A Bad Publishing Contract Deconstructed, Part 3 – The Uglier Facts

See other posts in this series: Part 1 | Part 2

We are going to finish deconstructing THIS contract. (If you haven’t read parts one and two, linked above, you’ll want to start there.) When last we left, my head was exploding. For those who need a quick reminder, this contract is publicly available on a Maine university website, and apparently a few less-than-stellar independent digital publishers have used it as either the total of or basis for their own contracts. If you are ever offered a contract like this one, RUN.

To add to the fun, one such publisher even added an additional clause CHARGING authors for editing. Yes, that’s what I said, charging them for editing. Again, RUN.

10. Revision

If at any time while this Agreement continues in force the Publisher deems the publication of a new edition or revision of the Work desirable, it shall notify the Author, by letter. If the Author is able and wishes to undertake the preparation of such a new edition, or revision, he shall so inform the Publisher in writing within thirty (30) days of receipt of said notice. Such new edition or revision, if undertaken by the Author, shall contain such material as the Publisher and the Author agree to be appropriate thereto, and the date of delivery of the manuscript thereof shall also be established by mutual written agreement.

On the surface, this clause doesn’t look too bad. Unfortunately, it’s pretty vague, and I’ve never seen a clause like this in the publishing contracts I’ve signed. I don’t like how vague it is regarding what happens if the author does not respond within 30 days. I would say this is at least a yellow flag to be wary of.

11. Competing Works

The Author agrees that during the existence of this Agreement, Author will not prepare or cause to be prepared or published in Author’s name or otherwise, any work that shall interfere with or injure the sale or distribution of the Work herein specified.

MASSIVE RED FLAG. Do NOT, EVER, sign a contract with a clause like this in it. Remember in part two when I flagged clause 1.D and said keep it in mind later? This is later.

D. If, at any time during the effective term of this Agreement, a claim shall arise for infringement or unfair competition as to any of the rights which are the subject of this Agreement

Basically, what clause 11  will do is prevent you from writing anything for any other publisher, or self-pubbed, under any other pen name. It will keep you tied to that publisher, if they decide they want to go after you. Unfortunately, you cannot take someone’s word for it if they say, “Oh, that’s NOT what it means. We’d NEVER do that to you!” Remember, ask them to CHANGE the contract to reflect what they DO mean. In other words, to remove this clause. Because then what can happen is if you submit other works to other publishers, or self-publish, and you sign a contract with this clause, at any time the publisher could come back and say, “Oh, you have a non-compete clause. You shouldn’t have published that with ____,” and then go after you.

It is common for publishing contracts to have right of first refusal (ROFR) clauses. That’s standard, IF they are phrased so that they specifically relate to a series or related characters from that series. If they are so broad that they can restrict you to being forced to submit everything to the publisher, DO NOT SIGN.

12. Force Majeure

The failure of the Publisher to publish or republish any of the Work shall not be deemed to be a violation of this Agreement or give rise to any right of termination or reversion if such failure is caused by restrictions of government agencies, labor disputes, or inability to obtain the materials necessary for its manufacture, or occurs for any other reason beyond the Publisher’s control; and in the event of delay from any such cause, the publication date or reissue may be postponed accordingly.

This is a yellow flag because it’s totally non-standard. I know it’s not uncommon for some contracts to have “natural disaster” or “act of war” or other business disruption clauses, but one like this in a contract is totally non-standard and when you add it to the total of the fuckery in this contract, I would say no.

13. Royalties

The Author shall receive a _____ advance on royalties consisting of ___ Dollars on ____ , 20__; ___ Dollars upon Publisher’s acceptance of the manuscript, and ___ Dollars upon the book’s actual publication date. Royalties shall be paid to the Author as follows:

A. A royalty of six percent (____%) of the Publisher’s net revenues for hardcover copies sold of the Work, up to and including 10,000 copies; ____ percent (___%) on hardcover copies sold of the Work, from 10,001 to 25,000 copies, and percent (___%) on hardcover copies sold of the Work, from 25,001 to 50,000 copies, and _____ percent (__%) on all copies sold thereafter. All royalties above shall be reduced by one percent (1%) for any paperback editions sold. There shall be no deduction for cash discounts or bad debts, except as provided below:

B. A royalty of [half of the beginning royalty in A above] percent (___%) of the amount of the Publisher’s net revenues for the net copies of the Work (less returns, but with no deduction of cash discounts or bad debts), on copies, either bound or unbound, sold as premiums, or otherwise in quantities to organizations outside the regular bookselling channels, provided such sales are made at a discount of sixty percent (60%) or more from the catalog retail price;

