A is for Auction

When an agent has a client who is wanting to shop for the best deal available from publishers or if there is a particular project that is bound to garner significant interest from more than one publisher, the agent can hold what it called an auction. Or if a project attracts multiple offers from different publishers a “bidding war” can ensue.

This word “auction” is tossed about in a way that it begs for a bit of definition or explanation. There are different kinds of auctions in publishing and they can go by different names. But first let’s describe what they are not.

Publishing Auctions are Not like a Charity Event or Sothbey’s

Many of us have been at a charity event where there is a “Silent Auction” with an item displayed and a piece of paper where you are supposed to put down your name and your bid. The next person coming to the table sees your bid and can put down a larger number. It is “silent” because there is no moderator guiding the process.

At a high-end place like Sothbey’s there can be a room of bidders and an auctioneer who asks for bids with the highest bidder receiving a loud knock of the gavel and the exclaimation, “Sold! To the lady in red.” (At least this is how we’ve seen it done in the movies, right?)

This is not how publishing auctions work, though there are similarities.

The Formal Auction

In a case where there needs to be a formal auction the agent sets up the rules of engagement and asks that each publisher abide by those terms. There are a number of ways to manage a formal auction. Let me describe two methods…and please realize these are only two methods and are not always done like this. This is for educational purposes only. Don’t expect your next book to be handled this way!

In a “rolling” auction the publishers submit their initial bids by a certain date. The bids from each publisher detail the advance dollars, the royalty rates, and the number of books, in the case of a multi-book opportunity (you might have proposed three but they are only bidding on two). The publishers do not know who the other bidders are. The agent then contacts the lowest bidder and gives them the opportunity to top the highest offer. That publisher can choose to make the jump to the top, increase the offer modestly, or stand firm.

The next lowest publisher is then given the opportunity and so on. The process continues until there is one left standing.

Another type of auction is similar to the “rolling” auction but is done in “rounds” like a round-robin (Click through to find this type of auction described in a real estate situation).

One time the process started with nine publishers putting an offer on the table, but in order to simplify things the agent set a threshold or floor for advance dollars. Those who were willing to exceed that number went to the next round. Eventually there were two publishers and they went back and forth in the final round until a winner was declared.

The key to a successful formal auction is the rules of engagement set out in the beginning. That keeps the playing field even for all participants. Unfortunately I’ve been told stories of agents who broke their own auction rules and angered multiple publishers. Our agency will never do that. Integrity in business is of great import to us.

The Informal Auction or Bidding War

When two or more publishers have indicated interest in a project with an offer the agent and author discuss the offers and develop a strategy for dealing with the multiple publishers. I technically do not call this an “auction.” Instead I prefer to call it a “bidding war.” This process relies heavily on the relationship the agent has with the various publishers. It isn’t a formal process like we discussed above. It must be handled carefully to keep the playing field fair for each publisher. Instead of specified rules, it becomes a type of multiple party negotiations.

Earlier this year I oversaw a bidding war with three publishers. Each presented a compelling case. Each made significant offers initially. Each increased their initial offer once they knew there were other publishers interested. In the end it wasn’t only the dollars that won the bid. The winning publisher had flown two editors to that author’s home for a face-to-face visit. And they also set up a meeting with their marketing director to talk with the author. And their monetary offer included a multi-page marketing plan.

I know of another situation, not from our agency, where the initial offers from the publishers were significant. The agent then circumvented the entire “bidding” process by saying, “The first one to $800,000 wins.” Each publisher went into their huddles and one made a quick phone call and said “Deal!”

I once had a situation where five publishers wanted the same non-fiction book. Each publisher’s offer was almost identical in money and royalties. But each publisher wanted the author to change the book in a specific way. No two ways were alike! In this case the author had to decide which publisher’s vision for the book was nearest to their own vision.

The Best Bid Format

One common method of handing multiple offers is to give each publisher one more chance to put their “best bid” or “best offer” on the table. The challenge for the publisher is that they are usually bidding blind, not knowing where their offer ranks against the others on the table. I remember one situation, many years ago, where we used the Best Bid method.

In the first round each publisher’s offer was nearly identical per book. In other words it was very close. So we went to the Best Bid format. Publisher number one stayed with their original offer. Publisher two increased their offer by 20%. Publisher three increased their offer by 125%. You can guess which offer the author chose.

It Can Be Emotionally Taxing for Everyone

The editors and publishers are highly motivated to “win” the bid. The author can be overwhelmed by it all, especially if it is the first time they have gone through the process. It can be both exhilarating to have publishers “fighting over you” but at the same time it is stressful. Sometimes the process can take weeks before all the final offers are on the table. Each move or counter-move accelerates the tension or anticipation.

Ultimately you, the author, chooses the best situation for you. And it isn’t always the one who put the most money on the table. It is the publisher you feel can do the best job for your project. It can happen where the offers are so close that non-monetary intangibles will weigh into the decision.

One Last Caveat

This blog by no means is an exhaustive or comprehensive description of what happens when multiple publishers have interest in you. Each situation takes its own specific approach, the one that is best for your project. Look to your agent for advice and strategy.

