Contracts With Publishers, Agents, and Others
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| Agents | ||
| Others | ||
Authors are at a disadvantage in almost every aspect of book publishing, but nowhere is the power imbalance so stark as in the matter of contracts. Few authors know or care to know as much about the laws and conventions of publishing as the lawyers who draft the contracts, and this ignorance can hurt them. Before signing, authors should learn as much as they can, and read carefully. Contracts can be negotiated.
The book contract sets the terms by which every aspect of the publishing process is governed. The most important clauses to study and negotiate are those relating to rights and royalties. This section briefly explains some of the terms of a typical book contract. Authors are encouraged, however, to pick up a book on the subject, such as Jonathan Kirsch's Handbook of Publishing Law. See Sites and Books for other relevant publications.
Trade book publishers have been squeezed financially since World War II, and as a result have cut costs wherever possible. Authors are the least savvy and least organized of the many entities to whom publishers are responsible; therefore, they are all too often paid last and least.
The royalty is the money paid to the author based on how many copies of the book are sold, and at what price. In the old days, it was common to pay authors, 10-15% of the retail price of a hardbound book, depending on sales. But the deeper discounts demanded by booksellers and higher returns from same have led most publishers to base royalties on "net revenue"--the amount the publisher is actually paid, which in many cases is close to half the cover price. Publishers may deduct from "net revenues" the costs of shipping, insurance, collection, etc., further reducing the author's cut.
It gets worse. Royalties are paid infrequently (from 1 to 4 times a year, typically), and often spottily. Publishers may also withhold royalties "against returns," meaning that the author doesn't get paid until it is certain the books already "sold" won't be returned by booksellers--a three- to six-month period, typically. Royalties may vary depending on the kind of sale as well. See Subsidiary Rights.
Some authors forego royalties in favor of a fee. With few exceptions, however, this is not a good idea, especially if the book has large sales potential.
This is possibly the most important point in the contract. An advance is a payment to the author (often parcelled out at acceptance, half-completion, and completion of the manuscript) in anticipation of royalties. Most books do not sell well enough to "earn out" the advance, meaning the author gets more money, and sooner, than she would have otherwise. It is always in an author's interest to negotiate an advance, and to make it as big as possible.
However, many publishers offer either modest advances or none at all, especially to new authors. The author's clout, measured in past sales and competition for his work, is the determining factor here.
Primary rights refer to publication of the author's work in book form and excerpts thereof in anthologies, magazines, etc. ("general rights"). These include paperback (trade and mass-market), international, and foreign rights, among others. The publisher and author usually split the proceeds from the sales of rights, 50-50. It is common for authors to reserve some of these rights for themselves.
Subsidiary rights are generally carefully specified in the contract, and can include audio, film, television, electronic book, and even "future media" (i.e., media that don't currently exist) rights. It's in the publisher's interest to reserve these for itself, as certain media (such as audiotape) can be quite lucrative. By the same token, authors or their agents often negotiate to reserve these rights themselves.
Both primary and subsidiary rights have a "term" associated with them--the amount of time that must elapse before the rights revert to the author. This can be specified in years, as the duration of copyright, or "in perpetuity." It is never in the author's interests to grant the last.
Representations and Warranties
The author herein guarantees that the work is original and unpublished, that statements of fact are true and diligently researched, that nothing in the work is libelous or obscene, etc. This is a serious clause, well worth reading carefully--not that any publisher would consider changing it. It is given teeth by the following clause.
Though it may seem unfair, a standard clause in book contracts makes the author responsible for the costs of lawsuits brought against the publisher because of alleged libel, obscenity, copyright infringement, etc. associated with the book. The publisher is even entitled to settle out of court without consulting the author, and take it out of royalties.
Some agents have contracts with their clients, and others rely on verbal agreements. In either case, the agent is likely to have an "agent clause" inserted in the publisher contract. This clause provides that the publisher sends all royalties and other payments directly to the agent, who then takes her 10 or 15% cut and forwards the rest to the author. Agents generally keep separate bank accounts for this purpose.
A typical author-agent contract has the following clauses:
- Rights. Unless other agents have already be retained, the agent expects to have the right to sell all the author's work everywhere. The agent will often use coagents in foreign and film markets.
- If the agreement is limited to one project or one territory, the agent will still get right of first refusal on everything, unless the author has another agent.
- Length of contract. This can be unspecified. In any case, either party can dissolve the agreement at any time.
- Commission. Although ten percent is the traditional cut, more than half of the agents listed in Literary Agents of North America take 15%. If editorial assistance is provided, that figure could be as high as 25%. When a coagent is used, expect another 5 to 10% added on top.
- Agent clause. See above.
- Expenses. Some agents charge only for copying; others charge for postage and other costs.
To come.