From Publishers Weekly:

The Borders bankruptcy is one issue that the book industry may have wanted to put behind it. But although there were less than six months between the mid-February 2011 filing for chapter 11 bankruptcy protection to the liquidation of the remaining stores, the bankruptcy is far from over.

. . . .

Despite the closure of hundreds of stores one and a half years ago, it’s still not clear how much publishers will be paid on the dollar even with Manhattan District Court Judge Martin Glenn’s approval last October of the BGI Creditors’ Liquidating Trust’s request to claw back payments made during the 90-day period before bankruptcy papers were filed.

. . . .

Top 20 Largest Unsecured Publishing Creditors & Amount of Claim

1. Penguin Putnam $41,118,914
2. Hachette Book Group $36,879,656
3. Simon & Schuster $33,757,445
4. Random House $33,461,062
5. HarperCollins $25,793,451
6. Macmillan/MPS $11,434,306
7. John Wiley & Sons $11,191,435
8. Perseus Distribution Services $7,776,292
9. Source Interlink Companies $6,879,906
10. F&W Media $4,546,275
11. Houghton Mifflin Harcourt $4,400,756
12. Workman Publishing $4,003,126
13. Diamond Comic Distributors $3,906,550
14. McGraw-Hill $3,093,871
15. Pearson Education $2,784,766
16. Rosetta Stone $2,226,553
17. National Book Network $1,956,713
18. W.W. Norton & Company $1,940,826
19. Zondervan $1,886,752
20. Hay House $1,886,752

Link to the rest at Publishers Weekly and thanks to Abel for the tip.

So here’s a question PG hasn’t seen discussed in any of the Borders bankruptcy stories he’s read – What’s happened to authors’ royalties?

If Penguin Putnam was owed over $40 million at the time the bankruptcy was filed, presumably most of that sum was for paper books that Borders had purchased from Penguin. $4-6 million of that amount would have been paid to authors if Penguin had received received such payment.

So, did Penguin, et al, pay the royalties to authors or not? Were these royalties (paid or unpaid) reflected on royalty reports in any way?

Off the top of his head, PG doesn’t remember seeing any provision in a Big Publishing publishing agreement that addresses what happens to royalties if a bookstore files for bankruptcy.

If print royalties are calculated based on the list price of a book, are they due to an author regardless of whether the bookstore pays for the book or not so long as the book has been sold by the publisher and not returned by Borders?

A royalty provision based on net revenue received by the publisher as is typical for ebooks would seem to let publishers off the hook for those unpaid royalties.

Some contract provisions describing royalty reports call for a statement of the “sales” of a hardcover or paperback Work without expressly requiring that a publisher actually be paid for those sales. If Borders didn’t return any books, a publisher probably couldn’t handle royalties accruing from unpaid book bills under a reserve for return clause.

Does anyone know if any of the publishers listed as creditors of Borders communicated with authors regarding the status of royalties for paper books sold to Borders?

Interesting questions.

From author Tim Marquitz:

While I loathe to make my arguments public, the unwillingness of Damnation Books to act like reasonable adults has forced me to take this step, the next being legal action. I want everyone to know how Damnation Books treats authors who want to leave their house.

On April 9, 2012, I sent a certified/registered termination letter to Damnation Books (received by Damnation Books on April 14, 2012) requesting the release of all rights they held regarding my works: Armageddon Bound, Resurrection, At the Gates, Skulls, The Long Road, and the Temple of the Dead.

On May 11,2012, I received a certified letter in response to my request, summarily rejecting my request.

. . . .

In the specific case of Armageddon Bound (on a different contract than the rest of my works), this response is in
direction violation of the contract tenn listed below.

Either party may terminate this contract for any reason with ninety (90) days written notice, sent registered mail to the current address of the Publisher. Upon termination of this contract, all rights return to the author .

. . . .

Further still, on May 8, 2012 (received by Damnation Books per USPS Delivery Confinnation on May 11, 2012), I sent $200 as payment in full of the minimum, ear1y termination fees listed in the contracts for Resurrection, At the Gates, Skulls, and the Temple of the Dead: $50 for each.

Once a work has gone Into editing and forward and the Author wishes to terminate this contract prematurely, a penally shall be charged to the Author to cover costs of staff and artists for work already performed. This fee shall be at a minimum of $50.00 to a maximum of $1000.00 to be determined by the time spent on preparing the work for publication and money recovered from sales of the work.

