Contracts

Doubling Down on DRM

17 July 2014

From Cory Doctorow via Publishers Weekly:

I’ve just seen a letter sent to an author who has published books under Hachette’s imprints in some territories and with Tor Books and its sister companies in other territories (Tor is part of Macmillan). The letter, signed by Little, Brown U.K. CEO Ursula Mackenzie, explains to the author that Hachette has “acquired exclusive publication rights in our territories from you in good faith,” but warns that in other territories, Tor’s no-DRM policy “will make it difficult for the rights granted to us to be properly protected.” Hachette’s proposed solution: that the author insist Tor use DRM on these titles. “We look forward to hearing what action you propose taking.”

The letter also contains language that will apparently be included in future Hachette imprint contracts, language that would require authors to “ensure that any of his or her licensees of rights in territories not licensed under this agreement” will use DRM.

It’s hard to say what’s more shocking to me: the temerity of Hachette to attempt to dictate terms to its rivals on the use of anti-customer technology, or the evidence-free insistence that DRM has some nexus with improving the commercial fortunes of writers and their publishers. Let’s just say that Hachette has balls the size of Mars if it thinks it can dictate what other publishers do with titles in territories where it has no rights.

. . . .

The truth is that anyone who wants to avail herself of a Hachette e-book title without paying for it will have no problem doing so. DRM doesn’t stop people who scan books, or retype books. DRM doesn’t stop people who download widely available cracks that can remove all the DRM from an entire e-book collection. And DRM doesn’t stop people who are inclined to download the DRM-free pirate editions. All DRM does is punish legitimate users who had the misfortune to be so honest that they paid for the book, rather than taking it.

Hachette’s letter claims, “Improvements in retailer systems and e-book platforms has led to more flexible DRM which grants the consumer” (this being the odious term the letter uses in place of “the reader”) “greater flexibility in their use of purchased files, such as the ability to share across multiple devices.”

Devices, perhaps. But not across multiple platforms. With the exception of the Kindle Reader app, or the Nook app, available in Apple’s App Store and Google Play, there is no way to read e-books across platforms. And recently, we got a reminder as to what happens when Apple decides that an app is eating into its profits: out it goes. Just last week, Apple stopped bundling the YouTube player with its devices as part of its ongoing war with Google.

. . . .

Readers aren’t stupid. When they discover that paying for books results in locked, crippled editions, and downloading for free (simply by typing the title and “free e-book” into Google or Pirate Bay) gets them the same book, minus the offensive restrictions, they start to put two and two together. After all, DRM is not a selling point. There’s no one who’s ever bought a book because it had DRM. No one has ever clicked onto Amazon saying, “I wonder if there’s any way I can buy a book that offers less than the books I’ve been buying all my life.” People buy DRM e-books because they have no choice, or because they don’t care about it, or because they don’t know it’s there. But DRM never leads to a sale.

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

The Publishers Are as Bad as Amazon

16 July 2014

From The Huffington Post:

In recent months, America’s publishing giants have been up in arms about the predatory practices of Amazon.com. Their outrage would be less hypocritical if they weren’t guilty of conduct that’s just as bad.

I’m an author. One of my books (Muhammad Ali: His Life and Times) was on theNew York Times best seller list. Another (Missing) served as the basis for an Academy-Award-winning film. I’ve learned over the years that big-name writers might be treated fairly by the media conglomerates that dominate publishing today. But the average author isn’t.

Publishing is a business. It’s about squeezing every last dollar out of every available source, and the most vulnerable source is the author. No clearer proof of that exists than the “standard” book contract.

Many clauses that are imposed on authors throughout the industry today bear no relationship to any economic reality other than the best interests of the publisher. Yet these clauses flourish because virtually every major publisher insists on them and the average author has no recourse.

. . . .

As for traditional options, publishing contracts now often contain the following provisions:

1) The author must submit his next book in completed manuscript form to the publisher before it is considered by any other publisher;

2) The first publisher need not consider the manuscript before publication of the work currently under contract; and

3) Even if the first publisher declines to bid on the manuscript, the author must subsequently offer the publisher the chance to match any offer received at a later date from any other publisher. Thus, an author who has a book under contract to a publisher can find his career put on hold indefinitely.

