From Kristine Kathryn Rusch:
Contracts have gotten worse, much worse in the past thirty years—and that’s with agents (so-called experts) negotiating them.
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For this blog, however, I’m going to focus on the discount clause.
Before you indie writers go heading off to the hills thinking none of this applies to you, look at the title of this post. Discount Abuse. Many of you indies are as guilty of discount abuse as traditional publishers are.
You just do it in different ways.
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Second: Do not do what traditional publishers do when they discount books. Generally speaking, traditional publishers do it wrong. Or their strategy is aimed at promoting their company, not at promotingan author. Your strategy is to grow your readership. A totally different thing.
Third: Be glad, as you scan this post, that you’re an indie writer. Even if you screw up and decide to discount your first book, you’ll make more money than your traditionally published friends do on theirdiscounted books. (Unless, you put your book up for free. Sigh.)
And—a bonus Fourth: Read this post now in case you decide to get a traditional publisher to publish your paper copies. Especially if you had (or will have) an agent negotiate the deal. Because much of what I’m going to discuss here applies to paper books, not ebooks. This is one of those areas where you, the indie who has gone hybrid, is most likely to get screwed.
In fact, this area is where writers have been getting screwed since some publisher thought to change their contracts in the last 1990s—and then all the other publishers followed suit.
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Discount clauses always send a ting of discomfort through me, and not just because the things are damaging to writers’ careers and writers’ incomes. But because they are one of those let’s-screw-the-writer clauses that got added into contracts in the past twenty years or so.
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And these modern documents have lots of let’s-screw-the-writer clauses. Sometimes they’re bunched into a single clause marked “the discount clause” and sometimes they’re spread out, such as these clauses from a fairly recent contract:
- Discounted sales. Some sales of the Work in the forms specified in [another part of the contract—forms like hardcover, trade paperback, mass market] above may be to jobbers, chain stores or others at substantial discount. Where the discount is fifty percent (50%) or more from the Retail Price, a royalty equal to one-half the regular royalty. Where the discount is sixty-five percent (65%) or more from the Retail Price, a royalty equal to ten percent (10%) of the Net Receipts per copy sold.
- Cheap editions. On all net copies sold of any cheap edition that the Publisher publishes at a price not greater than two-thirds (2/3) of the original retail price, a royalty of ten percent (10%) of the Net Receipts, but if the Publisher licenses publication of such edition by another publisher, a royalty of fifty percent (50%) of the Net Receipts.
- Other Book Publication. For other editions (including but not limited to premiums, mail order, schoolbook and book fair editions, and other special editions) sold in the United States: Ten percent (10%) of the Net Receipts.
This lovely publisher starts screwing writers right from the start. Chain stores or others? Most of the large stores get discounts over 50% as a matter of course, so that means that most of the royalties paid from a writer’s book are paid at half the usual royalty rate.
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These “discounted” books have no time limit, so if your book is really popular, and it sells to Barnes & Noble (chain store) or Wal-Mart (chain store) at publication, the publisher can discount the royalty rate too. Right from the moment of publication. No waiting a year, as in the 1980 contract.
And lookie here! The publisher doesn’t have to pay full royalties on books sold by mail order, which many publishers are now considering as books sold off their websites. In fact that entire clause that mentions other editions? It’s pernicious all by itself.
It says “For other editions (including but not limited to…)”
In other words, they can publish the definitive book, and then all kinds of other editions, because the author didn’t limit the kinds of books the publisher can publish. And believe me, there are a million different editions the publisher can think up, none of which the publisher has to pay full royalties on.
Things get even worse for writers. For example, this lovely publisher from whose contract I’m quoting has an even lovelier clause in its ebook royalty rate. That clause says:
Royalties For Ebook Editions sold in the United States, except as described in paragraphs 1-3 below: Fifteen percent (15%) of the Net Receipts.
Guess what, folks? Paragraphs 1-3 are the clauses I excerpted above. The discount clauses. So if your publisher has this clause in their ebook editions royalty rates, then your publisher can sell your discounted ebook and pay you even less. So that wonderful $1.99 sale they’re doing to “promote” you? Well, that $1.99 is significantly less than 50% of the cover price of your $9.99 ebook, isn’t it? Guess who doesn’t get paid a full 15% of net receipts on the ebook edition.
By the way, the contracts I’m using for this modern stuff were all negotiated by agents, not attorneys. Just pointing this out.
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My solution is to go back to 1980.
First, the publisher can’t discount anything without seeking the author’s permission.
Second, the publisher can only discount a book after the book has been out for a year or more.
If the publisher wants to discount titles to promote sales in the first year of publication, let the publisher eat the difference in the cost. Not the writer.
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Traditionally published authors have no idea what price their book is selling for and what royalty percentage they will get on that book. Without a full-blown audit of their publisher, there’s no way the traditionally published writer can know.
These discount clauses—which the authors have freely signed—are the way that publishers are increasing their bottom lines. This is also why so many #1 New York Times bestselling authors are seeing their royalty rates decline. It’s not because the books sell fewer copies (although that’s happening as well); it’s because the authors are being paid less per copy sold—significantly less.
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Do your best to negotiate out these pernicious clauses. If you do manage to get those clauses out of your contract, be prepared to audit your publisher regularly. Because they’ll probably still act as if the clauses are in your contract, and figure you won’t catch them at it.
Link to the rest at Kristine Kathryn Rusch
Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.
PG is always conflicted when an author proudly tells him that Costco is selling the author’s books. The author is understandably excited at the prospect of selling a lot of books.
PG has not had any author mention that he/she understands that royalties on such sales will fall through the floor because of deep discount clauses. So far, PG hasn’t had the heart to share the bad royalty news with the author.
The increasing rapaciousness of deep discount clauses explains why fewer and fewer traditionally-published books are earning out their advances.
Whenever PG is banging heads with a publisher trying to extricate an author from a bad publishing contract, the publisher’s counsel invariably mentions that some or all of the books haven’t earned out their advances (as if this is a mortal sin on the author’s part). PG usually responds by saying he’s not surprised because the publisher is paying the author 5% royalties instead of 25% royalties.
Kris is correct that publishing contracts have become longer and longer over the past 10-20 years.
The basic rule for all types of form contracts in the computer word processing age is that lawyers never take anything out of a form contract and constantly insert new provisions and expand old ones. PG sees this in enterprise software licenses and internet terms of service as well as publishing contracts.
He’s also seen an increase an old contract trick that gives something to the other side on page three and takes it back on page 15. A 30-page contract makes this easier than a 10-page contract does.
When PG is reviewing a contemporary contract, he’s constantly going back and forth to see how Paragraph 48 may affect Paragraph 12, etc., etc., etc.
The bigger the jungle, the more places the tiger can hide.