Tag Archives: publishing contracts

“Negotiation” Is Not a Four-Letter Word

By Susan Spann

Today we continue the pre-conference #PubLaw prep for the contract negotiation workshop at Colorado Gold (which I’m team-teaching with Midnight Ink editor Terri Bischoff) with an unusual look at publishing contracts: one that doesn’t talk about contracts at all. 

(Note: You don’t have to go to Colorado Gold to benefit from the concepts we’re discussing here – so whether or not you’re attending the conference….read on.)

Today, we’re talking about negotiation.

Many people understand only the “Zero-Sum” approach to negotiation, which essentially boils down to “one person wins, and the other person loses.” Under a Zero-Sum philosophy, every negotiation (or contract) point I “win” is one that the other side “loses.” The idea, then, is to win as many points as possible, and force the other side to accept a “losing” position in the final deal.

Unfortunately, zero-sum doesn’t work very well for publishing contracts. The reason should be obvious. The more one side takes an “author vs. publisher” or “us vs. them” position in the negotiating process, the more difficult it becomes to set those differences aside and build a  business partnership once the deal is signed.

The Mutual Benefit Strategy offers a far more effective method of negotiation for publishing contracts — and not just because it lays the groundwork for a better relationship after the signing.

“Mutual Benefit Negotiation” is a strategy which focuses on finding not only a “meet in the middle” solution to contract disagreements, but actually finding a place where both sides are better off than they were before.

Admittedly, it isn’t always possible to find a win-win solution to every problem. In some cases, only one side can have its way.

A good example is whether or not the contract includes both print and ebook rights. If the author wants to sell both, but the publisher offers ebook only–or, more commonly, the other way around–only one side can prevail and there really is no middle ground.

More commonly, however, there is a place where both sides can “win” and the contract terms can reach a mutually beneficial position.

For an example of this, let’s look at translation rights. They don’t have to be “all or nothing.” If a publisher has an in-house translator for Spanish, or French, or Italian, or regularly sells a lot of translation rights to certain countries, you may be able to negotiate to include only certain languages in your contract.

Another good example is special editions for people with disabilities. Most publishing contracts give the publisher the right to produce or license these editions (for example, Braille versions) with no royalties paid to the author. This is because, many times, the publisher “donates” the rights to these editions and/or licenses them free of charge. As an author, you shouldn’t want to deprive disabled people of the chance to experience your books. However, you don’t want to give out windfalls, either — so a compromise position is language which states the publisher can license these editions royalty-free, but that if the publisher does receive financial compensation for the license, that compensation is shared equally with the author. Win-win. The publisher keeps the right to get those editions on the market, and the author gets the right to share in any benefits that arise.

When you negotiate a publishing contract, be clever. Look at the publisher as a business-partner-to-be. That doesn’t mean you trust beyond what the publishing house deserves–or that you compromise in unreasonable ways. However, if you can offer creative solutions that leave both parties better off (or at least satisfied with the outcome) you can turn the contract negotiation from a hostile, zero-sum environment into an incubator for the (hopefully long-term) relationship to come. 

Again … this doesn’t mean roll over and show your belly. It means be smart, be creative, and be aware that sometimes the best solution to a problem is Option C – which, often, nobody thought about to begin with.

I hope to see you all at Colorado Gold!

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Susan SpannSusan Spann is a California transactional attorney whose practice focuses on publishing law and business. She also writes the Shinobi Mysteries, featuring ninja detective Hiro Hattori and his Portuguese Jesuit sidekick, Father Mateo. Her debut novel, CLAWS OF THE CAT (Minotaur Books, 2013), was named a Library Journal Mystery Debut of the Month. The second Shinobi Mystery, BLADE OF THE SAMURAI, releases on July 15, 2014. When not writing or practicing law, Susan raises seahorses and rare corals in her marine aquarium. You can find her online at her website (http://www.SusanSpann.com), on Facebook and on Twitter (@SusanSpann).

Forget the Money: Show Me the Contract

By Susan Spann

This September, I’m co-teaching a workshop at Colorado Gold with Midnight Ink editor Terri Bischoff. The workshop, titled “Contract Law: Where You Can Make a Difference,” is intended to offer advanced-level instruction on which publishing contract clauses are (and are not) negotiable.

