Tag s | Contracts

Defusing Contract Landmines

by Steve Laube

Laptop explodes

During the last six months we have run into some landmines buried within some small press contracts. In each case it was the author’s relationship with the publisher that helped land the offer, and so we proceeded to review the paperwork in order to protect the author’s interests.

In one case the small publisher was very grateful for our negotiations and contract changes. They plan to change their contract for all authors in the future. We were glad to help our client form that new partnership.

In two cases the publisher said they could not afford to hire a lawyer to review our requested changes to the contract and thus were unwilling to negotiate. We recommended the author walk away both times.

In yet another case the publisher wouldn’t negotiate and said, in essence, “take it or leave it.” We walked away. Our client terminated their relationship with us and signed the deal on their own.

A Couple Landmines (just a couple for the purpose of this discussion):

Royalties based on Net Profit not Net Receipts. This means the royalty the author receives is based on the Publisher’s revenue AFTER expenses. In the movie business this is called “Hollywood Accounting.” Read the linked article see how it is a clause that can be easily abused.

I laughingly told one publisher “You could go on vacation to Bermuda, call it a ‘research trip’ and charge it as an expense against my client’s book!”

The publisher did not laugh and said, “We would never do that.”

“Of course not,” I replied, “but how do I know that?”

“Plus,” I continued, “if your company is sold to someone else, the terms of this agreement will go to the next owner who may not have the same moral compass you have.” The Publisher was unwilling to change this clause in this case, although another publisher agreed to change their contract to “net receipts” after hearing our arguments on this point.

Bankruptcy Clause
This was missing in one of the contracts. It means there is no mechanism for the reversion of rights if the publisher declares bankruptcy. We have heard too many author stories about books they can’t get back because of bankruptcy proceedings with their publisher. While I’d rather not assume a publisher will go bankrupt, the principle of “Expect the best, but prepare for the worst” is something to consider on this issue.

Such are the weekly frustrations of an agent. While these were small publishers we have to watch every contract even if we have negotiated with that same publisher before.

By the way, if you got to the end of this article, “Congratulations!” Most have their eyes glaze over when they see legal stuff in these posts, despite the importance of such dry information.

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I is for Indemnification

by Steve Laube

Publishing is not without risks. Plagiarism, fraud, and libel by an author are real possibilities. Thus within a book contract is a legal clause called indemnification inserted to protect the publisher from your antics.

The indemnification clause, in essence, says that if someone sues your publisher because of your book, claiming something like libel (defamation) or plagiarism etc., your publisher can make you pay the fees to compensate for their losses. This is to “indemnify” which is defined as “to compensate (someone) for harm or loss.” Bottom line: The publisher has the right to hire its own attorneys (at the author’s expense) to defend against these claims.

Doesn’t sound like a happy clause does it? But you can understand why it is there. This clause and the Warranty clause are notoriously difficult to negotiate. (The Warranty clause is where the things the author guarantees or warrants are listed; i.e. the book is original, it is not libelous in content, etc. This clause will be more fully covered by me at another time) The language has been written by the publisher’s attorneys and are usually set in stone.

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D is for Dispute Resolution

by Steve Laube

Pray that it never happens to you. But if there is a situation where you find yourself in a legal battle with your publisher regarding your book contract there are terms that will dictate how that disagreement is handled.

Here is one version from an old contract:

Any claim or dispute arising from or related to this Agreement shall be settled by mediation and, if necessary, legally binding arbitration in accordance with the rules of a mutually agreed upon alternative dispute resolution service. Judgment upon an arbitration decision may be entered in any court otherwise having jurisdiction. The parties agree that these methods shall be the sole remedy for any controversy or claim arising out of this Agreement and expressly waive their right to file a lawsuit in any civil court against one another for such disputes, except to enforce an arbitration decision.

Regardless of the place of its physical execution, this contract shall be interpreted under the laws of the State of XXXXXXXXXX and of the United States of America.

If you read this carefully you’ll see it lays out the rules that keeps a dispute out of the court system and forces the two parties to use binding arbitration instead.

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Review Any and Every Contract You Sign

by Steve Laube

Today’s headline sounds like a blinding flash of the obvious but you’d be surprised how many writers are not careful about the agreements they sign. Those with a literary agent have that business partner who will review their book contracts, that is a given. But what about their magazine article or online article contracts?

Earlier this month the Condé Nast organization, which includes Wired, Vanity Fair, and The New Yorker, surprised their freelance writers with a new agreement that has Condé Nast controlling the film and television rights on articles published by their magazines, with a cap on the revenue paid to the writer. Why? Because past articles turned into big box office hits like “Argo,” “Eat Pray Love,” and “Brokeback Mountain.”

This contractual assertion has put writers in a bind because they do not want to lose the chance to writer for these prestigious magazines.

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News You Can Use – Oct. 2, 2012

Why is the new J.K.Rowling e-book priced at $17.99? – This brief article presents some succinct economic details to help you further understand how this industry works.

Penguin Sues Authors for Advances Paid – There are at least two sides to every story, but this appears to be a number of cases where a writer signed a contract, accepted a sizeable cash advance, and never delivered the manuscript. There must have been previous attempts to get the money back for Penguin to resort to the court system to collect.

