Contracts

Reserve, Rinse, Repeat

28 July 2016

From Brillig:

Here is a letter which I am sending today to the CEO of one of the major publishing conglomerates.  All authors and agents should feel free to copy and paste, put in appropriate specific details, and do the same.

Once upon a time, the reserve against returns was kind of necessary.  Books only sold in print.  All those print books were fully returnable.  Sometimes 70% of the copies were returned.

But now, books sell digitally, with very few returns on ebooks and downloadable audio.  Printed books are still fully returnable, but for a great many books, sales through channels that lend themselves to especially high return rates have dwindled.  I’m not saying reserves are entirely unnecessary.  I’m saying it’s time to push back on doing things this way because they’ve always been done this way, accepting reserves in any quantity when they no longer serve their original and intended purpose.

There are too many business practices tilting against authors, and we can’t continue to accept all of them.

Dear CEO:

I hate arguing about pennies, but I also don’t understand why publishers want to keep pennies from my authors for no reason, holding reserves on titles where none is necessary.

I’m attaching the summary page of the just-received royalty statement for [book by my client] by [client name], as the quintessential example of this.

Please notice the book earned $1750 in ebook royalties.

So how can you justify the 92 copy reserve on the trade paperback?

The trade paperback royalty per US copy is $1.20.  If the ebook royalties were to drop by half on [book by my client], [you] would still have $875 to credit to the author’s royalty account on the next royalty report.  That is a sufficient reserve to cover the return of 730 trade paperback copies. The actual returns on the trade paperback were 46 copies.

This isn’t reasonable.  It’s time for your contracts to acknowledge that, and to renounce the right to hold reserves against returns when ebook income can reasonably be expected to cover print returns, as is clearly and abundantly the case on this royalty report, and on so many others.

Link to the rest at Brillig

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Other Evil Clauses

22 July 2016

From Kristine Kathryn Rusch:

Writers tend to go through their business life like Pokémon Go players, looking for something that isn’t there, hoping to score a magic number of points, and not seeing what is there.

It’s impossible to show you all the bad contract terms. I’ve delineated several that you need to watch out for. I’m going to go through some important ones quickly in this blog post, and then look at a few more major terms in the next few weeks before we go to agents and attorneys.

After that, folks, you’re on your own.

. . . .

Definitions: Make sure all of the important and dicey terms in your contract come with an attached definition. And make sure that definition is in your favor, extremely clear, and very narrow. The biggest and most important definition in modern contracts is the definition of the word “net.”

Most contracts leave out the definition of the word “net” altogether. Those contracts assume, apparently, that we all agree on what the word means.

Here’s the thing about contracts, folks. Contracts create their own language and their own definitions. So if the word “net” is undefined, it means whatever someone wants it to mean.

If the publisher does define the word “net,” the publisher often does so in a way that benefits them. (Horrors! They don’t do that in other things…oh, wait, never mind.)

Publishers have moved to “net” in royalty payments at the same time as the rise in ebooks. But that’s not why publishers did it. They did it for the same reason that they have discount clauses in the contract, such as the ones we discussed in last week’s blog, to make sure the writer gets almost no money for the books the publisher sells.

If the publishing contracts end up defining the word “net,” then the clause usually looks something like this:

As used herein, the term “Net Receipts” means monies received by the Publisher on the sale or license of the Work after all discounts, fees, and returned copies have been deducted, and before addition of freight charges and/or handling charges.

It’s all very, very loosy-goosy. Monies received by the Publisher. I suppose you can audit for that, but there’s lots of room for dispute in that language. And lots of room for abuse.

. . . .

Basket Accounting: speaking of screwing the writer, let’s look at this old favorite, that has existed since the 1970s. Basket accounting refers to the fact that the publisher throws all of the books in one contract into the same “basket” before paying out royalties.

So if you have a three-book contract, and book one sells 5 times its advance, but books two and three never earn out, you probably won’t see a dime in royalties.

If each book were accounted separately, then you’d receive royalties for book one, making you significantly more money.

The clause is not called the “basket accounting” clause. Every contract does it differently.

And I have to tell you: in this modern world, it’s a lot more probable that you’ll get a basket accounting deal if you have a multiple book deal with a publisher. That publisher will guarantee that you don’t see a dime in royalties by underpublishing at least one of those books.

The best way to avoid this?

Have a one-book contract. Never ever ever sign a multiple book deal, no matter how much they offer you.

