I figured this is the best place for this topic.
I started a publishing business and hooked up with a sales rep who works for a distributor that distributes artwork (prints, notecards, etc.) for various regional artists. She said, `gee some of the artists works would work for book covers`. I agree and contract to license some of the artist they `represent` (sell on consignment), giving the distributor exclusive distribution in my area. My terms are net 30 on product shipped to customers and a credit line of no more than $15K. The distributor handles invoicing, & takes 25% cut.
Fast forward five months - lots of sales, over $60K, most of which I`m filling or trying to fill. (way beyond $15K limit). But no payments from the distributor. Nada. Zilch. Get all sorts of excuses. computer crashed. Roof leaked, etc. etc. I ask accounting of billed, paid, etc. (I drop ship the product so I see the invoice to the customer, so I know who received product.)
I get nothing but `the checks` in the mail and we billed them this, no it was this, etc. I finally say enough. I`m terminate the agreement. They countered with - take over the billing, we`ll just be sales reps. I say OK, you did sell; I`ll pay when I`m paid by the customer. (They had also extended Net 60 to customers without /against my authorization.) But pay me for what has already been billed. I get a check for $650 from distributor (small single person owned business) - far less than what had been received by customers months ago.
I start to bill customers. No issues with customers. Some have paid, most appear not to have been invoiced.
Then big customer cancels custom print job because of distributor badmouthing. Then two artists demand I stop publishing book with artwork. (I have an out clause for them that says they can do that.) Artists say they are being loyal to the distributor. (Distributor has many artists believing their artwork can only be used by distributor; most don`t understand licensing or that distributors agreement only states `consignment`.)
Distributor, artist and I - everyone loosing sales and $. I can get other artists, but some are well-known in area and bring in sales. I`ve already created many of these books and don`t want more to back out. (Lost time & revenue.)
Next sales rep for distributor chimes in saying she has `rights` to the books because she was the one that came up with the idea. (I had already been publishing books of this sort before she came along. She only put me in touch with the artists and sold the books on commission. I had no written agreement with her, but had agreed to pay her a `finders` fee at the end of the selling season. All copyrights are my publishing company and the artist.) I tell her because of this accounting mess and because people are canceling orders and artists are canceling books, I`m not going to pay commissions on anything if this keeps up. My frustration at the distributor simply ignoring my repeated requests and demands to follow my business practices (net 30 for example instead of net 60) has made me say things like forget it. I`m not paying anything! Of course I haven`t been paid by customers yet, so it`s hard to pay anyone anything anyway.
What would you do?
1. I could go `legal` on this distributor (small woman-owned business with indy reps) because it`s very apparent she breached our initial contract by not paying or giving accurate accounting.
2. I could just walk away and stop dealing with her entirely and sign up new artists, loosing some of the work I`ve done in the process and not getting the same `name recognition from most of these artists.
3. I could offer her a compromise and say look, I`ll pay as I initial promised the 15% and give you a bonus at the end of the year, if you bring back the artists. Let`s just move forward, etc. (I also sell these books myself and would offer exclusive distribution at this point only to customers in a geographic location. They`ve failed to sell in some key spots like hotel gift stores.)
4. Other ideas?
All the artists are somewhat `loyal` to this distributor because she got them their start in various galleries. What they don`t realize is that the art work has changed, and that this distributor isn`t working in their best interest by doing things like this, etc.Some artists have said - keep going. We`re behind you. Some haven`t said anything. I had to relay to them what happened and offer up new contracts.
I don`t want to see all my hard work go down the drain, and I admit they did great selling and don`t want to cut them out of commissions. But I also don`t want them in the middle of my business - thinking they have some claim to it just because they matched me up with artists. I`m willing to pay a finder`s fee, but not sell them my soul.