Guide to Book Contract Trouble Spots
I turned in my book's manuscript on time three months
ago, but my editor still hasn't accepted it. What are my
rights? And can my publisher make changes without my approval?
A. As always, your publishing agreement controls.
An industry-standard publishing agreement typically gives the publisher
the right to accept, reject, or ask for revisions in your
manuscript. But keep in mind that the editor who acquired
your book may not be the same editor who sees it through to
publication; editors change publishing houses
frequently. If a new editor comes in before your manuscript
has been accepted, he or she might just sit on your book while pet
projects take priority. You need some assurance that the
publisher: a) won't unreasonably delay production of the manuscript or
payment of your remaining advance by never getting back to you about
what changes the editor wants; and b) can't reject the manuscript
outright without giving you a chance to revise the manuscript.
solution is to insert a contact clause such as this: "Within 45 days of
its receipt of the complete manuscript of the Work, the Publisher shall
notify the Author in writing whether or not the Work is acceptable to
Publisher. If the Work is not acceptable to the Publisher,
the Publisher shall give the Author a request for changes and/or
revisions. The Author shall have 60 days from the Author's
receipt of such a request to deliver to the Publisher a revised Work
that is acceptable to the Publisher. The Publisher shall
advise the Author within 45 days of its receipt of the revised Work
whether or not the revised Work is acceptable to Publisher.
If the Work as resubmitted is deemed unacceptable, the Agreement shall
be terminated at the option of either party and neither party shall
have any further liability to the other. If the Author does
not receive any notice from the Publisher within the 45-day periods set
forth above, the Work shall be deemed to have been accepted."
Although some publishing agreements already will have a time limit for
the publisher's acceptance, they require YOU to notify an editor and/or
an executive of the house that "failure to respond shall be deemed
acceptance." If so, make sure you follow the specified
procedure: Failure to do so will leave you in limbo.
Also, who gets the final say on the manuscript after
acceptance? Some contracts allow the publisher to make
changes "provided the meaning of the text is not "materially
altered." In whose view? Generally, a publisher
should only have the right to make copyediting changes. You
should have the right to approve all material changes to the manuscript
Q. What is
cross-collateralization, and is there a cure?
A. Cross-collateralization is an
accounting concept (stay with me here) used in publishing agreements
(and also commercial loans). It refers to the right of the
publisher to charge your royalty account for any amount owing to the
publisher under any other agreement. Unfortunately, many
writers fail to understand the impact cross-collateralization can have
on their royalty income.
Let's say you have just submitted your third novel,
KILLING MADLY, to your publisher. Your first novel, KILLING
SPREE, sold well, but your second, KILLING FRENZY, earned out only
$10,000 of its $12,500 advance.
Under the terms of your current publishing agreement,
you are to receive a $15,000 advance for KILLING MADLY, upon
acceptance. But when the check comes, it's only for $12,500
-- the publisher has deducted the $2,500 shortfall from KILLING
FRENZY. (Alternatively, the publisher might pay you the full
$15,000 advance, but after it is earned out, it deducts the $2,500 from
Why? Because you have this clause (or one
like it) in your publishing agreement: "all Works covered by this
Agreement or any other agreement between Publisher and Author shall be
considered one account and shall be accounted for jointly or
What could you have done about it? Ideally,
you could have struck out the offending clause, usually found under
headings such as "Payments, Royalties, Overpayment, or
Accounting." Some publishers, however, won't delete it, so
you'll have to consider the negotiating points and issues:
* If this is your first agreement with the publisher,
the clause won't matter until and unless you sign another agreement
with the publisher. You probably can allow the clause in the
first agreement, then push hard to have it deleted in the second
contract. Keep in mind that, unless your first book was
somewhat of a success, it's doubtful you'll get a second contract from
that publisher anyway. You also might try to "cap" the
cross-collateralization to a specific dollar amount, e.g., that no more
than X amount can be setoff from any one contract.
* If you are offered a multi-book deal, consider
whether keeping the clause will leave you better or worse off versus
signing individual deals. In other words, is the guarantee of
publication from this publisher enough to outweigh the fact that one
ordinary book may soak up the benefits of commercial success in another
book? You might be better off selling to different
publishers. You also might try putting time limits on the
operation of the cross-collateralization clause: In other words, let
the publisher cross-collateralize only after an eighteen month or two
year period from the release of each book. This should at
least prevent any amount being take out of an advance for the next
* You could try limiting the cross-collateralization to
specific editions of a book -- i.e., only hardcovers can be
cross-collateralized against other hardcover editions, not trade
The key, as always, is reading and understanding all of
the clauses in your publishing agreements -- even the ones that, at
first glance, may seem innocuous.
