A Publisher's Conversation with Authors: What Does My Contract Mean and Should I Sign It? (paragraphs 8-12)

It is Tuesday. Time to tall turkey. Monday's madness is over, and Wednesday will take us over the hump, so Tuesday it is--for some serious discussion with authors. Tuesday talks mean to address authors in waiting and self-published authors who would like to go a more traditional route or who would at least like to take their steps with a publisher by their side.

Today's topic addresses -- what is a good one, what is a bad one, and what do the specialized terms actually mean? I have been answering these questions in a series of posts, using, to start, our contracts, and will go through them paragraph by paragraph. Then, I will look at some other publishers' contracts for differing content. A few weeks ago, we talked about paragraph 8, as found in a hybrid contract. We will now return to a discussion of traditional contracts and look at paragraphs 8-12. Please keep in mind, though, that the paragraphs in your contract may not be in the same order; however, they will contain the same information. This section of paragraphs talks about the publisher's responsibilities.

Paragraph 8 is generally a simple statement that the publisher will be publishing the book. Generally, the phrase "within a reasonable period of time," is included although what is a reasonable period of time depends upon the publisher. For some, it is 6 months; for others, three years. The latter tend to be academic publishing houses. You should clarify time and schedule expectations with the publisher, if not in the contract, before signing.

Paragraph 9 discusses royalties, and these can vary widely (or wildly) from publisher to publisher. Generally, the following sources of royalties are mentioned:

• Royalties on paperback and/or hard cover sales. 
• Royalties can be paid on list (rarely, but we do it); such royalties are the most favorable to authors. They can range from a very low percent to an average of 10% to a high of 12-15%. We scale up, and that is not uncommon. That means for a low volume of sales, we pay 10% on list, but for a higher volume of sales, we pay 12% on list.
• Royalties can be paid on net income, and the majority of publishing houses use this type of payment. Net means that all costs are deduced (production, marketing, etc.) prior to royalties being paid. What is left after costs are paid out is considered "net," Typically, payment will be 8-10% on net. For hybrid books paying on net, authors should expect 50% royalties and press for that level if not offered. We do not pay on net, but our 10% on list, over time, has worked out to be equivalent to 50% on net.
• Royalties on ebook sales. Generally, those have to be paid on net because list price goes up and down, payments are made for pages read as well as books purchases, promotions change book prices, and on and on. So, net makes the most sense and provides the easiest way of accounting. Generally, 50% of net would be considered reasonable for both hybrid and traditional, though not all traditional publishers will be 50% on net (this is especially true where the first edition of a book is in electronic format only since publishers need to recoup sunk costs for book production). 
• Royalties on other rights might be for audio books, licensing, foreign rights, translations, and more. Publishers vary in what other rights they contract for.
• Ancillary products (games, cards, figurines, etc.) can come from book. Think of the Harry Potter empire. Who gets the income from ancillary products should be specified. Typically, publishers are not interested in those, and the clause will simply state that the publisher shall not be entitled to compensation for them. 
• Returned copies can be a problem for publishers; they will not pay royalties on returned copies (or complimentary copes) since they receive no income from them. That is generally stated in the royalties section of the contract. Ditto for lost and destroyed copies.

Paragraph 10 will explain the author's right to audit publisher accounts -- at author expense. This would be done if the author felt that the publisher was withholding royalties. In such cases, it is better to ask publishers to provide an explanation. Audits are costly, and few publishers are untrustworthy. There are many reasons why a book may appear to be selling better than it really is.

Paragraph 11 commits to author copies of the books. 

• This paragraph states how many free copies an author will receive. Expectation would be 10-15 copies for an author of a book or an editor of a collection. Individual authors to an edited book are more likely to receive 1-5 copies, with one copy of the paperback and one of the hard cover being most common.
• This paragraph also indicates the cost of author copies. Nearly all traditional publishers give a significant discount, typically 40%, to authors. Hybrid contracts may use a different calculus.

Paragraph 12 provides a timetable for sending out royalty statements and making royalty payments. These usually vary from quarterly to annually. Sometimes the contant of this paragraph is contained within the royalties paragraph. 

The bottom line is that you live well or suffer by your contract. The terms are difficult to understand sometimes, but understand them you must. Take them to an intellectual property rights lawyer if you do not understand them; it is worth the money.  

Lesson for today's Tuesday talk: What publishers will provide to authors in terms of royalties, book copies, and discounts varies tremendously. This is one area in which negotiation is usually possible. Don't be shy; state what you want. The publisher may offer a compromise, and that could be a good thing. If the publisher does not, then you have a decision to make as to whether or not you want to sign a contract. Never sign a contract where you have misgivings in advance.

Read more posts about publishing HERE.

The Tuesday talks reflect real discussions between the management of MSI Press LLC and our own authors or those would-be authors who come through our doors but don't make the cut--yet. If you have a topic you would like addressed, leave the question in the comment section. Chances are, in our 18 years of publishing first-time and experiences authors, we have had a conversation with one of our authors that we can share with you.

                             

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