Traditional publishers and agents will tell you it’s in your best interest to sign a multiple book deal. After all, you’ll get money for years, and you’ll know how much. But you won’t necessarily get actual money for years, especially if there’s an “acceptance” clause in your contract. (Meaning your book is not considered publishable until the publisher deems it “accepted.”) And there’s no guarantee, in this publishing environment, that your publisher will be around five years from now.

Besides, if you have a one-book contract, and your book is successful, then you have the opportunity to negotiate a better contract for book two. And with the rise of indie publishing, if you can’t get a contract for book two, who cares? You can publish it yourself.

. . . .

Time limit on publication.

This one is sneaky. It caught me on my very first novel. What you want here is for the clause to read in your favor. Something like:

If the Work is not published within two years of the date of this contract, the contract terminates, and all rights revert to the author.

Usually this clause isn’t quite so writer-friendly. But something like this clause is in most good publishing contracts.

The contracts that leave it out—well, the publisher never has to publish the book.

. . . .

Why have the audit clause? Because right now, you’re going on faith that the publisher will be honest with you. They have no reason to accurately calculate your royalties and payments. Publishers have never been accurate in their royalty calculations. Never. Why should they start now?

So, get an audit clause on your book. Be prepared to use that clause, especially if you have royalty clauses in your contract that are different from the norm. Because publishers might “accidentally” default to the old way of doing things, and only shape up if you prod them.

An audit clause prods them.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

WriteIndia Writing Contest: When a Contest Sponsor Changes the Rules

20 July 2016

From Writer Beware:

I harp a lot here on how important it is to read the fine print–in your publishing contract, on websites that host user content, in literary contests. Sure, it’s tedious, especially if couched in lengthy legalese–but skipping this step can result in unpleasant surprises.

What happens, though, if the contest sponsor changes its guidelines while the contest is still in progress?

Last year, the Times of India–one of the world’s largest English-language newspapers–launched the WriteIndia contest. Each month for eleven months, a well-known Indian writer provided a passage or a prompt for contest entrants to develop into a short story. Eleven winners were awarded a Kindle, attendance at an exclusive writing camp, and publication in a compilation of winners’ stories published by TOI’s publishing imprint, Times Group Books.

Major newspaper, eminent writers, publication–what’s not to like? Thousands of writers entered the contest. The final slate of winners was announced July 15 on Twitter, prompting this question from one of the non-winning entrants:

To which the response was:

Wait, what? shocked writers demanded. How could that be?

When I put this post online earlier today, here’s how the next few paragraphs read.

Well, because of the fine print of WriteIndia’s Terms & Conditions:

7. OTHER TERMS AND CONDITIONS:

a. Participant acknowledge and agrees that [Times Internet Limited] shall have irrevocable, worldwide, exclusive right to publish and commercially exploit the story/content submitted with TIL, through any medium and channel for the period of two years from the date of completion of campaign. After two years exclusivity period, TIL shall have non- exclusive right to publish and commercially exploit the story, worldwide and in perpetuity. TIL shall have the right to adapt, edit or modify the story as solely determined by TIL. TIL shall not be required to take any further approval or to notify the participant or to pay any additional consideration for the grant of aforesaid rights.

Simply by entering the contest, writers granted TOI perpetual rights to their stories, whether or not they won–and not just nonexclusively, but on an exclusive basis for a full two years. TOI doesn’t have to pay writers whose work they use, or even notify them.

. . . .

In response to the flap, TOI’s Director, Vinita Nawra Nangia, is now saying that “anyone who does not agree to the said terms and conditions, is free to withdraw from the campaign.”

Link to the rest at Writer Beware and thanks to Deb for the tip.

Indian copyright law is on the long list of things PG knows nothing about.

In the US, PG wonders if there would be adequate consideration paid to the authors (accepting their stories in the contest and presumably reading them) to support an agreement to license their copyrights to the newspaper forever.

Regardless of the answer to that question, PG agrees with Victoria that you should read the terms and conditions of any writing contest you enter. Or just skip entering any writing contests and self publish your entry.

How Publishers Abuse Termination Fees

17 July 2016

From Writer Beware:

I’ve written before about termination fees in publishing contracts: why they are bad not just for authors, but for publishers, and how publishers can abuse them. Here’s another case study in how termination fees can become a tool for retaliation.

Sky Warrior Books, “a press dedicated to publishing quality SFF, mystery, historical fiction, paranormal, nonfiction, and other genres”, is run by publisher and author Maggie Bonham (who also writes as MH Bonham and Margaret H. Bonham). Among the lesser-known authors on its list, there are several books and anthologies written/edited by established SF/fantasy authors.

