Fangs First: Contracts Pt. I

This week on "Fangs First" we are back to Contracts. Today I am going to talk with you about the clauses in a book contract that will wrap their icy fingers of death around your writer’s heart and choke the creative blood from it until it lies like a useless lump of flesh on the floor. These are the clauses that will fall around you like chains just when you thought you were free. NOTE: Anyone who’s thinking “I’m going to publish this book traditionally and then I’ll try the indie route with my next book” need to pay SPECIAL attention.

WARNING: We are just overflowing with personality, so if you are easily offended, stop here. This is our blog, these are our opinions, and you have been warned. After hours of diligent research (as well as a plethora of our personal experience), Paranormal Passions presents:

Top 5 Farthest Reaching Contract Clauses aka The Clause That Didn’t End

1. Non-Compete Clause (a.k.a. Conflicting Publication Clause)
“One bite at a time! Now chew a hundred times. The next bite can wait . . .”
A non-compete clause means that you, the author, agree not to write anything that will compete with the work the publisher has just contracted. In spirit, this clause is meant to keep Fabulous Author from writing a book that might take sales away from the book they just contracted. It is perfectly understandable that a publisher would want to give the book they just contracted the best shot they can give it at selling the best it can.

Unfortunately, this non-compete clause can grow into a monstrous knight-eating thornbush if it is not pruned carefully. A poorly pruned non-compete clause can keep Fabulous Author from writing anything while Book A is under contract. This could conceivably include all novels, novellas, short stories, articles, and even blog posts. Also “under contract” can refer to the life of the copyright (author’s life plus 70 years, so FOREVER).

In its worst form, this clause can prevent the author from writing anything until their publisher says they can. Even if you sign with Super Nice Publisher, you can’t guarantee that Super Nice Publisher won’t be forced by evil boss to make this clause do something nasty. The something nasty? NEVER WRITE ANYTHING AGAIN.

Solution:

Refuse to sign anything with a non-compete clause in it. If you the publisher won’t back down, and you simply cannot force yourself to walk away, force the publisher to be more specific IN WRITING about the non-competition clause. Write out that what it means is that you won’t write another Erotic Paranormal Romance featuring the Characters in Book A until six months after Book A’s release date, with Book A’s release date being no more than 18 months away from the date the contract is signed.

Sample Clause (taken from the blog “Passive Voice” – see our blog roll):

“(a) During the term of this Agreement, the Author shall not, without written permission of the Publisher, publish or permit to be published any material based upon or incorporating material from the Work or which would compete with its sale or impair the rights granted hereunder.
(b) Subject to the terms of subparagraph (a) above, the Author agrees that in no event will the Author publish or authorize publication of any other book-length work of which the Author is an author, contributor or collaborator until six months after publication of the Work.”

2. Option Clause
“Yes. No! Wait. Um . . . I’m gonna need a few year to think about this.”

The option clause says that the Publisher you just signed a contract with has the right to look at/make an offer on your next book before anyone else. In spirit, this clause is supposed to help a publisher get the most out of an author by setting up a relationship with them and their career. A publisher doesn’t want one good book, they want a fabulous author who will write lots of great books. This clause lets them have a leg up on building that sort of commitment and it is perfectly understandable.

However, like its non-compete cousin, the option clause can be wielded like a very sharp pointy weapon. Let’s say Publisher A buys Fabulous Author’s Book 1. They have an option to look at Book 2. They also have right of first refusal. This means that until Publisher A decides if she wants to buy Book 2, Fabulous Author may not show Book 2 to Publisher B. If Publisher A wants to be a jerk, she can take as long as she wants to make up her mind. Years even.

Solution:

Limit the option clause as much as possible. Instead of “next book” call it “next novel length erotic paranormal romance.” Also, specify that the publisher has four weeks from the date she receives the manuscript (or proposal) to make a decision on whether or not to make an offer. Also, the option period should begin with the acceptance of the current manuscript, not after publication of the current manuscript (about an 18 month difference there).

