Business Musings: Introductory Remarks (Dealbreakers/Contracts)

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In 2012 and 2013, I published a series of blogs on contract deal breakers for traditionally published writers. I’ve been promising to update it for years now, but I’ll be honest: The very topic discourages me.

Still, I have come to the point where I can’t ignore the contractual changes in the industry any longer. The topic has become so large that I will probably end up with two books out of it: The revised Dealbreakers, and a book on contracts.

This post will serve as a kind of introductory blueprint to what I’m going to do. Regular readers of this blog will have seen some of this information before, but the rest of you probably haven’t.

When I start discussing contracts, most indie writers tune out. But they shouldn’t. Indie writers sign contracts all the time. Some are for foreign editions. Some are for short fiction. Some are with their cover designer. Some disguise themselves as terms of service.

Not everything I write here will apply to the indie writer, but much of it will.

Remember: the more you understand about this business, the better off you will be. And the harder it will be to take you off-guard.

Before I get much deeper into this blog, let me make one point very clear: I am not a lawyer. Nothing in my columns on contracts and the law and deals should be construed as legal advice. I do my best to research everything, but I can be (and sometimes am) wrong.

Now, let me define terms.

  1. When I say “indie writer” I mean writers who either have their own small publishing imprint or are self-published. I’m not calling all writers who do it themselves self-published writers, because so many of them hire out a lot of the work, from copy editing to layout. At some point, these writers have moved from complete DIY to a small business with contractors or employees.

If the writer is serious, eventually, they will become a tiny independent press, just because of the workload.

  1. When I discuss writers who want a “long-term career,” I don’t mean people who write an occasional book and finance their lifestyle through another career. While that’s a valid career path for writers, it is not the one being discussed here.

By “long-term career,” I mean someone who wants to make a good living as a writer—with earnings per year of $50,000 or more.

  1. When I mention “traditional publishing,” I mean the publishing industry that most people are familiar with. Some writers call this the Big 5, but I’m including some smaller houses as well. These are not ground-up businesses, but top-down businesses, with massive overhead, huge staff, and an infrastructure that has been in place for at least a dozen years or (in some cases) nearly a century.
  2. You should also know that I no longer sell my novels into traditional publishing in the United States. The contracts are too awful, which we will get into here. I do sell them overseas, where the contracts are better, although crappy contract creep is happening there as well (especially in firms that are part of those conglomerates). I do sell the occasional anthology into traditional publishing, and a lot of short fiction. I still have many novels in print through traditional publishers. This makes me a hybrid writer, with feet planted in both camps.
  3. I have not had an agent representing my work for years now. The reasons will become clear throughout this series.

With those definitions and caveats in mind, here we go with the body of the introductory material.

 

I mentioned above that the topic of contracts discourages me. That’s one reason I’ve put the revision of deal breakers off for so very long.

I had hoped that contracts would improve. They haven’t. They’ve gotten worse. What has happened is that predictions long-time writers, like my husband Dean Wesley Smith, made have come true: Writers are starting to split into camps. Dean predicted two camps—those who published their books traditionally, and those who published indie.

Unfortunately, we’ve divided into three camps: those who publish traditionally, those who publish indie, and those who publish through their agents.

That last clause “through their agents” is so wrong, I have trouble typing it. The agents who still represent the writer as an agent are breaking the law when they publish a writer’s books. The agents are then becoming publishers, which makes them violate all kinds of agency law. Not literary agency law, which, anyone will tell you, does not exist in most states. Agency law, which governs anyone who calls themselves an agent—from real estate agents to insurance agents to literary agents.

Agency law varies from state to state. I can’t tell you what Colorado asks of its agents any more than I can tell you exactly what Oregon asks of its. Because, again, I am not a lawyer, although as you can tell from some of my posts, the law fascinates me.

Most literary agents have no idea agency law even exists—at least, I hope they have no idea, because if they do, then they are flagrantly violating the law, instead of ignorantly violating the law. Me, I prefer the ignorant to the flagrant.

But law-breakin’ is law-breakin’ as they used to say on Western TV shows—and ignorance of the law is no excuse.

Above, I mentioned Westerns for a reason. Publishing has become the Wild Wild West. It was always a lawless place, governed by strange rules and ignorance. But much of it was genteel, and prided itself on doing what was right.

