How to Read a Book Contract – How Long Does It Last?
Given the recent discussions the SWFA began about Hydra’s contract, including the fact that it lasts almost forever, here’s a reprise of a post PG wrote on the subject a couple of years ago:
One of the standard provisions in almost every type of business contract is one that is sometimes titled, “Term and Termination.”
The Term part says how long the contract will last. One year, three years, etc.
The Termination part provides for ways that one or both of the parties can end the contract before its term is complete. Termination can include provisions that allow a party to terminate if the other party violates a material provision of the contract or it may simply give one or both parties the option to end the contract after a notice of so many days.
In a typical business contract, these are ordinarily brief and very straightforward. Usually, there are no gotchas here.
When PG first started looking at publishing contracts, he was surprised at the absence of any short and sweet termination provisions and few had any set term. Often, the publisher could terminate the contract or simply let the book wither on the vine, but the idea that, if the book was published, an author could terminate a publishing contract after five or ten years was nowhere to be found.
A bit of internet research disclosed sample contracts or clauses or checklists on the websites of attorneys who regularly deal with publishing contracts that show the same thing – the author doesn’t get to terminate after a specific period of time. In fact, the author can never terminate unless the publisher goes bankrupt or allows the book to go out of print (lots of murkiness here).
Let’s remind everyone how long a copyright lasts in the United States. Generally speaking, a copyright lasts for the life of the author plus 70 years.
Passive Guy has dealt with many different types of contracts during his legal and business career, but never had one that lasted for 50 or 75 or 100 years or more. Real estate mortgages of 30 years were by far the longest contracts he saw.
PG would bet you could comb through the contracts files of most Fortune 500 companies without finding a 100 year contract. Why does a publisher need a 100 year contract for a book?
PG would also bet that if he spoke with an ancient publishing lawyer, that lawyer would tell him the tradition of life of the copyright terms for publishing contracts began before 1964, when the length of a copyright in the U.S. was 28 years. During that period, if anyone remembered to renew the copyright, it could be extended for another 28 years, otherwise it expired. 28 years is still a long time, but it’s not as weird as 100 years or longer.
100 years is not slavery, but it’s not right either. What the current publishing standard means is that a 21-year-old author who signs a book contract will have to live with that contract every day, every year, for the rest of her life. She may hate her publisher, but when she’s teetering about in her 90′s, she’ll still have that book contract strapped to her back.
The law provides statutes of limitations for nearly every sort of crime except murder. If I take a gun and rob a gas station when I’m 21, after 7 years or 10 years (statutes of limitations vary by state), I can’t be prosecuted for that crime even if I admit I’m the bad guy.
However, if I don’t commit a crime and instead sign a publishing contract, I’m never free of it again. There’s no statute of limitations on publishing contracts.
So, here’s Passive Guy’s modest proposal for upsetting the publishing apple cart – a maximum ten-year term for all publishing contracts.
If the publisher can’t cover its costs and make a reasonable profit within ten years, either the book or publisher are defective. The publisher and author can always come to an agreement to extend the publishing contract for longer if both parties really want to do so.
Oh, and ten years is probably more time than you would serve for armed robbery if it was your first offense.
PG would be remiss in his rabble-rousing if he ended his discussion with a frontal assault demanding a term for a publishing contract that was in the same universe as nearly every other class of business agreement.
PG has previously discussed a minimum wage for authors contract provision here and here.
It’s easy to focus on the dollar amount in such clauses and how they could guarantee a reliable stream of payments to an author. However, they also serve another important purpose. For 99.99% of books written, such a clause will cause a publishing contract to terminate well before the life of the author plus 70 years.
, Amazon will pay Passive Guy a small affiliate commission on any of your purchases.
Thank you for reprinting and updating this information, PG. I learn a lot from your blog.
You’re welcome, Margaret.
“Why does a publisher need a 100 year contract for a book?”
