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Breaking Up Is Hard To Do

16 January 2014

From author Janis Patterson on Make Mine Mystery:

Like so many other writers I am in the process of trying to get my rights back. Why is it such a hassle?

Most new contracts are written where it seems the publisher controls all the rights forever, with little or no hope of reversion to the writer. Apparently many publishers feel that they own the book instead of just having the license to publish it, and that’s just wrong, especially if they do little or nothing to sell the book. Instead they just sit on it.

A friend of mine has had several books with a major publisher for years now and try though she will, she cannot get the rights back. There is a catch in her contract that she can expect her rights to be reverted only after her book has been on sale for a certain length of time. As her sales had been okay but not spectacular she wanted to try for the gold ring in self-publishing. Every time the magic reversion date comes close, though, the publisher brings out a new, cheapie edition inRumania or Patagonia or somewhere. It’s a new edition, however potentially unprofitable, and that resets the reversion clock. I guess they don’t want the author to make any money that they don’t control or the ability to put the book on the market where it might be bought instead of one of theirs. Either way it’s a dishonorable practice, whether or not it’s contractually legal.

Even worse is the publisher who has a distinct reversion of rights protocol in their contract, but who simply refuses to acknowledge it. Certified letters are refused, takedown requests are ignored, sometimes even royalties are withheld, but like a dog in a manger they keep the books – usually without doing anything for them. The books are simply held hostage and the author is forced into getting a lawyer to regain her property. I believe that I am facing this prospect now.

Link to the rest at Make Mine Mystery

PG has seen enough Out of Print or Reversion of Rights clauses from publishers large and small to be able to state that 99% are intentionally designed to make it almost impossible for an author to force the publisher to revert rights to a book unless the publisher wants to do so.

The clauses typically include a million hurdles for the author to clear and another million ways for the publisher to avoid releasing anything.

It’s a serious racket and one more reason not to sign a publishing contract that extends for the full term of the copyright.

A contract with a set term of five or seven years should provide a better chance at ending the relationship unless both parties want to to continue it. PG’s caveat here is that you have to watch for sneaky clauses that allow the publisher to extend licenses beyond the termination date.

Over two years ago, PG wrote one of his most popular posts discussing out-of-print clauses. Given the change in power relationships between publishers and authors that has occurred since then due to the increasing returns available from indie publishing , if he were rewriting these posts today, he would be a little more aggressive about authors rights.

Authors negotiating with publishers have more power now than they did two years ago if they’re prepared to walk away from bad deals.

A Minimum Wage for Authors

Kristine Kathryn Rush is writing some important essays about the publishing world (“blog post” is too lightweight to adequately describe her analyses).

In her latest, Kris discusses contracts with publishers and agents, dirty tricks in some contracts and a worrisome trend of agents becoming more concerned with the interests of publishers than the welfare of the authors they represent.

Excerpts:

We used to recommend agents, but we slowly stopped doing that. Some of it was simple: we didn’t want to endorse any one we weren’t intimately familiar with. But it became more complex than that. Some of our agenting friends had left the business. Others had moved to companies that had rather unseemly business practices, and still others had morphed their agenting business into something unrecognizable.

Rather than walk through the thicket of ethics, friendships, business partnerships, and individual monetary policy, we just stopped recommending any particular agent. Over time, we stopped recommending agents at all.

During that same period of time, we saw a lot of publishing contracts that were…dicey…at best. We figured that because the contracts were for newer writers, the contract itself was a lower level of contract.

. . . .

I was noticing a few other things at the time, but not putting them together because my own career had hit a crisis point. My agent and I would negotiate a contract. Then we’d get the contract, and we’d have to remind the publisher that we had changed certain terms. The terms would get changed back.

Or we’d negotiate a contract, then sell a second book six months later on the same terms. Only when the contract arrived, it would be a completely different document. While the terms we had explicitly discussed would be the same as the ones we negotiated, the other terms, from the warranties to the deep discounts, would be extremely different.

