to be used as pawns in his chess game with Random House, which declared it would do no more business with him if he went through with his e-book scheme.

Nor could Amazon.com find much humor when Wylie offered them a two-year exclusive commitment that he then had to abandon because he didn’t quite own the rights to the books he was offering. “The question of who actually owns the digital rights to works written before e-books were even a gleam in the publishing industry’s eye is still unanswered,” writes Weinman. Wylie failed to heed Random’s warnings that it would not yield those rights without a fight, warnings that were sounded nine years earlier in a lawsuit against Rosetta Books and more recently when startup Open Road Media made a similar play. When Wylie tried the same thing we wondered Will Random House Chicken Out Again?

Random House didn’t chicken out but came out with excommunications blazing, forcing Wylie to retreat from his position and inform Amazon that the titles they thought they had were actually the property of Random House. Furthermore he had to cough up to Random the e-files Odyssey had created. Those files will still be sold on Amazon, yes, but not exclusively as Amazon had expected. E-book editions of those titles will be sold in the platforms of Amazon’s competitors, courtesy of Random House.

Now Wylie can go back to being a Jackal on the hunting grounds he is familiar with, but with claws and fangs banged up by his foray into a world he does not understand. Weinman’s observations are devastating: “Considering that it’s the offspring of a literary agency that represents 700 authors and employs far fewer personnel to handle those rights, Odyssey Editions smacks of a water-dipped toe, a publicity ploy, rather than a deep commitment to digital publishing.”

Read Weinman’s Random House’s Backlist E-Book Deal With Andrew Wylie Leaves Much Unanswered for complete details.

Richard Curtis

Rachel Deahl of Publishers Weekly reports that Random House and agent Andrew Wylie, locked in mortal combat over Wylie’s decision to become a publisher for his own clients’ ebooks, have settled their differences.  We were waiting to see if Random House chickened out again. They appear to have regained face.

Writes Deahl:

“Random House, which charged last month that The Wylie Agency might be in murky legal waters by releasing e-book editions of titles by some of its authors, seems to have won the showdown, so to speak. The publisher and the agency have just released this joint statement:

“We are pleased to announce that The Wylie Agency and Random House have resolved our differences over the disputed Random House titles which have been included in the Odyssey Editions e-book publishing program. These titles are being removed from that program and taken off-sale. We have agreed that Random House shall be the exclusive e-book publisher of these titles for those territories in which Random House U.S. controls their rights. The titles soon will be available for sale on a non-exclusive basis through all of Random House’s current e-book customers. Random House is resuming normal business relations with the Wylie Agency for English-language manuscript submissions and potential acquisitions, and we both are glad to be able to put this matter behind us.”

More to come on this as we reach out to both parties.

Read it here RH and Wylie Come to Terms; Random ‘Wins’

Was this all a ploy for Wylie to wrest a higher royalty than the 25% that Random is offering everyone else?  If so, a lot of authors and agents will not rest easy until they know what RH agreed to.

RC

This is the text of an Authors Guild release posted on July 26 2010. For background see Will Random House Chicken Out Again?

We don’t know the details of the Odyssey-Amazon agreement, but we can make some informed guesses. The agreement is most likely under the agency model, with Amazon paying Odyssey 70% of the retail price of the books. Wylie and Odyssey are together taking a typical agent’s commission as compensation: 10 or 15% of the 70% received from Amazon. In round figures, this means that the author receives 60 to 63% of the retail price of the book.

For comparison, a typical contract with a traditional publisher pays e-book royalties of 25% of net proceeds. If the e-book is sold under the agency model, the author’s share is 25% of 70%, or 17.5% of the retail price of the book. After the agent’s commission, the author receives roughly 15 to 16% of the retail price of the book.

For a $9.99 book under the Odyssey-Amazon agreement, the author would receive royalties of $5.94 to $6.29 per book, net of all commissions. For a $9.99 e-book under a typical contract with a traditional publisher sold under the agency model, the author would receive royalties of $1.49 to $1.57, net of all commissions. The difference is about $4.50 per unit, a 300% increase in author income.

Revolutions produce unlikely heroes, and the Digital Revolution has produced a very unlikely one in the form of a man that many believe is so wanting in ethical principles that he is nicknamed The Jackal. Yet it is on literary agent Andrew Wylie’s fangs and claws that the populist dream of a fair e-book royalty rests as he dares the world’s highest profile trade book publisher to do something about the slap he has administered to its face.

The smart money is on The Jackal, and to understand why you have to think like a jackal.  While pundits debate contract law and publishing ethics, the real war is being conducted on a less visible battlefield. But it is one on which Wylie holds the high ground.

To understand Random House’s reluctance to protect its rights from Wylie and other marauders you need to understand a number of not so obvious factors.  The most salient of them is this: Publishers are loath to sue authors (or the widows and children of authors).