Link to the rest at The Dark Fantastic and thanks to Bridget for the tip.

Passive Guy hasn’t reviewed any of the contracts involved here, so he can’t give any opinions about whether the quoted portions of the contract are or are not affected by any other portions of those contracts.

However, he has observed that something about the publishing business seems to attract controlling personalities. While PG has witnessed it at all levels of publishing, it seems to be more common with some small presses.

One of the owners or managers of the publisher decides he/she is in control and authors need to be taught a lesson about the power relationships. The dinkier the press and smaller the sales of the book, the more jerkish some publishers seem to be.

Once more, PG advises any author considering a contract with a publisher to check the publisher out before signing anything. He entered: ”damnation books warning” into Google and found several complaints by authors. PG’s not going to blame the victim here but, while some small presses are wonderful, others are horrors and authors need to investigate carefully.

A few days ago, PG blogged about a post by agent Rachelle Gardner about non-compete clauses in publishing contracts. PG hasn’t kept track of the maximum number of comments various posts have received, but that one was certainly among the leaders. Most comments were not complimentary to Ms. Gardner.

She has a follow-up blog post.

From Rachelle Gardner:

I’m a literary agent.

I advocate for authors.

That’s my job, it’s what I choose to do, and I enjoy doing it. Every day I’m grateful for my partnership with so many talented writers. I consider it my privilege to assist them in reaching their publishing goals. I work hard to understand their needs, priorities, and dreams so that I can serve them well.

Part of my job as a literary agent is also to have a deep understanding of publishers. The better I understand their goals and concerns, the better I can find the right authors for them, and negotiate contracts that are win-win for both author and publisher. The more I do that, the more both authors and publishers appreciate working with an agent, and have a positive publishing experience.

On Monday I wrote a post in which I attempted to explain the publishers’ concerns in this new age of hybrid authors who are both traditionally- and self-published.

But I messed up royally.

In my effort to illuminate the publisher’s perspective on things, I inadvertently came across as completely defending the publishers’ viewpoints, and somehow being on the side of “Big Pub” (as some commenters put it) rather than being an advocate for authors. That was my mistake. I badly miscommunicated, and I regret it because it led to so much misunderstanding.

. . . .

I am the author’s advocate, and I take that role seriously, as I know most agents do.

. . . .

Like most agents, I always work hard on the stickier contract clauses, such as non-competes and options (“first right of refusal”). My goal is to protect the author’s rights and get them a fair contract. Many comments on Monday’s post seemed to assume I was saying I would “just accept” publisher non-competes. I’d be an extremely poor author representative if I did that! I meant to convey that I understand the goals of a non-compete, and this understanding helps me to speak to publishers intelligently and work with them to come to a win-win solution.

Link to the rest at Rachelle Gardner and thanks to Dan for the tip.

PG gives Rachelle credit for recognizing a mistake and correcting it.

From agent Rachelle Gardner:

These days, I’m sensing that many authors are gung-ho to write and publish as much as possible. Now that the term “hybrid author” has been coined, referring to those who are both traditionally and self-published, everyone thinks they want or need to be one. As one author put it, “It seems like the time is now! It’s time to be prolific!”

I am not sure what makes people think “the time is now” as if we are in some kind of awesome bubble that is going to burst soon. We’re not.

We are in a long, slow transition period of our industry, in which people are experimenting with different ways of doing business. Some will work, some won’t. More importantly, different things will work for different people.

More does not always equal better. More books in the marketplace might mean more money in your pocket, but it also means less time available to pay attention to high quality writing, and less time available for giving each book the full weight of your marketing efforts.

If you are contracted with a traditional publisher, you may have restrictions on your ability to self-publish “on the side.” And this is not because publishers are overly possessive, or “dinosaurs,” or “just don’t get it.” It’s because they have an investment to protect, and it’s their responsibility to ensure nothing you do will interfere with the saleability of the brand they’re building (you).

. . . .

The publisher is working hard to position you in the market a certain way, and to maintain a level of quality for which they want you (and themselves) to be known. If you self-publish, they lose their ability to have input into the quality of your work, or the branding. This  can not only reflect negatively on them, it can create confusion in the reader (who sees different kinds of books with your name on them) which can lead to lower sales.

. . . .

