Contracts

A Publishing Contract Should Not Be Forever

28 July 2015

From The Authors Guild:

From The Authors Guild:

Diamonds may be forever, but book contracts should not be. There’s no good reason why a book should be held hostage by a publisher for the lifetime of the copyright, the life of the author plus seventy years—essentially forever. Yet that’s precisely what happens today. A publisher may go bankrupt or be bought by a conglomerate, the editors who championed the author may go on to other companies, the sales force may fail to establish the title in the marketplace and ignore it thereafter, but no matter how badly the publisher mishandles the book, the author’s agreement with the original publisher is likely to remain in effect for many decades.

That’s the way most book contracts have been drafted for more than a century, and publishers take it for granted; only a few brave souls have asked why or argued with it because that’s the way it has always been. In the ideal traditional publishing partnership—where the publisher nourished the author’s career; where the same editor worked closely with the author over decades, editing and reworking books and new book ideas; where the publisher actively marketed and promoted the author and gave the author a sufficient advance to live on between books—then it might have made sense for the publisher to own the rights for the entire copyright term. But that is the rare author-publisher relationship today.

. . . .

Authors victimized by this status quo know that it’s long past time for publishers to offer a fair deal. We believe three basic changes are urgently needed: (1) time-limited contracts, (2) a clause that provides for reversion of unexploited rights, and (3) a specific new unchallengeable definition to replace historic “out of print” clauses that are not remotely relevant in the electronic age.

When it comes to time limits in agreements, publishers historically have positioned themselves on the lucrative side of the line. With authors, the deal they offer basically lasts forever. But when they’re on the other side of the deal, licensing things like paperback reprints or foreign rights to other companies, publishers typically don’t make agreements that continue for the life of a book’s copyright. Instead, the contracts are good only for fixed periods—seven years, for example. If publishers can routinely demand licenses that expire, why shouldn’t authors?

We think the “standard” contract should last for a limited period of time from the date of publication; it should end well before the 35-year termination window opens. When the contract expires, if a book is still doing well, the author and publisher might negotiate another time-limited deal—or the author might choose to move the book to a house that has put more effort into marketing the author’s later works. If the book is no longer gaining support from the original publisher, the author might choose to self-publish it or take it to another publisher. In any case, a time-limited contract gives authors the leverage and flexibility that they need in today’s publishing environment.

. . . .

That brings us to the third step: the “out of print” clause, which has failed woefully to keep up with modern publishing practices and must be replaced. The original concept was straightforward: When a publisher fails to keep a book on the market in a profitable way, the author should get all the rights back. This is more important today than ever, since e-books and print-on-demand make it easy for authors to republish their backlists: a recent study conducted by the British Authors’ Licensing and Collecting Society (ALCS) showed that 70% of authors who were able to reclaim their rights were able to earn more money from the work in question.

. . . .

The remedy is simple: Kill the entire outmoded concept of “out of print.” Instead, the contract should define when book rights are being “inadequately exploited” and therefore available for reversion to the author when the book fails to generate a certain amount of income—say, $250–$500—in a one-year period. Using income as the yardstick, not a specific number of sales, is essential: Publishers might otherwise be able to game the clause by offering one-cent e-books the way they’ve gamed existing clauses by using e-books and print-on-demand.

Link to the rest at The Authors Guild and thanks to Melinda for the tip.

PG will note that The Authors Guild proposal for revised out of print provisions is identical to A Minimum Wage for Authors which PG first publicly suggested in 2011.

He believes that the $250-500 per year threshold for reversion is too low, however. This is especially true if the threshold amount is not indexed for inflation (another PG suggestion from 2011). In the US at least, we’ve become accustomed to very low rates of inflation during the past several years. However, PG believes this is not the new normal.

$250 might not buy you a hamburger at McDonalds in a few decades. In 1964, a McDonalds hamburger cost 15 cents.

Publisher removes celebrity blurbs from Bill Cosby biography’s web pages

23 July 2015

From Entertainment Weekly:

Simon & Schuster has pulled a number of celebrity endorsements for Mark Whitaker’s Bill Cosby biography, which was published in September, from web pages for online retailers. The biography,Cosby, didn’t mention the sexual abuse allegations that recently became publicized, and was widely criticized for not doing so.

The Associated Press first broke the news, and Cary Goldstein, the Simon & Schuster vice president’s and executive director of publicity, confirmed to EW that it would pull the blurbs because of “recent events.”

“Simon & Schuster and the author have decided to remove all of the celebrity endorsements we received prior to publication last fall,” Goldstein said in a statement. “In addition, there is no plan for releasing a paperback edition, or for issuing a revised version of the book.”

