Friday, September 28, 2012

Penguin sues authors to recover advances

On Tuesday, Penguin decided it was finished with the book publishing business.

That's the only way I can interpret recent litigation developments from Penguin, which decided to sue a group of authors to recover advances paid for books that were never published.

The list of authors as reported includes some pretty significant names, such as Elizabeth Wurtzel, author of "Prozac Nation", and Ana Maria Cox, ex-editor in chief of the Wonkette political blog.

I've previously written a series of posts on book publishing (links below) and whether a publisher can sue authors to recover an advance is actually pretty well-traveled ground. The rules are pretty clear:

  • If the author fails to deliver an acceptable manuscript the publisher can get the money back.
  • If the publisher decides not to publish for other reasons even though the manuscript was acceptable the publisher can't get the money back.
(I'm trying to get a copy of the Complaint because I also can't figure out how Penguin can sue all of these same people, who would appear to have nothing in common with each other, in one lawsuit. For technical reasons that's usually not possible.)

But put aside the legalities for a second and let's just focus on the craziness. Any time a publisher pays an author an advance, the publisher is taking a risk. In one view, a publisher paying an advance is basically making the following bets:
  • This person will be able to produce a manuscript that we will want to publish.
  • The advance we will pay (using a calculation similar to the one I've set out in a previous post) will not exceed the amount of money we should have paid.
  • If the advance does exceed the amount of money we should have paid, it's still worth it to have this person for other reasons (e.g. we become popular with authors).

Focus on that last bullet for a second. Paying good advances makes a publisher popular with authors. The more popular a publisher is with authors, the more other authors want to publish with them. So question: why would any publisher risk its reputation with the author community? Especially, as Elizabeth Wurtzel pointed out when contacted by Above the Law for comment on this litigation, when the amounts at issue are relatively small?

It just doesn't seem to make any sense.

I'll be back with more updates in the coming days and weeks, no doubt.

(Thanks to Nate Hoffelder of The Digital Reader for the tip)

LINKS:
Legal Minimum posts on book publishing including: publishers rejecting manuscripts, whether authors have to give back advances, etc.
http://bit.ly/LjV4MC
Legal Minimum post on calculating royalties and determining the right advance:
http://bit.ly/Nwz9F3
The Digital Reader (follow this!):
www.the-digital-reader.com
Smoking Gun article about Penguin lawsuit:
http://www.thesmokinggun.com/buster/penguin-group/book-publisher-sues-over-advances-657390
Above The Law article including responses from Elizabeth Wurtzel and analysis:
http://abovethelaw.com/2012/09/lawsuit-of-the-day-penguin-v-wurtzel-and-other-authors/

6 comments:

  1. What's the point of a contract if one party can't recover damages when the other fails to fulfill it's obligations? She was paid to write a book, and failed to deliver. She shouldn't get to keep the money.

    Somehow, I think Penguin will continue to receive manuscript submissions.

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    Replies
    1. Thanks for your comment. I certainly think you're right: this won't put Penguin out of business. And if they really failed to deliver a manuscript, this is open-and-shut (except apparently for Wurtzel who also has a personal bankruptcy that may have cancelled the debt). But there's a lot of room around what it is or isn't to "fail to deliver" a manuscript where you give over something that the publisher just doesn't want to publish, and it's quite possible this case will turn on that.

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