Guest Scott Hoffman of Folio Literary Management talks about the changing economics of publishing, the explosion of the YA market, the diminishing relevance of gatekeepers, and more!
The Virtual Memories Show
Season 2, Episode 15 - Hassling the Hoff
[music] Welcome to The Virtual Memory Show. I'm your host, Gil Roth, and you're listening to a podcast about books and life, not necessarily in that order. We're closing in on the end of 2012, and I've already surpassed my podcast goal of one new episode each month. In fact, I have another one set for December, hoping to do two more interviews this weekend that I can bank for January, so you've got a lot of good content ahead of you, or so I hope. Borrowing a Mayan prophecy at Apocalypse, I'm hoping to stick with two episodes a month during 2013. Seriously, I am kind of happy that I was able to produce this show on a pretty regular schedule this year. And as part of my plan to make it even better, I took a one-on-one class last week in audio engineering at TechServe on 23rd Street in New York City. My instructor Ben taught me some great stuff that I hope will translate into better-sounding podcasts. I have to admit, I've been flying blind on this pretty much, and he's already helped me iron out a much better workflow for getting from recording to editing to final episode. He also turned me on to a different type of microphone, a condenser versus a dynamic mics that I've been using for interviews so far. I'll experiment with those depending on the recording situation, but I've got to tell you, it was just a good feeling to be able to put my audio files in front of someone and have that person say, "Oh, well, the problem you're having is this, and if you change that setting, it's going to sound much better." Anyway, I hope you guys appreciate the work I put in for this show. My guest this episode is Scott Hoffman, a folio literary management. Folio, what Scott co-founded in 2006, has 16 agents, 900 clients, and sold nearly a thousand titles, with around 20 of its books hitting the New York Times bestseller list this year. Scott has some pretty strong opinions about the publishing industry and its past practices and how it's approaching the future, or really how the future is approaching it. We also talk for a bit about the books that meant the most to him because, you know, that's my thing, man. Anyway, you can find more about the agency at foliolit.com. It's a new episode of the Virtual Memory Show with my guest Scott Hoffman, co-founder of folio literary management. Scott, you're an agent. How did you get into being a literary agent and, well, how has that feel changed since you began? Sure. Well, thanks for having me here. I'm delighted to be doing the Virtual Memory's podcast. I've been in the book business for about 10 years, but I haven't always been on the side of goodness and light publishing. It's kind of a second career for me. I was in politics in Washington, D.C. for about 10 years before that. I ran a lobbying firm, so all the people listening at home can boo in his right now. It's totally okay. I deserve it. Politics is totally a slimy business. Every story you've ever heard about D.C. is true, and it's probably only half the story. And is publishing that much better? You know, surprisingly enough. The one thing that I noticed when I got into publishing was that I would call all these high-level editors and publishers, and first of all, they would always take my call. You know, they would be so nice when I actually talked to them. It took me a few years to realize that you still get stabbed in the back just as often in the publishing industry, but when you do it, it's with a cocktail toothpick. So it's a little bit different than the whole politics thing, but what was going on in D.C. at the time was directly responsible for me getting into the book business. And I don't know. I imagine that all sorts of people who change careers have similar stories. I was absolutely miserable at the time, and I was tired of being asked to compromise my core values and look in the mirror every morning and wonder how I was going to be asked to sell my soul on that day. And I was looking for a way to get out, but I didn't realize exactly how I was going to do that. And as things often happen, I was probably about 27 or 28 at the time, and I was single. I went to a meeting in the Capitol building, and there was this woman, right? It's a show. It's a show. It's a love farm kind of thing, right? So she was smart, and she was gorgeous, and I remember doing the standard sort of ring check thing at the time. I looked at her left hand, and she was wearing this kind of turquoise ring. It wasn't engagementy, it wasn't weddingy, and so I didn't exactly know what her situation was. And she said, "So what's her deal? Is she single? Is she married?" I'm very attracted to this woman. She said, "Oh, yeah, she's married to some hot shot novelist. Hot shot novelist. How can you get married to a hot shot novelist?" And so I did the thing that any other single guy would do. I immediately went out to the bookstore, and I bought all this guy's books, and I started reading them. And when I got to the end of the first one, I said, "Oh my God, I could do this." And so when things got unbearable in the lobbying business, at 7 o'clock, 8 o'clock night after a whole day of haranguing members of Congress, I would close my door, and I started to work on the great American novel, or the typical sort of thinly veiled semi-autobiographical first American novel that everybody who thinks that their novelist tries to write. And this went on for about six months, and I had written a good portion of it, maybe 30,000 words, and then a couple of other things happened, and I realized it was time for me to leave. So I sold the lobbying firm, and I needed a real "career" to fall back on, and figured that I'd already sold my soul once, so I would make the perfect investment banker. So I went back to grad school, and I got an MBA in finance, and was all set to take a job in the banking industry, and I realized that I didn't want that lifestyle. I didn't want to work 18 hours a day, seven days a week, staring at spreadsheets and cubicles, no matter how much they were going to pay me. And so I figured one of the things that I really love to do is write, and maybe I will write for a living. Maybe it'll be fiction, maybe it'll be non-fiction. And so I remembered that I had this partially completed novel in the drawer, and I took it out, and I started reading it, and was absolutely appalled at how bad it was. And kept reading it just because I was in a self-destructive mood. And realized by the time I got to the end of it that while 25,000 of the words were complete, grabbed, 5,000 of them weren't necessarily that bad. And so I did lock myself on a closet for another four months, and wound up finishing the thing. And at that