Publishing Deal

How to Negotiate Your Publishing Contract

Publishing-Contract

Generally I am writing for Indie authors, and how they can successfully run their publishing business.  However, many of these tips, especially those about book marketing, can be used by “published” authors as well.  But in these promising times for author-publishers, there are still many writers who want to go with a trade publisher.  As always: Author Beware!  Get helpful information in this article, such as the – very detailed – checklist for your publishing contract negotiations.

Lawyer Lloyd J. Jassin, specialized in Publishing and Entertainment Law, posted via GooglePlus:

“A book is a book, except when it comes to e-Book royalties.”

A class action lawsuit has been filed against Simon & Schuster Publishing House by class representative Sheldon Blau, MD., – represented by Law offices Lloyd J. Jassin.  Why?  Lloyd J. Jassin explains:

“The royalty rate for e-book sales is much lower than the rate for the license of rights.  If categorized as a “LICENSE”, the author receives 50% of net receipts, rather than 25% of net typically paid to authors for the “SALE” of an e-book.”

If you work with a trade publisher, better check your contract, if it says: “license” or “e-book-sale”…  And while you are at it, go through your publishing contract, and compare it with the following list, compiled by contract lawyer Lloyd J. Jassin.
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Publishing Contract Negotiations.
Negotiating a publishing contract is a lot like buying a house or a car.  There’s some give and take, not everyone will get the same deal, especially for new authors and sometimes you have to pass on a publishing offer, if there are non-negotiation clauses that would interfere with your writing career.  What can authors do to get a fair deal?  Before navigating the minefield of book negotiation, READ the contract you have been offered, carefully, several times, line for line…  Use the checklist below, and ask the publisher or your agent IN WRITING what the clauses mean which you don’t understand, and think long and hard about the consequences for you.  Don’t accept a phone answer, get it in writing!

BEFORE you sign the contract, make an appointment with a contract lawyer to handle your contract negotiations.  Agents are not trained and able to give you legal advice!  How to hire an attorney who can help you is described in Kristine Rusch’s useful article.
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A couple of hundred dollars are a good investment that helps you possibly with all contracts during your writing career.

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Publishing Contract: Checklist What to Negotiate:

I. General Provisions

1. Name/address of parties
-Why kind of author? Joint? Single? Corporate entity?
2. Description of work (synopsis)
-Tentative title, no. of words, intended audience, fiction, non-fiction…
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II. Grant of Rights and Territory

1. Is it an assignment of “all rights” or a license agreement?
2. Term or time period (i.e., usually the life of the copyright)
3. Geographic scope
a) World
b) Limited (e.g., U.S., its possessions and Canada)
4. Exclusive rights granted
a) Primary rights
-Hardcover
-Trade paperback
-Mass market
-eBook
b) Secondary (subsidiary rights)
-Periodical rights
1) First serial (i.e., pre-publication excerpts)
2) Second serial
-Book club
-Dramatic rights
-Film/TV rights
-Video Recordings / Audio Recordings
-eBook
-Other digital versions (apps, enhanced eBooks)
-Radio rights
-Merchandising (commercial tie-in) rights
-New technologies
-Foreign translations rights
-British Commonwealth rights
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III. Manuscript Delivery

1. Delivery requirements
a) When due? Is the date realistic? Time is of the essence?
b) What format? Specify size of paper, spacing, margins, etc.
c) What to deliver?
-Number of manuscript copies, disks (what WP format?)
-Index (who pays?)
-Number of illustrations, charts, photos (who pays?)
d) Copyright permissions and releases
-Scope of rights (does it parallel grant of rights?)
-Who pays?
2. Manuscript Acceptance
a) Criteria: Satisfactory in “form and content” or at “sole discretion” of the
publisher? (Note: Historically, this clause has been a litigation flashpoint)
b) Termination for unsatisfactory manuscript
c) Termination for changed market conditions
d) How is notice of acceptance or dissatisfaction given
e) Good faith duty to edit
f) Return of the author advance
-First proceeds clause
-False first proceeds clause
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IV. Copyright Ownership

1. In whose name will work be registered?
2. Exclusivity
3. When will work be registered? (Should be done within statutory period).
4. Joint authors
5. License versus assignment
6. Independent Contractor or Work for hire
7. Reserved rights
-Overlap between audio & multimedia on the one hand, & performance rights on the other
-Overlap between print on the one hand, & screenplay / play publishing on the other

