PUBLISHED JANUARY 2016
by Mary Rasenberger, Executive Director, Authors Guild
On March 3, 2016, IBPA member Georgia McBride published a rebuttal to the article below. Georgia’s piece is entitled 10 Tips for Crafting an Equitable and Secure Publishing Contract: A Rebuttal for Publishers That Seeks to Inform Publishers Based on the Needs of Publishers. You can read it here.
The publishing enterprise is a partnership between authors and publishers. Too often, though, that’s not reflected in the terms of publishing contracts. In today’s rapidly changing publishing ecosystem, independent publishers are in a position to take the lead and offer their authors contracts that reflect the shared goals of the publishing enterprise.
Archaic contract terms are at least part of the reason many professional authors have been struggling in the digital economy. A 2015 Authors Guild survey revealed that full-time authors’ writing-related incomes dropped 30 percent since 2009; part-time authors saw a 38 percent drop. So, to open a conversation about why book contracts haven’t evolved, and to offer some answers about how they should be better, the Authors Guild launched the Fair Contract Initiative in May 2015.
Below, you’ll find some principles from the Fair Contract Initiative that we’ve adapted for independent publishers. Whether you’re new to the industry or you’ve been around for a while, here are 10 things you can do to ensure the contracts you offer your authors are fair to both parties and accurately anticipate the realities of the 21st century publishing ecosystem.
1. The Publishing Enterprise is a Partnership; Let Your Royalty Rates Reflect That
Traditional royalty rates reflected the concept that publishing is a joint venture between author and publisher: profits were split more or less equally between publisher and author. But despite the lower production and distribution costs associated with e-books, major publishers typically offer authors an e-royalty rate of only 25 percent of net proceeds. We think they should be 50 percent. Many indie presses strive to be fair on e-book royalties, and some do give 50 percent. When they’re able to do so, their authors are grateful.
2. Let Authors Get Their Rights Back When the Book’s No Longer Selling
It’s more important than ever for authors to reacquire their rights so they can make e-book and print-on-demand titles available from their backlists. At the same time, it has become increasingly difficult for authors to get their rights back if the book goes out of print. Publishing contracts shouldn’t hold books hostage; unfortunately, some out-of-print clauses do just that. Fair contracts should provide clear language stating that if the publisher has not paid a certain minimum within a certain period of time—e.g., if Author’s share of earnings from Publisher’s exercise of rights in the Work was $500 or less during the immediately preceding 12-month period—then the rights revert to the author.
3. Don’t Acquire Rights You Have No Intent of Exploiting
It’s understandable that a publisher, when acquiring a book, wants to acquire as many rights as possible. But it’s not fair to take rights and not exploit them. Our solution is simple: All subsidiary rights (such as foreign rights or audio rights) an author grants to a publisher should be subject to reversion upon the author’s demand if they are not exercised or exploited within 18–24 months of publication. Fair contracts include language to the effect of “at any time after 18 months from publication, Author may terminate the authorization granted Publisher with respect to any right which has not been licensed.”
4. Narrowly Tailor Your Non-compete Clauses
It goes without saying that publishers don’t want their authors to sell a book to a competing house that will jeopardize the current title’s sales. That’s the purpose of the non-compete clause. But if overly broad, these clauses can prevent an author from bringing new work to market. There’s a way to offer your authors a fairer deal. If it’s really necessary to have a non-compete, it should be kept simple: the author agrees not to republish the current title, long excerpts from it, or a substantially similar work. Anything more is an unfair restriction on the author’s ability to earn a living. For instance, we could live with a non-compete that states:
“Author agrees that during this first year of this Agreement, Author will not, without the written permission of the Publisher, publish or authorize to be published any full-length work specifically intended to supplant the Work in the marketplace, and which would clearly and directly harm the sale of the Work.”
5. Get Rid of the Option Clause
Anything that keeps your writers from publishing isn’t in their best interests. Today’s standard option clauses often let the publisher delay the option decision until the current work is published. That can keep the author in limbo for years. In our opinion, option clauses should disappear. If you want an option on a future book, it’s best to offer a separate payment for it and a quick decision on whether to offer a contract on the new work.
6. Pay Authors Promptly
Royalty statements and payments to authors typically appear only twice a year on income the publisher received between three and 10 months previously. And the publisher can delay payment still further by invoking what is inevitably called a “reasonable reserve for returns”—that is, an estimate of how many books it will get back—without ever defining what “reasonable” means. The result is that it can be up to two years before an author is paid royalties for a sale. We think it’s time for royalties to be paid at least twice a year with a limited delay, and that every contract should clearly define what exactly is a “reasonable” amount to hold in reserve for returns.
7. Don’t Slice and Dice Authors’ Advances
Once upon a time, advances were split into two payments: one on signing of the contract, and one on acceptance of the manuscript. In recent years, we’ve seen three-part payment schedules: one-third on signing, on acceptance, and on publication. Now we’re seeing four-part payments: signing, acceptance, publication, and paperback publication. Slower payments shift risk from publisher to author. They also defeat the whole purpose of advances: to enable authors to devote themselves to completing their books without having to take on other work to make ends meet.
8. The Acceptability of a Manuscript Shouldn’t Be a Matter of Whim
In standard contracts, whether a manuscript is acceptable or satisfactory is often in the “publisher’s sole judgment,” meaning a new editor or management can reject a book on a whim and refuse to let the author publish it elsewhere until the entire advance is refunded. This can happen after an author has invested several years of work in the book, foregoing other opportunities in the meantime. This is patently unfair. A publishing agreement based on a proposal is not an option, it is a contract to publish and pay—assuming the author delivers the book as agreed.
9. Don’t Foist Legal Risk onto Your Authors
No author can afford to put his or her entire net worth on the line, but that’s what many authors do when they sign publishing contracts. Authors are asked to assume the risk of suits for infringement or libel. This is true even where the publisher has lawyers who have vetted the book. Investigative journalists are most at risk. Publishers need to bear this risk; their liability insurance should also cover authors. The author’s share of the risk, if any, should never exceed the total amount of the author’s advance.
10. When Selling Directly to Readers, Give Authors a Higher Royalty Rate
Many publishing contracts reduce an author’s royalty rates for sales made directly by the publisher to a buyer. If anything, an author’s royalty rate on direct sales should be higher than normal, as the publisher is collecting both its regular share and the retailer’s share of revenue.
Since we began the Fair Contract Initiative, our guiding principle has been to restore contractual balance to the author-publisher relationship and help authors achieve a fair return for the efforts they contribute to the joint venture of book publication. That’s where publishers—particularly independent publishers—can help.
Mary Rasenberger is executive director of The Authors Guild, the nation’s oldest and largest professional organization for writers. Based out of New York City, the Authors Guild’s mission is to support working writers and advocate for the rights of writers by supporting free speech, fair contracts, and copyright.