Pub Rants

Category: Agenting 101

Agenting 101: Royalty Statements: Lack Of Detail

by Kristin Nelson

STATUS: Interestingly enough, I’ve got more film interest for one of my clients. This will be the fourth of fifth deal we’ve done in this year alone. Go film!

What’s playing on the iPod right now? HOLDING BACK THE YEARS by Simply Red

Just this month I received a royalty statement that only had the following info on it:

Total copies in print
Copies printed during period
Copies shipped during period
Total copies paid during the reporting period [note: because royalties are based on net—not retail price—which is sometimes true for smaller independent houses)
Total copies returned during the reporting period
Net amount earned during period.

That’s it. That’s all that is on the statement.

So right off, we have some legwork we are going to have to do in order to review this statement. Lots of info missing.

Not to mention, I’m going to have to create a whole separate excel spreadsheet so I can track earn-out. On this royalty statement, the advance paid isn’t listed. So it’s going to be up to the agency to track it so we know when the title has earned out because that info isn’t on the statement.

Also a problem? All sales are lumped together in “total copies paid during the reporting period.” That means there is no break-down of format (as in hardcover, trade paperback, electronic). We didn’t grant translation, audio, or other rights so that won’t be an issue (as we’ll sell separately) but I want to know how many of those sales are eBooks. This statement won’t remotely tell me that. And let’s not even get started about high discount, special sales, export, etc.

Do you see what else is missing? No mention of reserves held. Now maybe this publisher isn’t holding any but I won’t know that unless I ask. Some publishers do hold a reserve but don’t list that info on the statement. If that’s the case, we’ll have to make a note to always ask separately.

And the list goes on. For me, less is not more.

Agenting 101: Royalty Statements: Sales By Account

by Kristin Nelson

STATUS: Mondays are usual frantic but today was quiet. I’ll take it. I’ve got two submissions that need to go out by Friday.

What’s playing on the iPod right now? THE CHAIN by Fleetwood Mac

I began with Random House’s statement because it has a lot of detail, but even RH doesn’t have sales by accounts on their statements.

So what is that? It’s the breakdown of sales for your book via the different accounts such as Barnes & Noble, Borders, Amazon, Indies, book fairs (such as Scholastic) etc.

And the answer is no, royalty statements do not contain that information. However, I’ve certainly requested that information when tracking sales for a certain titles. Editors have also volunteered giving that information when a title is doing particular well and we want to chart where the majority of the sales are coming from. Or, equally important, getting on an account who hasn’t bought in for a title—especially when that book is doing well and it’s in their best interest to carry the title.

As hard as it is to believe (especially looking back now), it took Hyperion more than a year to get Borders to seriously buy-in Ally Carter’s YA novel I’d Tell You I Love You But Then I’d Have To Kill You. I know, in retrospect, seems pretty short-sighted of them to take so long. But Borders only had so much room for new YA titles and so Hyperion had to hound them about how good the sales numbers were to make them pay attention to this debut title.

Obviously now they are staunch supporters of the Gallagher Girls series but the break-down showed us what we needed to do.

We actually also use the breakdowns to see which Independent bookstores are really supporting the series and guess where Ally went on her book tour? A very good use of the breakdowns I’d say.

Agenting 101: Royalty Statements: Reconciliation To Print

by Kristin Nelson

STATUS: Although I’m not in Frankfurt, I spent a lot of today dealing with stuff from Frankfurt Book Fair. We’ve done 40-plus foreign rights deals so far this year. Bring it on! Sara, however, is hugely sad. She loved this project, offered representation but alas, the author had 7 different offers of representation but didn’t choose us. Unhappy face.

What’s playing on the iPod right now? FUGITIVE by David Gray

Ready to get back into the tutorial? Okay, I promised rec to print. First off, what does that mean?

A reconciliation to print is this and seems simple enough to give you the clause that we insist on having in all our contracts so you can see what it is in detail:

Reconciliation to Print clause: Upon Author’s written request, Publisher shall provide to Author the following information as to any particular six month accounting period: (i) the number of copies printed and bound in each printing of each edition; (ii)the date of completion of reprinting and binding of each edition; (iii)the number of free copies distributed; (iv) the number of copies remaindered, destroyed or lost; and (v) the cumulative total sales and disposals; (vi) reserves against returns; and (vii) licensing income, including licensee’s accounting statements.

I will tell you right now that if you don’t have this information, looking at your royalty statement is meaningless.

Why? Because there is no measure in place to compare the info on the statement to what actually happened with the book.