C. A royalty of [half of the beginning royalty in A, above] percent (___%) of the amount of the Publisher’s net revenues for net copies sold of any edition of the Work (less returns, but with no deduction for cash discounts or bad debts), on copies of overstock which the Publisher, after one (1) year from the date of first publication, deems it expedient to sell at remainder prices, i.e., at a discount of seventy percent (70%) or more from the catalog retail price, except when these are sold at or below cost, in which case no royalty shall be paid;

D. Fifty percent (50%) of Publisher’s net revenues accruing to the Publisher from the ceding by it to an English, Canadian, or other foreign publisher of the right to publish the said Work on a royalty basis or for an outright sum, in the English language or in any other language;

E. Fifty percent (50%) of all royalties accruing to the Publisher from the sale to recognized book clubs of the right to publish an edition or editions of the Work for distribution to members;F. Fifty percent (50%) of all royalties accruing to the Publisher from the sale to another publisher of the right to publish a cheap edition or editions of the Work in the languages and within the territories specified in Clause 1A and 1B above. No cheap edition may be published earlier than one (1) year from the date of the original publication, except with the consent of the Author;

G. “Net copies sold” as used in this Agreement, means the sale less returns of any and all copies sold by the Publisher through conventional channels of distribution in the book trade, and does not include promotional and review copies, or copies for which a royalty rate is otherwise set forth in this Agreement. “Edition” as used in this Agreement, refers to the Work as published in any particular content, length, and format. If the Work is materially revised or redesigned in any manner, or expanded in length or content, then the Work as revised shall be considered a new “Edition” for purposes of this Section. “Net revenues,” as used in this Agreement, refers to funds received by the Publisher, for the sale of copies of the Work, net of returns, after deduction of shipping, customs, insurance, currency exchange discounts, and costs of collection.

o_O Seriously?

Okay, for starters, just…NO. RED FLAG. If you need an accounting degree to understand the royalty structure, NO.

My publishing contracts (and my publisher has it on their website on their submissions page as part of the FAQs, so it’s no state secret) state this in so many words: 40% of download price for e-book sold at publisher’s website, 50% of publisher’s royalties received from distributors, 6% of cover price for print books. They define “net” as this: Net sales are defined as the actual total dollar amount PUBLISHER receives from the wholesale or retail sale of AUTHOR’s WORK.

Simple, no? No bullshit deductions for expenses, postage, etc. etc. Also, be VERY careful with clauses that allow for reserves against returns. In digital-first and POD publishing, it’s simple enough to apply returns, unless excessive, against future sales. It’s not like legacy publishing, where returns were the norm from some sales outlets since bookstores were frequently able to order stock and not pay until they sold the books, returning any that were unsold.

Eh, which is why legacy publishing is floundering and we no longer have a bunch of different large legacy publishers anymore after all the mergers.

14. Statements & Payments

A. The Publisher agrees to render semi-annual statements of account in duplicate and to make payments on or before April first and October first of each year covering sales (less returns) to the preceding January first and July first respectively.

Not standard, but not anything horrific, either. Many digital presses now pay monthly, although quarterly is extremely common as well.

B. In making accountings as provided in this Clause 14, the Publisher shall have the right to allow for a reasonable reserve against returns, not to exceed twenty percent (20%) of the amount due in each accounting period. Any reserve against returns withheld in an accounting period will be paid to the Author in the subsequent accounting period.

Again, I’m not fond of the reserve against returns, but some contracts still have that even for digital and POD. A clause like that alone is not enough to tank the whole contract, but it’s a caution that, if added to everything else, can swing the contract into non-sign territory.

C. All other royalties or other sums accruing to the Author in accordance with the provisions of this agreement shall be reported as of the accounting periods in which the Publisher receives them.

Again, not standard, but not horrific. It’s now standard for publishers to word the clauses in such a way to state that the author will get paid once money is received from vendors. In other words, as an example, they won’t report your sales from Amazon (if your publisher pays monthly) until they’re actually PAID by Amazon, so say you sell 20 books in July, they wouldn’t be on July’s statement, they would be on the statement where the publisher actually received payment for those books from the vendor. (If a publisher pays quarterly, then you’ll likely receive payments a quarter behind, for example, quarter 2 third-party sales would be paid in quarter 3 royalties, etc.)

