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?


Kev

People need to lighten up, Tao's an artist, a true original, he doesnt know about obscure rules, and if true artists dont break rules then who can? His books are amazing, you should read them and then you wont care what else he does. "the voice of a generation"

Ike

@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!

Christopher

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?

Dan M.

Tao better get himself a good securities lawyer... He is going to get in big trouble for that post if the SEC finds out.

Dave R

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?

R.A. Porter

@Lenore, I'm a bit confused. Did you just come back over the top of @XWL's sarcastic jab at the DMCA with more sarcasm, or did you think the original comment was in earnest?

I honestly can't tell, but if it's the former, kudos for a wonderful feat of meta-sarcasm.

R.A. Porter

Yeah. He's not serious at all. Shame. I would have considered becoming an investor in Tao Lin, LLC if he were actually going to sell shares. Spending a few minutes at his blog, and asking some pretty straight-forward questions, it's obvious he's a young man who snickers to himself a lot at his cleverness.

He doesn't even have the convictions of his publicity stunts. Unlike, say Michael Ian Black who I'm pretty sure is actually going to get in the ring with Tucker Max.

Jonas M.

What kind of incentives are at play here for the author? If he's transferring his financial risk to outside investors (and therefore diminishing his personal gains), won't this affect how "rogue" the book will be. If he's playing with house money, why not? I wonder if investors get a chance to see the final product before fronting money?

jordi

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.

Captain Celestial

Since I assume that this would be most applicable to an unpublished author or similar unknown (high risk quantity), due diligence and providers of such would be key. But with that, could work. Maybe that's the natural progression of blogging i.e. blog a bit and create some track record, then IPO your book.

JK

Libraries are just a form of piracy.. don't make me laugh. I guess utilizing tools for research is looked down upon in your family.

S.

Fab idea. If the people who promote IPOs did the same for the book industry, everyone would be reading instead of watching reality TV.

XWL

If the concept of a library hadn't previously existed, the publishing industry would clearly use the DMCA to go after anybody who even thought of setting one up.

Libraries are just a form of piracy, plain and simple

lenore Rapalski rapalski

XWL: I'm a retired librarian who never thought of libraries that way. I believe you're so right with entirely to me a new way of looking at libraries.

Does that mean any dues collected from a title should be passed along to the author?

Thanks for such an interesting horizon.

Lenore R.

AJ

If someone buys 41%, will that give them creative control over the novel?

Juliana Atkinson

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.

Helen

How does one get to be a rogue author?

Is it his refusal to use upper-case letters? (at least in the piece I looked at.)

Kelly

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.

Read more...

mm

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.