The Business Rusch: Deal Breakers Continued
The Business Rusch: Deal Breakers Continued
Kristine Kathryn Rusch
Before we get too deep into this week’s blog post, let me point you to a few things that came up in the last few days. Last week, I recommended that all writers, even those with an agent, hire an intellectual properties attorney to vet new contracts. Most agents do not have a law degree, and many agencies—even the big ones—do not have a lawyer on staff. Agents cannot give legal advice (that’s called practicing law without a license, and it’s, um, illegal), although they do make recommendations based on custom, etc.
The problem is that the industry has changed so rapidly that most agents have no idea what the new contract clause in traditional publishing contracts mean, and the agents certainly don’t know how to protect their clients from those clauses. I thought recommending the IP attorney would do it. Then fiction writer Annie Reed commented that most people are scared to hire an attorney.
My initial reaction when I read her comment was one of shock. It’s harder for people to hire someone they won’t have a relationship with, someone they’ll pay a flat fee to and can fire if that person is doing a bad job? As opposed to an agent whom they have never met, who often retains interest in a writer’s work after the relationship gets severed, someone who handles their money?
But then I realized that one of my best college friends is an attorney. Dean’s best friend is an attorney. Several of our close friends are attorneys, and we both know several judges. Dean went to law school and I went so far as to get an application for the LSAT exam that gets you into law school (until I realized that I not only didn’t have the money for the exam fee, but I didn’t have the desire to dig the money up).
It doesn’t occur to either of us to be afraid of lawyers. I hired one when I was horribly impoverished to get me out of a bad marriage. I look at lawyers as one of those professionals you consult when you have a legal problem, just like you consult a doctor when you have a medical problem.
I literally had no idea that people are afraid to hire lawyers.
It explains so very much about the problems writers are having. I’m watching a group of long-term professional writers turn themselves into pretzels, lose tens of thousands, maybe hundreds of thousands of dollars, because they won’t hire a lawyer (either separately or together) to sue an agency that is, through inaction and incompetence, destroying their careers. This is why writers’ eyes glaze over when I tell them in person to hire an attorney.
So with that in mind, I asked Annie to elaborate on her comment in a blog post on her site. Here’s the link. She explains how to hire an attorney. Her post inspired the Passive Guy, an attorney who isn’t currently practicing, to add some thoughts of his own. Fiction writer Laura Resnick, who has used IP attorneys to negotiate all of her deals for her for years, has a list of attorneys that she has personally vetted on her website. You can find that along with another post on how to hire an attorney. Really, it’s not that scary.
Finally, an attorney friend of mine pointed out after reading some of these posts that writers can find the appropriate lawyer by calling the local version of Volunteer Lawyers for the Arts. I know that my small town doesn’t have anything like that (my friend lives in LA), but VLA has a website that will help you find an attorney relatively close to you. Plus there is a branch in New York, and if your book publisher is in New York and the contract says it will be governed by the State of New York, then hire a New York based attorney. It doesn’t matter where you live, so long as the attorney is an expert in the kind of legal advice you’re seeking.
There. Now you have no excuse. Hire an attorney on your next contract. And remember, most attorneys will work with you to keep their fees affordable and to help you figure out how to pay them in a mutually beneficial way.
Okay…back to our regularly scheduled blog post:
Last week, I noted that a lot of writers will continue to publish with traditional publishing houses. In fact, most writers will continue to do so, some—like me, with a foot in both the traditional camp and the indie camp—others because they don’t want to go indie at all. If you plan to stay in traditional publishing, then read last week’s blog post before going any farther in this one. They are one long piece.
Last week, I quickly explained how to negotiate. And let me reiterate: just because I told you to negotiate doesn’t mean you have to be the person on the phone haggling. You can hire someone to negotiate for you (see the attorney stuff above), but you still have to guide that person.
When you negotiate, you should:
1. Know What You Want.
3. Be Prepared to Walk Away.
4. Stay Calm.
5. Never Reveal Your Entire Hand.
6. Don’t Flip-Flop.
When you negotiate a contract, you should realize these things:
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 need more information than that, you should get a book on negotiation. As I said last week, 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.
