Watchdog Analysis: De Montfort Literature

De Montfort LiteratureWe’ve seen quite a bit of media buzz recently about a new startup, De Montfort Literature (DML). DML’s novel venture — if you’ll excuse the pun — promises to select writers algorithmically, and pay selected writer a £24,000 annual salary (about $31,000 USD) while they write their books and cultivate their talent.

To an aspiring or fledgling author, this sounds like a dream come true. The goal of many professional authors is to earn a living wage from their writing, a goal that requires years of hard work, patience, and a bit of luck. Then along comes a wealthy investor offering to finance a full-time writing career.

The rate is slightly lower than the average full time salary (£27,600) but it skips the slow climb that most authors face and allows them to jump straight into a full-time career as an author.

But, as always, the devil is in the details. In this analysis, we’ll examine the pitfalls of this new company with an unflinching eye.

Hedge fund experience does not equal publishing experience

Jonathan De Montfort, the individual behind this venture, is a successful hedge fund manager who credits his firm’s success to “a mathematical system based partly on the Fibonacci sequence”. He claims this system has successfully predicted financial markets, the 2008 crash, and Brexit, and other events, and now believes it can be applied to literature. “I have taken what I know about hedge fund management and applied it to literature,” reads a quote on the company’s website.

However, De Montfort’s experience with publishing appears to be extremely limited; his first novel, Turner is scheduled to be published on August 31st of this year.

In a June 1 interview with The Guardian, De Montfort’s view of publishing becomes more apparent. He says,
“The traditional publishing models for fiction writers are littered with obstacles. Securing a literary agent is a lottery, and self-publishing is costly and time-consuming.” DML’s website positions their approach as a “new, alternative route to the traditional agents and publishers” which will “make being a novelist a valid career choice…”

The thousands of career authors who are earning a living wage from their “invalid career choice” may take exception to those comments.

DML’s website also stresses that they are open to any genre. A one-size-fits-all approach does not work for all books. Does the company have the expertise and understanding of the market to sell books across a wide range of genres?

De Montfort may believe his venture to be an innovative new approach (or, as his website puts it, “a totally new model” and “a game changer for the fiction industry”). But startups regularly arrive on the publishing scene promising to revolutionize an industry they have minimal experience with, and the results are rarely good.

Consider Inkitt, who debuted with similar Jedi hand-waves and claims of “an algorithm that predicts bestsellers by analyzing reading behaviour”. The founders’ experience in sales and software development did not translate to experience in publishing.

Disastrous contract terms underscored the company’s poor understanding of the industry, while aggressive spam campaigns led to their being banned from multiple social media platforms. Inkitt’s ham-fisted tactics swiftly raised the ire of industry watchdogs and prominent authors.

Publishing is a turbulent sea, and those entrepreneurs who leap in without understanding the depths of those waters often drown. Sadly, they may drag scores of novice authors down with them.

The lure of a full-time salary hides a sharp hook

While the fine points of DML’s contract are unknown at this point, the points that have been publicly disclosed are hugely problematic.

Authors who sign with DML are required to:

  • Quit their job
  • Write exclusively for DML
  • Turn over the copyright to any books they write while employed by DML
  • Surrender all subsidiary rights
  • Sign over the rights to the ideas the author proposes
  • Agree to hand those ideas to a ghostwriter at DML’s discretion
  • Agree not to publish any work for two years after the contract is terminated

Several of these terms are particularly odious in a publishing contract.

Non-compete clauses have the potential to cripple an author’s career and income. Sweeping rights grabs deprive authors of assets that are potentially far more valuable than the original work. And even if it’s enforceable in your jurisdiction, claiming ownership of an author’s ideas should be an immediate deal breaker for any publishing contract.

Promoting your authorial brand, which no longer belongs to you

DML states in its FAQ that “We are looking to promote you as an authorial brand.” However, that authorial brand is under the exclusive control of DML for years. The company claims ownership over your writing and the very ideas of your books, and has the right to hire less qualified authors to churn out content with your name on it long after you’ve left the company.

But, if you wish, you may buy back the rights to your creativity and your name for an undisclosed sum.

What’s fifty percent of nothing?

DML’s FAQ promises authors 50% of sales, after “all costs are taken into account”. These costs include “salaries, production costs, and marketing”. (The nature of those salaries is not explained in DML’s FAQ. Does that include the £24,000 salary paid to the author? If so, we’ve seen that business model before. It’s called an advance against royalties.)

There’s a phrase to describe the kind of open-ended costs DML lists above: Hollywood accounting. The television and movie industry is infamous for using creative accounting methods to inflate the recorded costs of a project in order to downplay profits. For example, Harry Potter and the Order of the Phoenix earned $940 million at the box office on a $150 million budget. Yet, on paper, Warner Bros. claimed that the film resulted in a $169 million loss. The studio claimed distribution fees of $212 million which the studio paid to — surprise, surprise — its own subsidiaries.

