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Traditional Publishing, Non-Compete Clauses & Rights Grabs

27 January 2016

From author Kameron Hurley:

When you’re a new writer, you mostly talk to other new writers about craft. Once you publish a book or two, though, you’re increasingly talking to your peers about the business of writing and publishing. You talk about contracts and foreign rights deals and rights grabs and the benefits and drawbacks of self-publishing and being a hybrid author.

One of the big issues we’ve been dealing with the last 15 years or so as self-publishing has become more popular are the increasing rights grabs and non-compete clauses stuck into the boilerplate from big traditional publishers terrified to get cut out of the publishing equation. Worse, these clauses are becoming tougher and tougher to negotiate at all, let alone get them to go away.

. . . .

This reluctance to nurse mid-list careers is bad news for writers who want to go the traditional publishing route, especially as it’s happening at a time when many editors are overworked and marketing budgets continue to get slashed and advances continue to tumble. If you’re a new author in SFF, don’t be surprised to get a first offer of $5,000 that demands your first-born child and everything you and they will ever write, and if you sell just 3,000 copies, well, sorry, we’re done with you and maybe go back to the small houses or come back to us with some vampire erotica we can sell.

. . . .

Non-compete clauses ask a writer to take an advance of $10,000 or $20,000 or whatever and prevent them from having any other novel-length work come out for a full year (or more!) before and after the book is published by that house. Sometimes this is “only” six months before and after. Sometimes it’s “only” novels in a related genre or can be negotiated to “only” novels in the same world. But it’s always awful and you always have to yell hard about it to get it wittled down to something manageable.

. . . .

For authors who write four books, or eight books, or more a year, big houses adhering strictly to this clause while paying advances under $50,000 a book would mean preventing most authors from making a living wage as writers (remove agent’s cut, taxes, and health insurance from that number, and yes, friends, that is what I’d consider an actual living wage, not . . . $20,000.

. . . .

Also of importance is that this clause makes the sort of unreasonable demands on an author that can only be made of an actual employee. You know, someone who gets health insurance and other benefits. By asking authors not to compete against themselves, they’re skirting dangerously close to moving us into the “employee” category that they want to keep us out of.  I have a non-compete clause in my employment agreement at my day job that prevents me from taking on freelancing work that competes with my day job work, and those hold up (mostly) because I’m actually categorized as an employee.

So are we employees or contractors? I’m actually surprised no one has taken a non-compete clause to court, because I think a serious legal inquiry would be interesting.

. . . .

I have some great publishers, and editors who have gone to bat for me to make things work. I have great relationships with the vast majority of them. I know it’s a tough business. I know they struggle with it too

But their parent companies see us as widget-makers, and they make it tougher and tougher for editors to hold out the open palm instead of the fist. Goodwill with your editor, or “my editor is so nice!” does not always translate to the nitty-gritty of the contract. A lot of those things are determined by the parent company up high, and are negotiated not with the editor but with people in the contracts department. Having a super nice editor who wants the best for you is great, but it does not guarantee there will be nothing but roses in your contract.

See, the big corp parent companies prefer the fist. They’d like to legally tie you to them, condemning you to live in poverty or keep your day job throughout your contract. But what editors and writers would certainly prefer is that publishers provide you with more value that helps make you and the work a success. Publishers who do things that make you WANT to do business with them are going to win over those who make it tough.

But that takes time, and effort, and resources. And so many editors are so short on those that it’s criminal. The great ones have done a fabulous job of helping us along, but their parent companies don’t always make it easy.

Clearly the parent companies, like many businesses today, are choosing the cheaper solution first. It’s way easier to serve up awful contracts than it is to invest in more editorial and marketing support. Better to just contractually bind authors to you because they have no other choice and are desperate for a sale.

Link to the rest at Kameron Hurley and thanks to Dana for the tip.

Here’s a link to Kameron Hurley’s books. If you like an author’s post, you can show your appreciation by checking out their books.

Kameron points out an interesting phenomenon in the dynamics of the author/editor relationship.

Authors, especially new authors, often regard editors as powerful deities who exercise life-or-death power over the author’s career. The editor is, of course, the gatekeeper controlling access to the publisher.

However, inside the publisher, except for all but a handful of senior editors, acquisition editors are pretty far down in the corporate hierarchy. Several levels of executives above the editor are the gatekeepers controlling the editor’s ongoing access to paychecks.

