From: Crawford_Kilian@mindlink.bc.ca (Crawford Kilian)
Subject: Fiction Advice 17: Contracts
Organization: MIND LINK! - British Columbia, Canada
Date: Fri, 6 Nov 1992 04:37:14 GMT

Reading a Contract

When you do finally receive a publisher's contract, you may feel your heart
sink. It runs to several pages of single-spaced text, highly flavored with
legalese and organized in a daunting sequence of numbered paragraphs and
subparagraphs. Who knows what thorns lurk in such a thicket?

Actually, not too many. Most of your contract is standard "boilerplate" text
that protects you as much as the publisher. It is often possible, even for a
novice, to negotiate specific aspects of the contract.

Still, it helps to know what you're getting yourself into, so let us take a
look at some of the key passages you're likely to find in your contract.

Delivery Of Satisfactory Copy

If you're selling your novel on the strength of sample chapters and an
outline, the publisher wants assurance that you'll submit the full manuscript
(often with a second copy), at an agreed-upon length, by an agreed-upon date.
If your full ms. doesn't measure up, or arrives too late, the publisher has
the right to demand return of any money you've received.

In practice the publisher is usually much more flexible. He may bounce your
ms. back to you with a reminder that you don't get the rest of your advance
until the ms. is "satisfactory." He (or more likely the editor) will tell you
in exquisite detail what you still need to do to achieve "satisfactory"
status. A late ms. also means you won't collect the balance of your advance
until it arrives, and it may also cause delays in final publication--as I
learned to my sorrow with Greenmagic.

Permission for Copyrighted Material

If you want to include the lyrics of a pop song in your novel, or quote
something as an epigraph, it's up to you to obtain the rights to such
material, and to pay for them if necessary. If you leave it to the publisher,
he'll charge you; if he can't get permission, and the novel doesn't work
without such material, the deal is off and you have to repay any advance
you've received. Obviously, this is an extreme case; normally you just drop
the lines from the song or poem, and carry on.

Grant Of Rights

You are giving the publisher the right to make copies of what you've written.
These copies may be in hardcover, softcover, audio cassette, filmstrip, comic
book, or whatever. You are also specifying in which parts of the world the
publisher may sell such copies. For example, a sale to a British publisher
may specifically exclude North America, leaving you free to sell North
American rights separately.

You may also be giving the publisher rights to sell foreign translations, to
print excerpts in other books or periodicals as a form of advertising, or to
sell copies to book clubs. Normally such sales require your informed, written
consent.

Proofreading and Author's Corrections

You agree that you will proofread the galleys or page proofs of your novel
and return the corrected pages promptly. If your corrections amount to actual
revision of the original manuscript, and will require re-typesetting more
than 10 per cent of the book, the publisher will charge you for such costs.
This can very easily destroy any income you might have earned from the book.

Advances and Royalties

This spells out how much the publisher will pay you, and when. The most
common agreement is payment of one-third of the advance on signing the
contract; one-third on delivery of a satisfactory complete ms.; and one-third
on publication date. You may be able to negotiate half on signing and half on
delivery; otherwise, you are in effect lending the publisher some of your
advance until a publication date that may be over a year away.

Royalties are generally a percentage of the list price of the book. For
hardcover books, the usual royalties is ten per cent of list price. So a
novel retailing for $24.95 will earn its author $2.50 per copy. For
mass-market paperbacks, royalty rates can range from four per cent to eight
per cent, usually with a proviso that the rate will go up after sale of some
huge number of copies--150,000 seems to be a popular target. A paperback
selling at $5.95, with an eight per cent royalty, will therefore earn you
about 47 cents. A "trade" paperback, intended for sale in regular bookstores
rather than supermarkets and other mass outlets, will probably earn a
comparable rate; the list price, however, will likely be higher and the
number of copies sold will be lower.

Whatever the royalty rates, you're likely to get only half as much for sales
to book clubs or overseas markets. (This is especially painful for Canadian
authors with American publishers: sales in your own country, as "foreign"
sales, earn only half the U.S. royalty rate.)

You will also agree to split the take from certain kinds of licensing sales.
For example, if your novel is a hardback and some other house wants to bring
out a paperback edition, you can normally expect a 50 per cent share of what
the paperback house pays. Sometimes a paperback house will license a hardback
edition (in hopes of getting more critical attention for your book and hence
selling more copies in paperback eventually); in such a case you should
expect 75 per cent of the deal.

If you can possibly avoid it, do *not* agree to give your publisher a share
of any sale to movies or TV. A film or TV show based on your novel will boost
the publisher's sales quite nicely; he doesn't need a slice off the top of a
deal that will surely pay you more than the publisher did. But if the book
seems highly unlikely to interest Hollywood, you might offer a slice of film
rights in exchange for a richer advance, with a proviso that an actual film
or TV sale will also produce an additional chunk of money from the publisher.