In preparation for that, my guest posts between now and Colorado Gold will offer some entry and mid-level information about the contracts process, to help authors get up to speed for the information Terri and I will present at Colorado Gold.

***

For many authors, obtaining a publishing contract is a lifelong dream-come-true.

It doesn’t matter whether you publish traditionally, through a self-publishing service like Amazon or CreateSpace, or with a hybrid publisher who gives the author significant control over things like cover art and pricing.

Getting your novels into print is both the fulfillment of a dream … and also the start of a business endeavor.

Smart authors remember to treat it as both.

No matter which publishing route you use, you must have a written contract. Copyright law requires one when rights are licensed on an exclusive basis (which is the case with most publishing contracts), and no smart author would ever publish a book without some writing governing the terms of the publishing deal.

In the case of self-publishing venues like Amazon, CreateSpace, and others, that writing is often the online Terms of Use.  Authors should treat those terms of use like a contract–albeit a nonnegotiable one, since website publishers generally will not change any terms of those contracts on an individual basis. Even so, online terms of use have been held just as binding as written contracts–so beware.

Many authors make serious contract mistakes because they allow emotion to get in the way of business sense. Don’t be that person.

When presented with a publishing contract (or preparing to self-publish your work), remember:

1. The financial terms (royalties and advances) are important, but NOT AS IMPORTANT as the sum of all of the legal terms in the contract. Don’t let royalties or advances blind you to the other legal terms.

2. Read the entire contract carefully, and get experienced legal help with anything you don’t understand. This help might come from an agent or an attorney — but it should always come from someone not affiliated with the publisher. The publisher may or may not be honest–but publishers have a conflict of interest when it comes to explaining your legal rights. It’s always more expensive to try and break a contract after the fact than it is to find out what the contract says up front.

3. Remember that contracts are legally binding documents — and that ONLY the actual words in the contract govern your legal relationship with the publisher. Emails, telephone calls, and other promises don’t mean anything if they’re not included in the contract. In some cases, a court may even prevent you from introducing evidence that “outside promises” even existed. Treat the contract as if it’s the only document that matters, and the only thing controlling your relationship with the publisher–and then make sure that everything is included.

4. Be wary of ANY contract which doesn’t comply with industry standards. In particular, beware: nondisclosure clauses (which prevent the author from talking about the publisher in public or on social media), non-competition clauses preventing the author from publishing ANY other works of any length without the publisher’s permission, a total lack of termination options for the author, and “out of print” clauses tied to inventory or “on sale status” rather than sales figures. These aren’t the only warning flags, but a contract which contains one or more of these must be approached with caution (and a lawyer in your corner).

These aren’t the only things to beware in your publishing contract, but they’re a decent start. Next month, we’ll take a look at some more contract pitfalls to avoid.

In the meantime – keep treating your writing as a business and remembering that, regardless of your publishing path, YOU are the one in charge of your publishing career.

***

Susan SpannSusan Spann is a California transactional attorney whose practice focuses on publishing law and business. She also writes the Shinobi Mysteries, featuring ninja detective Hiro Hattori and his Portuguese Jesuit sidekick, Father Mateo. Her debut novel, CLAWS OF THE CAT (Minotaur Books, 2013), was named a Library Journal Mystery Debut of the Month. The second Shinobi Mystery, BLADE OF THE SAMURAI, releases on July 15, 2014. When not writing or practicing law, Susan raises seahorses and rare corals in her marine aquarium. You can find her online at her website (http://www.SusanSpann.com), on Facebook and on Twitter (@SusanSpann).

When You Shouldn’t Finish What You Started

By Katriena Knights

One of the cardinal rules of being a writer is to finish what you start. After all, if you don’t finish those stories, you won’t have anything to submit or publish, right? Right. But there are times when it’s best not to finish or revisit an unfinished or unpolished piece. Continue reading

THE SALE: Then and Now

By Mary Gillgannon

I just contracted for the sale of my twelfth book. (I’ve published three independently.) The experience was very different from when I sold my first book over twenty years ago. Including the “signing”, which consisted of creating an electronic signature with a password.

