We're not talking about scam agents, by the way--this involves reputable literary agents/agencies with established track records of sales to large publishers.
Case A: Lori Perkins has a financial stake in the e-publisher Ravenous Romance.
Case B: The Waxman Agency is opening an e-publishing house called Diversion Books.
Neither Ms. Perkins nor The Waxman Agency belongs to the Association of Author's Representatives, which has a canon of ethics that states: "Members shall not represent both buyer and seller in the same transaction." That said, an agent doesn't need to belong to the AAR to be reputable; my former agent wasn't, and she was awesome-sauce with sprinkles on top.
However, most agencies that are reputable pretty much abide by that canon of ethics anyway. By getting into e-publishing, however, these two seem to have stepped outside those bounds.
Ms. Milan and Ms. Kane had some excellent points to make about this, and I recommend you click the links below and read both their posts:
From "On Self-Dealing" by Courtney Milan
Lori Perkins has explained that she doesn't take a commission on those sales to Ravenous from her clients--but all that this accomplishes is that now she truly has no financial interest in doing what is right for her clients. She has no interest in fighting for an extra 2% royalty rate, or a higher advance for her clients, because now she isn’t [...] getting paid for that.
From "It's Just Upsetting" by Stacia KaneI would like to stress, for anyone who didn't read the full blog posts, that I excerpted some of the blunter statements made. Ms. Milan and Ms. Kane are both very respectful of Ms. Perkins and The Waxman Agency and state firmly that they believe this agent/agency is reputable. I believe that too.
I honestly believe [Scott Waxman] thinks he's doing the absolute best for his clients. But why start up an epublishing imprint, thus creating a conflict of interest and a breach of AAR ethics? Why not submit your clients to an existing epublisher, or small press [...] if the project isn't right for NY? Isn’t an agent supposed to keep trying until the project sells, even if it's to a smaller house?
If you did read the posts, however, you'll have noted there's a certain amount of tip-toeing going on, and I'm going to tip-toe also--and for the same reasons: I don't want to be black-listed by agents.
But that wariness is part of why I feel compelled to speak up. Because major publishing houses don't take un-agented submissions, literary agents are in a position of power over writers, and it's not an irrational fear for me to wonder if having a valid-but-unpopular opinion would hurt--or even abort--my writing career. The stakes are high if I open my mouth to complain about literary agents.
That imbalance of power is exactly why we need to scrutinize literary agents, however. Anywhere there is an imbalance of power, there is the possibility of abuse, and the number of scam agents already in operation is a testament to that. We writers do need to stay aware of what reputable agents doing, and get vocal when they do something that puts them on the slippery slope from reputable to disreputable.
However, I still don't want to shoot myself in the foot, so I'll say only the following, and I'll keep it general:
An agent takes a 15% commission on a writer's earnings. The only way this relationship is symbiotic is if
a) the agent only makes money from the writer's work when the writer themself does, and
b) the writer makes more money with the agent's help than they would have made without it.
The moment either of those conditions ceases to be met, the relationship changes from a symbiotic one to a parasitic one.
If the agent makes money off the writer regardless of whether the writer is making any money, then the agent can't be trusted to have the writer's best interests at heart any more. The agent has less incentive to do their job well if their paycheque is already assured.
The situation becomes even more problematic when the agent stands to make more money from the writer making less money. This is exactly the situation that exists when the agent owns or has a financial stake in a publisher. The agent stands to make more money (as a publisher) from the writer getting a less lucrative deal, and it's an obvious conflict of interest for the agent to have a monetary incentive to do their job (as an agent) poorly.
What do you think of this? Agents want to help great books get published, and I can see how an agent might aspire to move into publishing in order to see this happen. How do you think such an agent should handle doing so, if they want to make sure they stay within the boundaries of ethical business conduct with regard to their agenting?
Would you consider signing with a reputable agency that had an e-publishing arm? Just because the owner of the agency also owns an e-publishing house doesn't mean the other literary agents at that agency are getting a cut of the e-publisher's profits. As long as the boss isn't exerting undue influence on his or her agents, those agents don't have a conflict of interest.
Finally, what about agents who are also writers? It can be argued they have a conflict of interest too, if one of their clients writes a book that would compete with the agent's book. How do you think that situation should be handled? Do you have reservations about signing with an agent who is also an author?
Anonymous commenting is on, if you have an opinion-bomb you don't want to catch any shrapnel from. I would love to hear everyone's (especially agents') thoughts.