The Business Rusch: Deal Breakers

The Business Rusch: Deal Breakers

Kristine Kathryn Rusch

For the bulk of my thirty-year career in publishing, the industry has remained the same.  In fact, the industry hadn’t changed much since the end of the Second World War.  Oh, there were changes—the rise of mass market paperbacks, the decline of the slick magazines, the introduction of computerized ordering—but those things happened slowly and usually one at a time.

In the past two years, the changes have come so quickly that it seems like we’re on the Starship Enterprise, heading into a new galaxy at warp speed.  You know that little wink of light when the starship goes into warp? That little dot was publishing in 2009.  We’ve been at warp speed for two-plus years now, and unfortunately, our navigation systems don’t work any more. We have no idea where we’re going, but we’re getting there fast.

A lot of writers are taking side trips, going into indie and/or self publishing.  Even more of us have one foot in the indie world and the other in traditional publishing. But the bulk of writers right now remain in traditional publishing, and want to do so.  Writers don’t want to trouble their pretty little heads thinking about business, so they expect their agents and their publishers to do that.

Unfortunately, the days when writers could farm out the business side of their writing are long gone.  Which leaves the writers who want to remain in traditional publishing in a heck of a bind.  Even if the writers have an agent (which is a dicey proposition these days.  See this post to understand why), the writers still have to learn how to negotiate.  Writers need to decide what’s best for them, and unfortunately, their formerly wonderful advisors might no longer know.

Even though the changes in the publishing industry are moving at warp speed, traditional publishing itself still putters along at sublight.  It still takes roughly two years from the sale of a new novel to the publication of that novel.  And even those of us whose crystal balls have been polished recently have no real idea where the industry will be in two  years.

So how do you negotiate a publishing contract in these uncertain times?

The kind folk at the writers organization, Novelists, Inc (NINC), asked me to write an article for them on deal breakers in contract negotiation.  I’m one of the featured speakers at the upcoming conference in October, and I’m worried that my advice will be out of date by then.

Imagine, then, the difficulties of negotiating a contract that will remain in force for at least four or five years, when we’re not even sure what we face two months from now.  I negotiated a book deal a year ago that was great at the time, and that I would not sign today.

So even though this article is called “Deal Breakers,” it should really be titled “Things To Consider While Negotiating Your Next Contract,” a title which, let’s be honest here, isn’t nearly as sexy.

Before we get into the nitty gritty, a few caveats.  First, I am not a lawyer, and I do not play one on TV.  I have not gone to law school, and I don’t plan to.  I have read thousands of publishing contracts—mine, those of my students, those of my colleagues, and those of the various publishing houses that used to employ me.  So while I have some standing to write this article, I am not giving you legal advice. What follows is just my opinion. Got that?

Second, before you sell your next book to traditional publishers, go forth and read a book on negotiation.  Yes, I know, the word “negotiation” isn’t a pretty one.  In fact, if your response to my last two sentences was either to cringe or to say blithely, “I have people for that,” realize that I am talking to you in particular.  You folks, with your head in the sand.  Yeah, you.  Pull your head up out of the sand for a minute.  I know negotiation scares you. It scares all of us.  I’m not telling you to do the actual face-to-face stuff yourself. But I am telling you that you must guide these negotiations, either behind the scenes with your “people” or via e-mail or whatever cover of darkness you need to complete this messy job.

There are lot of good books on negotiation, but I would be remiss if I didn’t tell you about mine.  It’s a section of my Freelancer’s Survival Guide called How To Negotiate Anything.  You can read that section online for free on this very blog or you can order the section as a standalone e-book or as part of the gigantic Freelancer’s Guide itself which has a trade paper edition as well as an e-book edition.

Here are the salient points from that section of the guide. First, the rules of negotiation:

1. Know What You Want.

2. Ask.

3. Be Prepared to Walk Away.

4. Stay Calm.

5. Never Reveal Your Entire Hand.

6. Don’t Flip-Flop.

(If you want detail or a greater explanation of what I mean by any of this, go to this post.)