Since huge conglomerates have taken over the big traditional publishers, no one even pretends at gentility any more. Smaller publishers which were often a dice-roll (some were great for writers; some were horrible for writers) are now as bad, or worse, than the Big Five. Much of this is economic—the economics of traditional publishing, done the old-fashioned way, isn’t working as well as it once did, so traditional publishers (large and small alike) are squeezing their writers like never before.

Most writers who publish traditionally can no longer make a living at writing. If those writers only write one novel per year, they definitely can no longer make a living at writing.

Most midlist writers are lucky to get an advance of $5000. Those advances are paid in three installments—signing, acceptance, and publication. Even being charitable and assuming that the advance is paid in the traditional two installments ($2500 each) or let’s be even more charitable, all at once, a writer can’t live on that kind of money.

The writer has to be able to write something else.

But most traditional publishing contracts —negotiated by agents —have some version of this clause:

The Work [the novel] shall be the Author’s next book-length work. The Author represents that there is no outstanding commitment for publication for the first time of another book-length work written or co-written by the Author to a third party and the Author will not offer rights to another book-length work written or co-written by the Author, or accept an offer for such a work, until acceptance of the Work by the Publishers and until the Author has complied with the option in Clause 3(a)

 

The option clause in most contracts is another problem, which options the author’s next work, and allows the publisher to take their own sweet time in deciding if they’ll buy the next work.

But note how pernicious this clause is. I took it from an existing contract that a writer sent me over a year ago. The only thing I changed was adding [the novel] for the sake of clarity. The rest is from the contract verbatim.

The contract is for a novel, yet this clause restricts book-length works. That includes nonfiction, short story collections, novellas, anything at book-length, which is not defined at all in the contract. So that means book-length could be anything the publishing company deems it to be.

It could also be argued that when a writer self-publishes a book-length work, the rights to that work are being offered for distribution. I wouldn’t put it past some big book company to argue that the self-publication is in violation of this clause.

Usually, though, there is another clause, buried in the warranty, that says the author warrants he will not publish any other book-length work that will compete with this book. And who determines that competition? The publisher, of course. Certainly not the author.

So…for a measly $5000 (minus agent fees, which actually will make this $4250), the author signed away his right to make a living. In the early 1990s, I sold eight novels before my first one was published. I also sold an anthology that I edited, and I was editing a series of hardcover anthologies that we chose to call magazines.

If my first novel contract had had that clause, I could not have done any of those things. So, instead of earning tens of thousands of dollars in those early years, I would have been left with a check for $2125—and some crappy day job.

But what about the dream? The home run? What about earning millions on your writing?

What about royalties?

First, most traditional books do not earn out their advances, so the writer never gets royalties. This isn’t because the books do poorly. It’s because of all of the contract terms, new definitions, and other ways that publishers are managing to keep most of the profit from any published book.

And that home run? That million dollar advance?

They are rare. They haven’t gone away completely, but they’re certainly down.

Part of the reason is because traditional publishers—the ones who can spend millions on a project—have devoured each other. When I came into the business, there were at least two dozen publishers who could offer large advances.

Now there are five.

Five.

The dream of having a dozen publishers want your book so badly that they’ll bid against each other to get it is just that—a dream. A pipedream.

Don’t believe me? Then go to Publishers Marketplace. For years now, Publishers Marketplace has tracked publishing deals on its website. Agents, in particular, love to report their really big coups to Publishers Marketplace. Publishers Marketplace divides the deals it reports into five categories, all by the amount of the advance.

PM defines “major deal” category—the largest advance category—as $500,000 and up. In the not-so-distant past, the major deal category was often for one book. If the agent secured a three-book deal that was $500,000 per book, the agent didn’t call that a major deal, because that wasn’t impressive. Someone might misinterpret and believe the agent got “only” $500,000 for all three books.

Instead, the agents would report a 3-book deal for $500,000 per book as a 1.5 million dollar deal.

I searched major deals this afternoon, and found quite a few. But when I looked at them, they were all for mid-six figures for a lot of books—usually a three-book deal, although I did see quite a few for five books, and one “major deal” for 11 books.