Sky Warrior’s contract–which is problematic in a number of respects, including vagueness in the royalty language–has not one, but two early termination fee provisions:

12.a.ii.: Prior to publication, the Author may terminate this contract for unspecified reasons by reimbursing the Publisher for costs incurred, plus a termination fee of $500. Examples of costs incurred include expenses such as editorial and cover art.

12.f.ii.: Post Publication: In the event that the Author is terminating the agreement in order to sell the Work to another publisher, individual or company for publication, the Author shall pay a termination fee of 10% of the advance and royalties earned on the Work to the Publisher, plus purchase all remaining inventory at cost +15%, with no royalties paid on copies purchased under this clause.

Sky Warrior also appears to have issues with timely royalty accounting. Complaints can be seen at the Absolute Write Water Cooler and at Ripoff Report; I’ve gotten some as well. Two of the authors who contacted me challenged the lack of payment and pressed for answers, whereupon Maggie Bonham terminated their contracts and reverted their rights, without asking for money. A third author–the one who’s the subject of this blog post–also got her rights back. From her, however, Bonham demanded termination fees.

. . . .

As it happens, Eve is an active member of the Science Fiction and Fantasy Writers of America. She turned the matter over to SFWA’s Grievance Committee, which has a good record of mediating disputes between authors and publishers. Bonham, however, refused to cooperate, doubling down on her denial of wrongdoing and reiterating her her demand for money. She also accused SFWA and Writer Beware of a dastardly conspiracy:

After all, if we are harmed, you will have participated in the further erosion of independent, small presses, and I can’t believe the rumor that SFWA and Writer Beware are cooperating with the Big Five publishing houses’ efforts to destroy the independents once and for all. Although I did find it curious that Writer Beware’s publisher avoid list is populated exclusively with small presses, often based in rural areas, far from the New York in-crowd.

Damn. And we thought we were being so discreet.

Seriously, though, I think Eve’s experience illustrates how publishers can use termination fee clauses to retaliate against authors who displease them. The other authors I heard from who complained about nonpayment had their rights reverted without any demand for money. It’s hard not to conclude that Eve was being punished for having the temerity to hire legal assistance.

Link to the rest at Writer Beware and thanks to Leah for the tip.

 

 

Discount Abuse

15 July 2016

From Kristine Kathryn Rusch:

Contracts have gotten worse, much worse in the past thirty years—and that’s with agents (so-called experts) negotiating them.

. . . .

For this blog, however, I’m going to focus on the discount clause.

Before you indie writers go heading off to the hills thinking none of this applies to you, look at the title of this post. Discount Abuse. Many of you indies are as guilty of discount abuse as traditional publishers are.

You just do it in different ways.

. . . .

Second: Do not do what traditional publishers do when they discount books. Generally speaking, traditional publishers do it wrong. Or their strategy is aimed at promoting their company, not at promotingan author. Your strategy is to grow your readership. A totally different thing.

Third: Be glad, as you scan this post, that you’re an indie writer. Even if you screw up and decide to discount your first book, you’ll make more money than your traditionally published friends do on theirdiscounted books. (Unless, you put your book up for free. Sigh.)

And—a bonus Fourth: Read this post now in case you decide to get a traditional publisher to publish your paper copies. Especially if you had (or will have) an agent negotiate the deal. Because much of what I’m going to discuss here applies to paper books, not ebooks. This is one of those areas where you, the indie who has gone hybrid, is most likely to get screwed.

In fact, this area is where writers have been getting screwed since some publisher thought to change their contracts in the last 1990s—and then all the other publishers followed suit.

. . . .

Discount clauses always send a ting of discomfort through me, and not just because the things are damaging to writers’ careers and writers’ incomes. But because they are one of those let’s-screw-the-writer clauses that got added into contracts in the past twenty years or so.

. . . .

And these modern documents have lots of let’s-screw-the-writer clauses. Sometimes they’re bunched into a single clause marked “the discount clause” and sometimes they’re spread out, such as these clauses from a fairly recent contract:

  1. Discounted sales. Some sales of the Work in the forms specified in [another part of the contract—forms like hardcover, trade paperback, mass market] above may be to jobbers, chain stores or others at substantial discount. Where the discount is fifty percent (50%) or more from the Retail Price, a royalty equal to one-half the regular royalty. Where the discount is sixty-five percent (65%) or more from the Retail Price, a royalty equal to ten percent (10%) of the Net Receipts per copy sold.
  2. Cheap editions. On all net copies sold of any cheap edition that the Publisher publishes at a price not greater than two-thirds (2/3) of the original retail price, a royalty of ten percent (10%) of the Net Receipts, but if the Publisher licenses publication of such edition by another publisher, a royalty of fifty percent (50%) of the Net Receipts.
  3. Other Book Publication. For other editions (including but not limited to premiums, mail order, schoolbook and book fair editions, and other special editions) sold in the United States: Ten percent (10%) of the Net Receipts.