Second, the rules of contract negotiation:

1. Expect to Negotiate A Contract.

2. Imagine How the Terms of the Contract Will Impact You Over the Lifetime of the Contract.

3. Focus on What You Want.

4. Make Sure You Have An Equitable Way to Terminate The Contract.

5. Make Sure You Know How You’ll Get Paid or How You Will Make Payments.

6. Control As Much of the Contract As Possible.

7. Once You Both Sign, Negotiation Is Over.

(If you want detail or a greater explanation of what I mean by any of this, go to this post and the following post.)

In the past, most writers did not think of any of these things, trusting their advisors to help them through the difficulties of negotiation.  But with things in such flux, our advisors often have less information about the changes in publishing than we do.  So we need to make decisions on our own.

A sidebar: I have always felt that writers should be actively involved in their careers. When I started teaching professional writers how to make breakthroughs in their careers, I wanted to put up a sign that said, No Whining.  But that really doesn’t work.  Instead, my husband Dean Wesley Smith and I came up with a sign that reflects our philosophy:

You Are Responsible For Your Own Career.

You signed the contract.  Your agent didn’t sign it.  You did.  Your agent might have given you advice, but you took that advice. You took that deal, finalized that negotiation, worked with that company. If you got screwed, then that’s your responsibility to make sure it never happens again.  If you had incredible success, then congratulations. That success came from your actions as well.

Now, back to the topic at hand. The third thing we need to look at ahead of time is this: Because things are changing so rapidly in this business, hire an intellectual properties attorney to help you negotiate your new contract.  Yes, yes, I know.  You have an agent, and you think that’s what an agent’s for. And, if this was the 20th century, you would be right.

But we are in a brave new world and agents have a serious handicap in modern negotiation: Most agents do not have law degrees.  In the past, we could get away with having a non-lawyer do our negotiating for us. Publishing contracts fell into certain types, and it was pretty easy to know what contract terms meant.  It was also easy to know what to ask for to improve those contract terms.

It is no longer easy, and it takes a legal mind to surf these rough waters.  Your publisher has a lawyer on their team.  You now need a lawyer on yours–even if you have an agent.

Okay.  So, you have a team in place. You have an offer on the table. You know what you want.

Now let’s talk about deal breakers.  What is a deal breaker? It’s the thing that you will not compromise on, not ever.  Rather than compromise, you will walk away from the deal.

Trust me, your publisher has deal breakers.  You need to know what yours are as well.

But I’m not going to talk in absolutes here, because each writer is different. We need different things, and we have different reasons for what we do. My deal breakers are not your deal breakers.

Instead of being hard and firm and telling you to walk if these terms appear, let’s discuss the places in a publishing contract where you should hold the line.

Those places are:

1. The Rights You Plan To License.

2. The Amount You Will Get Paid For That License.

3. The Number of Books You License in This Contract

4. Future Projects With That Publishing House.

5. The Sunset Clause.

Note that I’m using some terms unfamiliar to most of you.  If you do not understand that you license copyright, get a copy of The Copyright Handbook right now.  You as a writer do not sell books; you license copyright. If that does not make sense to you, then you are at a serious disadvantage in any negotiation with anyone.  You don’t understand the basic part of your business.  Buy this book immediately and read it.

I will explain the other terms in a minute, as I get to my five points.

1. The Rights You Plan To License.

The first thing every publishing contract states are the rights you will license to the publisher.  In the past, I used to recommend that a writer only license North American Rights—that is, the right to sell the book in North America (in other words, the United States and Canada).  Now, I recommend that you license World English Rights.  Why the change, seemingly in the publisher’s favor?

Here’s why: Most writers stay in traditional publishing so that the publisher will do the work.  It’s hard to hold national boundary lines on e-books.  In fact, in this modern world, it makes your fans angry.  So rather than sell a North American edition only, let your publisher put the book up on Amazon Kindle and in all countries in the iBookstore.  Gain English language readers all over the world.

But—and this is important—do not license World Rights.  Keep the rights to your work in translation.  Your publisher doesn’t need to sell the translation rights for you.  In this modern world, you can do that yourself.  If your book is published in English worldwide, then other publishers will easily see it, and will want to translate it into their native language.  Let them pay you for that, not your publisher.