Link to the rest at Entertainment Weekly

PG hasn’t seen a morals clause in a publishing contract yet, but someone at a big publisher is thinking about it after the Cosby disaster.

A morals clause (sometimes known as a morality clause) contractually limits the behavior of individuals, usually public figures, to avoid harming others who are parties to the contracts.

Here’s a 1921 Universal Studios morals clause:

The actor (actress) agrees to conduct himself (herself) with due regard to public conventions and morals and agrees that he (she) will not do or commit anything tending to degrade him (her) in society or bring him (her) into public hatred, contempt, scorn or ridicule, or tending to shock, insult or offend the community or outrage public morals or decency, or tending to the prejudice of the Universal Film Manufacturing Company or the motion picture industry. In the event that the actor (actress) violates any term or provision of this paragraph, then the Universal Film Manufacturing Company has the right to cancel and annul this contract by giving five (5) days’ notice to the actor (actress) of its intention to do so.

Here’s a morals clause from a 1922 contract between the New York Yankees and Babe Ruth:

It is understood and agreed . . . that the player shall at all times during the term of this contract and throughout the years 1922, 1923 and 1924, and the years 1925 and 1926 if this contract is renewed for such years, refrain and abstain entirely from the use of intoxicating liquors and that he shall not during the training and playing season in each year stay up later than 1 o’clock A.M. on any day without the permission and consent of the Club’s manager, and it is understood and agreed that if at any time during the period of this contract, whether in the playing season or not, the player shall indulge in intoxicating liquors or be guilty of any action or misbehavior which may render him unfit to perform the services to be performed by him hereunder, the Club may cancel and terminate this contract and retain as the property of the Club, any sums of money withheld from the player’s salary as above provided.

Here’s a more modern morals clause from an endorsement contract for an athlete:

If at any time, in the opinion of Sponsor, Athlete becomes the subject of public disrepute, contempt, or scandal that affects Athlete’s image or goodwill, then Company may, upon written notice to Athlete, immediately suspend or terminate this Endorsement Agreement and Athlete’s services hereunder, in addition to any other rights and remedies that Sponsor may have hereunder or at law or in equity.

Half of Net Proceeds New Standard for Trad Pub EBook Royalties

9 July 2015

Author John Ellsworth received an email from The Authors Guild which he posted on his blog, forwarding a link to PG:

From Authors’ Guild 7/9/15:

We announced our Fair Contract Initiative earlier this summer. Now our first detailed analysis tackles today’s inadequate e-book royalties. At the heart of our concern with the unfair industry-standard e-book royalty rate is its failure to treat authors as full partners in the publishing enterprise. This will be a resounding theme in our initiative; it’s what’s wrong with many of the one-sided “standard” clauses we’ll be examining in future installments.

Traditionally, the author-publisher partnership was an equal one. Authors earned around 50% of their books’ profits. That equal split is reflected in the traditional hardcover royalty of 15% of list (cover price, that is, not the much lower wholesale price), and in the 50-50 split of publishers’ earnings from selling paperback, book club, or reprint rights. Authors generally received an even larger share than the publisher for non-print rights (such as stage and screen rights) and foreign rights.

But today’s standard contracts give authors just 25% of the publisher’s “net receipts” (more or less what the publisher collects from a book sale) for e-book royalties. That doesn’t look like a partnership to us.

We maintain that a 50-50 split in e-book profits is fair because the traditional author-publisher relationship is essentially a joint venture. The author writes the book, and by any fair measure the author’s efforts represent most of the labor invested and most of the resulting value. The publisher, like a venture capitalist, invests in the author’s work by paying an advance so the author can make ends meet while the book gets finished. Generally, the publisher also provides editing, marketing, packaging, and distribution services. In return for fronting the financial risk and providing these services, the publisher gets to share in the book’s profits. Not a bad deal. This worked well enough throughout much of the twentieth century: publishers prospered and authors had a decent shot at earning a living.

How the e-book rate evolved

From the mid-1990s, when e-book provisions regularly began appearing in contracts, until around 2004, e-royalties varied wildly. Many of the e-rates at major publishing houses were shockingly low—less than 10% of net receipts—and some were at 50%. Some standard contracts left them open to negotiation. As the years passed, and especially between 2000 and 2004, many publishers paid authors 50% of their net receipts from e-book sales, in keeping with the idea that authors and publishers were equal partners in the book business.

In 2004, we saw a hint of things to come. Random House, which had previously paid 50% of its revenues for e-book sales, anticipated the coming boom in e-book sales and cut its e-rates significantly. Other publishers followed, and gradually e-royalties began to coalesce around 25%. By 2010 it was clear that publishers had successfully tipped the scales on the longstanding partnership between author and publisher to achieve a 75-25 balance in their favor.

