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Penguin Now Suing Authors to Recover Advances

Penguin must be anticipating terrible losses in the anti-trust lawsuit brought by the DOJ, because today I have learned that they’re suing authors in order to recover advances for unpublished books.

The Smoking Gun has uncovered details of the lawsuits. Apparently the publisher is suing to recover the advances paid to at least 5 authors, at least one of whom finished and submitted the book. But what’s worse, Penguin is also suing to recover interest on the advances. I guess they see these advances as unrepaid loans, or something like that.

Penguin is suing:

  • Ana Marie Cox, a blogger who signed a contract in 2006 to write a "humorous examination of the next generation of political activists,". Penguin wants the $81,250 advance as well as $50,000 in interest.
  • Rebecca Mead, a staff writer at The New Yorker, is on the hook for $20,000 and another $2000 in interest stemming from a 2003 contract for "a collection of the author’s journalism."
  • Elizabeth Wurtzel, author of Prozac Nation. She signed a deal in 2003 to write "a book for teenagers to help them cope with depression." Penguin wants her to return the $40,000 advance and interest accrued.
  • "Hip-Hop Minister" Conrad Tillard, who signed a contract in 2005 for a memoir about his "epic journey from the Ivy League to the Nation of Islam," and his subsequent falling out with Louis Farrakhan. Penguin wants around $38 thousand back from Tillard.
  • And last but not least is Herman Rosenblat, a Holocaust survivor who faked up a tale of wartime romance and made it into the national spotlight on Oprah before the story collapsed. Penguin wants over $40,000 from him in advance and interest.

In that last case penguin already has the finished book; the story fell apart during fact checking. They just don’t want to publish it.

The story has been out long enough that there is already a response from Penguin:

“Penguin regrets that it had to initiate litigation in these cases, and it did so reluctantly, only after its repeated attempts at amicable resolutions were ignored,” Penguin said when reached this afternoon.

They had to sue? I don’t see how. I would bet that the earlier advances have already been written off Penguin’s corporate taxes as bad investment and deducted accordingly. Does anyone know how that accounting would work?

Aside form the accounting issue, I won’t criticize Penguin. If the contract does allow Penguin to recoup the advances then it’s the fault of the writer for signing the contract. If the terms suck, negotiate a better one. If you cannot, more fool you for signing a contract where you give someone else all the power.

And yes, I do know that the terms of these contracts were likely near the industry standard. So what? No one held a gun to their heads.

via The Smoking Gun

image by greeblie

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Rashkae September 26, 2012 um 9:08 pm

Heck.. I cheer this action.. not expecting a publisher to swallow huge advances when the book aren’t delivered (or are revealed to be a fraud) is *way* better than the destruction of advances for good midlist writers we’ve been seeing.

fjtorres September 26, 2012 um 9:16 pm

I rather like the fact that they’re asking for interest: that should dispel the apologists' line that advances *aren’t* loans.

Eric Riback September 26, 2012 um 11:26 pm

In the case of an advance paid for a book not delivered, or a bill not paid, writing it off doesn’t mean they don’t still owe you the money or that you can’t take efforts to collect it.

They likely did write off those advances, but that’s an accounting treatment. If you (or your auditor) think it unlikely you’ll collect some or all the money, you have to write off or write down the value of the outstanding advance. In a sense it’s no different than if the book were published a,d based on sales, you realize the advance won’t be earned out. You then write off the remainder.

Richard Adin September 27, 2012 um 4:36 am

Basically, each of the lawsuits is a breach of contract action, no matter how you couch it. U.S. tax code, as I understand it, requires someone who writes off a bad debt to make attempts to collect on the debt (I’m not a tax person and my understanding may be wrong).

As for your statement that "In that last case penguin already has the finished book; the story fell apart during fact checking. They just don’t want to publish it.", they contracted for a true, factual story and received fiction. It is no different than someone signing a contract to write a nonfiction biography of Abraham Lincoln and submitting in its place a novel "President Abe Lincoln: Werewolf Hunter & Killer." It is a breach of the contract.

Your article implies that Penguin is bad for suing the authors who have breached their contracts but the authors are good for breaching. Seems to me to be a bit skewed. I’m obviously missing what you see as justification for authors stealing from a publisher. Perhaps you could explain the moral rightness of the authors' actions and the moral wrongness of Penguin’s in these cases.

Nate Hoffelder September 27, 2012 um 3:50 pm

"Your article implies that Penguin is bad for suing the authors who have breached their contracts but the authors are good for breaching."

Considering that I used the phrase no one put a gun to their heads, I am surprised that you would think I implied the authors did the right thing.

My opinion is complicated. I think less of Penguin for suing but the authors did sign the contracts. They made the bed and now they must sleep in it.

Steve Vernon September 27, 2012 um 4:43 am

I write for a small regional publisher and have received seven very small advances – beginning with three figures and moving in the last two books to four figure advances.

I dream of five figure advances like these folks received.

A writer is supposed to write, right? Somebody gives me five figures – I’m going to deliver.

Dude gets $40,000 and can’t finish a book.

What was he doing with the time that $40,000 should have bought? Off collecting iguana?

What it boils down to is each of these author took the publishing house’s money and said they would write a book and then FAILED to deliver. If I take somebody’s money and tell them I’m going to build a doghouse and then tell them that I couldn’t find the proper amount of dogs to glue together to build that house – (hey, I’m a writer, not a carpenter) – then I’m going to figure those folks are going to expect their money back.

Xyzzy September 27, 2012 um 7:26 am

Regarding the advance vs. loan, I read a useful bit of advice from an experienced author a while back: it’s not free money any more than a credit card, it’s merely an advance on what the publisher would otherwise pay you in the future, assuming your book does as well as expected. (Or something along those lines; I can’t recall precisely how it was explained.)

I have to disagree with the "if you don’t like it, just walk away" logic, though. If a newbie wants their book to be picked up by a major publisher, they basically have to take what their agent can wrangle for them; the choice ends up being "take what you can get" or "don’t get published at all, aside from what you can give away as a nobody on Amazon." It’s not until an author has proven themselves repeatedly that they can start trying to take any real steps away from the industry standard.

Speaking more generally, yes, technically a newbie can "walk away" from contracts with elements they object to, but after decades of hard work, sacrifices (both on their part and, if they’re lucky, their birth family and/or partner), and rejection, abandoning the entire dream when they have the chance to become that 1 in 100 that gets a chance isn’t a reasonable thing to expect of somebody.

I was originally going to say at this point that I don’t rate it alongside telling a low-income employee in today’s economy to quit if they’re unhappy with their labor contract, with the assumption that one is matter of economics and the other about happiness. Then I recalled having a major perspective change early this year from reading Ann Patchett’s short memoir The Getaway Car, which showed that for some writers, their talent is the best chance they have at escaping a variety of severe socioeconomic or interpersonal problems like poverty or domestic abuse. Somebody in that position will often be desperate enough to accept even horribly unfavorable terms and be taken advantage of rather than walk away, speaking first- & second-hand, and they (we) shouldn’t have to.

As I said, that commentary wasn’t specifically aimed at this situation as I don’t know enough about what the exact circumstances are. I will say, though, that if the authors couldn’t complete their work, IMHO the honest thing to do would have been to return the advance.

fjtorres September 27, 2012 um 8:16 am

That *used* to be true.
Nowadays walking away and self-pub’ing works fine for a lot of people whose primary interest *isn’t* validation.
The key word is clearly "desperation".
Not a good frame of mind to be signing any contracts, good, bad or indifferent.

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