The Traps in Publishing Contracts

The key to a good publishing contract is clarity. For authors, it is helpful to keep in mind that most contracts are not take-it-or-leave-it propositions. Be courteous. Be tactful. Knowing what to ask for is critical. Use an agent or attorney who understands the parameters of the typical publishing deal to negotiate your contract. Working through an agent or attorney allows the author to preserve his creative relationship with the editor or publishing house, explains Attorney Lloyd J. Jassin on his website.

 

Savvy Writers & e-Books online

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Traditional Publishing Contracts – Part Two of a Series 

There should be a large neon sign that says: NEVER, NEVER, NEVER sign a contract without having your contract lawyer going over it and explaining it to you in detail – sentence for sentence. The contract clauses described here in this blog post are the “norm” in publishing. It is difficult to see how your publishing agreement will play out in the long term, what you sign today could have profound, long term consequences.

Contract attorney Ivan Hoffman explains in his blog:
“In the US, many contracts that consumers commonly sign, such as for mortgage or auto loans or to
obtain a credit card, are subject to statutory requirements for fairness, clarity, etc.  If some of the clauses and drafting techniques commonly included in publishing contracts used by publishers were found in consumer contracts, those provisions would be…

View original post 1,789 more words

 

Do You Understand Your Publishing Contract?

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Traditional Publishing Contracts – Part Three of a Series
Signing a “Standard” Publishing Contract can have serious consequences for authors. A publisher’s standard agreement could contain a one-sided non-competition clause that prevents the author from using material from his manuscript in day-to-day business, such as blogs posts, magazine articles, even tweets. Or a clause in the contract might state that the author is prohibited to produce another work that competes with the title under contract without prior permission of the publisher. Well, what authors do with their time is their business, isn’t it? Shouldn’t they be able to write other books, for themselves or for other publishers? Are they slaves of the publisher?

Read the examples of book contract clauses here and in number two of this series (compare
them with your own contract) and find out “what it means” to you as the author:
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Publication and Revised Editions:
In some instances the book project never gets off the ground and without appropriate contract provisions, it may end up in legal limbo. What happens to the rights in the book in those events? Do the rights revert to the author? Do they remain with the publisher? What about revised editions? Will they be considered a new book? How will royalties be calculated on these newer versions?

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Competing Works:
“The author shall not publish any book on the same or similar subject matter that would directly
compete in the marketplace with sales of this manuscript. The author shall not undertake to write
another book for another publisher until the manuscript is delivered.”

What it means: If you have a contract for any type of cook book, say one about vegetarian
recipes, you cannot write a barbecue cook book and offer it to the producer of George Foreman
barbecues, and even a baking book, offered to another publisher who is specialist in bake
recipes is out of question.

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Unsatisfactory Material:
“If the Material for a given Book is not, in the publisher’s sole judgement, satisfactory in all
respects, the publisher may terminate this agreement upon written notice.”

What it means: The Publisher can end the deal for pretty much any reason it sees fit – as the
contract clause has no specific criteria to determine – or for no reason at all…

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Marketing:
“The Publishing House will also provide marketing/sales services for your book; this involves
handling sales to bookstores and direct mail sales.”

What it means: This unprofessional publisher has no clue about what’s involved in marketing.
He makes the author believe that delivering a book which is ordered from a bookstore or from
their website means marketing. Delivering is not marketing! Selling is not marketing! The problem is that when you enter into the publishing agreement, you don’t know whether your current book will sell well, and whether the publisher will do a good job marketing it.
The author should insist to have the publisher establish some sort of marketing plan in advance
and this plan should be part of the contract so that the author has some recourse should the
publisher not promote the book as originally discussed.

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General Provisions:
“In the event of bankruptcy or liquidation of Publisher for any cause whatever, Author shall have
the right to buy back the publications at fair market value to be determined by agreement or
arbitration, and this Agreement shall terminate. If Author does not purchase remaining copies of
the book, the representative of Publisher shall have the right to sell same at the best obtainable
price without payment of royalty to Author.”

