Kristine Kathryn Rusch

A Real Book Contract

1 September 2016

From Kristine Kathryn Rusch:

[O]ne of my readers forwarded me an article from Locus Online about Hachette suing one of their bestselling authors. It seems that for some reason, Seth Grahame-Smith did not turn in the second book of his contract with Grand Central for the follow-up book after Abraham Lincoln: Vampire Hunter.After two extensions of his deadline, and a threat from Grand Central, Grahame-Smith turned in something that Grand Central found terribly unacceptable. They claim he appropriated a 120-year-old manuscript as part of the book.

Considering Grahame-Smith also wrote Pride and Prejudice and Zombies, a book substantially based on a 203-year-old novel, I kinda had a yeah-so? reaction to the 120-year-old manuscript thing. So I went and read the lawsuit, and realized a few things.

First, the deal was made in 2010, before a lot of the major changes in traditional publishing occurred. The handwriting was on the wall, but back then, this Pride and Prejudice and Zombies thing was hot, so Grand Central ponied up a four-million-dollar advance, paid in $500,000 chunks.

Grahame-Smith received at least 1.5 million of those chunks, maybe as much as 2.5 million before the relationship soured.

Grand Central’s parent company Hachette is suing Grahame-Smith for $500,000, the advance on that second book of this contract.

Figure this: The publisher believes it’s better to sue the author than it is to leave that $500,000 outstanding. There are several reasons that Hachette could have made the decision to file suit.

For example, the time has long past for the second property to ever earn what the first properties did.

. . . .

By 2016, it’s really clear that Hachette will lose money on this second book. Better to file suit and ask for the $500,000 plus interest than it is to pay out an additional 1.5 million owed through the contract. Legal fees won’t equal that amount, even if the case makes it to court.

The case is a pretty standard breach-of-contract suit, and from my glance, it looks winnable for Hachette. Even if it’s not, the contract will be canceled, and Hachette won’t owe Grahame-Smith another dime.

It’s pretty much guaranteed that Hachette wouldn’t have accepted a manuscript from Grahame-Smith for any reason in 2016. Hachette was looking at a major financial loss on the second book in this contract.

Expect more of these kinds of suits in the future. If the writers who got huge advances do not meet their obligations with the publishers, the publishers will cut their losses and run as fast as they possibly can.

. . . .

I’m going to tell you a few things.

  1. This is an agent-negotiated contract. However, the agency that negotiated the contract is William Morris. I can tell you from experience that William Morris has lawyers on staff. In theory, those lawyers advise the agents. So, in theory, William Morris had lawyers who talked to Grand Centrals lawyers while negotiating this contract.
  2. I don’t care what entity negotiated for the writer. Whoever the hell it was did a piss-poor job. I have had better contracts for novels paying me $10,000 than this multimillion-dollar contract. I have to admit: I’m shocked by this contract. It’s a midlist writer contract (for a writer with no clout) dressed in million-dollar clothing.

I scanned, but I didn’t see anything I would expect in a multimillion dollar contract. No escalators. No protections for the writer. Low royalty rates. Bad discount clauses.

Half the stuff I listed as dealbreakers in this series are better than many of the terms in this contract.

. . . .

And then…and then…oh, my God, and then!

The agent clause (p. 19-20). It is the worst agent clause I have ever seen. Worse than the ones I warned you about. It has this lovely addition, which is new to me:

The provisions of this paragraph 25 shall survive the expiration of this Agreement and are specifically included for the benefit of the Agent which is hereby named as a third-party beneficiary.

Wow. Just—wow. Go back to the agent clause post I did, and scroll through the comments. See what the lawyers who responded said about the duties of agents and how these clauses are most likely illegal.

From one of the lawyers answering a question on the post: “Yes [the agent clause] is illegal. (1) “Agent” is a legal term for someone empowered to act on behalf of another person. (2) A conflict of interest occurs when a person acting as an agent benefits from the transaction. If a lawyer did this, the lawyer would be [disciplined]….”

. . . .

[R]ealize that this contract isn’t the worst I’ve seen, and it certainly isn’t the best. It’s a really crappy multimillion dollar contract—the author should have received protection from his representatives, but we all know how good that representation is. (Or, at least, you folks know if you’ve been reading my blog.)