Believe me, if that 11-book deal had gone to seven figures, the agent on the deal would have said “In a deal worth one million dollars…” Didn’t happen.

In the past year, searching for fiction only, I found three deals listed as million-dollar deals. They include John Scalzi’s 10-year, 13-book, $3.4 million dollar deal (which comes to roughly $225,000 per book when you subtract agent fees). Only one of the three deals was for a single book, which sold for 1.25 million. The remaining deal was for over a million per book, and that was a $7 million 5-book deal (which comes to $1.4 million per book before agent) for a self-published writer whose books sold 1.2 million all on their own.

Three million-dollar fiction deals in 2015. Only three. And none yet in 2016. There were nine in 2014, and at least one per month in 2013. In 2012, there were at least two per month.

Why is this important? Because that home-run is less possible for everyone in traditional publishing, and they’re looking for other ways to make money. One of the ways they make money is squeezing writers. Another way is to own the copyright—or at least, control the copyright. (Get yourself a copy of Nolo Press’s The Copyright Handbook by Stephen Fishman. It’s essential these days.)

And here’s the really scary part: Old contract terms, some written in the 20th century before ebooks existed, are being redefined and employed as a justification for publisher behavior. These traditional publishers—particularly those that have been subsumed into a major conglomerate—are not asking permission to change the definition of the terms. They’re just doing it.

Things that were pretty innocuous in 1985 are now weapons that are being used against authors.

You’d think that agents, who are supposed to work for the writers who hire them, would prevent this whole-sale change of meaning of old contracts. But a handful of agents are complicit in this, preferring to maintain their working relationship with a big publisher than rocking the boat for a small client.

Even more agents are just plain ignorant of what the changes in the clauses mean.

Those who run the agencies, though, do understand that their income is going down, so literary agencies have become pretty draconian in their own contracts. Those agencies make agreements with their authors, usually requiring the author to give them 15% of the earnings of a particular book if the agent sold the book. That’s bad enough, especially if the agent has been fired—as two of mine have (the two who still are entitled to 15% of certain projects).

But the agency agreements are moving into a whole new, and even uglier, place in relation to their writers. Agents are demanding a piece of their writers’ copyrights as well. Some agents are blatant about it, stating in the agency agreement that they make writers sign before the writer becomes a client, that the agent will own 15% of the copyright of any book the agent sells for the writer—or in the case of one agency, 15% of the copyright of any book the agent markets for the writer.

Other agency agreements are less blatant. You have to read them in conjunction with the contracts the agent has negotiated for the writer, to see that the agent has actually slipped his hand into the writer’s pocket and legally stolen copyright. Most writers trust their agents blindly, and never believe it would happen to them—until it happens to them.

These days, most agents have discovered that the best way to control the copyright on a piece of literary property is to publish the ebook. Some agents just publish ebooks through a side arm of their company. A lot of writers object to the quality of those ebooks, but that’s the smallest part of the problem.

Under agency law, an agent acts as a go-between for two parties, representing one of those parties in a negotiation or business deal. The agent cannot, by law, be one of those parties. So unless a second agent with a different agency negotiates the ebook contract, the agent who provides ebook services is violating agency law.

Some agents put up a wall between their publishing arm and their agenting arm. Some of these walls are more effective than others. For example, at least one agency has an exclusive arrangement with a big-name ebook company. Many clients are unaware of this exclusive arrangement and think their agent is “negotiating” a deal for them, when really, the agent just funnels the ebook into the big-name ebook company, and takes the boilerplate contract that the agency and the ebook company previously negotiated.

Again, there is no third party here, because the ebook company and the agent have a pre-existing partnership.

So if you think you’re indie published, but your agent does all the work, you are not indie-published. I don’t know what exactly you are, but you don’t have control over your rights or your publishing decisions the way a true indie published author is.

In my opinion, being “indie” published through an agent is the worst of all possible worlds. Choose. For your novels, either go 100% traditional and deal with the headaches and the fallout or go 100% self- or indie-published. Agents in the mix cause too many issues, which I will also deal with in upcoming blog posts.

What about indie writers? I mentioned above that they have to deal with contracts as well. Startlingly for many indie writers, they find that they have to generate contracts. You want to work with a good local copy editor? You’ll need some kind of agreement to govern your relationship. You want to co-author a book with your best writer pal? Who writes the collaboration agreement? Who handles the money?