The lawyers responsible for a publisher’s contracts typically report through the general counsel up to the big bosses who are high above the editor in the corporate organization.

Life is much easier for the editor if she doesn’t rock the contract boat. While some authors can hire an attorney, who will talk directly to the publisher’s lawyer without going through the editor, new authors may be concerned about legal fees and being viewed as a troublemaker inside the publisher.

The power dynamics are completely screwed up for the new author unless he/she is determined to exert management control over his/her career.

A couple of notes on non-compete clauses that PG has mentioned before, but are worth repeating:

Non-compete agreements are creatures of state law and limitations on them can vary from state to state.

Virtually all Big Publishing contracts specify that New York law will govern the contract. PG is not a member of the New York bar, but his nonofficial opinion is that many of the non-compete clauses contained in publishing contracts would run into problems in New York courts. PG doesn’t believe that lifetime noncompete agreements (the life of the copyright is the length of most publishing contracts) in an author/publisher relationship would be enforceable under New York law, for example.

PG is a member of the California bar, however, and is able to state that California simply makes noncompete agreements unenforceable except for a couple of narrow exceptions that don’t apply to publishing contracts.

With respect to noncompete agreements that specify the law of another state will govern the contract, where a California resident is involved, California courts have, in the past, decided that California law will protect California residents from noncompete clauses regardless of what the contract says about choice of law and venue.

PG is not saying that all authors should move to California to get out of their noncompete publishing clauses. However, if an author is thinking a change of location might be a good idea (Malibu has never had two feet of snow), being able to write what the author wants to write without worrying about publishing contracts might be a factor to consider.

 

Big Publishing, Contracts, Legal Stuff, PG's Thoughts (such as they are)

28 Comments to “Traditional Publishing, Non-Compete Clauses & Rights Grabs”

  1. Very interesting. Thanks.

  2. Al the Great and Powerful

    While I support PG’s suggestion to consider California (as a former resident of Ventura and Santa Barbara counties, just north of Malibu), I’d be remiss if I didn’t also point out that Malibu regularly gets big fires and landslides (which can close the highways even if they don’t destroy your home and possessions (and, IMO as a Hawaiian citizen, the water is just too cold…). I wouldn’t choose to live in the Malibu.

    Still cheaper than Hawaii, though. You need Preston-level swag to buy a house out here…

    • One of its fires is its income tax.

    • @ Al TGAP

      Yeah. Malibu is expensive. Anything near the coast is. But Bombay Beach is cheap. REAL CHEAP… if you could hack living there!

      (FYI, it’s on the eastern shore of the Salton Sea. Utterly horrible place — absolutely the worst place I’ve ever seen in California. So bad it’s worth a trip just to see it and marvel at those people who actually are living there. Shudder…)

  3. PG, I would respectfully submit that going indie is far more cost effective than moving to California when it comes to avoiding predatory contract clauses 😉

    (And yes, I am a master of stating the obvious.)

  4. I’m waiting for someone to go the other direction and sue big pub claiming that they’re actually an employee and not a contractor due to the non-compete agreement.
    If they won, the publisher would need to ensure minimum wage, as well as participation in all the benefits and bonus programs of the publishing house.

    • And if it had taken that writer ten years to write that book … (and of course claim ten years of NYC minimum wage!)

    • This is my favorite takeaway here, Debra Dunbar. Back when I was a toiler in the pink collar ghetto, I was a freelance temp–I did the same work as the $8/hr full-time employee and the $12-$15/hr Kelly Girl beside me, but I made $25/hr and up to $35/hr. Why? Because I was not an employee of the company.

      The company didn’t mind. They were paying about the same for me as for the Kelly Girl. If I’d been an employee, I would have cost them $45/hr, taxes, benefits, state unemployment insurance, and overhead included. If they complained about my rate, I shrugged. “For $5/hr less you could get a dumb temp. For the extra $5/hr, you’re getting me.”

      During the late eighties it became necessary for me to begin billing my hours through a scenery construction company my husband and I owned, because of the laws defining “employee” which Debra mentions here. That was no problem for me; I had our company to act as my “pimp” in place of Kelly Girls; but other freelancers had to scramble to form LLCs, DBAs, and other low-maintenance tax bodies in order to look like someone else’s employee.