In fact, hang onto as many rights as you can.  Do not license movie rights or audio rights.  Dean has a great post on how to think about all those rights.

I’d tell you not to license e-rights, but while that was possible in 2010, it’s not possible any longer.  Too many booksellers are going digital these days (I’m looking at you, Barnes & Noble).  No publisher is going to give up that market.

So in exchange for those e-rights, make sure you keep all the other rights in the work.  License only book rights. Not enhanced e-rights, not application rights, not smart phone rights.  Enhanced e-rights in particular are a place where publishers make outrageous rights grabs.  Make sure you only license the rights to the text itself, not to text with pictures, text with audio.  If you see something in the rights language that you do not understand, do not agree to the terms or sign the contract until you understand exactly what that language means.

Lately, I’ve had publishers here and in  England (England especially) tell  me that they don’t need the rights they’re buying. They’re just adding those rights for “insurance” and they will “gift” those rights back to me if I but ask them.  Look at the logic here. If they don’t need the rights, then they shouldn’t ask for them in the first place.  This happens in particular with enhanced e-rights and new technology rights. That’s where the biggest rights grabs are and the place to be the most watchful (at least here, in late 2011).

2. The Amount You Will Get Paid For That License.

This one’s a tricky proposition.  Because advances are going down significantly while the demand for rights has gone up.  Most established writers can make more money with self-publishing over the next two years than they can through their publisher.

The difference is that the publisher pays up front, and self-publishing does not.

There are a variety of ways to look at payment. The best way to examine what you’re getting for the rights you license is the value you’ll receive.

Note that I didn’t say the money you will receive.  Unless you’re a Times bestseller, you’re probably not going to be paid up front what you are worth, certainly not in these times.

So you need to examine the value of what the publisher offers.

1. Do you need the up front money to continue with your writing career? Can you live on that advance? If so, try to get the publisher to pay you on signing and acceptance of the finished manuscript.  (Limit your rewrites in your contract to no more than two.)

2. Can your publisher get your book into markets that you cannot? Are those markets worth going into? A  year ago, publishers could easily get your books into brick-and-mortar stores. Now, lots of brick-and-mortar stores are gone or cutting back on their titles. Is it worth losing a large chunk of your income for the opportunity to get into reduced brick-and-mortar market?

3. Does your publisher do quality e-books? I can name three traditional publishers who do not do high quality e-books, trying to drive readers to hardcovers instead.  If your publisher does a crappy e-book product and the market is moving to e-book, realize that your readers will blame you for the bad product, not your publisher.

4. Does your publisher do a timely e-book? Right now, one of my traditional publishers is delaying the e-book of my latest release to the consternation of me and my fans. We’re losing sales weekly because the publisher believes that the delay will increase sales of the trade paper. Instead, in this madcap busy world, readers who want the book now will forget that the book exists when the e-edition finally appears six months from now. Each day my traditional publisher delays causes significant lost revenues—and subjects me to confused and angry e-mails.

5. Will your publisher promote your book? I don’t necessarily mean whether or not your publisher will have an ad budget for your book. But is your publisher sending out galleys? Contacting the sales forces of local bookstores? Make sure the book bloggers know about the title? If your publisher isn’t doing any of those things, then you’re not getting value for your dollar.

Here’s how I look at a book advance.  If the publisher wants a lot of rights, the publisher must pay for them.  With advances declining, it’s less and less likely that a midlist writer can receive a good advance in exchange for the rights she’s licensing.

Yet I continue to sell into traditional publishing. Why?

Because I’m using traditional publishing to advertise my indie-published titles under the same name. When Wickedly Charming, my latest Kristine Grayson novel, appeared from Sourcebooks, the sales of all of my indie-published Kristine Grayson novels jumped dramatically.  They hit a higher plateau and have stayed on that plateau.  I’ll have another Grayson book out of Sourcebooks this fall, and I hope to see another bump.

Sourcebooks is promoting Kristine Grayson in venues that I have yet to reach. Instead of me spending advertising dollars to get the word out on my book, I’m getting paid to advertise.