This lovely publisher starts screwing writers right from the start. Chain stores or others? Most of the large stores get discounts over 50% as a matter of course, so that means that most of the royalties paid from a writer’s book are paid at half the usual royalty rate.

. . . .

These “discounted” books have no time limit, so if your book is really popular, and it sells to Barnes & Noble (chain store) or Wal-Mart (chain store) at publication, the publisher can discount the royalty rate too. Right from the moment of publication. No waiting a year, as in the 1980 contract.

And lookie here! The publisher doesn’t have to pay full royalties on books sold by mail order, which many publishers are now considering as books sold off their websites. In fact that entire clause that mentions other editions? It’s pernicious all by itself.

It says “For other editions (including but not limited to…)”

In other words, they can publish the definitive book, and then all kinds of other editions, because the author didn’t limit the kinds of books the publisher can publish. And believe me, there are a million different editions the publisher can think up, none of which the publisher has to pay full royalties on.

Things get even worse for writers. For example, this lovely publisher from whose contract I’m quoting has an even lovelier clause in its ebook royalty rate. That clause says:

Royalties For Ebook Editions sold in the United States, except as described in paragraphs 1-3 below: Fifteen percent (15%) of the Net Receipts.

Guess what, folks? Paragraphs 1-3 are the clauses I excerpted above. The discount clauses. So if your publisher has this clause in their ebook editions royalty rates, then your publisher can sell your discounted ebook and pay you even less. So that wonderful $1.99 sale they’re doing to “promote” you? Well, that $1.99 is significantly less than 50% of the cover price of your $9.99 ebook, isn’t it? Guess who doesn’t get paid a full 15% of net receipts on the ebook edition.

You.

By the way, the contracts I’m using for this modern stuff were all negotiated by agents, not attorneys. Just pointing this out.

. . . .

My solution is to go back to 1980.

First, the publisher can’t discount anything without seeking the author’s permission.

Second, the publisher can only discount a book after the book has been out for a year or more.

If the publisher wants to discount titles to promote sales in the first year of publication, let the publisher eat the difference in the cost. Not the writer.

. . . .

Traditionally published authors have no idea what price their book is selling for and what royalty percentage they will get on that book. Without a full-blown audit of their publisher, there’s no way the traditionally published writer can know.

These discount clauses—which the authors have freely signed—are the way that publishers are increasing their bottom lines. This is also why so many #1 New York Times bestselling authors are seeing their royalty rates decline. It’s not because the books sell fewer copies (although that’s happening as well); it’s because the authors are being paid less per copy sold—significantly less.

. . . .

Do your best to negotiate out these pernicious clauses. If you do manage to get those clauses out of your contract, be prepared to audit your publisher regularly. Because they’ll probably still act as if the clauses are in your contract, and figure you won’t catch them at it.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

PG is always conflicted when an author proudly tells him that Costco is selling the author’s books. The author is understandably excited at the prospect of selling a lot of books.

PG has not had any author mention that he/she understands that royalties on such sales will fall through the floor because of deep discount clauses. So far, PG hasn’t had the heart to share the bad royalty news with the author.

The increasing rapaciousness of deep discount clauses explains why fewer and fewer traditionally-published books are earning out their advances.

Whenever PG is banging heads with a publisher trying to extricate an author from a bad publishing contract, the publisher’s counsel invariably mentions that some or all of the books haven’t earned out their advances (as if this is a mortal sin on the author’s part). PG usually responds by saying he’s not surprised because the publisher is paying the author 5% royalties instead of 25% royalties.

Kris is correct that publishing contracts have become longer and longer over the past 10-20 years.

The basic rule for all types of form contracts in the computer word processing age is that lawyers never take anything out of a form contract and constantly insert new provisions and expand old ones. PG sees this in enterprise software licenses and internet terms of service as well as publishing contracts.

He’s also seen an increase an old contract trick that gives something to the other side on page three and takes it back on page 15. A 30-page contract makes this easier than a 10-page contract does.

When PG is reviewing a contemporary contract, he’s constantly going back and forth to see how Paragraph 48 may affect Paragraph 12, etc., etc., etc.