How have things changed?

Submission: Back then, I didn’t yet have a computer, so when an editor at the Colorado Gold (yay, RMFW) asked me to send her “the whole manuscript”, I had to print it out, which involved inserting 400+ individual sheets of paper in my word processor, basically a typewriter with a memory, and then patiently waiting as the machine typed it out page by page. I then boxed it up, took it to the post office and paid a substantial chunk to mail it.

This time I sent my manuscript as an email attachment, not quite a one-click process but pretty close.

Response: Back then, I got a letter with an offer in six months. That actually wasn’t an atypical response time. I once got a rejection letter for a manuscript I’d submitted eighteen months earlier.

This time, an editor responded to my query within a week, and two weeks later I got the offer.

The money: When I sold my first book, my editor had just started acquiring for a new line and I had a tough, hard-nosed agent who knew how to negotiate. She managed to get me an advance just barely in the five figures. Given that the first offer was for $2,500, I was over the moon.

This time the advance is… nothing. These days, lots of small publishers don’t offer advances. Instead, I get 40% of the download price of ebooks and 7% of print. So, unless I’m very lucky (and suspect I used up all my luck on my first sale), it will take me years (or never) to make as much on this book as I did twenty-some years ago.

Distribution: My publisher back then printed about 70,000 copies. That sounds very impressive, but be aware that my book was only readily available in stores for about five weeks (“The shelf-life of a banana,” my editor used to say.) For another year or so it was available to order, but after that the only copies anyone can buy are used copies, for which I get no royalties.

Today, my book will be available until… who knows. Unless there’s some internet catastrophe and/or the world ends, my story will be out there indefinitely. On the other hand, every ebook is like that, so in a few years, there will be millions and millions of them available. How do you stand out or get noticed in those circumstances?

Sales: I sold about half of my print-run back then. Not enough to earn out my advance, which did not endear me to my publisher.

This time, I can keep earning money for years and years. Even so, unless the book really catches on, it will take me a long while to earn as much as I did with my first book twenty years ago.

Marketing: My first publisher didn’t do a lot of marketing and promotion for new authors, other than sending out ARC’s to the two romance magazines around at the time. But they did give me great covers, and because they had good relationships with dozens of small distributors all over the country, my books were available at supermarkets and discounts stores as well as most bookstores.

Today, most smaller publishers expect authors to do much of their own marketing. Since I suck at social media, my only hope is that because I have thirteen other ebooks available, all under the same name, some readers will stumble onto this one. Sheer quantity does seem to help sales.

The joy: Back then, I really thought I’d made it. Now I know that unless you’re a top bestseller, there’s no way you can ever feel secure about your career. Fads and trends move quickly and what’s popular one month may not be the next. But after twenty-plus years, I appreciate more than ever how fortunate I am to make money doing something I love and having my stories read by readers.

Juggling Contracts, Part 3: Beware the Sub-Clauses!

By Susan Spann

Last month’s RMFW #PubLaw post talked about contract language authors want to see when juggling multiple contracts for different types of rights.

This month, we’ll take a look at the other clauses authors need to watch for.

Even contracts which seem to address only limited rights sometimes contain additional terms that impact sub-rights licensing and limit the other contracts the author can sign without a publisher’s permission. Here’s an overview of the most common:

1. Sub-rights paragraphs. Check the contract’s sub-rights paragraphs against your list of rights you intend to sell. Make sure you’re giving away only the rights you intend. Be careful, because the “grant of rights” paragraph doesn’t always contain all of the rights language. Many contracts contain sub-rights language in other places, farther down the agreement.

2. Licensing and assignment rights. Many contracts have separate paragraphs authorizing the publisher to sub-license additional rights. Be careful to ensure this doesn’t reach beyond the scope of the rights you intend to grant, and make sure these paragraphs specifically state that the publisher can’t license or sell rights beyond those “expressly granted to Publisher in this Agreement.”

3. Intellectual Property Ownership Provisions. Some publishers try to “grab” rights in the copyright and ownership sections. Read carefully, and ensure that you retain full ownership to all rights in the work (except for the ones licensed to the publisher, of course), and that your contract specifically states that you can benefit from those rights without owing the publisher any share or licensing fee.