Q. My publishing contract
provides that I "indemnify and hold harmless" my publisher from all
claims. That sounds drastic.
A. It is. Unfortunately,
indemnification and warranty clauses in book contracts frequently are
skimmed over and not fully understood by authors, agents, or
editors. These clauses set forth the respective
responsibilities of the parties in the event of claims against the
author and publisher for defamation, copyright infringement, invasion
of privacy, violation of rights of publicity, and other "torts" or
civil wrongs. Drafted by the publisher's lawyers, they often
are overbroad and publisher-slanted to a ludicrous degree.
In general, the warranty clause is the author's promise
to the publisher that her work is original, and further does not defame
(libel) any individual, nor invade anyone's right of privacy or right
of publicity. To give this promise teeth, the publisher also includes
an indemnification clause, which is the author's agreement to reimburse
the publisher for any damages suffered by the publisher if the author's
warranties are false. This is required even though all but the smallest
publishers carry "publisher's perils" insurance policies that will
cover the publisher for such claims.
What can you do about it? Ideally, you should
get the following underlined words inserted in the standard
indemnification clause: "The Author will indemnify the Publisher
against any loss, injury, or damage (including any legal costs or
expenses and any compensation costs and disbursements paid by the
Publisher) occasioned to the Publisher in connection with or in
consequence or any breach of the Author's warranties and which the
Publisher is not able to recover under its insurance
policies." In most cases, this will dramatically reduce your
Unless you are a best-selling author, however, it can
be difficult to get this change. Many publishers and editors treat
their indemnification clauses as sacrosanct, handed down, Moses-like,
from "Legal." There are some changes, however, to which many
publishers will agree. Most successful authors should be able
to get their publisher to make them an "additional insured" on the
publisher's insurance policy. This means that the author, as
well as the publisher, are covered by the publisher's insurance
policy. In that case, unless your actions were intentional,
the most you could be personally liable for in the event of a lawsuit
would be a share of the insurance policy's deductible amount
(typically, not more than $10,000).
Other realistic requests you can make: 1) ask that a
"best of your knowledge" standard be added to your
warranties. This will protect you from inadvertent errors or
omissions. 2) Ask that your indemnities take effect only upon
a final judgment -- insert the words "finally sustained" after the word
"damage" in the above sample clause. By doing so, you will
ensure that you will not have to pay the cost of frivolous
lawsuits. 3) Ask that your publisher be required to give you
notice of any claim and consult with you before settling any claim.
Q. What should I know about "out of
grant or assignment of copyright to your publisher generally is limited
only by this clause. 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, not just to the book's availability --
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 still can be bought online.
Unfortunately, many out of print clauses are vague, suggesting only
that when a book is no longer "available," the author may ask it be
declared out of print, and the publisher must respond within a certain
time frame -- usually six months -- by either issuing a new edition or
returning the rights to the author. But although there may be
no print copies available (and the book remaindered), if the
publisher's web site or Amazon still lists an e-book version or POD
(Print On Demand) version, it's technically available.
other variations of the clause may state that a book is declared "out
of print" if there are fewer than a certain number of books left in
circulation, or if your royalties fall below a certain amount for one
or more accounting periods, or if less than a certain number of e-books
or POD books are sold in a year.
the above versions of out of print clauses should be anathema to any
author. It's not in your best interest to have your rights
tied up by a publisher who's no longer doing anything with
them. Once a publisher no longer actively is marketing your
book and the book has stopped selling in decent quantities, your best
bet is to get the rights back and either resell the rights to a new
publisher (difficult, but not impossible), self-publish the book (POD
publishing is great for this), or cut it up and sell the serial rights
to magazines or anthologies, or so on.
Therefore, when negotiating your publishing agreements, try to get the
following clause, or some close version into the contract (or modify
the publisher's clause accordingly):
of print" is hereby defined as the Work not being available in the
United States through regular retail channels in an English language
print edition (not print-on-demand or other electronic means of
reproduction) and listed in the Publisher's marketing
catalog. If at any time the Work is out of print during the
term of this Agreement, Author may terminate the Agreement by written
request to the Publisher. Within thirty (30) days of receipt
of the request, the Publisher will return all rights in the Work to
Author, subject to any prior grants of rights authorized and the
continuing right to retain Publisher's share of any future proceeds
from those grants. If Publisher fails to provide a written
reversion of rights, Author may record this page of the Agreement with
the United States Copyright office in lieu of such written reversion."
