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Director’s Desk
Don’t Just Sign That Contract

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“Remember–when something sounds too good to be true, it usually is.” So my dad told me when I was an impressionable 14-year-old who had received a letter from some bogus modeling agency telling me that they needed my female type for literally hundreds of unfilled, high-paying jobs. Forget the fact that just about all my friends had received the same letter. I believed that this was my intro to becoming rich and famous because I wanted to believe it.

I find myself repeating my father’s warning many times to people who call the PMA office to talk about the “offers” they have from companies that want to “publish” their books. Typically, the person on the phone tells me that the publisher at the XYZ Publishing Company has just read their manuscript and thinks it’s the best book they’ve read in a long time. In fact, XYZ is going to pay a 50 percent royalty on each book sold!

Like my father, I try to explain reality to that person, who (like me back then) is too revved up to listen.

Normally several months pass by, and then I receive another phone call from the same person, who is totally upset by what has happened. They’ve signed a contract–usually without reading anything but the provision they wanted to see, the 50 percent royalty. And they’ve started getting bills for design, editing, printing, marketing, sales, promotion. They’re appalled. But, looking more closely at the contract, they see that they agreed to pay for all this up front; it’s just that they skipped reading that part originally because “contracts are too long and too boring.”

Don’t Say OK If You Don’t Understand

So the theme of my column this month is: Read, read, read each and every point in every contract before you sign it, whether it was drafted by a publisher, a distributor, a graphic artist, a PR person, a printer, or anybody else. Yes, many contracts are long, boring, and, in some cases, deliberately confusing. If you’re confused, don’t be embarrassed to admit that you need more, and clearer, explanations. This is your right. You are essential to the deal. Too many times, publishers, especially the smaller ones, are so eager to obtain distribution or other services that they quickly sign something and then spend years regretting it.

An example: When signing a distribution contract, make sure you truly understand how much revenue from the sale of your title the distributor can retain as a reserve against future returns. Your sell-through may be $4,000, but you might receive just a portion of that as payment from the distributor if your contract allows it to keep a sizable reserve against returns.

Another example: Be sure you know what “overs” and “unders” mean before you sign a printing contract. Sometimes a printer’s contract allows for a large “overage,” and publishers simply assume they know what this means when they don’t. Many publishers have told me that they thought that the “overs” would be a “no charge” item. But in this industry, where margins are so small, virtually nothing is free, and you have to pay for more copies than you wanted if that’s what you agreed to do. “Unders” are at least as dangerous. I remember one publisher who was extremely upset because he was going to a trade show where he had promised to deliver 2,500 copies of his book. His printer had delivered just 2,100 copies to him. The printer could not go back to press in time for the show, and the publisher would have had to pay another set-up fee if they has gone back to print. He had signed a contract in which he agreed to a 20 percent over/under provision.

Avoid Difficulties About Disputes

Most contracts specify the geographic location in which a dispute will be resolved if one occurs. Normally, this area in not in the publisher’s backyard; it’s usually in the same place as the company that issued the contract. If you don’t want this to be the case, you need to negotiate for a different location before–not after–you sign the contract and a dispute occurs.

It’s wise also to make sure your contract addresses the issue of how a dispute will be handled (by going to court, binding arbitration, mediation, etc.) even if the person with whom you have the contract is your cousin, who also designed your book. Or perhaps I should have said, especially if you are working with a close friend or relative. Putting your understanding down on paper at the beginning will keep you friends and/or friendly relatives in the future.

Did I take my dad’s advice the first time? Absolutely not! And, like many of you, I learned the hard way about the half-truths that people and companies use to lure you in and get you to help them make money when you think you’re getting them to help you make money. But did I learn my lesson eventually? Absolutely.

It’s too bad that many of the things that shape our business and personal learning curves have to be so expensive. But lessons learned the hard way are definitely never forgotten.

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