V. Author’s Representations & Warranties
1. Author sole creator
2. Not previously published; not in public domain
3. Does not infringe any copyrights
4. Does not invade right of privacy or publicity
5. Not libelous or obscene
6. No errors or omissions in any recipe, formula or instructions
7. Limited only to material delivered by Author
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VI. Indemnity & Insurance Provisions
1. Author indemnifies publisher
2. Does indemnity apply to claims and breaches?
3. Can publisher withhold legal expenses? Is it held in an interest
bearing account
4. Is author added as additional insured on publisher’s insurance?
5. Does publisher have ability to settle claims without prior approval of
author? If so, are there a dollar amount limitation?
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VII. Publication
1. Duty to publish within [insert number] months of ?
a) Force majeure (acts of god)
– Any cap on delays?
2. Advertising and promotion
3. Right to use author’s approved name and likeness
4. Bound galleys/review copies
5. Style or manner of publication
a) Title consultation or approval?
b) Book jacket
– Right of consultation? Approval?
c) Changes in manuscript
6. Initial publication by specific imprint or publisher may sublicense
rights?
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VIII. Advances & Royalties
1. Advance against future royalties
2. When payable? (in halves, thirds, etc.)
3. Royalties and subsidiary rights:

a) Primary rights
-Hardcover royalties
-Trade paperback royalties
-Mass market royalties
-eBook royalties
-Royalty escalation(s)
-Bestseller bonus
-Royalty reductions
1) deep discount and special sales
2) mail order sales
3) premium sales
4) small printing
5) slow moving inventory
6) bundling with other works
b) Secondary (subsidiary) rights royalty splits
-Book club (sales from publisher’s inventory v. licensing rights)
-Serialization (first serial, second serial)
-Anthologies, selection rights
-Large print editions
-Hardcover
-Trade paperback
-Mass market
-Foreign translation
-British Commonwealth
-Future technology rights
. -Audio rights
-Motion picture/TV
-Merchandising
-Advertising
4. Reasonable reserve for returns
a) What percentage is withheld?
b) When liquidated?
5. What is royalty based on? (Retail price? wholesale price? net price?)
a) At average discount of 50%, 20% of net is same as 10% of list
b) At average discount of 40%, 16-2/3% of net is same as 10% of list
c) At average discount of 20%, 12-1/2% of net is the same as 10% of list
6. Recoupment of advances
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IX. Accounting Statements
1. Annual, semiannual, or quarterly statements
2. Payment dates
3. Cross-collateralization
4. Audit rights
5. Limit on time to object to statements
6. Limit on time to bring legal action
7. Examination on contingency basis
8. Pass through clause for subsidiary rights income
9. Reversion of rights for failure to account
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X. Revised Editions
1. Frequency
2. By whom?
3. Royalty reductions if done by third party
4. Sale of revised edition treated as sale of new book?
5. Reviser/Author credit
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XI. Option
1. Definition of next work
2. When does option period start?
3. Definiteness of terms (i.e., is option legally enforceable?)
4. What type of option? (e.g., first look, matching, topping)
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XII. Competing Works
1. How is competing work defined?
2. How long does non-compete run?
3. Any reasonable accommodations?
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XIII. Out-of-Print
1. How defined? (Eg, __ copies sold over __ accounting periods)
2. Notice requirements
3. Author’s right to purchase digital files, inventory
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XIV. Termination
1. What triggers reversion of rights?
a) Failure to publisher within ___ months of manuscript acceptance
b) Failure to account to author after due notice
c) Failure to keep book in print (see Section X)
2. Survival of Author’s representations and warranties
3. Licenses granted prior to termination survive
4. First proceeds clause
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XII. Miscellaneous
1. Choice of governing law
2. Mediation / Arbitration?
3. Bankruptcy
4. Modification
5. Literary agency clause
6. Personal guarantee if the author is a business entity, not a human being.
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In case you ever need their advice:
Law Offices of Lloyd J. Jassin
1501 Broadway, New York, NY 10036
phone 212.354.4442
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LLOYD JASSIN is a New York-based publishing attorney. He teaches a digital rights & permission at the NYU Publishing Program. He is co-author of the Copyright Permission and Libel Handbook: A Step-by-Step Guide for Writers, Editors and Publishers (John Wiley & Sons, Inc.).
Lloyd has written extensively on negotiating contracts in the publishing and entertainment industries, and lectures frequently on contract and copyright issues affecting creators and their publisher partners. A long-time supporter of independent presses, he is First Amendment counsel to the Independent Book Publishers Association (IBPA) and sits on the advisory board of The Beacon Press, one of America’s oldest independent presses.