Sample Clause (taken from http://www.askdavetaylor.com/what_pitfalls_do_i_need_to_avoid_in_an_authors_publishing_contract.html)

“Since a continuing relationship is contemplated by the Author and the Publisher, the Author hereby grants to the Publisher the exclusive option to acquire upon mutually agreeable terms all rights to the next book-length work... until 45 days after submission of a detailed proposal...”


3. Multi-Book Deal
“One book! Two books! Three books! Ah, ah—AHHHHHHH!”
Ah, every author’s dream: the multi-book deal. Not only is your book awesome, it is so awesome that the publisher is convinced of your inherent awesomeness and wants to guarantee three more awesome books. Dreams of big advances and bestseller lists dance in your mind . . .

What if your publisher goes broke next year? What if you change your mind and decide you’re not making squat with the measly royalties your Big Publisher is giving you and you want to go indie? Now all of a sudden that three-book deal isn’t so great is it? Heck, even if you are happy with your first book’s sales (let’s say people eat it up and buy millions of copies), a multi-book deal means you don’t get to renegotiate the contract terms for the second and third books to reflect the success of the first.

Multi-book deals may have been awesome last year, but they can be death now. If the advance is all you care about and you just want that guaranteed money regardless of how much money you may lose later, then sign away. However, now that there are so many more options available to a writer, it just seems silly.

4. Term and Termination
“The fat lady doesn’t feel like singing yet, but you can keep begging.”
Term refers to how long the contract will last. Termination describes the process by which either party can terminate the contract before that term expires. In Publishing, the default term of a contract is longer than any other discipline: author’s life + 70 years. That means, that for the next 100 years or so, the Publisher owns your book and all rights related to your book (and more if you didn’t pay attention to the first 4 clauses we discussed). Since no one can reasonably expect a publisher to actively promote a book for 100 years, let’s turn our attention to the Termination bit.

We need to look at a few issues when we speak of Termination involving a book contract: Out of Print, Reversion of Rights, Perpetuity, and The Agency Clause (if you have an agent).

Out of Print (OOP)

“Out of Print” (OOP) MUST BE DEFINED. Possibilities include:
- Only 100 units are left in the warehouse (number is negotiable) (higher number=better for author)
- No physical books left in the warehouse
- Book is no longer available through standard channels (bookstores, internet, etc.)
- Publisher is no longer offering it for sale
- Fewer books than a pre-specified number are selling over a pre-specified time period

Now that there are ebooks, some publishers argue that books NEVER go OOP. They claim that since they can make an ebook available whenever, then even if they only sell 1 copy a year that counts as being in print. You can see why it is CRUCIAL to be very very SPECIFIC about defining ALL TERMS AND TIME PERIODS in an OOP clause.

Reversion of Rights

The reversion of rights is when the author gets back all the rights to her book. This means the publisher no longer wishes to make use of their publishing rights for that book (either because it is not selling well enough to justify the effort, or for some personal reason). The reversion of rights is often connected to the OOP clause, meaning the rights revert to the author when the book goes out of print.

Ideally, a reversion of rights clause will specify what Passive Guy (see Passive Voice blog on our bloglist) refers to as “minimum wage.” In other words, the contract is made to say that if the author is not making at least $3,000 semi-annually on royalties, then the publisher must either make up the difference to buy another year of trying, or allow the rights to revert. (NOTE: this does not apply until the author has earned out the advance plus 50%)

A reversion of rights clause should also specify how long a publisher has to contend with a request for a reversion of rights once the author has submitted a written letter of intent to seek such reversion. For instance, the contract may be made to say that the rights will revert to the author 30 days after the written letter of intent is sent to the publisher.

Perpetuity

Perpetuity means forever. This word should NEVER appear in any contract you sign. There is never a reason for the word “perpetuity” to be in a contract instead of a specified length of time. Perpetuity means there is no term and there is not method for termination. You want your rights back? Beg.

Side Note: Another word to strike from any contract is “irrevocably.” It means “no matter what, you can’t change this.”


Sample (taken from the blog the Passive Voice – see our blog roll)

“A. If, after the Royalties earned by Author under this Agreement total 150% or more of the Author Advance paid by Publisher hereunder, the Royalties for the Work are less than $3,000 on a semi-annual Statement of Royalties, and Author owes Publisher no other unpaid sums under this Agreement, Author may give Publisher written notice that Author desires to exercise the Reversion of Rights to the Work under this Paragraph.