What it means: …. this Agreement shall terminate: there is no set time limit. It can terminate in
three days, three weeks, three months. It is the sole decision of the publisher / liquidation trustee.
And the author does not get any compensation whatsoever, if the publisher goes bankrupt, while
the author is in vacation and who doesn’t know that an agreement is terminated.
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Indemnity:
“The author shall indemnify and hold the publisher harmless from any losses, expenses,
settlements, recoveries, or judgement arising from or related to any claim, action or proceeding
which would constitute a breach of author’s representations and warranties, especially to hold
the publisher harmless against any expenses incurred, including counsel fees, in connection
with any claim, demand, action or proceeding against Publisher or any other person, firm or
corporation selling the Work”

What it means: The author has to reimburse even third parties, such as movie companies, TV,
magazines, firms or corporations who reprint excerpts or selling the work and even subcontractors
of the publisher for expenses in any claims. Publishers will use lawyers to get money it feels it is owed, but not use lawyers to protect the author in case of being sued (for libel, copyright issues etc.). Publisher takes the lion’s share of the profits, but doesn’t make any effort to protect the acquired work from any lawsuits, so the author takes all the blame and financial burden. Example: Some books involve not only original writing, but also quotes from other sources, photographs, illustrations etc. Such materials should be licensed by an agreement in writing from the owner of the rights to such materials, and should be done by the publisher as he is the one profiting most from the book’s success.
Authors could face continual threat of action against them by the publisher at any time and no
definable cause – according to some clauses in publishing contracts. Such penalties could
include:

• refusal to publish
• withholding payment due
• refusal to extend time for delivery pay advances, and pay royalties
• reimbursements for advances or monies due

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Option on Next Work:
“Publisher shall have the exclusive option to acquire upon mutually agreeable terms the publishing rights to the next (i.e. written after the work) full-length work written by the author. The author shall not submit the said next work to other publishers, nor seek offers from or negotiate with others, with respect thereto.”

What it means: Any book that the author writes after delivering the manuscript to the publisher
has to be offered to him first – and only when the publisher refuses, the author is allowed to pitch
another publishing house.

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Out-of-Print and Reversion of Rights:
“In the event that after three years from the date of first publication, the work shall not be in print
and for sale in any edition by the publisher or any of its licensees and after written notice from the
author shall not within six (6) months be reprinted by the publisher or a licensee and offered for sale, (unless prevented from doing so by circumstances beyond its control) then in either of these events, the author shall have the right to terminate this agreement and upon written notice to that effect by the author to the publisher, all rights granted under this agreement shall revert to the author, subject to any outstanding licences and the publisher’s continuing right to participate in the proceeds thereof”.

What it means: The publisher alone decides if a book it “out-of-print” – which can be after three
years or never, as he can easily put the book on POD (print-on-demand), which means the
book is available and “in-print” indefinitely.
What events kick off the termination other than merely the book being declared “out of print” by
the publisher? What are the author’s and publisher’s rights in the event of termination? Can the
author get a complete list of outstanding licenses and deals made by the publisher? What are
the author’s rights to buy inventory? Who owns the rights to the work in the event of termination?

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Conclusion
Don’t become a slave of publishers!
Standardized contracts could be powerful negotiation tools. However, some authors will simply sign them, without even asking questions. These “standard” book contracts may have unexpected and unfair consequences for authors and their work. It is essential that authors approach the negotiating process with both, knowledge of their rights as well as a broad vision about what may happen to the book over the course of its publishing lifetime and deal with those potentialities within the contract.
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Do use the comprehensive Book Contract Checklist by Attorney Lloyd J. Jassin!
It will help you to prepare for a meeting with your contract lawyer, to check out your publishing contract in all details and to list your amendments you might have for your publishing contract.

As J.A. Konrath wrote in his blog: “The Big 5 are in such lockstep when it comes to this boilerplate contracts, they have effectively created a unified front. In other words, there is simply no other option because the Big Publishing Cartel have the unfair-contract market thoroughly cornered.”
Don’t accept clauses in “standard” book contracts, that denies you as an author not even
remotely equal power. You can better do on your own! Especially as nowadays authors have to market their books themselves – and more and more even have to deliver a fully edited
manuscript at their own cost.
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Resources:

Reversion of Rights

What Not to Miss When Negotiating Your Book Publishing Contract

Ten Key Negotiating Points

Frequent Asked Questions

Unconscionability Cases

Legal Corner for Authors, Levine Samuel, LLP

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The Traps in Publishing Contracts

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Traditional Publishing Contracts – Part Two of a Series 

There should be a large neon sign that says: NEVER, NEVER, NEVER sign a contract without having your contract lawyer going over it and explaining it to you in detail – sentence for sentence. The contract clauses described here in this blog post are the “norm” in publishing. It is difficult to see how your publishing agreement will play out in the long term, what you sign today could have profound, long term consequences.