In sum, just getting published is an adventure in contract law for most authors. And when authors are published, they find that their royalties have been cut precipitously by today’s standard publishing contract.

For example, most publishers now require a clause to the effect that, if the publisher increases its discount to a particular book-seller beyond a certain percentage, the author’s royalty is cut in half. The logic underlying this provision is that, if a publisher has to give a giant like Amazon.com a break in order to sell books, then the author should shoulder part of that burden. However, the way the formula works in practice, a publisher can sometimes increase its discount to the bookseller on a twenty dollar book by, say, forty cents (two percent of list price) and cut the author’s royalty in half (from $3.00 to $1.50). In other words, the publisher takes $1.50 out of the author’s pocket, gives forty cents to the bookseller, and keeps the remaining $1.10 for itself.

. . . .

But one ray of hope does exist. The antitrust laws of the United States are sometimes enforced. And in addition to outlawing predatory monopolistic practices, those laws provide that “every contract, combination, or conspiracy in restraint of trade is illegal.”

Quite possibly, what now passes for “standard” in the publishing industry is an illegal restraint of trade.

Publishing today is characterized by powerful corporate entities acting in concert to the detriment of essentially powerless authors. Something must be done to remedy the situation because it’s driving a lot of good writers out of publishing. They simply can’t make a living writing books anymore.

Link to the rest at The Huffington Post and thanks to Elizabeth for the tip.

Enhanced editions!

8 July 2014

From author Courtney Milan:

Hi everyone! The enhanced editions of my first five books–Unveiled, Unclaimed, This Wicked Gift, Proof by Seduction, and Trial by Desire, are now available–and they’re only 99 cents each through July 25th.

. . . .

Q. Why are you releasing enhanced editions?

A. Because I can. I know that sounds a little bit ridiculous, but let me put it to you this way–if you had a contract with a publisher for print-only releases, and the contract specifically stated that you reserved digital rights, would you put that book up as a digital edition? Of course you would.

That’s what my contract looks like with regards to enhanced editions. They specifically reserve the right to make enhanced ebooks to me. I had that right, and so I am now exercising it.

Releasing enhanced editions gives me control over pricing, covers, branding, promotion, and back matter. It also makes me more money.

. . . .

Q. Specifically what in your contract allows you to do this? Can I do this, too?

A. There are two parts to my contracts that allow me to do this. The first is the following statement in the Grant of Rights section of my contract:

(d) electronic use of the non-dramatic unenhanced verbatim text of the Work, excluding video use (whether in a now known form or hereafter discovered) … Notwithstanding anything to the contrary in this Agreement, electronic rights shall be limited to the display of the text in the Work and shall not include any moving images, sound or any interactive or multimedia elements.

Incidentally, give my agent, Kristin Nelson, a hand for drafting an extremely clear statement. If she’d just left it as “unenhanced verbatim text” or even limited it to “multimedia elements” we might have had to argue about what “multimedia” and “enhanced” meant. As it is, the line about “sound” gave me a really, really clear out: As long as I included audio, I was outside the rights I had granted to my publisher.

The second is something that is not in my contracts, and that is a noncompete provision of any kind.

I don’t know if you can do this. You’ll have to look at your contract. I’ve mentioned here the two things you’ll need to look at–the grant of rights section and…uh, the rest of the contract. In the grant of rights section, you need to look and see if you are only granting rights to the “unenhanced” text, or if you reserve “multimedia” rights or something along those lines. There are probably a thousand different ways to word the reservation, and so there’s no magic language I can tell you to look for.

There are also a lot of authors out there who don’t have an enhanced reservation at all. I’m pretty sure that Harlequin series boilerplate, for instance, will not allow this.

Whether you can do this will depend entirely on what you and/or your agent negotiated.

Link to the rest at Courtney Milan and thanks to Amy for the tip.

Start Media Buys Whiskey Creek Press, Imposes New Contract Terms

28 June 2014

From Writer Beware:

In early June, Debra Womack, owner of Whiskey Creek Press, announced in a letter to authors that the publisher was in the process of being acquired by Start Media (a company that has recently acquired two other small presses, Night Shade Books and Salvo Press).

