From Kristine Kathryn Rusch:
Recently, I got e-mail from another career writer, talking about a rights grab from a traditional publisher. I saw the document in question; it’s egregious. I do not have permission to talk about this particular document nor would I, since it’s proprietary, but it’s the kind of document I’ve seen at least six times in the last two years.
These documents are addendums to publishing contracts. Since the rise of e-books, publishers have issued the addendums frequently and often en masse.
. . . .
Once signed, addendums to contracts become part of the contract. All well-written addendums have language that explains the addendum’s relationship to the contract. For example, the addendum might say something like “nothing in this addendum will supersede the terms previously granted in the contract.”
Or, as I’m seeing in all these publishing addendums, they’ll have clauses that say things like “if there is a conflict between a term that is specifically defined in this addendum and a definition of the same term is in the contract, then the definition specified in the addendum governs.”
In other words, the addendum will not only become part of the contract; it will make parts of the contract null and void.
. . . .
But the addendums I’m writing about today are rights grabs. The publisher wants more than the writer has given before, and wants a larger percentage of that right. These addendums change the terms of the existing contract to benefit the publisher and (accidentally) to benefit the agent. The writer loses money and licenses even more of her copyright than she ever has before.
Contracts are the product of a negotiation. Addendums, as part of a contract, are also subject to negotiation.
I know many writers who believe that when they receive an addendum to their contract, they must sign the addendum because it is already a part of their contract. That is wrong. Do not sign until you understand the document before you, what that document changes in the contract, and why the document even exists.
. . . .
From the perspective of a publishing company, these addendums make sense. Here’s what the big traditional publishers are facing.
They have hundreds of thousands of active contracts, all with different terms. Most of those terms are standard and can fit into a chart or computer program of some kind. It goes like this: If the contract says X, then the publisher must use this calculation to pay the writer Y. It’s really a very simple, very old, system.
. . . .
Right now, publishers and others are involved in lawsuits trying to change the definition of the word “book”—not for a dictionary, but in the legal sense. If they succeed, “book” will be the content, not the format. And then all of those contracts signed in the mid-to-late 20th century will cover ebooks. Some of these lawsuits have already been adjudicated—finding against the publishers. But there’s a lot of money at stake, so expect litigation of this kind to continue.
Contracts written after ebooks became a possibility but before they became a force in the industry, generally defined ebook rights like all other subsidiary rights. Some of my earlier contracts gave me 50% of the rights to a flat-out ebook sale (splitting the profits with the publisher), with royalties being defined as a 50/50 split with the publisher. (In other words, if the publisher sold the book to ebook company EB, and EB paid a $10,000 advance, the publisher would get $5000, and I would get $5000. We would then split the royalties, which would, presumably, have been identical to book royalties.)
. . . .
Contracts devised after 2009 either paid the author 15% of gross or 25% of net (with net undefined). Most dumb writers believed the 25% was a better deal, and that became industry standard about two years ago.
. . . .
The role of agents has changed in this new world. Their business model is evolving of necessity. Once, writers needed the contacts and knowledge that an agent had, particularly in dealing with the dozens of New York publishers. Now there are only five major publishing houses, and a handful of small ones. Publishers do not hold auctions much any more, and they rarely bid against each other, even for a hot property.
Plus, with all the power on their side, most publishers won’t negotiate any but the smallest of contract terms. Agents rarely have clout any longer, and with few exceptions, can’t tell a so-called Big Five Publisher to take a flying leap because that would mean that a hundred clients might not be with that publisher any longer.
. . . .
Agents are a party to traditional book publishing contracts in one way: they have convinced publishers to include a clause in the contract that stipulates the agent will receive payment as the designated “agent” of the author, which then fulfills the payment terms of the contract. Some agents add all kinds of other things to that clause, most of which have not been litigated. Almost all agent clauses in contracts also stipulate that the agent will receive both payment and their commission for the life of the contract.
. . . .
Agents have a vested interest to remain on current contracts. Right now, a lot of writers are trying to cancel those contracts and get the rights back so the writer can publish books herself. If it becomes hard to revert the rights in the contract, then the agent remains on the book contract and continues to earn the 15% commission.
Well, all of these addendums that I’ve seen have changed the reversion clause in the contract. To get the rights reverted on a book becomes almost impossible.