The lowball e-royalty was inequitable, but initially it didn’t have much effect on authors’ bottom lines. As late as 2009, e-books accounted for a paltry 3–5% of book sales. Authors and agents ought to have pushed back, but with e-book sales so low it didn’t make much sense to risk the chance of any individual book deal falling apart over e-royalties. We called the 25% rate a “low-water mark.” We said, “Once the digital market gets large enough, authors with strong sales records won’t put up with this: they’ll go where they’ll once again be paid as full partners in the exploitation of their creative work.”

E-books now represent 25–30% of all adult trade book sales, but for the vast majority of authors the rate remains unchanged. If anything, publishers have dug in their heels. Why? There’s a contractual roadblock, for one: major book publishers have agreed to include “most favored nation” clauses in thousands of existing contracts. These clauses require automatic adjustment or renegotiation of e-book royalties if the publisher changes its standard royalty rate, giving publishers a strong incentive to maintain the status quo. And the increasing consolidation of the book industry has drastically reduced competition among publishers, allowing them more than ever to hand authors “take it or leave it” deals in the expectation that the author won’t find a better offer.

The elephant in the room

And then there’s the elephant in the room: Amazon, which has used its e-book dominance to demand steep discounts from publishers and drive down the price of frontlist e-books, even selling them at a loss. As a result, there’s simply not as much e-book revenue to split as there was in 2011when we reported on the e-book royalty math. At that time, publishers made a killing on frontlist e-book sales as compared to frontlist hardcover sales—at the author’s expense—because, as compared to today, the price of e-books was relatively high.

When we analyzed e-royalties for three books in the 2011 post, “E-Book Royalty Math: The House Always Wins,” we found that every time an e-book was sold in place of a hardcover, the author’s take decreased substantially, while the publisher’s take increased.

Since 2011, we have found that publishers’ e-gains have diminished. But the author’s share has fallen even farther. Amazon has squeezed the publishers, to be sure. The publishers have helped recoup their losses by passing them on to their authors.

These were our calculations for several books in 2011. The trend was obvious. Compared with hardcovers, each e-book sold brought big gains to the publisher and sizable losses to the author when the author’s royalties are compared to the publisher’s gross profit (income per copy minus expenses per copy), calculated using industry-standard contract terms:

Author’s Royalty vs. Publisher’s Profit, 2011

The Help, by Kathryn Stockett

Author’s Standard Royalty: $3.75 hardcover; $2.28 e-book.

Author’s E-Loss = -39%

Publisher’s Margin: $4.75 hardcover; $6.32 e-book.

Publisher’s E-Gain = +33%

Hell’s Corner, by David Baldacci

Author’s Standard Royalty: $4.20 hardcover; $2.63 e-book.

Author’s E-Loss = -37%

Publisher’s Margin: $5.80 hardcover; $7.37 e-book.

Publisher’s E-Gain = +27%

Unbroken, by Laura Hillenbrand

Author’s Standard Royalty: $4.05 hardcover; $3.38 e-book.

Author’s E-Loss = -17%

Publisher’s Margin: $5.45 hardcover; $9.62 e-book.

Publisher’s E-Gain = +77%

What’s happening now? We ran the numbers again using the following recent bestsellers. Because of lower e-book prices, the publishers don’t do as well as they used to, though they still come out ahead when consumers choose e-books over hardcovers. But authors fare worse than ever:

Author’s Royalty vs. Publisher’s Profit, 2015

All the Light We Cannot See, by Anthony Doer

Author’s Standard Royalty: $4.04 hardcover; $2.09 e-book.

Author’s E-Loss= -48%

Publisher’s Margin: $5.44 hardcover; $5.80 e-book.

Publisher’s E-Gain: +7%

Being Mortal, by Atul Gawande

Author’s Standard Royalty: $3.90 hardcover; $1.92 e-book.

Author’s E-Loss= -51%

Publisher’s Margin: $5.10 hardcover; $5.27 e-book.

Publisher’s E-Gain: +3.5%

A Spool of Blue Thread, by Anne Tyler

Author’s Standard Royalty: $3.89; $1.92 e-book.

Author’s E-Loss: -51%

Publisher’s Margin: $5.09 hardcover; $5.27 e-book.

Publisher’s E-Gain: +3.5%[1]

Exceptions to the rule

It’s time for a change. If the publishers won’t correct this imbalance on their own, it will take a critical mass of authors and agents willing to fight for a fair 50% e-book royalty. We hope that established authors and, particularly, bestselling authors will start to push back and stand up to publishers on the royalty rate—on behalf of all authors, as well as themselves.