You should also understand what you are negotiating, and most writers don’t. Writers believe they are selling books or stories, when actually writers license copyright. If that confuses you, get a copy of the Copyright Handbook.
After explaining all of that, I discussed the changing terms in traditional publishing contracts. I listed five areas you need to watch in the new contracts. Those areas 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.
I covered points one through three last week. If you haven’t seen them, go back and read them now.
Before we move to the remaining two points, let me give my disclaimer. I am not an attorney. I did not go to law school. I am not giving legal advice here. This is just my opinion. Okay? Got that?
Let’s move on to the remaining two points.
4. Future Projects With That Publishing House.
Publishers have always tried to lock the writer into that house with something called an option clause. That clause gave the publisher an option on buying the writer’s next book. In other words, the publisher got the right of first refusal on that book, and no one else could see it until the publisher made up his mind.
Properly negotiated, an option clause benefited the writer as well as the publisher, often by forcing the publisher to bid on the next book long before the first book came out. A bad option clause could prevent a writer from publishing another book for a year or two after the first book came out—and this was in the previous century.
But agents, attorneys, and most writers learned how to take the teeth out of an option clause. And those toothless option clauses remain, which is why I am not calling point four the option clause. Your option clause will probably look fine.
Instead, publishers are adding something I haven’t seen in almost two decades. It’s called a non-compete clause, and it’ll look something like this:
The Author agrees that during the terms of this Agreement he will not, without the written permission of the Publisher, publish or authorize to be published any work under this name or any other, including blog posts, short stories, nonfiction articles, novels, or the like.
In other words, the contract will prevent the writer from making a living at his craft. I saw that clause in my first contract with Bantam Books fifteen years ago and hit the ceiling. (The word blog was not in it, of course.) I thought I was going to lose this rather large contract because no way in hell would I sign a document with that clause in it.
Writers have signed this non-compete clause, however, and have done so recently. I know of at least two mystery writers who need their publishers permission to put up a blog post. I know of several more who have gotten a blanket permission from their fiction publisher to write nonfiction.
Folks, let me simply say: this clause is ridiculous. It’s there to prevent you from controlling your craft. According to that clause, your publisher is in charge of everything you write, whether the publisher pays you for it or not. Got that?
I have seen other versions of this clause, negotiated by (idiot) agents for their established clients. Those versions usually read something like this:
The Author agrees that, during the term of this Agreement, he will not, without the written permission of the Publisher, publish or authorize to be published any work substantially similar to the Work or which is likely to injure its sale or the merchandising of other rights herein.
This is only marginally better. Seriously. You’re still asking your publisher’s permission to write something. Granted, it’s only under one name, and if your publisher withholds permission, you can start up a new pen name, but seriously…who signs this stuff? And what advisor thinks something like this is okay for a writer to sign?
Because the problem isn’t with the publisher’s permission. The problem here are two phrases: “substantially similar” and “likely to injure.” Who decides if my funny fantasy novel about fairy tale characters is substantially similar to my science fiction novels about the Moon? They are supposedly in the same genre—sf/f. Or what about my mystery set in 1968? Is that substantially similar to the mysteries set on the Moon? They are both mysteries after all. And many of my romance novels also have mysteries in them.
And who determines of those Moon mysteries “injure” the sales of the 1968 mysteries? Does the fact that I’m also publishing romance, a genre that many sf editors don’t respect, “injure” the sales of my sf books?
See the problem?
It gets worse when you think about who gets to decide. Most writers—apparently afraid of hiring lawyers—will let their publishers decide. Those writers who aren’t afraid to hire a lawyer will find their books, their careers, their livelihoods tied up in civil court, waiting for a judge to decide.
I have seen several versions of these clauses negotiated to death, with all kinds of phrases added in, but none of them are toothless, and all of them tie the writer’s output to his publisher’s permission. For me, this clause is a deal breaker. No one controls my career but me. No one tells me what to write but me.
You can negotiate this down by doing something like this: “The Author agrees…that he will not, without written permission from the Publisher, which will not be unreasonably withheld, publish or authorize to be published a novel in the same series as the Work and which would be reasonably likely to compete with the Work.”