The bigger the jungle, the more places the tiger can hide.

What Does ‘Brexit’ Mean for Publishing?

3 July 2016

The day I feared since David Cameron stepped out the door of 10 Downing Street in May 2015 to declare victory for the Conservative Party came to pass in the early hours of June 24, when news spread that voters opted to take Britain out of the European Union, of which it had been a grouchy member for more than 40 years. “No man is an island,” John Donne wrote in his Devotions upon Emergent Occasions. “If a clod be washed away by the sea, Europe is the less.”

At the most basic level, uncertainty is always bad for business. Small British publishers—always conscious of cutting their cloth—will be cautious indeed. The multinational houses that dominate the industry will be modeling various scenarios. I hear that one has already put new projects and contracts on hold. And as with the 2008 recession, some will use Brexit as an excuse to rationalize, to put out to grass older and wiser, but more expensive, heads and hire younger, cheaper staff. (How must indebted British postgraduate students feel, their futures blighted?)

On both the high street and Amazon, sales of books (and much besides) in the U.K. will slump. Brexit will mean an increase in the cost of living. Inevitably, all that means at least a short-term cut in discretionary spending, as there was in 2008. Clearly that will have impact on British booksellers and publishers; lists will be trimmed—perhaps slashed—in response.

Publisher turnover will be further imperiled by the loss of European sales. After skirmishes a few years ago, it was broadly agreed that U.K. publishers should be able to acquire exclusive English-language rights for the entire E.U. market. But with Britain out of the E.U., Europe—including Ireland—becomes an open market, a battleground where the cheapest edition wins out. Academic and educational publishers will be able to continue to seek world English rights and possibly continue to obtain a full assignment of copyright, but trade publishers will not.

Moreover, U.K. trade publishers need Europe to give them scale; after all, their U.S. counterparts already have Latin America and sometimes Canada. The realignment will reduce the income of British authors for whom Europe is currently part of the home market so far as royalties are concerned. The situation could become desperate if—or when—Scotland gains independence in order to remain in the E.U.

Read the rest at Publishers Weekly.

To Compete Better, States Are Trying to Curb Noncompete Pacts

30 June 2016

From MSN Money:

In today’s on-your-own economy, workers are urged to be entrepreneurial job hoppers, constantly adapting and searching for the next opportunity.

But an estimated 30 million Americans — nearly one fifth of the nation’s work force — are hobbled by so-called noncompete agreements, fine print in their employment contracts that keeps them from working for corporate rivals in their next job.

Now a number of states are looking to untangle workers from these agreements. The Massachusetts House of Representatives is scheduled to vote this week on a noncompete reform bill. The state is also the location of a union organizing campaign on the noncompete practices of the EMC Corporation, a large technology company based in Hopkinton, Mass., that is known for its aggressive application of these employment contracts.

Other states are also taking steps as noncompete agreements have spread to summer interns and sandwich shop employees. Hawaii banned noncompete agreements for technology jobs last year, while New Mexico passed a law prohibiting noncompetes for health care workers. And Oregon and Utah have limited the duration of noncompete arrangements.

. . . .

The issue hits Massachusetts with particular force because of its technology heritage and failure to keep up with Silicon Valley. In the early 1980s, the Route 128 corridor outside Boston, birthplace of the minicomputer industry and long-gone tech giants like the Digital Equipment Corporation, was seen as the Silicon Valley of the East.

Noncompete pacts were only one ingredient in the recipe that worked against Massachusetts and to the advantage of Silicon Valley, where employees can depart and start their own companies mostly without fear of a lawsuit. But they mattered. In California, companies are generally prohibited from enforcing noncompete agreements because of a worker-friendly statute from the 19th century.

“It’s hurt our economy in the past, and it’s a statement of values about entrepreneurship and mobility that Massachusetts has noncompetes and California does not,” said Stephen Kraus, a partner at Bessemer Venture Partners and president of the New England Venture Capital Association.

. . . .

Technical workers in Massachusetts would be paid about 7 percent more if the state’s noncompete practices mirrored California’s, said Evan Starr, an economist at the University of Maryland’s Robert H. Smith School of Business.

Job mobility is reduced, according to other research, and workers are more likely to detour from their original career paths. Sometimes companies sue departing employees, but those cases are the exception.

“It’s not about the lawsuit, but about the far larger chilling effect,” said Matthew Marx, a professor at the Massachusetts Institute of Technology Sloan School of Management.

