Guest Blog Post: Why Small Publishers Fail

Posted by Victoria Strauss for Writer Beware

I've used up a lot of column space on this blog warning about the risks of submitting to small presses, especially brand new small presses. In my opinion, this is currently the most dangerous area for writers--not so much because there are a lot of scams (though there are quite a few) but because so many small presses are undercapitalized, run by inexperienced people, have deluded goals and aspirations, or all three.

Today's guest post by multi-published author and Absolute Write Water Cooler moderator Cathy Clamp takes an illuminating look at some of the things that can go wrong at a small press--not just for authors, but for staff--based on several real-life examples (the names of the publishers have been withheld, but Cathy has provided them to me and I'll provide them to you if you email me). Cathy also explains why it's so important to ask tough questions of new publishers, and why grilling them isn't "mean" (an accusation often made at Absolute Write) but essential.

This is a really long post, but it's well worth reading in its entirety.

For more information on small press dangers, as well as advice and resources to help you protect yourself, see Writer Beware's Small Press page.

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by Cathy Clamp

Absolute Write and its Bewares, Recommendations, and Background Check Forum host a lot of threads asking about new independent publishers, as well as announcements from new independent publishers seeking authors, editors and cover artists. Not in all, but in many cases, they’re start-up pubs founded by individuals who are either former authors or former editors.

When the threads open, we moderators allow people to ask questions about both what the publisher is seeking and about the company’s suitability as a new market. Quite often, the publisher (or an employee or an author pubbed by them) notices the discussion and drops by to interact with the members. That occasionally leads to problems, because legitimate questions by the members and moderators about the company’s business practices can feel like "attacks" on the integrity of the people running the publisher.

Nothing could be further from the truth. In fact, it’s the authors and the  publisher that we’re trying to protect. I know it doesn’t seem like it, but really—we’ve seen dozens of publishers come and go since Absolute Write has been in operation, and we tend to fret when it seems like the people involved are inexperienced about the business of publishing, because things can go wrong so very fast in this business.

Once you spend much time working with publishers, you realize that the business of publishing is counter-intuitive to the rest of the world. Normal business strategies used in other industries frequently won’t work in publishing, so experience in "running a successful business" seldom applies to becoming a successful publisher. Nor does being a published author automatically give a person experience in the behind-the-scenes business of publishing. It takes study and hands-on experience. Someone without both of those elements is going to struggle more in setting up shop.

I think it’s important to demonstrate just HOW wrong things can go by providing some real-life examples of situations that have happened to well-meaning and enthusiastic new publishers. To protect all parties, no names have been used (although in some cases, a gender may be given.)

This is a (pre)cautionary tale to those either starting a new publisher or planning to sign on or hire on with one. At the end of the scenarios, I’ll give you a list of what the companies failed to do to protect themselves and their authors.

Scenario #1 — The publisher, a self-pubbed or aspiring author, opens a company with fellow authors as "co-owners." Some of the co-owners become the editors for the publisher.

The co-owners don’t actually put up any cash to ensure that there’s capital to do things like form a legal entity, hire an attorney to prepare the contract, or design and host a website. They trust that the founder/publisher/primary co-owner has made all these arrangements. But the publisher doesn’t realize what needs to be done. So she never actually files the paperwork for the legal entity. Instead, she opens the publisher as a d/b/a (doing business as) of herself--meaning that it’s a sole proprietorship, not a partnership.

The publisher throws everything into the business. She racks up credit card debt, takes out second, third, and fourth mortgages, leases professional office equipment and . . . doesn’t sell enough books to pay the loans and cards and leases. But she doesn’t discuss this with her co-owners. She endures the worry and pain alone. Soon she doesn’t have the money to pay the editors anymore. Or the author royalties. Or the website host.

She files bankruptcy. Unfortunately, because the publishing company was a d/b/a, it’s a Chapter 7 bankruptcy--of a person, not a company. Author contracts become personal assets that the Bankruptcy Trustee seizes to pay debts. The royalties aren’t secured debts, and the editor salaries aren’t secured debts--but the mortgages are. The credit cards are. The equipment leases are. So everybody loses everything. The company closes. Authors don’t have their books back (because the bankruptcy trustee forbids the reversion of rights) and the editors never get paid.

