The Business Rusch: Deal Breakers 2012

I have a sticky note on my computer marked “Deal Breakers—by July 30.” It’s a reminder to revise the deal breakers article I wrote last year for the binder that Novelists Inc. give out at their conference every year.

I was scheduled to speak last year, but had to cancel because of problems with the estate we dealt with all fall.  As a result, my article showed up at the convention, but I didn’t.

This year, the kind folks at NINC asked me if I wanted to revise the piece for inclusion in the 2012 binder. I glanced at what I wrote and thought it would be easy to update.

Hah! So much has changed in the past year—in the world of publishing as well as in my own thinking—that a simple update isn’t possible. I also realized that I was long overdue in updating my thoughts on  publishing contracts. So even if you’ve seen some of this from me before, please follow this post and the next, because there will be new material here.

I know many of you only plan to publish indie from now on and believe that contracts don’t apply to you. But when you click yes to the Terms and Conditions on Amazon’s KDP site or on Pubit or on the new Kobo do-it-yourself publishing site, then you’re effectively agreeing to a contract. You should really understand it and how it applies to you. (Most of the angry complaints you see on the Kindle boards about Amazon are from people who’ve never read the Terms and Conditions that they gladly clicked when they put up their books.)

I also get questions from five to six writers per week whose indie books have attracted the attention of foreign publishers or Hollywood or audio markets or theaters.

All of those subsidiary rights (and yes, a foreign book is a subsidiary right) require some contract knowledge and a bit of balls in negotiation. If you haven’t read my pieces on negotiation, please read them now.  If you want to read them all in one place, you can find them in my Freelancer’s Guide short book titled How To Negotiate Anything, as well as in the big gigantic Freelancer’s Survival Guide itself.  You can buy both books in print or e-book form, or you can find the same material in slightly different form here on the website.

In other words, what I have to say about contracts applies to both indie and traditionally published writers. So don’t dismiss the topic just because you believe it does not apply to you. It might in the future. It might have in the past.

Second, let me remind you that an agent no longer has the skills to negotiate a book contract. Things have changed too much. If you feel you need an agent (and that’s a whole other blog post), then add an intellectual property attorney to your business team as well. Let the attorney handle the contract side—with your supervision of course. (If you want to see a list of intellectual property attorneys, see this post by Laura Resnick.)

Publishers have a team of attorneys designing their contracts. Most writers never seek the advice of an attorney on contractual matters, preferring to trust a glorified salesperson/manager (the agent) to handle such things—even though an agent should not dispense legal advice. That’s practicing law without a license, which is illegal in most states. Also, contracts have gotten so complicated that most agents do not understand them at all. I’ve seen contracts renegotiated by agents to be more favorable to the publisher, not less. Why? Because the agent used to be an editor (in other words, she used to work for the publisher), and thought those details had to be in any contract.

If you don’t want such things to happen to you, hire an attorney.

Please remember that attorneys specialize and any old attorney will not do in this situation. Find one who specializes in copyright law. This rule applies whether you are an American author or a European one or any flavor of author in between.

I start every contracts post talking about negotiation because most writers—professional or not—do not realize that contracts are negotiable. In fact, a contract is not set in stone until both parties sign it. An agent or an attorney, for that matter, is not party to a publishing contract. The writer and the publisher are. So it really doesn’t matter what advice your attorney gives you. If you follow it, and sign the contract, then you are responsible for your end of the contract.

If you sign a bad contract, it’s no one’s fault but your own. So learn this stuff. If that scares you, get the negotiation book and combine it with The Copyright Handbook,  so that you understand exactly what you’re doing when you license something. (If you don’t understand this stuff, you will find yourself in trouble down the road.)

The other reason I start with negotiation when I get to contracts is because you have to know at what point you will walk away from a book deal. Yes,  many long-term professionals have walked away from a book contract at one point or another in their career. Sometimes these professionals walk during the negotiation. Sometimes they realize a contract is untenable and pay money to get out of a contract. I very nearly did that in October when a representative of one of my many traditional publishers did something so egregious, I felt I could no longer trust my work to that publisher. Only negotiation and a lot of work on the part of the publishing house kept me in the fold.

Professional writers know what their deal breakers are.  In the past, most writers rarely talked about this. Now it’s becoming part of the conversation, mostly because professionals are walking away from contracts more and more.

Last week, the gifted mystery and science fiction writer, Kate Wilhelm, blogged about her deal breakers. She announced the creation of her new publishing company, done in collaboration with her family. What makes this news is several fold.

First, Kate has been a ground-breaker for her entire career. She published her first short story in 1956. She co-founded The Science Fiction Writers of America, the Milford Writing Workshop, and the Clarion Writers Workshop. She and her late husband, Damon Knight, published a lot of valuable guides for writers, and did all kinds of things that were then revolutionary, but are now considered normal.

One thing that Damon did was write a model contract for writers, things that writers should have. Kate and I used to live in the same town, and one of my many memories of her involved her sitting on a corner of her couch, a legal notepad in front of her, making a list of the things that a movie had in common with one of her books, in preparation for a lawsuit that she eventually won.