Then realize that traditional publishing is not really giving these big advances any more. The big-advance books aren’t earning out. Which is why Hachette is cutting its losses here.

So your chance of getting this kind of advance is pretty slim. And even if you do, did you notice the lovely clause about promotion?

The Publisher shall have the sole discretion to determine what, if any, promotional services the Publisher may perform for the work…

(I added the bold for emphasis here and below.)

That’s clause 8(d) (p.14) and while there are other clauses that apply to promotion, the operative phrase here is “if any.” It means all those other clauses are wasted typing. If the publisher doesn’t want to promote these books, the publisher doesn’t have to. Ever.

. . . .

[T]here’s another scary clause that favors the publisher in this contract, a clause that I had never seen before. The royalty statements don’t have to be accurate. It says so right in the contract. It uses a phrase I’ve never seen in any contract before.

It says:

The Publisher shall render semi-annual statements of “estimated net sales” and net licensing revenues…

“Estimated net sales.” That’s new to me. The Publisher then defines “estimated net sales” as “sales less actual returns and less a reasonable reserve against returns of the Work…”

“Reasonable reserve” is not defined, and if the author wants to know what the publisher actually is withholding, the writer has to ask, in writing, for that information. The writer also has the right to audit the publisher—at the writer’s expense, of course.

Oh, and—there’s no cap on returns, and no time limit on the reserve.

I had the misfortune of mis-negotiating a reserve on returns twenty years ago on a work-for-hire project. I still get royalty statements—on a book published in 1995—in which reserve against returns continue to be withheld. Even now! Twenty-one years later.

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 will note that the lawyers on staff for the William Morris Agency work for William Morris, not the author. William Morris lawyers were likely the ones who crafted the agency clauses that Kris rightly criticized as totally unfair to the author.

PG was not and is not involved with this matter in any way. Looking from the outside, he wonders if counsel for the author is considering a suit against William Morris for failure to properly advise the person who was supposed to be their client.

Agent Agreements

22 August 2016

From Kristine Kathryn Rusch:

We’re almost to the end of the contracts/dealbreakers series. I can’t tell you how pleased I am about this, because I feel dirty just looking at some of these contracts and agreements.

Most of you indie writers tuned this series out long ago, because you believed it didn’t apply to you. And yet, I read all the time about indie writers who sign with an agent to sell the print versions of an ebook and to sell foreign rights and auxiliary rights.

Bad move. Really, really, really bad move.

First, you’re signing traditional publishing contracts if you sell your paper book rights. You’re also signing traditional publishing contracts if you sell foreign rights. And I’m not even going into Hollywood options or movie deals or TV deals—

. . . .

Think about that for a moment: this writer hired an agent to represent all rights in the book, including movie and TV rights, and the agent had the writer sign a shopping agreement with a third party. Right there, that’s suspect. Because the agent should already have representatives from the agency (or a partner company) shopping the property.

This shopping agreement had no termination date, allowed the third party to shop the book to anyone who might make a film, a game, anything that moved, in technology developed or not yet developed, in territories around the world and the universe in perpetuity. For the duration of the agreement, the third party and the agent controlled all of those subsidiary rights in the project.

And the kicker? No money exchanged hands. The writer lost control of all subsidiary rights in her book project for no money and no reason, in perpetuity. All because her agent told her to sign the damn agreement. And the writer did.

And then she sent it to us as an example of the agent doing a good job.

. . . .

At first glance, these agent agreements, as they’re called, seem pretty benign. Most are no more than 3 pages long, and seem to be written in English. In fact, most of them are written in chatty language, usually in the form of a “letter,” so the writer thinks they’re signing something informal, when really, they’re signing a contract.

The worst one I’ve seen comes from a huge, very famous agency, whose chairman (and lead agent) apparently figured he could save money on legal fees, and cobbled an agreement together himself.

It looked like it was made of spit and glue, and had many unenforceable clauses. I’m sure it’s been revised since by lawyers, because I know two writers who challenged the thing in court.

