Once you’ve done all the hard work writing your book and finding a literary agent or publisher willing to publish it, you have to go through one more process: signing the contract. Signing a publishing contract is a little more complicated than signing a contract for a mobile phone, say. For one thing, it’s the realisation of a dream. For another, it could contain all sorts of loopholes that strip you of creative control and could even deny you the royalties that are your due.
This is one area where literary agents really earn their commission because you can rely on their experience in the industry and their contract negotiating experience. That’s not to say that you can sit back and let your agent do all the work for you. It’s in your best interests to learn as much as you can about publishing contracts so that you understand all the legal agreements, terms, jargon, and sub-clauses that determine your earnings, rights and responsibilities.
Untangling the red tape
Contracts are lengthy documents that often need to be translated by a lawyer, even if you have an agent on your side. Here are four important points that should always be in your contract; points that you should understand so that you can negotiate a better deal if you need to.
- Rights – yours and the publishers
Publishing contracts grant and protect certain rights for publishers and authors. For example, publishers may have the right to publish the books in all formats, including audio books and translations for various foreign countries, as well as the right to sell the rights to movie and TV producers. Authors should retain subsidiary rights where they can, including the right to grant others permission to publish excerpts and the right to distribute merchandise. If publishers retain most of the subsidiary rights, authors need to negotiate suitable royalties or profit sharing deals.
It’s very important that you don’t give away all of your rights, otherwise you could lose all control of your book.
- Payments – advances and royalties
Payment is one of the most important details that are hammered out in publishing contracts; this includes the payment schedule for advances and royalties on your book. Not all publishing companies pay advances, so don’t bank on it. If an advance is forthcoming, it won’t be paid in one lump sum. Publishers often spread advances over two to four payments, depending on where the book is in the publishing process. It’s important that the advance isn’t refundable – unless you fail to meet your obligations regarding delivery or if it turns out that you’ve plagiarised someone else’s work or have misrepresented yourself in some way.
Many first-time writers don’t have a clue how royalties are calculated, or what a fair percentage is. According to David Koehser, there are two types of royalty payments: a percentage of the retail list price of each book sold, and a percentage of the actual amount received from each sale. Royalty rates vary, but 10% per book sold is usually standard. It’s possible to negotiate rates of 12-15%, and according to Rachelle Gardner, royalty rates for ebooks can be as much as 25%.
Authors also get a share of subsidiary rights licensing, for example, TV or movie deals, merchandising, and translations. Typically, authors get half of the advance, but it depends on the terms of the contract. In some cases, authors negotiate a higher percentage, and in others publishers get the lion’s share.
According to Koehser, payment schedules are similar for royalties and shares, as they are usually paid twice a year.
This is a very sensitive matter for authors. Obviously, you want your book to remain unchanged. You’ve invested months, probably even years of your life in your first book; so, you are understandably protective and resistant to change. Publishers, on the other hand, know what sells and what doesn’t and they generally know how to make a good book even better, so that it can reach its selling potential. You will have to compromise; allow publishers to make some changes, but retain the right to approve those changes. Ensure that the contract is very clear on this.
- Option to publish more books
It’s music to writers’ ears when they hear that publishers want the first option to publish their next book. It’s important to note, however, that this doesn’t obligate the publisher to buy the book; it just means that they get the first look at it. Koehser says it does not preclude other publishing houses from making an offer, but it does mean that you have to take that offer to your first publisher to see if they want to relinquish their rights of if it spurs them to make an offer of their own.
Other legal agreements in publishing contracts include:
- Delivery obligations; essentially the author’s deadline.
- Publication deadline; the date by which the publishing company needs to have books on shelves.
- Warranties and indemnifications; kind of like insurance for both parties in case things go pear-shaped.
- Out-of-print clauses; which relates to authors’ rights when their book goes out of print.
- Print-on-demand clauses; in which books never technically go out of print and authors’ never regain their rights.
- Free books for authors, as well as reasonable buy-back rates; which has to do with self-promotion (and giving copies to family and friends, of course).
- Copyright; which should always be in your name.
- Right to termination; conditions which allow either party to terminate the contract.
There are no standard publishing contracts, as each publishing company has learnt different lessons that require them to protect themselves against different scenarios. In addition, authors want to retain different rights and insist on different clauses. It’s essential that you properly understand your rights, obligations and the limitations of publishing contracts so that you can get the best deal for your book (and all subsequent books).