It Can Happen To You

I recently had a book project get canceled in the middle. Although I had proposed the basic idea, the publisher wanted something near to it but different (like the difference between Manhattan and Trenton - at least they're both in the Northeast). The head of this imprint had decided to fit the book in with a new concept she tried in another book. And then the initial sales results came in: that book did terribly and she decided to can this project, assuming that it would have as many fiscal problems.

There was a clause in my contract that let the company cancel the contract should it decide that the book wouldn't sell in advance of its actually coming out and selling, and my legal remedies were limited to getting the parts of the advance that had come due. And I singed it, because the chance of losing the project was low, and even if it occurred, the advanced owed me would reasonably cover the blow. And, to be fair, my editor let me know, but said that I wouldn't be asked to pay anything back. I now have to look around for some replacement work, but it's only inconvenient, not a disaster.

I went into this with my eyes open, and only agreed because I had inherently limited any damages. That's because I've been around the block enough in life to know that any given unexpected event may be unlikely, but when you add all the things that can go wrong, chances are that something will. Many writers go into projects holding their noses at some unpleasant clause in a contract, but tell themselves that the situation can't happen. But of course it can. Look at all the news you've heard about the sub prime credit meltdown. Sophisticated and highly-paid managers at prestigious financial institutions told themselves that they were getting their organizations into easy money. After all, what could go wrong? Oops.

If you see a clause in a contract that makes you uncomfortable, be realistic about how safe you might be. If you're writing an essay about how you did something foolish and embarrassed yourself and don't mention anyone or anything else, then, sure, you aren't going to have a problem with libel. But if you tell yourself that you're only writing a small article and that who would take offense at something you said, then you are out of making a realistic analysis and into the realm of rationalization. You've crossed the line and aren't thinking, but coming up with ways to excuse your behavior to yourself.

You can't eliminate all risk from doing business. Risk is an inherent part of business, because it is the risk that also offers the opportunity. But do avoid foolish risks, and make sure that for the ones you take, you've got enough protection to keep yourself from taking an unexpected bath.

Read the Business Pages

What do sub-prime mortgages, debt-backed equity derivatives, and growing credit card debt have to do with writing? Nothing, if you don't cover financial matters. But they have everything to do with a writing business. You not only have to crank out words, but you need to properly plan your business, understand where you should be steering it, what external blockades their are to your progress, and what pitfalls lie ahead. Of course that means studying markets and particular publications, but it also means understanding the business climate.

The global economy affects clients of all sorts. Publications depend on ad revenue. Corporations depend, ultimately, on people buying something. People depend on having enough spare money to make their purchases. Trip one area up - like a credit crunch hitting consumers and investors while tripping the housing market, which has been artificially inflated and the source of much of the wealth people thought they had but didn't - and the rest may also take a spill.

When you see an impending economic black hole, it's time to consider your potential strategies. If you focus on the financial markets, then you have to ask yourself if your clients are overly involved in these problematic areas, because when they run into a wall, so might your client. If you're not specifically in the financial area, then you should consider the possibility that within six to eight months, there is a good chance that companies may need to reduce their spending. To keep your business humming, that means you need to diversify, not just among different industries, but also among different companies.

If you have a significant portion - 20 percent or more - tied up with a single client, consider backing off a bit and not being so dependent. Generally diversification is a smart risk-management practice, but in times like these, it can keep you from getting crushed. When you spread the risk, you're not in as great a danger of that one big client cutting back on its work flow.

I'm not suggesting that anyone panic, and, obviously, I have no way of knowing what the economy will do exactly. I'm no financial expert, but I do read the business pages, particularly the articles that talk about broad economic trends. I also try to read between the lines and connect information I get from various sources. This is a case where, if I'm wrong, diversification won't hurt. But if I'm right, it could save my bank account. Maybe a little preemptive risk management could do the same for you.

Diversify Out of Danger

As I've written on this blog and said to people in talks and courses, you have to be able to walk away from a deal if you're going to negotiate with any integrity. Anything less and you are a psychological slave. The answer I've often heard is, "But I need the work. I need the money. I can't say no!"

I understand the pressure of having to bring in cash and feeling at a disadvantage when contractual issues come up. What you need to do at times like that is work like mad at marketing so you can diversify out of the danger areas. For example, I'm increasing the amount of corporate work I take on to raise my income and, as importantly, to make myself less vulnerable.

I don't expect to keep rights for corporate work. I also know that I'm not going to run anywhere close to the same risks under such things as libel and right of privacy. If it takes two months to get paid - well, it's not that much longer than publishers, and in some cases it can be shorter.

