The Author’s Guild on the Book Contract

Most of us who have ever negotiated a book contract will tell you that these agreements are unfair to authors. Contracts are classic asymmetrical agreements whereby the publisher gets the rights to exploit your writing in all possible manner and in all possible venues for the term of the copyright (life plus 70 years). They have the right to keep you from publishing any other book that they deem will compete against the contracted work. They will attempt to restrain you from showing your next work to another publisher until they have had an exclusive opportunity to look at it and make an offer. They will claim the right to reject the book for any reason and require you to return the advance paid. In exchange, they will give you a teeny bit of money. No wonder authors are claiming that they are better off self publishing.

To combat this, The Authors Guild, my favorite author organization, has developed a new program to shine a light on the unfair elements of the book contract. Today they published an outline of the Fair Contract Initiative and describe the areas that they will be analyzing going forward. It’s worth a read.

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“On May 28 we announced the Authors Guild Fair Contract Initiative. Its goal is to shine a bright light on the one-sided contract terms that publishers typically offer authors and to spur publishers to offer more equitable deals. This is not an abstract issue: today’s contracts directly affect authors’ livelihoods and ability to control their works. As standard terms have become less favorable to authors in recent years, their ability to make a living has become more precarious.

Authors are among our more vulnerable classes of workers. Book authors receive no benefits, no retirement income or pension, and there are no unions to protect them. They live or die by copyright—their ability to license rights to publishers in exchange for advances and royalties. While copyright is meant to give authors control of how and on what terms others can use their works, publishing agreements tend to be negotiable only around the edges, and even then only by well-represented authors.

“Standard” contracts—the boilerplate offered to un-agented (or under-agented) authors—are even worse than those that most authors with agents or lawyers sign. That’s because agented agreements traditionally start off with the many changes that the agent or lawyer has previously negotiated with a particular publisher. One agented contract we’ve seen includes at least 96 changes from the original “standard” language, plus seven additional clauses and two additional riders. Every one of those changes is a point that the agent has negotiated in the author’s favor.

Why do publishers insist on offering their newest partners more than a hundred conditions so dubious that they’ll quickly back down on them if asked? It largely boils down to unequal bargaining power and historic lethargy. Anxious to get their works published, authors may wrongly believe that the contract their editors assure them is “standard” is the only deal available, take it or leave it. And much of that “standard” language has been around for years thanks to institutional inertia; as long as somebody signs an unfair clause that favors the publisher, the firm has no interest in modifying it. But even contracts negotiated by agents and lawyers often include longstanding “gotchas” that live on only because “it’s always been that way.”

It’s time for that to change. We’ll be highlighting particular clauses in the weeks to come. For now, here are just some of the issues we’ll be looking into:

Fair Book Contracts: What Authors Need

Half of net proceeds is the fair royalty rate for e-books
Royalties on e-books should be 50% of net proceeds. Traditional royalty rates reflected the concept that publishing is a joint venture between author and publisher. But despite the lower production and distribution costs associated with e-books, publishers typically offer only 25% of net. That’s half as much as it should be.

A publishing contract should not be forever
We think contracts should expire after a fixed amount of time. Publishers may pretend to consider this an unreasonable request—yet it’s precisely what they demand when they license paperback rights to others. Today’s contracts are generally for the life of copyright (meaning they essentially last at least 35 years, at which point copyright law gives the author the right to terminate the agreement). That’s too long.

Thanks to clever contractual language, it has become increasingly difficult for authors to get their rights back if the book goes out of print. “Out-of-print” clauses may be easily manipulated in this day of e-books and print-on-demand technology. At the same time, it’s more important than ever for authors to reacquire their rights so they can make e-book and print-on-demand titles available from their backlist. Unfortunately, we have heard too many stories of publishers refusing to revert rights or to make their authors’ books meaningfully available. Publishers should not be allowed to hold a book hostage; their contracts should provide clear language stating that if a specific royalty minimum is not paid within a certain period of time, then the book is defined as “out-of-print.”

