How Book Deals Are Negotiated by Agents and Publishers

One of more remarkable and helpful insights to come out of the DOJ versus PRH trial is the multi-faceted exploration of how book deals get done. There is no single way to sell a book and—as with editorial decisions at the Big Five—much depends on experience and gut instinct.

Because the antitrust case is focused on anticipated top-selling books that garner advances of $250,000 or more, one might assume such books are always sold in highly competitive auctions. But testimony has revealed that’s not the case. Before we dig in, though, it’s necessary to define some terms.

• An exclusive submission is when an agent submits a project to just one editor, either because the author prefers to stay with their existing editor or because the agent has identified the perfect fit.
• A pre-empt is when an editor waves around a lot of money up front to incentivize the agent/author to avoid going to auction. Sometimes agents solicit pre-empt offers from editors.
• Best-bid auctions are typically a one-round process in which each interested editor submits their best offer for a book, possibly with a chance to improve the bid. An agent may choose a best-bid auction if there’s an insufficient number of bidders for a book. Some agents who testified don’t really consider this an auction, since editors aren’t directly bidding against one another. But, for trial purposes, these are classified as auctions.
• Round robin auctions involve several rounds of bidding as publishers with the lowest bids are eliminated from contention. This is probably what most people think of when they imagine books being sold at auction, and an agent might conduct one to build buzz around a book or to create “auction fever,” where publishers end up paying more for the book than they really should. Such auctions usually conclude with a call for each finalist’s best bid.

And there are also hybrid versions of auctions, with varying rules that agents may apply to bidding.

When the government asked an economic expert to review the $250K+ publishing deals for the trial, about 50 to 60 percent of deals were “bilateral negotiations.” The rest were auctions. Simon & Schuster’s CEO testified that more than half of their acquisitions are not at auction—instead, they are option books, exclusive submissions, and books they commission or elicit.

Hachette’s CEO said that after Random House acquired Penguin, agents began using best-bid (rather than round robin) auctions with some frequency, since they were essentially pitting PRH against everyone else. That said, the trial has shown that PRH and S&S are left as the final two bidders in a rather small pool of auctions. Pietsch confirmed in his testimony that Hachette’s bidding would not change as a result of a merger. (Also: Trial testimony has revealed that publishers outside of the Big Five win or come in second in 23 percent of auctions.)

PRH allows for its imprints in separate divisions to bid independently against each other, unless and until such time that only PRH imprints are left bidding. If PRH acquires Simon & Schuster, CEO Markus Dohle has promised to apply the same policy and go a step further, allowing PRH and S&S imprints to bid against each other even absent an outside bidder. However, such a policy cannot be legally enforced and has been a contentious part of the trial.

The trial includes testimony from several longtime agents and editors regarding how they sell and acquire books. Here are the high points.

• Agent Ayesha Pande provided information on eight of her significant deals ($250K+ advance). Five of the eight were exclusive submissions, option books, or pre-empts. Pande’s auctions are typically best bids but with two or three rounds. She testified that she always submits books to both PRH and S&S. Notably, if Simon & Schuster and PRH had been merged prior to any of her deals discussed at the trial, it would not have had an effect. They were never the last two publishers bidding against one another for her clients.
• Former agent Jennifer Rudolph Walsh held up exclusive submissions and pre-empts as making a “perfect match”—“like a badge of honor.” She did not hold many auctions as an agent, and her interest was in finding an enthusiastic bidder—she said she only needed one. She didn’t by default send to a large number of potential bidders, partly because she avoided widely circulating unfinished work. (There are no NDAs in publishing; everything is on the honor system.)
• Agent Elyse Cheney doesn’t always submit to both Simon & Schuster and PRH when conducting an auction. She testified, “I don’t think of it as PRH and Simon & Schuster. I think per imprint, and for particular books, I’m going to try to find the imprint that’s going to be best suited for—and the editors best suited for—the material.”
• Agent Andrew Wylie, perhaps the most famous agent in the world, said while he sometimes submits to multiple publishers, he doesn’t consider them auctions. Rather, he evaluates the offers that come in and decides which one to accept. Out of 52 Wylie projects discussed at the trial, 36 were submitted to a single editor. When asked how he can get the best deal by sending a project to just a single person, Wylie responded, “Well, I’ve been doing it for 42 years, and I can calculate with a high degree of accuracy the amount we would be able to achieve through a multiple submission; and if we can achieve that through a single submission, then we do a single submission.”
• Agent Gail Ross doesn’t expect the merger to lower author advances because, she argued, “It only takes one competitor in a sense or the idea of one competitor to make my negotiations strong.” But she does always submit to both PRH and S&S unless she’s doing an exclusive submission.
• Publisher Jennifer Bergstrom at Simon & Schuster’s Gallery Books Group said 75 percent of their acquisitions come from directly approaching celebrities, politicians, athletes, and the “celebrity adjacent.” They participate in auctions the other 25 percent of the time, but she doesn’t like them because they are time consuming and don’t offer the kind of editorial control they like to have. (Presumably, this is due to contract terms, e.g., that as-is clause mentioned in the previous item, which means the author doesn’t have to revise.)
• A publisher at employee-owned Norton, one of the largest independent houses, said the majority of their books are acquired through auctions; 20–25 percent are not. They frequently compete against the biggest publishers.
• Publisher Sally Kim at Putnam (PRH) said that 80 percent of what they buy is through one-on-one negotiations with agents. The rest they buy at auction. She noted that the deal for Where the Crawdads Sing was a pre-empt for the mid six figures. Kim also testified that other PRH imprints are probably her biggest competitors and that she loses more to internal peers than external.

Bottom line: One of the tensions during the trial is what defines the best deal for an author and how much it comes down to the size of the advance. Just about every agent is in agreement that the highest advance isn’t necessarily the best deal for a book. And some agents explicitly say in their auction terms that the author/agent reserves the right to choose a lower bid. As literary agent Elyse Cheney said in her testimony, “I’m going to the person [editor] who has the highest success rate with that kind of book. I’m going to the person who understands how to position that book in the world. I’m going to the person who knows how to work with my author to get the best book possible out of them. If that person, that editor, and I see eye to eye, we’re both going to see the maximum value of that particular project.” Then, later, she added, “I regularly suggest that people don’t take the largest advance.”