The Hidden Dangers in Short-Form Publishing Deals
By Susan Spann | September 25, 2017 |
Authors have many things to watch out for when evaluating a publishing deal, but one of the most common—and most serious—dangers is something the author doesn’t see: the vital clauses and protections that are often missing from “short-form” publishing contracts.
Most authors look at standard publishing contracts (which can easily run from ten to twenty pages, or even longer) with a combination of confusion and concern. For those not versed in legalese (or, more precisely, Publisher-ese) standard contract terms can range from “complex” to “might as well be written in Sanskrit.”
Because of this, some authors see a three-page form and think “hey, this is great!” and “finally, a contract that makes sense!”
Beware…that way be dragons.
Publishing contracts are usually long because they deal with many important legal issues. (Note: anthology contracts are often short, because of the rights involved—this post addresses contracts for novel-length works only.)
“Copyright” is actually a bundle of rights, each of which needs to be addressed in some way in the publishing contract—if only to state that the ones not expressly granted to the publisher stay with the author.
Failure to deal with all of the relevant issues creates ambiguities, and in short-form deals, many of those ambiguities cut in the publisher’s favor.
I’ve recently seen a number of “short-form contracts” that claim to offer authors a “better deal” than “old, traditional, complicated forms.”
Again: beware.
Short form contracts do often include quite a few important clauses, such as grants of rights, royalty statements (and royalty levels), and when the publisher has to send royalty checks. However, short contracts often omit other critical provisions. When problems arise, the author goes to the contract, only to discover the “friendly form” doesn’t address the issue (or, worse, it does, but the publisher prevails).
Here’s a list of just a few important provisions short-form contracts often don’t include:
1. Complete statements of rights/reservations of rights. The shorter the contract, the more likely it is to simply grant the publisher “all rights” to the work. Publishers don’t need “all rights.” They need a license to publish certain forms and formats (in certain territories, and certain languages). Everything else is open for negotiation, and much of it should remain the exclusive property of the author.
2. Author termination rights. Most publishing contracts ostensibly last “for the life of copyright,” but that’s only if the contract remains in force, and isn’t terminated before the copyright term expires. Good contracts give the author several ways to escape if things go badly, including the right to terminate (and revert all rights) if the publisher fails to publish the work within a specified time, goes out of business, breaches the contract, and/or fails to sell at least a specified minimum number of royalty-bearing copies every year. Short form contracts often fall woefully short on authors’ termination rights (if they give the author termination rights at all).
3. Sales Statements. It’s not enough for the publisher to send royalty checks periodically. Each check should be accompanied by a sales statement detailing the number and price of copies sold and other relevant information (e.g., returns and discounts) during the period in question. I’ve seen many short-form contracts that skip the issue of sales statements entirely—and if unwary authors focus on the royalty numbers, and forget the need for documentation of those sales, it can be difficult (read: impossible) to force the publisher to exceed its contractual obligations once the contract has been signed.
4. Audit rights. The author should have the right to audit the publisher’s books and records (as related to the author’s work) at least once in every calendar year. Good audit language actually goes beyond that, but this is the minimum—and even this is often missing from short-form deals.
5. “Out of Print” status properly defined (and tied to sales). Short-form contracts often omit the author’s “out of print” termination rights altogether or tie “out of print” status to “availability” – meaning that as long as even an ebook version remains on sale, the work is never out of print.
Last, but not least: never rely on any promise or representation which isn’t written into the contract. Contract law says that a promise which isn’t contained in the contract generally does not exist as part of the deal. (There are exceptions, but you should never rely on falling within an exception to the rule.)
Please note: this list is not exhaustive. There are many other important provisions which short-form contracts often omit (or fail to mention) and which may need negotiating even in standard contracts. The clauses above are just examples, to demonstrate how dangerously incomplete short-form contracts often are.
Agents and publishing attorneys scrutinize contracts carefully and know to look out for important clauses. Unfortunately, short-form contracts often come from smaller presses, and the authors who receive them may not have an agent or attorney. Before you sign any publishing contract, have it reviewed by a literary agent or publishing lawyer. Don’t rely on your own ability to spot the missing clauses—it’s a dangerous risk, and one many authors eventually regret.
Publishers and authors should be able to trust one another, and good publishing relationships function like partnerships between the author and the publishing house. Good publishers come in many sizes, and the size of a publishing house is not always a good indicator of the quality of its contracts (or business operations).
However, it’s also true that good fences make good neighbors, and good contracts make for good partnerships—in publishing and elsewhere. Make sure your contract contains the industry-standard terms required to establish the professional relationship you and your work deserve.
Have you seen a short-form publishing contract? Did you notice any important omitted terms?
Susan Spann writes the Hiro Hattori Novels (Shinobi Mysteries) featuring ninja detective Hiro Hattori and his Portuguese Jesuit sidekick, Father Mateo, who solve mysteries set in medieval Japan. Her first novel, Claws of the Cat: A Shinobi Mystery (Minotaur, 2013) was a Library Journal mystery debut of the month and a finalist for the Silver Falchion Award for Best First Novel. Her fourth Hiro Hattori novel, The Ninja’s Daughter, releases August 2, 2016 from Seventh Street Books.