Kate believes in author’s rights, and in standing up for yourself in publishing. She’s done it for 56 years. I can only aspire to this.

And now, at the age of 84, she’s starting a new venture. Please read her entire post.

As she writes about the impetus for the new venture, however, she talks about deal breakers. She encountered some recently and dealt with them in the only way possible. She writes:  “In the fall of 2011 I was offered a contract that was so egregious that the publishing house that sent it should have been ashamed, and if I had signed it I would have been shamed.”

Please notice her wording there. She puts the onus on both the publisher and the writer, the publisher for even proposing such a contract, and any writer who even thinks of acquiescing to such terms.

She responded to that contract professionally. She writes, “I proposed additional changes to those my agent had already managed to have incorporated and each suggested change was refused. I rejected the contract and withdrew the novel.”

In other words, she declined the deal. The publisher’s terms were a deal breaker for Kate.

In the past, there wasn’t a lot of recourse for a writer who left a publisher over contract terms. The writer could try to sell the book to another publishing house and hope that the terms were better there. Or she could shelve the book until later.

I had a couple of deal breaker contracts in those years, and always managed to sell the book for more money. That became harder and harder in this new century, plus a new wrinkle got added in.

Agents started complaining: We had a deal. I spent time negotiating it. We should accept it. (In other words, the agent wanted payment for his work, even when he wasn’t acting in the author’s best interest.) Because many writers see their relationships with their agents as “a marriage,” the writers would acquiesce, apparently thinking that the agent was an equal partner in the career.

The agent is not an equal partner. He gets hired to do a job, nothing more. And if he fails at the job, he doesn’t get paid because he works on commission. Which means he gets paid only if the client gets paid.

Old-time agents understand this. The big agencies and newer agents (in the agenting biz for 10 years or less) don’t.

I want you to notice something else in Kate’s post. She read her contract, even after her agent went through it, and had even more changes to make. She tried to negotiate, and failed. (Yes, I know, she didn’t hire an attorney, but she has used attorneys in the past. Apparently, after 56 years in the business, she didn’t feel like she needed one in this case—and she probably didn’t.)

Here’s another part of Kate’s post. It’s subtle but it’s important. She’s been in this business longer than the people she was negotiating with. She’s written more books—successful books—than most writers ever will.

Yet she got treated poorly here. This publishing company—and it’s a major company—did not treat her with respect.

I’m sorry. That’s criminal. But that’s what has been happening to long-time professional writers for more than ten  years now. I just corresponded with one today who actually left the business because she’s been so poorly treated in this new decade of the twenty-first century.

But I digress.

I have no idea how Kate initially reacted to all of this.  I suspect she was both angry and disappointed. I know I’ve had those feelings in the past when I’ve been treated badly by publishers.

Then Kate did what Kate always does. She looked at her options.

She writes, “At that point, I could have tried a different publisher but I knew it would have been a repeat performance, because the major publishers are tightening ranks and the contract I had rejected was more or less the new standard.”

Again, Kate has remained aware of all of the trends in publishing. She knows what has been happening to contracts all over the business, and that her treatment by her publisher is not unique (sadly).

She writes, “It wasn’t about the advance, I might add. It was about rights, especially electronic rights, not only those in existence today, but anything that might be developed in the future in any form: who owned them, duration of ownership, how they would be exploited, how and if they would ever revert, and so on.”

Kate wanted to retain as much ownership of her work as possible. Since publishing houses and all of those jobs—from editor to sales manager to publisher—would not exist without us, the writer, the content provider, you’d think we would get more respect.

But that’s going to come in the future, when traditional publishing starts to understand that we’re no longer going to put up with bad service, bad contracts, and bad attitudes.

Kate Wilhelm, at an age when many business people have been retired for twenty years, is so on top of her game that she not only walked away from a contract, she’s now using this opportunity to start a whole new business.

She formed a company with her sons and daughter-in-law, to publish Kate’s new and backlist titles. Then when that “Herculean task” (her words) is complete, Infinity Box will publish her late husband Damon Knight’s work. And the plans don’t stop there.

She adds, “After our initial offerings are complete, we will open the doors to other writers.”

You can bet that this publishing company will offer fair contract terms and good treatment to writers. After all, Kate has devoted her career to it.

Smart writers are making choices like Kate’s all the time. Gregory Benford now works with Lucky Bat Books to get his backlist out.  I’m not sure if he’s doing his front list or not. Joe Konrath flirted with Amazon’s publishing house, and has now returned to the indie fold, after realizing that his own publishing company has greater reach to readers than the mighty giant Amazon does. (Joe learned the downside to exclusivity—angry fans who don’t want to buy on just one platform.)

Even though I follow trends in the industry, I learned about Kate’s break-out move from another longtime professional, Lawrence Block. He’s been indie-publishing for a couple of years now. He’s doing all kinds of fascinating things, from publishing old stories to collections to a never-ending e-book series of afterwards about his existing novels (of which there are many). He keeps adding to the afterwards book, so I refresh my edition from time to time.