B. After receiving such written notification, if Publisher desires to continue to exercise its rights to the Work under all the terms and conditions of this Agreement and Publisher is not in material default under any provision of this Agreement, Publisher may, within 30 days of receipt of such notice from Author, pay to Author the difference between the actual Royalties paid with respect to the Work on the preceding Statement of Royalties and the sum of $3,000. If Publisher makes said payment in a timely manner, this Agreement shall continue until later terminated under this Paragraph or another Paragraph of this Agreement.

1. By way of illustration and not limitation, if Publisher pays Author the sum of $2,000 with a Statement of Royalties and Author gives notice as provided above, Publisher may cause this Agreement to continue by paying Author the additional sum of $1,000 within 30 days of said notice.

C. If

A. Publisher fails to make the payment described in sub-paragraph B. above or

B. Publisher has made one such payment and, thereafter Royalties for the Work are less than $3,000 on any subsequent semi-annual Statement of Royalties and Author has given a second written notification of intention to exercise Reversion of Rights as provided in sub-paragraph A. above,

all rights to the Work shall revert to Author on the Effective Date set forth hereafter, and Publisher shall have no further rights to the Work, subject only to the provisions of sub-paragraph F. hereof.

D. The Effective Date upon which all rights to the Work revert to Author shall be 30 days following receipt of the last notice from Author as provided in sub-paragraphs A. and/or C. above.

E. On and after the Effective Date, Author may exercise all of the rights of the owner of the copyright to the Work free and clear of any claim whatsoever by Publisher.

F. For a period of one year following the Effective Date, Publisher shall have the right to liquidate any remaining inventory of hard copy books in its possession on the Effective Date, subject to its obligation to pay Royalties to Author therefor and all other obligations of Publisher under this Agreement. In the event that Publisher has any remaining hard copy books in its possession on the first anniversary of the Effective Date, Publisher shall cause such books to be destroyed at Publisher’s expense.

G. Any other provision of this Agreement notwithstanding, after receipt of any notice from Author under sub-paragraphs A. and/or C. above, Publisher shall not enter into any agreement with any third party assigning, transferring, selling or licensing any rights to the Work in whole or in part without the express written consent of Author to the specific transaction and any such purported assignment, transfer, sale and/or license without the express written consent of Author shall be void ab initio.”


5. Agency Clause
“Alimony for agents.”
An agency agreement is an agent’s attempt to get their 15% in perpetuity (uh oh!). It basically means that the agency who negotiated your book contract is the agent for that book FOREVER. That means that even if you get the rights reverted to you and decide to self-pub it as an ebook, the agency will STILL be collecting 15% of everything you make off of it. This clause is not only in the contract you sign with your agent, it is also often inserted into the actual publishing agreement.

In the publishing agreement, this clause can have a reasonable purpose. It allows the publisher to pay the author through the agent. This allows the agent to take their 15% and send the rest to the author so the author doesn’t have to handle all the proof and recordkeeping that would go into paying the agent herself (poor baby author can’t be expected to do math, now can she?)

Unfortunately, in its broadest scope, the agency clause binds an author to that agent and allows the agent to collect a commission long past the time that commission should have stopped.

Sample Clause (as taken from the blog the Passive Voice – see our blogroll)

All sums of money due to the Author under this Agreement shall be paid to the Author’s agent, Annie Agent, of 321 Applesauce Avenue, New York, NY 10023, U.S.A. (hereinafter called “the Agent”) and receipt by the Agent shall be a good and valid discharge of all such indebtedness and the Agent is hereby empowered by the Author to act on the Author’s behalf in all matters arising in any way out of this Agreement. For services rendered and to be rendered the Author does hereby irrevocably assign and transfer to the Agent the sum of 15% (fifteen percent) as an agency coupled with an interest out of all monies due and coming due to and for the account of the Author under this Agreement.

Solution:

Limit the agency clause to a certain time period or, to the end of the publishing contract (which will involve the OOP and reversion of rights we discussed earlier). As we should all know by now, the key to most of this stuff is limitation, being specific, and being willing to walk away if you have to.