Without the rec to print, your statement tells you nothing. As you can see, I’m not in the camp of less is more and giving more info just confuses authors and agents and wastes everyone’s time by useless questions.

In fact, because Random house gives this info as a matter of course, it takes the least of amount of time for me to review and assess RH statements.

Do I still find errors. Certainly. But then it’s easy to call the royalty department and say, “look, you have an error here.”

And they always reply with “you’re right. Let us correct that and get the corrected statement out to you immediately.” (And just so you don’t think this is an RH love fest, other houses have done similar but I’ve had to ask for the rec to print; however, if an error was found, they’ve corrected it.)

Analyzing your rec to print with your royalty statement allows you to assess whether an audit is necessary. Given that so many of the big NYC houses are putting limits on look-back for audit (2 years is unfortunately becoming a sort of “standard”), it’s more important than ever to analyze statements and see what action, if any, is necessary.

And I know most of you are thinking that the big NYC houses would never intentionally hurt an author. Call me cynical but if you believe that, then you haven’t been keeping track of the major lawsuits against publishing houses in the last 10 years. Lawsuits that have been won by the way. Now to be clear, that’s not the norm, but it has happened.

So reviewing and analyzing your royalty statements is hugely important. I’ll also tell you right now that not all agents are created equal in this matter. Some agents just look at the statement and lay back and think of England. Others have whole departments devoted to the care and analysis of statements.

Nelson Literary Agency? We hire an outside gun who has been doing reviews, audits, and lawsuits on royalty statements for 25 years.

And let me tell you, together, we have found plenty of errors that needed correcting—always in the author’s favor.

So, that’s the rec to print.

Agenting 101: Random House Royalty Statement

by Kristin Nelson

STATUS: Statements and more statements.

What’s playing on the iPod right now? POOR UNFORTUNATE SOULS by Little Mermaid soundtrack.

When talking about royalty statement, first off you need to know that not all statements from different houses are created equal.

Today I’m going to begin by talking about the Random House Statements. They are my favorite. The statements are at least four pages long (sometimes longer depending on formats sold) and always contain all the information I need to evaluate if the statement is accurate.

Now this is not to suggest that every other publishing house has terrible statements. That’s not true. They just sometimes don’t contain all the info needed and then we have to request the extra info we need. All the houses, in general, are great at giving you the reconciliation to print info on request—but you have to request it. With RH, it’s all there.

Love that. (Tomorrow I’ll explain reconciliation to print, what it means, and why it’s important to have it when evaluating the accuracy of royalty statements.)

But for now, back to the Random House statement.

Page 1:
For RH, this is the royalty summary sheet and also highlights the ending royalty period. Then the page looks something like this (depending on what rights were sold to the publisher and how many formats have been exploited—by format I mean hardcover, paperback, audio etc.)

There would be four columns for the formats listed:
Current Copies, Current Earnings, Cumulative Copies, Cumulative Earnings

Hardcover
Trade paperback
Mass market
Audio
Electronic book

Then of course the above columns would be filled with numbers. The rest of the remaining sheets in the statement are to show detail for this summary sheet so you can see sales broken down by the individual ISBN numbers for the various formats.

So the next page or pages will have six columns:
Market, Royalty Rate or external market, royalty per Unit or net receipts, current copies, cumulative copies, cumulative earnings.

Then of course all these columns would be filled it with numbers.

But the next page is my favorite at RH—the Print Summary (this is all the reconciliation to print info that’s so necessary to review statements). Three columns for all this info.

Description, Current Copies, Cumulative Copies

Shipments
Returns
Reserves released
Reserves held
No Charge

Total reportable sales

Printings
Returns to stock
Scrapped from stock
Adjustments
Internal Summarization
Inventory

Total Shipments

Then we have the Sales Summary by Market with four columns:

Market, Gross Copies, Return copies, Net copies
US
Canada
Export
Spcl disct
No Charge
Total

Then we have Rate of Movement by Month with three columns

Month, Shipments, Returns
Oct
Nov
Dec
Jan

As agents, we stay on top of print runs done, how many copies in print, what is Bookscan reporting. Does the info we have match up to what the statement is telling us? If not, we are going to have a lot of questions.

In order to grab the columns, I was looking at a statement where only North American rights were sold to the publisher. (In other words, translation was not given to the publisher and the agency kept them to sell separately.) If the publisher has World rights, then that detail will also show on the royalty statement.

That’s all I’ve got time for today. More tomorrow!