Susan is the 2015 Rocky Mountain Fiction Writers’ Writer of the Year, and also a transactional attorney whose practice focuses on business and publishing law. She founded and curates the Twitter hashtag #PubLaw (for Writers), where she answers questions and provides information about publishing business and legal issues.
When not writing or representing clients, Susan enjoys traditional archery, reading fiction and nonfiction, and raising seahorses and rare corals in her marine aquarium. She lives outside Sacramento, California, but you can find her online at https://www.SusanSpann.com, on Twitter (@SusanSpann), or on Facebook/SusanSpannBooks.
Solid advice as always, Susan. You’ve hit the most important deficiencies. I’ll add just one more.
Royalties. Or more precisely, the basis for calculating the author’s royalty. Those new to contacts may assume that receiving a share of the publisher’s “net receipts” expresses the common idea of royalties: It’s a share of the price a consumer is charged for a book.
Not so. Sharing “net receipts” and sharing a percentage of the “cover price” (or “catalogue price” or similar) are two different things. Ten percent of the cover price of a $25 hardcover is $2.50. Simple.
Ten percent of the publisher’s net receipts, though, is less. Why? Because the publisher doesn’t get the whole $25 charged to the consumer. The publisher supplies copies to bookstores at a discount. That discount varies but for a rough estimate can be regarded as 50%.
Thus, ten percent of fifty percent of $25 is not $2.50 but $1.25. Basically, in a “net receipts” deal, take the stated “royalty” rate and mentally cut it in half. Ten percent of “net receipts” really means five percent of the cover price.
Know what you’re getting into. Really appreciate your clear view of contract complexities, Susan. Nice post.
Thank you Don – I appreciate the compliment and the addition of the royalty language. The royalty percentage calculations can be confusing – and a lot of short contracts abbreviate it even further (often with disastrous results for the author) – but it also needs careful review even in longer forms, for exactly the reasons you’ve indicated.
This is clear and helpful advice,Susan. There’s so much to learn about contracts. I’m constantly looking to educate myself. I used the Volunteer Lawyers for the Arts (New York) to review my publisher’s contract and terms; they were excellent. They charge a reasonable fee and well worth it as they were far less expensive than a literary lawyer: https://vlany.org/ . I think there are probably volunteer organizations like this in other states. I didn’t know about your Twitter #PubLaw. I’ll be sure to take a look. Thank you!
Thanks for sharing your experience, Paula. I’m always glad when people share contacts and tips like this.
The only caution I’d give to authors looking for contract review is to ensure the lawyer who reviews the form is actually experienced in publishing contracts specifically – many general contract lawyers don’t know the industry standards and can miss things because they don’t know what to look for. That said, as long as the lawyer knows publishing, it’s definitely great to find organizations that offer authors more affordable help.
I received a short-form sample contract along with a tentative offer to purchase translation rights, but I let the negotiation drop because of all the gaps in the contract. The other party made some representations by email when I questioned them, but has shown no willingness to alter the contract.
As a self-publisher, I see no reason why I shouldn’t offer my own contract as a basis for negotiation once I reach the point where more people are interested in my IP. Do you? It would of course be an investment to find the right lawyer and have the contract drawn up (there’s got to be huge scope for an online service here!), but I think it might be worth it. I’d rather walk away from a deal than make a bad one.
I’m glad you had the business sense to walk away from a deal that didn’t work for you, Jane. It can be difficult, but in the long run it’s always the right decision.
You probably won’t have any success trying to get publishing houses to use your contract, however. Publisher’s contracts are written (in the case of smart publishers, by attorneys) to contain the terms the publisher needs to conduct its business operations. Asking a publisher to use your contract is essentially asking them to change the way they do business (and, importantly, the way their various departments, including accounting) handle their standard functions. That’s really not appropriate, because the publisher has standard operating procedures that allow it to function properly and smoothly as a business.
While it’s tempting to think–or hope–a publisher will fall in love with your work so much that they would be willing to change their business operations to work with you, I’ve never seen it happen and I don’t think it would – but not because publishers are stubborn or mean. It’s because the publisher’s contract reflects the way its business operations are set up, so all the publisher’s employees can do their jobs without having to consult a bunch of different forms to see what applies in a given situation.
Most publishers would realize the disruption a one-off contract could create in the business operations (for example, making people have to read the contract every time they deal with you, instead of functioning on the basis of the business operations they already understand) and would insist on using their own form.
I understand the desire to have a contract that contains the provisions you want a publisher to agree with, but in this case you’d be better off to think through a list of contract terms and language you want to see, and finding publishers whose contracts contain those terms (or who are willing to negotiate them into their standard contract) – remembering, of course, that negotiation and business relationships are also about compromise, and that if you want to retain absolute control over all aspects of your work and the way it’s published, being an author-publisher is often a better option than traditional publishing.
Great post, Susan. My most recent contract from S&H Publishing was one of those long ones, and I wondered about that at first. Why not use something less wordy and ponderous? But as I read through it, I understood that they were simply trying to cover all bases, and this contract was much like the lengthy one I had received from Kensington some time ago.