Business Musings: Long-Term Thinking: The Option Clause (Contracts/Dealbreakers)

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A few weeks ago, the Passive Guy, who runs The Passive Voice website, posted some thoughts on the way that publishers treat writers versus the way that companies (and the law) treat employees and stockholders. PG said this:

Of course, an investor who bought into a mutual fund can sell his/her shares and have nothing further to do with that fund and its managers. A hedge fund that purchased a publisher can sell the publisher and be done with it. Since no US state permits life-time employment contracts, a publishing executive or editor can either quit immediately or wait a couple of years, then bail out on a failing publisher.

Only the authors who signed contracts that last for the full term of the copyright are tied to whatever corporate entity once called itself a publisher, but now is a hedge fund asset, for the rest of their lives plus 70 years.

In the body of the piece, he added this:

Under current contract practices, the author is the only person who has to think in the long term while everyone else in the publishing business is focused on the short term.

Clearly, that stuck with me. I’ve been thinking about the way that writers think versus the way that publishers think for some time. I’ve also been analyzing my own out-of-date thinking for quite a while.

I learned to read when I was three. I can’t remember a time when I couldn’t read. Books were everywhere in my world—my parents’ house, my grandmother’s house, my aunt’s house, the drugstore, the library, school—and somehow, I got the notion that books were forever. I know part of that notion came from school.

Some of it came from my training as a writer. Everything we learned as writers in high school, college, and beyond was how to make our books “art” so that they would be read hundreds of years from now. As if it were that easy to be read forever.

Libraries dump books, bookstores go out of business, and in the old days of print-only books, the print run determined your maximum number of readers—even if your book eventually ended up in a used bookstore. And then there are the behind-the-scenes way that books disappear, such as through badly managed estates (see last week’s post).

I noted in some comments elsewhere about my post that people who indie published seemed to think they were immune from a badly managed estate. And I sighed. Because indies might just be the most vulnerable.

But that’s another topic…except in the short-sightedness.

Indulge me for a moment.

Some of us write to be read. Some of us write to be entertainers. Some of us write because we have no choice. And a few of us write to be read forever like some of the works that we’ve read throughout our lives.

Yes, I realize that it’s arrogant for a writer to believe her work will last through the ages. But, as I’ve always said, writers are an interesting mixture of ego and insecurity. The ego allows us to think others will find our writing worth reading; the insecurity makes us constantly ask if we’re good enough.

We writers are used to long-term thinking. That’s part of the “art” argument.

But we writers do very little to protect our work properly for the long-term. Indies and traditionally published writers.

Here’s the thing, folks: I don’t care where your work originally gets published. If someone reads that work and loves it, that someone might want to purchase an auxiliary right to that work. (See the copyright discussion a few weeks ago) Much as those of us who are indie and hybrid want to, we can’t do everything. So we will sell rights in translation or to audio or to television or to some YouTube start-up.

We will sign contracts. And, I hate to say it, we will sign bad contracts.

That’s part of the learning experience.

But most writers only look at the amount they’ll get paid and what their due dates are. They let others (cough: incompetent agents) handle the messy details. And the others never do it right.

Neither does the writer. For all the dreams of having work last forever, writers are their own worst enemies in making those dreams come true. And the mistakes happen in the little decisions.

Let’s take the option clause. Option clauses exist in many, many publishing contracts—everywhere from audio contracts to gaming contracts and beyond. But I’m going to focus on a traditional book contract, since that’s where most writers will see the option clause.

The option clause in a book contract will say something like this:

The Publisher shall have the exclusive option to acquire upon mutually agreeable terms the publishing rights to the next novel by the Author. The period of this option shall be for sixty days following the acceptance of the last Work in this contract. During the period of this option, the Author agrees not to submit the work or its outline to other publishers. If the Publishers wishes to publish said novel, the parties shall negotiate in good faith the terms of the publishing agreement. If the parties are unable to reach agreement before the expiration of the option herein granted, then the Author shall be free to offer the next work to others, but only on terms more favorable than those offered by the Publisher. The Publisher shall have the right to match the offer of any other publisher.

Realize that all option clauses are different, and this is only an approximation of a clause, not a suggested version. Please be clear on that.

Now…to continue:

Once upon a time, in a land before ebooks, an option clause made sense for both writer and publisher. Sometimes, option clauses still make sense for both writer and publisher.

But only sometimes.

Let’s look at the past for a moment. Before conglomerates took over the publishing world, before ebooks, back when publishing was a smaller business, filled with Mom-and-Pop publishers, there was a lot of competition for good, established writers. When I started in the business, Publisher A might buy the first three books in Really Great Series by Brilliant Writer, investing a lot to get Really Great Series by Brilliant Writer off the ground. Then Publisher B would swoop in and offer Brilliant Writer five times the money for books four through six of Really Great Series, and Brilliant Writer (because he’s brilliant) would move to Publisher B.