A manuscript’s acceptability should not be a matter of whim
In standard contracts, whether a manuscript is acceptable or satisfactory is often in the “publisher’s sole judgment”; that means a new editor or management can reject a book on a whim and refuse to let the author publish it elsewhere until the entire advance is refunded. This can happen after an author has invested several years of work in the book, foregoing other opportunities in the meantime. Under some contracts, the publisher can even have the book rewritten at the author’s expense, decide whether or not to credit the new author, and maintain its own copyright to the additions and revisions. This is patently unfair. A publishing agreement based on a proposal is not an option, it is a contract to publish and pay, assuming the author delivers.

Advances must remain advances
Once upon a time, advances were typically split into two payments: one on signing of the contract, and one on acceptance of the manuscript. In recent years, we’ve seen three-part payment schedules: one-third on signing, on acceptance, and on publication. Now we’re seeing four-part payments: signing, acceptance, publication, and paperback publication. Slower payments shift risk from publisher to author. They also defeat the whole purpose of advances: to enable authors to devote themselves to completing their books without having to take on other work to make ends meet.

Publishers should share legal risk
No author can afford to put his or her entire net worth on the line, but that’s what many authors do when they sign publishing contracts. Authors are asked to assume the risk of suits for infringement or libel. This is true even where the publisher has lawyers who have vetted the book. Investigative journalists are most at risk. Forcing authors to assume the risk of a lawsuit can amount to a restraint on their speech. Publishers’ liability insurance should also cover authors. The author’s share of the risk, if any, should never exceed the total amount of the author’s advance.

Non-compete clauses must let the authors write
Authors must be free to write. The non-compete clause—an attempt to restrict the author from publishing work elsewhere that might cut into the current title’s sales—is no longer reasonable in the era of instant publishing. The clause should be simple: only the publisher can publish the current title, long excerpts from it, or a substantially similar work. Anything more is an unfair restriction on the author’s livelihood.

Options must be fair and paid for
Anything that keeps writers from publishing is simply unacceptable. That means option clauses should disappear. If a publisher wants an option on a future book, it should offer a separate payment for it and a quick decision on whether to offer a contract on it. Today’s standard option clauses often let the publisher delay the option decision until the current work is published. That can keep the author in limbo for years; it’s deplorable.

The author must have final say
When it comes to the text of the book, the author should have the final cut—that is, no changes in the text should be made without the author’s approval. The publisher should submit jacket flap and advertising copy to the author for approval. And the author should have the chance to approve any biographical material used in the book and/or publicity produced by or for the publisher.

Payments must move into the 21st century
Publishers’ methods of accounting have inevitably favored the publisher. Royalty statements and payments to authors typically appear only twice a year on income the publisher received between three and ten months previously. And the publisher can delay payment still further by invoking what is inevitably called a “reasonable reserve for returns”—that is, an estimate of how many books it will get back—without ever defining what “reasonable” means. The result is that it can be up to two years before an author is paid royalties for a sale. We think it’s time for royalties to be paid at least every three months with a limited delay and that every contract should clearly define “reasonable.”

“Special” book sales must not be at the author’s expense
Book contracts include a variety of royalty rates for different types of sales. Contracts routinely allow high-discount deals (such as selling a bulk load of books to a big-box store or a book club) to reduce the basis of the author’s royalty from the list price of the book to the much smaller net amount the publisher receives. Crossing the discount threshold from “normal” to “high” can magically reduce the author’s cut by more than fifty percent, giving the publisher a strong incentive to take that step. Why should an author accept this?

The above is just a taste of what we’ll address in the coming months. In addition to the standard book contract, we’ll also be identifying unreasonable provisions in self-publishing and freelance journalism agreements.

We’d like to hear from you. If a publisher has handed you especially egregious contract terms, please let us know. You can contact us here. But if your contract includes a non-disclosure clause, please don’t violate it. By the way, we don’t like those clauses, either.

Ultimately, we hope this initiative will create a climate of “just say no” to egregious contractual terms. We’d like you, the authors, to understand what you’re giving away when you sign your contracts, what you’re getting in return, and to make self-interested judgments about what’s fair. Of course, you just want to sign that agreement and get on with writing, but in the long run it’s in your interest to take a deep breath and to stick up for your rights, and for those of your fellow authors.”

