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Termination Fees in Publishing Contracts: Why They’re Not Just Bad for Authors

15 February 2016

From Writer Beware:

In the course of my work with Writer Beware, I see a lot of publishing contracts (for the most part, these are from small presses). One of the red flags I’m encountering more often these days is early termination fees: a penalty that must paid by the author if s/he wants to get out of a contract early.

. . . .

Why are termination fees a red flag? Obviously they are onerous for authors, who might have good reason to want to end a contract early, and can’t do so without opening up their wallets.

Of more concern is the fact that publishers may employ them abusively, holding them over the heads of unhappy writers, attempting to use them as an extra income source by offering to jettison dissatisfied authors at the slightest provocation (one publisher I know of even provides an annual “get out of jail free” period where writers can request an invoice), or terminating the contracts of writers who’ve pissed them off and demanding the fee even though termination wasn’t the writer’s decision.

I’ve gotten complaints about all of these. For instance, last year I heard from an author who was quoted an early release fee in the low four figures, described as a reimbursement for production costs–despite the fact that the book had been in circulation for some time and the publisher had likely made back its investment.

. . . .

But termination fees aren’t just bad for authors. They’re bad for publishers, too.

Sure, from an honest small publisher’s perspective–a publisher that isn’t planning on browbeating its authors with termination fees, or using the fees to try and make an extra buck–a termination fee may seem to make good business sense. “We don’t want to hold onto an unhappy author,” the publisher might reason. “But we invest a lot of work in editing, designing, marketing, etc. So if we can’t maximize our investment by selling the author’s book for the full contract term, it’s only fair that we should get some reimbursement if she decides to leave early.”

Problem is, if the unhappy author can’t afford the fee, the publisher is stuck with her anyway–along with, possibly, the extra resentment produced by the author’s knowledge that she could have escaped if only she’d had the cash.

Link to the rest at Writer Beware and thanks to Deb for the tip.

PG says a termination fee is always a red flag. While PG will concede the theoretical possibility that an honest publisher somewhere includes an early termination fee in its contract, so many fly-by-night publishers use this shady tactic that you can assume a termination fee means there’s a 99% probability that a crooked or inept publisher is behind it.

One additional reason that early termination fees are a bad idea for a publisher – a disgruntled author with some time on his/her hands can use social media to make certain that anyone who spends five minutes with Google will learn that the publisher engages in questionable practices plus it doesn’t know how to sell books.

There’s an old marketing adage that a happy customer will tell one other person about their experience while an unhappy customer will tell ten other people why they’re unhappy. Social media of all sorts multiplies the platform of the unhappy customer a thousand-fold.

The days when an unhappy author had to keep his/her mouth shut about mistreatment by a publisher for fear of being blackballed are over. More and more frequently, an unhappy author will tell the world.

Since PG has gotten warmed up about publishers mistreating authors, he will make a prediction.

PG believes, more and more of the smartest authors are pursuing self-publishing because that’s the best way to make a living or getting rich as an author in 2016. If this trend continues (and PG sees no reason why it will not), Big Publishing will eventually end up with all the dumb authors and none of the smart ones.

PG does not mean to insult traditionally-published authors, particularly those who started down that path a long time ago, but the genteel poverty that is increasingly associated with the privilege of telling others you have a New York publisher won’t pay your mortgage or let you quit your day job.

What the cool kids were doing ten years ago is not what they’re doing today.

Contracts, PG's Thoughts (such as they are)

12 Comments to “Termination Fees in Publishing Contracts: Why They’re Not Just Bad for Authors”

  1. What’s needed is fees the publisher has to pay everytime they don’t do what’s in the contract. (Of course that means the writer actually makes sure said contract has what they want/need in it; like dates things will be done by, what promotions/ads will be run, and the way things are going — what type of pricing for ebooks — since that seems to be something some (excuses for) publishers don’t actually want to sell.)

    Sadly it seems you first need to find an agent that not only understands IP law, but is actually working ‘for’ you and not just doing whatever they can to get you to sign any old contract so they can get their cut. Or you need to hire an IP lawyer to make sure the agent isn’t taking you for a ride …

    Or there’s always self publishing if this is getting to sound like more work than it’s worth — oh wait, that’s a different type of ‘work’ too …

  2. It seems to me that if the book earned out it’s cost for the publisher(not earned out the advance) then there is little real justification for early termination fees.

    • “… there is little real justification for early termination fees.”

      There is if it keeps that writer from writing anything anywhere else because of a non-compete clause — that’s money in the bank to a publisher.

      • Hehe, I was using justification as fairness for once and got called on it!

        I’m usually using it in as ‘people justify insane things with insane reasons.’ I guess I was unconsciously giving the small publishers more faith than I do the big ones.

  3. @ Allen

    +1

  4. One more reason to be happy it took me a while to get to the ‘publish’ line.

    Many writers do their learning on the traditional publisher’s dime: each book gets better, the writer learns more about how to produce good work, interacting with an editor gives them an opportunity to improve with feedback…

    But each one of those opportunities, which for midlisters haven’t been hugely rewarding (most writers have a day job), leaves the work so produced chained to said publisher for a very long time.

    I am happy I missed that apprenticeship, because the guild fees are onerous.

    I lucked out.

    Thanks, PG, for finding so many new ways to make me happy.

    • Many writers do their learning on the traditional publisher’s dime: each book gets better, the writer learns more about how to produce good work, interacting with an editor gives them an opportunity to improve with feedback…

      Not necessarily so. Usually, you just get a whole bunch of “Thanks but no thanks” letters…or you hear nothing at all. If you get beyond that point, you’re dealing with *one* individual’s preferences and peeves and preconceptions– nothing to do with the quality of the story or writing. And if you want “in,” you’re *obligated* to abide by that person’s opinions, whether you agree or not.

      So you don’t even get your dime’s worth in trad pub, and as you say: chained for life.

      • Exactly this.

        Self publishing is freedom to write the story you want to write, your way.

        Reminds me of when I taught Zumba. There were some who believed there was only one right way to teach. But some of us (the crazy independent types) said no. Do your Zumba, your way. Your music. Your style. Your class. And then find the students who like it the way you do it.

        Compromise only for the music’s sake. 😉

      • I meant from the point where you have gotten an agent interested enough to start you on the bottom step of the traditional publishing ladder.

        Before that we’re all on our own, except only some of us are choosing to ‘submit’ to someone else’s judgment.

        I have no problem with the concept, except that, knowing how biased the system is, and being of a mature age, I have no desire to be rejected by just-out-of-college interns.

        • Unless your agent has the backdoor key to the publisher, you’re still at risk of some slush-pile intern looking at the first two lines of your masterpiece, muttering “Boring” and you getting rejected for what might have been the next 50 shades or harry potter.

          Heck, with all the talk we hear of them trying to buy self-published works, that might be the faster way to get noticed. Of course we’re also hearing that some of the contracts offered were so bad the self publishers have told them ‘no thanks’.

          YMMV as they say. 😉

  5. I agree with PG’s prediction for traditional publishers, with one caveat. It makes the presumption that the behavior of traditional publishing will not change for the better. Whilst all indications to date seem to point this way, and I would never bet against it, there is a remote possibility that Big Publishing will adapt and modify its practices to some meaningful extent. I’m just not holding my breath!

  6. I find there are high-IQ authors who sign with traditional publishers because validation and perceived status is very important to them. I think it may have as much to do with personality as with IQ.

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