The basics of book contracts, part 3 - the promises made and what they mean

 

So you have a book contract. Wonderful! And you’ve looked at the key elements I’ve talked about so far — licencing, termination clause, advances and royalties — things that will benefit you if you get them right.

But what about the promises — often called “warranties” in your parts of your contract? And the guarantees the publisher makes to you? Because this is a legal contract, and if you break any of these promises, you might find yourself in a load of trouble.

Warning: I am not a lawyer or an agent, so what I say here is not legal advice. It’s knowledge and experience from 25+ years of book contracts, and too many writers are ignorant of things that could cost them a lot. Or even everything.

What you promise the publisher

Let’s start with the first thing you promise them — the date you will hand over the final edited draft of the manuscript, after you have worked with their editor. Whether you have disputes with the editor or not (and it’s a good idea to avoid this or sort it out early), publishers usually create a schedule for publishing your book that starts with the publication date and works backwards.

If you hand in your final draft two months late, you stuff up their whole schedule. They might have decided your book should come out in early October to gain Christmas sales. You being two months late means they’ll be struggling to get your book out there by early December, and will be pretty upset at missing two months of sales.

Of course you can’t avoid catastrophes, but if something like that happens, you will have to talk to them pronto. Just not handing over the manuscript by the due date means you have broken the contract. Communication is key.

Warranties are also your promises

Now for the section called warranties. Firstly, you warrant that the work belongs to you and you are entitled to enter into the contract. You also warrant that you own the copyright, and the book has not been previously published in the territories you are contracting for.

BUT you also warrant that the work is original — that means you wrote it. Now, to the best of my knowledge, nobody is seeing a clause under warranties YET that specifically says your original work has not been written with the use of AI or ChatGPT. But it would not surprise me if it’s coming.

(I think the use of AI is going to bring quite a few changes to this section of the contract, and you will have to be on your toes about what it means for you. Look at the legal outcomes — and what you might have to prove.)

You also warrant that in writing your work, you didn’t use anyone else’s work and present it as your own. Everyone talks about academic writing and quoting properly to avoid plagiarism, but this happens even in novel writing. A recent example is a novel shortlisted for a prestigious prize that turned out to be not the author’s work.

What would happen if you did this? Apart from your book being pulped and your reputation shredded? Your publisher may require you to return your advance, and they may decide to sue you.

The same could happen if you break your contract because of another warranty — the one where you warrant that you have not included anything libelous, defamatory or obscene. You wouldn’t think this would apply to fiction, but there have been cases of not-so-carefully disguised “revenge” characters where the real person can be identified.

In non-fiction, this can be a real issue, especially in biographies, and you also have to warrant that you have not included anything that can cause harm (statement, advice, information, instruction, recipe, formula etc). Sure, books inciting hatred are published — this is the nasty world we live in now — but those publishers would already understand what risks they are taking. However, if anything went really pear-shaped, guess who would get blamed?

And the ultimate clause that follows the warranties? That the author will indemnify the publisher against any loss, damage or injury caused by breaching those warranties.

And by the way, if you do use material or words that belong to someone else, where you can get permission for the use so it’s all legal — you have to pay the permissions fee. That can cost you hundreds or thousands of dollars. It’s a clause you really need to negotiate if you are in this position. It’s why editors tell writers not to use song lyrics, for example. Two lines of a famous song can cost you $2000 (which happened to a friend — who decided to make up her own lyrics for the story instead).

Now, what does the publisher promise you?

Firstly, that they will publish your book AT THEIR OWN EXPENSE within a certain date. It can be six months or twelve months from the date of contract signing. It might be longer, depending on the book.

I’ve capitalized “at their own expense” because this is important — when you are being scammed by a vanity publisher, you won’t see this promise, because they’re going to make you pay for almost everything. If your book is being traditionally published, by a genuine publisher, they pay for publishing costs, including editing, design, printing and distribution.

If you are presented with a contract where you are being asked or expected to pay ANYTHING, then please get proper legal advice, from a writers’ organization or an arts lawyer. I once had a student come to me very excited at receiving a publisher’s offer for their picture book — all they had to do was pay the publisher 8000 pounds. No. That’s a scam.

The publisher also promises to publish the book in a professional manner — so that includes good editing, page and cover design, blurbs etc. You may be consulted about covers etc, but don’t expect to have the final say. They do (and they usually know a lot better than you what the market is and how to present the book).