4. Competitive Works Provisions. Many contracts prohibit the author from publishing or licensing “competitive works,” defined as works which might damage the market for the work referenced in the contract. Be sure these provisions have carve outs for derivative rights and sub-licensing of the other rights you intend to exploit. In fact, the contract should expressly state that the author’s exploitation of reserved rights is not a violation of this provision.

5. Option Clauses. Beware the lurking option clause that casts too broad a net. If a publisher takes an option, restrict that option as much as possible. For example, if you’re licensing publication rights to a novel, the option should be for “Author’s next book-length work of fiction in the same series only” and should not include derivatives, spinoffs, and short stories or novellas.

As you can see, the job of juggling rights becomes more intricate as more publishers and rights become involved. I recommend that authors who want to juggle multiple contracts have an agent or an experienced publishing attorney at their side, and that the author hires professional help before the first contract is signed.

Juggling rights requires careful planning and attention to detail, as well as a solid understanding of legalese and contract law. Don’t go it alone. The rights–and the profits–you save will be worth the trouble.

*As always, be aware that this column is general business advice, and not intended as specific legal advice to any person. All authors should consult an experienced publishing attorney before signing contracts or compromising their legal rights.

Have questions about this or other publishing legal topics? I’d love to hear from you in the comments!

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Susan Spann is a publishing attorney and author from Sacramento, California. Her debut mystery novel, CLAWS OF THE CAT (Minotaur Books, July 2013), is the first in a series featuring ninja detective Hiro Hattori. The sequel, BLADE OF THE SAMURAI, will release on July 15, 2014. Susan blogs about writing, publishing law and seahorses at http://www.SusanSpann.com. Find her on Twitter @SusanSpann or on Facebook.

Awesome Events Ahead from Rocky Mountain Fiction Writers

Attend a Class

Online Class
Editing and Revision
for Fiction Writers
Presented by Cindi Myers
3 Week Course

Start Date: Monday, February 3
End Date: Sunday, February 23

$35 Members – $40 Non-Member

Register

E.B. White said “The best writing is rewriting.” No matter how much care you put into your first draft, only when you’re done and you’re able to see the book as a whole will you be able to give the work the polish it needs. If you’re a rough draft writer like Cindi Myers, the editing and revision process is where the real magic of creating a book happens. Cindi will share her process and techniques for taking a story from a messy rough draft to a polished gem ready for submission. Exercises and class interaction will help you address your particular editing and revision problems and learn techniques for making the daunting task of editing a complete manuscript more manageable.

In Person Class
RMFW Screenwriting 101 with Trai Cartwright
Tuesdays, 6:00 P.M. – 9:00 P.M.
Start Date: March 4
End Date: April 22
2369 Trenton Way, Suite M
Denver, CO 80231

$225 Members – $250 Non-Member

Register
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Submissions for 2014 Conference Workshop
Submit Workshop Proposal
RMFW is now accepting workshop proposals for Colorado Gold through March 31, 2014.

If you have any questions, email Susan Brooks at conference@rmfw.org.

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RMFW Anthology 2014 Submission Guidelines
Download PDF of Theme and Guidelines
Anthology Theme: Crossing Colfax
Submissions are due by March 14, 2014.

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Attend the 2nd Annual RMFW Writers Retreat

With Special Guest, Agent Kate Schafer Testerman
Organized by Angie Hodapp
March 16-21, 2014
Table Mountain Inn,
Golden, CO
REGISTRATION CLOSES FEBRUARY 15TH

The 2013 writers retreat was a smashing success! It’s back in March of 2014 and will become an annual spring event. How much does it cost to attend the retreat? We are pleased to introduce flexible registration options. Attend for two days (minimum), three days, or all four days, and pay only for the days you attend. How do I register? Go to the RETREAT EVENT PAGE for more information and the link to register.

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New events and other announcements are available on the Home Page of the Rocky Mountain Fiction Writers website.

Do You Know How to Juggle … Contracts?