point, I had no idea how novels got published, nobody ever did a schoolhouse rock on how a manuscript becomes a book. So I did the only thing that I could think of. I went back to my friend in Washington, D.C., with whom, at that point, I'd become quite good friends and said, I'm curious, how did your husband get his first book published? And she said, actually, I don't know. It was before I met him, why don't you ask him? So I took the guy out for a beer, and he said, oh, I just wrote the damn thing and my agent did the rest. Your agent. What do you have? Movie star? You've got an agent? And he kind of laughed, and you look at the guy, he's like five foot six, he weighs a buck 20, he's got less hair, he had less hair than than I do now, which is zero. And he said, no, no, my literary agent, the woman who does all my book deals, and I laughed, like that can't be a job. And I thought it could be my job. Right, exactly. And so I said, can you make a living doing that? And he said, well, you know, she makes 15% of everything I make, and she's got 49 other clients. And that's kind of when the light bulb went off in my head, and I did the math and I realized that this was entirely viable on the economic side, and then I realized that my two favorite things in life had always been books and deals. And here was this career where I could do book deals, so I immediately just shotgunned out my resume to every literary agency in New York and got absolutely no response. Eventually, somebody did call me back and said, and I invited me in for an interview, and I told the guy, more or less, that I would work for him for free if he would teach me the business. And so I started out as an intern of a small literary agency, the way that lots of people do. I was doing filing, and I was doing photocopies, and I was doing deliveries, and it became pretty obvious early on that my time was probably better spent doing other things. And so I got access to the infamous slush pile, which at that point was probably 12 feet high and contained, this was in 2003, I guess, early 2003, so most of the submissions that came in were still paper submissions, they weren't e-mailed now, just about everything is done electronically. And so I went through this slush pile, and I started reading, and picked out a couple of manuscripts, and the guy who had been in the business for 30 years, wound up selling them, and a couple of them got published, and realized that not only did I absolutely love doing this, but I was kind of okay at it. And so wound up getting a full-time job there, started taking on some clients on my own, and it became obvious very early on that the guy who ran the place and I had very different personal styles and wanted to represent very different kinds of books. Well, the stuff that I was interested in tended to be on the more sort of, on the more intellectual side, on the more literary side, although the first book that I did ever sell in my career was a zombie novel. There's nothing wrong with that, I mean it's definition of anti-intellectual, but there's nothing wrong with that. That's true, but they do have a great affinity for brains, so there's always a natural tie in. Yeah, no, and in fact, this was before the zombie craze, this was probably in, this was in late 2003, the guy is still one of the, I think one of the best writers writing in America today is named Walter Greatchill. And the book when I sold it was called Zombies with an X. It was about this 14-year-old girl who had a genetic defect in her ex-chromosome, which rendered her immune to a chemical plague that swept the country turning all of the women in the world into zombies. The book was published to very little notice by anybody except hardcore zombie fans, went out of print, but I was vindicated. We wound up actually reselling the rights back to Berkeley, the original publisher, once the zombie craze hit, and it's become fairly successful since. So Walter's the kind of guy who had he been writing in 1950, would have been one of the most successful novelists in America because he's got this amazing smart pulp sensibility. But he was being published, I think, at the wrong time for the kind of writer that he was. So started doing that, took on some literary fiction as well, and eventually it came time for the guy who owned the agency in Ida Partways, and I was looking to join another literary agency. I'd been doing it for maybe two or three years, and I didn't feel like I had enough of a knowledge of the industry to do it on my own. But the economics of the industry were fairly complex at the time, and the deals that other agencies were offering there, associate agents, were horrible. I mean, the way that most agents were getting paid at the time, you would go into an agency and say, "Okay, great. We'll split all your commissions with you 50-50, we'll take 50 percent, and you take the other half, we'll give you an office, and we'll give you a letterhead." And I knew how big my practice was at that point, and I knew what sorts of commissions I was generating, and I also knew how much letterhead cost, and I knew how much an office in New York City cost, and that just didn't seem to be a good deal for me. And the other thing that was fascinating about the agencies in New York was that they really weren't interested in doing anything new. They were sort of denying the fact that the industry was changing at all. They were trying to do things the same way that things were done back in 1920, and for the ones who had big backlists and large clientlists, it was working just fine for them, so they had no interest at all in disrupting the industry. Became clear pretty soon after that that if I wanted to do this the way that I wanted to do it, I was going to have to do it on my own, or at least start my own thing, and so my two business partners and I founded Folio Literary Management in 2006. We never really planned on getting big, but a bunch of other things happened in the industry that changed our strategy. To make a long story short, we just hired our 16th agent. We represent about 900 clients, we've sold close to 1,000 titles, and this year alone we've had 20 books on the New York Times bestseller list, so yeah, not a bad run. How would you characterize how publishing changed essentially since you became involved in the sausage making aspect of it? It's been trendy in publishing recently to talk about, you know, to project gloom and to project doom, and to say that the book business is going away, that books are dead, that publishers aren't going to be able to survive, and as far as I can tell, and from talking to folks who've been in the industry for a long time, that's been a consistent theme. The old joke is that the first book that Gutenberg printed was the Bible, and the second book that he published was a book on the death of publishing. So right around 2006, I guess, when