D. Whenever the Author has received an overpayment of monies under the terms of this agreement, the Publisher may deduct the amount of this overpayment from any sums that may accrue to the Author from any agreement with the Publisher.

Unfortunately, this contract doesn’t contain an audit clause (and the lack of such a clause is a HUGE honking red flag) so you can’t tell what you’re supposed to really be getting from the publisher.

E. The Publisher agrees to give to the Author on publication ten (10) copies of the Work and to sell to Author further copies for Author’s personal use, not for resale, at a discount of forty percent (40%) from the catalog retail price.

Um, they’ll give how many in what format? Yellow flag, because they don’t specify whether this is print or digital or what.

F. If the Author places an order with the Publisher for 100 or more copies of the Work in advance of the first printing of the Work for Author’s personal use, then the Publisher will sell Author these copies at a non-returnable discount of fifty percent (50%) from the catalog retail price. The Author will be billed for these copies, payable upon of Author’s receipt of them.

Yeah, not really a flag, but it’s non-standard wording. What you do have to worry about is any contract where it will REQUIRE you to purchase copies. Any contract with a clause like that is a huge red flag.

15. Termination & Reversion of Rights

A. If at any time after the expiration of two (2) years from the date of first publication the Publisher shall determine that there are not sufficient sales of the Work to enable it to continue its publication and sale profitably, it shall be privileged to dispose of the copies remaining on hand as it deems best, subject to the provisions with regard to royalty set forth in Clause 13 of this agreement, provided that the Publisher first notifies the Author in writing addressed to Author’s last known address and offers to Author an opportunity to purchase said copies at the Publisher’s cost of paper, printing and binding of said copies.

HUGE, HONKING, FLASHING RED FLAG. This one rates right up there with the life of copyright clause, and them sucking all the rights away from you. NEVER sign a contract with a clause like this. It doesn’t specify what the “sufficient sales” threshold is. This is as bad as “out of print” clauses. (Some traditionally published authors are now going to battle with publishers over what is considered “out of print” since the publisher made e-book versions available.)

Contracts terms should be specified in a LIMITED NUMBER OF YEARS. Say it with me: 2, 3, 5, 7 15 years, or anything in that ballpark. NEVER sign a contract that is for “life of copyright.” NEVER sign a contract based on sales thresholds, or based on “out of print” stipulations. EVER.

EVER.

You want a limited, CLEARLY STATED number of years for the contract, then it expires and ALL THE RIGHTS immediately revert to you, unless you have a renewal clause where you can choose to leave the book with your publisher. (Beware of “evergreen” renewal clauses that can be difficult to break in some cases.)

B. If the Work is out of print in the United States of America and if within ninety (90) days of written demand upon the Publisher by the Author, the Publisher does not agree to bring out a new printing within one (1) year, then upon repayment of any overpayment of royalties or other sums due the Publisher this agreement shall terminate without further notice. The Work shall be considered in print if it is on sale by the Publisher or under license granted by the Publisher as provided herein, or if any contract for its publication, granted by the Publisher, is outstanding. In case of delays from causes beyond the control of the Publisher, the period shall be extended to cover such delays.

HUGE RED FLAG. Again, read what I wrote above.

C. In the event of bankruptcy or liquidation of the Publisher for any cause whatsoever, the rights of publication shall revert to the Author upon payment of fair market value to be determined by agreement or arbitration. Thereafter this agreement shall thereupon terminate without notice.

RED FLAG. It’s common for publishing contracts now to contain clauses stating something to the effect that if a publisher has to close or suspend operations, that rights will immediately revert to the author, or if they file bankruptcy that they will try to delay six months (or some amount of time) so as to return rights to the authors to prevent them from becoming assets. (If that happens, it can tie up your book for YEARS while stuff winds its way through the court system.)

D. In the event of termination of this agreement, the rights herein granted to the Publisher shall revert to the Author. For thirty (30) days after such termination the Author shall have the right to buy from the Publisher or its successors in interest all copies on hand at the cost of manufacture, or the plates and binder’s dies, if any, at one-third (1/3) of their original cost of production, or both. Thereupon the Publisher or its successors in interest shall have the right to sell the remaining copies not purchased by the Author, at the best price it can obtain therefor. Termination of this agreement shall not deprive the
Publisher of the right to receive its share of sums due from licenses or contracts granted by the Publisher prior to termination nor relieve Publisher of the obligation to pay to the Author royalties due on such sums.