Scenario #2 — The publisher starts the business and hires author-friends to become editors (rather than making them co-owners.) But the publisher doesn’t have written agreements with the editors telling them what their duties are. She doesn’t tell the editors that they’re not only responsible for structural editing, they’re also responsible for making sure the copy editor stays on schedule, for proofing galleys, for writing back cover copy, for assigning ISBNs, for creating website blurbs, and for working with cover artists to make sure work is done on time.

The publisher feels the editors should know that this is standard business practice with any publisher (which it is, by the way) and presumes that the editors are doing their jobs. Until everything stalls. The cover artist is never contacted, the ISBNs are double (or triple) assigned, the copy edits go to the authors without the editor’s knowledge before the structural edits are even done, the blurbs never get put up on the website. Essentially, the books never make it to the point of being sold. Ever.

The editors leave en masse, deserting the company and the authors. The publisher folds.

Scenario #3 — The Publisher assigns a book to a co-owner editor where the author is a pain to deal with. The author and editor argue constantly about editorial suggestions and the author wants to spend HOURS on the phone with the editor, so the editor can tell them what a wonderful job they did. In other words, they’re needy.

By call number 15, the editor is so fed up with the author that they contact the Publisher to say, "No more! Give this author to someone else." Except the editor is the fourth person to have the author, it’s a terrific book, and the Publisher says. . . well, "Suck it up and do your job."

The editor isn’t amused and does his best to avoid the author’s calls. The editor also avoids even looking at the manuscript because it reminds him that he’ll eventually have to talk to the author again. With no contact and no edits, the author takes to making snide comments on websites, and on the editor’s blog and MySpace page (yeah, this was a while ago.) Annoyed, the editor lets the deadline for edits pass. The deadline for publication also passes.

The author sues. The editor shrugs--to him, that’s the publisher’s problem. Unfortunately, he’s wrong. Because, being a co-owner, his pockets are just as full of gold as the other owners’. He’s found liable for breach of contract because there were no ownership documents limiting liability.

Scenario #4 — The editor is working on the third book of an author’s contract. The editor is also an author who has contracted books with the Publisher. The manuscripts have the exact same due dates, from edits to copy edits to publication.

The editor complains to the publisher that he can’t both do his book and work on the author’s. But the publisher has nobody else to assign to the author’s book to, so the editor is stuck. The editor makes the decision to finish his book first and then work on the author’s book. But then the editor gets sick/injured and cannot work for several weeks. The editor doesn’t realize that the author has a specific time that the book MUST be out to catch a particular event (I think it was a themed holiday or something). The editor wasn’t part of the negotiations of the author’s deal.

The author complains to the publisher and threatens to sue. The publisher comes down hard on the editor and makes a similar threat. The editor rushes, but the author’s book fails to meet the publication date. The author hears through the grapevine that the editor’s book did reach the shelf on the due date and sues the publisher for loss of income. The publisher countersues the editor (because the editor is a freelance contractor, not an employee or co-owner). The author wins in court--but the publisher is not the one to pay. The editor is.

Scenario #5 — The publisher opens its doors and uses authors as editors on a contract basis, paying by the word or page. The publisher hires a cover artist, also on a contract basis.

A dozen books later, and the artist hasn’t been paid for his work because the books aren’t making a big profit. The publisher pays part of the artist’s bill, but then can’t afford to pay what royalties are owed. The publisher also can’t pay the editors. The editors stop working until they get paid. The cover artist refuses to allow any of the covers to be displayed on the site until he’s paid in full (which is what his contract stipulated) and contacts the web host to demand the covers be removed.

The authors, not realizing there’s any problem between the publisher and artist, continue to use their cover art to promote their books. The artist finds out and separately contacts the authors  to advise them they cannot use the art, and goes into long detail about why the publisher is a thief and cheat. The authors, panicked, contact their editors and demand to know what’s up. The editors don’t know and direct the authors to the publisher (but privately send their own emails asking what’s going on.)