electronic books started to proliferate when Amazon started to really gain market share, the sort of strengths and weaknesses of traditional publishers became, started to get highlighted, right? So there are certain things that traditional publishers are very good at, and there are other things that traditional publishers are not very good at. The things that they're good at, they are excellent at working with agents, going out and finding talented writers who can tell stories or who can write well constructed and well researched non-fiction books. They're excellent through the editorial process at making those books better. They employ fantastic designers who can do both interior and exterior design. They're great at handling the logistics of printing, warehousing, and shipping. Basically, they're very good at getting books into bookstores or to a place where consumers can buy them, but what they're really, really horrible at is getting them out, again, into the hands of consumers. They're really horrible at convincing a person to either go to a website or to go to a physical location, pick up a specific title, and take it away. And so, as a result, what wound up happening was that authors who had some way, some fanatical following or some way of getting in touch with the public became more and more focused of the publishing companies, right? And so, the word platform started popping up over and over again, right? Does this author have a platform? Do they have some following? They have some way of communicating with their audience because we're not very good at doing this. We do have a lot of money, and we can trade our money for their platform. And that's why you had folks like Tina Fey getting five million dollar advances for their books, Sarah Silverman getting millions of dollars, Lena Dunham with her most recent advance. I've seen it, though, on a smaller scale as a web cartoonist who, at a gigantic following in her world, and apparently met with the story I heard, was met with some New York publishers and heard their terms, heard their rates, and said, "No, I can go to one of the two major indie comics publishers because my book is going to sell 100,000 copies, whether it comes from them or comes from you." And she went with the smaller, with a comics-oriented publisher and blew through the roof is the biggest seller they've ever had, largely because, again, she had this massive, massive web following that didn't, I think, the major publishers thought that they were doing her a favor in terms of, "Well, you just said an online cartoonist. We'll re-print some of your stuff, and I don't think they really got the value at that point of what she was able to deliver, and I don't know how good they are really assessing, you know?" Yeah, that's true, you know. And it's been fascinating, though, so when you talk about the death of books and about the death of publishing, I think that the people who are crying gloom and crying doom are -- couldn't be any more wrong. I don't know whether even in five years -- oh, my physical books are going to exist, but I don't know whether they're going to exist the way that vinyl records do now as a curiosity for collectors or for fanatics, but people read more today than they have at any other time in history. I mean, they read more words per day than any time of human existence that might be on their phones, it might be on their computer screens, but one of the ways that we communicate now is through -- one of the ways that we communicate now in contrast to, you know, 20 years ago, if you wanted to talk to somebody, you picked up the phone. Now you're going to text them. They're going to be -- they're going to be experiencing you and your stories and your person through, you know, either, well, it could be through, you know, single digits or single letters in this case of text speak, but people are reading more words per day than they ever had at any other time in human history. And so there's always going to be a place, I think, for people who can either tell stories in the case of fiction, create art in the -- even if they're not plot-driven novels necessarily, or who can teach people about subjects in the case of nonfiction. So there's a -- if traditional publishers aren't necessarily the vehicle for doing it, I'm still convinced that people will be able to share their writing with other people and make a very good living doing that. The market -- the market has really bifurcated quite a bit. There used to be a very vibrant -- what they call midlist in the publishing industry, right? They weren't necessarily the biggest books that a publisher published in a given year, and they weren't the smallest books on the list, but they were books that were expected to do moderately well on the nonfiction side. It was books largely by academics or by journalists. They would offer advances of maybe, you know, anywhere between $50,000 and $150,000. You know, the kind -- you could make a very good middle-class living as a midlist author. On the fiction side, you know, you might be able to get a $75,000 advance. You might sell 15,000 hardcover copies, 10,000 hardcover copies of your novel. And you could -- you could do quite well, and the hope was eventually that your career would continue to build and build, and eventually you might become a, you know, like John Grisham on the commercial side, or you might become a Philip Rother, whoever are on the literary side. And what we've seen happen over the past five years really is that that middle has sort of disappeared. There's a gigantic doughnut hole. And the folks who are on the smaller side of the market, the lower advance side of the market, are, you know, they're -- to assert -- their business model looks very similar to what it did before, smaller advances, $5,000 advances, $10,000 advances, selling roughly the same number of copies that they used to. On the high end of the scale, however, we're seeing, in a lot of cases, higher advances than we did in the past. And we've gotten more high-six and seven-figure advances in the past two years than we had at any -- in any time in our history. And that's because it's, you know, it's largely a function of the winner-take-all society, right? Where -- if you've got somebody who's got an already fanatical following, let's say they've got -- they know that they're starting from a core of 100,000 people or 150,000 people. Traditional publishers can help them get to the next level. They can help them to expand beyond their fanatical following and become more mainstream. And as a result, those people become more economically valuable to everybody in the supply chain. And so the publishers can afford to pay them more money up front, take on a little bit more risk, because the ultimate reward is going to be greater. Globalization has also played a huge part of that, too. One of the things that we as literary agents