. . . .

I was thinking of getting a new agent (yet again) and I asked him what his super-famous really big agency could do for me that a smaller agent couldn’t. Maybe because he’d had a few drinks, maybe because he is a very savvy man who has a finger on the pulse of publishing’s future, maybe because we were friends, he told me that he couldn’t do as much for his writers as he could have ten years before.

Clout counted for less and less in this business, he said. And since his business was all about clout, he was quite morose about it.

Then he told me stories about canceled contracts and misfired deals, stories like the ones I just told you, only these had happened to big name writers—writers with more clout than I ever had, more clout than that poor textbook writer could ever hope to have had. And the agent said he could do nothing about it.

Now, honestly, I’m not that shocked that publishers take advantage of writers. Writers and publishers enter into a business relationship, and business relationships can be adversarial. Personalities factor in, but so do the structure of companies. The smaller the company, the more likely it is to be on less solid ground financially, but the more likely it is to be a friendly place to work with.

Writers have always (usually?) been unarmed as they went into these business relationships with publishers. The writers would hire advocates to take care of them, to handle the adversarial part. Early on in my career, I hired an agent not just because I believed the agent knew more about publishing and publishing contracts than I did (and at the time, he did), but also to stand up for me when the time came, to fight for my needs and wants, to be my advocate.

Slowly, over time, agents stopped advocating for writers, and instead, started advocating for their agencies. Again, I noted the change, but believed it was only a few agencies, working on the Hollywood model. In fact, the agencies that pioneered this behavior came from Hollywood, and then branched into publishing as a side business.

I knew that many agents had forgotten who they worked for when the agent started refusing to mail books that “weren’t good enough” and refused to do things in their clients’ best interest because it “might hurt our other clients.” I always felt those were firing offenses, but a lot of writers put up with those things and more. And, it seemed, the behavior got worse, which I blamed mostly on the cutbacks in publishing. Those cutbacks forced a lot of laid-off editors into agenting, and editors didn’t know business nor did they know how to keep their hands off a perfectly fine manuscript.

But I was wrong.

I hadn’t realized until a few months ago that the adversarial relationship that sometimes existed between writer and publisher had moved into the agent/author relationship.

Link to the rest at Kristine Kathryn Rusch

What basic publisher and agent contract advice does PG have for you?

1. Read the contract, every word of it. This isn’t like a credit card agreement that is regulated up one side and down another. There are no consumer protection laws for publisher’s and agent’s contracts. What is on the paper is what you give. What is on the paper is what you get.

2. Every contract is negotiable, so negotiate what you don’t like. “This is our standard contract” is the oldest scam in the world. Standard contracts are for banks who print them by the million. Publishers and agents may want “standard contracts,” but they probably also want world peace. You don’t have to accept their standard contracts. If a publisher or agent is interested enough in your book to want a contract with you, they’ll be willing to change some things. Negotiation is the process by which each side to a potential contract discovers how much they want the contract.

Authors are in a terrible psychic spot in negotiating their first contract with an agent or publisher. They sent out a million queries before they got an agent. Ten publishers turned down their manuscript before one became interested. Authors are inclined to think, “I’ll sign anything. Just don’t tell me no again.” Don’t get into that mode. Your old buddy, Passive Guy, will guarantee that you’ll be in a worse psychic spot if you and your manuscript are treated like trash under the terms of a bad contract. You must be ready to walk away from a bad deal.

3. Make certain every contract ends at some time. In recent publishing contracts PG has examined (and some that Kris describes in her essay), the contract goes on forever. So long as a product page exists for your book on some online bookstore, the contract continues. If the publisher decides your book should sell for $5,000 per copy in ebook form and you last received a royalty check for $2.93 ten years ago, under the terms of some “standard contracts,” the contract continues forever.

Don’t fall for a “life of the copyright” clause. In the United States, the copyright for your book ends 70 years after you die. When you are finally free of your agent, he won’t have returned a phone call for more than 70 years.

