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Strip Mining the Authors

27 May 2011

Kristine Kathryn Rusch has written another important essay on the changing face of publishing. I’ll intersperse some excerpts with my comments, but this is one you’ll want to read in its entirety. There is, as always, a link at the bottom.

As will be abundantly clear from Kris’ examples, traditional publishers and the new agents-turned-publishers are making a brazen grab for as many rights from authors as possible while reducing the amount of money they will pay authors for their books. This is the new strip mining model for publishing.

Why are they doing this?

When the ship is sinking, some of the passengers start fighting over the lifeboats.

With each passing week, the handwriting on the wall becomes more and more distinct. What does the writing say?

Big Publishing, the agents who rely upon it and the traditional bookstores that provide its lifeblood are sinking. Just like the Titanic, they’re not disappearing in an instant. The band is still playing and fashionable people are doing business on the upper decks. The good ship Big Publishing will be bobbing in the waves for some time to come, but Amazon, ebooks and indie publishing have punched big holes in the hull. Those holes cannot be patched and the ship is going down.

Does this mean the end of publishing ships? No, but it means the demise of the grand ocean liners. The S.S. Amazon is an entirely different design, crafted for speed and efficiency and it doesn’t need many sailors schooled in the old ways.

While the band is playing and champagne flows, people make brave speeches about the timelessness of their trade. But, make no mistake, a battle is underway below-decks for spots on the lifeboats. If it’s necessary to toss authors over the side to make room, well, that’s just the nature of the business these days.

From Kris:

[A bestselling] writer, more than any other writer, is in danger of losing money and copyrights, of in fact going from making a lot of money to making little or no money at all. How can she lose money when she will probably maintain her bestseller status, her sales will probably go up, and her work will go into more markets than ever before?

Simple. Her contract terms will change and she might not even notice.

At some time hidden in the mists of time, an ancient rule of contracts was formulated: When a business partner is in financial trouble and wants a change in a long-standing agreement, watch your wallet. The more “routine” the change, the more dangerous it probably is.

Kris talks about e-rights:

Another clause to beware of in the e-rights clause of your new contract is this one:

“The Author hereby grants to the Publisher…the exclusive license to produce, publish, sell, distribute and further license any Electronic Version of the Work…. ‘Electronic Version’ means versions that include the Work…in a complete, condensed, adapted, or abridged version and in compilations for performance and display in any manner whether sequentially or non-sequentially and together with accompanying sounds and images, if any, transmissible by any electronic means, method or device (including but not limited to electronic and machine-readable media and online or satellite-based transmission or any other device or medium for electronic reproduction or transmission whether now or hereafter known or developed…)” [Emphasis mine.]

Yikes! Ick! No. Never, ever, ever, ever sign this clause. Think about this: movies are digitized—they are performance, and they are often distributed online. Not only does that clause allow someone to monkey with your work, abridging it, taking it out of order, adding things to it, making it into a performance piece, adding sound effects, but it also is a backwards way of granting television rights, video display rights, and any other performance right, so long as that performance can be distributed electronically.

And don’t believe that someone in your publishing house won’t use that clause down the road. The editor you trust may leave, the publishing company might change hands, and a clause that was designed for one thing will be used for something completely different.

Gold has been discovered in ebooks. Smart people are prospecting for more gold with enhanced ebooks. Video in ebooks is a definite possibility.

While a few people sprinkled in publishers’ management positions high and low may have seen a vision of what books could become and the effect that might have on publishers’ profits in their traditional lines a few years ago, nobody bothered to tell the gnomes who tended the standard-form contracts.

Kris has seen far more publishing contracts during her career than Passive Guy has, but the ones he’s examined that are more than a couple of years old are tight where paperbacks and hardcovers are concerned and they leak like a sieve everywhere else.

Back to Kris:

Watch out for your option clause. Try to avoid signing one at all. In the past, option clauses were like job security, but no longer. Option clauses have now become a way to tie a writer to a publishing house and to prevent her from working for anyone else. So strike your option clause if possible.

. . . .

Watch your warranty clause.  Now, many publishers are reverting to an old practice. They want writers to warrant that the writer will not write anything until this particular book under this particular contract is published.