do is take the work that a novelist or a nonfiction author does once and then sell it over and over again all over the world. So we'll do a deal with the United States publisher or North American publisher like a random house or a Simon & Schuster. But then we'll also sell the book in Germany and Italy and Korea and Taiwan. And the emerging middle class in a lot of the rest of the world has become a quite lucrative source of income for many of our authors. We're doing six-figure deals in Korea, in Brazil, in a way that never would have been possible five years ago or ten years ago. What sort of books do you target for that? Really depends. You know, each market likes its own thing. So Brazil, in particular, tends to like books that have a spiritual component. You know, their best-selling author of All Time is Paulo Queldo, who wrote The Alchemist and probably half a dozen of their books. He sold over 140 million copies worldwide. But folks who do sort of inspirational or spiritual fiction to a large extent are very, very popular down there and the publishers are willing to pay a lot of money for them. One of my best clients is a guy named Brendan Burchard, whose most recent book is called The Charge, Activating the Ten Human Drives that Make Us Feel Alive. He's sort of an intellectual heir to a spiritual heir, to a certain extent, to Tony Robbins and the other sort of motivation-driven authors and speakers. And he's done extraordinarily well in that territory and also in Korea. Places like Japan and China, they're so hungry for American business content. It's crazy. Virtually everything we sell to a U.S. publisher that's on a business topic will sell there for usually lower advances, but they'll sell, in some cases, tens of thousands of copies. And we've got a guy named Michael Pantelon, who did a book called Instant Influence, which has been the best-selling book in Taiwan for months and months. He sold probably close to 50,000 copies now. And this is a guy who, I don't think he's ever been to Taiwan. I'm virtually certain he doesn't speak Taiwanese. And yet he's influencing tens of millions of people in a way that never would have been possible even even 30 years ago. So it's an extraordinary time to be in the publishing industry right now. And what's your take on the random penguin merger and the whole necessity of the majors trying to consolidate? Good question. Publishing consolidations have, as far as I can tell, been a fairly routine part of the industry since the 1950s. The first wave was when you had hardcover publishers merging with paperback publishers, the way it used to work would be to sell the hardcover rights to one house. And if you were a really good agent or if you had leverage, you would be able to sell the paperback rights to another house. If you weren't necessarily, you would license them both to the hardcover house and then they would sub-license them to another publisher. But then the houses realized that it was a different world, and that as the distribution change started to change, that there were economies of scale that they could benefit from by coming together. And so you had the merger of the great hardcover houses and the great paperback houses. And then, I guess, in the '80s, you went through another wave of mergers where large media conglomerates started taking over the publishers and folding them in. So you had the news corp taking over HarperCollins, and you had Pearson taking over Penguin, and you had Bertelsman taking over Random House, and you had CBS5 com taking over Simon & Schuster. And now what's happening, I guess, is that as an increasing portion of the book business becomes how well and how cheaply you can access capital, bigger is easier. And so the most, I guess the most recent news is the proposed merger between Penguin and Random House, which I give a very low chance of actually occurring. I think that-- What do you think will derail it? I think that regulators will derail it. There's a very large chance that United States regulators won't allow it to happen. I think that there's an even greater chance that regulators outside the United States will try to put the kabash on it. The publishing industry in the past couple of years has come to the attention of US regulators because of this whole transition to electronic books and their pricing model. And as I know from my Washington days, as soon as an industry starts making real money, that's when the folks in Washington start stepping around. Although it seems their complaint is that they're not making enough money. Well, you know, and I don't necessarily think that that complaint really holds. As the transition to electronic books happens and accelerates, their costs are going down dramatically. They continue to deny this. They still think that they try and say that PPB has not changed--the printing paper and writing has not changed in the slightest because of ebooks. It's just not right. And they try to use that line with us as well, but we see what the royalty statements look like and we see what the royalties they're paying. Their authors are. And so when you're paying less for your cost of goods sold, both in terms of physical material, but then also in terms of transportation, in terms of what it would cost to actually handle all those returns, that-- To me, that's the biggest factor, is that you're eliminating the returnability that bookstores have relied on since the Depression. Well, right. And I guess a lot of your listeners, unless they're huge publishing junkies, might not know that those books that they see in bookstores--the bookstores, I guess, while they have technically legal title to them, they're more effectively fancy loans from the publisher. Well, it's consignment. Bookstores work on consignment. The books are sent there. If they don't sell-- Then they get to send them back to publishers. Yeah. Stores can send them back for credit. Right, right. And for years, this has traditionally been one of the biggest sources of economic consternation for publishers, because you have to figure out, in the past, you had to figure out how many copies to print in order to satisfy what your projected demand was. And if you were wrong on the low side, you missed a ton of sales. If you were wrong on the high side, you printed far too many copies. And you know, your unit cost was two or three dollars for a hardcover, and it cost about a dollar to warehouse and ship that thing. For every copy you're off by, you're going to eat that, and you're going to lose it in your bottom line. And we've had some authors who've been remarkably successful in the past couple of years, almost entirely on the strength of their e-book sales. And even if there were large print demands forecast by the publishers, in some cases, authors who would sell 30,000, 40,000, 50,000 e-books, the publishers would say, well, okay, that means we're