Rx For Contracts
by Daniel Steven
Every mystery writer experiences a dual
feeling of pleasure and unease when presented with a publishing agreement. Pleasure, of course, at the sale of a book or
proposal; unease, however, about whether the deal is fair.
Publishing agreements are written by
publisher’s attorneys, and generally are heavily weighted in favor of the publisher
(I know, I’ve written several). The
typical contract is replete with “boilerplate” clauses used by all the major
publishers and many of the smaller presses.
But won’t your agent protect you? Perhaps. Most
literary agents, however, are former editors, proficient at brokering the major deal
points such as advances, royalties, and subsidiary rights, but with only a cursory
knowledge of the standard publishing clauses. In
addition, most agents have surprisingly little understanding of legal terminology.
Whether you have an agent or not,
it’s important that you understand some key contract provisions and their
implications. Here are some of the common
issues I see in my practice:
1. Rights. The standard publishing agreement will provide
that the author licenses or assigns all “print” rights to the publisher, plus
“subsidiary” rights: foreign, book club, electronic, film, audio, drama. This license generally will be for the term of the
copyright (author’s life plus 70 years), but will revert to the author under the
conditions set forth in the “out of print” clause of the agreement (see below). DANGER SIGN: watch for the magic words “work
for hire.” If you see these words, it
means you are giving up all rights to your work, forever.
Novelists should never work for hire unless they are contracting with a book
packager. If you don’t have an agent,
you should know that all of these rights are negotiable, depending on your bargaining
power. Always try to retain as many
subsidiary rights as you can. Even first
novelists should be able to retain film and foreign translation rights.
2. Royalties. Don’t fixate just on the royalty percentage;
the key to royalties is not only the royalty percentage but what price the
percentage is based upon. You must
understand the implications of your formula before you can understand your proposed
royalty rate. DANGER SIGN: watch for the
words “invoice price” or “net receipts” or “net revenue”
instead of “list price” or “cover price.” Invoice price differs from retail price or cover
price by not including the “Freight Pass Through” to compensate the publisher
for the cost of shipping, and thus the invoice price is less than the list price. “Net receipts,” of course, is the
wholesale price; a novelist always should receive royalties based on list or cover price. (For subsidiary rights like foreign or audio
rights retained by the publisher and sold to a third party, net receipts are okay,
provided they are shared at least equally with the author.)
Also be sure to check the “reserve against returns” language. DANGER SIGN: Many contracts allow the publisher a
“reasonable” reserve against returns – an intentionally vague provision. Try to get a “cap” on the reserve of
between 10 and 25 percent, the lower the better; also try to limit the time that the
publisher can hold the reserve to no more than one accounting period.
3. Warranties
and Indemnifications. These are purely
“legal” clauses often skimmed over by authors and not fully understood either by
agents or editors. These paragraphs set
forth the respective responsibilities of the parties in the event of claims by third
parties against the book, such as for defamation, copyright infringement, or invasion of
privacy. Drafted by the publisher’s
lawyers, they often can be overbroad to a ludicrous degree.
DANGER SIGN: the contract specifies that the your indemnities take effect
merely upon a claim being made, rather than upon a court decision. Instead, ask that your indemnities take effect
upon a “finally sustained” judgment, so that you do not have to pay the cost of
frivolous lawsuits. Also, try to get a
“to the best of your knowledge” standard added to your warranties. Finally, require that the publisher must give you
notice of any claim and consult with you before settling the claim.
4. Option
Clauses. These clauses give the publisher
the right to either buy or make an offer for the author’s next book. Best advice: don’t accept any option
clause. Most publishers are willing to yield
on this issue. If you can’t eliminate an
option clause entirely, then make sure it imposes no real burden. DANGER SIGNS: any contract language requiring you
to submit a completed manuscript, rather than a proposal; lengthy (more than 60 days)
consideration periods for the publisher; and a requirement that you offer your next book
to the publisher on the same terms as the current book.
Ideally, you should aim at setting up a very limited period during which the
publisher may bid on your next book (“right of first negotiation”), and
permitting you to sell the book to other publishers if a higher offer can be obtained.
5. Out
of Print clauses. Your grant of rights to
the Publisher is generally limited only by this clause (in addition, since 1976, any
author may terminate his or her grant of exclusive or nonexclusive rights after
thirty-five years for post-1978 works). It
therefore is critical that “out of print” be defined reasonably, especially now
that digital and on-demand publishing can make the literal meaning of the clause obsolete. Ideally, the definition should be pegged to the
publisher’s marketing efforts ¾ when the
book no longer is in the publisher’s catalog and/or available through major chains,
it should be considered “out of print,” regardless of whether it can be bought
online.
6. The Agency Clause. This is an almost universal clause requiring the
publisher to send all royalties to your agent (if you have one), and to keep his/her
commission before passing the money on to you. DANGER
SIGN: Watch for the words “coupled with
an interest” anywhere in this clause. Legally,
this makes your agency relationship irrevocable; it should be deleted. You should have the right to direct the publisher
to send royalty checks directly to you in the event you terminate your agency or in the
event of the agent’s death or bankruptcy.
It bears repeating-if you are
unsure about these clauses, ask a knowledgeable expert for help. It may save you from a great deal of grief.
© 2003 Daniel Steven
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