Link to the rest at Kristine Kathryn Rusch and thanks to James for the tip.
One of the oldest tricks in the contract-drafting business is to give something in paragraph 5, then take it away in paragraph 37. Passive Guy has seen this a thousand times and blogged about it a couple of years ago.
PG thinks this is a dishonest drafting practice, but some attorneys disagree, pointing out (correctly) that the contract needs to be viewed as a whole in order to determine its meaning.
The bottom line is that you need to read the entire contract in detail and avoid assuming that a provision on page 2 is the last word on that particular subject. When PG is reviewing a contract, he is constantly going back and forth between various contract clauses to make sure some subtle wording hasn’t changed what was written earlier.
The only reason a publisher is sending you an amendment is that it wants something it didn’t get from you in the original contract. These may be called a variety of things – addendum, modification, extension, etc. If it requires your signature, it’s a document that changes the meaning of the original contract.
A contract amendment is a wonderful opportunity to take things away that the original contract gave you. Or get things from you that you didn’t originally give the publisher.
When you receive an amendment, you need to carefully – repeat carefully – read the original contract and the amendment as a single document.
It is dead-simple to write an innocuous-sounding amendment that makes major changes in the contract itself. As just one example, PG has seen amendments that include a minor modification to a definition in the original contract that completely change the meaning of the original contract.
It is not unusual for a publisher to send a cover letter explaining why the amendment is such a wonderful deal for the author.
Maybe the letter is correct and maybe it is not. The letter may reference one part of the amendment that is a good thing for the author while omitting any mention of the part of the amendment that is not.
Can a publisher lie in the cover letter explaining the amendment?
Yes, it can.
Depending on the nature of the lie, it might provide a basis for suing the publisher. However, in the interim, the terms of the amendment will govern how the author is paid and what rights the author does and doesn’t have.
If the author wants to sue, he/she will have to front the expenses of the suit to find out if a court believes the lie is substantial enough to mean the amendment should not be enforced. And the larger the publisher is, the more expensive and time-consuming it will make the litigation process for the author.
Depending upon how well the author’s books are selling, it may cost more to litigate the misrepresentation than the underpaid royalties or transferred rights are worth. If your contract with the publisher does not provide that you receive attorneys fees if you successfully sue (and they never do), you’ll pay your own attorneys fees and court costs regardless of whether you win or not. (This is the general rule in the U.S. Other countries have different rules on attorneys fees and costs.)
It’s much, much better not to sign the bad amendment in the first place.
This has been a little complicated, so let PG boil down his advice to a simple rule that will apply to most amendments that an author receives from a publisher these days:
Don’t sign the amendment.
To avoid any “mistakes” on the part of the publisher that might erroneously believe you have signed it and act accordingly, send a letter to the publisher saying that you have decided not to sign the amendment. Keep a copy.
In the universe of publishers and the amendments they ask authors to sign, this advice will be wrong sometimes. In PG’s experience, however, most of the time, it will be right.
As long as he’s cranked up, PG will talk about one more species of communication from publishers to authors.
Sometimes, publishers send letters to authors announcing that the publisher is doing some terrific new thing for the author.
PG recently reviewed a letter from a religious publisher announcing that the publisher was making a change that would (wonderfully) mean the author’s books would remain in print indefinitely. It would do this by making several books print on demand only.
Royalty percentages would, of course, not change because the books would sell under Small Print Run royalty provisions already in the publishing contracts.
The author would, of course, be pleased that all this was happening.
Not mentioned was that this practice would prevent the author’s rights to the books from ever reverting.
Also unmentioned is that, as with most publishing contracts, small print run royalties are lower than standard print royalties – often 50% of standard print royalties. That’s not necessarily pleasing for most authors so why mention that in in a cheerful letter?
Given his suspicious nature, PG reviewed the publishing contracts. He found something very interesting. There was no royalty provision for small print runs. The publisher’s letter was referring to non-existent royalty rates.
One more interesting discovery was that the out-of-print clauses in the contracts did not allow the publisher to sell single copies and keep the book in print.
So, let PG expand his general rule previously mentioned.
1. If you receive an amendment from your publisher, don’t sign it.
2. If you receive a happy talk letter from your publisher, check your contract.