Yellow flag simply because a digital-first, POD press won’t have “binders dies” lying around their utility room. It’s a clunky, non-standard clause that has no business being included in a modern publishing contract.

16. Notices 

Any notice or other communication required, or which may be given, pursuant to this Agreement, shall be in writing. Any such notice shall be deemed delivered (i) on the day of delivery in person; (ii) five (5) days after deposit in first class registered mail, with return receipt requested; (iii) on the actual delivery date if deposited with an overnight courier; or (iv) on the date sent by facsimile, if confirmed with a copy sent contemporaneously by first class, certified, registered or express mail; in each case properly posted and fully prepaid to the appropriate address set forth below, or such other address as a party may provide notice of in accordance with this section.

Nothing horrific in this clause.

17. Successors and Assigns

This agreement shall be binding upon and inure to the benefit of the executors, administrators, and assigns of the Author and upon and to the successors and assigns of the Publisher.

Again, nothing horrific there.

18. Term of Agreement

Unless previously terminated as provided herein, this agreement shall continue in force, with respect to copyright obtained under the laws of any country covered by this agreement, for the term of the original copyright, renewal, or extension thereof which relates to the Work and which may accrue to the owner of the copyright under the present or any future law of said country.

RED FLAG. Again, NEVER SIGN A CONTRACT SPECIFYING LIFE OF COPYRIGHT. PERIOD. I would make that sentence blink and reach through the screen and slap you, if I could. NEVER sign a contract for life of copyright. Do NOT do it.

19. Waivers 

The failure of either party to exercise any of its rights under this Agreement for a breach thereof shall not be deemed to be a waiver of such rights, and no waiver by either party, whether written or oral, express or implied, of any rights under or arising from this Agreement shall be binding on any subsequent occasion; and no concession by either party shall be treated as an implied modification of the Agreement unless specifically agreed in writing.

RED FLAG. This doesn’t look too bad, right? But what it can do is be used in conjunction with the non-compete clause for an unscrupulous publisher to come back and say, “Um, heeeeey, you published with another publisher, you’re in violation. Gimme money.” You think it can’t happen? Go back to the example I used in part 2 about what would happen with the rights if you hit a lightning strike success of a book. You don’t think if you published a gonzo bestseller elsewhere that a crook of a publisher might not come back with his or her hand outstretched to grab onto your coattails?

Um, think again. Remember, this is a BUSINESS. Writers who make business decisions about signing with a publisher because they are a “friend” are looking to get SCREWED. Your publisher is supposed to be running a BUSINESS, not giving their writers an ego circle jerk. You are a BUSINESSPERSON. You are SIGNING A CONTRACT. So you need to think about PROTECTING YOURSELF.

20. Amendments

No amendment of, addition to or modification of this Agreement shall be effective unless reduced to writing and signed by the parties hereto.

21. Laws Applicable

This Agreement shall be interpreted according to the laws and statutes of the United States of America and of the State of Maine, except that its conflicts of law provisions shall not apply. Any litigation relating to this Agreement shall be pursued in the Superior Court, State of Maine.

20 is fairly standard. 21 is personally giving me a giggle, and is why you MUST CAREFULLY READ your contracts.

Never have I ever had a contract have separate jurisdiction and litigation locations. For example, my publisher is in Texas, and their clause states that the contract is subject to the laws of Texas and any litigation will be held there, etc. THAT is standard.

The giggle comes in because a few friends have sent me THIS contract, with the jurisdiction being set in a different state than the litigation, which they left as Maine because apparently they were either too sloppy or stupid to change it. (And it’s one of the ways I was finally able to scrounge up where this contract came from in the first place.) And, oh yeah, the jurisdictional state? Over ONE THOUSAND MILES AWAY. Seriously. I did not make that up.

Um, yeah, sure, just what you want. A publisher too stupid/lazy to PROOFREAD THE CONTRACT. *nods* That’s one sure-fire way to guarantee confidence in their ability to figure that atrocious royalty system…NOT.

22. Severability

In the event one or more clauses of this Agreement are declared invalid, void, unenforceable or illegal, that shall not affect the validity of the remaining portions of this Agreement.

23. Entire Agreement

This Agreement sets forth the entire agreement of the parties, and replaces and supersedes any previous agreement between the parties on the subject, whether oral or written, express or implied.