This used to be a separate clause, and very easy to find.  It existed in a lot of contracts 20 years ago, then faded away.  Now it’s back with a vengeance.  It used to be that the writer guaranteed that the book she had just contracted for would be her next book and no other book would compete against it.

Now she’s guaranteeing that she will not write another book until this one is published.  And in many cases, the publisher enjoins her from writing anything.

This clause, which has been in every new book contract I have seen from traditional New York publishers in the past six months, is buried in the warranties.  Which are the boilerplate part of the contract, the part that includes bankruptcies and acts of God.  A lot of established writers stopped reading the legal gobbledygook in the boilerplate years ago, and have been snared by this clause.

Sometimes people fighting for lifeboats don’t act in rational ways. During the fight, the lifeboat may be damaged, supplies lost and passengers capable of providing valuable assistance to the survivors prevented from boarding.

When he read Kris’ description of these provisions, Passive Guy was reminded about one of the fundamental rules of making contracts with important long-term partners: Don’t screw your partner in the contract even if you have an opportunity to do so. When your partner realizes you screwed her as she inevitably will, she’ll spend all her time and energy working on ways to get out of the contract instead of doing whatever it was that you wanted her to do when you signed the contract.

What about the clause that hog-tied the author to the publisher? PG’s already thought of a half-dozen likely ways to evade the clause. He can’t help it, that’s just the way his mind works. However, he’ll keep those under his hat for the moment because he hasn’t seen the language in the contract.

Something else also came to mind, however. As described, the hog-tying clause potentially precludes a professional author from earning a living by writing for a competing publisher. When you think of it that way, it sounds a lot like a non-compete clause.

Non-compete agreements are common in the tech world. When you go to work for a tech company or become a contractor for a tech company, you’ll be required to sign a non-compete agreement that prevents you from taking everything you learned while you worked on the Apple ebook project and taking it with you when you’re hired for the Microsoft ebook project.

As with everything else, however, non-compete agreements were abused by some employers and today a dense combination of state laws and court decisions have placed substantial limits on how much a company can restrict the post-employment work of a former employee.

One of the fundamental limitations on non-compete agreements is a public policy that people should be free to work and support themselves in their chosen profession and should also be free to move from job to job. Limitations on that freedom included in non-compete agreements must be narrowly-tailored with time limitations to protect the vital interests of the company, not punish ex-employees or former contractors for quitting.

Back to the bigger picture for a moment, hiding material limitations on an author’s freedom in obscure warranty clauses as Kris describes is an unethical business practice.

Depending upon how it’s done and what extra-contractual representations are made to the author, we may be moving into fraud territory.

This practice exploits the great mismatch in resources and negotiating power between a large publisher and an individual author. Passive Guy has no problems with bare-knuckles contract drafting and negotiations when both sides have access to good-quality legal advice, but this is over the line. It demonstrates disrespect for an author and an intention to fleece the author for the financial advantage of the publisher.

This is antithetical to a relationship of mutual respect between professional colleagues. This is destructive exploitation – strip mining – of an author’s life work.

Such behavior by a publisher gives rise to an additional inevitable question. If the publisher is willing to engage in borderline fraudulent practices in its contract with an author, what additional types of fraudulent practices may it engage in? Even hidden clauses in a contract are far easier to discover than under-reporting of sales and underpayment of royalties.

So, how do we deal with hidden gotchas in a publishing contract?

Next week, Passive Guy will unveil yet another lovely contract provision for authors. Check back to learn about the Smoke ‘Em Out Clause.

And most definitely read the entire post by Kristine Kathryn Rusch. This one can make or save you some big money.

Big Publishing, Contracts, Ebooks, Legal Stuff

44 Comments to “Strip Mining the Authors”

  1. Bridget McKenna

    The changes are coming fast and thick. What an exciting time to be a writer. Okay, perhaps less exciting to be an agent or publisher, but DAMN. Hard to keep up, but you and Kris and Dean, Joe and Barry, etc. Do a good job of keeping us informed. Thank you, Passive Guy.

    • Thanks, Bridget.

