Financial crisis commission's report to bring book advance, cut of profit

By Jason Horowitz
Washington Post Staff Writer
Monday, August 9, 2010; C01

The government commission tasked with writing a public report to expose the causes of the financial crisis is keeping the structure of its own publishing deal private.

On Aug. 3, the Financial Crisis Inquiry Commission, a presidential body, announced that it had chosen Little, Brown and Co. to publish its final report about the meltdown -- an anticipated and authoritative account pieced together by well-known journalist Matt Cooper. It did not mention, however, that the deal had unusual terms for the publication of a public document, including an agreement by Little, Brown to pay an advance to the government and the stipulation that a portion of the proceeds from sales be paid into U.S. Treasury coffers. The commission's chairman, Phil Angelides, said the details of the deal will be divulged once the contract with Little, Brown is finalized.

"Our primary goal was to make sure that it was a great report and accessible to people not just in distribution but in content and form," said Angelides, who, with vice chairman and former congressman Bill Thomas, interviewed several publishers before selecting Little, Brown. "And to the extent that we thought we could do well by the taxpayers, that would be a good thing."

"FCIC is all about transparency," said Will Lippincott of the literary agency Lippincott Massie McQuilkin, who is one of the agents the government hired to sell the book. "But until the contract is complete, it's not a done deal."

Government commissions hooking up with commercial publishers to boost distribution is nothing new. The Warren Commission Report, the Starr Report and the 9/11 Commission Report all did exactly that. But this time the process is raising questions about whether a public report about the exploitation of the commodities market isn't itself being overly commodified. The commission retained literary agents, who will likely receive a percentage of the deal for their efforts, and then auctioned off the manuscript to publishers.

"The government usually does not ask for royalties on public domain documents," said Drake McFeely, president of W.W. Norton, which published the 9/11 Commission Report. This transaction appears to be modeled on the moneymaking kind, McFeely noted: "The FCIC deal was handled very much like a traditional book deal."

The bidding for the report is all the more remarkable considering that downloading such information is no longer so arduous. The book and e-book will hit shelves simultaneously with the report's release in a free and downloadable form on government Web sites on Dec. 15.

Geoff Shandler is the editor at Little, Brown who won the bidding for the report -- and who edited George Soros and worked on the published version of the Starr Report when he was with PublicAffairs Books. He apparently calculated that there would be a market for an authoritative and official history of the crisis, even though consumers could get a version online. (Little, Brown referred all inquiries to the FCIC.)

The book-buying public has already invested in behind-the-scenes accounts of the collapse, such as "The Big Short," written by Michael Lewis, the best-selling financial writer and, incidentally, Cooper's former colleague at now defunct Portfolio magazine. And Little, Brown's bet on that market includes a souped-up e-book version.

'Intangible' benefits

Thomas, the commission's vice chairman, didn't see the deal in dollars and cents but instead noted the value of "intangibles," such as the commission's comfort level with the publisher.

"If you went with the tangibles, we had several opportunities to choose quality publishers who were interested in the product," said Thomas, noting that the deal came down to relationships. "And we felt very comfortable with them. If you have the luxury to choose between several, it winds up coming down to intangibles."

Thomas's fellow commission leader pointed to the multimedia opportunities that Little, Brown offered. "We are looking at a book as well as an enhanced e-version that will link to the documents and video," Angelides said.

That e-version will allow readers to click on the names of bankers, officials and Wall Street investors and immediately have the opportunity to watch or listen to those people delivering hours of public testimony.

Angelides spoke about a "deep hunger" for books explaining the financial crisis. The commission believes that its book will take a more comprehensive look at the root of the crisis than bestsellers that have emphasized the dramatic unraveling of the financial industry, because it will take readers back to 2003 and 2004 to explore the beginnings of the troubles.

Cooper's involvement in the report, commission spokesman Tucker Warren said, ensured that it would "tell a story" and be "a readable document that is not 1,000 pages." He also argued that the e-book features will give Little, Brown a "jump start" on the potential competitors and "allow people to take a deeper dive."

Cooper, a longtime Time magazine columnist before joining Portfolio, is also known for having been part of a local power couple (with Hillaryland veteran Mandy Grunwald) and for moonlighting as a stand-up comedian. But the writer was uncharacteristically speechless when asked to talk about the project. The commission declared that its staffers were off limits.

The commissioners emphasized that they were not hiding anything about the deal. According to the existing agreement, they said, a portion of the book sales will go to the federal government. Sources with knowledge of the negotiations, who spoke on the condition of anonymity, said that agents for the FCIC also required an advance for the government. In an e-mail, Warren wrote, "Occasionally authors receive an advance on their work -- which may or may not happen in this case."

In July, the commission's agents -- Joe Spieler of the Spieler Agency along with Lippincott -- shopped the report around to publishers.

"It was an open process and a competitive process," according to Lippincott, who would only say that the bidders included five of the big six publishing houses, which usually include Simon & Schuster and Random House. For his part, he said that receiving a cut of profits is far from exceptional: "The standard operating procedure is that commissions are paid. But until the contract is signed, I can't comment."

Lippincott and Warren both expressed optimism that the contract would be inked within two weeks.

'Value proposition'

Books about the crisis have sold exceedingly well, and the report presented Little, Brown with a "value proposition," as Lippincott put it, in that the company could use its existing relationships with Apple, Sony and Kindle to make the most of the trove of audio, visual and written public testimony. Little, Brown could "package material" in a way that competing free versions could not, Lippincott said.

Spieler struck a similar note about the book's earning prospects. "With the financial crisis, there are probably any number of overlapping markets," he said. "Business people, economists, teachers, brokers, lawyers. It's hard to see who might not be interested!"

Both agents argued that there was a strong precedent for public reports becoming profitable ventures for publishers and cited Norton's publishing of the 9/11 Commission Report, which was nominated for a National Book Award and sold more than 1 million copies, as well as the strong showing for the Iraq Study Group Report, which sold hundreds of thousands of copies.

"If you research the sales," Spieler said, reports such as these, while also available gratis online, "sold in large numbers because people wanted to have something bound between covers."

McFeely, the Norton executive who looked over the FCIC report but decided not to bid on it, said the 9/11 Commission never asked for money from the publishing house, nor did it expect a cut of the profits. Instead, that commission required only that the report be made widely available, at a modest cost and in rapid delivery, so that as many Americans could get their hands on it as possible.

McFeely said the commission selected Norton among three publishers and that the publishing house invested $1.5 million to get 600,000 copies to bookstores in the 48 contiguous states within six days of its completion.

"Until the day it started selling, we thought we were going to lose money," McFeely said. "We took it on as a public service."

© 2010 The Washington Post Company