In 2008, Brian Connolly, an engineer with years of experience writing software for medical devices, joined a start-up developing diagnostic technology to identify biohazards, First Light Biosciences. After the financial crisis hit, the start-up laid off 12 of its 14 employees, including Mr. Connolly.

Shortly after meeting with a new company, Mr. Connolly got a call from his previous employer, telling him the noncompete prohibited him from joining any company in diagnostic devices, even if the application and the technology were different.

“I understood noncompetes were common practice, but I didn’t think they would enforce it, and that broadly, after a layoff,” he said.

Link to the rest at MSN Money and thanks to Kat for the tip.

PG has discussed the problems that non-compete clauses in publishing agreements present for authors on several previous occasions.

Assuming that the publisher would never enforce a non-compete clause against an author (even when the editor representing the publisher says this is the case) is a bad idea. Typical publishing contracts are assignable and, even if the statement is true with respect to the publisher’s current owners, it may not be with the publisher’s future owners.

With the disruptive changes sweeping through publishing, PG says you can expect more and more traditional publishers to merge, file for bankruptcy or hold fire sales of their assets. Those assets will include all the publishing contracts authors have signed with those publishers. The publisher who holds rights to your books in 2040 will almost certainly be substantially different than the publisher you sign with in 2016.

During the life of a “full term of the copyright” publishing contract, it is certain that the management of publishers will change and very likely that the ownership of publishers will change. It’s a bad idea for an author to accept any contract provisions that aren’t exactly right for the author’s long-term career prospects.

One of the many advantages of self-publishing is that, following Amazon’s lead (and pursuant to standard practices for tech companies using click-to-accept online contracts), self-published authors can expect their contracts will permit them to terminate the agreement with their distributor/etailer at any time.

However, don’t assume this is the case. You need to read those click-to-accept contracts, AKA
Terms and Conditions, when you decide to work with a distributor/etailer to license your ebooks or sell your physical books.

PG is sorry this is the case. He knows you would rather swallow worms than read that turgid lawyerese. He knows that outlandish terms in such contracts might be overturned by a judge if challenged, but his advice stands.

PG will also reveal that more than one tech company has failed to read or understand the Terms and Conditions contract it received from its attorney and just posted the document on its website. If you see something you don’t like in the contract, send an email to the company to tell them it’s a deal-breaker. You may be surprised learn that management of the company agrees with you.

Thugs, Lawyers, and Writers

18 June 2016

From Kristine Kathryn Rusch:

Here’s the best and worst thing about writers:

We have fantastic imaginations. Those imaginations serve us well when we write books and stories. Those imaginations often fail us when we enter the business world.

What do I mean?

It’s rare to find a writer with a Pollyanna view of the world. Most writers are better at gloom and doom than they are at unremitting optimism.

Writers also have an inflated sense of self—we couldn’t do our jobs otherwise—and a weirdly introverted need to be the center of attention. If we screw up, we feel like the entire world knows—and the entire world will react.

Badly.

For reasons I don’t understand, writers also want rules. They want to know how to write, what to write, and what to do when they’re finished writing. They cobble bits and pieces of information from blog posts to Mrs. Hanson’s Fourth Grade English class, and come up with some convoluted set of rules that they believe every writer could and would follow.

And, more so than in almost any other profession I’ve encountered, most writers are ethical to the point of self-harm. For example, in the United States, we have an annual homework assignment—our federal and state tax returns. Convoluted laws and all kinds of regulation allow for deductibles and legal ways to move income from the taxable side of the equation to the not-taxable side of the equation.

Writers often won’t use those deductibles and regulations that favor them, preferring to pay the full tax burden. Why? They believe that everyone should pay their fair share.

. . . .

But the writerly weirdness causes conflict with our careers and our businesses, in part because we are (as a group) imaginative, rule-bound, pessimistic, ethical, and the center of our own small universes.

We bring all of those things into the realm of contracts.

Be honest with yourself: What do you imagine will happen to you if you don’t follow your book contract to the letter?

Many of you imagine the Worst Case Scenario. What is that? You don’t know, because it’s never happened to you or your friends or your friends’ friends. Writers tend not to discuss what happens when they don’t follow their contracts to the letter.

But most writers imagine they know. They imagine those thugs from the old Warner Brothers cartoons showing up at their doorstep, doing bad Jimmy Cagney impressions, and threatening them with everything from bodily harm to loss of their home to—I don’t know.

. . . .

I’ve spent too much time with lawyers, businesspeople, and sales executives. To them, the entire world is negotiable.

