Wednesday, August 26, 2009

What Agents Talk About When We Talk about Auctions

STATUS: Finishing up a client manuscript tonight.

What’s playing on the iPod right now? ME AND BOBBY MCGEE by Janis Joplin

Truly a scintillating topic. Kind of like watching golf. Earlier this week, one of my agent friends was conducting an auction so of course that got the whole discussion going about what we preferred—round robin or best bids auctions?

Funny enough, it’s not an either/or question because what is preferred (or what is conducted) always depends on the situation that is unfolding around any given project.

Now what I can say to you for sure is that most editors hate best bid auctions.

Why? Because there is only one round of bidding. That’s it. And if your bid doesn’t come in the ballpark of what other houses are bidding, then you’re knocked out of the running early. I can see why that would be frustrating for editors if they are really keen on a book.

So why do them? It’s a great way to shorten up an auction when the agent has already done a lot of talking to the various editors interested in the work. In other words, a lot of the pre-auction elements are already clear (like the level of excitement, the anticipated advance, what the agent’s expectation is). Then the best bid auction is to simply see all offers at once and then allow the author to choose the best house (and not necessarily a winner based on something like advance alone). Saves a lot of time and energy. Best bids can also work effectively if there is uncertainty on how many houses might participate in the auction. Everyone who attends is supposedly putting best offer forward. Can save a lot of headache if a publisher doesn’t show up to the auction.

Most auctions are probably round robins. This is an auction with subsequent rounds of bidding by multiple publishers until either a clear winner is declared or all houses hit their bid ceiling and only one publisher is still willing to go forward. Round robins work most effectively when there are numerous houses bidding. Not as great a structure if the auction is small—like with only 2 houses bidding. Still, it can be done.

Not to mention round robin auctions can last for days (which is exhausting for everyone involved as nothing else can really be accomplished if an auction is going on). Also, if an author has a clear choice for the editor he/she wants to work with, round robin might knock out the favored house too early in the process. That wouldn’t be good.

Interestingly enough, I have done round robin auctions that then evolved into a final round best bid. Basically when the auction had gone on and on, I let all the editors know that I’m only going to entertain one more round of bids so make it your best and final offer. I think my Grandmother would call that **** or get off the pot bid.

For the most part, I like to negotiate elements of an offer even within an auction and that’s hard to do in a best bid situation so I don’t tend to favor that auction approach. I think a better idea is what I call a two-round best bids. Each house involved in the auction knows it will get 2 rounds of bidding. The first round is for everyone to feel out the field (and it also allows me to say where I think their offer might be lacking). The second round is for everyone to truly get serious about the next offer as this will be the final round of the auction. It feels more effective to me.

And here I’m just touching on the tip of the iceberg but all these different strategies is what we agents talk about when we talk auctions.

Are you still awake? Didn’t think so but if you want to see a group of agents get lively, this is a good topic.