Those of us attending the Bologna Book Fair this year from the USA will have a pleasant surprise when we check our credit card statements on our return home. That splurge at the Hoffmann toy shop for your niece will be a lot cheaper than you expected. That side trip you made to Florence before the fair was actually affordable. That bill you racked up at Majani buying chocolate for yourself and the office – that’s not showing up as the usual number of dollars.
Our nightly hotel rates might be higher than normal this year in Bologna because the Fair is the week before Easter. However, with the Euro at its lowest compared to the U.S. dollar since 2004 (on March 13 it hit $1.05 per Euro), your hotel bill could be on par with last year’s, when the Euro was worth about $1.40. That’s the one good thing to come out of a falling Euro (and pound, and Canadian dollar, and Australian dollar): your travel expenses will be noticeably lower.
But it’s not all good for your bottom line. That sale you made at Frankfurt Book Fair for Italian language rights for €10,000 was once worth about $13,000. Then you had to get the contracts been signed, the 6166’s requested from the IRS. Your co-agent just wired you the money – and it’s about $2,700 less than you expected back in October. In addition to complaints from your client, you have made suddenly less money on this deal than expected – and through no actions on your part. You didn’t mix up a deal term or forget to send wiring instructions. The Euro fell $.30 in five months.
Then there’s the huge book deal with A Giant Publisher you closed last year for $1 million. You made an exception to your policy of holding onto world rights and let the publisher have them. When the editor was offering that much money, the rights department of AGP said they would be on the hook for a good chunk of that advance, helping AGP make the book as profitable as possible before publication. The rights director of AGP had strong interest in Germany, and closed on a deal for €100,000 in November (most of which will go to your client, of course). By the time her co-agent wired the payment, the advance has lost about $25,000 in worth. Meaning less money for both the publisher and your client – and you.
Four of the Big Five are owned by foreign companies (I am counting News Corp as foreign, but of course it no longer technically is). Three of them (Hachette, Macmillan and Penguin Random House) have parent companies who report in Euros. While a strong dollar means that Grand Central will look better than expected compared to its siblings, Hachette still reports to investors in Euros. This can be a good thing for those European countries in the short term. In the long term, a consistently weak currency becomes less attractive.
Let’s not even focus on how a strong dollar means our books being shipped to the Open Market will now cost more. A more expensive American edition of your book placed beside a British edition in an English-language bookstore in Amsterdam – which edition looks more appealing to a reader paying in Euros?
In a few instances, the currency fall is long overdue. Australia’s dollar has been inflated (due to mining and other booms in natural resources) for a decade or more. It’s correction down to $.76 is overdue. But the Euro’s intense plummet is due to the European Central Bank (located right near the Frankfurter Hof, fellow foreign rights people!) trying desperately to stimulate the Euro Zone economy. Last year, they cut interest rates below zero and just this month they started a quantitative easing program (the ECB creates new Euros and uses them to buy outstanding government bonds held by banks. This increases the amount of Euros banks have to lend. It also increases the total number of Euros in existence, which drives down their value). Some experts predict that parity with the dollar will happen by the end of 2015, and by 2017, we could see the Euro as worth $.85 to the dollar. I really hope that does not happen.
The Euro falling to record lows may mean that our T&E reports in April after the fairs look better than expected. But would you rather have a cheap hotel bill in Bologna? Or a deal in Spain for €4,000 that’s worth more than $4,000?
Ginger Clark is a literary agent with Curtis Brown Ltd. and will be attending Bologna for the eighth time.