And what about all those 99-cent boxed sets with 9 or 10 authors? I’ve seen some pretty shitty boxed set contracts that essentially say this:

Suzy, Janice, Alice, Marcy, Mike, Scott, Dan, Jessie, and Madison will put their books in a boxed set that will sell on Amazon for 99 cents. They agree to put 50% of their earnings into advertising and split the remaining 50% among themselves. Suzy will handle the money, and Janice will handle the publishing. Signed and dated, the group.

Oh. My. God. I have not heard about the fights and levels of problems that have arisen because of these “simple” contracts, but I can bet that some friendships vanished, along with a lot of money.

And those are just the indie problems I can think of off the top of my head. I know there are more.

I know, I know. I’ve just cracked open that huge can of worms. Wait. Let’s call it for what it really is, shall we? It’s a Dumpster full of worms. Hell, it’s probably a garbage pit full of worms. And I’m going to dig through it over the next several months—with an occasional column off to explore something else.

I will need a few things from you folks. First, those of you who have contracts and are willing to share them, contact me through this website. I will never mention you by name and I will not discuss your contract. Some of its clauses will be discussed, especially in relation to other, similar contracts, but never with a name, date, publisher or book title attached.

If you have a good contract, I’d love to see that.

If you have a horseshit contract, I’d love to see that.

If you have an old contract that you can’t seem to extricate yourself from, I’d love to see that too.

Please clear off the personal information (social security or personal id number, address, name, book name). I’d like to know the advance—in general, not in specific. Something like—this contract is for my book and my advance was less than $5,000 or my advance was less than $10,000 or my advance was in the mid-five figures or low six figures or however you want to say it. Do leave in the payout schedule, please, but only as percentages (half on signing, half on acceptance; half on signing, one-third of the remaining payment on acceptance, hardcover publication, and paperback publication).

If you have a contract from one of the big five publishers for a short story collection—and this contract is recent—I would love to see it. (Again, the stuff above applies.) Same with a contract for a major anthology.

If you’re published overseas, I’d like to see foreign contracts in both English and Spanish (the languages I can read).

If you have a contract with an agency, I’d like to see that.

If you have a contract with an agency for your ebooks, I’d like to see that.

And if you have a contract for one of your older titles with some of the newer ebook-only companies (the ones that produce your ebook for you), I’d like to see that as well.

I won’t be able to help you personally with your contract. Remember, I am not a lawyer. But the information you provide will prevent writers from getting into the same circumstances. If you have a good contract, you will be able to share great clauses with writers who need to know that such good things are possible.

I promise that I will make sure I cover things that indie, hybrid, and traditional writers are interested in, and I also promise that I’ll be keeping up on any big news that needs discussing—if you all promise to help me keep my mood up.

Because I will be digging through mud for you. And I will be getting pissed off. So-called legal scams make me mad.

I hope that, in the end, this series of blog posts (and eventually, the books) will give a lot of you the ability to slog through the muck as well.

I will need funding on this one, though. So please, if a particular post touches you, teaches you something, or helps you avoid a pitfall of your own, please leave a tip on the way out.

Thanks!

 

Click paypal.me/kristinekathrynrusch to go to PayPal.

“Business Musings: Introductory Remarks,” copyright © 2016 by Kristine Kathryn Rusch. Image at the top of the blog copyright © 2016 by Canstock Photo/cteconsulting.




25 responses to “Business Musings: Introductory Remarks (Dealbreakers/Contracts)”

  1. Ryan Petty says:

    Chris,
    I have a 35-year old contract with a Big Publisher in which I sold them rights to republish a self-published, how-to nonfiction book. Several of the provisions were negotiated vs standard. The most interesting had to do with the retention of my rights to self-publish, exempting anything that I self-published from the grabbiest provisions of their more standard contract language. It’s so old it may not be relevant, but you be the judge if you’d find interesting.

    BTW, since then, I’ve obtained the reversionary rights, but they attempted in the language of reversion, to maintain certain rights which creates just enough mud that I will probably have to do a Section 203 Termination of Rights (which at the 35-year mark), I’m now entitled to do. (Reason: I have some children’s picture book manuscripts which I fear I may not be able adequately to self-publish–and my have to pursue traditional agent/publisher relationship for those. Would probably want a blank slate vs complexities of my old and dormant traditional publishing relationship.)