His newsletters are always interesting. The one with the notice about Kate’s new venture put me in mind of a lesson I learned from Mike Resnick about fifteen years ago now.

Mike told me and Dean that it wasn’t our job to worry about the future of some start-up company. We should always “run to the money.” And then when the money gets tight, we should leave that company.

Not surprisingly, Mike is an early e-book adapter too, and has indie published a large number of backlist books. He ran to the money.

Professionals of long-standing, and by long-standing, I mean decades, writers that include Kate Wilhelm, Lawrence Block, and Mike Resnick, are turning to independent publishing because that’s where the money is now. Writers make more money starting their own publishing companies and publishing their backlists (and  yes, folks who whine about the terms, that is indie publishing in all senses of the word) than they ever will through traditional publishers.

Particularly with the current contracts being offered to writers—with the egregious parts of the contract being non-negotiable.

Before you give up on your favorite traditional publisher, however, do a cost-benefit analysis. (See if you’re getting adequate payment for the amount of money you will lose by going with the publisher.) Benefits might not be monetary.

But do not count promises as a benefit. Only count results. So if your publisher promises you bestseller status, and you don’t get it, then that is not a benefit. That’s just a promise, and an empty one at that.

The key to doing business with someone other than yourself—be that someone a traditional publisher, an independent press run by another writer, a foreign publisher, a Hollywood studio, or Amazon.com—is to both understand and negotiate the contract you’re presented. Unless the terms you get are in writing in that contract, the promises you hear, the terms you’re told about, do not count as part of the deal.

Got that?

The best way to measure your value to the publishing house is to negotiate for the best contract terms you can get. What the house is willing to bend on will tell you how much monetary value they believe your work has to them. (It will have a different value to you.)

I recently negotiated one of my traditional contracts with a house I’m quite pleased with. I ended up walking away, but to that house’s credit, they told me this: one of the terms I considered a deal breaker was not available to me because I am not a New York Times  bestseller. Had I been one, they would have budged. It wasn’t worth their while to give up that particular part of the contract with a midlist author like me.

I understand that. It wasn’t worth my while to stay with them in that case. But we parted on friendly terms and I wouldn’t hesitate to approach them again with the right project, if we can come to a mutually satisfactory agreement.

Next week and possibly the week after, I will write about the changes in my thinking about traditional publishing contracts from last year to this year. But for the rest of this post, I’m going to include the points from last year’s article that I believe still hold up in 2012.

Remember as you go through this short list that I am not a lawyer nor do I play one on TV. What you see below are my opinions only. Yours might differ.

I’m listing three points that you should consider when negotiating a contract with a traditional publisher:

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, you license the publisher 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.  I’d tell you not to license e-rights, but while that was possible in 2010, it’s not possible any longer unless you are a very big name.  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.

Last year, I 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 at the moment.

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. Here’s how:

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 get your work into? (Make sure you know what’s possible as well. See Dean Wesley Smith’s Think Like A Publisher for that.) Are those markets worth going into? Two years 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 several 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? Last year, one of my traditional publishers delayed the e-book of my latest release to the consternation of me and my fans. I lost hundreds of sales weekly because the publisher believed that the delay would increase sales of the trade paper.

All it did was make readers angry at me. Even now, that particular publisher does not put my books in all e-book markets. So I constantly get letters from fans about inaccessibility of my books.

When my contract came up for renewal last year, I asked the publisher what he needed to satisfy the option. I also told him that unless he offered me a significant advance and a change in e-book policy, I would not license my book to his company.  We parted ways quickly after that, and I can’t be happier.

Why do I insist on an e-book that’s published simultaneously with the hardcover? Because, 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 a traditional publisher delays causes significant lost revenues—and subjects the writer 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? Making 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 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.

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? It was on the first Grayson book. Since I wrote this piece last year, I’ve published two more Grayson books with Sourcebooks. The increase in sales has not been as dramatic.

I suspect that the loss leader theory only works for a few books, rather than an entire series of them.

Which brings us to:

3. The Number of Books You License in This Contract.

In the past, every writer wanted a multibook 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, multibook contracts no longer provide security. They might harm us by locking us into contract terms that won’t be good for us in 2013 or 2014.

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 multibook contract that year, you are probably still fulfilling that contract.  And it’s out of date.)

And that’s all, folks, at least for the moment. Three deal breaker points that have remained the same out of five for last year. I suspect I’ll have at least three more in the next few posts, plus some more in-depth explanations.

Last August, when I wrote the initial piece, is decades ago in the changes that have occurred in publishing. Some of what I wrote no longer applies given what has been happening in publishing these last three months.

I’ll address those points in the remaining articles in this series.

Speaking of series, my post on Perfection led to a mini-series for me. I hadn’t expected to do that, but your comments, on the post itself and in the e-mail, led to the longer posts. Thank you!

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“The Business Rusch: Deal breakers 2012,” copyright © 2012 by Kristine Kathryn Rusch.