The publisher, feeling picked on by both sides, refuses to talk to anyone and ignores calls for months on end. The publisher also makes snarky statements on the front page of the company website, and deletes private messages and emails on the company forum that speculate as to the problem. The publisher begins to privately contact authors to ask for "donations" to keep the company afloat.

Tempers rise. Multiple lawsuits follow, with nobody ever getting paid and the authors never getting back the rights to their books.

Scenario #6 — The publisher opens its doors and brings in friends with no publishing or writing experience to help run the business. To make it seem like it’s a huge company, instead of a two- or three-person shop, the Publisher adopts different personalities online and, sometimes with friends in tow, wanders around the virtual universe commenting on every website, every review, every blog where any of the books published by the Publisher are mentioned.

They give dozens of five star reviews on bookseller sites, argue with reviewers in comments or forums about what a reviewer says about the book (especially if it’s panned.) They make personal attacks on third parties, frequently without the knowledge of the author. By the time the authors learn about the flame-war going on across the web, their names are frequently mud and they have to scramble to make amends if their books are to have any hope of selling.

So, what did these publishers do wrong? Here are some of the things:

1. The person(s) founding the company never created a paperwork trail that included a corporate/LLC/partnership documents, binding freelance contracts, employment agreements for W-2 employees (where you pay taxes on income) specific to their company vision. Not an "off the internet for free" or "buy it off the shelf in the office supply store"--but hiring an attorney and an accountant to work up a real company structure.

2. The person(s) founding the company didn’t put any investment dollars into the company. Often the company runs on a shoestring until money starts to flow in. But the nature of publishing is that most of the money goes out before it comes in. Websites cost money (up front), cover art costs money (up front), equipment and printing costs money (up front). Etc., etc. Ultimately the publisher winds up paying Paul with money owed to Peter. That's just not a sustainable business model.

3. There was no communication between the publisher and their staff. "We’re going to be a friendly team" doesn’t work when there’s no communication. The publisher should provide the staff, in print, with clear guidelines of what duties are required of their job. Heaping everything on one person is the path to failure.

4. The Publisher entered the fray. Yes, there is a desire to protect the authors of a fledgling publisher. It seems to be a financially sound thing to do. But, in reality, the publisher, editors and artists should never interact with reviewers or fans to argue about the reviewer’s opinion of a book. They should never demand (or strongly suggest) that their authors buy or review each other’s books. They should never make snarky statements about authors, reviewers, or watchdogs of the industry. Finally, the publisher, editors and artists should never ask for "donations" from authors in order to stay afloat.

Instead, they should be professionals. Always. They should freely discuss their plan to keep afloat and the business standards they intend to use. They should willingly open themselves to scrutiny by those who hope to profit from the publisher--because that's what professionals do.

What happens after one of these scenario melt-downs? Well, then we get a flood of people at Absolute Write, asking why we didn’t ask more questions. Why we industry professionals didn’t warn people at the beginning, when we knew that meltdown was likely to happen. We used to try to explain that everybody gets a chance to open their doors and give starting a business a shot--but over the years, we’ve gotten to the point where it’s easier to ask the tough questions up front and risk hurting the feelings of one publisher, than soothe anger and frustrations of dozens of authors after the blood and dust settle.

So, if you’re a new publisher, know that yes—we WILL ask the tough questions. We will question your plan, your goals, your experience, your qualifications, your background, and sometimes your integrity. These are questions that people looking to place their "baby", their novel or nonfiction book, need to know. Editors trying to hire on with a new publisher, and cover artists placing their work, also need to know. They deserve to know whether you, the publisher, have your plan in place and your ducks in a row.

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Cathy Clamp is half of the USA Today bestselling author team of C.T. Adams and Cathy Clamp, who write paranormal romance and urban fantasy. Cathy's/C.T.'s current releases and sample chapters of all of their books and anthologies are available at www.catadams.net

1 comment to Guest Blog Post: Why Small Publishers Fail

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