But the version I have gave the agency 15% of the copyright in every project the agency represented. It said so flat out in the agreement. (I’m sure the updated version says the same thing, as well. I’m sure it says all the same things, except in better legalese.)

The agency also decided to cover its tushy by adding some version of this:

The writer agrees to follow any agent clause in a publishing contract to the letter.

In other words, that agent clause in your traditional publishing contract, the clause we discussed last week, the clause stuffed full of things that benefit the agent? Well, if you had no agreement like this with your agent, that clause is toothless.

If you have an agreement saying you will abide by the clause in that traditional publishing contract, then suddenly the clause has teeth. And so does every version of that clause you signed from the beginning of your relationship with the agent.

. . . .

The agreement I have before me, from a long-time agency, founded by one of the big name agents of the mid-20th century, has an agency agreement that looks like the chatty letter-type agreements I saw in the 1980s.

Until you read it.

And then you find clauses like this (the emphasis in bold is mine):

You hereby irrevocably assign to us and we shall be entitled to retain a sum equal to fifteen (15%) percent of all gross monies and other considerations paid to you or on your behalf with respect to any and all contracts negotiated and concluded under the terms of this agreement…

Well, you can delete the word “irrevocably” and the clause isn’t that bad, right? If they negotiated something, then they’re entitled to their percentage, right?

Um, the clause doesn’t stand by itself. Combine it with this baby:

This agreement is effective immediately and continues in effect until terminated by either party…We will continue to function as your agent and to receive our commission on all contracts negotiated and concluded during the term of this agreement, or within six (6) months following termination, if negotiations were commenced during the term hereof, and any modifications, replacements, extensions, and supplements of such contracts regardless of when made or by whom negotiated or when payments were received

So imagine this: you fire the agency because they screwed up your negotiation. Say, maybe, they tried to give a free option to a big name actor, or something stupid like that.

You do the negotiating yourself on the deal (with a lawyer back-stopping you), get a movie option for six figures, that’s then made into a film for seven figures, plus the book the movie is founded on stays in print, and becomes a bestseller, and you renegotiate the contract and, according to this stupid agreement, you still have to pay the f***-up agent her 15%. The agent you fired because she was bad at negotiating.

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.

The Agent Clause

15 August 2016

From Kristine Kathryn Rusch:

So, you decided, even after last week’s post, that you need an agent. Maybe you were one of the people who found a way to dismiss the post because of my hyperbole in the beginning, figuring I don’t know what I’m talking about. Sure, sure, your agent would never do such things. Ever, ever, ever.

. . . .

[I]n case you’ve forgotten it, you hired that agent. They work for you. (In theory. Generally, in practice, their interests align with the publishing company, but that’s another blog.)

So what this means is that you have or you will sign contracts with your publishers that reference your agent. And you will sign an agreement with your agent, creating a document that governs your relationship with them.

Writers rely on their agents to negotiate contracts, which means that agents will negotiate things into those book contracts that benefit the agent.

. . . .

Because writers who rely on their agents to negotiate book contracts generally sign agreements with the agent or the agency which the agent is attached to without negotiating that agent agreement at all.

. . . .

This week, let’s deal with the clause that agents insert into your book contract with your publisher.

. . . .

Agents have been abusing this clause for years now. Agents, not publishers, even though this clause is in a publishing contract between the writer and her publisher.

Once upon a time, publishers paid the writer directly and the writer paid the agent. Which is, frankly, how it should be. After all, the agent is someone you hired, not the publisher.

However, some brainy publisher got the idea that if Agent A has 20 clients with the publishing house, it’s easier to write one check to Agent A than it is to write 20 checks to the writers. Agents liked this because that meant they didn’t have to browbeat their writers to get the commission.

If the contract is between the publisher and the writer, the publisher cannot just pay the agent. That’s illegal. The author can’t just say, “Oh, pay my agent,” because that’s not legally binding.

If the author wanted to the publisher to pay the agent directly, it had to say so in the writer-publisher contract. So some lawyer came up with the way to do this. That was the origin of the agent clause, which was, in reality, a payment clause.

Back when this started, the clause looked like this:

The Author hereby authorizes the Author’s agent, Agent A, to collect and receive all sums of money payable to the Author pursuant to any of the provisions of this Agreement.