As part of the acquisition process, Start is asking all current WCP authors to agree to and sign an offer of new terms as follows on page two below. We are offering you the non-refundable sum of $1 and other good and valuable consideration, payable to you if and when the sale of the company to Start is completed (expected to be by the end of June 2014). Upon closing you will also receive a payment from WCP of current royalties and/or advances or any other sums owing to you by WCP for sales up through and including April 30, 2014.

. . . .

WCP’s contract includes this clause:

If the Publisher sells its assets to another publisher who does or plans to market and promote books of the type and genre of the Work, the successor publisher will be bound, as a minimum, to the same terms delineated in this agreement.

In direct contradiction to this, however, the letter of agreement Start Media is asking authors to sign imposes some substantially different terms. WCP’s contract term is 3 years from publication; Start Media’s is life-of-copyright. WCP’s ebook royalties are 35% of the net download price; Start Media’s are 25% of net (“all monies actually received”). There’s also a troubling gap between April 30, when WCP ceases to pay royalties, and July 1, when Start Media’s new royalty rate kicks in. What happens to books sold in May and June?

Understandably, WCP authors are upset and angry. Many are refusing to sign–despite the fact that no explanation has been provided, either by Womack/WCP or Start Media, of what will happen to their rights if they don’t.

Link to the rest at Writer Beware

The moral of this cautionary tail is that authors can’t assume the publisher they sign with (and who gives them all sorts of promises that aren’t written into the contract) will be the same publisher they’ll be dealing with for the entire term of their contract.

Indeed, in a life-of-the-copyright agreement, it is virtually certain the existing publisher will disappear before the contract ends. At a bare minimum, all the people working for the existing publisher will be long gone before the contract is done.

Writer Beware is an excellent site and provides insightful analysis and warnings concerning publishers and their contracts. However, PG disagrees with WB’s defense of life-of-the-copyright contract terms. Ultimately, it’s the worst sort of rights grab and, in PG’s unceasingly humble opinion, is always unreasonable.

Additionally, as they are typically written, out-of-print clauses are seldom a reasonable solution to the problem of ridiculously long publishing contracts.

First, the typical OOP clause is extremely complex and difficult for an author to navigate. Having to pay an attorney to help figure out whether a book is out of print and work through the OOP administrative process is ridiculous.

Second, the typical OOP clause gives the publisher all sorts of ways to avoid reverting the title with no material benefit to the author.

Third the typical OOP clause is set to such a low trigger point – WB mentions 50 copies per year or 25 copies per year – that the author has probably experienced years of absurdly small royalties before the OOP clause can be triggered.

A long time ago (as measured in Internet time), PG suggested an improvement to OOP clauses – A Mimimum Wage for Authors. Basically, it’s tied to royalties paid by the publisher to the author, not the number of copies the publisher sells. The author cares about dollars (or euros, etc.), not how many ebooks were sold at 99 cents each.

In a nutshell, the Minimum Wage for Authors OOP clause says if the author doesn’t receive a certain minimum royalty payment for a book, the book reverts. In a life-of-the-copyright contract, PG recommends that an inflation adjustment provision be applied to the minimum royalty payment as well because $100 will be worth a lot less fifty years from now than it is today.

The best solution is, of course, a publishing contract that ends within a specific number of years which is the way contracts operate in the reality-based business world.

Why Creativity is Your Best Negotiation Tactic

28 June 2014

From Fast Company:

Ted Leonhardt always got the jitters before a big client meeting. It didn’t matter that he ran a design firm with big name clients like Boeing and Charles Schwab, raking in $10 million a year in fee revenue. Closing a deal with a new client always brought up those same feelings of insecurity.

Leonhardt would duck into the men’s room before a meeting, lock himself in a stall, and jot down a list on a scrap of paper–projects he’d done successfully, awards his company won, other accomplishments. “I would make two to three lists a week and they were always the same,” he says. “I never needed to read them, but making the list, and putting it in my coat pocket made me feel okay about whatever it was that was stressful.”

And it gave Leonhard the confidence to tackle what so many creative professionals dread doing: negotiating.

. . . .

