When a Novelist Holds an IPO

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?


Quincy

In a document available here, http://www.sec.gov/litigation/complaints/complr17469.htm, an SEC complaint, SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. SURGILIGHT INC., JUI-TENG LIN,

YUCHIN LIN and AARON TSAI, Defendants, please see that Tao Lin's parents are referred to in just the first paragraph:

"Summary

1. The SEC brings this civil fraud action against two securities fraud recidivists, Dr. Jui-Teng Lin ("Dr. Lin") and his wife, Yuchin Lin ("Mrs. Lin") (collectively "the Lins"), as well as Surgilight, Inc. ("Surgilight") and Aaron Tsai ("Tsai"). The Lins and their accomplices defrauded innocent investors of million of dollars through an unlawful pump and dump manipulation scheme. Incredibly, the Lins launched this scam barely a year after being adjudged securities fraudsters and enjoined from such activity by another federal court."

I am sorry to make this public, but if Tao Lin is going to engage in securities fraud, then I think his parents' background as "securities fraud recidivists" is relevant.

Melville House has a signed contract with Tao Lin for the novel in question, and as such, that company is involved with this "offering." What is Melville House's position on this?

When an SEC complaint is filed against them as well as Tao Lin -- this is clearly a violation of federal securities law -- I guess we will find out.

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Nathan

Apparently you're not happy with what they're paying you!

Tao Lin

I will respond to things by Clarice, Fortling, and Yujin who I think are the same person who also made nearly the same comments about me 5-10 times before in the comments sections of blogs .

"Tao once once sold some of his books to blog readers via paypal, then announced that he would had decided to keep the money and not send buyers their books."

I announced that "as a joke." Everyone received their copies. I've given away or sold 200-300 books on my blog. I've given away 50 books or something whenever I had "extra money."

"You" know that isn't true about me not sending people their books because I already addressed that in an earlier thread, I think on my blog.

"He has tried again and again without success to get publishing contracts and the best he can do apparently is a small firm which apparently knows enough to pay him exactly what they think he is worth."

Since I signed the contract with Melville House for my first non-poetry book, BED, in 2006, I have not tried to get any other publishing contracts from any other publishing houses (except I sent EEEEE EEE EEEE to 2-3 other publishers but withdrew it before anything happened with any of them). I have had a "larger" house "approach" me but I "just" said I was "with Melville House." I'm very happy with Melville House.

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Yujin

Dan M. is right about Tao Lin getting in trouble with the SEC about that post. But check out the SEC actions against his father and mother for their part in the Surgilight stock debacle. It involved fraud and money laundering.

Tao Lin is someone who has spoken numerous times of shoplifting (Google "Tao Lin" and "shoplifting"), describing his attempts to steal from American Apparel, Barnes & Noble, Whole Foods and other "greedy corporations." According to both his blog and the Gothamist blog, he has been involved in vandalism, putting up stickers advertising his books on the storefronts of Duane Reade, Citibank and other, presumably "greedy," retailers.

The editors and publishers at mainstream book publishing houses are not so stupid that they would overlook the potential revenue Lin's books might offer. He has tried again and again without success to get publishing contracts and the best he can do apparently is a small firm which apparently knows enough to pay him exactly what they think he is worth.

In other words, if this childish scheme is worthy of Freaknonomics' attention, well, then, you would have loved what Max Bialystock and Leo Bloom were selling.

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Fortling

This is an interesting idea. If it weren't Tao Lin, it might be worth doing. Tao once once sold some of his books to blog readers via paypal, then announced that he would had decided to keep the money and not send buyers their books. He also regularly shoplifts (or at least says he does on his blog). There are multiple, documented reasons not to trust Tao Lin.

Clarice

According to the December 18, 2002, issue of the Orlando Business Journal (available online), Tao Lin's father, J.T. Lin, the founder and former chief executive of Surgilight Inc. was been convicted at the time by a Brooklyn jury of fraud and money laundering. I quote the article:

"According to the Securities and Exchange Commission, J.T. Lin was convicted for manipulating Surgilight's stock price by stating in press releases that it developed a way to cure presbyiopia, an age-related deterioration of eyesight.

Those statements were false, the SEC maintains.