And that’s it. That’s all. Really simple, right?

The net effect was this:

Checks sent to Agent A (at such-and-so address) counted as payment to Writer Z, and thus fulfilled the contract. That’s all. If the writer signed the contract, then the clause became activated, and all payments went to Agent A.

The problem with this is, if you fire Agent A, you need an addendum to the contract, so that payment would go either directly to you or to Agent B, who is now your representative.

Well, that might screw Agent A out of money that you might owe him. So the agent started adding words like “irrevocable” to the agent clause which, of course, he negotiated with the book publisher.

Then things went crazy. Agents started adding all kinds of things to the agent clause which are in the agent’s interest, but no one else’s. The agent would add things like “the agent represents the author on this book, and all foreign sales of this book” and so on.

. . . .

I’m not assigning anyone anything “irrevocably”—certainly not someone I can fire for cause. Especially if my money goes through their account first. I will not “fully empower” anyone to act for me.

(Some agents go so far as demanding legal power of attorney—which is something you should never give anyone. What that means is that they then have the right to be you in all legal matters. No. Do not give legal power of attorney to anyone without good cause—like you’re dying and need someone to handle your accounts [and even then, it might not be a good idea].)

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.

Protecting Your Content and Your Name

29 July 2016

From Kristine Kathryn Rusch:

Back when I was writing a lot of tie-in novels for Pocket Books’ Star Trek division, a brand-new editor asked me to help him rescue a short story anthology. It seems that the main writer on the project had quite unexpectedly. The writer had outlined the story, and the outline had been approved by Paramount, which was a major hurdle. What the editor needed from me was an actual draft of the story.

In other words, none of the characters were mine. The plot, setting, and theme were not mine. The editor needed my style as a writer and my name on the cover. That was it.

I had never worked with this editor before. My usual Star Trek editor advised me to stay clear. But, I figured, it was just a short story. What could it hurt?

Well…it didn’t exactly hurt. But it was perplexing. I wrote the 6,000 word story as requested from a 2,000 word outline. Turned the story in on time. Got an acceptance, and the ridiculously high acceptance payment.

Then I got the copyedit.

Which wasn’t a copyedit. The editor himself had rewritten every single sentence of the story. Every single one. Sometimes adding passive voice. Sometimes making the meaning unclear. Always dumbing down the content and the voice and the point of each sentence, let alone each paragraph.

I looked at that, glanced at my contract, and realized that even though this short story was written as work made for hire, I could make a huge stink about this. I could pull my name or pull the story or cause all kinds of grief.

In the end, I decided to leave it alone. If you look up this short story now, you’ll see the most poorly written thing ever published under my name.

. . . .

That is the only time in my recollection that I can recall allowing an editor’s or copyeditor’s full rewrite of my work to get into print. I’ve had worse rewrites in my career, including a copyeditor who changed every single piece of punctuation in one of my romance novels, but I never let those go through under my name.

I cited contract terms, refusing to allow the changes. I pulled books from publishers because of shenanigans like this. I got copyeditors fired. Repeatedly.

I defend what I write. My writing in some story or novel or nonfiction article might be awful, but it’s mine. If I put my name on it, guaranteed—except for that one short story—every word in the piece is a word I wrote or approved. Every single one.

. . . .

I told you that most writers check their traditional book contracts for the advance, the payout, and the due dates. They don’t look at anything else. Writer after writer, and editor after editor, have told me this.

I always look toward the editing clauses first. Because if they’re ugly, the rest of the contract usually is as well.

This applies to all kinds of writing for traditional markets, especially for nonfiction and short fiction. I’ve seen terrible editing clauses in those contracts, and what’s ironic is that those clauses often seem to be the most innocuous.

What you want is complete control of the content of your work. In every single short fiction contract I sign, I change the publisher’s right to “edit the Work” to “copyedit the Work.” I always add a line that ensures I must approve any changes, including those copyedits, to the Work.

If I don’t like the copyedit, my version stands. If my version isn’t going to stand, then the story doesn’t get published. Period, end of story.

. . . .