There have been cracks in some publishers’ façades. Some bestselling authors have managed to obtain a 50% e-book split, though they’re asked to sign non-disclosure agreements to keep these terms secret. We’ve also heard of authors with strong sales histories negotiating 50-50 royalty splits in exchange for foregoing an advance or getting a lower advance; or where the 50% rate kicks in only after a certain threshold level of sales. For instance, a major romance publishing house has offered 50% royalties, but only after the first 10,000 electronic copies—a high bar to clear in the current digital climate. But overall, publishers’ apparent inflexibility on their standard e-book royalty demonstrates their unwillingness to change it.

We know and respect the fact that publishers—especially in this era of media consolidation—need to meet their bottom lines. But if professional authors are going to continue to produce the sort of work publishing houses are willing to stake their reputations on, those authors need a fair share of the profits from their art and labor. In a time when electronic books provide an increasing share of revenues at significantly lower production and distribution costs, publishers’ e-book royalty practices need to change.

[1] In calculating these numbers and percentages for hardcover editions, we made the following assumptions: (1) the publisher sells at an average 50% discount to the wholesaler or retailer, (2) the royalty rate is 15% of list price (as it is for most hardcover books, after 10,000 units are sold), (3) the average marginal cost to manufacture the book and get it to the store is $3, and (4) the return rate is 25% (a handy number—if one of four books produced is returned, then the $3 marginal cost of producing the book is spread over three other books, giving us a return cost of $1 per book). We also rounded up retail list price a few pennies to give us easy figures to work with.

Likewise, in calculating these numbers and percentages for the 2015 set of e-books, we are assuming that under the agency model—which is reportedly the new standard in the Big Five’s agreements with Amazon—the online bookseller pays 70% of the retail list price of the e-book to the publisher. The bookseller, acting as the publisher’s agent, sells the e-book at the price established by the publisher. The unit costs to the publisher are simply the author’s royalty and the encryption and transmission fees, for which we deduct a generous 50 cents per unit.

Link to the rest at John Ellsworth and here’s a link to the Authors Guild website

Here’s a link to John Ellsworth’s books

Gravity Lawsuit Update

20 June 2015

From author Tess Gerritsen:

For a second time, the court has concluded I have not stated a viable claim for breach of contract against Warner Bros. or New Line. My 1999 contract with New Line Productions guaranteed me “based upon” credit, a production bonus, and back-end profits if a motion picture is ever made based on my novel Gravity, which is about a female astronaut trapped aboard the International Space Station after the rest of her crew is killed.  Warner Bros. acquired New Line in 2008 and owns and controls its assets, including the film rights to my novel Gravity. Despite our arguments that the two companies are inextricably bound together, the court ruled that Warner Bros. is not liable for New Line’s contractual obligations to me.

Nor can I sue for copyright infringement, as my Gravity film rights are owned by New Line. The only entity with the legal standing to sue for copyright infringement is New Line – and they will certainly not sue their parent company, Warner Bros.

This ruling allows me no possibility of remedy.  Even if the Warner Bros.’s film had copied my story word for word, there would be nothing I could do about it.

. . . .

The ruling was made without affording my attorneys any opportunity for oral argument. We were never given an opportunity for discovery.  We have been stopped at the courthouse door, unable to present the evidence we’ve amassed about the direct development links between my novel Gravity and Cuaron’s filmGravity.

The court has again granted me the opportunity to file an amended complaint, for which I am grateful. I am not by nature a crusader, but the consequences of this ruling could be devastating to all writers working in any media, including film, television, and publishing.

As one entertainment attorney (unconnected with my lawsuit) observed:

What is troubling about this case is that Gerritsen … attempted to protect herself through not only a standard assignment provision, but also required that New Line execute and deliver a Continuing Guaranty in which it guaranteed the “full and faithful performance” by Katja of all of Katja’s obligations under the Contract.Despite these precautions, “by virtue of a written agreement dated January 1, 2010, all intellectual property acquired by New Line at any time (in perpetuity) is deemed to be automatically transferred to and owned by WB. WB paid no consideration to New Line for entering into this agreement, nor is WB obligated to pay any consideration in the future when intellectual property rights are acquired by New Line and automatically assigned to WB. The express purpose of this agreement “is solely to vest in WB the benefits of specific rights-related provisions of Content Agreements” and per the agreement, “WB assumes no obligations under such . . . Agreements.”

With Sony, Dream Works Animation, Lions Gate, and MGM just a few of the possible players currently looking to acquire or be acquired, the ‘gravity’ of this situation should not be overlooked or downplayed.

Link to the rest at Tess Gerritsen

Here’s a link to Tess Gerritsen’s books

 

 

The Recent Tintin Ruling Offers a Valuable Reminder that Creators Need to Understand the Contracts They Sign

18 June 2015

From Ink, Bits & Pixels:

How well do you know the contracts you’ve sign?