With both publishers and agents, PG recommends a “minimum wage for authors” – a dollar (or Euro, etc.) amount that the author receives every six months or year for a book. If the author doesn’t receive that amount, all rights to the book revert to the author, free of any publisher’s or agent’s claim.

An example of a minimum wage clause would be if an author doesn’t receive at least $5,000 in royalties in any year for her magnum opus, Dogs and Cats Can Get Along Just Fine, she can send a letter to the publisher and/or agent notifying them that she is retrieving her rights and they don’t have a piece of the book any more. The publisher has a year to sell out any hard copies in stock, but can’t print any more.

Don’t go for “out of print” provisions, particularly those that will require someone to count how many books are in warehouses. “Out of print” is meaningless for an ebook listing on Amazon.

This is a business relationship, not a tree-house club. If the publisher isn’t producing dollars for the author, it’s over. If the agent isn’t producing dollars for the author, it’s over.

4. Don’t give either the publisher or agent any option on your future work unless you’re writing a series. In that case, give them an option for the rest of the books in the series, but nothing else. If you write a sequel to Dogs and Cats, it’s reasonable to allow the publisher and agent to have rights to it, perhaps on the same terms as the first book or perhaps not. However, they don’t have rights to your manuscript for War and Peace and Zombies.

If you’re happy with the way things are going with the publisher and/or agent, you will almost certainly want to give them first shot at W&P&Z, but if you’re not happy, you should be free to pursue other options. Is your publisher guaranteeing it will publish your Zombie book or whatever else you write in the future? Is your agent guaranteeing the same thing? If not, you’re just asking that obligations and freedom from obligations be be the same for you as they are for them.

Watch out for “rights of first refusal” in their many guises. PG never saw a ROFR that he couldn’t break, but you don’t want to have to hire a lawyer and sue somebody just to find the right home for your Zombie series.

There are other things to watch out for in publishers and agents contracts, but PG has rambled for way too long.

One overriding principle to remember whenever you read a contract is to don’t assume that everything will go just fine. If the relationship with your publisher and agent is filled with bliss, nobody will ever look at the contract after it’s signed. The contract is for when something goes wrong.

Everybody loves one another when the contract is signed, but, as a student of human behavior, Passive Guy will assure you that love sometimes fades and dies. Love can even turn to hate. As a useful exercise, read your publisher/agent contract with this question in your mind: “How does this work if I hate my publisher and my agent has stopped speaking to me?”

Because all things change, also read your contract with this question in your mind: “How does this work if my publisher gets purchased by a Chinese steel company and my agent is fired and replaced with somebody who is six months out of Wellesley and believes anime is the next big thing?”

. . . .

And, later, PG wrote a follow-on post about the same thing.

How to Read a Book Contract – Minimum Wage for Authors

Passive Guy has received a lot of questions about his “Minimum Wage for Authors” reversion of rights clause.

The purpose of a traditional reversion of rights clause in a publishing contract is to return all rights to a book to the author when sales of the book have tailed off or, for whatever reason, the publisher is no longer interested in publishing the book.

Often, reversion of rights is connected to an ambiguous Out of Print clause. Under some contracts, a book goes out of print when the publisher declares it to be out of print. Under others, a book goes out of print when the number of printed copies in the publisher’s inventory drops below a specified number. Under one OOP clause PG heard about recently, if the publisher had fewer than 100 printed copies of the book and the author was willing to purchase those copies, the book would go out of print.

A reversion of rights clause without a definite trigger is nothing but an invitation for an author to go begging to his publisher from time to time.

Again, to protect the relationship of the author with the publisher, following isn’t the exact reversion of rights language in any contract I helped with, but it will give you some ideas about how such a provision might be constructed. All capitalized words or terms are Defined Terms described elsewhere in the Publishing Agreement.