The publisher will normally not charge for the production of versions of your
novel in Braille or other formats for the handicapped. So you will get no
money from this source.

The publisher should agree to supply you with two royalty statements a year.
Each will cover a six-month reporting period, and each should arrive about 90
days after the close of that period. So a statement for January-June should
reach you at the end of September. This will probably be a computer printout,
and may be confusing. But it will indicate the number of copies shipped, the
number returned unsold by booksellers, and the number presumably sold. The
publisher will hold back on some of the royalty "against further returns."
Whatever remains is the actual number on which the publisher owes you money.

Chances are that your advance will have consumed any potential royalties for
the first reporting period, and perhaps for the second as well. Once you have
"earned out" your advance, however, you should expect a check with each
royalty statement.

Do *not* sign a contract that does not explicitly promise you at least two
royalty statements a year. Some publishers promise a statement only after the
novel has earned out its advance. This means you may go for years--or
forever--without knowing what your sales have been.

Author's Warranties and Indemnities

Here you are promising that this is indeed your work, that it isn't obscene,
a breach of privacy, libelous, or otherwise illegal. If you do get into
trouble, you agree to cooperate with the publisher's legal defense, and you
agree to pay your share of the costs instead of asking the publisher,
booksellers, or others to do so. If the publisher's lawyer thinks the
manuscript poses legal problems, you agree to make the changes required to
solve those problems--or to allow the publisher to do so.

You may find an insurance rider as part of your contract; this is intended to
protect both you and the publisher from suffering total financial disaster if
you get caught in a losing lawsuit.

Copies to Author

You will get a certain number of free copies, and will pay a reduced rate for
more copies. That means you will still pay for those copies, and you should.

Option Clause

Pay attention to this one! This says you are giving the publisher right of
first refusal on your next book (or at least your next book of this
particular genre). The option clause means the publisher will give the next
book a close, prompt reading. You should expect a response within 90 days,
but some contracts specify 90 days after publication of your current book.
That means you might have to wait for months, maybe over a year, until the
publisher sees the initial reaction to your first book.

In practice, though, you probably will get a quicker response than that. If
the publisher does make you an offer, you have the right to refuse it; you
can then take your second book to any other publisher you like. However, you
can't sell it to anyone else unless you get better terms for it than your
original publisher offered.

You may well find yourself trapped as a result. If you need money in a hurry,
you may feel you've got to accept a bad offer rather than spend months or
years shopping your ms. around the market until you find a more generous
publisher. And then, of course, your second contract will include an option
clause for the *third* novelI

Your best hope in this case is that sales of the first book will warrant a
heftier advance on the second or third book. And if the publisher still won't
cooperate, you can then go to another publisher with at least some
respectable sales figures that show you deserve a better deal.

Going Out of Print

If the publisher lets your novel go out of print, you can make a formal
request for it to be reprinted; if he doesn't want to, you can then demand
that all rights revert to you. You are then free to sell the book to another
publisher. (I have done this a couple of times. You don't make as much money
on the resale, but at least the book stays out on the market longer.) You may
be able to acquire the plates or film from which copies of your novel were
made, making it possible for a new publisher to bring your book out quite
cheaply.

You will probably not make any money from "remaindered" copies that the
publisher may sell to a book jobber at a deep discount. In some contracts,
however, the author may indeed receive some percentage of such sales. It's
also possible to buy copies of your book at a similar low price.

A Word of Advice

If at all possible, go over the contract with the editor or publisher, asking
whatever questions arise. Then take your contract to an agent, lawyer, or
professional writer. Chances are that it's perfectly okay. But even if you
don't find something sneaky in the fine print, you'll have a clearer
understanding of what you and your publisher have committed yourselves to. If
something arises later on, like a problem over the option clause or the
frequency of royalty statements, it won't come as a total shock.

Finally, bear in mind that if you have read this far, you are seriously
interested in mastering an art and craft that rewards very few
practitioners--novices or experts. Fiction in print is still relatively
popular, but only relatively. For every reader you might attract, TV or films
or recordings attract hundreds of consumers. You will work for months or
years to create a product that is theoretically eternal, but in practice has
a shelf-life of a few weeks. Most of your readers will, two months after
reading your work, be unable to recall anything about the story (including
your name)--maybe not even whether they liked it or not. And you will reach
more readers with a punchy, witty letter to the editor of a metropolitan
daily than you're likely to reach with your novel.

Is it worth it? Only you can answer that question. My answer has been yes,
and I don't regret it. Writing ten novels has been not only fun but an
education; I can hardly wait to find out what the eleventh novel will teach
me.

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