In the advertising business, they call what I’m doing a loss leader.  I am losing some upfront money to bring someone to my product. Is it worthwhile? So far, it is on the Grayson books.  A few of my other traditional publishing ventures aren’t working out and I will re-evaluate them for the next contract.

Which brings us to:

3. The Number of Books You License in This Contract

In the past, every writer wanted a multi-book contract.  It gave us security, and it made sure that the publishing house put an effort into publishing our work. The publishing house had a lot of money and future profits at stake, so the house worked harder on multibook contracts.

Now, with things changing as rapidly as they are, multi-book contracts no longer provide security. They might harm us by locking us into contract terms that won’t be good for us in 2012 or 2013.

Right now, go with a one-book contract. It gives you flexibility to negotiate better terms for you in the future, terms we may not even be able to envision now. (Did you know what an app was in 2008? If you signed a multi-book contract that year, you are probably still fulfilling that contract.  And it’s out of date.)

There are still two more points on my list, and I’m out of room.  I’ll deal with those two points and some general thoughts next week.

Every week, I lose 3,000 words of fiction to write this blog. My fiction sells and resells (see my husband Dean’s Magic Bakery article) where often these posts are one-shots, out of date before the week is out. In other words, that 3,000 word fiction loss is a financial hit for me, an indulgence I should really give up.

But I feel this blog is important. We need to discuss the changes in publishing. I’m learning from you through comments, e-mails, and links. I hope you’re getting something out of this from me.

If you are, please throw a few dollars in my virtual tip jar. It encourages me to give up those words of fiction every week and make the blog a priority. Thanks for the donations and for spreading the word about the blog itself.


“The Business Rusch: Deal Breakers” copyright 2011 by Kristine Kathryn Rusch.

 

 

 

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23 Comments

  1. **clink clink** in the tip jar…

    Thanks, Kris, as always, for the great advice.

    I’d add that going to IP lawyers might sound a bit daunting as well, but I have recently done just that and am very happy with how helpful and easy they are to work with (at least, mine are). They adjusted their usual process and rates downward to match my needs/budget. So what I thought was going to be a scary, costly effort has turned out to be a great experience. Definitely would not have gone that route without the advice of ‘pay-it-forward’ writers like you, Dean, et al.

    Thanks again!

    A. J. Abbiati

    Reply
    • Thanks, AJ, for the tip and for the comment. I know people think hiring a lawyer is daunting, but hiring an agent will save them. Right now it’s the opposite. A lawyer will protect their interests–must, in fact–while agents are trying to figure out their new business model. So thanks for letting folks know that it’s not difficult at all.

      Reply
  2. Great post as always, Kris. I’ve been thinking about this a lot lately, as I’m about a third of the way through my second novel now, and I was thinking to send this one out on the query-go-round with editors. With what I know right now, I think for me the big deal breakers would be the non-compete clause and the reversion clause. As you say, part of the reason for going to the traditional houses is to advertise the indie titles. But if the non-compete clause prevents me from writing more under the same pen name, that’s a no-go. As far as the reversion clause goes…now that ebooks are here to stay and books essentially will never go out of print, a contract might end up being for life of copyright, if a writer’s not careful. I’m 35 now. A life of copyright contract will potentially last for the next 120 years! You’d have to pay me a lot of money, and I mean a LOT, to get me to agree to that. Frankly, I don’t see a publisher being willing to pay enough, so the reversion clause will be critical. I don’t know how feasible it would be to negotiate, but I’m starting to think pushing for a strict time limit on the contract is better than the various other options. Mr. Publisher, you can put my stuff out there for 5 years. More than that, we need to renegotiate. I think that’s reasonable, because if a publisher can’t make a profit selling my book for five years, there’s either something wrong with the book or the publisher just sucks. I wonder how easy it would be to work that sort of thing in there, though. Anyway, thanks for sharing your thoughts. Looking forward to reading the rest next week.

    Reply
    • Thanks, Michael. Good analysis. You’re right about those last two points, which is why I left them for next week. I can’t finish this in 400 words and explain myself clearly. So better to take some time on it. (Thanks too for doing the math! LOL)

      Reply
  3. Great post, Kris.