probably going to have to print that many hardcovers as well, would be selling 4,000 and 5,000 hardcovers, and would have to eat those other 25,000 copies. So while the publisher wasn't making any money at all, the authors were doing quite well because they don't have to bear any of that risk. And you know, that's another advantage of what the calculus for an author now about whether to self-publish, whether to go with a smaller independent publisher, or to go with one of the big guys, is fairly complex, and that's one of the things that we as agents try to coach them through. There are always different factors for them to consider. When you're dealing with a traditional publisher, the largest one is the fact that A, it's a lot less work for you because they've already sourced all the people who need-- You have a department. Exactly. They've got a department for that. They might not be the-- well, depending on which department is, they might be the best in the world at what they do, or they might be okay. Their editors are spectacular, their designers are fantastic, and their publicity and marketing people are okay. They're nowhere near as good as the publicity and marketing people who, you know, at Procter and Gamble, or at General Motors, but they still get the job done in a way and the author doesn't have to pay anything out of their own pocket. There's also a big financial guarantee that the publishers come along with, and so the types of books that I work on tend to be the very top of the list. They tend to be six and seven figure advances for people who are very successful in their fields. For those people, if the publisher's willing to give you $2 million upfront, well, okay, because there's always the chance that you're not going to sell the more than 700,000 copies that it would take to keep on that. Exactly. I took to earn it on the back end, and so probably seven out of 10 books don't ever earn out their advance for an author. And if you're on that side of the equation, then it's great to go with a traditional publisher because you're getting paid more per copy in most cases than you would if you went on your own. I think the highest, I calculated this once, the highest advance or the highest effective royalty per copy when you're taking into account what the advance was and then divide it by the number of copies sold. The highest advance I think I ever got an author was worked out to $1,200 a copy. It was just an extraordinary advance or really horrible sales. You know, it was a combination of both. It was probably -- it was a business book that published in early 2009 about the wisdom of Wall Street. It still reminds me of Jack Welch's great business book that was going to change the whole nature of business publishing was going to be adopted by every business program in the country that had the unfortunate release date of Tuesday, September 11th, 2001. So yeah, it never really got any traction after that. Yeah. Exactly. Exactly. You know, and so one of the things that we talked a little bit about was why we decided as an agency to get bigger and we realized that the industry was becoming necessarily more volatile. And as the high end was getting higher and the low end was staying the same but maybe getting a little bit broader and the middle was disappearing, for two reasons we thought that it would make sense for us to represent more authors and to have a more diverse business model. So the first reason is that, you know, we thought that the people to whom we were selling the books were going to -- the cast of characters was going to change. And whether it was due to -- due to mergers, due to acquisitions, whether we're dealing directly with news core people, whether dealing directly with Pearson people, or whether we're dealing directly with retailers like Google, Apple, Amazon, we would much rather be the agency that represents 1,000 or 2,000 authors, has a roster of 100 best-selling clients, and hopefully has some ability to -- some leverage to -- to get the best possible deals for our authors, rather than be the little boutique agency that's got 100 clients, maybe one bestseller, and who needs the retailers more than they need us. And that's definitely been the case, too, particularly as we've been negotiating with folks like Amazon for some direct publishing deals. That's one. And the other thing is that we've realized that as the -- as the sort of economics of the industry shift, what's probably going to happen is that advances are going to change. You'll still have people at the high end who are getting high advances. But at the low end, the advances are largely going to disappear, and many of those people are going to be self-publishing, because the value the publishers had for them in the past was largely based on distribution. You know, a lot of those romance authors, a lot of those genre authors, mystery authors. The way that a publisher was most valuable to them was in handling the logistics of printing and distribution, getting those books to the drug stores or the grocery stores. And in a lot of cases, the bookstores were the consumers would buy them. But now that the mass market paperback business has virtually disappeared, and the people who read in those genres are starting to read almost entirely electronically. Now, actually, it's a question that just comes up. How educated are authors now about those terms, given, say, where you were when you first heard about the novel and how do you sell this sort of thing and how do you find an agent? Do you think they're becoming more cognizant of this business environment, or is there still that notion that the cache of a major publisher still means something, even if the economics of it don't add up? Well, you know, different authors have different perceptions of value across the structure. Yeah, I was talking about youngers starting out, you know. So, again, for most authors, the reality is that the publishing, the traditional publishing business has largely been a numbers game. Most people who are writers are never going to be published by traditional publishers no matter what they do. Just to give you an example of the kinds of numbers that we see at the agency, we get approached by, you know, between 100 and 200,000 people a year who want us to represent them. And in a good year, we'll sign maybe 100 to 200 new clients. So your chances of even getting represented by an agent are about one in a thousand. And then when that happens, we probably place, I'd say, maybe 80% of the books that we take on with traditional publishers. So for the vast majority of authors, and particularly the vast majority of novelists, the traditional publishing world is just never going to be an option for them. Now going direct to retail or going direct to consumer through Amazon's Kindle Direct, or through Barnes and Noble's public program, they all of a sudden have