In the case of the Belgian cartoonist Herge (or rather his estate), the answer is not very well.

The Comics Reporter and Artnet reported last week that the Herge estate has lost an important copyright lawsuit over Tintin, the famous Belgian cartoon character. The estate had sued a Netherlands-based Tintin fan club in 2012 over its use of the original copyrighted images in newsletters sent out to club members. The estate sued the club in a Belgian court, and after three years of legal wrangling the judge ruled in favor of the club.

And here’s where things get interesting.

The fan club won the case not because of fair use (as I would expect) or because the estate didn’t own the copyright (it still did). The estate lost this case after lawyers working for the fan club found and submitted an old contract which showed that Herge had assigned the publishing rights to his publisher in 1942. The court has ruled that 73-year-old contract was still valid, casting a legal shadow on all rights contracts for Tintin.

. . . .

Between the book rights, movie and tv rights, and most importantly the merchandising rights, the Tintin decision just upset contracts worth millions of dollars a year – no joke.

Link to the rest at Ink, Bits & Pixels and thanks to Michael for the tip.

PG says you should think long and hard before you commence litigation. In the nature of lawsuits, any relevant contracts are examined much, much more carefully after a suit is filed than they likely were before they were signed.

In PG’s litigating days, the local Legal Aid office asked him to represent an indigent client who was being sued by a large bank in connection with the repossession of the client’s auto by the bank.

Essentially, the bank loaned too much money on the auto and, following repossession, couldn’t recoup the full amount of the loan balance by selling the vehicle. They sued PG’s client for the deficiency.

PG told the bank’s attorney that the man had no money (you had to be indigent to qualify for Legal Aid assistance) and, even after the bank succeeded in the lawsuit (an almost certain thing), there wasn’t property or income available to pay any meaningful portion of the amount owed.

The bank’s attorney insisted on a trial because PG’s client had signed a contract and contracts were sacrosanct, dammit.

During his trial preparation, PG discovered the bank had made a basic error in drafting its form auto loan documents. PG had no obligation to disclose his discovery to the other side and he decided it would be interesting to surprise the bank’s attorney with this news during the trial.

The bank’s big attorney brought two little attorneys with him to court and PG brought his briefcase (in later times, he would bring his computer, but this is an old story).

The bank presented its slam-dunk case and PG pointed out that the document the bank had required his client to sign referenced a specific statute number as its basis for repossession. That statute number referred to nothing. There was no statute with that number. The bank couldn’t enforce a non-existent statute against PG’s client.

The bank’s lawyer said that the bank clearly meant to reference another statute number that did exist. The little attorneys frantically paged through stacks of papers.

PG responded that the bank wanted to strictly hold his client to the detailed provisions in the loan documents and, in fairness, PG thought the bank ought to be held to the specific language it had included in documents PG’s client had signed. Contracts were sacrosanct, dammit.

Darned if the judge didn’t rule in favor of PG’s client.

The bank’s lawyer was very upset and said the bank would appeal. PG pointed out that, since this was a standard bank form, the bank had probably used the same document for thousands of auto loans. (It was a very big bank.)

An appeal would be a higher profile affair than a trial in a small courtroom with no one other than the parties and their attorneys in attendance. Did the bank want additional publicity about its defective documents and their imaginary statute?

Shortly thereafter, the bank dismissed its suit and released PG’s client from any claims.

So, there’s one war story about unanticipated consequences that can arise during a lawsuit.

 

 

A Digital Picket Line: The Authors Guild Would Like Your Attention

11 June 2015

From Thought Catalog:

‘Authors Are More Vulnerable To Exploitation Than Ever’

 London-based publisher Michael Bhaskar has called digitally empowered readers “the power brokers who matter most” in publishing today.

While that kind of commentary refers to the industry’s efforts to strike a more direct-to-consumer stance with a curatorial audience, there are other ways in which readers soon may begin to broker power.

A readership drawing closer to its authors might begin to care more about those people than they have in the past. It’s not that readers didn’t like their authors, it’s just that in previous decades, there was comparatively little contact. Readers knew little if anything about the relationships between their favorite writers and the great publishing houses that proudly produced their books.

The digital dynamic has changed that. And the Authors Guild is ready to take its case for publishing contract reform for its writers directly to those readers.

. . . .

On Friday (12th June), the Guild plans to post a new article on its revamped Web site explaining more about its plans to address, one issue after the next, the standardized contract points with which its leadership maintains that publishers do authors many disservices.

We want to do just that. We want to raise these issues in a very public way so there’s an open dialogue on them.

. . . .

