All About Auctions
As we all know, acquisitions is complicated, and when I last blogged about the process, I wrote about the editorial board and what goes on in a publishing house when trying to make an offer.
However, that's all buildup, really. Part I of a three part saga, the middle part of which is when monies are actually offered. (Part III is contracts.) Today I would like to discuss Part II: Offers, and specifically auctions.
The process of offering money can vary widely from project to project: sometimes only one house makes an offer, sometimes several houses make an offer, sometimes a house tries to pre-empt the book, etc. This stage of acquisitions is a bit about game-playing, especially when there are multiple players. Publishing Poker, if you will.
If you are an author fortunate enough to have several houses interested in buying your project, congratulations! Your agent will go out and gauge the playing field and decide whether or not s/he wants to set a closing date (after which the two of you can consider all the offers that have come in) or to take your project to auction.
There are many factors that go into whether or not an agent takes a project to auction. If offers are flying fast and high, then s/he may suspect there's enough interest to say "May the best publisher win." A pre-empt, or a very high offer from a publishing house to take the project off the table, is generally a good indicator of whether or not an auction could be in the works. At which point, the agent will set the date and the rules.
Like everything else, the rules of an auction can change, but there are generally two types of auctions: round robin and best bids.
This is the most "traditional" type of auction. Each player puts in an opening bid, and then bidding goes in rounds, increasing incrementally. Bidding increases by increments of X, determined by the agent and the relative "hotness" of the project. For example, the agent could say bidding increases in increments of $5000, $10,000, or even $100,000. In incredibly high profile projects like Lena Dunham's collection of essays, the incremental increase amount was $100,000, and a floor was set at $1 million. (We'll get to floors in a bit.) Round robin auctions continue until one by one, the players drop out, and the last publisher is left standing.
As you might imagine, round robin auctions can go on for quite some time. Like cricket, it can theoretically go on forever if no one folds. Sometimes the game strategy can simply be to wait it out: He who has the most patience will win.
Unlike round robins, best bids is quick and to the point. Best bids auctions are exactly what it sounds like: the players have one shot to put together their most attractive offers. Once all bids are in, the agent and author can choose the subjective "best" offer (which can include things such as bonuses and special marketing plans). If two publishers happen to come in with very similar offers, best bids can sometimes progress on to another round, where the publishers are given a chance to improve on their initial bid.
The raison d'etre for choosing round robin vs. best bids is generally up to the agent, who is familiar enough with the parties involved to know which is best for the project. If s/he thinks most of the publishers will come in with similar offers, then best bids might be the way to go. On the other hand, going in rounds can often nudge a publisher to pay more, especially if competition is tight.
Now, there are many variables and rules that can alter the way an auction is run. For example, as I've mentioned earlier, Lena Dunham's deal came with a floor set at $1 million. A floor is a number set by the agent to indicate that this is the lowest possible bid. In poker, we would call this a blind--a minimum bet. It's often a way to gauge which publishers are serious enough about the project to commit to the number set by the floor.
The agent can also limit the number of rounds in a round robin by restricting the number of players advancing to the next round. For example, an agent might say that the top 4 bidders will progress to the next round. The agent might also say that the winning bid must be higher than the others by an increment of $25,000, or that publishers must also come in with a marketing plan, or that auctions will consider advances only, etc. There a million permutations to the auction game, which part of what makes them so exciting.
So that's a basic rundown of auctions for you! If you have any questions, please leave them in the comments below, and I'll try and answer them as best I can!
Oh, and in case you guys haven't already seen it, y'all should head on over to Sooz's blog to see the cover reveal of her next book A DARKNESS STRANGE AND LOVELY!