They also promise to market and sell the book in a professional manner, trying to get you as many sales as they possibly can. Here, you need to understand that the marketing budget is also out of your hands. If you are a debut author, you may get extra in the budget, especially if you or your book has an “angle” that can be promoted.

I would add here, too, that some contracts will stipulate that you make yourself available for publicity and marketing — this might mean speaking at writers’ festivals, doing interviews on various media, doing appearances at events. If you are afraid of public speaking, you may need to find a way to get over this, or discuss it with them first.

I have not seen any contracts that stipulate you must do your own marketing via social media, but there is certainly an expectation that you try. Some authors are really good at this. Most at least give it a try. We do our best. But if you do want to engage more on SM, start now, and get your website sorted ASAP as well.

The takeaway from all of this

A contract is exciting. But it is also a legal document, enforceable in court, so it’s a good idea for you to look at these sections of your contract and understand exactly what they mean for you and your book.

Part 1 of these articles looks at licencing, copyright, termination clauses. Part 2 looks at the money — advances, royalties etc.

Warning: I am not a lawyer or an agent, so what I say here is not legal advice. It’s knowledge and experience from 25+ years of book contracts, and too many writers are ignorant of things that could cost them a lot. Or even everything.

This article was first published by me on Medium. https://medium.com/@sherrylclark/why-you-need-to-know-the-basics-of-a-traditional-book-contract-part-3-promises-promises-37526c0e4409

Continuing the basics of books contracts - "show me the money"

 

This second article on book contracts is going to deal with the money, or in other words, what you are likely to get paid when you have book accepted for publication, and what you might expect (vs what you might hope for). First article is here — read first if you can.

Warning: I am not a lawyer or an agent, so what I say here is not legal advice. It’s knowledge and experience from 25+ years of book contracts, and too many writers are ignorant of things that could cost them a lot. Or even everything.

Many people (not just writers) don’t realize that the advance you receive when you sign a book contract is exactly that — an advance on future earnings. So if you receive a $2000 advance for your book, you won’t receive another cent until the publisher has sold enough books to cover your advance.

Thus, if your book is selling for $20 (as an example, for easy math), and your royalty is 10%, that means you will receive — on paper — $2 for every book sold. Your publisher would need to sell a thousand copies of your book for you to “earn out” your advance. If the book is still selling, you will start receiving royalty payments.

RRP — what is it?

The above example is based on Recommended Retail Price. Theoretically, this is what your book will sell for in most bookshops. However, if your publisher does a deal with BigBookChain X to sell them 1000 copies at deep discount, that might mean instead of you receiving $2 each for that 1000 copies, you might only receive 80 cents. So instead of $2000, you’ll get $800. (You may or may not see deep discount mentioned in your contract.)

Your sales will look better, but you are a bit further from earning out. You will very likely have a different rate of royalty for the e-book version of your book. Instead of selling for $20 as print, the e-book might be selling for $4.99.

So while your contract might say that you will get 30% royalty for each e-book sold, that actually means just over $1.49. And if your publisher does a special promotion of your e-book for 99 cents, well, that could mean just over 29 cents per book. It’s not that your publisher is trying to do you out of money — this is a common method of promotion now, and probably works out cheaper than advertising campaigns or book tours.

So what does Net Receipts mean?

Net receipts is what the publisher receives from the distributor. Some publishers do their own distribution, but it’s common for them to use commercial distributors, who get the book into shops etc and fulfill orders. A pretty standard discount for distributors is 40%, but it can be as high as 60% depending on the arrangement and what the distributor allows the bookshops as a discount.

Already you can see that if you are being paid per book on net receipts, the pot can become small fairly quickly. Your $20 book sold at 40% discount would garner the publisher $12, and from that they have to pay you, but also pay their print and marketing costs etc. Still, if you accept 10% of net receipts as your royalty, your portion of the book’s sale drops from $2 down to $1.20.

This is why, if your publisher insists on net receipts, you need to insist on at least 17% to earn that $2. For an e-book, you want at least 30% royalty on net receipts, and the closer to 40% the better. And for many new authors, the idea of negotiating for a better royalty sends them into a spin. We get back to that whole thing of being so grateful your book is accepted that you sign without working out the figures.