The British publishing company has the right—if the publisher deems that right necessary—to completely rewrite my article. They could change everything. They could add stuff I find objectionable—political points of view, for example. They could libel someone through careless writing or even deliberately. They could take a piece in which I say I love something, and change it to say I hate it.

They can do all of that, because I would have signed that right away. Then I would have waived my right to remove my name as the author of the piece. So they could write all this stuff, and claim I meant it, because my name is on it.

. . . .

Oh, and one that drives me as batty as the editing clauses: they have the right to my name. Not just to use my name in publicity. I “empowered” them to use my name in any situation they “considered necessary.”

My name.

I see this clause a lot. Writers give up the right to their own names to a corporation for a few thousand dollars and the publication of a novel.

. . . .

She wrote back, refusing to change the editing clause, and then said this:

I’m afraid the moral rights clause is not one that I am able to make any alterations to. It is a standard clause across all of our contracts and our lawyers will not accept changes to it. As you say, this is a clause that relies somewhat on trust; I can only assure you that we will not act unreasonably, as it would not be in our interest to do so….

I kid you not. She wrote “Trust us. We won’t hurt you.”

. . . .

Make sure the editing clauses in your contracts—from short story contracts to article contracts to novel contracts—limit what the publisher can do to your work. You essentially should allow them to change some things to house style (like whether or not you put a capital after a colon). You should have the right to review a copyedit—and to have the final say on that copyedit.

You also need a clause that limits revisions. When there’s a clause in the contract that says that the finished book must be “accepted” by the Publisher, then you have to define what that means. If it means revisions, then those revisions should be limited to no more than two or three before the contract terminates.

I’ve known writers who rewrote their books for years before the books finally were tossed back as unacceptable by the publisher. One author I know rewrote her book every year for ten years for a textbook publishing house I worked for. When my boss left, and the next editor took his place, that editor saw this continual revision, and canceled the contract. the writer had to repay her entire advance.

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.

Regarding responses such as our lawyers will not accept changes [to a standard contract provision], PG says that the lawyers work for the publisher, not the other way around.

If a publisher tells its lawyer to modify a contract provision to reflect a request from an author, the lawyer will do so. The lawyer may advise the publisher not to make the change for this or that reason, but if the publisher instructs the lawyer to make the change anyway, the change will be made.

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.

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.

The Midlist Rules!

24 June 2016

From Kristine Kathryn Rusch:

Inspired by the Author Earnings Report, someone asked people on that forum to report in, if they were in the top 1% of indie published writers. Meaning, according to this forum, that these writers earned at least $100,000 per year on their indie published books. Not on one book. On all of their titles combined.

Overall income.

That’s an important point.

I spent an hour reading the self-selected responses. Of course, folks who didn’t earn that much responded as well, and frankly, those posts were just as interesting as the others.

What I found fascinating wasn’t the number of writers who earned $100,000 on their Amazon sales alone. It was the other numbers in their reports.

Unit sales.

My little brain was blown.

And it shouldn’t have been. It really shouldn’t have been.

. . . .

I have known for years now that all of us earn more money on a per sale basis when we self- or indie-publish a book than we do when we sell our traditionally published books.

. . . .

To make $100,000 in a year, the traditional writer would need to sell 113,636 ebooks that year [with a net royalty of] 88 cents each.

Got that?

For an indie writer to make the same money that year, the math is pretty simple.

The indie writer gets 70% of the $5.00, just like the traditional publisher does. So the indie writer gets $3.50.

To make $100,000 per year, the indie writer needs to sell 28,571 ebooks in a year.

. . . .

You see, in traditional publishing, how much writers earn cumulatively doesn’t matter. Traditional publishing is all about The Book. One book. Not a series of books. Not all books by author. One book.

Royalty statements are based on the contract. If the contract is a one-book contract, then the only thing counted on those royalty statements is that one book.

That thinking is deeply, deeply engrained for me. And what’s worse, I have two sets of traditional calculations in my head.

The first is how many books per year I needed to sell to a traditional publisher to earn $100,000 by advance only. Because the advance is the only thing a traditionally published writer can guarantee.