      I probably suffer from too much ADHD, but it’s fun to be in the middle of a storm if you’re a good sailor.

      • Interesting you’d say that: I’m a sailor by hobby and a writer by trade. When all the other boats are making for port, I’m getting my jollies on. I’ve also burned up my options clauses, retained ebook rights, and tacking for the open waters of self-publishing (which only yesterday felt like an insult but today is genius). Thanks for the great post. ch:

        • Christopher – I’m not a sailor, but would venture to say when the wind changes directions, you handle the boat differently.

  2. What a great post, PG! I’m passing it along to everyone I know with a recommendation to read it all.

    One thing: in your last few paragraphs, you mention the publisher disrespecting the author and practicing borderline fraud in contracts. The contracts I’ve seen in the past three years, especially those given to first-time writers, have many unenforceable clauses put into them strictly to force a writer to behave in a certain way.

    Publishers know that writers don’t understand contracts, and will do whatever a contract says. I can’t tell you how many times a writer will have done something against her own interest, and I’ll ask why. She’ll respond that it’s in her contract. I’ll refer her to an attorney who will reaffirm what I already knew: the clause was unenforceable. “Let them come after you,” the attorney will say. But the writer won’t.

    So these practices have become common in the past ten years on the part of publishing. It’s up to writers to say no to them, but most writers–especially new writers on these silly season clauses–are so desperate for a deal that they’ll sign anything and do anything.

    One of my students recently asked if he should negotiate a contract. He said he didn’t want to p*** off his editor by asking for changes. I about hit the roof, especially since he’d been to classes of mine in which he was told to negotiate. But at least he asked. How many writers don’t?

    Scary times.

    Good post. I’ll be sending quite a few folks your way.

    Kris

    • Kris – Thanks for the kind words and keep up the terrific essays.

      I understand and share your frustration with writers and negotiation. The fact that a publisher has offered a contract means the publisher wants to make a deal. The publisher won’t get scared off if the writer makes a few reasonable requests. And a little pushing back on “nonnegotiable” clauses has gotten me a lot of changes over the years.

  3. “Depending upon how it’s done and what extra-contractual representations are made to the author, we may be moving into fraud territory.”

    Could you make an note to riff on this section further, too?

    Kris Rusch & co. always stress that one shouldn’t take as gospel the assurances that an editor, senior editor, etc. give a writer, for obvious reasons.

    But is there a way to make these representations count, outside of hard contract language?

    Probably a post for another day — if so, I’m awaiting it with interest.

    • LP – I will do a riff on all the extra-contractual representations and how an author might be able to use them.

  4. Great piece PG … continued kudos to you and Kristine with this one.

    Today we had an excellent example of a high-profile case involving the allegations of intellectual theft and betrayal: you can read it here: http://fxn.ws/jou74T.

    Thought you and my brothers and sisters in the writing community would be interested. 9-)

    Have a great Memorial Day weekend PG and to your readers!

    • Gerard – As you know, that sort of suit is an almost mandatory part of an inter-corporate kabuki ritual whenever a major tech talent moves to a competitor. It would be an insult if you moved and nobody sued.

      If anybody ever offers Passive Guy a big tech job, his employment contract will include a provision that mandates that the employer file suit when PG goes to work for another tech company. Otherwise his reputation would be (even more) ruined.

      Have a great Memorial Day yourself and thanks for your kind words.

      • “… inter-corporate kabuki ritual …” too funny PG (you should be a writer …(grin)) and yes, well aware of it.

        In the financial industry the ritual is coined, “selling away from the firm.” It is less a crime and more a rite of spreading one’s wings.

        I’ve always found it ironic (and a bit humorous) that, in most cases – selling away from one’s firm is punishable by … termination. Yet, in the majority of cases, the only reason a person would sell away from his firm in the first place, is when he’s INTENDING to move to another anyway.

        Silly …

  5. Thanks for the great analysis of Kris’ post and adding your own insights to this highly-charged topic.

    With everything I’ve been reading over the last few months, signing a contract with ANYONE scares the hell out of me.

    Keep up the good work!