Why a Huge Advance is Not Always Wonderful

Remember that term — earning out? When the publisher does all their work on estimating the market for your book, which in turn means how many copies they think they can sell, a number of elements come into it.

Firstly, they calculate costs, and your royalty rate comes into it as well. If they decide your book is a hot topic (or they believe with marketing they can create you and your book as “hot”), they’ll be planning for a lot more sales than 2000. It’s an investment. In-house costs (editing, design, proofreading, marketing, special cover treatments etc) tend to be straightforward for them to calculate. Although to make your book “hot” they will probably allocate a much higher amount to marketing.

If they had to beat off some other publishers to get your book (we all wish for this to happen), then they have very likely already done the calculations — what it is going to cost them to publish — and have set a limit on what they will pay as an advance. It reverberates all the way down the chain, including things like reducing other authors’ book marketing budgets in order to pay for yours.

So let’s say that you’ve been offered a $50,000 advance for your book. Champagne! Meanwhile, at the publishing company, they’re likely to also be celebrating this hot new book they’ve acquired, and then doing all of their calculations again.

When your hangover wears off, do your own calculations. Let’s stick with the $20 RRP to make it easy. Your book now has to sell 25,000 copies for you to earn out your advance.

Here’s a little reality check. On average a book published in the USA sells 300 print copies. When you include e-book and audio sales, it’s about 1000. (Source) There are very few books that sell 10,000 copies. Very few. And even fewer that would get to 25,000. Yours might be one of them, if your publisher’s campaign works.

We’ve all heard of books that come out of nowhere and sell hugely (Where the Crawdads Sing anyone?). But your book? Who knows? It might. It more likely might not. So instead of earning out and making your publisher a bundle of money, let’s say your book did quite well and sold 10,000 copies. You will still be $30,000 short of earning out your advance.

Will your publisher want to take a chance on another book from you? Especially if you only got lukewarm reviews and no shortlistings for any awards? Hmmm. These days, maybe not.

So I should be grateful for a $4000 advance?

Not necessarily. Remember that marketing and publicity department? The lower your advance and the less “hot” your book is, the lower the budget for marketing.

If you can get a higher advance, the publisher is likely to spend more money on marketing because that way, they are keener to get their investment back and hopefully make a profit. It’s like a balancing act in a way, and you as the author are part of it. It’s a key reason why agents are worth their commission. A good agent is going to do their best to get you a bigger advance, which will not only cover their commission but also get your book better marketing dollars.

If you don’t have an agent, try thinking about it this way. How many hours have you spent writing your book? What value do you put on your creation? Do you want to keep writing and want to see enough of a return to maybe drop your work hours to part-time, for instance? If you do some sums on the publisher’s offer, it might just give you the courage to go back to the table and ask for more. It’s your writing career and future books at stake.

It is possible to go online and research what book advances have been paid, or you can ask around. Advances in the USA are usually much bigger than Australia, for example. Do your homework here and it will be very useful. Writers are notorious for keeping the money stuff secret and it doesn’t help — knowledge is power in negotiations.

Big warning here! If you get a letter of offer that stipulates the advance and royalties in the letter — in writing — be very careful. Signing or agreeing to that letter of offer can be binding for the contract and give you NO room to negotiate.

OK, that’s probably enough for this article. Your head might be spinning by now. But get out your calculator and do some sample sums yourself. If you have book contracts you have signed, go back and look at your advance and royalties, whether you’re on RRP or net receipts, and what your book actually sold for in the bookshops. It’s a very good exercise!

By the way, as a heads-up from Article 1, if you made the mistake of selling your copyright in your book, none of this is relevant. What you received when you signed the contract is it. No more money ever again.

(And as I said up front, I’m not an agent or a legal expert. Just pointing stuff out I’ve learned.) This article was first published on Medium - https://medium.com/@sherrylclark/why-you-need-to-know-the-basics-of-book-contracts-part-2-show-me-the-money-c171e099f01

Why You Need to Know the Basics of a Book Contract If You Want to be Traditionally Published

 

Here’s a word you might have heard — boilerplate. And here’s a term — termination clause. If you don’t know what either of them mean, I’m going to explain — and more.

Warning: I am not a lawyer or an agent, so what I say here is not legal advice. It’s knowledge and experience from 25+ years of book contracts, and too many writers are ignorant of things that could cost them a lot. Or even everything.