access to a publishing platform that they never in a million years would have had before, unless they spent the money to print their own books and try to sell them out of the truck of their car. And in a lot of ways, I think this is one of the most exciting developments that's happened in the history of publishing, because now you don't have a whole bunch of people in New York City who are the gatekeepers anymore, right? For years and years, I've always thought that the New York publishing industry really missed a large section of readership. For a long time, they always thought that, quote unquote, those people, whoever those people were, didn't read books. And it wasn't until June 3, when they started publishing Rush Limbaugh and Howard Stern that people were like, oh, well, maybe those people do actually read books, and not only do they read books, they read millions of them and are willing to pay tens of millions of dollars to do it. You know, Al Wregnery was making $50 million a year doing conservative books in the '80s and all of a sudden the New York publishing establishment woke up and started their own conservative imprints to sell books to people who didn't have the traditional New York City cocktail party values. For a really long time, African-American and Latino authors were underserved by the New York publishing community. And then some African-American authors, in particular, a lot of female African-American authors out of Philadelphia started doing just what I described. They started getting their own books printed and selling them out of their trunks and proved there was a market there, were selling 10,000 copies of a title, 20,000 copies of a title, and then lo and behold, the New York publishing establishment comes in and says, oh, it's very funny. Those people do, in fact, read books. So one of the really exciting things about this direct to consumer trend is that you don't have to rely on the New York establishment to be able to produce something that a lot of readers might actually derive a lot of pleasure from. One of the things I noticed very early on in my career was that editors tend to acquire and edit the kinds of books that they themselves would like to read and that are relevant to their own lives. And when the New York publishing establishment was controlled by white men, in the 1950s, you wound up getting a lot of broths and John Updikes and-- >> Norman Baylor. >> Exactly, right? And then when the industry changed and was largely being run by upper middle class white women who lived in Manhattan and Brooklyn, you wound up with a lot of nanny diaries and Delaware's Prada's and books like that. And so as the makeup of the editorial staffs of publishers has changed, a lot of the types of books that have dominated the market have changed. And so if you didn't fit into that category, if you happen to be writing in a genre that wasn't in favor in New York, or if you happen to be writing the kinds of books that nobody had ever tried to publish before and never published successfully, well, you know, you can always just put it up on Kindle and see what happens. So for instance, if you happen to be writing derivative fan fiction, that was erotic based in the case of, say, 50 Shades of Grey, all of a sudden you can prove that there's a market for it and 100 million copies worldwide later, you're one of the best-selling novelists ever. And I've heard it was originally a fanfic of Breaking World, or they managed to de-gender or de-specify what it was in the end. Right, right, right. Yes, it wasn't Christian in Anastasia, it was Edward and Bella, and hey, you know, but I'm a big fan of capitalism and I'm a big fan of letting the market, just letting people decide what they want to read. And if that's what they want to read, god bless them. There was a stretch where it was during trade show season, I was on flight after flight and you would notice at least 60% of people in the rows around me were reading one of the 50 Shades of Grey, either on Kindle or in paperback, it was just, wow, this is market penetration. They really figured out something. It is extraordinary, just to see that cover over and over again and to think that so many more people were reading it on their kindles or on their iPhones or on their nooks or whatever. For us, the moment that we knew that a book had really made it was when we got on an airplane and we got on the subway and saw somebody reading a physical copy of one of our books, that would mean that, wow, this had actually made it out into the marketplace and it wasn't just a tiny little boutique title, and if you saw one copy, then it was great. If you started to see multiple copies, then you knew that you were probably headed for the bestseller list and that your author was going to have a fantastic career ahead of him or her for the next 10 years or so. And then you get to the 50 Shades of Grey level, where apparently it accounted for 25% of all books in America. The book market, yeah. And you know what? God bless them, that they are making people happy and generating a lot of revenue. People are reading and whether it happens to be the kind of thing that you might read or I might read, it doesn't matter one bit. Not the slightest. I've got my library at home, I can be perfectly happy with what I've got there, I don't have to begrudge anybody else's choices. One thing I wanted to ask, you mentioned books and deals being sort of your two great passions. What books sort of guided you growing up, what do you feel really shaped your intellectual development or literary development? Sure. That's an excellent question and one of the reasons that I decided to get into this business in the first place is because books had always been just such emotional objects for me. I had a childhood that was full of strife and the way that I would, there were two things that I would always escape with and they were books in video games and when things got really bad, I could always go to my room and close the door and escape to a totally different world, which as an 11 year old, it's not like you can hop on the bus or get on a plane and go to Fiji to escape everything, so you do that, you do it virtually. So I have all of these virtual memories of the authors who got me through my childhood and I guess probably the two authors that as a kid most shaped my, well, let's say three authors who most shaped my literary development and my love for books. The first one has to be Madeleine Lengel. I think that reading a wrinkle in time was a completely transcendent moment for me because there were characters in it that I identified with and who were going through extraordinary versions of the types of things that I was going through in my life at the time and just to know that I wasn't alone, that there were other people who had experienced these sorts of things was a great comfort for me and so I read