Publishers spend considerable money on several rounds of editing, copyediting, and typesetting. They also have expensive, experienced designers for your cover as well as the interior design of the book. It’s risky for them when an author self-publishes and leaves the publisher without the ability to ensure a certain level of quality.

. . . .

When a publisher contracts with you, they’re not only buying the rights to your books, they’re expecting you to devote the proper amount of time to the whole endeavor. This includes taking the time to write the best book you can, and it also means spending some time on the marketing of your book. Publishers are rightfully concerned that your efforts in self-publishing will take away from your ability to give your best to the books you’ve contracted with them.

. . . .

Publishers don’t want your promotional efforts on your self-published books to eclipse their promotions on your contracted books. If they allow you to self-publish, they may lose their right to set boundaries on what you’re allowed to do promotionally, and this can be disastrous.

. . . .

All of this adds up to competition, i.e. situations in which your self-pub books are competing with your traditional-pub books for the reader’s attention. That’s why the paragraph in the contract that covers this is called the non-compete clause. The publisher has a right to protect themselves from their contracted authors competing with the publisher, thereby potentially harming the publisher’s sales of your book(s).

Link to the rest at Rachelle Gardner and thanks to Mira for the tip.

For PG, this sounds like a first-grade teacher trying to make sure all the disorderly authors stay in their seats.

Many authors are “gung-ho to write and publish as much as possible” because they have this irrational desire to give up their day jobs and make a career as an author. Silly authors. Be quiet and do as you’re told.

PG has had discussions about non-compete clauses with a number of publishers during the course of helping authors with their publishing contracts. He has never heard a rational business basis for these clauses.

If you would like to have an interesting experience with a publisher, propose that the non-compete clause be reciprocal. The author won’t publish anything that will compete with the author’s book and neither will the publisher.

That way, the publisher can “devote the proper amount of time to the whole endeavor” and won’t be releasing any books that might compete with the author’s. After all, an author  is “rightfully concerned” that the publisher’s efforts in publishing other books will detract from its ability to give its best to the author’s books they’ve contracted to publish.

In the non-compete clause world, the publisher controls the market and, when the publisher releases your romance novel, it will be alone on the bookshelves. Amazon will list no other romances for sale.

If you release a self-pubbed romance at the same time, romance readers will become hopelessly confused. “I never buy more than one romance novel a year,” they’ll say. “Which Jane Jones book should I buy? This is very disturbing. I’m going to wrap myself in my blankie and buy nothing except Doritos until my confusion goes away.”

On a more serious note, signing a publishing contract with a standard non-compete clause can prevent you from ever writing in the same genre during the term of your publishing contract (the rest of your life plus 70 years).

Passive Guy first wrote about this a couple of years ago in How to Read a Book Contract – Non-Competition. He will provide a further warning that some publishers attempt to disguise their non-compete clauses by burying them back in the contract boilerplate that inexperienced authors and some agents don’t read.

From Yahoo News:

Harper Lee, who wrote the Pulitzer Prize-winning novel ”To Kill a Mockingbird,” filed a lawsuit Friday to re-secure the copyright to it.

. . . .

The lawsuit alleges the son-in-law [and defendant], Samuel Pinkus, failed to properly protect the copyright of the book after his father-in-law, Eugene Winick — who had represented Lee as a literary agent since the book was published in 1960 through the firm McIntosh and Otis — became ill a decade ago. The 87-year-old author alleges Pinkus took advantage of her declining hearing and eyesight seven years ago to get her to assign the book’s copyright to him and a company he controlled.

Link to the rest at Yahoo News and thanks to Danyelle and several others  for the tip.

This news item originally appeared in a comment to another post and PG responded as follows:

This situation illustrates an issue most authors don’t think about in an agency agreement. If the agent obtains a publishing contract, the agency agreement will often provide that the agent will receive a commission and be the author’s representative to that publisher for the life of the contract.

If the publishing agreement extends for the life of the copyright – the author’s life plus 70 years – the original agent is going to die long before the publishing agreement does. The agent may well sell the agency when he/she wants to retire.

Under most agency agreements, the author has no control over who replaces the original agent when that agent dies or retires.

One more reason to insist on split commission checks. Most agency agreements will provide that the agent receives the entire royalty check and thereafter will forward the 85% that belongs to the author to the author. A split-check provision in the agency agreement and each publishing agreement for which any agency commission will be paid means that the publisher will pay the author his/her 85% directly and pay the agent the 15% to which the agent is entitled directly.