By Susan Spann

Last week, someone asked me if I’d ever written a post about the legalities of contracting with multiple publishers (or publishers and others) for various forms and formats of the same creative work. 

In simpler language: “What do I need to know before I license print rights to one publisher and then license audio, or translation, or film rights (to the same work) somewhere else?”

Today we’re starting a discussion of that very topic. It’s a complex one, so we’ll come back to it for the next few months, at least.

I’ve mentioned before that “copyright” includes a bundle of different rights, including print, ebooks, translation to foreign languages, TV and film rights, audio rights, apps and gaming, braille, and many more. Until and unless an author licenses some or all of those rights, the author owns and can control them all.

Sometimes, a publisher wants to contract for more than one kind of rights. Some publishers take only one or two. We could write an entire book (and many blog posts) about the decision whether or not to license multiple rights at once–but for now, I want to focus on what happens when the author has the chance to split the rights among different publishers or companies.

IF YOU WANT TO HAVE MULTIPLE CONTRACTS, PLAN AHEAD.

The author needs to plan for multiple contracts from the very beginning–meaning BEFORE he or she even signs the first one.

Publishing contracts (and film, TV, app and gaming contracts also) always contain two clauses:

– A clause which states that the author cannot enter into any contract which would violate the terms of the contract (s)he is signing, AND

– A clause in which the author warrants (a fancy legal word for “promises”) that the current contract doesn’t violate the terms of any other existing contract or agreement involving the author and this work.

Do you see the issue?

If the author gives away too many rights in the first (or any other) contract, or doesn’t make sure that each contract allows the author to dispose of the remaining rights in any way the author chooses, the author can end up trapped and unable to license additional rights, sometimes even if those rights weren’t expressly included in the first contract.

BEFORE YOU SELL RIGHTS TO YOUR WORK, MAKE A LIST OF THE DIFFERENT CONTRACTS YOU HOPE TO OBTAIN 

Create a list (or a spreadsheet) containing all of the rights you might want to license. This might include:

Leave space so you can write in the name of the publisher (or company) to whom you license each set of rights.

In addition to keeping your publishers straight, this list becomes your “rights review checklist” every time you prepare to enter a contract. Make sure each contract names and licenses only the rights you want to license to the company in question. Be clear during negotiations: let the publisher know in advance that you’re offering only certain rights, and that you intend to license and exploit your other rights in other ways.

You’ll also need to ensure that each publishing language contains some important language protecting your rights … but that’s the topic of next month’s #PubLaw post here at the Rocky Mountain Fiction Writers Blog.

So tune in next month for the next installment!

In the meantime, if you have questions about this or other publishing legal issues, please feel free to ask in the comments! 

 

 Susan Spann is a publishing attorney and author from Sacramento, California. Her debut mystery novel, CLAWS OF THE CAT (Minotaur Books, July 2013), is the first in a series featuring ninja detective Hiro Hattori. The sequel, BLADE OF THE SAMURAI, will release on July 15, 2014. Susan blogs about writing, publishing law and seahorses at http://www.SusanSpann.com. Find her on Twitter @SusanSpann or on Facebook.

 

Never Give Up!

By Mark Stevens

Regrets? I’ve had a few.

One bothers me more than most.

I knew it at the time, when I first read Gary Reilly’s stuff.

Gary ReillyWe’d meet in coffee shops, frequently the Europa Café on South Pennsylvania Street in Denver. Hip joint. Cool vibe.

Gary would pluck a stack of things from his satchel—offbeat fiction he’d found in the used bookstores along Broadway. He’d pull out cheap paperbacks, maybe a manuscript of mine that he had edited for the fifth or sixth time. He’d tell me the story of some B-movie he’d stayed up to watch. The guy loved movies.

And, over the years, he’d hand me one of the novels he had written.

About 25 of them.

This was years ago, when he was healthy and hearty and could talk for hours. Two rounds of large iced lattes, no problem.

I’d take the novels home—one at a time.

I was astounded at the sheer range of voices the guy produced—the comic adventures of his erstwhile cab driver Murph (the star of 11 novels), two dark psychological thrillers, some sci-fi, some fantasy, some straight-up, multi-generational all-American fiction and two of the best Vietnam-era novels I’ve ever read.