In an opinion piece last month at The Bookseller in London, the literary agent who uses the pen name “Agent Orange” (because he or she fears that being known could cause repercussions for author-clients) wrote:

The publishing industry exists to connect the creative talents of authors to a market. The Internet was supposed to streamline the business, get rid of the middle man and put more money in authors’ pockets. That was always a dangerously simplistic point of view. What we couldn’t have predicted is that it would create a world in which authors are more vulnerable to exploitation than ever. There’s a really strong case for authors to come out on strike and remind everyone in this business exactly where the value in it resides.

It won’t happen, of course. But it should.

In Agent Orange’s UK market, the typical income for a professional author in 2013 has been reported to be only some £11,000 in 2013, roughly $17,000, a plunge of 40 percent since 2005. That news is tremendously controversial in London, the Society of Authors having issued a damning statement to remind publishers that “authors are the one person 100-percent necessary” to the world of books.

. . . .

If anything, however, it’s hard to hold the author corps, as a whole, completely blameless in historical terms. To many of us today, it’s baffling that some of our greatest minds and thinkers — cultural giants in many cases — would ever have accepted such absurdities as the industry’s infamously unreadable royalty statements. No one you ask in the industry even tries to defend those things: much noisy effort has gone into making royalty statements more understandable, even now without complete success in some quarters. A bit of a scramble has occurred in efforts to give authors online dashboards so they can monitor and track sales. In the past, authors had no such information about their own books.

When I ask Rasenberger how such sharp minds as our most celebrated authors could have tolerated whole careers of what the Guild says are unfair and sometimes illogical contract traditions, she says that much of the holdover standards come from a time when authors were better cared for and more aggressively supported by their publishers.

“There are some very famous authors who have signed contracts you wouldn’t believe,” she says. “There was a real sense of partnering between authors and their publishers, authors and their editors, who worked closely with those authors. Authors felt they were being taken care of, they trusted them. As long as those people stayed in place, yeah, their editors looked out for them and could take care of them.”

. . . .

Rasenberger calls the Fair Contracts Initiative, “a shame-on-you comment on publishing” because, she says, the contract points the Guild sees as most egregious are the ones that harm the most vulnerable authors the most: un-agented authors. While she doesn’t have figures at hand as we speak, she tells me that she was surprised when she began her executive direction of the Guild to learn how many of its members don’t have agents.

Link to the rest at Thought Catalog and thanks to Paul for the tip.

PG can’t see anything wrong with the Authors Guild trying to spread the word among readers about terrible publishing contract provisions. However, even a contract geek like PG doubts whether this topic will be of interest to anyone outside the traditional publishing world.

A far more effective response to unfair traditional publishing contracts is one that’s been underway for a few years – self-publish and don’t worry about what dinosaur publishing would like you to sign. Don’t worry about whether your agent is one of those who really fight for her/his client or just wants to get the contract signed and the advance delivered as soon as possible.

Amazon is not a perfect company, but the fundamental proposition it offers to authors is a continuing agreement between two willing parties. If either Amazon or the author decides the agreement has stopped working for them, one or both can take their bat and ball and go home. Authors can fire Amazon as their distributor for any reason or no reason at any time.

Authors Guild Announces Fair Contract Initiative

29 May 2015

From The Authors Guild:

Times have changed in the world of publishing, but the “standard” book contract has not kept up. It’s filled with terms, conditions, and language that would be recognizable to authors of a century ago, remnant of a bygone era when e-books, print-on-demand, deep pricing discounts, and online booksellers weren’t even a gleam in the eye. At the same time, new overreaching clauses have been added to insulate the publishers from any potential loss, placing all risk on the author. Yet today’s authors are often asked to sign these standard agreements “no questions asked,” and if they question author-unfriendly terms, they are often told the clauses are “not negotiable.”

In April 2015, the Authors Guild conducted its first major member survey since 2009. Though the complete results are still being compiled, our preliminary findings suggest that fulltime and part-time U.S. authors have experienced a significant decrease in writing income over the last five years. Median writing-related income decreased 24% in that time frame—to only $8,000, with full-time authors’ median income down 30%, from $25,000 to $17,500. Authors who have been writing between 25 and 40 years have seen the greatest drop in income, from a median of $28,750 to just $9,500.  While there are many reasons for this decline in income, unfair terms in publishing agreements don’t help. Notably, during the same period, publishers’ revenue has seen steady annual growth. There’s something very wrong about that disparity.

. . . .

The traditional publishing enterprise was conceived as a joint venture, with authors and publishers working as partners to produce and distribute books. In the pre-digital climate, this meant that publishers split their profits more or less equally with authors. Publishers earned an equal split of profits as compensation for their efforts in shepherding a book through the publishing process, from creation to distribution to sub-licensing. But that is far from today’s reality.