Since advances are never paid as one lump sum amount, a writer would have to do one of two things—sell a book to a traditional publisher for at least $300,000 or sell a lot of books to traditional publishers that same year so that the total paid out would equal $100,000.

First, the $300,000—divided into signing, acceptance, publication. $100,000 for each third. Book contracts are still structured like this, although often, these days, it’s divided by four or more.

. . . .

My very first novel, The White Mists of Power, came out in 1991 as a mass market paperback with a cover price of $4.99. I was a baby writer, with my first novel. So my royalty rate was 6% on that book. Which meant that for each copy sold, I made 30 cents.

To earn $100,000 on that one book, I would have had to sell 333,334 copies of that title at full price. (Getting the full price royalty was easier to do in those days, by the way.)

. . . .

For me—and people like me, people who “grew up” in traditional publishing—earning $100,000 on one book in one year meant you either had a great agent who managed to bump the advance on that book or your book sold at bestseller numbers. Pre-2010 bestseller numbers.

So…when I hear that a writer makes $100,000 per year, and is only doing so on a handful of books, I default to my training. Oh, I think, they’re selling hundreds of thousands of copies.

Nope. They’re selling tens of thousands of copies.

Most of my traditionally published novels—including the absolute failures, the ones that never earned back their advances—sold more copies in their first year of publication than the books that are making their indie writers $100,000 per year.

I am not saying this about my traditional books to say that traditional is better. It no longer is. In fact, if you look at the Author Earnings numbers, you’ll see that a traditionally published debut author will actually sell fewer copies than an indie published debut author. And not by a few hundred copies, but by thousands of copies.

I’m making this point because so many long-time traditionally published writers get stuck in the wrong number.

We look at copies sold rather than income earned.

. . . .

Back in the 1980s and 1990s when a lot of us started, we sold at least 30,000 copies of a single title in the first month of release.

Book sales figures went down rapidly in the years 2007-2010, yet most midlist books in the first month of release sold at least 10,000 copies . The sales would fall rapidly after that because the book would disappear from store shelves, but the initial sales were high.

Now, sales build. They start small and grow.

. . . .

You can make what I call bestseller money—$100,000 per year or more—without selling more than 5,000 copies per year of a single title. Look at the numbers above.

To earn $100,000 per year, the indie writer has to sell fewer than 50,000 books per year. If the indie writer has one series of five books that sells better than her other series, she could sell 10,000 copies of each book in the high selling series over the entire year, and make that $100,000 (at the $3 price point). If the other non-series titles are trucking along at a much slower pace, the writer could be selling, say 8,000 copies of her books in her series, and 10,000 copies of all her other books combined, and make more than $100,000 per year.

Those book sales figures are small by old traditional publishing standards.

. . . .

People who work in traditional publishing have been making the same mistake I continue to make. They weren’t thinking about the real numbers. I know better. But they apparently do not.

They’re buying, say, paperback rights to ebook series and expecting to get bestseller numbers out of those books. Or even midlist numbers.

Even those indie authors are extremely successful, their single titles are often not selling at the kinds of numbers that make an international conglomerate happy.

Which is why so many formerly indie writers—and their traditional publishing editors—end up confused and disillusioned. The indie writers who’ve gone traditional expect their numbers to increase, which is a reasonable expectation, given all the hype that traditional publishing shells out about its ability to market books.

The traditional editors expect the formerly indie writer with the proven title to sell at old-fashioned traditional numbers—30-50,000 copies out of the gate. That usually doesn’t happen any more, and rarely happens with the paper-only deals.

Everyone gets disillusioned. Of course, the traditional editors aren’t doing their due diligence because hey! that’s numbers, and they do numbers much less often than I do. They go with their gut.

Or they do something else entirely. Like this absolutely terrifyingly accurate piece from the May 6, 2016 Entertainment Weekly, titled “The Million Dollar Book Club.”

The article purports to explain why publishers are “betting big” on some debut authors. The amount of “gut sense” and ignorance of actual numbers in that article is so staggering, the reporter noticed it, and asked one of the publishers interviewed about it.