The major components of the provision are:

  • It can’t be exercised until royalties earned equal or exceed 150% of the advance. So the demonstration provisions didn’t become too complex, I didn’t include termination provisions for situations where royalties earned were less than 150% because the equities between author and publisher differ if the advance isn’t earned out.
  • If any semi-annual royalty report provides for payment of less than $3,000, the author can give notice of intent to cause rights to revert
  • The publisher can pay the difference between actual royalties and $3,000 and continue the contract. This gives the publisher a second shot at promoting sales of the book.
  • If the publisher doesn’t cure the shortfall or a subsequent royalty report provides for less than $3,000 in royalties, the author can terminate the contract and publisher can’t stop this from happening

Here’s the language

Reversion of Rights

A. If, after the Royalties earned by Author under this Agreement total 150% or more of the Author Advance paid by Publisher hereunder, the Royalties for the Work are less than $3,000 on a semi-annual Statement of Royalties, and Author owes Publisher no other unpaid sums under this Agreement, Author may give Publisher written notice that Author desires to exercise the Reversion of Rights to the Work under this Paragraph.

B. After receiving such written notification, if Publisher desires to continue to exercise its rights to the Work under all the terms and conditions of this Agreement and Publisher is not in material default under any provision of this Agreement, Publisher may, within 30 days of receipt of such notice from Author, pay to Author the difference between the actual Royalties paid with respect to the Work on the preceding Statement of Royalties and the sum of $3,000. If Publisher makes said payment in a timely manner, this Agreement shall continue until later terminated under this Paragraph or another Paragraph of this Agreement.

1. By way of illustration and not limitation, if Publisher pays Author the sum of $2,000 with a Statement of Royalties and Author gives notice as provided above, Publisher may cause this Agreement to continue by paying Author the additional sum of $1,000 within 30 days of said notice.

C. If

A. Publisher fails to make the payment described in sub-paragraph B. above or

B. Publisher has made one such payment and, thereafter Royalties for the Work are less than $3,000 on any subsequent semi-annual Statement of Royalties and Author has given a second written notification of intention to exercise Reversion of Rights as provided in sub-paragraph A. above,

all rights to the Work shall revert to Author on the Effective Date set forth hereafter, and Publisher shall have no further rights to the Work, subject only to the provisions of sub-paragraph F. hereof.

D. The Effective Date upon which all rights to the Work revert to Author shall be 30 days following receipt of the last notice from Author as provided in sub-paragraphs A. and/or C. above.

E. On and after the Effective Date, Author may exercise all of the rights of the owner of the copyright to the Work free and clear of any claim whatsoever by Publisher.

F. For a period of one year following the Effective Date, Publisher shall have the right to liquidate any remaining inventory of hard copy books in its possession on the Effective Date, subject to its obligation to pay Royalties to Author therefor and all other obligations of Publisher under this Agreement. In the event that Publisher has any remaining hard copy books in its possession on the first anniversary of the Effective Date, Publisher shall cause such books to be destroyed at Publisher’s expense.

G. Any other provision of this Agreement notwithstanding, after receipt of any notice from Author under sub-paragraphs A. and/or C. above, Publisher shall not enter into any agreement with any third party assigning, transferring, selling or licensing any rights to the Work in whole or in part without the express written consent of Author to the specific transaction and any such purported assignment, transfer, sale and/or license without the express written consent of Author shall be void ab initio.

Unlike some attorneys, Passive Guy doesn’t believe he is perfect or incapable of making mistakes. If anybody sees a problem with this language or has suggestions for improvements, please make a comment or send me a message via the Contact page.

Contracts, Passive Guy

26 Comments to “Breaking Up Is Hard To Do”

  1. I am so very grateful that you are here PG.

  2. That’s why I support limited-term license agreements, rather than rights and reversions thereof. For seven years, authors get 70% of what their books take in via Exciting Press; at the end of seven years, they get back all their files (ebooks and covers) unless renewal is negotiated. Terminable at any point during those seven years when agreed by both parties–and we’re not about to stamp our feet and hold our breath to work with authors who don’t want to work with us. We have almost more work than we can accommodate already.