During our years of coffees, I went from “unpublished” status to “published.” Yes, a small indie publisher but I got an advance; it was a regular deal. Nobody could have been happier for me than Gary Reilly.

Here’s where the regret comes in.

I just re-read the first of the Vietnam-era books again: The Enlisted Men’s Club.

Poetry on every poetry. We’re in the Presidio, in San Francisco, and Private Palmer is waiting orders to ship out to Vietnam. All he wants to do is drink beer and avoid “shit details.” Nearly 100,000 words of raw honesty. Gary drew on his own experiences (he served as an MP in Qui Nhon) and The Enlisted Men’s Club takes you smack back to the mood and the feeling of that messy political era.

Here are the opening two paragraphs (following a brief prologue):

The ground is damp where Private Palmer is standing, sandy, with some sort of small-leafed green vine which wraps itself around everything planted in the earth—the white wooden legs of the NCOIC tower, a picket line of telephone poles, even the rows of smooth white rocks as large as footballs which border the sides of the dirt drive leading into the rifle range.

The sky is overcast and the wind is blowing hard, making Palmer’s fingertips ache each time he pinches a brass-jacketed round of ammunition and tries to stuff it into a spring-loaded magazine. His gloves are in the pockets of his field-jacket because this isn’t the kind of work you can do wearing gloves, you have to do it bare handed. Colorado raised, he’s used to the stale dry mile-high bite of lifeless Rocky winters, not these damp, heat-sapping, muggy mists blown inland from the coastal waters at dawn. San Francisco Bay is hidden by barren brown hills which border the rifle range, but he can still smell the odor of beached fish in the air.

I read The Enlisted Men’s Club and knew Simon & Schuster would need only tweak four or five typos to turn it into a book today. Flawless, perfectly paced and beautifully structured. The ending is a piece of work—a fine insight into humanity that gives a ray of hope to what is otherwise a fairly bleak tale.

And, now that Gary is gone (he died nearly three years ago), I was near tears as I read The Enlisted Men’s Club.

I’m angry that I didn’t stand him up, march him out of the coffee shop, drive him to a place where I could really give him a piece of my mind—that he needed to do more to get his damn books published.

I was frustrated at the time that Gary wouldn’t send out more queries.

But I didn’t really do anything about it.

I was frustrated at the time that Gary wouldn’t come to RMFW events, to network and find a path to publication.

But I didn’t really do anything about it.

When I’d ask him if he wanted a list of agents to contact, he said would think about it. He’d give me a little shrug of the shoulders. Self-promotion and marketing weren’t part of his DNA.

But I didn’t insist.

I should have made an issue out of it.

Gary would go back home—and write. We’d meet again in six weeks or so and he would have polished up another manuscript.

The guy was born to write and tell stories. He wrote (obviously) for the sheer joy of it. He was fascinated about the process. He loved words like nobody I have ever met.

Twenty-five novels and most (in my mind) could go straight to print.

Five Murph (The Asphalt Warrior) novels have been published so far and the response has been terrific. One Colorado Book Award finalist, two number one Denver Post best-sellers, and reviews coming in from all over the country—and around the world. Murph has followers on Facebook and Twitter.

Because Gary was a vet, the Vietnam Veterans of America website just reviewed all five of Gary’s books—and raved.

The VVA is waiting on his Vietnam novels, of course. If all goes well, The Enlisted Men’s Club will be out late this spring or early summer. Readers will not be disappointed. I guarantee it.

When readers start to see Gary Reilly’s range and his storytelling ability, I have a feeling my case of regret will only get worse.

What’s the lesson for the rest of us? Sure, write up a storm. Sit in that coffee shop. But get out there and network—knock on every door, query everyone in sight, never give up.

Truly.

Never.

Give.

Up.

Gary Reilly books

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Mark StevensMark Stevens is the monthly programs coordinator for Rocky Mountain Fiction Writers and the author of the Western hunting guide Allison Coil mysteries Antler Dust and Buried by the Roan. Book three in the series, Trapline, will be published by Midnight Ink in November 2014. Mark is also a partner in Running Meter Press, the company publishing Gary’s works. All proceeds from the company are going to Gary’s longtime girlfriend.