As publishers became big corporations, and the accounting and business-think changed from long-term to short-term (sometimes as short as the next quarter), the idea of buying books four through six of an established series went away. Now, Publisher B would only consider all of the books of the series, if they became available.

But, Publisher B would consider Brilliant Writer’s work if Brilliant Writer started a new series for Publisher B. And so Brilliant Writer did. An Even Better Series got excellent reviews. Brilliant Writer even did a few standalone books for Publisher C.

Then time continued marching forward, and companies consolidated even more. Publisher A got swallowed up by Publisher F, and within a year, everyone who worked at Publisher A got laid off. All the plans for Really Great Series went out the window. Early books went out of print, and Brilliant Writer had only Publisher B and Publisher C left.

Brilliant Writer had a brilliant career, but amassed a track record of sales. Some books sold well; others sold poorly. Publisher H absorbed Publishers B and cut writers like Brilliant Writer, because his sales weren’t up to expectation.

Publisher C passed on Brilliant Writer’s next work—and no other publisher would take Brilliant Writer. Brilliant Writer was done, under that name. No one would buy him.

As you can see, all of these changes had a huge impact on the careers of writers.

The one thing that did not change, however, was the contract writers were offered, and the contracts that writers (and their [cough: incompetent] agents) negotiated. Those writers and agents still seemed to think there was a lot of competition for the writers’ work out there.

A well-negotiated option clause always protected the writer and the series on some level. It gave the writer the hope of a home. The writer could offer the publisher a book on the same or better terms, and the publisher would have to consider that book within a short period of time. If the publisher did not consider the book in that period of time, the writer could take the book to the competition.

Then the competition mostly disappeared. Writers were screwed, even though they kept negotiating option clauses as if there was competition.

Fast forward to 2009 or 2010, and suddenly, writers had opportunities again. Publishers didn’t have competition in the form of another big publisher as they did in the middle part of the 20th century. Publishers had competition in the form of the author himself.

Now, Brilliant Author doesn’t need the publisher to continue the series. Frankly, there’s no real reason to ever sign an option clause—except for the publisher.

Let me speak as a publisher now:

It makes sense that a publisher, who has invested (at minimum) $250,000 into a book, to want to not only recoup the investment in the book, but to have first dibs on another book from the author who made that publisher money.

No publisher is going to consider buying more books from an author if the author doesn’t make the publisher money. And no author can tell, not even from royalty statements, how much money the publisher made off that author—especially now, with ebook revenues up.

(Why am I saying ebook revenues are up, even though all the statistics say they’re down? Because I’m not talking about ebook sales for traditional publishers. I’m talking about how much money they make off of each sale, which is significantly more than they make off a standard print deal. Ebook revenues have kept many a publisher afloat these past five years.)

The publisher wants to wrap the writer up in a tiny little bow, and hold onto that writer—and the writer’s work—as long as possible. Especially now, because a book might not earn back its advance (or anything else) in the first two months out of the gate, but because of e-books, the book might take off a year from now.

Imagine if the publisher has a tight option clause on a particular work from the writer. Then the publisher can decide to take the next book, months or years, after the initial publication.

This used to happen, back in the bad old days, when options were poorly written. Then writers got smart about option clauses (more or less), and publishers started adding non-compete clauses, which I will get to next week.

Now, a publisher must decide whether or not to buy the next book—according to the option—at some point before the book is published, when (in theory) sales from retail outlets are just starting to come in. Um…except…the biggest sales are often ebook now, and ebook preorders aren’t nearly as big as any preorder from a brick-and-mortar store.

So a publisher will make the author wait until there are actual sales figures.

However, times have changed in a whole bunch of ways.

Now there is only one reason for the author to wait for a publisher to see sales figures before considering the next book. That reason? The author actually wants to work with the publisher, and no one else.

I know, I know. I’m blowing your minds. No option clause? Ever?


The option clause only benefits the publisher. The publisher has invested a lot of time and money into a project that it has no real ownership of. (Unless the writer didn’t follow the other dealbreaker aspects of the contract that I have or will discuss elsewhere in this series.) So, the publisher needs the writer more than the writer needs the publisher.

The writer has options now. The writer can sometimes (often) self-publish a book or a series better than a traditional publisher can.

In fact, option clauses get in the way of writers. Option clauses no longer help writers at all—and should be removed from most contracts.

I suppose after making a statement like that I should probably remind you that I am no lawyer, and nothing in this blog poses as legal advice. What I’m doing in this series is informational, so that you can make your own decisions, based on your own needs. (And for more disclaimers, please see the first blog in this series.)

Why am I saying the option clause should be removed? I didn’t say that in the original version of Dealbreakers which I published four years ago.