Q. Tell me about option clauses.
A. These clauses traditionally give publishers the right to
either buy or make an offer for the author's next book or
books. Of course, if your book sells well, there's something
to be said for loyalty to the press that helped you get
there. Publishers and agents alike complain that writers tend
to jump ship after they've helped make the writers successful. The
option clause, therefore, is a bit of an insurance policy for the
publisher that you have to give them another shot after they invested
in you. It's not usually an evil clause in its intent, but
there are too many situations where the clause becomes impractical.
problem is that when you enter into the publishing agreement, you don't
know whether your current book will sell well, and whether the
publisher will do a good job editing and marketing it.
Further, what if your next book isn't appropriate for this
publisher? You decide to write a sweeping historical
thriller, and your current publisher specializes in cozies.
You'd have to show your historical to them, and they could hold you up
from submitting it to appropriate publishers.
advice -- eliminate the option clause entirely. Many authors
are surprised to learn that publishers will agree to delete
it -- but you have to ask! If you can't eliminate
it, however, make sure it imposes no real burden. Get rid of
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. (What if
your first book is a bestseller and now you can command a much higher
advance and royalties?)
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 the publisher isn't interested. And don't accept any
clause that stipulates you can't accept an offer from another publisher
if it's not on "better terms." That may sound logical, but
what if Publisher A offers you more money up-front, while you trust
Publisher B to do a better job at marketing? Or perhaps you'd
prefer to try a smaller publisher that can't pay as much, but can show
you more personal attention. You should always have the right to refuse
your publisher's offer, no matter what the terms are, if you choose.
All the first option should do (if you have to include it) is give the
publisher a right to read the work and make an offer.
You'll also want to restrict the definition of "next
work." Make sure it's limited to the next work in
the same genre, or in the same series, or the next work that's in
categories the publisher deals with. And make sure the option
is for no more than one book.
a well-restricted clause can be an annoyance because it wastes your
time. So think long-term, and never be afraid to negotiate.
Should I negotiate the date of my novel's publication?
Yes! There always should be a limit to the amount of time a publisher
has to publish your work. If no time frame is specified, you run a
significant risk: What if the publisher runs into monetary problems, or
reorganizes the types of books they publish? Or maybe they're not even
really sure if they want to publish it anymore, but they've already
paid your advance, so they think they should hang onto it just in case.
And rarely, a publisher may buy a book that stands to compete with a
book they're about to publish (or have already published), then
purposely hold it, or fail to market it, because it may interfere with
the success of the other book.
publishing agreement should stipulate that the publisher has somewhere
between 12 and 24 months to release the book after the publisher has
accepted the manuscript (you also should have a time limit for
manuscript acceptance. Always aim for the shortest time possible while
understanding that you probably don't want the publisher to rush your
book to print in less than six months. First novelists should be aware
of the many steps that need to be taken care of before a book is
released: editing, copy editing, typesetting, proofreading, cover
design, endorsements, catalog inclusion, listing with Books in Print,
press releases, advance review copies to the trade, etc. Twelve to 18
months, at maximum, is plenty of time.
Sometimes the problem isn't even the publisher's "fault," but a shift
in the market. For example, many thrillers about terrorism were delayed
after 9/11. Then there are the "force majeure" ("Act of God,"
unavoidable catastrophe) problems: What if the publisher's building
burns down, or there's a flood, earthquake, hurricane, or other such
emergency that forces the publisher to delay your book's production? In
such cases, the author always should have the right to take the book
back if the publisher doesn't show plans to get the book released right
away once the immediate problem has ended.
Here's a contract clause that will accomplish this goal: "If the
Publisher does not publish the Work within the time specified above for
reasons other than first serial or book club use, delays of the Author
in returning the copyedited manuscript or proofs, the Author's failure
to comply with requests made by the Publisher's counsel or delays,
caused by circumstances beyond the Publisher's control, and if the
Publisher at any time thereafter receives written notice from the
Author demanding publication, the Publisher shall within 90 days of the
Publisher's receipt of such written demand either publish the Work or
revert to the Author in writing all rights to the Work granted to the
Publisher in this Agreement, subject to any outstanding licenses, which
shall be assigned to the Author, and the Author shall retain any
advance payments made under this Agreement prior to such reversion as
liquidated damages for the Publisher's failure to publish the
What rights should I grant to my publisher?
The standard book publishing agreement "Grant of Rights" clause
commonly takes all "print" rights plus certain specified "subsidiary"
rights - foreign, translation, book club, electronic, film &
television, audio, dramatic, and periodical. Don't skim over these
clauses - they are the most important elements of your publishing
agreement. Examine them closely, and, if necessary, consult a
publishing lawyer or literary agent.