In the past month, I found myself explaining writers to lawyers. Lawyers know that contracts are not written in stone. They’re rarely written in blood. All contracts can be changed, modified, muted, and defanged with enough effort. Sometimes that effort requires a judge and a courtroom.

Often that effort is as simple as a letter of notification, saying quite clearly that one party to the contract no longer wants to follow one particular clause in the contract. If the other party may simply accept that notification, or the other party might protest. Either way, a dialogue has been opened and the contract might end up being renegotiated.

However, lawyers—all lawyers I’ve met anyway—say something when discussing contracts that confounds most writers. Lawyers use the word “ignore” a lot.

Here’s how the conversation goes:

Kris: [flailing about, describing in great and horrid detail how upset she is about a contract clause that is ridiculous, probably unenforceable, and most likely will not stand up in court.]

Lawyer Friend: I don’t think that clause is legal.

Kris: But writers will follow it anyway.

Lawyer Friend: Tell them to ignore the clause and see what happens.

Kris: Writers would never do that.

Lawyer Friend: Why not? People ignore unenforceable clauses in contracts all the time.

Kris: Writers just won’t. They follow rules.

Lawyer Friend: What’s the worst that could happen?

Kris: I don’t know. You tell me.

Lawyer Friend: [shrugs] They’ll end up in court. Might be good for everyone involved, so that there’s clarity on that clause.

Lawyers aren’t afraid of thugs and goons and cartoon characters that go bump in the night. They’re not afraid of someone who plays the Big Dog and says, You’ll never work in this town again. Lawyers generally say, Well, let’s see.

Lawyers know there’s usually a solution—and it’s often as simple as standing up and saying to the person on the other side of the contract, I’m not playing your silly game. No. I’m not doing it. Now, what are you going to do?

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like an author’s post, you can show your appreciation by checking out their books.

PG says that litigation also costs publishers money, whether they file suit or the author does.

From his own experience, he suggests that if a publisher is owned by a large European conglomerate, the big bosses in Germany, France, etc., believe the American legal system is insane and way, way too costly.

For the American subsidiary to pay money to US lawyers instead of sending it back to headquarters seems like a waste of good dollars and the US CEO who does so better generate a good return on those legal fees or he/she will be an ex-CEO.

This doesn’t mean that litigation is something to be taken lightly or that publishers will always cave, but it’s a factor to keep in mind.

‘Starting To Hit the Wall’: A Conference Focuses on Publishing Rights

14 June 2016

From Publishing Perspectives:

The rising importance of a mindful, purposeful, aggressive approach to rights management in publishing was phrased many ways during the course of Monday’s conference, Rights and Content in the Digital Age, organized by Publishing Perspectivesin the Grand Hall at New York University’s Kimmel Center.

One of the most intriguing images for the potential value of what book publishing has to offer came from digital content strategist Matt Dellinger, who has done a lot of work in archival content with The New Yorker, Esquire, and other magazines:

“The future of content is more and more about the history of content,” Dellinger said. “It’s a matter of taking the deeper end of the culture pool and circulating it in the kiddie pool of snack-food content.”

From Dellinger and other speakers—and as much in regard to frontlist as backlist—the message was clear: More orchestrated, coordinated, and supported approaches to the management of rights is fast becoming a major key for publishers at a time when sales are challenged in saturated markets: a failure to exploit rights to the fullest, most efficient degree possible is something publishers can’t afford.

Ingenta Chief Revenue Officer Randy Petway’s presentation pointed to how minimal investment has traditionally been made by publishers in the infrastructure of rights departments—something later echoed in comments by longtime rights specialist Kris Kliemann, formerly of Wiley.

. . . .

The day opened with a keynote address from author Roxana Robinson, President since 2014 of the Authors Guild, who warned of the mounting difficulties authors are facing in finding compensation of their work in digitally complicated markets.

“Suppose you want to buy a copy of my newest novel, Sparta,” Robinson said, “which was published in 2013. If you go to Amazon, you will find that they offer a new paperback for $12.98. And also another new paperback for $4.33. And a used paperback for one penny.

“Now, why would you choose to buy the more expensive copy, the $12.99 paperback instead of the $4.33 paperback? They’re both new. You’ll buy the cheaper one. But where does that $4.33 paperback come from? It’s probably a copy the publisher sold off to make room in a warehouse somewhere. It’s very common. Publishers have high hopes for every book they make, they make more copies than can sell…After a certain period of time, they realize they need that space in the warehouse, so they sell off copies cheap to a jobber, a middleman. They sell them at a very deep discount.