    If there’s a publishing contract out there more amenable to authors, I’m not aware of it.

    Because breaking up may be hard to do, but business agreements should be easily terminable when they are no longer beneficial to all parties involved.

    (I’m not just the Exciting Press director; I’m also an author.)

  3. Bookmarked. Thank you so much PG.

  4. Awesome.

  5. It seems to me that the contracts are perpetual, which is good for the Publisher, but horrible for writers. In any case no contract should be indefinite, or better yet, it should not be tight to the publishing in Rumania or Patagonia or other territories just to claim it’s in print. It should be tight to a monetary amount. When the book does not return certain amount of royalties in a year, game’s over. Let’s see if the Publishers will fork royalty money in excess of what they get in sales from that book just to keep the rights.

  6. “Even worse is the publisher who has a distinct reversion of rights protocol in their contract, but who simply refuses to acknowledge it. Certified letters are refused, takedown requests are ignored, sometimes even royalties are withheld, but like a dog in a manger they keep the books – usually without doing anything for them.”

    PG, what would happen in this case if the author self-published her books anyway? I suppose she could get new covers, issue new titles and the publisher might not even know, but if they did discover them, it seems as if the publisher would have no grounds to sue because they’d be in violation of their own contract. I’m just curious.

  7. Almost every publisher I’ve dealt with in the past has either extended the term of their ‘standard’ contract, or won’t budge from ‘life of the copyright.’

    Even an editor from a Big 5 imprint recently complained to a group of authors she was pitching that writers were walking away. But her bosses refuse to budge from life of the copyright.

    I had to walk away from this, myself, recently. The publisher kept trying to convince me that it was okay. NYT bestsellers have signed this, he said. I wasn’t convinced.

    Unfortunately, there are always starry eyed authors ready to sign, so the maw continues to be fed. Even the Author’s Guild contract guide doesn’t come out against life of the copyright.

    That said, PG thanks for keeping at this. I want all authors to make the most informed decisions.

    • Even an editor from a Big 5 imprint recently complained to a group of authors she was pitching that writers were walking away.

      Yay! That’s so good to see. I hope this is part of a long-term trend.

      Oh, but sorry about your experience [which you smartly walked away from]. At least you have your head on straight :)

      • It was a HarperCollins imprint, so I won’t hold my breath. They’ve signed an amazing number of debut authors in the last six months.

    • A non fic publisher I work with refused to modify the “life of the copyright” clause because their legal department warned that it would cause too many problems. I suspect other authors would want the same thing, and the board of directors for the press would have a fit. Since a previous contract requires that I get this manuscript published ASAP, I agreed to the contract anyway. (Might I add that my IP lawyer says the press needs to get its IP lawyers to redo the contract? Among other things it’s self contradictory and uses outdated terminology.)

    • You’re welcome, Jinni.

  8. From what I’m reading from Kristine’s blog it seems to me that the Titanic is sinking and every agent and publisher is for himself/herself to the non-existing lifeboats.

    • Yes, but it seems like a slow motion, silent sinking. Has anyone seen any big agents or publishers acknowledging that the business model, it is a-changing? The few I visit seem to be on some other planet where query letters, etc., are a main topic of conversation. Or, like that sweet author PG & Lexi Revellian posted about last week who had posted her earnings from her trad-pub deal.

      • There will always be people who refuse to inform themselves. I still laugh when I run into authors who are that worried about crafting perfect query letters when they haven’t really looked into what’s happening in the publishing world recently. In some ways, it feels like meeting people from the early 2000s or the 1900s. I feel like I’m meeting people from another time. But that’s just how people are. Some don’t update their knowledge as new knowledge becomes available. Some people just refuse to help themselves. It’s unfortunate, but these people will come whining that they didn’t know in a few years when their fates are tied to the publishing houses they got into bed with without first looking into their character.