  6. I’m wondering if authors can sell their manuscripts like software. Say, I give you a license to make, market and sell 100,000 copies of this manuscript. Name-authors could auction off the licenses and it would put the power in the producer’s hands again, whilst these agents and publishers become what they really are: buyers.

    • KW – I thought I responded to your comment earlier, but evidently did not.

      I think the idea of a limited license is an interesting one. Effectively, you could do this by self-pubbing ebooks and POD, but the idea of a publisher bidding on the first 100K books, then another bidding on the second 100K is interesting.

      • Authors do this all the time, even under the current system. A lot of foreign publication deals are done on a licensing basis.

        I.e. a publisher in finland buys the right to print 10,000 books for a fixed price.

        • Thomas – Very good point, I didn’t think about foreign rights.

        • Thomas – do they buy it off the author, or their agent? I’m curious which authors do this and if you know of any writing about it on the internet.

          • I’m sure dean wesley smith has talked about it on his blog from time to time. It’s not something many people talk about online, simply because these are bread and butter deals… say, $1,000 here, or $2,000 there.

            It’s much easier to do the deals without an agent. If you do the sums, the money you are talking about isn’t enough to compensate the agent for their time. And agents hate them in general.

            That’s aside from any other conflict of interest ( agents get paid their 15% for the life of the contract. So, they like open ended deals, and not fixed deals)

            So, agents tend to discourage them.

            As a rule, the publishers come to you if you have a decent website.

    • Thomas E – Kris Rusch says some dishonest agents do a foreign rights deal and keep all the proceeds.

  7. [...] Wesley Smith  points out a couple of must-read articles by J.D. Sawyer and The Passive Guy warning of the traps evolving in publishing [...]

  8. Thanks PG, for drawing our attention to such important points so ably put forward by Kris!

    I love the image of the publishing industry as a sinking ocean liner while the band is playing and champagne flows!

    No question about it, Amazon.com has come up with a new business model (vide your post on the “long tail”) and it is a winning one…which will require no doubt new kinds of contracts for writers once Amazon launches itself as a publisher (and I bet soon to become a major one!). But I hear that they are very much above board and honest?

    • Claude – I would love to see a copy of Amazon’s publishing contract, which Barry Eisler praised highly. It’s an interesting possibility that Amazon may use a fair and reasonable contract with higher royalties to attract authors from traditional publishers.

      • Until they have critical mass, then what? Amazon has its own share of gray behavior.

        • Rick – Anything is possible, but Amazon has different genes than the publishing world does. Plus, Amazon is accustomed to living in a world of bloodthirsty competitors and will be careful with pricing and suppliers (including indie authors) who bring it sales.

          An additional safeguard is that it’s always easier to build something the second time than it is the first. If someone with money sees a weakness in Amazon, it’s not difficult to build a clone of the Kindle store and start trying to attract authors over there.

          Apple is already a threat Amazon takes very seriously because of the iPad and the iPad is not going away any time soon. The Nook store is another competitor in place plus Google is sniffing around the book distribution area. Within the next few years, I can’t see Amazon doing anything to tick off any group it sees as important to its competitive position.

  9. Thank you PG and Kris for this post. Just another thing to be wary of with the Big Publishers. Talk about rats running from a sinking ship, they’ll stick anything in a claus to make the author pay before its ultimate demise.

    • Anne – Thanks for coming. As mentioned in my post, mistreating long-term business partners is a really stupid thing to do.

  10. [...] http://www.thepassivevoice.com/05/2011/strip-mining-the-authors/ Blog this! Recommend on Facebook Subscribe to the comments on this post Bookmark in Browser Tell a friend This entry was posted in Blog. Bookmark the permalink. ← Techno-Joy or Techno-Fear, a post by Melissa Douthit [...]

  11. Another good one. Thanks for this!

  12. The industry has been evolving, I believe, not changing. E-books are here to stay and will ultimately overcome all other formats. Some schools, private and public, recommend laptops for their students to use in class. E-readers or tablets will replace those at some point. Therefore, schools will save money buy buying less books and parents will be buying downloads to support their children’s education. To me, that evolutionary model to teaching is as clear as daylight. Finally, with that model, legendary publishers will be cast aside or terrifically marginalized. Writers will suffer the most, just like those publishers’ planned it in their profit margins.