“Many contracts have clauses that will allow the publisher, under these circumstances of deep discount, to pay no royalties. The publisher gets paid by the middleman. And the middleman gets paid. Only the author will get nothing at all for the sale of this book which she just wrote…The publishers know this. But they do it [sell at discount to middleman vendors] because they want some money now.”

Link to the rest at Publishing Perspectives and thanks to Dave for the tip.

Permit PG to translate: Publishers are facing more and more difficulties in attracting and keeping top authors because more and more authors are learning they can make more money self-publishing. Such difficulties are, of course, adversely impacting revenues and profits.

So publishers are turning to books by authors who have already signed publishing contracts that grant the sun, moon and stars to publishers. The expanded rights management activities are aimed at maximizing revenues from those authors’ books.

As the comments from Ms. Robinson reflect, more revenues to the publisher doesn’t always mean more royalties for the author. Deep discount clauses are buried in the back of most publishing contracts and, in all such contracts PG has reviewed, he’s never seen any evidence that changes to those clauses were negotiated by anyone representing the author.

(For a number of years, it was not unusual for changes to the boilerplate contracts of large and not so large publishers to be highlighted in some way (bold type, underlines, indents, etc.) in the version of the contract the author signed. This practice continued for long after word processing software came into common use. Where such practices were followed, it is easy for PG to see what modifications to standard agreements were made to the author’s benefit or detriment and what unfair contract language was left unchanged.)

Under complex contracts granting a wide range of rights to a publisher, it is sometimes possible for the publisher to license or sell a book in a variety of different ways to affect how much money the publisher keeps. Harlequin’s former practice of licensing every book to a related HQ company instead of directly publishing it, thereby substantially reducing HQ’s royalty payments to authors, is one example of exploiting complex contract provisions in ways authors may not expect.

The standard contracts of other large and small publishers would permit them to do the same thing HQ did to increase profits and reduce royalty payments. It’s something PG has seen and corrected more times than he can remember.

When lowering the price of a book to increase sales, a publisher that is paying attention to the deep discount clause can make more money by pricing the book at a penny less and triggering deep discount royalties (or non-royalties) than it will make by pricing the book at a penny more and paying standard royalties.

PG suggests that aggressive rights management activities are more likely to materially increase the publisher’s income than the author’s income.

On the True Costs of Bargain Books, Or Guilting Readers Because Authors Signed Bad Contracts

10 June 2016

From The Digital Reader:

James Mayhew has taken up the cause of trying to guilt, harangue, or otherwise convince readers to overpay for books from legacy publishers.

About a month ago (I just now found it) Mayhew published a post where he argues that fans should not buy bargain price books because an author’s royalties are slashed as the price drops.

So how does it all work? Authors get paid royalties, which are a percentage of the book price which you may (or may not) earn from books sales, usually around 5-10% of the price, but very often less; most books are discounted in any case, and the royalty shrinks accordingly. In simple terms, you would expect to get between 50p and £1 for each hardback book sold (and less on a paperback). This is completely normal, and I have no complaints, although it’s often a shock to people.

What happens when books get discounted further? Subject to contractual terms, the royalty may shrink on cheaper books. So you end up getting a tiny % of an even smaller amount. We are talking pennies. Once upon a time there was a system called the Net Book Agreement, limiting the extent to which books could be discounted. But that was abandoned in favour of a “free market” years ago. The result? books can be reduced to next to nothing.

But increasingly, publishers broker cold, hard, cynical deals with these people and then print to order. The publisher is complicit in the arrangement and sells books at extremely low prices (less than 50p per book) to the discount catalogue (but not at a loss to themselves) who then sell them on at a very nice profit – usually £1 per book. Tens of thousands of copies. And the author? I get less than 4p a book, while the discount company makes millions every year. …

. . . .

Authors and publishers might see things differently, but what I see here is an author who is trying to guilt readers over the price they pay for books.

That is a pretty obnoxious behavior, but it gets worse when we look at it sideways. That’s when we realize that the real issue here is not the price of the books but the contract terms Mayhew agreed to. He’s trying to make readers responsible for his, and other authors’, bad business decisions.

Link to the rest at The Digital Reader

That’s just the strategy for attracting more book buyers – make them feel guilty for doing so when books are discounted.

PG suggests that when indie authors are talking to readers, in addition to thanking them for buying the author’s books, it might be a good idea to let the readers know that when they buy indie ebooks on Amazon, in many cases, most of the money goes directly to the author. That’s why Amazon is such a great friend to authors and readers.

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