Agenting 101: Royalty Statements: Accounting Periods

by Kristin Nelson

STATUS: Cross-eyed from reviewing statements all day.

What’s playing on the iPod right now? OUT OF AFRICA by John Barry

So I have to admit that it’s been a while since I did some nuts and bolts type blog entries. Personally, I find them a little tedious as I LIVE the nuts and bolts of publishing every day. But I don’t want to forget that a good majority of my blog readers have not been published yet and may actually be endlessly fascinated by some nuts and bolts blog entries.

Either that or I’ll bore y’all to tears. Both are equally possible.

Since I’ve been yammering away about royalty statements all week, let’s dig in to this topic. I’ll have to start off a little light because it’s just now occurring to me that this might make a couple of interesting posts and I’m typing this from home (rather than from work where I would actually be looking at a royalty statement).

Obviously I can’t share specifics about any given statement (as that is client confidential) but I can certainly tell you about what is generally on royalty statements (or is missing) and what information agents end up digging for.

So flex your fingers and kick off your shoes; we are diving back into some Agenting 101 entries that I’ll need to bookmark on the sidebar.

Because it’s a little late in the day (and I really need to finish up a client manuscript read), let’s start with something simple.

The accounting period.

This is a lovely and archaic system that publishing houses have in place despite all our digital technology. I imagine that at one time, this sort of accounting period made sense. In today’s world, it’s a relic and I wish it was like a dinosaur and would become extinct.

The traditional NYC Publishing houses do reporting in 6-month increments. For ease of explaining, imagine a royalty period that begins January 1, 2009 and ends on June 30, 2009.

Six months.

Then the publishing houses, and this cracks me up, get four months (oh you read that right—4 months) to generate and mail that royalty statement (with a check if monies are owed). Why four months is necessary in this day and age is rather a mystery. Or maybe not a mystery. Publishing houses want to hold on to your money for as long as possible. (As an aside, I love Holt Uncensored and Pat Holt’s idea of revolutionizing the royalty system by making online royalty accounting available for authors). Brilliant—but then there would be no reason for taking four months to mail you the statements.

But I digress. So if you have a royalty accounting period that ends on June 30, 2009, the author is going to have a royalty reporting period of April/October (October for the June-ending statement and April for the December-ending statement).

All information on the statement will be for sales (in all formats) from that six-month period. So when you get the statement, you’re already months behind in knowing current numbers.

Got that?

Agenting 101 Revisited: Author Warranties

by Kristin Nelson

STATUS: On Friday it was colder in Denver than most cities in Alaska. Today it’s 60 degrees and gorgeous. But never fear, it’s supposed to snow again on Friday—therefore not breaking our snow streak.

What’s playing on the iPod right now? IT’S MY LIFE by Talk Talk

All publishing contracts have a clause that basically asks the author if the work is original and whether the author has the right to enter in this agreement.

That’s reasonable.

The clause will read something like this:

“The Author warrants, represents and covenants: that the Author owns all rights and licenses herein conveyed and has the full and sole right and authority to convey all such rights and perform its obligations hereunder; that the work is original with the Author in all respects, except for any portion which has been previously published and is identified as such; that, with respect to works of nonfiction, all statements contained in the Work as published are true or based on reasonable research for accuracy: that the Work is not in the public domain and is or may be validly copyrighted or registered for copyright in the United States and…”

And the clause will go on to make sure the Author hasn’t defamed anyone or invaded privacy. That there is no litigation pending or a claim outstanding. That the work won’t cause harm etc.

You can see where Mr. Frey ran into some difficulties with lines 5 and 6. Ahem.

To me, these are all valid considerations and the Publisher has the right to ask an author to attest to the above and sign his or her name to it in agreement.

What I don’t like, as you well know, is when the Publishers sneaks a little phrase in that reads something like this, “that the Work will be the Author’s next book-length work (whether under the Author’s own name or otherwise)”

This usually comes in line 3 after “rights and perform its obligations hereunder.”

Basically the Publisher is asking that the author warrant that this Work will be his or her next published work.

You know my take. That’s none of the Publisher’s business. The real issue is that the Publisher doesn’t want the work they’re buying to have to compete with a myriad of other titles by this author upon publication.

That’s not a true warranty. That’s a no-compete clause and it irks me to have this little sentence buried in with all the other elements of the Warranty clause that are actually relevant and justifiable by the Publisher.

Not to mention, embedding this phrasing is a recent occurrence (at least for the contracts I’ve been seeing).