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Signing a Publishing Contract: Calculations?

Advance

There are lot of reasons why authors want to go with trade publishers.  They don’t want to do the work. They want books on the shelves.  Or they want the prestige.  They think a trade publisher will do a better job in marketing.  They want reviews in major print publications.  Great expectations and wishful thinking… But how will you fare money-wise in the end?
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Imagine you have two publishing offers:
One has a advance of $5,000 and 6,5% royalties against the advance, the other publishing contract presents $2,500 advance and 9% royalty you will earn out against the advance. Which offer do you take and why?

Money earned today is worth more than money earned next year…
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You could take the money you earned today, put it in the bank, and have more money next year – also not in a savings account with these whimsical interest the banks are paying, you would need to invest it smarter.  So, if you are thinking about the rights you are giving up to a publisher, consider their value for 35 years, and take into account the time-value of money.  Luckily, economists have been doing this kind of calculation for years. It’s called a net present value calculation.
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How much is Money Worth over Time?  
Money today is worth a lot to you.  Money earned in a couple of months is not worth nearly as much.  If you’re carrying credit card debt at a 19% interest rate, money today is worth a lot more to you than it is to someone who has no debt at all.

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Let’s Take the Example:
You are offered $2,500 advance for a book.  What would it take for the net present value of your self-published earnings to come out to $2,500?  Using for example 2% as an interest rate, a contract that offers you $2,500 is the equivalent of earning approx.  $109 a year for 35 years, which is making you in the neighbourhood of $9.97 a month.  That’s what $2,500 book advance means roughly.  What kind of steady sales would you need to equal that advance over time?  A $2,500 advance is an absolutely pitiful investment by a publisher.  They will earn back their money in short time.

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Bestselling Author C. Milan Calculated:
“What if you were offered $500,000 for a book?  A huge advance.  A self-published book that has the same net value is one that makes $19,750 a year, $1,645 a month – which means selling about 633 copies at $3.99 a month every month.  Put another way:
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A book at $3.99 that falls somewhere between Amazon rank 5,000 and 10,000 for 35 years is worth $500,000 today.
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Whether your books are still performing well in 35 years will probably depend on whether you are still writing new books at this time, and what you’re doing to promote and push your books in Year 35.”
You also have to take into account that you can earn out your advance on your traditionally published books.  If you’re offered an advance of $2,500 for a book, you will earn out your advance over the course of your publishing career unless your book was unprofessionally produced and priced. How long will it take you to earn out? How much will you earn per year after that?
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Let’s assume you self-publish the book at $3.99.  That you sell 2,000 copies of the book a year for the first five years (the lower price point combatting whatever marketing the publisher may or may not do for the book) and 500 copies a year for the next 30 years of comparison.  And let’s suppose that you must spend $2,000 to get your book on the market.

The first year, you will make $3,200 – $5,200 income minus $2,000 in expenses.  From year 2-5 you earn $5,200.  Years 6-35 you make $1300. The net value of self publishing your book is in the vicinity of almost $50.000.

If you want to know what your rights are worth,
you should think of the value over time for 35 years.

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Why go With a Trade Publisher?
Have at least some sense of what this is costing you.  If you are offered an advance of $2,500, look at people from this particular publisher who are similarly situated, and ask what kind of marketing they are really getting.  How much is it worth?

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Another Consideration:
“Ebooks are Forever”. It might be true in the strictest sense of the word. Yet ownership rights in your ebook will terminate seventy years after your death – no matter if you self publish or work with a publisher.  However, if you sign a traditional publishing contract, your publishing rights are not tied up forever if you are an American author.  All U.S. authors have the statutory right to terminate a grant of rights 35 years after publication under 17 U.S.C. 203.  Self-published authors and publishers can relaunch books at any time.  Traditionally published authors sometimes get the opportunity to relaunch a book when their publisher reverts a book’s rights back to them.
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Let your heirs know this too and mention it in your will or give your family copies of your contract, just in case! Thirty-five years is a long time, but it’s not forever.

