When rogue author Tao Lin set out to write his second novel, he realized he would need to raise some capital to sustain himself. So he has decided to sell shares in 60 percent of the U.S. royalties for his forthcoming, as-yet-untitled book.
Not only will the scheme defray his financial risk if the book does poorly, but Lin hopes that shareholders will promote his book out of self-interest.
Dubner has wondered if public libraries could be created from scratch today. If the novel were invented today, would they all use Lin’s startup model?
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As a publishing professional, I don’t see why this model is a good thing. There is already shared risk between an author and publisher with between an advance and royalties. And will the publicity offered by shareholders cause book sales to jump up enough to defray the loss of the royalties to the author? Nice publicity stunt, but not a workable model.
I can only assume Mr. Lim hasn’t bothered to register this offering with the SEC (typically a six-figure proposition). If I’m correct, Mr. Lim could only be operating under an exemption from registration, which generally require the offering to be restricted to those with whom the offeror (in this case, the author) has a substantive and pre-existing prior relationship. This means he can’t advertise the offering in a public forum (i.e. a blog). Also, unregistered shares (meaning shares offered wtihout the benefit of registration) generally are very restricted in their resale (by law). However, Mr. Lim’s blog assures potential investors there are no restrictions.
Accordingly, Mr. Lim appears to be offering shares without any regard for federal and state law applicable to this activity. In this respect, he’s on very dangerous ground. By handling this offering in such a sloppy fashion, Mr. Lim is essentially handing his future shareholders a free put. If they lose money, a smart plaintiff’s lawyer could easily get it back from Mr. Lim, as he appears to be violating every rule in the book.
@XWL (#2)
Even worse… you’d probably be limited to only taking the book into certain establishments – anyplace with a Xerox machine would be outlawed.
@Lenore (#3)
Wow, what a concept for attorneys: haggling over the percentage of late fees that an author is entitled to collect for overdue books!
I’m not so sure libraries would be considered a form of piracy. For the same reason a video rental place isn’t. They pay a lot more for a “rental-ok” version of the DVD’s. Maybe $100 or so, from what I remember. It gives them license to rent it.
Do libraries do this too, or do they pay retail?
Tao better get himself a good securities lawyer… He is going to get in big trouble for that post if the SEC finds out.
In the US, libraries started as a subscription service. Dues were used to purchase a pool of books from which the participants could borrow materials. There are some collaborative libraries in cities and buildings that operate in the same basic vein.
I’m not sure if novels are the norm for the model, but a lot of journalists go on leave to write books — nonfiction in my experience, but fiction as well. If the diabolical experiment in the basement goes well, the writer makes money. If the diabolical experiment does not, hopefully there is a publisher’s advance so the starving artist does not emerge with pasty skin and a hankering for human flesh.
Wait a sec… maybe that’s my Great American Novel! Anyone want to fund my write up?
This seems to be the trend…a British band called Morton Valence is selling 100 shares at 300 Pounds of their next album. Personally, I think it’s a terrible waste of money, but still.
If you suspect your novel is going to be a dud; sell shares in it before release. If it’s the blockbuster of your career; keep it to yourself.