So my advice is, if you are going it alone, to read carefully. There are some changes we as agents ask for when negotiating and dealing with the warranty and indemnity clauses but as you can guess, these are the two clauses that publishers show most reluctance to negotiate since the point of them is to protect the publisher. Yet, if you don’t deal with this pesky little sentence, you may find your career a little constrained.

Agenting 101 Revisited: No-Compete

by Kristin Nelson

STATUS: It’s colder in Denver today than in most of the cities in Alaska. That’s just wrong.

What’s playing on the iPod right now? SWEET LOVE by Anita Baker

Get out your notebooks. I was a little too cryptic earlier this week. So let’s talk about the no-compete clause and the Author’s Warranties in publishing contracts.

A little background. Publishers like to include a little clause that is usually called something like “Conflicting Publication” or “Competitive Works” in their book contracts.

To sum up, this clause will usually say something like this:

“During the term of this Agreement, the Author shall not, without written permission of the Publisher, publish or permit to be published any material based upon or incorporating material from the Work or which would compete with its sale or impair the rights granted hereunder.”

Fair enough.

But then the publisher likes to continue. The real crux of this clause is in the next section that will state something along these lines:

“Subject to the terms above, the Author agrees that in no event will the Author publish or authorize publication of any other book-length work of which the Author is credited under his/her own name as an author, contributor or collaborator until six months after the publication of the book under this agreement.”

Therein lies the problem if the author wants to have a prolific career. This clause would severely limit the variety of books the author could publish at any given time (if they have to wait 6 months after the publication of the book in this agreement or their other agreements). Just imagining the scheduling conflict alone is enough to give me a headache and if the author writes nonfiction as well as fiction or young adult as well as adult novels… you can see why this clause would inhibit a writer’s career.

So, agents limit the clause. “Any other book-length work” is too open-ended. We dig in and start defining that book-length work. Now how we define this can vary depending on what the author writes, what they have going at the time, and what they plan to write in the future. If the author already writes in let’s say an adult genre but now we are doing a contract for YA books, we force the publisher to acknowledge their upcoming adult books in this clause as well so it’s clear that even though those books are out on the shelves at the same time, they aren’t “in competition” with the book in this contract.

Why do publishers bother? They want to protect their investment and not have a diluted market when releasing their book. That’s the argument I’ve heard anyway.

Of course what’s not taken into consideration is the synergy and buzz that can be created when an author has multi-books out on the shelves at the same time.

You can probably also see that the bigger the author is (i.e. Nora Roberts or Dan Brown) the less of an issue multi-books become because there is room for all with his or her avid fan base. The no-compete clause becomes a moot point of the publisher wants that author on the house list.

We’ll tackle warranties on Monday. This is a too brain-taxing way to end a Friday. Happy weekend folks.

Agenting 101: Conclusion

by Kristin Nelson

STATUS: Had a great lunch with my author Jana DeLeon this afternoon. Her RUMBLE ON THE BAYOU is coming out this October. If you love Stephanie Bond type stuff—romantic comedy mystery, then bookmark Jana’s website since her book will be right up your alley.

I mean, look at this terrific cover?

What song is playing on the iPod right now? It’s a clock radio in the hotel room and I can’t quite bring myself to turn it on and look for a station.

Basically I want to finish up Agenting 101 before too much time elapses between entries. There are just a few more housekeeping details to share with you folks about negotiating a contract.

So here there are:

1. If an editor is asking for more than one book (so a two or three book offer), it’s really important to ask that that the books be accounted separately. We call that no joint accounting.

What’s the issue? Well, if they are jointly accounted, that means that you, as the author, would have to earn out the first book completely in order to see royalties for the second book and so on.

The monies are linked. What happens if the first book bombs, second one is stronger but the sales of the second book have to be accounted with the first until the first one earns out before the author sees any money for book 2.

See the issue? Books should be accounted separately and should stand or fall on their own merits. Let book 2 do the same.

The next two housekeeping issues aren’t really contract-related items (although one will have a tie-in to the contract) but should be questions you should ask before doing the contract negotiation.

Question 1 (to ask the offering editor): What editorial changes do you see as necessary?

And if you can get in writing, all the better. Simply, you want to make sure that the editor’s vision for the work matches with yours and you’d be amazed on how opinions can differ.

I just sold a book in the last couple of months and editor responses to this question really differed. We had a choice of editors so we made sure that the editor’s editorial comments wouldn’t suddenly make the novel leap off into a different direction.