That lead to the article’s final paragraph, and it’s a doozy:

Given the amount of books a publisher needs to sell in order to make a profit, it’s possible that none of these novels will actually make money. But Random House publisher Susan Kamil believes that the honor of having a sparkling literary talent on your list can offset any financial loss. “We want to have the best writers in the world at Random House,” Kamil says. “Sometimes those writers come at a premium—and we have paid it.”

Think about that for a moment. This is someone who is charged with running a for-profit business, trying to make sales, and boosting a bottom line, and she’s saying, “The honor of having a sparkling literary talent…offsets any financial loss.”

Um, no, honey. It doesn’t.

That’s how authors with big advances and sparkling debuts end up getting dumped by their publishers.

. . . .

What I’ve been telling all of you for years is this: you can make more money indie-publishing than you can as a traditionally published writer. More money faster, and more money in the long term.

I’d been seeing it in my own income. However, I also saw the sales figures and good old-fashioned me felt odd about it. Because of those high velocity numbers my books used to have back in the day.

Right now, the new books in my various series (with all but one pen name) are selling annually at much higher numbers than they ever sold when published by New York. Not in that first month. But by the time the books would be off the shelf in the old model, the sales I have are greater than that first month of traditional publishing sales. And the numbers are cumulative, meaning next year and the year after those books will still have very good sales, growing sales.

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 will observe that Kris is describing a textbook characteristic of disruptive innovation.

The industry incumbents don’t want to compete in the market where the small disruptive businesses are selling their products. Those markets simply don’t generate enough profit to support the cost structure and profit needs of the incumbents.

Good sales for indie authors – sales of all their books sufficient to generate $100K in annual royalties – won’t move the needle for big publishers.

Once the small businesses reach or exceed break-even, they can continue to operate, compete and expand. PG predicts the number of authors who earn $100K or more in annual royalties will continue to increase in future Author Earnings reports. And so will the number of authors who earn seven figures or more in annual royalties.

More and more of these authors will be those who, absent indie publishing, would have signed with a traditional publisher and made money for a traditional publisher. But no $100K indie author is going to be satisfied making $30K as a traditionally-published author. And no $1M author is going to be satisfied making $200K as a traditionally-published author.

Any indie author who is supporting him or herself with their writing and who looks past an attractive one-time advance to consider their future ten-year or twenty-year income from indie publishing is not going to be tempted to take the traditional route.

From the indie author’s perspective, the cost of doing business with a traditional publisher is so high that the publisher will have to sell a large multiple of the number of copies the author would sell as an indie and keep selling that large multiple year after year to beat what the author would earn from self-publishing the same books.

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.

The Grant of Rights Clause

26 May 2016

From Kristine Kathryn Rusch:

I am revising the Dealbreakers 2013 book. I had hoped to revise it every year, but I get so discouraged looking at the contracts as they exist now. I actually started to revise in the hopes of having the new book in this Storybundle, and then discovered I had so much new material that I didn’t have time to finish the book by mid-May.

Why is there new material? Because traditional publishing contracts have gotten ugly (or should I sayuglier?). And they’re not alone. Contracts for movie deals, gaming rights, comic books, and now works in translation are also getting more and more draconian.

Corporate entities have finally gotten a clue about the value of copyright and trademark. Now, those entities which own many of the companies you’ll deal with—even as an indie writer—want to own each piece of the copyright to any property they put their grubby little fingers on.

. . . .

As I’m revising the old Dealbreakers book, I am finding a lot of material that no longer applies. 2011-2013 was a transitional period in the ebook revolution. Traditional publishers didn’t know anything about ebooks, and writers had a lot more leeway in what they could do.

Now, things are so different that some of the contracts I’m touching feel toxic to me. I want to wash my hands after holding them.

. . . .