Don’t Get Caught in the Royalty Net

By Susan Spann

My last guest post here at the RMFW blog took an overview look at publishing rights, with a focus on the “Big Four” – Exclusivity, Geography, Translation, and Formats.

Today, we’re taking a look at royalties - specifically, at royalty calculation and the contract language which bases an author’s royalties on “gross” or “net” sales proceeds.

Royalties are the money an author receives from a publisher on sales of the author’s work.

The amount of the royalty usually varies by format, with typical percentages averaging 9-10% on hardcover sales, 8-9% on trade paperbacks, 5-6% on mass market (sometimes also called “rack sized”) paperbacks, and 25% on ebooks.*

Many contracts also contain “escalation clauses,” which increase the percentages once sales pass a stated numerical threshold.

When the author receives an advance, the publisher pays the author a lump-sum payment (sometimes in several installments) which is credited against the royalties due on future sales. When authors receive an advance, the author receives no royalty checks until the author’s royalties on actual sales (less returns) exceeds the advance amount. 

At first glance, royalty calculation seems pretty simple: sales price multiplied by the royalty percentage equals royalty due … right?

Not exactly. You need to read (and understand) the fine print in your contract.

Publishing contracts calculate royalties in one of two ways:

Gross royalty calculation (sometimes phrased as calculation on “list price” or “price received”) means the author’s share of sales is based on amounts the publisher receives, with no deductions (except for returns, severe discount sales, and review copies, as well as a couple of other standard situations where royalties are never–or almost never–due). A gross royalty clause calls for calculation of the author’s royalties based on the publisher’s list price or the money the publisher receives on sales, without deductions for publishing costs or other costs incurred by the publisher. This is the best form of royalty for the author, and the one an author should try to insist on.

Net royalty calculation means that the author’s share of royalties is based on some amount less than what the publisher actually receives. The contract language will use the word “net” or specify that the publisher can deduct certain sums or expenses from the sales proceeds before calculating the author’s share. In cases where the publisher insists on net royalty calculation, the author must insist that the contract specify exactly what expenses the publisher can (and cannot) deduct before calculating the royalties due to the author. Unspecified “net royalty” clauses are dangerous for the author, because the publisher can reduce receipts (and therefore the author’s royalties) by deducting all kinds of costs that the publisher should normally bear.

Remember: in traditional publishing situations, the publisher–and the publisher alone–bears the costs of producing, distributing, and marketing the books. The author does not and should not share those costs.

The language to watch for reads: “Publisher will pay Author X% of Publisher’s net receipts (or net profits) on sales of the Work.”

Paraphrases of this language are equally bad.

When a contract uses the word “net,” or allows the publisher to deduct sums other than taxes and shipping added to the purchase price (meaning taxes and shipping paid by the purchaser over and above the price of the books) authors should, at a minimum, be wary. If changing the contract to gross royalties isn’t an option, and the author still wants to go through with the deal (there are reasons to make such a choice, but only after consultation with a trusted agent or attorney) the author must ensure that “net” is thoroughly and specifically defined and that publisher deductions are based upon “actual, documented” costs – not estimates or undocumented “costs.”

Not all net royalty contracts represent blatant attempts to defraud the author – some reputable publishers do use them – but authors must be very careful about agreeing to royalties based on net, and should never do so without professional advice.

One final word about the term “net” – in recent months, I’ve seen a couple of publishers’ contracts which use the word “net” but define the term in a way that actually represents a gross royalty calculation. Unless you’re well-versed in publishing legalese, you might not be able to tell the difference.

The best way to ensure your rights are properly protected? Find an agent or an attorney you trust and never sign a contract without professional review and advice.

*(Note: these numbers hold if you’re published by a New York publishing house. Digital-only presses, POD publishers, and small independent houses may (and usually do) vary.)

Have questions about this or other publishing legal issues? Please feel free to ask in the comments – I’m glad to help!