Unless there is a specific reason not to do so, you always should try
to retain as many subsidiary rights as you can, keeping in mind that
certain rights are considered "non-negotiable" by publishers -
typically, audio, electronic, and book club. On the other hand, even
first novelists should be able to retain either film/television, or
foreign/translation, or both. Film/television rights, of course, allow
your book to be made into a movie or television show. These are rights
I always advise authors to keep for themselves. They can be worth a
sizeable chunk of money, and under the typical publisher subsidiary
rights clause, if the publisher makes the sale, the proceeds of the
sale are split 50/50 between you and the publisher. Further, under a
typical literary agency agreement, you also will owe your agent 15% of
your 50%! Finally, if the publisher controls the rights, it
makes all the decisions; you don't get to negotiate the terms. On the
other hand, if you retain film & television rights, and a movie
studio or producer makes an offer, you or your agent get to negotiate
the deal, and you don't owe the publisher any money.
Foreign publication rights give the publisher the right to license your
book to foreign publishers ("foreign" being defined by the "Territory"
in the agreement). Translation rights give the publisher the right to
have the book translated into other languages. Should you give these
rights to the publisher? Some publishers do aggressively pitch their
books to foreign publishers, so they may be in a position to make more
sales than you or your agent could. In that case, it's not bad to split
the money-they do the work, and you just collect extra checks. If you
don't have an agent, though, you have to do the legwork and contact
foreign agents or foreign publishers yourself. In some cases, the
publishers will come to you: if your book does very well in the United
States, chances are "scouts" will be watching to offer you a deal to
print the book abroad (in English or translated into other languages).
problem is that it's hard to determine how aggressive your publisher
may be with exploiting foreign rights. The secondary problem is that if
you let the publisher keep foreign rights, they're the ones who get to
negotiate and determine the deals, and you have to agree to them. They
could agree to sell French rights to your book for $100, and you
couldn't turn it down.
make sure you understand the rights you are giving your publisher, and
don't be afraid to negotiate.
about royalties in book contracts.
may vary wildly in the
contemporary book publishing industry; however, typical hardcover rates
are 10% - 15%, with “break points” that escalate
the royalty as more copies are sold; e.g. 10% on the first 5,000
copies, 12 1/2% on the next 5,000, and 15% thereafter. Mass
market paperbacks generally have between a 6% and 9% royalty, sometimes
at a “flat” rate without break points.
Trade paperbacks (large format) formerly carried the same royalty rate
as hardcover, but unfortunately this no longer is true. Many
of the big publishers, such as Simon & Schuster, now give trade
paperback the same royalty range as mass market.
More important than the percentage
amount, however, is what the
percentage is based upon. Fiction publishers generally use an
author-friendly list or cover price formula, with some major
exceptions, like Sourcebooks, which uses a “net
receipts” formula. This formula is based on the
publisher's actual receipts after discounts, rather than the cover
price. Under such a formula, you will receive less
royalties – often half as much -- as a “cover
price” author would receive from the same amount of sales.
The deep discount.
publishing agreements provide that an
author’s royalty is reduced for certain
“discounted” sales -- sales at greater than the
publisher’s “normal wholesale discount”
or “greater than a 50%
discount.” The reduced royalty rate for
deep-discount sales may be either one-half the stipulated royalty or a
percentage (7 percent to 10 percent) of the publisher's net
receipts. Originally, this clause was meant to apply to
non-returnable quantity special sales that a publisher made at a high
discount to purchasers outside normal book-purchasing channels (such as
premium sales, export sales, direct-mail sales, or sales on a
non-returnable basis). But guess what? Many publishers now
apply the clause to normal bookstore and wholesale sales.
Since many --sometimes most-- books are sold to bookstores and to
Amazon at a discount rate of 55 percent, and to big discounters like
Wal-Mart, Target, and clubs like Costco, at over 65%, this clause in
effect guarantees that the author's royalty rate always will be
reduced. (Discounts also can be considerably greater for mass
market paperbacks, e.g., 60 to 65%.)
The solution? Some writers and
agents request a copy of the
publisher's current discount schedule before agreeing to royalty
schedules – but the publisher can change the
schedule. Instead, try to increase the percentage above which
your royalties reduce, the higher the better. In the example
above, changing the percentage to 56% would protect you from
a reduction for sales to Amazon and some of the bookstore chains, but
not from the big discounters. A better alternative is making
sure the clause only applies to its original purpose –
“special” sales. To do this, add language
to your discount clause specifying that your publisher will be able to
apply the reduced royalty rate only to “sales outside normal
wholesale and retail trade bookselling channels.”