This clause, right here, is WHY YOU NEED TO HAVE IT IN THE CONTRACT. You get sweet-talked by someone into submitting to their brand-new house. They say, “Oh, that’s just what the contract says. That’s not what we REALLY do.” When they screw you later, and you try to come back and tell them hey, that’s not what you said in email/on the phone, they will point to THAT clause and say, “Well, it’s not in the contract, so it doesn’t count.” Aaaand that’s when you need an attorney to go after them. However, if you only have phone conversations, you have no proof. Emails are only slightly better, but you cannot count on an attorney being able to use them effectively in your defense. The other party can simply deny they sent them, or claim that you faked/altered them.

Okay, now that *deep, cleansing breath* monstrosity is deconstructed, here are a few  things to keep in mind:

ISBN – While the contract is busy grabbing copyright ownership, it does NOT say anything about ISBN assignment. That’s usually assumed by the publisher (due to the way they’re registered) and is always found in a modern contract.

AUDIT CLAUSE – There isn’t one. That’s a HUGE red flag.

EDIT CHARGES – One of the houses using this contract is charging editing fees. They added an extra clause into the contract to that fact. NEVER sign a publishing contract that charges you editing fees. NEVER. NEVER.

“Mentoring clause” – Yes, one of the houses several people sent me contracts on specify some nebulous “mentoring” period of time for the author. The funny thing is, it doesn’t really specify WHY. And I’ve NEVER seen that in another publishing contract. EVER. And there’s no benefit to the author to have it in there.

ADVERTISING/PROMOTIONAL/MARKETING CHARGES – Again, repeat after me: “Money flows TO the author, NOT away.” Any contract charging you any of these fees is one you do NOT want to sign. The only time it’s acceptable for a publisher to charge an author in the contract is when specifying how much an author will have to pay/how much of a discount they will get if they buy copies of their own book. That’s IT. PERIOD. Now, I’m not talking about your publisher puts out a notice to their authors that they’re buying an ad in an expensive magazine, does anyone want to buy-in and get their book featured. It’s not uncommon for smaller publishers to do a co-op sort of thing like that. But it’s NEVER mandatory, and it’s NEVER in the contract that it’s required.

ROYALTY/”NET” – NEVER sign a contract where you can’t do the math with a pencil in a few minutes. I know that old legacy publishing contracts could sometimes be really convoluted (such as this one) but in modern times, a royalty system like the one in this contract is just…heinous and inexcusable. And, again, it shows how sloppy and inexperienced a publisher is to not research and use one of the better model contracts available out there. Frankly, I wouldn’t trust a publisher with a royalty payment scale like that one. How on earth are you going to verify they’re even figuring your royalties correctly? It’s just… RED FLAG.

PAYMENT TERMS: They don’t specify how you’ll get paid. That might sound nitpicky, but you really do want it in there.

RIGHTS: NEVER, EVER, EVER sign away more rights than you need to. A brand-new digital-first house likely is NOT going to be able to utilize foreign language rights or audiobook rights. Remember what I told you: English, digital text, paperback/POD version, and THAT’S IT. MAYBE hardcover IF they have a proven track record there. Do NOT sign away other languages, do NOT sign away audio books, movie rights, merchandising, etc. EVER. EVER.

Basically, if you signed this contract, or one based on its structure, you’re screwed. Seriously. You will either need to go to the publisher and demand your rights back, demand a full contract revision, or get an attorney involved.

As I also mentioned, NEVER sign a contract without investigating the publisher first. One of the publishers people sent me contracts on, when I looked on the state website, they were over six months delinquent filing their annual corporate reports, meaning they likely aren’t even legally able to be signing contracts in the first place. (Which is a good thing for those authors, because if they ask for rights reversals, they will likely get them without having to get an attorney involved because the publisher will be afraid of word getting out about their shady business practices.)

Look at the publisher’s website, BUY some of their books. Is the website up to snuff compared to others? Are the covers decent? How are the editing and formatting? If they have print books, BUY some. How do they look compared to other books out there?

This is your career we’re talking about. You MUST research. Don’t get so caught up in the heady buzz of their acceptance to forget to use common sense. Research them BEFORE you sign. Look in all the places, like the Absolute Write discussion forum’s list of publishers, Preditors and Editors, Piers Anthony’s site, the Writer Beware blog, to see if there are any issues. ASK people. Ask other authors. Ask people who USED to write for them and no longer do. Run various Google searches on the company.

Don’t let yourself get screwed. When in doubt, do NOT sign a contract. And don’t make business decisions based on emotions.

It is a vicious jungle out there, but you can take reasonable steps to protect yourself.