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 Susan Spann is a publishing attorney and author from Sacramento, California. Her debut mystery novel, CLAWS OF THE CAT (Minotaur Books, July 2013), is the first in a series featuring ninja detective Hiro Hattori. The sequel, BLADE OF THE SAMURAI, will release on July 15, 2014. Susan blogs about writing, publishing law and seahorses at http://www.SusanSpann.com. Find her on Twitter @SusanSpann or on Facebook.

 

Do You Know Your (Publishing) Rights?

By Susan Spann

The grant of rights to the publisher is among the most important (and trickiest) terms in a publishing contract. Although the paragraph itself is seldom long, it’s often connected to several others, not all of which are obvious during an initial read.

Regardless of the length or complexity of the terms, it’s critical for authors to understand the rights the contract grants to the publishing house.

The most expansive (and most commonly requested) rights provision grants the publisher “exclusive, worldwide rights to publication and distribution in all languages and in forms and formats now known and hereafter developed.”

Although short, the quote above contains the four primary factors authors need to consider in any grant of rights:

1. Exclusivity. Rights granted “exclusively” to the publisher cannot be granted to or utilized by anyone else (including the author) for the duration of the contract (which normally lasts for the term of copyright in the work, unless termination language in the agreement gives other options). It’s normal (and not abusive) for publishers to want exclusivity. The publisher is investing time and money in your work, and deserves to profit from that effort (as do you!). Just make sure the publisher has the resources to exploit the rights granted in the contract. A small, U.S. only publisher may not need exclusive worldwide rights. Exclusive North American (or U.S.) rights may suffice. Then again, it’s difficult to publish ebooks effectively without the right to sell them on the Internet, and Internet sales often cross borders.

2. Geographical Reach. Since the publisher will normally want exclusivity within its territory, pay attention to the manner in which that territory is described. Options include “worldwide” (formerly “throughout the universe”) or any lesser territorial boundaries the parties agree upon. U.S. rights are different than North American rights – so pay attention and be sure to ask if you have any question about the geographic and territorial descriptions in the contract.

3. Languages. The contract should specify what languages the publisher’s rights include. Contracts which merely state “exclusive, worldwide rights” are generally deemed to include all languages. If you intend to grant only English-language rights, the contract must say so. If the publisher wants a more extensive grant of language rights, be sure the publisher has the capacity to translate accurately and distribute in those markets. A poor translation is sometimes worse than no translation at all. On the other hand, you shouldn’t refuse foreign language rights to a publisher with a proven track record and the capacity to translate and market your work abroad.

4. Forms and Formats. Most publishers will request “all forms and formats”  – author, BEWARE. Does this include film, TV, and gaming too? It shouldn’t. Those rights aren’t tied to a publisher’s right to publish the book in print and ebook formats. Make sure your publisher has the capacity to act on all of the formats you grant, and that you don’t give away formats the publisher doesn’t need or deserve. It makes little sense to grant print rights to an e-only publisher – and is equally nonsensical to refuse e-book rights to a major brick and mortar house. Be aware that “all forms and formats” now includes mobile devices and potentially also app, gaming, TV, film, merchandising, and many more. A specific carveout is required if you want to retain those rights.

There are other factors that merit additional consideration, too, and which may appear less commonly in publishing deals. These can include film and TV rights, editing, the use of outside “co-authors” and/or editors, and several other issues. These often take a back seat to the “big four” we discussed today, but they remain important, and we’ll take a look at a few of them next week.

The “right” clause depends on many factors – there is no “one size fits all” – so be vigilant and pay attention, and make the right business decision for you and your book.

Today’s big take-away lesson is this: pay attention to the grant of rights, and know what rights you’re agreeing to give your publisher. A proper grant of rights lays the foundation for a positive, long-term business relationship between the author and the publisher – and that, of course, is good for everyone.

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 Susan Spann is a publishing attorney and author from Sacramento, California. Her debut mystery novel, CLAWS OF THE CAT (Minotaur Books, July 2013), is the first in a series featuring ninja detective Hiro Hattori. The sequel, BLADE OF THE SAMURAI, will release on July 15, 2014. Susan blogs about writing, publishing law and seahorses at http://www.SusanSpann.com. Find her on Twitter @SusanSpann or on Facebook.