Get Paid More for your Freelance Work! – This article has 37 negotiating tips to improve your freelance editing income.

Congratulations to our clients Aaron McCarver, Diane Ashley, and Susan May Warren for winning the Carol Award for their fiction category. Click here for a complete list of winners and their book jackets. Well done!

The Accidental History of the @ Symbol – The origin of things like these is always fascinating to me. This article is from the Smithsonian Magazine.

The Importance of a Good Contract – “I Love Lucy” is worth $20 million annually…sixty years after the show aired.

My father, Roger G. Laube, passed away on September 15th and we recently held the burial and memorial services with family gathered from six states. He was a remarkable man who had an unwavering faith in God and a vigorous life in business, church, music, and family. He served as an incredible model for all who were touched by him. We love you Dad. You will be missed. An online memorial can be found at this link (http://bit.ly/QCg6tc). Included there is a full obituary and a “more photos” section. (Memorial gifts should be sent to Gideons International.). Picture to the left is from his 90th birthday, last year.

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Goodbye to Traditional Publishing?

by Steve Laube

Recently Ann Voss Peterson wrote of her decision to never sign another contract with Harlequin. One major statistic from the article is that she sold 170,000 copies of a book but earned only $20,000.

Multiple clients sent me Peterson’s “Harlequin Fail” article and wanted my opinion. My first thought is that this was typical “the publisher is ripping me off” fodder. But that would be a simplistic and knee-jerk reaction and unfair to both Peterson and Harlequin.

Yes, Harlequin pays a modest royalty that is less than some publishers. Since when is that news? That has always been their business model because it is the only way to create and maintain an aggressive Direct-to-Consumer and Trade publishing program. Their publishing machine is huge and they are a “for profit” company. For Profit. If they are unprofitable, they go away.

If an author is uncomfortable with the terms, then don’t sign the contract (which is Peterson’s decision going forward). I urge each of you to be careful not to sign a contract and then complain about it later. Unless you were completely hoodwinked you agreed to those terms and should abide by them.

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What if You Get a Book Deal on Your Own and Then Want an Agent?

One of our readers asked this via the green “Ask us a question” button.

What happens if you get a book contract before you have an agent? What if, by some miracle, an editor sees your work and wants to publish it? (1) would having a publisher interested in my work make an agent much more likely to represent me, and (2) would it be appropriate to try to find an agent at that point (when a publisher says it wants to publish you)? My fear is that querying an agent and receiving a response could take several months, but I’d need to accept a potential contract with a book publisher right away (I would think). Is it appropriate to ask the editor to speak with an agent on your behalf to speed the process?

This is a great topic but there are a few questions within the question. Let me try to break it down.

Many times have had authors approach us with contracts in hand and seeking representation (happened just last week). Of course this will get an agent’s attention immediately. But there are caveats:

a)      Who is the publisher? There is a big difference between a major company and your local independent publisher. Not all publishers are created equal (see the Preditors & Editors warnings).

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News You Can Use – Feb. 7, 2012

Author Says McGraw-Hill Cheats on Royalties – Details of a pending lawsuit.

What is Pinterest? –  The latest craze in Social Media Networks. AuthorMedia shows you the simple steps to sign up and tips on how to use it in the next article below.

Three Ways an Author Can Use Pinterest – Last week an editor told me how she was following a couple of her authors on Pinterest and how much she liked it.

5 Ways to Break Out of the Social Media Doldrums – Well said by Aubre Andrus.

10 Ways to Ensure No One Will Read Your Blog Post – Ali Luke give great insight

How Hard Can it Be to Write a Kids Book? – Sally Lloyd-Jones helps dispel a common myth.

A very cool six minute video envisioning a future technology. Imagine computing being done on glass walls, desks, and even National Parks. From Corning. By the way, Corning makes the “Gorilla Glass” that you find on the iPad2.

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Deadlines and Taxes

Two certainties in the life of a writer. Deadlines and Taxes.

You know what a deadlines is. It has the word “dead” in it for a reason. And intrinsic to the reality of taxes is that April 15th filing deadline.

But what about those taxes?

Many articles appear in early April about taxes when approaching the filing date. But I thought we should explore a couple items now so there won’t be any surprises come April.

First, the obligatory disclaimer. I am not a tax attorney or a tax accountant. I am merely discussing concepts and ideas which you may or may not use in your situation. And, as always, when it comes to your taxes, make sure to consult a professional.

Some of you may roll your eyes and say, “I already know this.” But remember there was a time when you did not. I get many “beginner” questions each year from debut authors who are discovering much of the business side of this industry for the first time.

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2011 – The Year in Review

It is a good exercise to reflect on the past year. Count the blessings, reflect on the hard lessons, and remember the good times.

The highlight was bringing both Tamela Hancock Murray and Karen Ball into the agency in late May. I was and continue to be very excited about the talent and work these two are doing on behalf of our clients.

That hard work had visible results as we secured sixty-four (64) new book contracts that will cover 113 new books. That works out to a new contract every four business days.

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