Now I'm sure some will say, "But I don't like doing corporate work!" Then find something else - teaching, maybe, or editing, or work for non-profits. But definitely start developing the attitude that if you're going to be in business, you can't guarantee that you'll be in love with everything you do. Not even great artists have that luxury. Think Michelangelo or Rembrandt or Bach never had to consider clients?

Sometimes you won't work with someone because you find it too distressing, but you have a duty to keep yourself financially sound enough to do the work that is important. The sooner you diversify enough to operate your business while minimizing your risk, the sooner you can be picky about the types of work that you want to do. You've undoubtedly heard of suffering for your art or craft. I think many in the creative fields don't really grasp the concept. They think they have to be miserable to produce good work. Not at all.

To suffer for art means that you undertake and solve difficult situations so you can stay on track with what is important. It doesn't mean living in an impoverished state. It means working hard enough, and bearing what seems unpleasant to you enough, so that you can do what is more important. If you can't manage that much for your duties to craft - let alone family and society - then you should get out of the business, because continuing is irresponsible and affects not just you, but everyone around you.

Organize Magazine and Opportunity Risk Analysis

Part of a freelance writer's business is analyzing a client before you consider working with it. You need to answer questions about the reputation of the people involved in the venture and the company's financial stability and ability to pay. I thought this might be clearer through an example.

The subject of a recent New York Times article was a new publication called Organize. Joyce Dorny, a professional organizer, developed the concept with an investment of about $100,000. No one involved with the venture has ever run a magazine before. According to a second article, the title is selling in some supermarket chains, all 500 Borders stores, and three-quarters of the 800 Barnes & Nobel stores, with the first issue getting orders for 20,000 copies. The bimonthly's first issue has nine pages of advertising.

I did a quick web search and found nothing alarming. If I were actually thinking of taking an assignment, I might do a search on a service that can pull up public records, including criminal and bankruptcy, to see if there are any red flags that might make me uncomfortable about doing business.

Now let's look at the available financial information. In this case we have a significant piece of information: the size of the start-up investment. According to MagazinePublisher.com (site of a custom publisher):

A small niche subscription base magazine can probably be launched for under $50,000 - a full featured newsstand consumer magazine would require into the millions to successfully launch.

Distribution and content help tell you what the magazine's focus is. In this case, according to the Times piece, the focus definitely seems to have a consumer slant:

Marketed to women who work full-time or are full-time mothers, its purpose, Ms. Dorny said, is to help these women find “a sense of order and a feeling of control over the work desk or toy bin.”

If you see a picture of the magazine, it appears to be a glossy with sophisticated design. All this means that the start-up costs are quickly racking up the zeros. This money has to cover printing, design, content, customer acquisition, marketing, and many other expenses. In other words, $100,000 for a title like this is little money. Now factor in that the ad sales of the first issue were only nine pages out of a total of 64 pages. That's 14% ads, which is extremely low in the industry. The question is whether there will be enough cash flow to keep everyone paid in a timely manner without depending on an additional investment.

Of that first 20,000 order, according to experts in the business, traditional magazine distribution typically sells only 3 out of every ten copies it places. Combine that with the $4.99 cover price, and the total brought in could well be just under $30,000, and the publisher sees only some portion of that, with the rest split by the distributor and the store. In other words, newsstand sales aren't going to bring a windfall, and neither will 9 pages of ads.

I don't know the people involved and certainly can't predict whether this venture might hit a consumer nerve or not. But the quick analysis would suggest that the numbers are against them without more investment, meaning that getting paid could be risky. Even if you took an assignment, it would seem prudent to wait for payment before accepting a second.

There may be rare cases where this kind of analysis causes you to turn down what would prove itself a great opportunity, but in the long run you'll avoid far more painful times than paychecks.

Addendum: Ms. Dorny emailed me. I had misread something in an article that made me thing she was an author - she isn't. I suspect the public reports of the numbers were off, as she said the distributor sold 35,000 copies of the first issue and they have about 1,200 subscriptions. The second print run will be at least 110,000, and they're investing more of their own money.

That said, the magazine hasn't paid any writers for submissions. As she wrote:

We have been very blessed with writers who believe in the idea of the magazine so much, and in the long term possibility of it, that they were willing to contribute for the mention of their name, business and/or website. They will be the first to get paid when we begin doing so (we plan to start with the jan/feb issue).

Definitely not a market for a pro writer, as you'd apparently be helping to underwrite the development of the magazine. I don't know if the designers were paid, though I'm pretty sure that printers don't work for nothing.

Update - March 29, 2008

Some writers had asked again if this market was paying, so I emailed owner Joyce Dorny. She responded as following:

We do now pay, but on a limited scale.

We pay $500 for a feature article and $250 for a column. We also pay on the 15th day of the publication month.

So it is a paying market, though limited pay and payment comes after publication.