Shares in Surgilight climbed from about $2.50 to $25 on that information. According to the SEC, which regulates publicly traded companies, Lin then sold off Surgilight shares he controlled for a profit of about $1.5 million. He then wired that money overseas.

In addition to the criminal case in Brooklyn, Lin and his wife, Suchin Lin, face civil charges for violating laws governing securities trading. The SEC is seeking to recover the $1.5 million in question plus interest and other penalties.

The Lins had previously settled a civil action filed against them involving another laser eye surgery company in September 1998."

So Tao Lin, apparently, has family experience in selling shares of stock based upon worthless claims.

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David Kirk

@BR Kelley

Similar but not quite the same. As far as I can recall, the Bowie Bond reflected an existing, relatively known and stable income stream of royalties from an existing asset. As the name suggests, it behaves more or less like a bond since the future income stream is relatively predictable. The bond was issued in 1997 and related to works created prior to 1990.

In this proposed situation the potential income stream is highly uncertain and is more like a venture capital or private equity investment. Similar to private equity, there appears to be a plan that the shareholders will take sufficient interest in the success of the book that they will actively involve themselves in promoting the book, much like a traditional publisher.

So, they are both derivative financial instruments, but the risk, reward, and active involvement characteristics are very different. Also, Prudential purchased the instruments as a serious, long-term investors within the constraints strict risk management and regulatory requirements. As another commentor posted earlier, it is unclear whether these "shares" have been appropriately registered and whether it is legal to issue or purchasae them!

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Susan

Many people would like Mr. Lin to stop lying and stop cheating people.

Here is a post from his blog dated April 13, 2006, http://reader-of-depressing-books.blogspot.com/2006/04/dear-everyone-who-pre-ordered-my-book.html, entitled "dear everyone who pre-ordered my book":

"you will not get the book; you will not get your money back

i am spending your money and keeping the books; this information is very simple and straightforward; please process it"

Mr. Lin needs to process the fact that he is not dealing with kids anymore; he has put himself in the public eye, on the website of the New York Times, and he is now subject to adult rules - and SEC regulations.

Nita

Let me explain what Tao is discussing when he refers to the MTA, Metropolitan Transit Authority.

He posted stickers advertising his books on subway cars, on the posts of subway stations, and on the turnstiles at various stations, including 14th Street-Union Square.

These books were published by Melville House.

This vandalism was a violation of MTA rules. It was defacing public policy, avoiding paying for the advertising posters to the MTA, and generally showing little respect for his fellow citizens of New York.

A complaint was filed with the MTA about this illegal stickering of subway stations and the complaint was against Melville House, the publisher of Lin's books, since the stickers advertised a Melville House product and except for his authorship, there was no definite connection between the vandalism and Lin himself.

I encourage anyone in the media who wants a good story to look at the archives of Lin's blog, Reader of Depressing Books. There you will find him the private emails of his editors, taunting editors who discovered that he had violated the rules of their publications, making death threats against individuals who crossed him, and bragging about his vandalism and shoplifting.

It is truly an appalling record.

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David Kirk

In relation to the piracy comparison between libraries and digital media, I've written a brief economic analysis of this, highlighting how many creative works will not be produced under the current piracy/economic framework unless artists (such as Madonna with her Live Nation deal) change their own business model.

http://twentythirdfloor.co.za/2008/08/02/economics-of-piracy-at-the-limit/

adam

Tao:

You are famous.

America is great.

Jack Morgan

This thread has really cracked me up. All you stodgy people caught up in rules is exactly what's wrong. If Tao "got in trouble" for this, it would only create more hype like that time Matel sued Aqua. I love that Tao is realizing this idea and that people are freaking out about it. I hope the law does get into it. It would be extremely funny and interesting. Literature needs more excitement. The closest thing we've had in a while is when that plagiarist at Harvard got busted. The law being interested in little Tao Lin and little Melville House would be great. It would give all us bloggers more to write about. It would turn Tao into a superstar.

Tao thinks of cool and funny things to do, and he writes in a way that people find refreshing and different. I think he is the closest thing literature has to a prodigy and that he will be lauded as one soon enough by others.

This thread shows how the book world is filled with sticklers and nay-sayers, editors are baffled, lawyers are befuddled, PR people are benighted, and people in general are afraid of anyone who is doing something slightly different from what they are doing.

