Let me not admit impediments… the Perfect Contract

17 Mar

Marriages are never perfect (no matter what the fairy tales say).  Without question, some are better than others; some are much better.  Regardless, all of them are subject to negotiation (or ‘bargaining.’)  And if the marriage is truly bad –there is always divorce.

If it was only so easy with writing contracts.  Generally the worse a contract is, the harder it is to get out of it.  At least for the writer.  Publishers (big ones) have a battery of lawyers working to protect their interests and screw the writer.  Writers seldom have one lawyer; many don’t even have decent agents.  If a writer can command big bucks, they can hire help and negotiate from a position of strength.  Most authors aren’t nearly so lucky.  Which is why so many of them sign bad contracts.

Still, the news isn’t all bad.  In the face of collective outrage, Random House made some changes in their e-book imprints.  And there are plenty of business oriented writers willing to share some practical advice.  Still, it is mostly an unequal relationship.

Of course, I approach this issue from a different perspective.  I’ve written a few books and I hope to have bigger and better results in the future.  But I’m also a publisher – a small but ambitious one.  These are competing interests.  Contracts are meant to find a balance between interests.  The perfect contract is the one where nobody gets everything they want.  But they all get some of what they need.

A writing contract licenses the intellectual property rights of one party (the writer) to another (the publisher) for a fixed period of time for a payment in the form of royalties (a percentage of sales).  Those royalties may be paid up front (an advance) in expectation of a certain number of books being sold.  Seems simple enough but the proof is in the boilerplate.

The main questions to be decided are what rights, for how long, and for how much.  There are ‘industry standards’ for all of these things – mostly a mixture of ‘the way things used to be’ and ‘what big corporations can now get away with.’  But things aren’t the way they used to be – in so many ways – and writers, at least those who are psychologically so inclined, have options that don’t include publishers, big or small.

But as I say the devil is in the details.  Let’s start with ‘rights.’

The writer of original work retains copyright for all aspects of the work.  Any contract that tries to transfer those rights to someone else is a very bad contract and should never be signed.  If you have any doubts about that, ask John Fogerty.  There are ‘write-for-hire’ projects – such as Star Trek (TM) novels and similar projects.  But they aren’t ‘original’ work; someone else already owns those rights. 

Copyright is divisible.  For a novel, you can have English language rights or it could be further divided into North American English rights and World (meaning everywhere else) English rights.  Some writers are even able to negotiate separate rights for separate countries.  In fact, some multi-national publishers separate rights that way so they don’t compete with their sister imprints.  Then there are foreign language rights – a separate right for every language in the world.  All of these can and often are sold separately. 

Most publishers, including most multinational publishers, don’t want to divide copyright.  At the very least, they want World English rights, and increasingly insist on them.  It’s not simply greed; there is business logic behind it.  Years ago (I mean ten or twelve), there was an actual physical component to a book design; now it is all computer files.  They can be produced anywhere and sent electronically to printing plants around the world.  Printing is still done locally (i.e. any place connected by highway or rail) because it is cheaper than outsourcing it to China, but design – which can easily cost more per book than the actual manufacture – is perfectly transferable.  And, of course, an electronic book can – provided there are no rights limitations – be produced and sold anywhere by the simple click of a mouse. 

So with respect to English language rights, I expect the trend is world rights.  I’m not saying it is just but I suspect it is true, not just because of publishers–book distributors and large (especially on-line) retailers also are involved.  Commercially successful writers will still be able to negotiate separate rights but it will be more difficult for new or mid-list writers to resist.  However, by being aware of the alternatives or having a strong agent who is, even beginning writers might be able to negotiate a better deal by using the division of rights as a bargaining chip. 

Writers should retain foreign language rights – individually they may not be much but collectively they can be worth as much or more than English rights.  Most publishers can’t successfully exploit foreign rights and either won’t ask for them or will readily give them up if pushed.  Writers and their agents should push – and then try to exploit them as best they can.  You might look to Canadian writer, Douglas Smith, for advice.  The same can be said for adaption rights – audio, stage, TV, film, video game – publishers of books can’t exploit them (though some of the largest publishers are also active in other media).  But that won’t stop them from asking for them.  Again, push back.