Contract attorney Ivan Hoffman explains in his blog:
“In the US, many contracts that consumers commonly sign, such as for mortgage or auto loans or to
obtain a credit card, are subject to statutory requirements for fairness, clarity, etc.  If some of the clauses and drafting techniques commonly included in publishing contracts used by publishers were found in consumer contracts, those provisions would be deemed void and unenforceable. In some cases, they might even constitute consumer fraud and would subject publishers to fines and penalties.”
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My advice: Before you even have a publishing contract meeting, do your homework and google the publisher, adding the word “complaint”. You might be surprised what you will discover!
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Publishing contracts are not negotiated from the ground up between the author and the publisher. They are prepared by the Publisher and delivered to the Author as though ready for signature.  And many authors sign without understanding what the contract contains or what rights they are giving up. They focus only on the royalty rate and the advance, if there is any. While those points are important, they might be far less important than some other provisions in the agreement. Authors should not assume a “standard” contract will be fair or equitable. Nor should authors assume they will be able to easily get out of that contract if found out later to be unfair.
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Samples of unfavorable publishing contracts

Duration of the contract and Territory:
“Author grants and assigns to publisher the sole and exclusive rights to the manuscript throughout the
territory, (which means the World – I have seen contracts that state “throughout the Universe” ….) during the entire term of the copyright and any renewals and extensions thereof.”

What is means: This contract is for the life of the author, plus 70 years after her death, plus renewals and extensions, binding to your heirs as well… Have you ever seen or signed a contract that extends beyond your lifetime? Pretty unfair and one-sided! It also should have a clause, that you get the rights back if the publishers doesn’t exploit it in a given time. For example: if they don’t translate your book into French, Spanish or Cantonese, they should state in the contract to return the rights for those countries to you, say after 2 or 3 years. Most likely they will refuse to …
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Rights granted by the author to the publisher:
“The Publisher has the exclusive rights to:

• Magazine or newspaper before and following publication
• Publication of condensations, abridgments, and in anthologies
• Book club publication
• Direct sale and mail order”

What it means: In their contracts, publishers will almost always seek to obtain ALL rights to the
manuscript. No author should give up all rights. If the author is in a stronger bargaining position, the
author may be able to withhold electronic rights, foreign rights or any other of the rights. If for any reason the contract terminates, there should be a clause, dealing directly with what happens to the rights in the book in those events. Do the rights revert to the author?
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Manuscript delivery and unsatisfactory material:
“If the manuscript for a book is not, in publisher’s sole judgement, satisfactory in all respects, the
publisher may terminate this agreement upon written notice.”

What it means: the Publisher can end the deal for pretty much any reason it sees fit, or for no reason at all. This clause has no single criteria to determine if a book is satisfactory – and it doesn’t give the author equal power to terminate the contract if she/he is not satisfied by the book the publisher created, for example if the publisher did not edit the book properly, priced it to high for the market or choose a terrible cover or a ridiculous title?
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Advances and Royalties

What is an advance
An advance payment is not a signing bonus. Instead, it is money the publisher is paying the author to live on while the book is being written. The publisher will be paid back this money once the book starts selling. They will take the advance money right off the top of your earnings. Depending on the size of your advance and how well your book sells, you may not receive any royalty payments for a long time. Maybe never. When a book sells enough copies to cover the cost of the advance, it means the book “has earned out.” Now your royalties can start rolling in …
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Royalties:
“Hardcover: 10% of the invoice price for the first 5000 copies, 12.5% thereof for copies from 5001 to
10,000, and 15% thereof for copies in excess of 10,000. Mass Market Paperback: 8% of the invoice
price for the first 150,000 and 10% thereof for all copies thereafter. On Ebooks: 25% of the amounts
received by Publisher, excluding taxes and handling charges.”