virtually everything that Lengel wrote and have gone back and reread a lot of them as an adult and they hold up, they're still spectacular books. The first sort of genre stuff that I started reading as a kid, when I was maybe in sixth grade or seventh grade, were Robert Lovelin's three word title spy novels and loved those really, really whipped through all of them and because he was so prolific, there was such a large canon to go through and about four or five years ago I picked some of those up and started to reread them and sadly those didn't hold up. Not as much? Yeah, no. I don't know whether it was because my literary taste had evolved or whether the relevance to me just wasn't there. It always puts me in mind of the Hitchens and Rushdie story about renaming Shakespeare plays as though they were Robert Lovelin. So yeah, so that was, I spend so much time with those books and also some of the Stephen King books at the time were fabulous reads for me. And then I guess my other great, and I don't necessarily, I don't know that I would necessarily call her a literary influence, but certainly a philosophical influence was on Ren. And I read Atlas Shrugged one, I was maybe 14 or maybe 15, sometime in high school. And probably, you know, I grasped the themes and I was able to grasp the characters, but you know, but missed, probably missed a good 60% or more of what was in the novel and just reread it. In fact, I started reading it about two weeks ago. And it's uncanny how relevant it is to today, you know, to that a book that was published and I guess what was 1956, could have been so, could have called so many things that are going on. And the dialogue that she writes, particularly the dialogue coming from politicians, is almost verbatim what you will hear if you turn on MSNBC or CNN now, it's both edifying and frightening to a certain extent. So I sort of started there and then really started reading a lot of SFN Fantasy. Orson Scott Card has been one of my all time favorite authors. And Ender's Game for Me was sort of the one book that got me to love science fiction. Well, you know, Reklin Time I suppose is technically science fiction, but I abandoned the genre for a while and came back to it with Ender's Game and have since read all the other books in the series. And I'm just in awe of what he's been able to do as far as creating a universe and populating that universe with characters and telling their stories in a fabulous way. On the fantasy side, George RR Martin, particularly his first four books were a huge influencer for me, I've always been a plot-driven literature kind of guy. And so to be able to experience such, I guess the freedom that comes along with setting books in a world entirely of your own making allows you to do things with plot that sometimes you can't necessarily do in a sort of realist world. So a lot of the books that I love the most tend to have some sort of speculative elements. You mentioned how editors acquire the books they'd like to read as an agent. What do you look for for, especially from first-time authors, I assume from novelist because that's the sort of people who are going to ask that question. You know, it's true. And the sad fact is that my practice has largely shifted to nonfiction, almost a hundred percent. Well, I've got some legacy novels who are spectacular novels soon I continue to represent. Is it financially driven choice or? Absolutely. You know, when I started the company six years ago, before I started the company I had more time to do editorial work on the novels. And I'm a very editorial agent. I like to make sure that things are the best books that I can possibly make them before I even show them to publishers. And so it would not be uncommon for me to do four or five editorial revisions of a novel with an author before I would send it out. And as the demands of my time began to change and as I had to spend more and more time doing the same things that any small business owner has to do, dealing with accountants, dealing with attorneys, dealing with real estate, those sorts of things, I found out that I had less and less time to be able to do editorial work on novels, particularly first novels, which often need them much more than others. And so, and many of your readers might not actually know this, but you have to write an entire novel to sell it, in most cases you have to write an entire novel to sell it to a publisher. On the non-fiction side, however, you can sell your non-fiction book based on a proposal, which is in most cases just a 30 to 40 page document that's a business plan for your book essentially. It's an explanation of why you're going to be a good commercial partner for them, what the book is going to be about, what its audience is going to be, and how you can reach that audience. And for me, it was a purely mercenary decision to start to concentrate more on non-fiction because it was easier for me to work with authors to craft these 30 or 40 page proposals and then turn them over to some of the best non-fiction editors in the world who could help them really shape the actual books themselves. I still do fiction, I still, in particular, love to do some young adult and some minds and middle grade stuff. But how has that market grown in the last few years, I mean, you know, every literary agent and every person who's at all involved in the economics of publishing should have a shrine to J.K. Rowling somewhere? It's really all stepping from her experience. It really is, I guess. She so transformed the industry and that Harry Potter books so transformed the way people look at, even look at reading. I mean, she created an entire generation of people for whom books were events. You know, those lines outside bookstores of midnight on the evil release of a new Harry Potter novel. Those are the people who are reading Fifty Shades of Grey now, you know, and they're the ones who started-- That's kind of gross. Well, you know, and there was the horrible Harry Potter and Hermione fan-fixed stuff too that I tried to stay away from. But you know, reading like anything else is a habit, right? And if you get in a habit very early, you're going to carry that habit throughout your entire life. And so the people who grew up eagerly anticipating those Harry Potter novels are the ones who were eagerly going to anticipate novels from adult authors in the future. So that was part of it. The other thing was that she really sort of reinvigorated a whole segment of the marketplace readers from maybe 16 to 30 who were interested in stories that were relevant to them that portray characters who had lives that were similar to theirs, obviously, you know, not when it came to magic users versus muggles or anything. But people who were having the same issues and having the same problems and same hopes and dreams and desires. And also so transformed the commercial side of the