Let’s see how these factors play out in the power struggle unfolding before our eyes.

Random House not confident of its legal position

In 2001 Random House sued Rosetta, an e-book startup that acquired directly from authors the digital rights to books by such Random House lions as Kurt Vonnegut Jr., Robert B. Parker and William Styron, books that were still in print in paper format under Random House imprints. Random had published them before there was such a thing as e-books, but nevertheless considered a book is a book is a book whether in tangible or digital form. The courts however rejected Random’s position, denying their request for an injunction against Rosetta. Random filed an appeal and the court turned it down. A second appeal was rejected too, forcing Random to work out a settlement with Rosetta. The critical issue – what is a book? – remained unlitigated and left Random uncertain about its legal position.

Random Backs off from Open Road Threat

When publishing superstar Jane Friedman launched her Open Road e-book venture she declared her intention to start with several works by Styron including Sophie’s Choice and the Pulitzer Prize-winning Confessions of Nat Turner. The problem was, Random House claimed it owned those rights (presumably having recovered them from Rosetta as part of the settlement) and it issued a stern warning to all “third parties” without naming Friedman specifically. Authors, stated CEO Marcus Dohle, are “precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained.” By drawing a line in the sand, Random expected Friedman and other potential interlopers to back off or face the full wrath of the publisher’s litigators. (see Random House Serves Notice on Would-Be E-Interlopers)

It is  a fundamental business principle that you don’t make threats you aren’t prepared to act on. And that is why we were flabbergasted four months later to learn that Random House had released e-rights to the Styron estate (See Random Returns Sabre to Scabbard in Styron E-Book Standoff). What was that about?

“The decision of the Styron estate is an exception,” Random executive Stuart Applebaum explained. “Our understanding is that this is a unique family situation.”

Why, after rattling its saber so truculently, did Random give in? In our estimation it’s because ultimately, to make good on their threat, they would have had to sue Styron’s widow and children. And that would be a public relations disaster.

Whether Styron was truly an exception or Random blinked, one thing was clear to publishing professionals: sooner or later there would be further tests of the publisher’s determination. How would Random react the next time?

We’re about to find out.

Don’t Bother Suing Agents

Claiming that he hates the low e-book royalties paid by traditional publishers (see Random House Changes E-Book Royalty Policy), agent Wylie, representing hundreds of distinguished authors such as Salman Rushdie, Martin Amis and the late John Updike, announced that he is starting his own e-book publishing venture and intends to launch it with books published by Random House and other trade book publishers.

Does he have the right to do that? Wylie says he does: “The fact remains that backlist digital rights were not conveyed to publishers, and so there’s an opportunity to do something with those rights,” he declares.

Despite what happened with Open Road, some industry observers expected Random House to threaten to sue Wylie’s ass into pebble-sized pieces. But Wylie knows they won’t, because, generally speaking, agents are not legally liable for breaches of contract committed by their clients. A lawsuit against Wylie would in all likelihood be thrown out of court, and the judge would tell Random that if they have a beef it’s with Wylie’s authors, they’ll have to sue Wylie’s authors. Which brings us back to our thesis: Publishers are loath to sue authors (or the widows and children of authors).

So? How does Random intend to punish Wylie? “Regrettably,” Applebaum declared, “Random House on a worldwide basis will not be entering into any new English-language business agreements with the Wylie Agency until this situation is resolved.”

This is known as the We’ll Cut Off Our Nose to Spite Your Face ploy, and it will avail Random nothing. Wylie’s clients are so coveted by Random’s rivals that if Random made good on its threat you’d see the greatest migration since the Aleuts crossed the Bering Land Bridge.  Jackals are standing by!

Buyer? Seller?

Though legal threats won’t faze Andrew Wylie, handling the challenge of being both an agent and an e-book publisher might. A number of knowledgeable people like Macmillan’s John Sargent have not only deplored Wylie’s decision to put all his authors’ eggs in Amazon’s basket but have questioned whether it’s in the best interests of his authors. There is arguably more money to be made selling not just to Amazon but to Sony, Barnes & Noble, Apple, Kobo, and other retailers.

Navigating the shoals of conflict of interest between buyer and seller is another daunting task. Even if he is able to build a “Chinese wall” insulating the two functions from short-circuiting each other, Wylie’s own clients will reasonably want to know how it’s going to work: “If my agent is now my publisher, who am I supposed hire to negotiate with him?”

Will Wylie’s stratagem succeed in forcing publishers to raise their royalty rate?  Not a chance.  E-book royalties will eventually go up, but it will be no thanks to Crusader Wylie. But we thank him for articulating the dissatisfaction of authors and agents with low royalty rates and for so fearlessly acting on his convictions.

Richard Curtis