Additionally, the author never assigns his/her copyright unless the assignment is part of an estate plan to take care of the copyright upon his/her death or disability. There may also be some tax-planning exceptions to the “never assign” rule.

PG wrote a post about a real-life mess that occurred after an agent died in How to Read a Book Contract – Somebody’s Gonna Die

From Dr. Kevin Smith, Duke University’s Scholarly Communications Officer, whose principal role is to teach and advise faculty, administrators and students about copyright, intellectual property licensing and scholarly publishing.:

It was a rather embarrassing moment.  I was in a meeting with other copyright specialists from academic libraries when I received the email telling me that my article with Taylor & Francis had been published.  Before I could stop myself, I expressed my surprise out loud, then had to explain to my colleagues that I had just had an article published in a library science journal published by Taylor & Francis, and that I was not expecting it.

. . . .

[D]ue to their archaic authors’ rights policies, this is not a publisher with whom I would have chosen to do business or encouraged authors who consulted me to use.

. . . .

The story began when I gave a talk at the 2012 conference of NASIG, the North American Serials Interest Group.

. . . .

I signed an agreement, as a “Vision” speaker (kind of ironic), allowing my talk to be mechanically recorded and also agreeing that a human “recorder” would write up what I said for an article for The Serials Librarian.  In due time, that reporter sent me a copy of the article and I agreed that it was a good representation of the talk I had given, ready to be published.  Not until the article was published did I realize that The Serials Librarian was a Taylor & Francis journal, and to the best of my recollection I never signed a copyright transfer agreement with T & F.

. . . .

So the first lesson is obvious — be careful what you sign.  More careful than I was.  I should have determined who the publisher was and made an intentional decision before I signed that agreement about what would be done with the article that resulted from my talk.  It is quite likely that I would have agreed even after that small bit of research, since the article was actually written by someone else (as, I suppose, a derivative work from my original talk), and I had no further plans to use it in any way.  What I often tell authors is to consider the agreement they are presented with in light of their own plans and hopes for their work, and transfer or license rights in a way consistent with those plans.  If the agreements allow one to meet those goals, well and good; if they do not, negotiation is called for.  The decision should rest with the author.  In the experience I had, I did not make that decision in an informed way, and that, rather than the ultimate result, was the problem.

. . . .

Joint authorship arises, of course, whenever two or more people each contribute original expression with the intent of creating a unified work.  In the case of my talk, my original expression was fixed in the PowerPoint slides and notes that I had made.  Recorder Susan Davis then created a derivative work from that original, adding a great deal of her own original expression.  Once I had indicated my assent to that process, she and I became joint authors.  Like all joint authors, we each hold an equal and undivided share in the copyright, and are each entitled to exercise the exclusive rights granted by copyright, subject only to a duty to account to each other for any profits (which I don’t expect, in this case).  Because of this situation, if Susan signed a copyright transfer agreement for publication of the article, she was perfectly entitled to do so.  And because of the potential that fact has to create misunderstandings and surprises for other joint authors, it illustrates how important it is in general that joint authors agree in advance, whenever possible, about how their shared work will be used, licensed and made public.

Link to the rest at Scholarly Communications@Duke and thanks to Matthew for the tip.

Passive Guy is not an expert on scholarly publishing, but it is his understanding that typically, academic journals require that the author transfer copyright to the publisher, a practice that is seldom found in other publishing areas.

In PG’s obstreperously humble opinion, this is a barbaric practice and one more reason why traditional scholarly publications should be replaced by open-source publications as soon as possible.

Among other things, unless the author is careful in his/her negotiations, the copyright transfer may mean the publisher can modify the author’s writings without obtaining approval from the author, that the publisher need not acknowledge that the author is the author in its publication and/or the author cannot post the work on his/her own website or reprint it for distribution to colleagues or students.

From Shelf Awareness:

Skyhorse Publishing and Start Publishing have partnered to acquire Underland Press, which specializes in science fiction, fantasy and horror, in a purchase that is part of the joint effort to “deepen their relationship to the genre community.”

Link to the rest at Shelf Awareness

We’ve heard about Skyhorse and Start recently with their Nightshade acquisition. This is another reminder for authors signing with publishers large or small that a publishing contract is typically assignable, particularly if the publisher is sold.

