It can be exciting if more than one publisher is interested in your book. The publishers gather their calculators and prepare to make their offers on the book.
Depending on how many publishers are involved in the bidding process (we’ve had as many as nine at once for a property) it can quickly become complicated. (We talked about the “auction” in a previous post.)
Some will bid solely using an amount of advance dollars paid to the author. Others might keep the advance lower but offer a higher royalty percentage. Some might do a combination of both and toss in a bonus payment based on sales performance (e.g. if it earns out its advance within 12 months of publication an extra $10,000 is paid). Or there may be other elements presented like a sizeable marketing budget.
But sometimes one of the publishers will use what is called a preempt (or preemptive offer) to end the bidding war immediately. We read about these deals in the industry’s news: “The Goobernoober by I. Noah Tall was sold to the Clever Publishing Company in a preempt by The Steve Laube Agency.”
When this happens, a publisher has placed an offer on the table that you don’t want to refuse. (Not unlike the “Godfather”…well, maybe not quite like the Godfather…) For example, Let’s say you have Publisher A with an offer on the table. But they have just heard from the agent that Publisher B has also placed an offer, or are just about to do so. Publisher A does not want to get into a bidding war with Publisher B (by the way, we do not tell the publishers who the other bidder is). The problem with bidding wars is that the money can occasionally become rather spectacular.
In an effort to stop the war from happening Publisher A contacts the agent and puts a very high number on the table and says, “This is a preemptive offer. You have 24 hours to accept or reject it with the condition that this will end the bidding war.” If you reject the preempt, Publisher A’s original, much lower offer, is back on the table and the bidding war begins. The agent/author who rejects the preempt is taking the risk that the bidding process will not exceed the amount of the preempt.
I know this can sound convoluted, so let’s take it out of publishing for a moment and take it into another situation. Imagine that you really want a signed first edition of The Wizard of Oz by Frank Baum in mint condition that is going to go up for auction (with a starting value of $5,000). But you know the person who owns it, or at least you know their agent. Rather than going to the auction and getting into an emotional frenzy over buying it you decide to make a preemptive offer to keep it from going to auction. You say, “I’ll give you $25,000 for that book right now. Or you can take your chances that it will garner more than that at the auction. Take the cash now or leave it.” The owner has to decide whether or not to take the money in hand or wait for more. (Sort of like the “Buy Now” option on e-bay, except in that case the seller is setting a guaranteed price.)
That is the power of the preempt. To “tempt” the author/agent to take the offer now or take their chances with the bidding process. It is a negotiating tool that can do two things for the publisher who wins: 1) guarantees they get the project, because in a bidding war, anything can happen 2) caps the advance dollars expended on the project. There is no danger of wanting a project so much that the publisher keeps upping the ante.
Publisher B, C, and D do not like preempts because they get locked out when the offer is accepted. However, they too have the preempt in their arsenal.
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
P is for Preemptive Offer