“For about 10 years I’ve been consulting with creative firms and over and over I would find people who are sophisticated professionals running firms with 50 to 100 people [who are] terrible negotiators,” he says.

. . . .

A common weakness of creative people is impostor syndrome–that nagging voice telling you that you’re just a big fake, no matter how successful you are.

Creative work requires a healthy measure of sensitivity. You want your work to move people, which means being in-tune with their emotions. But at the negotiating table, this same sensitivity can backfire for creative people. “They are too sensitive. They don’t want to bicker over the price. They just want to get over it and get to the work,” says Leonhardt. “Learning to ask for what you need is really important and it’s hard to do.”

Link to the rest at Fast Company

Open Road Fires Back at HarperCollins in Copyright Case

23 June 2014

From Publishers Weekly:

In a court filing, Open Road attorneys last week assailed what it called HarperCollins’ “extreme”proposal for an injunction and more than $1.1 million in legal fees and damages to settle claims stemming from Open Road’s unauthorized e-book edition of Jean Craighead George’s Julie of the Wolves.

Claiming that the Harper proposal is based on “a misleading portrayal” of the facts, Open Road attorneys argued that not only has Harper not suffered the kind of irreparable harm necessary to justify its proposed remedy, in fact it has not suffered any harm at all. “Harper cannot prove any present harm, let alone irreparable harm,” Open Road attorneys argued, noting that despite its win in court, Harper does not have the right to sell Julie of the Wolves e-books without the author’s consent, “which it has never obtained” owing to “a fundamental disagreement as to a fair e-book royalty.”

. . . .

 In its response last week, Open Road argued that it litigated the case in a “non-vexatious” manner only after two separate legal reviews supported its belief that George held e-book rights. The brief concluded that a damage award in the $750 to $30,000 range would be “sufficient,” given that Open Road has not made significant profits and that Harper lacks the explicit right to publish a digital edition of its own.

. . . .

 “Authors who believe they have retained e-book rights and traditional publishers who often overreach in claiming broad grants under the original contracts are often involved in negotiations over the exploitation of the authors’ works in new media,” the Open Road brief argues. “Given the disparity in economic resources, those negotiations are already heavily skewed in favor of the large publishers. The Court should not skew the balance further against authors who seek to assert their rights with the threat of million dollar attorneys’ fee awards.”

. . . .

 At its heart, however, as Open Road’s brief suggests, the case is more about e-book royalties. HarperCollins signed George’s Julie of the Wolves in 1971, for a $2000 advance and has since sold over 3.8 million copies in print. But according to court filings, Harper has refused to budge from a 25% net royalty on e-book sales, which George, before her death in May 2012, deemed fundamentally unfair. Open Road paid George a 50% e-book royalty.

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

Christina Brashear Returns as Publisher at Samhain Publishing

22 June 2014

From The Digital Reader:

Dogged by reports of conflicts with authors, struggling digita- first publisher Samhain Publishing announced today that owner Christina Brashear is returning to the company and taking up the role of Publisher.

. . . .

There haven’t been any rumors about financial issues, but in May 2014 Dear Author reported that authors were having problems getting Samhain to revert the book contracts to the authors.

The publisher was in general described as being unresponsive to queries, and they had also recently started using a new boilerplate contract which reserved copyright over a book’s metadata (title and other technical info about the ebook) to Samhain. While it might seem unimportant at first, that new contract clause could make it more difficult for an author to subsequently republish an ebook.

Link to the rest at The Digital Reader

Why I rejected my publisher

11 June 2014

From author Jordan McCollum:

If you’ve poked around my site or been a subscriber for a while, you might remember that in November 2011, I received an offer of publication from a regional publisher, with a 2013 anticipated release. . . . Like any publishing offer, it was a long time coming.

Three years and two weeks after I started the novel. Two years after I submitted it to the same publishing house the first time (obviously they rejected it, and with good reason). Eighteen months after an editor at the publishing company told me not to bother resubmitting the revised, newly-award-winning manuscript. Almost nine months after I went ahead and did it anyway.

I got the good news at a writers’ retreat and I was so excited to share with my friends there.

. . . .