    In light of what you’ve said, I think I ended up with a pretty good contract (special thanks for the negotiation help from some good people) with Simon & Schuster for DARKROOM. It will be interesting coming May 2012 if they delay the ebook release after the trade paperback release.

    This is definitely a worthwhile discussion for anyone who is traditionally publishing.

    Reply
  4. I’ve worked for lawyers for so many years, I didn’t realize how intimidating it could be to sit on the client side of the table until I had to hire an attorney years ago to deal with my mom’s estate. Here’s a couple of hints for writers who might feel intimidated when faced with hiring or dealing with an attorney:

    1. You can shop around for an attorney just like you would for any other consultant you’d hire for your business. Hourly rates differ, same with amounts of retainers. Some attorneys don’t ask for a retainer at all. Some attorneys offer a flat, set amount based on the type of work instead of number of hours worked. If the attorney you talk to gets miffed because you tell him you’re going to talk to a couple of other people before you decide who to hire, chances are that’s an attorney you don’t want to hire. Likewise, you don’t want someone who talks down to you or whose office staff is rude to you. A lot of people are used to rude behavior from legal and medical professionals, but you don’t have to put up with it. There are more and more intellectual property attorneys out there to choose from. Hire one you feel you can get along with.

    2. If you don’t understand something your attorney’s talking about, make her explain it to you. People who work in the legal field tend to forget that not everyone speaks legalese.

    3. If money’s tight (and whose isn’t?), discuss payment plans up front so you know what the attorney expects from you and the attorney knows what she can expect from you. If the attorney bills by the hour, you can ask for a cap on the number of hours you authorize the attorney to work on your behalf and ask for notice when you’re getting close to that cap. That way you can decide if you need her to keep working even over that cap, and you won’t get hit with an unexpectedly high bill.

    4. Along those lines, discuss what you want the attorney to do. Simply explain contract terms? Suggest alternatives? Negotiate on your behalf? It’s best for both of you to know what each other’s expectations from the beginning.

    5. If the attorney’s not doing the job you hired her for, fire her and hire someone else. Any retainer agreement or engagement agreement you sign with an attorney should allow you to fire the attorney without having to cite a reason. What? An attorney’s going to make me sign an agreement? Some will. Make sure you know what you’re signing and if you don’t understand something, ask.

    And with that, we’re back to contract negotiation. *g* Great column, Kris!

    Reply
    • Annie, thanks so very much for that post. It might be worth putting on your website so that folks can find it easily. I’ll link to it. Great, great stuff.

      Reply
  5. May I add “be polite in your negotiations” to your tips. Lots of people in my industry lost offers by playing hardball when simple polite negotiation would have sufficed.

    Reply
    • I’m such a midwestern girl, Randy, it didn’t occur to me that people would be rude. Yes: Be polite. But don’t confuse hardball with rude. It’s okay to hold your ground. Stand your ground, politely. Go in knowing your limits and stick to them politely. If compromise is necessary, then do so, without begrudging the other person their side. Got that, Congress–I mean, writers? :-)

      Reply
  6. Wonderful post, Kris.

    As a lawyer myself (though I try not to practice anymore, being a full-time academic) I wonder about the real value of law school & bar membership in this sort of an interaction. Most of the things I’ve noticed in literary contracts that other people (non-lawyers) haven’t noticed, things I’ve brought to their attention and asked them to think about, weren’t things I picked up in law school. They’re mostly things I find just by reading the words of the contract very slowly, and asking myself what each one would mean.

    There are things I miss in these contracts, even though I teach contract law, because of insufficient familiarity with the business of publishing. This is where I find advice such as yours so very valuable. I may have a law degree, but you have long and deep experience in publishing and a strong sense of the consequences a phrase in a literary contract might have. Might I have figured out the practical significance of “World English Rights” vs. “North American Rights” by myself? Maybe. But I don’t think so.

    I suppose it’s possible that the habit of reading one word at a time and pondering its possible meanings is something picked up in law school or law practice, but I think it’s a skill anyone could develop with a little discipline.