  9. I consider myself very lucky to have gotten the rights to my books back. SMP dragged it on for a year, but they finally sent me those reversion letters and Macmillian UK did it almost instantly.

    I figure either they liked me or they felt my books had so little value it wasn’t worth putting up a fight… ;)

  10. I’ve gotten the rights to four traditionally published novels back, three from major NY publisher, one from a small regional publisher. The efforts ranged from easy to “I’ll sue.” Letters from lawyers tend to get read more often and more promptly than letters from writers. The attorney’s fee was more than compensated for by increased sales.

  11. QN: Why is the 35-yr Statutory Right to Termination (35 yrs after first publication date) which applies to all US licensing agreements, never mentioned in discussions such as this one? This is a US statutory right, so overrides all “contract language” and definitely applies to all US publishing licenses from 1978 onward.

    I think the lawyer who has written most about this is Lloyd Jasin (not sure of the spelling). There was an article in the Author’s Guild newsletter a year or so back which was the clearest explanation of the issues and how to use the right that I’ve seen.

    I know that several major authors are currently reclaiming rights under this provision – note that books published in 1978 became eligible for final reversion in 2013, so the reclaiming is just starting. So as an ultimate out-clause it’s there and exercisable. But authors have to know about it and act – write the correct sort of letter – within the right time frame to reclaim their rights…or the contract does indeed simply roll on.

    I have a spreadsheet with all my US-license publication dates, and it has a column labelled “Date to send reclaiming of rights letter” alongside – it lives with my estate planning documents, because it’s probably going to be my granddaughter (currently 1 yr) who has to act to get the last of those rights back. In a world in which e-books exist, it’s almost impossible for any of the older-style reversion clauses to be enacted.

    For those interested, the corresponding time in the UK is 25 years after the author’s death.

  12. “1. Read the contract, every word of it.”

    PG, I agree with everything you wrote but this. Hire a lawyer with expertise in the business and have him read it and advise you.

    Laymen understand words in their common usage. Lawyers understand words in their legal usage.

    A word-for-word identical non-compete clause has a different meaning in New Jersey than it does in Texas. Would a layman know that?

  13. This is a great start.

  14. Will:
    Once more you’ve said something about Exciting Press that makes me want to be one of their authors. When are you going to let some of us in?

  15. A good deal of this comment is no help to authors whose works are currently being held hostage by publishers in the many and various ways described above.
    In many plagiarism court cases – generally movie take-offs – a figure as low as only 5% difference is quoted as being acceptable to make the work ‘different’ from the original.
    As author of a work you cannot be charged with plagiarising your own work.
    My recommendation is revise your work, rename it, recover it and self-publish it.
    Many writers seem to want to obey publishing contracts to a ridiculous degree even when it is plain the usefulness of the document has long passed. While allowing their publishers to do what they want.
    If the publisher who has you on perpetual suspension ever finds out – what would they do?
    If on the remote chance the publisher contacted you about the strange resemblance of your recent work to your past novels published by them (given none of the current staff would have read even one of your backlist) you could always request that they revise your contract and pay you an annual wage for the privilege of holding your rights.
    It’s never to late to be assertive and on the attack. Go ahead – open negotiations that benefit you.
    I’ve gotten all my rights back from Random Penguin – I was clear that if they were failing to sell my novels that I wanted all my rights back and I got them.
    Sometimes it’s as simple as being firm and clear about what you want and making sure you get it.
    Otherwise – repackage and indiepublish. There’s no rule that says that only one version of a book can exist.

  16. Thank you, thank you, thank you! Just found your blog this morning, and I think it’s a wonderful service to writers and those of us with dreams to join this complicated world of publishing. It’s comforting to know there are lawyers out there who really care about writers and not just the bottom line. Will definitely be following your blog and (if the stars align) contacting you in the future if a book deal is ever in the cards for me. Thank you!

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