Question 2: What is the potential pub date?

And the contract important factor is to make sure that the publisher must publish within 12, 18 (or worst case scenario) 24 months and if they don’t (barring force majeure—acts of God), they are in breach of contract and rights revert.

You don’t want your project hanging out in publishing limbo forever without some recourse if the publisher doesn’t get on the ball.

That’s it. Now you can negotiate like the pros.

No, I don’t really believe that but at least you will be less clueless if you decide to go it alone.

Good luck.

Agenting 101: Part Eight: Option Clause

by Kristin Nelson

STATUS: Yep, another late night. And gosh darn it’s hot in New York City. I realize it’s hot everywhere right now but 100 degrees in NYC is not the same as 100 degrees in Denver—not by a long shot. I think the word “sweatball” comes to mind.

What song is playing on the iPod right now? Nada. Not even the telly is on at the moment

So, I promised to talk about option clauses. As I mentioned before, Publishers want the broadest language possible and agents want the narrowest language possible.

For example, Publishers will ask for “the option on the author’s next work” or some such similar language.

Well, duh, of course they do but that’s way too wide open. Next work could mean anything—from nonfiction to the next literary novel to the next romance or what have you. Any next work from the author.

Agents always limit the option to specifically what the author is writing and the more specific, the better.

For example, if the author writes historical romances, then you can limit it to that. Better, is to even designate what type of historical (ie. Next historical erotic romance, next historical paranormal romance, next regency-set historical romance).

Specifics is key.

In fantasy, you can have the option be “for the next fantasy work in this series.” Next epic fantasy. Next Urban fantasy, next dark horror fantasy.

Get creative.

For nonfiction, you can limit it to the next self-help nonfiction work appropriate for XYZ line.

Another good thing to remember is to put the word “adult” in front of certain unclear categories such as “adult chick lit.”

This is super important if you have an author that’s branching out into young adult, middle-grade, or children’s and as an agent, you need to manage both sides of the career.

You can also add “writing under the author’s own name” or “XYZ pseudonym.”

Limited option clauses are imperative for authors who want to write for several houses, in different genres, or for two different markets—like adult vs. children’s.

Another tricky clause to be on the look out for is the non-compete clause.

Publishing houses like to insert that little bad boy in there and often it will read something like this: “this work will be the next published work by the author and the author will not allow any other work to be published until six months after publication of the final book in this contract.”

And this is a loose paraphrase since I don’t have a contract in front of me.

Well, that can get darn complicated if the author is writing in various genres for various houses.

An important clause to really dig in and change.

Okay. My brain is done for the day.

Agenting 101: Bonus Clarification

by Kristin Nelson

STATUS: I have to say that the next two weeks are going to be silly hectic—with my trip to New York and then RWA in Atlanta back to back, blogging might be sporadic or really late at night.

What song is playing on the iPod right now? LEVON by Elton John

I just realized (after reading the comments section a couple posts back) that I actually never defined what a bonus was. I just listed the types that are common in publishing contracts and explained the two points of view about them.

Yep, a good example of knowing my topic so well that I’ve forgotten that others probably have no idea what I’m talking about.

And yes, sad but true, I was a college teacher back in the mid-90s and should know better.

My excuse is that I’ve been out of the classroom (except for the workshops I give at conferences etc.) for a good ten-plus years.

So let me define what a bonus clause is for an author.

A bonus is an outlined stipulation for the Publisher to pay the author an advance sum beyond the original advance negotiated when certain parameters have been triggered.

A general world example: you’ve heard of athletes getting a “signing bonus” when the contract is signed and if Colorado is like other states, the nursing shortage often means that nurses get a “signing bonus” when coming aboard. Also, athletes can get a “performance bonus” if they throw X number of touchdowns in a year or reach a certain RBI level (and folks, I have no clue what the bonuses are in the sports world so I’m just making this up but you get the picture).

Well, authors don’t really get a signing bonus but a performance bonus is definitely a similar idea.

An author might have a $15,000 advance for one book, original trade paperback. Then there can be a clause in the contract that if the work ships more than 25,000 copies in a 12-month period, the publisher will pay the author an extra advance of $5000.00 (or whatever).

This is 5k above and beyond the original 15k that was negotiated (and before the account has “earned out” in royalties the $15,000 that the publisher has already paid).

It’s an extra advance that the author will now earn out but is likely to because if the bonus clause was triggered, the book is doing well.

Clear?

Probably not but I’ll keep muddling along. Have a great weekend.