And maybe you should be afraid. After Tao stops being sad and defensive about this garbage all over the internet about him today, he will wake up to the reality that he doesn't care what you think because it doesn't matter, and he will go back to doing whatever he wants and maybe changing the world little. And the people who like him will line back up to buy his new book joined by throngs of others who are now just learning who he is and discovering that he is somewhat of a maverick. Then maybe more people will "deface" subway cars and "buy shares" in his books. oooooh.

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Adam Robinson

"the dangerous commercialism spiraling out of control in the book industry"

HiFiGuy

This is a great idea!

Now, will he be calling his new novel "Springtime for Hitler" by any chance?

tao

I don't understand how I have engaged in securities fraud.

I think you're the same person who tried to "turn Melville House against me" when you emailed them about the MTA sueing me or something.

I'm like an ant trading a mote of sand for a leaf or something. I'm an ant, I go home to my room, I sit there alone. Sometimes I read a Joy Williams short story.

"What do you want from me."

Eric Gelsinger

Since American art hasn't been able to provoke moral outrage or political response from the government, the avant-garde has been relegated to academia.

An economic trespass, however, may be just what is needed to bring back the spotlight. For there's a field worthy of vigilant defense!

B.R. Kelley

Is this not the thing as a "Bowie Bond", a financial derivative first ingenuously used by David Bowie?

Richard Grayson

While I've heard it said that pompous, self-important pamphleteers self-righteously criticized Jonathan Swift for advocating the eating of Irish babies in "A Modest Proposal," I'm astonished at all the clueless people without any understanding of what Tao Lin does so brilliantly here.

Folks, this is SATIRE, and the fact that none of you -- those who debate its merits as a model for financing the arts, those who condemn it as some kind of "illegal" stock fraud (you'd be laughed out of court), and those who see it as proof that once again the literary world has gone to hell in a handbasket -- can apparently recognize yourselves in the mirror Tao Lin is holding up to your faces only proves what incisive cultural commentary he's created.

Duh, he's a FICTION writer. (First clue: he's discussing a NOVEL he's writing.) If everything on Tao's blog and in the literary universe he's created is taken for reality, then bears can discuss philosophy and blueberries can feel lonely. You need to see this "IPO" in the context of his entire artistic output.

It's no more to be taken seriously than the very funny "I'm taking your money and not sending you books" threat (quickly retracted, as a joke, if you actually go there and check) that some non-joker above referenced as proof of Tao's monstrous nature.

Instead of debating his idea as an investment or a criminal enterprise, you should be laughing at your own gullibility in taking this so seriously.

Hopefully Tao Lin is having a well-deserved last laugh on all of you, as I am.

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tao

i'm serious, i just wanted enough money to last me 3-4 months when i will get an amount of money from something else

i have achieved my goals

'anything is possible'

'america is great'

Johnny

To me, this is a cautionary tale about the dangerous commercialism spiraling out of control in the book industry. The reason why its dangerous is that Tao Lin's antics have exposed his artistic and social faults.

He relies on what he thinks are humurous gimmicks (hyper-self-conscious, malicious jabs, and mocking turns of phrases and other openly chaffing word-play) while eschewing deep formal construction and substantive ideas.

I liked his ???? at first (just like a new audience can find pleasure from a new comic's schtick). But the charm has worn away and the superficiality and meanness inherent in it has become clear.

Tao Lin should work on his art and develop honest relationships in which he does not deceive people.

Drop the pose. Good art finds audiences, even for people blighted by criminal or near-criminal backgrounds.

Edward Champion said it best on his blog (http://www.edrants.com/roundup-222/), and I quote:

"I must say that I was considerably underwhelmed by Tao Lin’s latest collection, *Cognitive-Behavioral Therapy*, a book so slim and perfunctory that I finished it in twenty minutes, and I think this YouTube clip reveals why. Tao Lin now wants to play his crowd without putting the time into his work, rather than keep his crowd guessing with more elaborate and iconoclastic poetry. I do think Tao has talent, but the more that he surrounds himself with Tao imitators and people who will be amused by everything he writes and who feed his desire to please others, the lesser he becomes as a writer."

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