Let me show you an example of something you should never ever sign. This is from a real contract, offered to writers this year, which someone sent me a little over a month ago:

Effective immediately upon the execution of this Agreement, the Author hereby grants to the Publisher the following:

1) The sole and exclusive worldwide rights and license to print, publish, distribute, sell and sublicense, and generally exploit the Work, in all languages, whether in print, electronic, digital, audio, video, television, film, theatrical, or any other form or format now known or hereafter discovered or created, in all languages, including any and all editions and formats of the Work, in whole or in part and all revision of the Work and any edition thereof. As used herein, the term “editions” shall include worldwide rights: the term “formats” shall include all print, book club, and all electronic formats including download (whether over the Internet, through an “app” or otherwise), audio, disk, CD, or any other electronic or digital format known or to be invented, enhanced ebooks, mass market, large print, and any future formats/technologies for the duration of the contract term;

The Grant of Rights section goes on, with three more points that I’m not going to deal with here, because that clause all by itself is so squiggy that I shuddered as I typed it. Ugh.

. . . .

Any writer who signs this damn thing can’t even publish an author’s preferred edition with the text dramatically altered. Or compile an omnibus. Or publish half the book in Spanish, a quarter in Italian, and the rest in English. Signing this contract, with this one clause, gives the publisher rights to everything.

The contract goes on in terrible, awful, horrible ways. The noncompete is actually in a section calledAuthor Rights (!) and says that the author cannot “publish or permit to be published during the Term of this agreement any book or other writing based substantially on subject matter, material, characters or incidents in the Work without written consent of the Publisher.” And then there’s another non-compete later, and a third even deeper in the contract.

Link to the rest at Kristine Kathryn Rusch

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

Prince, Estates, and The Future

29 April 2016

From Kristine Kathryn Rusch:

Last week, the death of Prince hit me hard. I was in the middle of teaching the Romance Workshop, here on the Oregon Coast, and working my tail off. A satellite radio station that I always listen to had breaking news—something they never do (which is why I listen to them)—that I could barely hear. I heard “prince” and “died” and “young” so I’m wondering Prince Harry? Prince William? I pick up my iPad across the kitchen to look up the news, and that’s when I see it.

. . . .

I was thinking maybe it was the exhaustion from the workshop, but no. I realized it was because Prince had a huge influence on the way I go about handling business. Doing my work. Taking control of my contracts, my royalties, my art.

I immediately planned an entire blog post on Prince and business.

. . . .

I was still on the fence about how I was going to approach the blog—Prince, control, business, or thinking long-term and contracts—until late yesterday, when I saw on the news that Prince did not have a will.

I sighed. I was afraid of that.

. . . .

Why would someone as smart as Prince about business make this kind of mistake? A million reasons, some of them psychological. None of us believe we’re going to die, not really. And Prince had no children to leave things to. He was famously private, and putting together a will that would handle an estate of that size, with all of its future earnings potential, means that lawyers, financial advisors, and estate planners would have been combing through every aspect of his life, trying to figure out what would happen past his death.

. . . .

Like so many of us, Prince handled his own business. He hired help, of course. Otherwise continuing to be creative would have been impossible. Sometimes he partnered with a record label, sometimes he did not. But he had his fingers in everything.

He had his hands full. Estate planning was probably something he figured he could do later. Of course, later never came.

I’m sure that a lot of projects died with him. A lot has been written just this week about all the music he kept in a temperature-controlled vault at his Paisley Park estate. Speculation about what’s in that vault is rife, but Prince was clear about it. He believed the music in that vault was raw, not ready to be released, for whatever reason. He made conflicting statements about what he wanted done with that music—burned upon his death or eventually released, once it was ready.

It’s not ever going to be ready now, not the way that Prince envisioned, anyway. It’ll be up to whoever ends up managing the estate.

. . . .

I know how much work it will be to manage my estate. A friend of mine, with maybe 20 or so novels to his name, wrote an eight-page single-spaced sheet of instructions to the person who will inherit under his will, explaining terms (like intellectual property) and where the heir can look for more information on things like copyright.

In the middle of this document, which he said I can crib from when I get back to my estate posts, he writes that he has attached a spreadsheet which is a master file to all of his work, including the name of every work published, the ISBN of the print publications, date of publication, what channels the work has been published in, and whether or not the work has been registered with the copyright office. He added a separate file of all his passwords, and then a map on how to find the files (and their backups) for everything he’s ever written.

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, while there is lots of material about self-publishing, marketing, promoting, pricing, getting an agent, getting a publisher, etc., etc., Kris is the only writer he knows who has shared thoughts about what can/should happen when an author dies.

Next Page »