A more complicated issue and, for me, a grayer one is ‘participation rights.’  These clauses don’t transfer the entire license for an audio book or a movie adaptation but establish an interest in those licenses, often 10-20%.  Essentially, they say that if you, the writer, sell the screen rights (from option to production) of the book, you owe the publisher a cut.  Their rationale is that your book would never have come to the attention of a movie producer if they hadn’t published it.  This may or may not be true.  Certainly, few unpublished novels get turned into movies (surprisingly few published ones do, too).  Most books don’t make publishers a lot of money; a significant number actually lose money.  No writer likes to admit that people think their baby is ugly – but it is a sad reality.  From the publisher’s point of view, they want to milk as much out of the few really successful books as they can. 

My own view is that publishing a book is a shared risk.  Writers invest their time and energy up front to write a book; publishers invest money up front in the hopes it will sell.  In a perfect contract, they share risk and they should share reward.  Before anyone starts screaming at me about it being my (the writer) ideas, my story, my rights – let me point out that selling a novel to the movies is FREE MONEY, often with less investment by the writer than buying a lottery ticket.  Writers have seldom done a lot of extra work to get a movie deal (his agent – that’s another story).  The novelist isn’t selling a screenplay, he is selling the right for someone else to write one (and doesn’t that tale often end in tears).  So maybe the publisher – without whom the novelist would merely be ‘aspiring,’ – deserves a small slice of the pie.  How big is another matter – for doing nothing, a thin sliver; for actively promoting or networking the book, maybe a little bit more.

How long should the license last?  The standard clause nowadays is ‘for the duration of copyright.’  In the US, that is 70 years after you’re dead (about 50 years elsewhere).  That seems a bit onerous to me (my writer half speaking).  The more important issue is: under what circumstances does the license lapse?  As Dean Wesley Smith puts it: How do I get my book back?  Reversion clauses, in theory, establish when a book is ‘out of print’ based on existing inventory or annual sales levels.  In effect, most books in modern contracts go out of print when the publisher says so.  Personally I don’t think that is particularly fair.  Writers should try to negotiate reasonable reversion clauses – based I think on the principal: If you can no longer make significant money from my work, you should let me give it a go.

Which finally brings us to advances and royalties.  Royalties are, of course, the most important element of the contract for the writer.  They determine how much, over the life of the publication period, the writer will be paid.  Royalty rates are negotiable within a narrow range and are different for different formats (8-10% for mass market, 10-12% for trade, up to 15% for hardcover, 25% or more for digital).  The more books you sell, the higher rates you can negotiate.  If you have no sales history, you can guess the results.  Of course, royalty rates tell only part of the story.  Making 15% on 1000 books is not nearly as lucrative as making 8% on 100,000.  But things like print runs, distribution and marketing strategies are largely not negotiable.  Nor are sales ever predictable.  A sure fire bestseller can bomb (usually ending the career of the writer, editor and associated sales people) while a sleeper can become a runaway sensation (a la Harry Potter).

Which is why advances are important.  The advance on royalties is the only sure money for the writer.  They get it even if the book is a complete and utter failure, selling only as many books as the writer has cousins.  The advance represents a recognition of the work the writer has already done; for the publisher it is both an expression of faith in the book and a recognition that, in this business, publishers risk money while writers risk time.  Both risks are real.  The publisher takes on some of the writers risk by giving him money in advance and the writer takes on the publisher’s risk by being helpful and cooperative and publicly personable (even if they hate people).  Ideally, in the end, everyone makes money.  Publishers who don’t help their writers prosper will soon lose them to someone else; writers who don’t care if their publishers make a profit will soon be looking for another one.

The amount of the advance is of course – what? – that’s right: negotiable!  A simple rule of thumb – the bigger you are, both writer and publisher – the bigger the advance.  New writers with small presses should expect something but not a lot.  Established writers with small presses can demand more.  You can do the math on the rest (probably an unfair assumption – so many writers can’t do the math at all which is why they make crazy demands or sign stupid contracts).

The rest of the contract is important but often commonsense or non-contentious: delivery dates and publication schedules, protection against fraud or libel, free author copies and so on.  Pay attention to them but focus on the big three.


This is the last week for our Indiegogo campaign – Strange Bedfellows.  We are almost to our goal but could use a bit more help to pay writers real money.

And thanks to all those who have already contributed or spread the word on Facebook, Twitter or in their blogs.

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