While we waited on that contract, they assigned me an editor, who happened to be someone I’ve wanted to work with for a long time. They asked me for the “final” submitted version of my manuscript (although editing was at least a year away). They requested an author photo, then a release from my amazing photographer. They needed tax documents. I got it all turned in.

Finally, the contract came in the mail. I held my breath as I opened that big white envelope and read through those pages with my publisher’s name and mine. And I cried.

But they weren’t tears of joy.

With a friend’s recommendation, I consulted with a lawyer who specializes in contract disputes and intellectual property law. He spent looong billable hours reading the contract and writing me an extremely thorough analysis. And, yeah, it was as bad as I feared.

. . . .

Naturally, I was very worried about the possibility of a book never being declared “out of print” because the publisher had an ebook version on the “shelves.” I might never get the rights to my backlist back unless the publisher was feeling very generous.

. . . .

But my lawyer was more concerned with another issue, one that I was anticipating, but didn’t think it would be as bad as the reality. The contract demanded the right of first refusal on basically everything I might write for the next 21 years. If I submitted any work anywhere else, it would be deemed accepted by this publisher, and contractually obligated to them first. There was no timeline in the original contract, meaning they could spend three years sitting on my manuscript, before granting me one year to try to find someone else to take it (after which the time frame and rejection process would start over).

. . . .

I offered options, options I knew other authors had gotten added to their contracts with this company, and options I knew other publishers used. I gave some, and they gave a little.

Ultimately, however, they wouldn’t budge on the most important issue.

. . . .

I sent a final message to the publisher. I told them I didn’t want to burn any bridges, but I would need to see changes to these clauses of the contract.

They said no.

So I said no.

Link to the rest at Jordan McCollum

To answer a question that may be on the minds of some — Jordan is not one of PG’s clients.

However, the contract problems she describes are very familiar to PG.

Typical out-of-print clauses are virtually impossible for an author to enforce unless the publisher wants to revert the book. See one of PG’s first contract-related posts describing a minimum wage for authors for a better alternative to standard out-of-print clauses.

Rights of first refusal and non-compete clauses can substantially limit an author’s freedom to self-publish or choose to work with another publisher, even if the first publisher is doing a terrible job of selling books.

Cordelia’s Promise and High-Discount Clauses

6 June 2014

From attorney C.E. Petit:

Most of the grousing about authors’ earnings concerns the base rates imposed upon them by commercial publishers. The authors gripe about “25% of net” for e-books, and rightly so. They gripe a little less loudly about 8%/12.5%/15% on hardcover trade fiction as a base royalty rate. They gripe loudly about advances, if seldom with numeric disclosures attached. What they neglect, however, is the high-discount clause: In almost all commercial publishing contracts, the author’s per-copy compensation is cut in half for copies sold at a high discount (but not “remaindered”, for which the author receives nothing). Consider, for example, an author at top escalator (that is, 15% per copy) for a hardcover novel — not a bestseller, but a steady-selling work of general fiction happily ensconced on the midlist for half a decade now that long ago earned back its advance — currently retailing at $25.95.3 For the royalty period ending on December 31, 2012, the royalty statement showed that there were 1,227 US sales of that edition. (Plus sales of other editions, but let’s concentrate on this line item for a moment.) Calculator in hand, the author figures that she should have been credited with 1,227 * $25.95 * 15% = $4,776.10 in royalties. That’s not what the royalty statement says, though; instead, it accounts for those sales like this:

227 ISBNxxxxx $883.59
1000 ISBNxxxxx $1946.25
1227 ISBNxxxxx TOTAL: $2829.84

for an on-its-face and in-your-face detriment to the author of $1,946.26. This particular author is no shrinking violet, so she (there’s no agent on this book any more, as the agency went into bankruptcy and everything got returned) called the royalty department in New York. After five calls, she finally reached someone who knew: That second line was a single bulk order from Amazon… at a discount of 0.5% over the trigger for the high-discount clause.

That was bad enough, and sent the author shrieking for assistance. At which point the following math comes into play that demonstrates the real problem here:

Discount Gross
Receipts
Author
Compensation
Publisher’s
Net
Receipts
45% $14.27 $3.89 $10.38
50.5% $12.85 $1.95 $10.90

That’s right: The publisher’s per-copy net is five percent higher if it accepts a five-percent-lower gross from Amazon.

