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  I’m one of the featured speakers at the upcoming conference in October, and I’m worried that my advice will be out of date by then.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 20^th 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.