Loose Change

Let me preface this article by saying: I am not a contract attorney. I don’t play one on TV. What follows are my PERSONAL opinions and insight based on many years of watching new baby authors -- as well as more than one publisher -- take it from behind with no lube. This is my advice. Take it as you will. When in doubt, hire a contract attorney.

I hear a lot of “discussion” about this or that company’s contract terms -- often from authors who have already signed contracts. This always strikes me as a bit backasswards. Clue, here. The time to question contract terms is BEFORE you sign the contract. Of course in order to sign a contract, you first have to read it. Major DUH? Not really. Wish it were. I’ve talked to many, many authors who signed contracts without ever doing more than a cursory read. Most swear they didn’t bother because they weren’t going to understand them anyway.

Why not? Assuming the contract is written in English, and you speak English, grab a dictionary if you have to, but read the thing. (And if it’s in German, and you speak German, the same rules apply.) Print the contract out, highlight sections you don’t understand, and reduce them to terms you do understand.

No, you’re not going to become a contract lawyer overnight, but you should find MOST literary contracts have the same general information. There are clauses about indemnity, and who gets to pay for the lawyers if you stole someone else’s book and are trying to pass it off as your own. There are probably liability clauses about who gets to cover attorney fees and such if you describe an improbable act and someone gets hurt trying to do something that would have been difficult at best for a twenty year old. We’re not really interested in those clauses here.

Let’s look at what a contract does -- the principles that are of primary importance to you. The basic purpose of a publishing contract is to assign the right to sell THIS book to THIS publisher.

The contract should stipulate who you are, where you live, how to reach you, and your legal tax reference number -- your Social Security Number if you live in the United States. It should also list who the publisher is, where their primary place of business is, what their mailing address is, if different from their physical address, and their phone, fax, and e-mail contact information. If you read the contract and couldn’t locate the company from the information on the contract, this should be a sign that they don’t want to be located. Head for the paper shredder.

Assuming we’re all right to this point, look again at my primary assumption: the basic purpose of this contract is to assign the right to sell THIS book to THIS publisher. “Book” is a concept whose definition has changed over time. Because “book” can mean several different forms -- paper, digital, and audio being the most common, it’s important that you know WHICH rights this contract is assigning to this publisher. If the publisher sells only electronic books in the form of digital downloads, they have no reason to ask you to contract any other rights. In theory you could still sell the print and audio rights to another company.

Here’s the reason most companies ask for print rights even though they don’t intend to use them. For some reason, some authors seem to think of e-publishers as a convenient place to “park” a book until they sell it to a “real” publisher. They’ll sign the e-book rights over, then keep shopping this book to larger houses. The problem here comes if they actually do have an agent or editor express interest in the manuscript. The new house wants all the rights. But that book already belongs to the house that bought it initially. NO, you CANNOT have those rights back just because someone made you a “better” offer. You signed a contract. You can’t sell the same rights to two different houses.

On the other hand, there’s no reason for the small press to ask for rights they’re not going to use -- or the large press either, for that matter. If you only sold the e-book rights and now you want to sell the print rights to another company, there is no reason for the print house to need the electronic rights, other than the fact that they may not want two versions of the book out at once. You can sell the print rights, just make sure they know if they want the electronic rights, they won’t be available until the e-book rights terminate.

Which leads us to the next part of the contract to look at. HOW LONG is the contract good for? E-books tend to have about a ten times longer “Shelf life” than paperbacks. While a paperback may only be shelved for 60 to 90 days in bookstores,  an e-book generally seems to hold decent residual sales for a year and a half to three years. Most small press houses will age out their contracts so that the book naturally goes away at the end of its lifespan. If it’s still selling, of course, you’ll generally have the option to renew your contract.

If you take the book back before the end of the contract, you’re costing the publisher money. Expect to have to pay a “Kill fee” ranging from $100.00 to $1000.00. Yes, it’s your book, and you invested the time to write it, but the publisher invested the money to have it edited, proofed, line edited, cover art designed, and marketed. Most companies won’t even consider a “Kill” -- early termination of a contract -- until the book has been in publication for at least six months to a year.

Which brings this ramble to another point. Dates. A contract has two dates that are important -- the date you signed it and the date that the book is released.  The contract expires at whatever it’s contract term -- say three years -- from the date the book was PUBLISHED. Not the contract date. So if it took you three years to write, the contract isn’t going to expire the day after the book was released.

The contract date -- the date the publisher received and signed the contract -- is important because the contract should be good for a limited time PRE production. Let's say you’ve contracted to write The Three Sexy Bears (a shape shifter trilogy.) Book one is completed when the contracts are signed. Book 2 is a partial. Book 3 is a concept, not yet started. The contract for each book -- they need three separate contracts -- should tell you how long you have to turn in the final manuscript.

