Passive Guy missed a great essay from Kristine Kathryn Rusch a couple of days ago.
The topic? Negotiating a publishing contract, something close to PG’s heart.
Excerpts:
First, the rules of negotiation:
1. Know What You Want.
2. Ask.
3. Be Prepared to Walk Away.
4. Stay Calm.
5. Never Reveal Your Entire Hand.
6. Don’t Flip-Flop.
. . . .
Second, the rules of contract negotiation:
1. Expect to Negotiate A Contract.
2. Imagine How the Terms of the Contract Will Impact You Over the Lifetime of the Contract.
3. Focus on What You Want.
4. Make Sure You Have An Equitable Way to Terminate The Contract.
5. Make Sure You Know How You’ll Get Paid or How You Will Make Payments.
6. Control As Much of the Contract As Possible.
7. Once You Both Sign, Negotiation Is Over.
. . . .
You signed the contract. Your agent didn’t sign it. You did. Your agent might have given you advice, but you took that advice. You took that deal, finalized that negotiation, worked with that company. If you got screwed, then that’s your responsibility to make sure it never happens again. If you had incredible success, then congratulations. That success came from your actions as well.
. . . .
But we are in a brave new world and agents have a serious handicap in modern negotiation: Most agents do not have law degrees. In the past, we could get away with having a non-lawyer do our negotiating for us. Publishing contracts fell into certain types, and it was pretty easy to know what contract terms meant. It was also easy to know what to ask for to improve those contract terms.
It is no longer easy, and it takes a legal mind to surf these rough waters. Your publisher has a lawyer on their team. You now need a lawyer on yours–even if you have an agent.
. . . .
[L]et’s discuss the places in a publishing contract where you should hold the line.
Those places are:
1. The Rights You Plan To License.
2. The Amount You Will Get Paid For That License.
3. The Number of Books You License in This Contract
4. Future Projects With That Publishing House.
5. The Sunset Clause.
. . . .
2. The Amount You Will Get Paid For That License.
This one’s a tricky proposition. Because advances are going down significantly while the demand for rights has gone up. Most established writers can make more money with self-publishing over the next two years than they can through their publisher.
The difference is that the publisher pays up front, and self-publishing does not.
There are a variety of ways to look at payment. The best way to examine what you’re getting for the rights you license is the value you’ll receive.
Note that I didn’t say the money you will receive. Unless you’re a Times bestseller, you’re probably not going to be paid up front what you are worth, certainly not in these times.
So you need to examine the value of what the publisher offers.
1. Do you need the up front money to continue with your writing career? Can you live on that advance? If so, try to get the publisher to pay you on signing and acceptance of the finished manuscript. (Limit your rewrites in your contract to no more than two.)
2. Can your publisher get your book into markets that you cannot? Are those markets worth going into? A year ago, publishers could easily get your books into brick-and-mortar stores. Now, lots of brick-and-mortar stores are gone or cutting back on their titles. Is it worth losing a large chunk of your income for the opportunity to get into reduced brick-and-mortar market?
3. Does your publisher do quality e-books? I can name three traditional publishers who do not do high quality e-books, trying to drive readers to hardcovers instead. If your publisher does a crappy e-book product and the market is moving to e-book, realize that your readers will blame you for the bad product, not your publisher.
4. Does your publisher do a timely e-book? Right now, one of my traditional publishers is delaying the e-book of my latest release to the consternation of me and my fans. We’re losing sales weekly because the publisher believes that the delay will increase sales of the trade paper. Instead, in this madcap busy world, readers who want the book now will forget that the book exists when the e-edition finally appears six months from now. Each day my traditional publisher delays causes significant lost revenues—and subjects me to confused and angry e-mails.
5. Will your publisher promote your book? I don’t necessarily mean whether or not your publisher will have an ad budget for your book. But is your publisher sending out galleys? Contacting the sales forces of local bookstores? Make sure the book bloggers know about the title? If your publisher isn’t doing any of those things, then you’re not getting value for your dollar.
Here’s how I look at a book advance. If the publisher wants a lot of rights, the publisher must pay for them. With advances declining, it’s less and less likely that a midlist writer can receive a good advance in exchange for the rights she’s licensing.
Link to the rest at Kristine Katherine Rusch
This is a must read.
Passive Guy will add that having a third party negotiate for you or assist in negotiations can make a big difference. That’s one reason why lawyers are involved in so many big business contracts.
The entire preliminary process of reaching the point where two parties, two businesses, etc., want to complete a transaction involves pitching, selling, promoting, conceding, bluffing and a million other techniques. Every deal picks up momentum as it progresses toward a close and people directly involved in generating that momentum become very caught up in getting it done. It’s not easy to move from selling mode to negotiating mode and there’s a serious tendency to concede contract points to sell the deal to conclusion.
This very human tendency is why standard practice in every sales organization with which PG has been involved is to give the sales rep a set of well-marked parameters – You can discount the price up to 10% and no more. You can throw in X and Y extras and that’s it. Beyond that point, you need approval from your boss, the CFO or someone else who isn’t directly involved in the pitching and tap-dancing.
Whoever has approval rights looks at the deal with fresh eyes and is more likely to see the big picture because he/she hasn’t been involved in the 50 steps needed to bring a deal to a point where it’s ready to be closed. This person may be able to say, “If we don’t have to paint our gizmos in different colors, we can make money with a 15% discount. Tell the other side we can deliver everything in red at 15% off, but if they want other colors, 12% is as far as we can go.”
Lawyers make excellent bad guys in the negotiating process. While he was practicing, if PG was advising his client without being directly involved in the negotiating, he would sometimes say, “Blame your lawyer for needing to have X in the contract. You’re a reasonable and cooperative person, but your lawyer says you have to put this in.” From a psychological perspective, this allowed my client to maintain the sympathetic relationship she had built up with the other side and I was the remote bad guy.
Attorneys are not always a magic solution to all negotiation issues, however. Lawyers operating a contingency fee (a percentage of the amount received by a client from a settlement or a trial) can have the same issues literary agents do. If the attorney is running below the revenues his law firm expects from each firm partner and year end is approaching, that attorney may be tempted to settle faster by accepting less than he would if his billings for the year were higher.
While Passive Guy would readily agree a certain percentage of lawyers operating on contingency fees shortchange their clients for some of the same reasons a certain percentage of financially desperate literary agents do, the attorney has the option to take the case to trial and force money out of the other side. Unless there’s a little-known agent thing PG is not aware of, hauling a publisher up in front of a jury to obtain a reasonable advance is not one of the things agents can do.
One other difference is all attorneys operate under strict standards prohibiting conflicts of interest and other types of misdeeds. In the states PG is familiar with, a letter from a dissatisfied client can trigger an ethics investigation. Such an investigation can require the attorney to provide documents, testify before a commission or administrative law judge under oath and engage in a lot of other embarrassing and time-consuming activities.
While PG would not claim ethical rules for attorneys always operate in a perfect manner, every lawyer knows they’re hanging over her head. No lawyer wants to deal with an ethics complaint and that threat has a real effect on attorneys who may think about crossing the line.
Why? Ethics enforcement agencies have the power to disbar attorneys. If you’re disbarred, you get to pay off your law school student loans on the money you make running a milkshake machine at McDonalds.
Without implying all or many agents are crooked, etc., Passive Guy observes that agents have no similar ethical standards backed by ethics enforcement procedures. Nobody can disbar an agent.