      Key to this discussion: The third alternative, for us to pay self-employment tax (familiar to authors), was no longer possible. Because the government had established a checklist of earmarks of an employee. The government now saw us as employees, not contractors.

      The federal law defines an employee, among other ways, as someone who works for you *and only you,* on tasks you define, at a rate you control, under your supervision.

      These are among the specific provisions that might challenge publishers who demand these non-compete clauses and life-of-copyright reversion terms in book contracts.

      I would love to see the proposition tested that authors working under such contracts are employees of the publisher.

      This should be the work of the Author’s Guild.

  5. It was precisely the high-handed intransigence concerning modifications of the legal clauses that led me to decline my first (and last) legacy publishing contract. Nothing so declasse’ as money issues, even. And this was back in 2006, so either I was Patient Zero or the rot has been spreading for a long time. One wonders if this has broken through the code of silence due to vast numbers of authors running into this behavior, not just newbies.

    • Sabrina; Back in the early-to-mid ’90s, when e-publishing was just first trying its wings, and self-publishing was, if not first, then earlily (is so a word) beginning to look like a real possibility, I recall Jack Chalker bemoaning (on CompuServe) non-compete clauses as one of the unfortunate features of life in Big Time Publishing.

      M

  6. What exactly are “the drawbacks of self-publishing”? I’ve been doing it for 5 years now and I honestly can’t see them. (And I say this as someone who spent 10 years writing for the big NY houses, so I’m quite familiar with trad publishing.)

    Why do these unfortunate authors feel they “have no other choice and are desperate for a sale”? The problem isn’t the crummy contracts. The problem is their desperation.

  7. Sadly, I believe new writers and much of the public put undeserved faith in trad publishers. They assume that these companies care about authors and books, for instance. That they actually promote most books. That they understand readers and the market. That they’re being treated unfairly by Amazon.

    I understand how hard it is for a writer to get started these days. But when I started over 30 years ago, it was hard, too. Even the little stuff. Ever heard of White-Out, retyping a ms. and paying for postage both ways?

  8. Better to just contractually bind authors to you because they have no other choice and are desperate for a sale.

    Nobody is going to offer these authors the choice they want. Nobody is going to structure their business so the author gets what he wants.

    Authors are binding themselves.

    All they have to do is hit the Amazon KDP button and structure their own business any way they choose.

    Times have changed. This isn’t Cabot Cove in 1985.

    • “All they have to do is hit the Amazon KDP button and structure their own business any way they choose.”

      And the publishers (and all those agents!) dang sure don’t want new writers knowing that!

  9. *(Malibu has never had two feet of snow)*

    Low blow, PG, low blow….

    I’d move to California if I could see over the snowdrifts to the highway….

  10. I moved to California over 25 years ago. And I joined KDP almost as soon as I got here. I’m in heaven. (Or will be when I make as much money as I think I need.)

  11. I am on my third one-sided contract with a traditional non-fiction publisher. The contract is a printed form you sign or you don’t sign. No negotiation possible. My advance is a pittance and I have not seen a dime of royalties.

    Yet I am satisfied. The experience has taught me what it takes to write a book on a schedule. I have an editor whom I genuinely like and he has given me guidance that I appreciate. The non-compete is not draconian: no publishing books on the “exact same topic” to the same market, no publishing a second edition for someone else. They register the copyright in my name. Which I am not keen on because I have to handle requests for permission to quote.

    I am not trying to defend the trads, only say that different publishers have different practices and authors have different experiences. If there was more money, it would be great. I doubt that I can go with Springer-Apress again. I can’t afford to; I either have to be paid more or quit writing, but I don’t regret the experience.

  12. Kameron sounds really frustrated in that article. If she doesn’t want to dip her toes into self publishing yet, maybe she should try Amazon Publishing’s 47 North. I read the advances are decent and best of all, their noncompete clauses are really reasonable. You get Amazon marketing behind you but the con is it stays in Amazon. Still, I always see Amazon published books in the Top 100, mainly their Thomas and Mercer titles.

  13. From the blog entry:

    This is not meant to be a jibe at any publishers I’m currently working with (well, except the usual one, and they know who they are).

    Shots fired.

  14. Quite right on editors, Ward. They are lowly-paid employees who keep hoping for a bestseller. If their authors don’t deliver, they can turn quite nasty. Some of them also are unfamiliar with the genre they are editing. The one time I had a top editor in the house, I was passed off to her assistant.

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