Removing the option clause goes back to that long-term thinking. Writers need to control the future of their projects. An option clause prevents that.

Say you’re happy with your publisher at first, but by the time you’ve gone through the entire publishing experience, you don’t like working with that publisher any more. An option clause locks you into a negotiation—and a timetable—that you don’t want.

Let me give an example.

Hardworking Indie Writer has had some luck with her series This Romance Sucks, but she prefers to read mass market paperback romances. She wants to see her novels in mass market paperback. So when Huge Traditional Publisher approaches her (because of her sales numbers) for the next book in the series, Hardworking Indie Author offers them a brand new series instead.

Huge Traditional Publisher takes the brand new series and publishes three books quickly for traditional publishing—one every six months.

But…all of the promises that Huge Traditional Publisher gave to Hardworking Indie Writer were broken. There was a mass market edition, but it didn’t get into Wal-Mart like the now-laid-off original editor promised. There was no advertising budget. Hardworking Indie Writer got her money, but nothing else.

In fact, her fans are getting restless because they can’t get the new books in the series as fast as Hardworking Indie Writer can write the books.

Hardworking Indie Writer wanted mass market editions, but has discovered that she really hates working with traditional publishers. She’s going to publish the next books in her series herself.

However, Hardworking Indie Writer is bound by her option clause, which looks like the one above. It says that the publisher has sixty days after the acceptance of the last work in the contract to make an offer for the next book. And the publisher must have exclusivity for those sixty days.

The clause appears to have a timetable, but it really doesn’t. Formal acceptance of a book manuscript by a traditional publisher usually comes in the form of payment. Sometimes, the editor might say in a letter that the book is accepted and the check will be forthcoming, but often the writer doesn’t know when the check was requisitioned.

Formal acceptance, like that check, will take anywhere from three to nine months after the turn-in of the last manuscript. From that moment, the publisher has sixty days to consider the next book.

So that’s another two months, even if the writer is going to say no. But the option clause says both sides will “negotiate in good faith.” Good faith is a concept that has a lot of implications under the law. Essentially, good faith in this instance means that both sides will deal with each other honestly, without malice, and with no intention of fooling the other or defrauding the other.

(Sometimes I wonder how traditional publishers can even use the phrase in their contracts, but that’s a point for another time.)

Hardworking Indie Writer does not want to continue with her publisher, but she has signed an agreement that ties her to a negotiation on something she doesn’t want to sell. In most cases, that’s not going to be an issue—most books don’t do well enough for a publisher to fight on this point.

But here’s where success can hurt Hardworking Indie Writer. If her book in the new series becomes the publishing house’s bestselling title of that spring, then the publisher might try to enforce the option clause. And there are a whole bunch of ways to do it.

For example, the clause says that the writer can only accept deals that are “more favorable” than the one the publisher offers. Who decides what “more favorable” is? If the publisher is going to offer a $250,000 advance is that more favorable than the zero-dollar advance Hardworking Indie Writer will get from her own self-publishing company? Is her company a real publisher according to the terms of the option clause?

Is this something to be concerned about?

Once you start arguing these points, you’re starting to argue the way that lawyers will. Often the only way to settle these points is in court or mediation.

Best to avoid this stuff altogether.

And the best way to avoid it?

Delete the option clause.

Does that mean the presence of an option clause is a dealbreaker?

No, at least, not for me. Because an option clause can be just fine. And it should be relatively simple.

It should be something like this:

The Publisher shall have the exclusive option to consider upon mutually agreeable terms the publishing rights to the next series novel by the Author. The period of this option shall be for thirty days following the submission of the last Work in this contract.

Note that I changed the language from the start. Not the exclusive option to acquire the work, which means the publisher can buy it. But the exclusive right to consider the work. That means the publisher will be the sole company thinking about purchasing the work. There is no talk of a deal, and there is no talk of how that deal will be structured.

The only thing the clause has is exclusivity for the publisher for thirty days after the writer turns in the last book in this contract. Once that thirty-day period is up, the writer can do what she wants with the project.

Heck, even if the publisher makes an offer, the writer can do what she wants. Because there is no obligation in that option clause for the writer to publish her next book with this particular publisher—or with anyone.

Now, lots of writers are either going indie or becoming hybrid or realizing that their jump to traditional wasn’t as fun as they thought it would be. They want out, only to find themselves boxed in by a variety of things they signed away in that traditional publishing contract.

Sometimes those things are in the details. Words like “acquire” versus “consider,” for example. Or limiting the definition of the next work to the next work in the series or “the next work of science fiction featuring aliens” or something equally specific. (Saying the next novel, or the next book, really ties the writer’s hands.)