Many publishers are doing less than ever for their authors. In many cases the companies provide less editing, little to no marketing, and no promotional budget. Instead, they ask authors to do their own marketing by engaging in time-consuming social media campaigns. Rather than compensate authors for this additional work, publishers usually insist on keeping a whopping 75% of income from e-book sales. That’s just one of many unacceptable policies.

. . . .

Here are just some of the unfair terms in today’s standard book agreements:

  • In exchange for some money, you give the publisher all rights to your book for 35 years—or your lifetime plus 70 years (let’s just call it “forever”) if you or your heirs forget to terminate after those first 35.
  • The publisher gets to reject your manuscript for any reason or no reason, and if that happens, you have to give back all the money you’ve received before you can publish the book with somebody else.
  • The publisher can publish your book when the company gets around to it, which may take as long as two years from the time it accepts your manuscript—or even longer. You have no control, and you may have to wait for the last part of your “advance” until the book finally appears in print.
  • If you are even one day late delivering the work (time is of the essence, it seems, only when it comes to the author), the publisher can opt to terminate the agreement and ask for the advance back.
  • You can’t publish another book under your name or even a pseudonym anywhere in the world until this one is published—even if the publisher has put it off.
  • You have to offer the publisher the rights to your next book, but the publisher can wait to decide whether to offer you a deal on it until two months after this one comes out.
  • You have no say in what the cover, jacket flap, and ad copy will look like.
  • If the publisher does anything you don’t happen to like, such as assign you an incompetent editor, fail to exploit subsidiary and foreign rights, print too few copies to satisfy customer demand, forget to register your copyright, consistently forget to pay you on time, or go bankrupt, you have no real recourse.

Like authors, publishers have had to adapt to the new realities of the digital age; one unfortunate way they have adapted is by squeezing the author.

. . . .

If authors can’t make a living producing works of quality, there will be very, very few people who can afford to write books.

Link to the rest at The Authors Guild and thanks to Michael for the tip. Here’s a link to the announcement of the initiative.

PG would have added a few items to the list of unfair contract terms, but this isn’t a bad start.

The progress or lack of progress on this initiative will be one way of demonstrating whether The Authors Guild is a relevant organization for 21st century authors or not.

Will Author Solutions Case Go Class Action?

19 May 2015

From Publishers Weekly:

Federal judge Denise Cote could soon decide whether the ongoing case against self-publishing service provider Author Solutions will go forward as a class action. In the latest round of briefs, attorneys for the plaintiff authors argue that a common question sits at the core of the case, and merits action class status: “Did [Author Solutions] engage in a fraudulent scheme to sell authors worthless marketing services?” But in a reply motion filed last week, Author Solutions attorneys claim the case is without merit, and falls short of the requirements for class certification.

Notably, the latest round of briefs details an evolving case, including a “shifting roster” of author plaintiffs, and a narrowing of the case from the the initial complaint. First filed in spring of 2013, the initial suit alleged that Author Solutions misrepresents itself as an independent publisher, luring authors in, and then profiting from deceptive and fraudulent practices, including “delaying publication, publishing manuscripts with errors to generate fees, failing to pay royalties, and up-selling ‘worthless services’ to authors.”

. . . .

 At the heart of the case is an alleged “deceptive” scheme to lure authors in with promises of sales and marketing exposure, when the “primary goal” is not to sell books, the plaintiffs argue, but to “sell services and books back to authors.” In filings, attorneys for the authors paint a picture of Author Solutions “consultants” with little or no publishing experience, selling “worthless” services to unsuspecting authors. “[Author Solutions], as part of a company-wide policy, hides from consumers that it is a telemarketing operation,” plaintiff attorneys argue, “with no stake in the quality or retail success of its authors’ books.”

Link to the rest at Publishers Weekly

Dead to Rights

15 May 2015

From author Roxanne St. Claire:

About a dozen years ago, I had a conversation with a friend, and she shared a secret about an online “e-ffair” she was having with an ex.  Her story sparked the idea for a book about women who are tempted to connect with ex-lovers over the internet, something that was just coming into the social conscious at that time.  Classmates.com had just launched, but Facebook was in Mark Z’s imagination, and tweeting was still something birds did.  Email had become our main source of communication, along with a little technology we turned into a verb, as in “Let’s IM tonight.” (Instant Message, the precursor to texting.)

Hit Reply poured out of me, full of characters drawn from real life and my imagination, written entirely  in the epistolary form – all “letters” – only in this case it was emails and instant messages.  At the time, I had sold my first few romantic suspense titles and was very (very) slowly building my name in that genre.  But “chick lit” was hot, pink covers were everywhere, and Bridget Jones’ Diary was still very much the in the mainstream.  My publisher had  launched an imprint that I thought would make a good home for a story about friendship, exes, and major life changes.  They loved the concept and offered a contract, giving me a release date almost two years in the future.