    • Ryan, I would love to see the contract with the reversion letter they did. Because that will give me insight into how they’re changing old contracts to the new reality. Thank you! (And good luck with this.)

  2. newcoxchapter says:

    Hi, Kris! Great post! Totally reiterates what I’ve already learned, plus more! I am publishing with a hybrid, She Writes Press, this April, and couldn’t be happier with my experience. People love to attack hybrids for some reason, but not all are created equal. Much misinformation abounds out there. I see reputable hybrids as the new exploding middle ground. It’s exciting!

  3. Teri Babcock says:

    “The Author represents that there is no outstanding commitment for publication for the first time of another book-length work written or co-written by the Author to a third party and the Author will not offer rights to another book-length work written or co-written by the Author, or accept an offer for such a work…”

    I knew these clauses were career-killing bad, but I hadn’t realized that the Publishers also intended for you to kill a pending deal for another book that might pre-date theirs. Also, that if you co-write with someone, and the other author gets a deal on another book, you might not get published after all.

    I actually had a nightmare last night — one of the ones where you don’t realize you’re dreaming — that I had a novel accepted by a BPH. All my family were smiling, saying, “We’re so proud of you! You got a $3000 advance! How are you going to spend the money?”

    All I could think was “I submitted to a trad publisher!? Have I lost my mind? Can i cancel the contract? Noooooooo…”

  4. Darryl says:

    It’s a shame that as far as I can see Authors do not have a strong truly representative body, The industry cries out for a standard contract fair to both authors and publishers. Such a contract would only form a basis. There would almost always be additional conditions, but such conditions would come under particular scrutiny.

    Of particular concern is that books now need never go “out of print”. Combine this with the huge corporate groups who now own the large publishers and we have a rights grab. Your story becomes an asset on the balance sheet with the potential to make money for the whole ridiculously length life of the copyright. Authors who are properly informed and/or represented will not agree to this except in return for very substantial payments. But the Publishers know that they will mostly get away with it for many reasons, not the least being the Stockholm syndrome and the “captive” players in the industry including agents and no doubt even some legal advisers. And, of course the dream, the vanity, the need for acknowledgement and validation which traditional publishing seems to offer in place of fair payment.

  5. Have you received about five identical messages from me via your contact form? I tried adding some info to your research.

    • I haven’t gotten anything through the contact form, Kristina, although I did just send you a thank you for the donation. Please send the new information to that e-mail address. (And thanks again.)

  6. Contracts strike me now as being a game, and if you don’t know how to play well, you lose. It’s like bridge, where you need to know the bidding game, the trick game, and the scoring game and how they all interact with each other. I welcome this series because I would absolutely lose the contract game if left to my own devices.

  7. Felix J. Torres says:

    Publishers have already used the “outstanding commitments” clause to stop publication of at least one collection of reprints.

    There was the Kiana Davenport to-do back in 2011.
    http://kianadavenportdialogues.blogspot.com/2011/08/sleeping-with-enemy-cautionary-tale.html

  8. Dane Tyler says:

    Wow, Kris, this is going to be huge. I can’t wait to refer my writer friends, desperate to be published by the Big Five, to these series. IF they’re still speaking to me after all the…um…”discussions” we’ve had about indie vs. trad publishing. Sigh

    Boy, this is going to be gritty, but very good. Thank you. From the bottom of my heart, thank you, because this is so important, and I can’t think of anyone, not a single person, better suited to this task than you. You’ve been there, done that, in every aspect of publishing.

    You and Dean are amazing, and one day, I will be able to repay your kindness and generosity.

    As an aside, I have a couple of boilerplate contracts with non-fic agents. Is that anything you’d like to see, or is this specific to the fiction side? Those are from 2009-ish, btw.

  9. Stefon Mears says:

    Kris, do you want to see short story contracts too, or just contracts for book-length works?

    • Short story contracts would be marvelous, Stefon. Thanks!

      • savantefolle says:

        I have about two dozens of short story contracts in French. The recent ones are fairly good to my opinion. You may check the electronic pub clauses.

