Publisher Storm Warnings: Diversion Books

Posted by Victoria Strauss for Writer Beware®

Founded in 2010 by Scott Waxman of the Waxman Literary Agency, Diversion Books was one of the earliest of the literary agency-powered publishing ventures that sought to take advantage of the growing digital market, including the opportunity to bring their clients' backlists back into circulation (others include Arthur Klebanoff's RosettaBooks, Andrew Wylie's Odyssey Editions, and Richard Curtis's E-Reads). 

Diversion has since expanded into traditional print, audio, and subsidiary rights representation. It has also, over the past few weeks, become the focus of author complaints.

I first heard about problems at Diversion much earlier than that, though, in 2018, from an author who cited late and missing royalty statements, multiple errors on the statements they did receive (including mis-allocated subsidiary rights income), and failure to register copyright as contractually stipulated. (To this day, this individual is still struggling to obtain a full and correct accounting of their book's sales and income, and believes they have not been paid all the royalties they are owed.)

To me, the seriousness of the problems the author reported, as well as what appeared to be Diversion's difficulty in addressing them, suggested a larger pattern rather than a glitch affecting just one person. I didn't have confirmation of that, though, until last week, when I received an email from a group of Diversion authors who are working to publicize what they describe as long-standing issues with the publisher--issues very similar to those reported by my original complainant three years ago. 

Recently several authors published with Diversion banded together to notify various author groups that we have not received royalty statements and/or payments from Diversion for years. One writer spent over $10,000 in legal fees to get her rights returned. Another author said she was offered her rights back only if she would sign an agreement not to seek past royalty payments from them. The stories are myriad and heartbreaking.

So far, we have sent letters outlining various cases to the Mystery Writers of America, International Thriller Writers, Romance Writers of America, Sisters in Crimes, American Association of Literary Agents (AALA) and the SFWA. Some of the groups have formal grievance committees who are actively investigating the cases. Others have “preferred publishers” lists, and we are asking that they remove Diversion from those lists.

I also began hearing directly from Diversion authors who described their own experiences, including:

• Missing royalty statements (in some cases going back several years).
• Royalty statements with errors, such as erroneous chargebacks, that authors and their agents struggled to get Diversion to correct.
• No royalty payments, even in cases where there appeared to have been thousands of sales. Diversion has a practice of recouping several hundred dollars in production costs (between $500 and $800 in contracts I saw) from initial sales proceeds, before authors are eligible for royalty payouts (a setup that's reasonable for re-publishing backlist books--Open Road Media, which specializes in backlist titles, offers a similar arrangement--but is not typical practice for first-time publication). This seems to play some part in why royalties have been withheld--but without a full run of royalty statements, authors can't trace the figures back to verify or even understand them.
• Failure to register copyrights as contractually stipulated.
• Failure to respond to reversion requests once the four-year contract term expired.
• In 2019, a unilateral switch from a quarterly royalty reporting/payment schedule to a semi-annual one, despite contract language requiring that no such changes be made "unless in writing and signed by both parties."
• Promises by Diversion to some authors and their agents to provide missing royalty statements by the end of March 2021--with no statements appearing by that date.

On Monday of this week, I reached out to Scott Waxman for comment. He referred me to Dawn Reshen-Doty of Benay Enterprises, which was hired in 2019 to handle Diversion's royalty accounting and other back office tasks. Dawn gave me the following statement:

We apologize greatly for any delay in the processing of royalty statements and payments. While we can’t speak to the entire history of these issues, when Benay Enterprises Inc. took over as the business management and back office company for Diversion in March 2019, we took on the responsibility of updating the internal systems and making the process smoother for the authors and agents. It has taken some time to take corrective action, especially during the pandemic. We are continually learning and striving to accomplish this with each statement period. We are currently up to date on royalties and all of our backend obligations, and addressing any concerns or questions from the authors and agents. Our goal is to pay authors in a timely way, and of course accurately. 

As of this writing, Benay appears for the most part to have caught up on royalty statements for the most recent reporting period (second half of 2020, courtesy of that unilateral switchover to a semi-annual reporting schedule). Many of the writers who emailed me with complaints last week confirmed that they'd since gotten at least that statement (though none report receiving a check). However, there seems to be some inconsistency. Some writers who are missing multiple statements say they've received just the latest statement, while others have gotten all their missing statements. And one writer told me they got nothing at all. 

I contacted Scott again to ask when authors who are still awaiting royalty statements might expect to receive them. He responded: "As we have an archive of all statements, we will be happy to furnish any missing statements upon request." Which raises the question of why the statements weren't furnished in the first place, not to mention why so many writers and their agents say they haven't been able to get Diversion to respond to earlier requests to provide them. (Interestingly, all the Diversion contracts I saw include this sentence in Clause 6, which covers payment schedules: "The Author or his/her representatives may request information about his/her [royalty] account at any time, and will receive this information within six weeks of this written request.")

It's also worth noting that Benay took over Diversion's royalty accounting more than two years ago, yet it wasn't until the past few weeks that writers who'd been missing statements going back to 2019 and even earlier finally started receiving them. (Part of the impetus may have been International Thriller Writers' decision last week to suspend Diversion for six months pending resolution of author complaints.) It's encouraging that statements are finally going out, but this late and apparently hasty effort just casts the reported problems into sharper relief. 

At any rate, Benay has given me an email address that authors can use: Diversion-Benay@benayei.com . They seem to be responsive; one author who wrote to inquire about missing statements told me that they received them the next day.

In addition to International Thriller Writers, other writers' organizations are investigating complaints from members. I'll keep following the situation, and will post updates as I receive them.

UPDATE 10/8/21: I've now heard from a handful of Diversion writers who say they are receiving royalties and royalty statements on time (though one writer has told me they are still having difficulties with accounting and payment). It's an encouraging sign, though I don't have enough info to judge whether it's the new normal or case by case.

If you're a Diversion author who has had the difficulties described in this post, would you please let me know what your current experience is? Names and any other identifying information will not be shared.