    Reply
    • Thanks, Ken. I think reading word by word and then asking someone what those words mean is valuable. But most valuable of all is the one thing you mention above: a knowledge of what you don’t know. One of my friends, a major corporate attorney, read one of my publishing contracts and shoved it back at me, telling me he didn’t understand it at all because he didn’t know the jargon. He understood the words but knew that they meant something different in a publishing contract than they would in, say, a stockholder agreement.

      Yes, we can all understand the contracts and negotiate them ourselves up to a point. But when things are changing, it’s important to consult someone with a legal specialty in the subject, so they can see the pitfalls and explain them to you so you can decide what to do about it all.

      Reply
  7. Oh, and here’s something I did pick up in law school:

    Agents are legally required to protect your interests too. They may still be trying to figure out their business model, but if they are agents as that term is used by common or statutory law, they have a duty of loyalty to put the principal’s interests before their own.

    I understand that, from a practical point of view, they are often either ignoring that duty or writing contracts in which that duty is eliminated — in which case, in my view, they are no longer “agents” at all within the legal meaning of that word.

    Reply
    • Thanks, too, Ken for that post on agents and their legal responsibility. I keep waiting for someone to address this in a meaningful way in a blog post. I really want someone high profile to take their agent to court on this and have it all hit the news. Because agents who call themselves agents do have a duty under the law, a duty many of them are ignoring.

      Reply
  8. One of the things that I’ve found strange about the changes in publishing is that magazines ask you to submit a story electronically in “standard manuscript format.” Well, part of standard ms. format includes (at least in some still-extant reference sources) putting the words “Manuscript disposable” in the upper right corner if you don’t want it returned. When you’re attaching a Word file to a form, seems . . . odd to say the least.

    More seriously, standard format used to include the rights you were selling, so the upper right corner of your story’s first page might read:

    Approximately 3500 words
    First North American serial rights
    Manuscript disposable

    I have not seen a style guide that has mentioned adding rights-for-sale to a (short story) ms. in a long time. I am thinking it would be best to put “First World English rights” on MSS. Thanks for the post, Kris.

    Reply
    • Boy, you’re using a very old model, Eric. Standard ms format: Name, address, contact info, e-mail, blog, left hand side. Right side: word count. Go down several returns, title & byline Then begin story. That’s it. Nothing more. No copyright notice, no rights you’re selling (that’s negotiable so expect to negotiate it), nothing else. That’s what they mean by standard ms format.

      Reply
  9. Hi Kris,

    I was getting so many requests for referrals via private email, I decided to put a directory of literary lawyers on my website. Just posted. These five lawyers can all be considered personal referrals from me, if anyone’s interested. I will update the list as I get more recommendations from friends who’ve dealt with other literary lawyers.

    FYI, here’s the links:
    http://sff.net/people/laresnick/About%20Writing/Writers%20Resource.htm#Lawyers

    Or the tiny URL: http://tiny.cc/gomwn

    Laura Resnick

    Reply
    • Thanks, Laura. This is great. Btw, have you ever written a post along the line of Annie’s, on how to hire an attorney? Apparently people are scared to do it, so the more we all can show them how easy it is, the better. (I’ll do one in a month or so.)

      Reply
  10. Kris, yes. I included a couple of short essays (the links are posted front-and-center on the directory) about “Why Should A Writer Hire A Lawyer?” (i.e. the reasons/scenarios/situations in which it’s worth retaining legal counsel), and “Laura’s Advice About Literary Attorneys,” which includes info about hiring and working with one.

    Direct access to both pieces via this link:
    http://sff.net/people/laresnick/Excerpts/Lawyers.htm#WhyHire

    Laura

    Reply
    • Wonderful, Laura. Thank you!

      Reply
  11. Kris, I learned about your blog at the Midwest Writers Workshop this weekend. I need to hang out here a couple of hours. Thank you for the time you put into this blog.

    I liked Annie’s recommendations on hiring a lawyer. You could almost substitute the word CPA and it would all ring true for working with an accountant. :)

    Reply
    • Carol, perfect. Thank you!

      Reply
    • Wonderful, Annie, thank you!

      Reply

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