If you don’t turn in the final manuscript for whatever reason, the contract should terminate at the end of that time period. So let’s say you turned in Book 1, something went wrong, you had miserable sales, the publisher dies, the eastern half of the United States gets hit by a nuke, whatever. You don’t fulfill the other two contracts.

As long as the publisher has not invested any time or money into the books besides assigning an ISBN and postage to return your contract, the contract should terminate at the end of a given period (often nine months to two years.) They haven’t spent any money, you don’t owe them any money.

IF however you DID write the books, but now you don’t want this publisher to publish them, it’s a bit too late. No publisher is going to let you take books they’ve committed time, energy, and money to and walk just because you’ve decided you’re too good to need to do edits. What you WILL get is blacklisted all over the internet.

But back to unwritten books. If you’ve fulfilled your contract obligations on Book 1, but are unhappy and don’t want to write Books 2 and 3 now, there’s nothing anyone can do to force you to write books. Slavery was outlawed in this country many, many years ago. Just let the contracts die of old age.

What you can NOT do is write those books for another company. You already sold the rights. You can’t change title or the characters’ names and write another book with the exact same plot set in the same universe, either. (That whole INDEMNITY thing.)

You CAN write more books that have nothing to do with this series for some other company -- as long as you -- repeat after me -- READ YOUR CONTRACT BEFORE YOU SIGN IT.

DO NOT sign any contract that promises a publisher books rights to future uncontracted works. You own your pen name, world, your characters, and your plot ideas. Keep it that way. At most a publisher has the right to expect that a universe you created solely for them will continue in their house -- and this is a clause you should be able to negotiate. At most give away “Right of first refusal” on a series that is still in production at that house.

Here’s what I’m talking about. Bears 1 sells like hotcakes. It’s so cool it gains national recognition and brings a whole new readership to e-books. You’ve finished books 2 and 3 and they’ve also sold really well. Now you want to sell a NEW series to a NY house. But your contract says for ANY other book you write the initial publisher has right of first refusal. Are they going to turn down a book from you when you’re selling like ice water in the desert? I don’t think so. You, my friend, are screwed.

Or. Scenario #2 -- you’re willing to let series one sit where it is and pay your cell phone bill (Hey, you’ve got to have those 2000 minutes a month. Kids in college. Whatever.) every month for the next three years, but you want to write Bears 2: The Sequel. Trouble is, your initial contract says your publisher owns the characters. Hey, you signed it. /SMACK!

As for your pen name -- do you really want to invest in starting over from scratch? What’s our theme song here? READ YOUR CONTRACT. We’re not talking about stuff that’s hidden in obscure language. There aren’t any tricky Latin obscurities to hide these clauses behind. They are, however, usually toward the end of the contract, so read the ENTIRE contract.

Your contract should also tell you how much you get paid, and how often. Small press standards range from 30% to 50%. 50% of one company's sales may well work out to less money in hand than 30% of another company’s sales, so don’t go for the shiny thing without talking to other authors. Some companies pay monthly, some quarterly. One thing that should be consistent with any company is that your royalties should be based on Gross, or Retail, at least in house. It’s way too easy on Net sales for a company to change their mind as to what constitutes Net. In a lean year you could find yourself not getting paid till the book’s made enough to cover the cost of cover art and editing. As an author, I would never again sign a contract based on Net sales. Been there, done that, can’t afford the T-shirt.

Beware of reserves. For E-books, at least, there are no returns. Therefore no reason to hold back reserves. There may be a reason a company has a clause that says they don’t write checks till you’ve earned more than $25.00 -- I can’t think what it would be other than time constraints, because most publishers use electronic banking, which generally means they don’t even have to buy stamps. All part of the monthly fee. Our bank doesn’t even charge a fee. The exception would be overseas checks. No point in spending 90 cents to mail out a $2.00 royalty payment. But then again, there’s PayPal.

And lastly, the one everyone wants to know about after this last year, where we’ve seen a dozen or so of our competitors go under for various reasons.

No clause in any contract, no matter how carefully worded, supercedes Bankruptcy court jurisdiction. Your books are an asset which will be assigned to the court to sell off. However since we’re talking about intellectual property, the original contract terms DO still apply as far as length of contract. Expired is expired, no matter how much creditors are owed. As far as books that aren’t yet written -- see above. If you don’t want to fulfill contracts which were based on a proposal, start a new series, a new world, a new universe… no one can force you to write anything. Unless, of course, you’re trapped in a Stephen King book…

And remember AFTER you signed the contract is the wrong time to ask what it means.

Margaret Riley
www.changelingpress.com