    • A.T. – I agree with most of your prognostications.

      I will just add that, during disruptive changes affecting other industries, almost none of the prognosticators (including me) got most things right.

  13. [...] Strip-Mining the Authors/ [...]

  14. Your blog has become my “must-read” stop, even on a holiday Monday. Keep the analysis coming. I appreciate your effort.

  15. Awesome!

    I’ve been wanting to write a post on Kris’s blog this week but didn’t have time. Today I think I will.

    Thanks, Passive Guy! I’ll be looking for the new blog next week!

    Melissa

  16. [...] of the best: Publishers (Surviving the Transition Part 2.) Passive Guy talks about it in his blog: Strip Mining the Authors.  In it, Kris shows the reader exact clauses that she has seen recently in contracts that are [...]

  17. I have a newcomer’s question. Wouldn’t some of the clauses, such as not allowing the writer to write or publish anything before the book comes out, run afoul of the IRS employee guidelines? I took classes at my local Small Business Administration in tax law affecting small businesses before I started my writing business 4 year ago (they were free, and very helpful) and they harped about the differences between contractors/freelancers and employees. With the deadlines for manuscripts, and then the publisher regulating what the writer can and cannot do in the meantime, it starts to sound like the writer is an employee of the publisher. As they keep changing their contracts, they could easily find themselves in hot water for not paying Medicare taxes, minimum wage, Social Security taxes, etc. Many large companies have had the IRS knock on their doors despite having contracts that specified a person was NOT an employee of the main company. Just ask West Telemarketing, UPS, and many others.

    My bet would be that the lawyers at the publishing houses aren’t even thinking about this because of the long standing traditions and precedents. However, as the contracts continue to change, and more and more restrictions are placed on the writer, I could see this becoming an issue. Especially as the IRS looks for more tax revenue streams.

    If I’m being a total newbie, let me know. :) I just know while I was writing non-fiction copy I had to fire at least two different clients for wanting me to be “available” via chat during hours they weren’t paying for my writing just in case. That starts making me their employee, rather than their contractor. No bueno, in my opinion. I don’t ever want to be someone’s employee ever again. :)

    • Hey, Elizabeth, I like the way you think. One of the many things I’m not an expert on is tax law, but it would be very interesting to look at the contractor cases where the IRS determined they were really employees. I would thing the exclusive claim on the writer’s work would tend to point toward employment.

      I’ll let any accountants or tax lawyers who wander around here chime in.

      • I was invited to be a member of the class action suit against West Telemarketing. I declined as I didn’t have accurate personal records to really contribute, and I only worked “with” them for about two months. They were dinged because they labeled us contractors as we worked from home and provided our own equipment, but we had to sign into their system at regularly scheduled hours. It was taking in-bound calls through your computer at home. I took MANY Magic Bullet orders. However, say you scheduled yourself from noon until 2 PM, yes the pay was $10 per hour, but the company was only paying the exact minutes the “contractor” was on the phone. So for two hours, you sit on the phone, can’t take any personal calls, and can’t miss a call if it comes in. And if you think well just lengthen the call, they penalized you for being over the average call length, and that could lead to termination.

        This gives a list of factors for determining the employee/contractor dilemma. http://www.justice-for-ic-drivers.com/static.php?page=static080510-155737

        Where I see potential issues is preventing the author from writing or self-publishing after the product has been delivered and before the book is released or for the entire life of the contract (yuck). That is controlling the means and methods of the work outside of the original scope of work, but that’s just my own common sense and from watching recent cases. #5 and #8 are the most likely problems with these types of contracts becoming the “standard.”

        I don’t have a publishing contract and will not be pursuing one. But if someone has these types of clauses in their contracts, they could contact a lawyer of course, but they might also want to ask the Federal Labor Board or the IRS about it. I believe the IRS has a reporting mechanism for what to do if you think you might be an employee instead of a contractor. Not that these actions are without consequences, if you become an employee, you can be fired. But it could be a way out/ even a way to claim back pay for time worked.

        I’m really surprised if no one has raised this issue yet.

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