 

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Beware! Read What Fellow Writers Can Teach You

publishing contract

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Brooke Warner, author and publisher, writes on Huffington Post: “Most writers have traditional publishing aspirations.  They want an agent to fall in love with their project and champion their work; they’re looking for the external validation of being accepted by a publishing house; their fantasies about getting published involve a red carpet experience that’s increasingly elusive in this industry.”  But she also cautions: “Be vigilant, self-advocating, and savvy during this process.”
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Caveat. Scriptor: Let. the. Writer. Beware! 

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Be Careful What to Wish For.
Following blog posts of “published” writers, you might have read similar remarks as I found on the website of a bestselling author, who went for many years with traditional publishers.  She explains in her blog that she has never been paid on time.  She had to threaten her publisher more than once to pull her books, in order to get her royalty payments that were months overdue.  This author sometimes had to wait only for her royalty statements two months.
But that’s not all: “The production on my last two books ran so late that there were no review copies sent to major markets and reviewers. I had turned in my manuscripts early, so the problem was entirely on the publisher’s end.”  For her latest book she had to remind them for the copy edit because the book – its launch was only two months away – had no copy editing, proofing, or Advanced Review Copies (ARC’s). Her e-book came out nine months after the print book…

She is talking here only about book production and payments. Another example how unprofessional publishing companies are handling the book promotion and sales pages of their authors at online retailers, can be found in two of my recent blogs :

http://www.savvybookwriters.com/test-yourself-how-professional-are-you-publishing-part-1/
http://www.savvybookwriters.com/2nd-part-of-test-yourself-how-professional-are-you-publishing/

Book Rights And Wrongs And Traps To Avoid


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Check the Publisher Before you Sign an Agreement.
Talk to a variety of authors who work with this publisher, bestseller, mid-list and first-time writers, but also with authors who left the publishing company and are now self-publishing.  Ask these writers:

  • Has the publisher lived up to its contractual obligations?
  • Has the publisher tried to change the terms of the contract after signing?
  • Does the company pay on time (within 30 days of the payment’s due date)?
  • Does the company issue royalty statements on time?
  • Has it published the books in a timely fashion?

Before you ever contact a traditional publishing company, do your research.  Start with Publisher’s Marketplace, and don’t forget to google the publishing company with the added word: “complaints”.

Websites that are stating complaints and are giving advice what to look out for:
The Fine Print of Self-Publishing
Predators and Editors
Author Beware Thumbs Down Publisher List
So far you will not only find complaints and cautionary stories about trade publishers, but also about Vanity publishers.
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Vanity Publishers or so-called “Self-Publishers”.
“Self-publishing companies” – the worst of predators – are really an oxymoronic: you are either self-publishing or someone is publishing you.  Paying someone to be your publisher is like hiring someone to take a vacation for you so you can stay home and work.  Read my former articles about Vanity publishers:

Five Worst Publishers
Comparison of Trade/Vanity/Author-Publishing
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Here is the definition for the term, “publisher.”  A publisher is an entity that invests in and assumes the risks for the producing and distributing a piece of media, such as books, e-books or audio-books.  And you as an author license the copyright (or parts of it) of your manuscript.

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What to Look for in the Publishing Contract?
Find out if the trade publisher company:

  • will negotiate certain points of its contracts
  • will reserve the right to revise my manuscript
  • will try to buy all book rights
  • will want to own all rights to any pen name used by the writer

There are many more traps in publishing contracts, such as mentioned in these blog posts:

https://savvybookwriters.wordpress.com/2013/08/16/the-traps-in-publishing-contracts/
https://savvybookwriters.wordpress.com/2014/05/05/do-you-understand-your-publishing-contract-2/

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NEVER, NEVER, NEVER sign a contract without having your contract lawyer going over it and explaining it to you in detail – sentence for sentence.
“There is no consumer-type protection for authors, 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 (and costly) hurdle to clear.”

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The Traps in Publishing Contracts

ebooksinternational:

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.

 

Originally posted on Savvy Writers & e-Books online:

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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…

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Tagged: Advances and Royalties, basketing, Book club publication, joint accounts, Minimum Wage for Authors, Publishing contract, Publishing Deal, Reasonable Reserve, Traps in Publishing Contracts


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