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15 Responses to “The Author’s Guild on the Book Contract”

  1. Gordon Brown Says:

    I am attempting to contract through my atty an option for film rights to a self published book that was written by a now deceased author. A very commercial unknown story that can be converted into a documentary styled “made for tv” effort. Book is in hands of family who wants to keep publishing rights as they view themselves as offering it up to a major imprint company as they dream of “getting rich”…but with no savvy as to the business. Author died in 2010. I have heard from them but with strict instructions as to their right to view any and all script rewrites of the story….since it is a first hand account of their father’s experience. Would like to crowd fund a production…or just offer up to a tv cable network. Am “I” dreaming as to the likelihood of getting film rights? Seems like they would restrict me …and make my life miserable…appreciate your response before I spend even more $ on this project with some very good upside ……maybe! Thanx.

  2. andyrossagency Says:

    Gordon, I’m not sure I can offer any informed advice. Sounds like you need to talk to an intellectual property lawyer.

  3. writermash Says:

    Andy your posts are always interesting and pertinent. This is one I will definitely file away for future reference.

    Thank you.

  4. Vi Says:

    I found this article very helpful, even though I’ve read up on the subject. I’ve been the victim of publishing houses, even though for one of my books I had a prominent literary agent representing me. She told me to take the deal they offered. It was a huge mistake. They messed up the whole focus of the nonfiction book. It’s my work. Mine. Not the work of the publisher. I’m the one who starved for years. They didn’t. I do not know of a reputable intellectual property attorney who doesn’t charge way too much. In fact the person I saw years ago, charged a lot of money, and I came away with no help whatsoever.

    How do university presses stack up when it comes to publishing contracts? One of my works is currently being considered by Ooligan Press at Portland State University. It’s run by grad students. Do you know anything about them?

    • andyrossagency Says:

      Vi. Most of the university presses I have worked with are comparable to trade publishers with contracts that have similar pitfalls. I have never heard of Ooligan Press, so I can’t comment on their contracts.

  5. Sam Leston Says:

    Hi Andy Ross
    A blog post worth printing out.

    Kind regards
    Sam Leston
    PS
    I have been reading Jeffrey Masson’s twitter feed often.

  6. Mary Says:

    Have you ever had any contact with Ulysses Press and their standard new author contracts? Family member is being offered one, but the royalty rates are lower than everything I have come across while doing research (and are based on net revenue), and their non-compete clause completely prohibits author from developing or using any material they deem ‘similar’ to the subject of the book (how-to for photography), which is a massive umbrella that cuts out any other opportunity for the author to offer any training or education opportunities outside of this one book. Is this normal?

    • Vi Says:

      No, I don’t know Ulysses Press, but your family member needs to turn down the contract. He/she is being ripped off. It would be better to publish it themselves. That way, even if the sales are low, they would get more out of it and retain their rights. I have had a couple of bad contracts. They are counting on the author’s desperation to be in print. People who accept them make it bad for all of us.

    • andyrossagency Says:

      Mary, I’m familiar with Ulysses Press, but not their contract. There are lots of smaller presses who base their royalty rate on “net” rather than cover price. The rule of thumb is that net is about half of cover price. So if you are offered a contract that gives 10% of cover price, an equivalent rate would be 20% of net. There are lots of smaller presses though that give much less than that. All book contracts have non-competition agreements. A good agent will attempt to limit them as much as possible by narrowing the types of books or subjects that would be subject to the term. At the very least your family member should include language that says the author makes a living from teaching and speaking about this subject and nothing in the contract shall limit that. Something to that effect. There are other roadside bombs in book contracts that are difficult to see if you don’t have experience. A good reason to have an agent or a lawyer conversant in book contracts.

  7. Vi Says:

    I was once offered 3 – 5 % of net. I turned it down. She wouldn’t even allow me to look at her books.

    Andy, how do you know if your agent is good at contracts if they have never handled one for you before?

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