By claiming a loss in this way, studios can minimize their taxes and reduce royalties to a fraction of their actual value.

Hollywood accounting is why authors must be extremely wary of royalties based on net profits, or a percentage of profits after expenses. It’s all too easy — and perfectly legal — for a publisher to claim tens of thousands of dollars in marketing expenses, salaries, and other fees paid to entities under their control. If you’re being paid a percentage of net after costs, this creative accounting cuts deeply into your income.

We haven’t seen the state of DML’s accounting yet, but the cynic in me notes that a hedge fund manager whose raison d’être is amassing wealth will almost certainly be looking to maximize profits.

Literary sweatshops are not the future of publishing

De Montfort assures us that DML is born out of a desire to elevate authors, and to invest in their future. But no matter how benign those intentions may be, framing authors as salaried employees opens the door to dangerous, even dystopian possibilities. I do not relish a scenario in which authors are simply human resources to be hired and fired at the whim of an algorithm, where creativity is subject to quotas and mandatory targets, and most importantly, where the newfound independence and agency of authors is sacrificed for the promise of a paycheck.

DML does not specify how many books an author will be expected to pen, stating only that the number “depends on the author and their ideas”, and that they will be “expected to hit certain targets”. What are those targets? 2,000 words per day? 10,000? 15,000? We just don’t know.

And therein lies the primary concern with DML’s contract and business model. It requires the author to have faith in De Montfort Literature’s good intentions, yet enables a raft of potential exploitation. It may yet turn out that DML is an incredible boon to authors, and that De Montfort’s good intentions are backed by good faith actions. Money does flow toward the author under this system, but as it stands, the potential harm inflicted by the restrictive terms of DML’s employment offset the benefit of a steady paycheck.

Good intentions are commendable, only a well-crafted contract that protects the interests of both parties will save authors from being exploited.

In the best case scenario…

  1. The author passes DML’s screening and is accepted into the program.
  2. The author quits their day job to pursue their passion, writing.
  3. The author collects a steady paycheck.
  4. DML allows them to write what they want, without restriction.
  5. The company assigns modest goals, and supports the author in reaching them.
  6. The author does not have to worry about editing, marketing, distribution, or any of the minutiae of publishing.
  7. The company proves to be skilled at marketing books of all genres, and generates exceptional sales.
  8. The company deducts minimal costs from the author’s royalties. Profits are excellent.
  9. The author is happy, flush with cash, and remains with DML to grow their author brand.

In the worst case scenario…

  1. The author passes DML’s screening and is accepted into the program.
  2. The author quits their day job to pursue their passion, writing.
  3. The author collects a steady paycheck.
  4. DML’s algorithms decide that steamy vampire detective thrillers have high profit potential.
  5. DML assigns the author a steamy vampire detective thriller project very loosely based on the author’s original historical romance idea.
  6. DML requires six steamy vampire detective novels per year. Writer’s block is not allowed.
  7. The author has an idea for a fascinating book on a topic that has captivated their interest. DML declines to pursue the project. The idea now belongs to DML, and the writer is prohibited from authoring similar works.
  8. Although the author is entitled to 50% of the steamy vampire net profits, DML claims that marketing, production, and salaries have resulted in a net loss.
  9. The author quits in disgust… or DML informs the author that they are no longer needed and dismisses them.
  10. DML retains the rights to use the author’s name, branding, ideas, and books.
  11. The author is prohibited from writing or publishing anything for two years.
  12. Meanwhile, DML markets a series of horrendous steamy vampire detective thriller under the author’s name, ghostwritten by an overworked amateur.
  13. When the author asks DML to stop, the company invites the author to buy back the rights to their intellectual property for $20,000.00.

Which scenario will be closer to the truth? We’ll have to wait and see, but I would not want to be the guinea pig for this experiment.

De Montfort Literature did not respond to our request for comment.

Over to you

What are your thoughts on De Montfort Literature’s business model? Does a steady paycheck offset DML’s restrictions on your career? Do you trust them to treat authors fairly? Let us know in the comments below!

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4 Responses to Watchdog Analysis: De Montfort Literature

  1. Karen Myers August 13, 2018 at 1:37 pm #

    This article mirrors my own suspicions from the initial announcements. Run far away. At best, if you dabble with something like this, try to use a pen name, or you may be stuck creating a pen name to use for the rest of your career to live down the potential damage to your reputation after X years in such a system.

    In terms of modern writing ateliers, like Patterson’s, at least the man demonstrably knows his market, adds his own expertise to the story outlines, and has a brand with significant value. While I don’t know the terms of his contracts, there is potential for those to make financial sense for some authors who are a good fit. If people were still looking for writers for Nancy Drew or the Hardy Boys books, the same would apply. But this offer isn’t restricted to an existing product with a successful brand, and it attempts to own the author in ways that are very alarming.