        Most of my novel contracts in Canada are OK, kept the French publication rights for 10 years, 10%. One publisher insisted for a “adaptation” annex ( movie rights, translation, etc) and as they never had movie/adaptation deals done, I convinced them to let go of the annex and treat the adaptations au cas-par-cas (drafting an agreement as needed)

  10. Mike Southern says:

    HI, Kris. I’d just like to know how recent a copy of The Copyright Handbook needs to be. I have a copy but it’s the 2006 edition.

    • If you can afford the new one, get it. But 2006 should give you some grounding. Once every 10 years or so, replace it.

      • Mike Southern says:

        Thanks, Kris. I didn’t think copyright law changed too much, too often but I wasn’t sure.

        • C.E. Petit says:

          The Copyright Act itself has not changed that much since 2006. However, there have been several very important judicial opinions since then that relate to both how an author should treat copyrights… and how an author should treat contracts. For example, since 2006:

          The Supreme Court has explicitly ruled that registering a copyright is not a jurisdictional prerequisite to a copyright claim, but instead a “claim-processing” requirement that’s part of a claim. This may sound like lawyerly quibbling — and it is — but it’s the difference between being in court with a chance to fix any administrative errors, and not being in court at all. And, in doing so, it smacked the Second Circuit pretty hard (keep in mind that what passes for a “publishing bar” in this country worships dead Second Circuit judges and decades-old decisions).
          The Supreme Court has explicitly ruled that once one lawfully buys a book, one can sell that book… even if the initial purchase was of a supposedly territory-restricted copy. Folks, this means that “territorial rights” are at best a highly endangered species, because it brings US copyright practice into line with EU antitrust practice. It also means that there’s yet another source of potential strife over “competes with” language in contracts.
          The various Circuit Courts of Appeal have made a lot of rulings on fair use — among other copyright-specific matters — that should have (but haven’t) influenced my pet peeves in contracts: The warranties and indemnification clauses.

          And those are just the obvious examples.

          NOLO Press is very good about updating its books — most, including The Copyright Handbook, are done annually. Most major public library systems are good about keeping within four years or so for the major NOLO titles. I do not recommend doing a contract negotiation for copyrighted material at this time without first at least skimming a 2013 or later revision.

  11. Reality Observer says:

    Having no income at the moment – much less writing income – I fear that I cannot leave a tangible offering at this time.

    However, you are racking up saved souls for the Author’s Heaven. I just sent off a rather lengthy missive to a poor fellow (or could be female, actually) that is even further behind on the learning curve than myself. The poor person was asking about “When do I start looking for agents?”

    Um. I basically said “Never!” (with somewhat less… vitriol…). Sent him my list of “must read” sites, also – and “Business Musings” was at the top.

    So, sorry about no income boost, but perhaps a tiny bit of ego boost will suffice for now?

    (Oh, BTW, your check boxes are still missing their labels. At least in the latest Firefox.)

  12. Hi Kristine,

    A great and comprehensive article. You spoke of big conglomerate publishers – other bloggers and writers speak of this as a phenomenon of Indie publishing where houses are combining to protect themselves against Indie and eBook publishing. Do you think publishing houses and paper books will continue to fade away in the wake of Indie publishing? Even now thousands of books are ebook only, including 3 of mine.

    For an Indie writer agents, in my experience, often do more harm than good. If someone is thinking about going that route, they should research all options first, understand what the agent will do for them, then decide if they are actions they can take themselves. Chances are they can do it all themselves and save a small fortune.

    • The conglomerates didn’t form in response to indie. The conglomerates are working on a big international scale for large business, and are gobbling up smaller companies left and right. It has to do with corporate decisions, not small inside one industry decisions. Believe it or not, publishing is a very small industry internationally. And yeah, you’re right on agents. We’ll get to that issue at some point. 🙂

  13. Vera Soroka says:

    Very interesting and look forward to this series of posts. I’m so glad I chose the indie route. It’s been a steep learning curve but I don’t regret making the decision to go indie. I own all my rights and I write under different pen names. A traditional publishing contract would end that career. I’m also a multiple genre writer and I will not have one pen name being stifled because of some whim of traditional publishing company saying I can’t do this or that. No thank you.

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