But man, I hate that as well. For example, even though “reasonable” is a term defined in the law, who determines whether or not the publisher was unreasonable? A judge, that’s who. And the case would go to court.
The best way to handle a non-compete clause is to refuse to sign one.
So…you take the non-compete clause out and you’re in the clear, right?
Hell, no. Lately these publishers have been adding something in the boilerplate section of the contract (which most agents don’t even read). A boilerplate section is the stuff that should remain the same from contract to contract—you negotiate it once, and it doesn’t change. It’s stock or formulaic language that covers expected things like insurance coverage and Acts of God. Some boilerplate can be changed and some can’t.
In the boilerplate section is something called a Warranty, and in it, you’ll find language like:
The Author Warrants that the Work is original, and uses no material from any other source…
Things like that.
Only cagey publishers have started to add this:
The Author Warrants that she will not publish any other work until this contract is fully executed.
In other words, the Author can’t publish anything until all the terms of the contract are met. Meaning that she cannot publish anything until the second or fifth or tenth book of the contract is published, and maybe, depending on the wording, not even then. She might not be able to publish until the book goes out of print.
Seriously, folks, watch out for this stuff. Take it out of the contract. If your publisher refuses to remove language like this from your contract and you still sign it, you will have no one to blame but yourself for your tanking writing career. Because you put your signature on a legal document giving someone else control of your output.
By the way, I had an editor verbally assure me that the non-compete clause in one of my contracts wouldn’t affect my short stories. I know the value of a verbal promise when faced with a written legal document. There is no value.
I made her put her promise in writing. I did end up signing a non-compete clause that wouldn’t allow me to publish another original full-length novel in the same series by the same pen name until thirty days after the book was published or two years from the signing of the contract, whichever came first. I still don’t like that non-compete clause, but I can live with it—because I write a lot of series under a lot of names, and I wasn’t planning to write anything sooner than that anyway.
I wanted the book deal, so I figured out a way to make it work. If I didn’t care about the deal, I would have walked. Had she not allowed me to take the teeth out of the non-compete clause, I would have walked whether I wanted the deal or not. I’ve done that throughout my career and I have never regretted it. (I did have an agent “fire” me, though, because I did that. I was told I was impossible to work with because I stood my ground. That’s someone I want to negotiate for me. Not.)
Finally, let’s examine the fifth and final point:
5. The Sunset Clause.
Contracts need a termination clause or else they’re not valid. No contract can exist in perpetuity. This is a difficult dilemma for publishing because if a book is successful, both publisher and author want it to remain in print.
How do you make sure that the contract has a termination, then? You define it by something other than a set date. (By set date I mean, “This contract will expire on June 15, 2025.”)
In the past, publishing contracts ended when a book went out of print. The term “out of print” was usually defined as “unavailable in bookstores.” This was well and good when bookstores were brick-and-mortar buildings only, but now they’re online.
I have one book that I have “lost” to Pocket Books because I sold the book before this phrase became common in out-of-print clauses: “A print-on-demand edition will not be considered ‘in print’ for the purposes of this contract.” When I sold the book, Fantasy Life, there was no such thing as a print-on-demand edition.
However, Pocket was a pioneer in e-books, and it did have an e-rights clause in that very old contract. So I had sold them e-rights, which to me at the time were like selling them Mars rights. Yeah, we might have bookstores on Mars someday, but not in the near future, and even if we do, those rights won’t amount to much.
Times changed. When I noted that the book was out of print and unavailable in bookstores (including Amazon.com), and asked for my rights reverted, Pocket reverted all rights to me…except North American print rights and e-book rights. Then they immediately put out an egregiously expensive POD version of the book. I had no recourse because of the contract I signed (except going to court). So I asked for the e-rights to be reverted. Pocket refused for two years.
Finally, I wrote and said if they did not exercise the e-rights immediately, I would have my attorney contact them. Next thing I know, there’s an e-book edition of the novel.