    If you’re going to take risks, and all publishing is a risk, better risks you control rather than risks you don’t. I’d rather devote my own modest efforts to growing my own business than devote my attention to the lottery of traditional publisher acceptance and the subsequent loss of control in hopes of “scoring the next big one.” This offer is even more restrictive in terms of control, and why would we expect that “chasing the market” in terms of “the next big concept” (50 shades of wizard schools, anyone?) will be more successful for him than for the trad publishers who already do that?

    It may feel less risky to take a guaranteed income (for some time) than to go into business for yourself, but all you’re doing is delegating that risk to an inexperienced 3rd party with no brand and losing all upside and control over your creative products. At least if you own your work, it’s yours and remains yours, and you can decide what to do with it as it accumulates. Meanwhile you’re free to publish it yourself these days and start earning money directly.

    Plus let me note: one of the canards against self-publishing is the notion that “you have to write a lot of books quickly to make more money”. Whether true or not, this offer makes that a central part of the deal.

  2. R.K. Lander August 13, 2018 at 11:47 am #

    Just by looking at those contractual conditions, no, I would not trust this company. I am a self-published author making a living from writing and I have not spent ridiculous amounts of money on publicity. I’ve worked it up, read everything I could get my hands on and waited it out. I now have a literary agent for subsidiary rights who offer me a contract that is fair and I would have it no other way. I don’t want to be employed – that’s why I chose self-publishing. Unfortunately, it seems there are many, many published authors who see themselves as superior to independent authors and that’s fine, because at the end of the day, I earn my own salary, I control my own enterprise and above everything else, I decide what to do with my ideas; I can gift them, I can sell them or I can keep them.
    Personally, I feel it is the disillusioned author that would go for a company like this. Perhaps they have tried and failed to self-publish because they refuse to put in the hard work that marketing implies, or maybe they are published authors with abusive contracts, or good contracts but failed to sell enough books for the publishers to want to keep them on. Why would you want to hand everything over for a discreet but steady salary? What about the great ideas, the strokes of genius – you give everything you are for a paltry two thousand dollars a month? Not me!!

  3. Deborah Jackson August 9, 2018 at 3:29 pm #

    mmmm……I was published by the time I was twenty-six and although it wasn’t novels but more picture and young readers I was pretty proud of myself for getting there. I was rejected a few times but the agent or publisher always took the time to come back to me with some encouragement. I was always told that I shouldn’t write for money but the love of the written word and they were right. I only received 10% royalties and by the third edition, I received 7%. To this day I have no idea what the costs were and wouldn’t have asked. My contract gave me copyright, yes but I still don’t have the right to publish it again without the express agreement of the publisher. So what is the difference here? Now when you send off your manuscript, you find a plethora of agents to choose, some who look like they have just graduated and a large number of publishers who hand over their slush pile to an intern. So what exactly is your point here? For the first time, writers are no longer at the bottom of a large money-making machine and I for one am very excited. Apart from the few exceptions and in most scenarios – luck or contacts, there doesn’t seem to be a lot of opportunities for writers. When you take away the literary snobbery from the industry, a publishing company unless you’re a charity, is like any other company and that’s making money. A writer writes to be read and how are we read if not published? As for the terms, Jonathan makes it quite clear that you should liaise with a lawyer. As for sweatshops, Patterson, to name one, has a number of writers working for him. Does he run a sweatshop? It’s about time that writers are recognised and supported and not ignored. As for ideas, what on earth is the problem with that? In any creative market, you are paid to come up with ideas. You are paid to brainstorm and it is the intellectual property of said company. De Montfort is also hiring the experience. I really think you should focus on supporting a company that has the guts to step out of the shadows of the big five. I’ve applied and chatted with him. I have no idea what my chances are but it’s better than trying to sell my soul to the many so-called experts out there and be part of an evolving enterprise. As for Inkitt, well I could have told you that wouldn’t work as you had to put your work online and whoever was the most popular got picked. No. Wait. They do that on Amazon already. Isn’t that called ‘Self-Publishing?’ I am more surprised that for someone who seems to promote self-publishing and is part of the Alliance of Independent Authors you would understand how difficult it is to promote your own book. As for genres, most of the publishers I know want what sells and will only be interested if that’s the case. You only have to look at manuscript wish list to see what publishers and agents want. Again, when you pull it down to the bare bones, it’s about selling a product and making a few coins from it. If vampires sell better than, How to repair your car,’ then it’s a no-brainer. Give them a chance and I will reply a little later about my experience if I’m one of the lucky few, if not then I tried and will continue on my way.
    Yours Sincerely, Deborah Jackson

    • Orna Ross August 13, 2018 at 4:45 pm #

      Thanks for your feedback Deborah. John is in further conversation with the company and we will have more information soon. We’d love to have your feedback if you do get involved.

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