Maybe I’m way off bases and revealing a slight bit of cynicism, in more ways than one … but it strikes me that one possible answer to the above question is … ” … because it has been so easy to get”
Although it was old in the art, one type of termination clause which I had some success in introducing into an industry sector where it had not been common before was the Minimum Guaranteed Royalty clause. This provided that the licensee had to pay the licensor a certain amount per year or else the contract would terminate automatically. The carrot for the licensee was that if they paid it out of their own pocket, they could maintain the license indefinitely even if sales were not good in a particular year but they felt strongly about the product’s long term viability. The stick was that they ALWAYS had some skin in the game.
IMO this is a really good concept for very long term licenses like publishing contracts. You can even have the MGR scale with the length of the contract, etc. The reason I had success with this was that it enabled the licensors to accept a lower advance while still having confidence that if the product did well they’d get a continuing revenue stream and if not there would be no arguments about whether the licensed products were still being sold. As in publishing, many licenses provide that if licensed products are not being sold (the equivalent of a book going out of print) the rights revert. And it is common in many sectors for the licensee to play games like making six licensed products and selling them in Costa Rica or something and claim that the license is still in force.
The next step down from the MGR, which was my fallback, was to require “commercial quantities” of products to be sold. This obviously is less definitive than a MGR but in context it can be fairly objective.
Good ideas, Marc. One sounds a bit like my minimum wage for authors.
Yep. Like I said, I didn’t invent it.
Practice tip: To the licensor, it’s a minimum guaranteed royalty. But you get a lot less pushback from licensees if you call it an “Alternative Minimum Royalty” in the actual license. That word guarantee, it gives licensees the screaming heebies.
if you don’t put it in, they keep reading long enough to realize they don’t HAVE to pay it. Probably not news to you, but to anybody following along at home…
There is definitely an art to lulling the reader into semi-somnolence over the tricky bits of a contract, Marc.
Lucid and intelligent, as usual.
I remember reading somewhere about the Panama canal, and the lease for Hong Kong, where the term of 99 years was somehow the longest period that a lease – which is a type of contract, is it not? – could be.
Life of the author + 70 years could easily be more than 99 years, if the author is young and lives a long time.
No contract should be able to bind the future heirs of 5 average generations. That is just unconscionable – our laws shouldn’t allow it.
I just realized I’m not sure if I agree that the heirs should be supported by the intellectual property for that long, either – but if the Duponts can leave their money to their heirs, I should also leave any revenue streams (which would have to be maintained by the heirs appropriately). The difference being that the AUTHOR is indispensable, while the PUBLISHER (and AGENT) is quite replaceable.
I now have a terrible urge to try to overturn one of these contracts on the grounds that it violates The Rule Against Perpetuities.
It won’t work, but it is a strangely ironic argument that we should allow an author to bind his heirs for 70 years if the property is a (highly portable) book and 21 years if it is a (singular and nonportable) plot of land.
A rule against perpetuities claim would certainly give the judges something to talk about over lunch, Marc.
I love seeing you two talk lawyer even though I have no idea what you mean
Although I have always loved the Rule Against Perpetuities, which is what happens when you let math majors go to law school, I think most lawyers would tell you “be glad you don’t understand.”
And don’t even ask about the Rule In Shelley’s Case. Although I have the funniest story…
If the copyright grant was signed after 1978 (and does not fall under one of the 9 work-for-hire exceptions), the artist can terminate a grant after 35 or 40 years (depends on publication status).
There really is no such thing (in terms of today) as a perpetual copyright grant. The contract can say forever, perpetual, a billion years or from here to eternity, but the artist or his heirs (if the work was not considered a work-for-hire) can reclaim the copyright grant after a time.
This is a big deal in the music business right, as labels are scrambling to keep those older songs, but not so much in book publishing.
Why is this a big deal now?
Any song published after 1978 can be reclaimed by the artist after 35 years. 1978+35 years = 2013.
@Marc: I am familiar with the concepts in this “Minimum Guaranteed Royalty”. However as someone in the business world I am not myself completely a fan, though I see it’s attractiveness. My problem is that it enables a Publisher to sit on the Rights for their own reasons by paying a small annuity, when it is very possible the author could achieve far higher sales with another publisher.
In my view we have to revisit this “Term issue” from the perspective of the interests of the Author. I apologise for the length of my post and for the generalizations and business-speak. Some will pooh pooh all of this, saying that the publishing world has it’s own methods … I say it’s about they changed.