business. In the past, you know, children's publishing had been much less competitive than adult publishing, had been largely-- let's call it maybe art-driven, more than commerce-driven. And for some people, you know, they may be mowing that fact. They may say that, well, you know, maybe we're getting all these thinly veiled romance novels in the guise of wire middle-grade books. But the fact is that more people are reading middle-grade and young adult novels now than any of their time in history. And some of the most exciting books that are coming out in terms of plot and theme and groundbreaking ground are in that space. And so you've got the big sort of-- the big marquee series, the Harry Potter's, the Twilight's, the Hunger Games, but even some of the other stuff that's coming out has been fantastic. We talked a little bit before the podcast about Corey Dactaro and some of his books. And, you know, really dealing with high-level concepts and things that are directly relevant to what's going on in the world today in a way that's accessible to kids and young adults and makes them think about their role in their society. So it's a great time to be in the-- it's a great time to be in the book business. And the one thing I wanted to ask before we close out, I was looking over your query's page. And why the bias against Westerns? That's what really-- because I had a zombie Western novel, I was in a pitch, and I was really disappointed. Yeah, you know, it's actually-- that, I think, is largely a function of the New York bias, right? Louis Lamour, one of the best-selling authors in American history, right? One of my all-time favorite books, "Lonesome Dove," Larry of Mercury, right? The fact is is that as far as the sort of traditional genres that publishers had always dealt with Westerns, mysteries, romance, SF, and fantasy, of those, Westerns kind of dropped off the map in maybe 1995 or 2000. But yeah, you know, I actually think that one of the genres in which direct-to-consumer publishing is going to be helped the most is Westerns. I think the last publisher that was really publishing Westerns in physical form to any success was Kensington. And they've stopped almost entirely as far as I can tell, but I do think the demand is still there. And I think the people who write them will now be able to find the economics will work going directly to consumer in a way that it didn't work with going through traditional publishers. As an agent, to a large extent, because this is our business, we're beholden to what our customers want to read or want to publish. Now, so for the past 50 years, most agents considered publishers to be their customers. Authors were their talent, were their clients, but their customers were major publishers. And so they often took on books that they knew that they could sell to the major publishers. Now you've got the freedom of perhaps being a little bit more flexible. We have a program at Folio that we started that's sort of a pilot program called Folio Unbound that facilitates direct-to-retail-ourself publishing. We're doing it with a lot of our client's back lists, particularly in the romance space and some in the mystery space, helping them to format the things the way that they need to be formatted to come up with covers, to optimize their metadata, to set their prices. And this is for print? This is a book. You can do it with a print component for some authors. But in most cases, the economics just don't make it--the numbers don't work out. It's been an interesting experiment we're doing about 25 books right now. Some of them have been modestly successful. Some of them have been not at all successful. And we're ranging from maybe four copies sold a month for some authors to low four figures. So that's something I think that's going to be--that's where the industry is really in flux and the role of agencies is coming into question. In the long term, in any business, you're never going to capture more value than you add. So what value can we add to those authors who self-publish or who are publishing on their own? Can we help them editorial make their books better? Yeah. Okay. Maybe that editorial function is there. Can we help them--can we guide them through what in some cases is an archaic and fairly Byzantine process of doing the conversions to EPUV or Moby format sourcing their covers? Yeah, we can potentially do that. But at the end of the day, is that going to--is the value we're going to add? Is it going to increase their earnings enough to have it make sense for them to work with us and to have it make sense for us to work with them? Remains to be seen. But we're going to try it. And it could be the way with the future for agenting it might not be. Never know. So reminds me of Andrew Wiley with his short-lived attempt at publishing a bunch of backlist authors. Yeah. Yeah. Because he wanted leverage to get better deals from his-- From the traditional publishers, of course. Yeah, exactly. Or Scott Waxman or whomever else. But it's a really--with all the new options available to authors, I think that it's forced the best agents to rethink their role in the industry. And so I don't really even necessarily consider myself to be in the book business. I consider myself to be in the artist management business. And so it's my goal to know what the different options are for my authors about how to monetize their intellectual property and how to--how to best take advantage of what's out there. So there are a ton more tools that are available now. The question is how we coach them, how we guide them, and how we negotiate those deals on their behalf. The type of personality that can sit in a closet and create an extraordinary novel or the type of author who can research and write an amazing non-fiction book is very often not the kind of personality who can negotiate a good deal for themselves. And that's why I think there's always going to be a role for agents in the book business. Scott Hoffman, I want to thank you very much for your time and I'll be back when I've recrafted my zombie western novel into a zombie SNM novel. And that was Scott Hoffman, Ophelio Literary Management. Like I said, he's got some strong opinions about publishing. Sorry I stayed quiet during the IAN RAN segment, but I really didn't want to take the conversation in that direction. I will note that this is the third episode since September to mention Miss Rand. I hope that doesn't mean we need to vote an entire episode to objectivism at some point, but you know, if I can get a panel conversation together with Neil, Pert, and Steve Ditko, and I totally get around to reading Atlas Shrugged then. Anyway, this has been The Virtual Memories Show. You can find more episodes online at the iTunes Store or at chimeraobscura.com. I'm your host Gil Roth, and if you'll excuse me, I need to get back to my rewrite of Fifty Shades of Brains. [MUSIC] You