The people who persuaded you to sign the contract may not be the same people who are using the contract to determine what rights they own in your book. The acquirers will look at what the contract actually says, not what the former publisher told authors it said or meant.

From Michael Stackpole:

As has been bruited about all over the ‘Net, Skyhorse heavily amended its letter of agreement to authors earlier this week. I’ve finally been sent a copy, got a chance to review it, and have decided I’ll sign.

The agreement isn’t perfect. I still have my royalties cut, but not nearly as drastically as before. The ebooks royalty clause actually includes an escalator—as more books sell, my percentage goes up—which is a good precedent to have set in that realm. Other clauses have been modified or added that make the sort of nightmare scenarios I outlined in last week’s posts unlikely. The audio book and second serial rights clause was changed to include a sunset provision and the pass-through wording I wanted.

While I do have to make some concessions to allow the deal to go through, I’m okay with that. It saves me the time of dealing with a bankruptcy court.

Link to the rest at Stormwolf and thanks to Joshua for the tip.

From Work Made for Hire:

Sometimes you don’t need a long post about how to look deep inside yourself and find your inner negotiation ninja.

Sometimes you just need to know what to do to get what you want.

. . . .

Too many people think of negotiations purely based on the last move that was made. They spend all of their time negotiating by reacting to what the other guy just did.

That’s not negotiation, though, that’s reaction.

Take the time to figure out what you want and why you want it before you start negotiating. That way, as offers come in you can compare them to how they bring you closer to what you want, instead of trying to do the mental gymnastics to figure out if the deal you were offered is any good.

. . . .

If only one thing in a negotiation is important to you, money, time, prestige, you will miss out on equally thrilling opportunities that don’t fit into your narrow focus.

Listen, if you aren’t negotiating over the release of hostages, there are many many many ways in which a deal can be made.

But if you only focus on one thing, you won’t be able to see those options.

. . . .

If you can only do one thing to improve your negotiations, do this: shut up and listen.

Cut the amount of time you spend talking in half and listen to what the other side is saying.

When they begin to object, instead of rushing to provide more information, listen to where their objection is coming from. Don’t assume you already understand. Listen to what they say. If the objection doesn’t make sense to you, don’t respond by telling them why they’re wrong, ask questions. Then listen some more.

Link to the rest at Work Made for Hire

PG will second the importance of thinking carefully about what you really want out of the business relationship and contract before you start negotiating. You definitely want to figure out what your minimum requirements are. You may also want to think about what your optimum contract terms would be.

Otherwise, particularly if you are starting with someone else’s contract, in the back and forth over particular contract language, you may get pushed into something that’s not going to work and not realize it until after you sign the contract. You may also discover that you’ve overlooked something that was not in the contract that should have been there.

From author Amy Chavez on IndieReader:

I’d walked away from two book contracts because they were not in my best interest, financially, to sign. I’m a professional writer and I have to make a living. If I’m not going to make any money publishing a book, I’m not interested in a book contract. My time is better spent on other writing projects that pay. And believe me, writing a book takes a lot of time away from other money-making projects. Furthermore, I was happy with the sales of my self-published e-book.

But still in the back of my mind was that I should give a publisher a try. Many of my published writer friends scoffed at me saying I had to expect to “give away” my first book in order to break into publishing. And a publisher can bring you prestige, get your book into bookstores and get the big reviews from Publisher’s Weekly and Library Journal.

So when a small press with over 40 years of publishing experience was interested in my latest manuscript, I decided it was time to see what a publisher could do for me.

. . . .

I’ve summed up my experience in the following 10 points, which I’ve put under the heading:

When to suspect you’re getting taken for a ride by your publisher

. . . .

1. They won’t negotiate any points in your contract. (All book contracts are designed to be advantageous to the publisher and disadvantageous to the author. It’s up to you to negotiate. I tried to negotiate the major points, they refused to budge. I signed anyway).

. . . .

3. They don’t answer emails asking basic questions you need to know so you can plan a marketing strategy (ie: Will the book be available in bookstores? Overseas? In e-book form?).

. . . .

8. They shun Amazon sales because they don’t make as much money as they do selling the book on their own website, where they are charging US$11.00 for domestic shipping on a 220-page, 10.4 oz book.

. . . .

Next time, I’ll self-publish.

Link to the rest at IndieReader