The time limit is important too. Because it needs to be strictly enforced. I always had tight option clauses on my books. If (and only if) I wanted to work with that publisher again, I would remind the editor that she had thirty days to consider the outline I was submitting when I submitted it. Then I would send a reminder fifteen days into the exclusive period.

If I did not want to work with the publisher, I would not say a word about the timetable, and let corporate inertia work in my favor. No editor can get a deal done in thirty days unless that new project is worth a lot of money to the company.

As with anything in a contract, the key to an option clause is control. The publisher (or audio book company or gaming company) will want to control the future works of a writer. The option clause is one way to do so.

Delete the option clause and one problem is solved. The writer can still make a deal with the publisher: the writer is just not bound by anything in the previous contract.

If the publisher insists on an option clause, negotiate the clause into something that is toothless—meaning the next work is defined so narrowly that it can only mean one particular project—and make sure that the clause has a strict timetable.

Make sure the clause is not about acquiring the next work, but about considering the next work on an exclusive basis for a short period of time.

Remember to think long-term. Even though the option clause pretends to be long-term for the publisher, it’s really not. It’s just a cover-your-ass move for the publisher. Here’s the thinking: If the book we just licensed does really really well, we don’t want anyone else capitalizing on the success we built into this project. So we don’t want anyone else to license the next book in the project.

If the publisher doesn’t get the next book, no big deal. Sure, some executive editor might have a bad day at the office as everyone piles on about losing the best book of the season, but that’s it.

Then the publisher will go on to publish other books.

Long-term for the writer has a completely different meaning. If the option clause says “next book” instead of something narrowly defined, then the writer has to wait to do anything with the next book until the publisher makes a decision. If the option clause has a crap-ass timetable like the one in the original clause I put up, then the writer might have to wait a year or more to do anything with her next book.

In other words, the publisher can move on to other projects. The writer cannot.

You do not want a contract with a publisher (or any other entity) to limit your future. A bad option clause will limit your future, all because you were not thinking long-term.

Frankly, writers no longer have the time to wait for a publisher to get back to them. Hardworking Indie Writer, above, might want to publish six books in the year after she leaves her traditional publisher, but she can’t because of her option clause. She might have to wait. And if she’s successful, that wait might involve time with lawyers and maybe the courts.

Yes, I’m deliberately giving you a worst case scenario because in this (and many other instances in book publishing), the worst-case scenario comes from success. The more successful the writer is, the harder it is for her to control her own destiny.

Counterintuitive, right?

You think all of that has come about since the ebook revolution? Think again. Publishers want to control as much of a writer’s output and her copyrights as possible, especially if that writer has a following. Many traditional contracts, written decades ago and vetted by agents (not lawyers), only benefit the publisher.

From what I’m seeing, auxiliary rights contracts—like some audio contracts or gaming contracts or contracts for other derivative works—are worse for writers than the original traditional publishing contracts ever were.

Remember that copyright protects your work while you live. After you die, copyright protects your work for another seventy years.

You need to be aware of that with every document you sign. Because the future of a work of art (and yes, you literal people, writing is art) is quite long. And you can easily sign your control of that art away, if you’re not careful.

So be careful, and as you negotiate your contracts—and you are going to negotiate, right?—make sure you think about the future.

Not the next five years, but the actual future—ten years, twenty years, thirty years.

Because the only person who will protect your work during its long life is you. And one thing you need to protect is the right to have your work published in the first place.

I’m getting into the nitty-gritty of contracts now, as I promised when I started this series. A lot of you have supported me with encouraging words, questions, forwards, and emails. I appreciate that. I also appreciate those of you who have supported the series financially.

Because we’re getting into the details now, the financial support starts to wane. So if you were thinking of donating a little bit toward this project, now (and the next month) is the time.

Thanks too to the people who have shared documents and legal opinions with me. That’s extremely helpful.

Until next week…

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“Business Musings: Long-term Thinking: The Option Clause,” copyright © 2016 by Kristine Kathryn Rusch. Image at the top of the blog copyright © 2016 by Canstock Photo/iqoncept.



4 thoughts on “Business Musings: Long-Term Thinking: The Option Clause (Contracts/Dealbreakers)

  1. When an option clause says “next work” with modifiers, how strictly is that interpreted? So if an option clause says “the next work of science fiction featuring aliens”, and my next work of SF has no aliens, is that it? The option goes dead? Or, if I write an SF book featuring aliens ten years later, would I have to offer it to this publisher?



    1. Good questions, Angie. The “next work” with modifiers is interpreted strictly. That’s the point of the modifiers. So your next sf without aliens could go elsewhere. And if you write an sf book with aliens ten years later…well, remember that timetable. The publisher only had thirty or sixty days to consider the next project after you turned in the previous one. So, ten years later, even if the company is existence and if the same editor is there (LOL), you won’t have to send this project to them first, unless you forgot to add the timetable. 🙂

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