Publishing A-Z series:
A is for Agent
A is for Advance
A is for Auction
B is for Buy Back
C is for non-Compete
D is for Dispute Resolution
E is for Editor
F is for Foreign Rights
G is for Great
H is for Hybrid
I is for Indemnification
I is for ISBN
J is for Just-in-Time
L is for Libel

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12 Responses to A is for Auction

  1. Avatar
    Jackie Layton September 8, 2014 at 5:15 am #

    Fascinating.

    I adore auctions. So much excitement. And stress. One of my stories begins with the heroine at an auction to buy a house.

    Thanks for sharing.

  2. Avatar
    Judith Robl September 8, 2014 at 5:18 am #

    What an interesting post. I’d love to have multiple publishers bidding for my book.

    Oh, wait… That means I probably need to finish the proposal or manuscript first. Back to the salt mine.

  3. Avatar
    jude urbanski September 8, 2014 at 8:01 am #

    This was a really informative post, which I have saved-‘until I need it.’ would love to! LOL Thanks, Steve.

  4. Avatar
    Jeanne Takenaka September 8, 2014 at 9:30 am #

    I’ve read one other post about auctions. Steve, yours explains the different ways multiple publisher offers can be handled very clearly.

    I am curious, in an auction situation, is it only the money that is the deciding factor, or do author and agent look at other terms in the contract a publisher is offering?

    it must be quite a decision process when authors find themselves in this situation!

    • Avatar
      Steve Laube September 8, 2014 at 12:49 pm #

      Money is one of the factors in every offer. Royalty rates. Rights purchased. Number of books included in the deal. Deadlines. And the subjective nature of whether or not the author feels they “connect” with the publisher.

  5. Avatar
    Jenelle. M September 8, 2014 at 9:37 am #

    I knew the particular part of the process was involved, but whoa…

    Not to switch topics here, but this confirmed some information I’ve been researching.

    This posted showed me the importance of having an agent to go at bat for you. Some people may be like ‘duh Jenelle’ of course every author should get an agent, but there are many who bypass an agent to seek publication from a smaller press who accepts manuscripts without representation. I have some friends that have gone this route. One loves it, but the other is looking at getting represented so she can get more royalties. She has exposure and a track record now, I’m curious to see how that works.

    Have you seen that happen? What if a publisher is interested in your manuscript, but you don’t have an agent. Can you send proposals out to agents and include that a publishing house is interested in your story?

    I’ve spent the last few years researching all the options out there for writers; agents, publishers, self-publishing, and publishers who don’t require solicited work. This post confirmed the importance of not trying to get published just to be published, but to really stand back and take a look at what is best for the story.

    I appreciated the examples you gave, Steve, but the one about the author going with the publisher whose revisions were nearest to the authors own, made me nod in understanding. Thank you for including that.

    It seems to be best to not put all your eggs in one basket or be quick to accept an offer from any publishing house. Being represented would help translate the business lingo and get the best deal for the story. I am glad to be educated further on this topic.

    P.S—Steve, stay safe today in all that water. My sister lives in Gilbert and called me this morning with all the rainmania news.

    • Avatar
      Steve Laube September 8, 2014 at 1:03 pm #

      Jenelle,

      Hard to answer the question because there is no hard and fast rule. I could say “yes” that has happened, because it has. I could say “no” that wouldn’t work because it hasn’t. Each situation demands it own specific response.

      Your friends desire for better royalties, etc. may be fine, but if the project isn’t strong enough it won’t matter.

      And just because a publisher says they are interested doesn’t mean much unless we know the publisher, the editor, and the extent of their interest. A “send it me me that sounds interesting” is not the same as “we are offering you $10,000 for this book.” I’m being a little silly, but do you catch my drift?

      I will often be told “a publisher wants my book, you must represent me” when in actuality the author misunderstood what the publisher said.

      Steve

      • Avatar
        Jenelle. M September 8, 2014 at 1:12 pm #

        Ha, not silly at all and yes, I understand. Many thanks for answering my questions clearly. I was very curious to know your thoughts.

        I think that statement is very bold from an author. I couldn’t justify saying that unless a contract has been offered. But that’s just my opinion. Great learning today!

  6. Avatar
    Sandy Faye Mauck September 8, 2014 at 11:54 am #

    Very interesting. I haven’t been too concerned about the agent’s job on this front. Just trying to write. These kind of things makes for more questions on my part.

    I’ll ask just one: I would assume that this is extremely rare with a first book and maybe more prevalent with a non-fiction?

    • Avatar
      Steve Laube September 8, 2014 at 12:58 pm #

      Sandy,
      You would be surprised how many first books get multiple publisher’s interest. If the book, fiction or non-fiction, connects with its amazing idea, amazing writing, amazing author, then yes, it could go to a bidding war.

      It is more rare for a first time book to be held as a formal auction.

      I have had many first book projects receive multiple publisher’s interest.

      Steve

  7. Avatar
    James Ellis August 9, 2018 at 8:08 am #

    Hi Steve,

    If my agent gets an offer, does he then have to tell the other publishers who made that offer and any specifics?

    Thanks!
    Jim

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  1. P is for Preemptive Offer - The Steve Laube Agency - October 12, 2015

    […] many as nine at once for a property) it can quickly become complicated. (We talked about the “auction” in a previous […]

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