So … the Author usually signs a contract with a specific publisher for two reason – to sell his books and earn money. Normally one assumes he should be choosing the specific Publisher because he thinks that this Publisher can deliver both better than anyone else. Agreed ?
In business, when a licensee (in this case the Publisher) is offered a contract, the focus is on how well that licensee will perform. He is offered a contract based on an assessment of how well and for how long he can perform successfully (usually units sold)
A reasonable Term is chosen which balances his needs to invest and build a market, with the interests of the Rights holder to achieve maximum performance in case the licensee fails to perform, for some reason.
So … a reasonable term for the contract is chosen, allied with a reasonable level of performance.
Typically the Term might be a 3-5 year period, depending on the product and state of the market. Then a minimum Standard of Performance is agreed. Usually the Rights holder chooses a level below which he is pretty confident another licensee could definitely do better – and that level is applied to the contract after, say, two years. If the minimum performance (sales numbers OR Net Sales Dollar Value) is not met in the third year, then the Rights holder has an immediate option to cancel the contract and the Rights automatically revert. Commonly also, the contact allows for automatic renewal in the absence of any notification to terminate by either party.
Back to the Author. In my view a Author has a RESPONSIBILITY to themselves and their talent to ensure they do NOT sign a contract for more than five years for any individual title under any circumstance. Five years is forever in the modern world of technology and publishing. In my view also no contract should be signed without a thorough conversation with the publisher about what their joint goals and expectations are for sales levels. And it is this conversation that should lead to the minimum Performance level. When a Publisher puffs up their chest and claims they can sell 50,000 copies each year … then maybe that is fine in the view of the author … and hence he needs to set his minimum performance at, say, 1,500 copies a month. After all if the Publisher doesn’t think he can sell the title, why is he seeking to take it on ? The Author should let the Publisher hoist himself by his own petard. This of course does not apply where the author has good reason and justification to expect much larger or smaller sales numbers in which case those numbers should drive this calculation. (NOTE: these numbers may well be ‘Net Sales Dollar Value’, and not Sales Units)
In this case therefore, I would suggest that the Contract Term section of the Contract should say that the term of the Contract is 5 years. After 18 months, if the sales numbers are below an average of 1,500 copies per month, over rolling three month periods, for more than 4 months in a row, then the Author has the option to terminate the contract by notification in writing, with the rights reverting immediately.
My two cents
I have heard from reliable sources that Stephen King’s contracts run for only ten years, and then can be re-negotiated at that time (for, presumably, more money).
Terms and termination were two major ways I wanted to start from scratch when I founded the publishing company I started. We went for limited-term contracts (with industry-leading royalties–though no advances, to Scalzi’s great consternation) easily terminated on either end.
The problem is “boilerplate.” I’ve seen way too many agents talk about “boilerplate” contracts: “this is what’s always been, so it’s what stays.” Worse yet is the “standard” adjective.
Thanks for this, PG. Another example of why, when writers talk to attorneys about their contracts, there’s often little to say. Pulling one’s hair out is probably an appropriate response.
When I first learned about standard publishing contracts, I was flummoxed.
Now that I’m both writer and attorney, I talk to myself regularly.
You’re welcome, Patrice.
Like Patrice, I’m a writer and an attorney (although I write about stuff that has nothing to do with the type of law that I practice).
Consistent with the “fool for a client” advice, I will hire an attorney to review and negotiate my agent contract and publisher contract. But it’s good to know the top issues. Thanks, PG.
You’re welcome, Valerie.
This is so helpful, PG. Thank you for drawing away the screen and showing what lies behind the curtain.
I’m not a lawyer, but I can easily understand this. It also helps me see, clear as day, just how much Publishers took advantage of their monopoly to draft harsh contract clauses.
It’s so important that writers know this.
If agents are allowing these clauses, they are not negotiating contracts in the best interest of the writer. There is simply no arguing with that.
You’re welcome, Mira.
Posted at http://www.facebook.com/pages/Change-It-Up-Editing-and-Writing-Services/362306400523555. Thanks to you and all the commenters for a very insightful discussion!