. . . .

By the time that distant date came about and Hit Reply was released, chick lit was waning, and pink covers were verboten at Barnes & Noble and Borders.  I hoped for the best, but the “all email and IM” format didn’t grab attention, and neither did one of the most ill-conceived covers I personally have ever seen.  (Because everyone puts their wired mouse in their back pocket, right?)

Whatever, the book tanked.

. . . .

Fast forward (not really fast) ten years.  Forty-five books for me, several publishers, more agents than I’m proud to admit, and a healthy, sustaining career that has moved firmly and completely into indie publishing.  Still, Hit Reply is my personal favorite of all my titles, a book that truly came from my soul, and is dear to me.  It’s long out of print, but the publisher has kept it in Print on Demand for $18 for a paperback and (brace yourself) $16 for the ebook.  No surprise, it has sold four copies in the past year.

In my  burning desire to see this book published, I signed a contract that includes this line in the rights reversion clause:  “The book will be considered still in print as long it is available for purchase in any format, including electronic.”  This contract was signed in 2003.  And now, I can never, ever, ever have the rights back to my dear little book, at least not while I’m young enough to do something with them.

. . . .

It’s MY work.  They’re MY words.  These are MY characters who came from MY imagination and live in MY heart.  But, the publisher has informed me that they “don’t wish to revert THEIR rights.”  They’ve offered to do a special pricing for a short time if I would agree to promote the book.

Link to the rest at Roxanne St. Claire and thanks to Kristen for the tip.

Here’s a link to Roxanne St. Claire’s books

Judge wants $10 million set aside for possible award in Fifty Shades lawsuit

28 April 2015

From the Fort Worth Star-Telegram:

A state district judge wants $10 million in cash or investments to be set aside for a potential award after a Tarrant County jury ruled earlier this year that an Arlington woman was cheated out of royalties from the blockbuster novel Fifty Shades of Grey.

. . . .

A Tarrant County jury in February ruled that Hayward defrauded Pedroza out of the financial windfall created by the erotic New York Times bestseller which also inspired a movie by the same name.

. . . .

Pedroza sued Hayward last year, contending that she conned her out of her rightful partnership interests in advances and royalties.

Pedroza and Hayward, who lived in Dural, a Sydney suburb, were partners in The Writer’s Coffee Shop, which started out as an online blog in 2009, along with Waxahachie resident Jennifer McGuire. Visitors to the fan-based website discussed books and wrote “fan fiction” stories.

McGuire did design work for the blog, Pedroza uploaded contributors’ writing, and Hayward worked with the authors, court records show. Later, Christa Beebe, another Arlington resident, joined and helped with marketing and distribution.

By 2010, Pedroza and Hayward had the Coffee House operating as a publishing house. And in 2011 it published Fifty Shades of Grey, a romance novel by E.L. James, a British author, as an e-book and print-on-demand full-length book.

The company published the sequels, Fifty Shades Darker and Fifty Shades Freed, in 2011 and 2012. The Fifty Shades of Grey trilogy became an online sensation, selling 250,000 copies through e-book and print-on-demand, with another 20,000 print copies.

In 2012, Random House made a deal with Hayward and James to publish the books. Pedroza received a one-time payment of $100,000 after the Random House contract was signed, but she was never told of the full terms of the transaction. Random House was not named in the lawsuit.

The lawsuit acknowledges that the two Texans — Pedroza and McGuire — and Hayward never signed a prepared partnership agreement. But in 2011, The Writer’s Coffee Shop filed a partnership income tax return, naming Pedroza as a general partner, it says.

Pedroza contended in her suit that Hayward in 2012 secretly converted the Coffee Shop into a company she alone owned. The jury determined that there was a partnership between the women. Beebe settled her claims in December in a confidential agreement.

Link to the rest at Fort Worth Star-Telegram and thanks to Suzan for the tip.

As a general proposition, if two or more people start and operate a business together, the presumption will be that they have created a partnership unless they have an agreement signed by everyone to the contrary. The presumption can be rebutted, but the individual(s) who don’t want a court to find that a partnership existed have the burden of proving the business was something other than a partnership, that a person was an employee, for example, and not a partner.

Absent evidence to the contrary, all persons who are partners are entitled to a share of partnership profits.

When there’s no partnership agreement, the way the business was run, who was paid how much, statements the parties made about the business, emails,  tax returns, etc., will be used to determine who is entitled to what percentage of partnership profits. The default presumption is that partners will divide partnership profits equally.

Partnership agreements can be very simple documents. However, without such an agreement, signed by everyone, resolving disputes over who gets the money can be very expensive.

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