Because this contract is old and because most of the things that are common in contracts now were impossible to imagine then, I have “lost” that book to my publisher. If I wanted to, I could force the issue by taking them to court and making the argument I’m making to you now—and I will, if my e-book royalties aren’t the 50% of retail price required by my contract—but until then, I’ll just wait and see.
I have written a lot of other books.
Most writers aren’t in the position of having so many books that they can shrug off the “loss” of one. These writers need their out-of-print clause to be accurate.
For most of this century, writers tried to define out-of-print by velocity. First, the contract would state that a print-on-demand version was not considered in print, and second, it would state that once the e-book sales went under a certain point (fifty copies/five hundred copies/a thousand copies) in a six-month period, the book would be considered out of print.
But I think that threshold is dated now too, and probably filled with as many pitfalls as my little contract problem with Pocket. Here’s what I suggest you do:
Define out of print this way: The book shall be deemed out of print if, after five years in print, the author is not receiving a royalty check of at least $500 per six-month period.
In other words, your book has to have earned out its advance, and be paying you royalties of at least $1000 every single year.
Publishers are loathe to agree to this because it’s not in their best interest. Negotiate on the number of years to recoup the advance—three years, five years, ten years—but never on the money. You have to be earning real money on this book for them to hang onto your rights indefinitely.
Remember, these are my suggestions only. You may not agree with all of these points, or they might not suit you in your current negotiation. You are responsible for your own career.
But, for heaven’s sake, negotiate your contract. And really, really, really think about what every clause in that contract means before you sign your name to the document. Ask yourself if you can live with the clauses you’ve signed ten or twenty years from now.
Can you handle being the only one who isn’t making money off that book? I know of several New York Times bestsellers who can’t make a living wage. Since I know how much publishing companies make on bestselling books, I have to wonder where the authors’ money is going—and what horrible contract they signed in their hurry to be published or to pay last year’s mortgage.
I signed that contract with Pocket Books and thought it good at the time. I’m still living with it, and probably will for years, depending on how accurate the royalty statements are.
I signed that non-compete clause as well, and we’ll see how that goes. It was a calculated risk. But I understood the risk when I took it. And that’s what most writers fail to do. They fail to understand the contracts they’re signing, trusting their agents and their editors to treat them fairly.
If you expect an agent without legal training to get you out of that first non-compete clause above, I suggest you reread the second non-compete clause, the one negotiated by agents. Then look at my non-lawyerly analysis, and ask yourself how the agent missed that.
I can tell you: Most agents have a BA in English. Not a JD from a reputable law school. Most agents know as much about contracts as you do, and maybe less.
Scare you? It should. Hire that IP attorney. Know what you’re signing. Make an informed decision. And if the publisher refuses to negotiate, run from the deal.
You have options now, including publishing the novel yourself. Remember that. You don’t have to take a bad traditional publishing contract just to see your book in print. In fact, that’s probably the worst thing you can do. It’ll tie your work up for decades, and you’ll have to go to court to set that work free.
And, um, going to court means you’ll have to hire an attorney.
It’s been exactly one year since I finished the Freelancer’s Survival Guide and replaced it with the Business Rusch. I’m rather stunned that I made it this far.
Part of that is because I would rather be writing fiction. I haven’t missed a single week on the Business Rusch. Each post is roughly 3,000 words long (some longer, few shorter), which means that I have written at least 156,000 words on the blog in the past year. I’d love to say that’s 156,000 words I haven’t written in my fiction, but that’s not fair. The crunch of the deadline gets me in here with a headache or when I’m traveling, so honestly, I suspect I only lost about 140,000 words of fiction to do this blog.
Still, for a fiction writer, that’s quite a commitment—and a heck of a loss. About 1.5 novels worth, if you want me to be honest. So if you’re getting any value from these nonfiction blog posts, please share them with folks who haven’t seen them, and please donate.
However, I do think the discussion here is important, and I am constantly learning from y’all. I think I follow the business news closer because of all this. And I am constantly re-evaluating my own opinions so that I can express them here.
Anyway, here’s the donate button. Add a tip if you’re getting some value from the blog. Every little bit helps. Thanks!
“The Business Rusch: Deal Breakers Continued” copyright 2011 by Kristine Kathryn Rusch.