What it means: Between 8% and 12.5% for books is a pitance, and a lousy pay for the hard work of the author. And equally outrageous is what the author gets on e-books: 25% royalties – which is equivalent to 17.5% of the list price. However, the publisher gets 52.5% of the list price! Compare it to 70% you get from Amazon for books between $2.99 and $9.99. Do I need to say more?
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Royalty Payments
“Publisher shall provide Author with semi-annual royalty statements showing the amount due to the
Author, by April 1 and October 1 of each year for the six-month period ending the preceding December 31 and June 30th, respectively.”

What it means: These publishers might have never heard from a computer, nor do they use any : ) It does not take 6 months to compile the data for sold books, Amazon shoes your sales in mere minutes, and Barnes&Noble, CreateSpace and Kobo pay monthly. But if the money is withheld for months,it’s to the Publisher’s advantage. The longer, the more interest they can earn on the principal due to delayed payments.
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Most important: What is your royalty based on?
Retail price? Wholesale price? Or net price? Bookstores and other retailers get often deep discounts, up to 55%. If your contract states 10% of net, and the book is delivered at 55% discount to retailers, you might end up with only a couple of cents per book …

• At a discount of 50%, 20% of net is same as 10% of the retail price of your book
• At a discount of 40%, 16,66% of net is same as 10% of the lretail price of your book
• At a discount of 20%, 12,5% of net is the same as 10% of the list price of your book

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Joint accounts – another trick of the trade publishers:
“Books one, two, and three will be held in a joint and open account, and the publisher shall not pay the
author’s share of royalties and subsidiary rights income on any book of the work until the author’s share of royalties and subsidiary rights income for all books exceeds the total advance.”

What it means: If you have a three-book deal with an advance of $60,000, you don’t make a cent in
royalties until all $60,000 has earned out – if for example book one earns already royalties, those
royalties go toward paying off the advances on books two and three. This is called a basket account or joint accounting. This way you might not earn anything, even with one very successful book, just
because other books in the basket weren’t as successful, often at the publishers fault – or haven’t been released yet.
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Statements and Payments
“Books one, two, and three will be held in a joint and open account, and the publisher shall not pay the
author’s share of royalties and subsidiary rights income on any book of the work until the author’s share of royalties and subsidiary rights income for all books exceeds the total advance.”

What it means: If you have a three-book deal with an advance of $60,000, you don’t make a cent in
royalties until all $60,000 has earned out – if for example book one earns already royalties, those
royalties go toward paying off the advances on books two and three. This is called a basket account or joint accounting. This way you might not earn anything, even with one very successful book, just
because other books in the basket weren’t as successful, often at the publishers fault – or haven’t been released yet.
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Reasonable Reserve
“The publisher may retain a reasonable reserve against returns in any accounting period. If the author
receives an over-payment of royalties resulting from copies of the work reported, sold, but subsequently returned, the author shall repay such amounts to Publisher to the extent that Publisher is not able to deduct such amounts from monies due to Author at the end of the royalty payment period after the period in which the over-payment is discovered.

What it means: This looks like a Publisher can pretty much withhold money from an author, and it
doesn’t define what a “reasonable” reserve is.

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As contract lawyer Ivan Hoffman wrote:
“However, in the absence of consumer-type protections, the laws governing (publishing) business contracts assume that each party to such contracts will watch out for themselves. If both parties sign a contract, the strong presumption is that each party understood what the contract meant and voluntarily agreed to be bound by it. In extreme cases, if a lawsuit were filed, a contract might be deemed unconscionable and voided in whole or in part, but that is a high hurdle to clear.”
Knowing the problem is widespread, doesn’t mean it should be ignored. Big companies are exploiting artists. They are getting rich, and the creators are getting shafted.
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Stay tuned for number three (final) in the series, and spread the word, RE-BLOG these articles, so that as much writers as possible learn about the tactics of the publishing industry and how to read between the lines.

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Resources:

Great Book Contract Checklist

Book Publishing Contracts: Checklist of Deal Terms

Copyright Termination

How to Read a Book Contract

Author Concerns and Complaints at Crimson Romance Contracts

Blog Posts by a New York Contract Lawyer

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