It’s astonishing how little is understood about book contracts. Not all of this is the writer’s fault. Some publishers deliberately create 50-page contracts full of jargon to bamboozle you. They don’t want you to ask questions. They want you to sign and shut up. (That’s why good agents are worth their percentage, by the way. Good agents don’t shut up, and they shouldn’t get bamboozled.)

I was incredibly lucky — when I received my very first book contract, another writer with a ton of experience and knowledge took me through it, clause by clause, and explained everything, as well as what I should be asking for. I will be forever grateful to him. I had to negotiate more than twenty contracts on my own, and it was pretty nervewracking at times. But knowing what I was entitled to, and understanding what the parts of the contract meant, made all the difference.

I have since had agents, but I still read every contract and discuss it with my agent so nothing is missed and we are on the same page about what to ask for.

This knowledge is important. Without it, you could lose a lot, including the rights to your own book. So here is some of what I have learned to share with you.

Boilerplate

This is the name given to the publisher’s standard contract. This contract almost always favors the publisher. It gives them a higher percentage of many of the rights that can be sold. It often has no termination clause. It can also waiver your moral rights, and put the onus back on you if anyone sues.

In other words, never sign the boilerplate contract. How do you know that’s what it is? Because it will be the first one they offer you, expecting you to be so excited that you will sign without even reading it. I know quite a few authors who have literally done this. And been sorry.

One author signed away her copyright, not just on that book but the next one she had agreed to write for them. When the first book sold and sold, she never got another cent. An illustrator signed away everything for a flat fee rather than royalties and rights payments, so when the books became bestsellers and the publisher produced merchandise using the illustrations, the illustrator got nothing.

Publishers will say that they don’t deliberately set out to swindle you. But the fact remains that almost every boilerplate contract will have clauses that are in their favor which take money away from you.

Copyright and licencing

One of the very first clauses will be about “licencing the copyright” to the publisher. This is NOT the same as granting or selling the publisher your copyright — if you do that, you lose any rights whatsoever to the book from there on.

Generally, you licence the publisher. It will read something like this: The Author hereby grants to the publisher the exclusive licence to publish the Work in volume form (including electronic book, audio book and omnibus book form).

It will probably also stipulate the territory — in Australia, many publishers want world rights so they can sell the right to publish in other territories. It’s different in different countries (and if you have a good agent with overseas connections, he/she might limit the territories).

Where people get confused is over what the licencing means, because often this clause has another part that talks about duration — the licence shall be for the legal term of copyright plus any extensions. So they assume that is the same as selling their copyright.

Not so.

The termination clause limits the licence

You have to have a good termination clause to go with the licencing clause, and this termination clause may be much further into the contract. Without it, the publisher can insist that as long as the book is available as an e-book, it is still “in print”. Even if it isn’t selling, and hasn’t for ages, you can’t request a return of rights without “out of print” being defined to your advantage.

Once upon a time, before e-books, out of print usually meant it was no longer available to buy (they’d sold them all) or the book had sold less than 50 copies in a 6-month royalty period. You wrote a letter requesting a reprint, and if they didn’t want to reprint, they returned the rights to you. E-books have messed with this “out of print” clause.

I have contracts now where there is a “low sales” clause that covers this as effectively OOP after a minimum period of time. But the termination clause should also cover what happens if the company goes out of business. It needs to stipulate, as well, that if either party doesn’t comply with the contract, then the contract is terminated and rights returned to the author. This might include not publishing the book within the specified time, or the author not delivering the manuscript by the date it is contracted for. It works for both of you.

Finally, if the book does stop selling and your rights are returned to you, make sure you have an official “reversion of rights” letter, and keep hard copies of it as well. I was lucky that when a small publisher I had a book with was sold to a larger publisher, and I had asked the small publisher for my rights back first, I had printed out the email for my files. It was my only evidence, as my computer had died, but it was enough that the big publisher had to pay me some money they had inaccurately received for the title.

Your book is not just your pride and joy. It is also a product with various rights that can be sold, and you never know what might happen — so learn what it all means and how to protect what you have created.

I’ll write about other important clauses in the next article (Part 2 — the money).

(And remember, if you need legal advice, either find an agent or look for an arts lawyer. Not the lawyer your mom used for her will!)

This article first published by me on Medium - https://medium.com/@sherrylclark/why-you-need-to-know-the-basics-of-a-book-contract-if-you-want-to-be-traditionally-published-782514c78f7e