. . . .

My point is that the trigger levels for the high discount clauses in most publishing contracts were set without claimed knowledge that there was — or, more to the point, might be during the foreseeable life of the contract — a distribution system different from the publisher-distributor-bookstore-with-discounts-and-returns default of the time.
. . . .

[I]n our author’s situation, the publisher clearly already knew. At the time that contract was negotiated and signed, that publisher was already making deals on terms not disclosed to the public with “big box” vendors like Wal-Mart/Sam’s Club and Costco. Later audits have disclosed that those terms, for large orders, also fell into high-discount territory. In short, that publisher knew before negotiating that contract that the implied rarity of the high-discount-clause term was deceptive, and reflected a probable change in future market conditions and structure. The author (and now-deceased agent), however, did not have that information, and was in fact deceived. Bluntly, this is not an instance of mutual mistake allowing voidability; it is an instance — a pattern and practice — of deceptive conduct by one party to a series of relatively-but-not-entirely-standardized contracts.

Link to the rest at Scrivener’s Error

PG says that, in today’s publishing world, high-discount clauses have evolved into screw-the-author clauses and should be avoided completely. PG has seen contracts under which the author can expect virtually all sales of his/her books to qualify for high-discount/low-royalty treatment.

PG is not the only person to witness tradpub authors go wild with delight when they discover their books in Costco. As C.E. points out, many of those authors will be lucky if their Costco royalties fund a Costco hotdog and drink combo.

We’ve observed the beginnings of class-action suits by groups of authors against publishers based upon the deceptive business practices enabled by vague clauses hidden in standard form publishing contracts. PG suggests the high-discount discount scam is another area class-action lawyers may wish to consider.

All that nurturing authors receive from their publishers can come at a very high price.

Thriller writer Joseph Finder’s publishing plot twist

28 May 2014

From The Boston Globe:

After publishing 10 suspense novels, two of them bestsellers turned into Hollywood movies, Joseph Finder had what most writers would sell their souls for: brand-name author status; a seven-figure, multibook deal with a major publisher; a list of his previous works aggressively marketed by his publisher; and a loyal readership for virtually anything he wrote.

Then, two years ago, in a plot twist befitting one of Finder’s didn’t-see-that-coming thrillers, he made an abrupt change. After his last novel, “Buried Secrets,” failed to make the bestseller list, the Boston-based author bought out his contract with a seven-figure check, left his longtime publisher and agent, and wrote his next novel without a signed deal in place.

. . . .

“It was the bravest thing I ever did, and I’m not a brave person,” Finder, 55, said about cutting ties with St. Martins, then writing his next novel on spec.

Finder’s new novel, “Suspicion,” debuted this week, and all signs are that his gamble paid off. “Suspicion” was eventually bought by Dutton, with whom he signed a lucrative three-book contract last year.

He makes it clear that he bears no ill will toward St. Martins, and that any disagreement between the two parties was not over money.

“If not for them, I would not be a New York Times best-seller, period,” Finder said at his Back Bay office. “We just disagreed. They wanted me to be the CEO of Suspense. And I felt that was too constricting.”

. . . .

According to his own market research, female readers represent about 70 percent of the book-buying public interested in fiction of any kind. Many have commented to Finder personally, he says, that while they might buy a novel marketed as a “corporate thriller” for their husband, they would not pick one up themselves.

“Branding is a two-edged sword, a way of creating trust in a product,” he said. ‘The ‘CEO of the corporate thriller,’ though, does not describe what I do. I do ordinary-guy thrillers, regular people in extraordinary circumstances. There’s nothing corporate about ‘Suspicion.’”

According to Little Brown publisher and industry veteran Reagan Arthur, it’s not unheard of for an author of Finder’s stature to change publishers in an effort to be marketed differently. Romance novelists and thriller writers are the most likely to do so, she added.

“Changing your agent and publisher is a more dramatic approach, though,” Arthur said. It’s also unusual for an author to buy out such a lucrative contract before it’s completed, she noted.

Link to the rest at The Boston Globe and thanks to Andrew for the tip.

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