Pub Rants

Category: Publishing Deals & Contracts

If You Haven’t Got Anything Nice To Say…

by Kristin Nelson

STATUS: Springtime in the Rockies! It was 65 degrees and sunny today and I must admit, I left the office at 2:30 in order to take Chutney out for a run and enjoy the day. In exchange, I’m working all evening.

What’s playing on the iPod right now? TOMORROW PEOPLE by Ziggy Marley and The Melody Makers

Come sit next to me!

Last week, I pretty much spent every entry talking about contracts but today’s discussion tops the cake.

Just recently, a publisher made an offer for the next books from one of my clients. Excellent. But this publisher is also one of the big 6 that have announced that they are moving to the agency commission model for the sale of electronic books.

As ya’ll know based on my math lecture about net receipts last week, there are some key questions that really need to be answered about electronic books and exactly what 25% of net is going to mean.

So my contracts manager and I insisted on talking to contracts director before closing the deal.

The publisher’s response (and this is a paraphrase): they have no idea what the definition of net receipts will be and feel uncomfortable accepting the language we have put forth. Their suggestion? If the author would like to put the contract on hold until the company makes a corporate decision on this, then the author is free to do so. However, the publisher has no timeline for when this will be resolved.

Snort. That’s the solution?

Publishers. The world is changing. Quit dithering. We agents have to negotiate contracts now so maybe get on this. Telling us we can just put it on hold until you get your act together isn’t an alternative.

Rant over.

Redefining Net Receipts Where eBooks Are Concerned

by Kristin Nelson

STATUS: Lots to tackle today so getting the blog entry out early.

What’s playing on the iPod right now? THE BLACKEST LILY by Corinne Bailey Rae

And the fun of how electronic books are changing the publishing contract continues. Today, boys and girls, we are going to talk about net receipts in Ms. Kristin’s neighborhood.

In light of this new agency commission model where Amazon and Apple will no longer carry the product per se but have an agreement to sell titles via their site in exchange for a 30% commission on the sale (see earlier post to get up to speed), suddenly agents need to re-examine the whole definition of net receipts in publishing contracts.

The definition of net receipts (or amount received) for an electronic book is not the same as the definition of amount received for a physical book.

With the agency commission model, the biggest question is this. Will publishers deduct the 30% commission paid or will they absorb it when calculating net receipts and determining what is the total used to pay authors their 25% of net receipts? One major publisher has stated that their current thinking is that the royalty would be calculated BEFORE deducting commission. In current negotiations for contracts in play, I’m not seeing publishers as excited about redefining net receipts this way.

So what does redefining net receipts mean to the author? Let’s do a little math!

Let’s say a title will sell on Amazon or Apple’s iPad for $10.00 (might as well make it easy math).

Now let’s look at the difference between net receipts if the publisher absorbs the cost of the agency commission versus if they don’t in defining and calculating net receipts.

If Publisher absorbs commission:
eBook price: $10.00
25% of net royalty (all the rage with publishers as of late)
Royalty to author: $2.50 per title sold

If Publisher does not:
eBook price: $10.00
$7.00 received by publisher (after 30% sales commission to retailer)
25% of net royalty
Royalty to author: $1.75 per title sold

Yep, definitely worth the time to find out exactly how this term is going to be defined in the contract when it comes to electronic books.

eBooks and Royalty Statements

by Kristin Nelson

STATUS: Remember when I said we were reading a lot? Yeah, that was before the Olympics began. Bad Kristin but I can’t tear myself away from the TV in the evenings!

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

As you know from a previous post, I’m not all that enthusiastic about this move by Publishers to switch an eBook royalty rate based on retail price to a royalty percentage based on net amount received.

As I ranted about this topic previously, my issue is the lack of transparency on the statement. It’s impossible to track actual amount received by the publisher unless you can get more detailed accounting info

So what have we been doing? Asking Publishers to included language in the agreement that contractually obligates them to provide more accounting information upon request. The only way to verify the accuracy of the Publisher’s stated amount received is to get info such as a list of customers purchasing and disseminating the electronic product, the business model used (wholesale or agency commission or maybe something not even invented yet), the actual retail price, the discount, any deductions made to establish the Amount Received figure from which the royalty calculation will be based.

And I could go on.

Notice that yet again, the onus is on the author/agent to go out of their way to request this information. It won’t necessarily or automatically be stated on the statement.

If we are having such a revolution in publishing over the electronic book, is it too much to ask that publishers have a revolution regarding the info provided on a statement? You got to change the system anyway to account for these new royalty structures. Why not make the whole reporting process more transparent. Heck, why can’t all this info be readily available online and the author can access it at anytime.

Now that would be a step in the right direction.

Bonus Clauses—Another Item to Re-evaluate With eBooks?

by Kristin Nelson

STATUS: Anita, our new assistant, started her first day of work today. Hooray! We have so much work we could pile on but we are trying to be reasonable. Both she and Sara have colds. Oi! Knock on wood that I don’t catch whatever is going around.

What’s playing on the iPod right now? SWEET EMOTION by Aerosmith

Here is an interesting thought.

Agents will often negotiate bonus clauses with publishers. A popular one is a bonus (increasing the advance) for X number of net copies of the title sold during a certain period of time (12 months being a popular number).

Currently, the publisher ties the bonus to the specific edition. For example, if the title is published as an original trade paperback, then the bonus will be tied to X number of copies of the trade pb edition sold within that time period.

Make sense?

Well, eBooks are changing the landscape and are often released simultaneously with the original edition (be it hardcover, trade pb, or mass market).

So my thought? Why not count and include the sales of the electronic books in the total that is triggering the bonus clause? True, it is considered a separate edition but it’s rather unique in that it mirrors the original edition and doesn’t need a separate performance creation like, let’s say, an audio book.

Brilliant! Oh I’m sure Publishers will be stampeding to this point of view (not) but it is an interesting discussion, no?

My guess is that now we need to start creating bonus language specifically for sales connected to the eBook—especially as this format becomes more prominent and the sales start catching up or outstripping the other main format editions.

Fun fun!

You Need A Reserve For Returns For eBooks Like You Need A Hole In Your Head

by Kristin Nelson

STATUS: I had a To Do list a mile long but I buckled down and just concentrated on it. The fact that I only got 70 emails rather than my usual 120+ today made a big difference in accomplishing what I did.

What’s playing on the iPod right now? HEY, SOUL SISTER by Train

It’s been awhile since we’ve talked about contracts. I know. Your favorite thing but to be honest, contract language is ALL I’ve been thinking about for the last 3 weeks since Apple made their big iPad announcement, Amazon pulled the links for Macmillan titles to flex some muscle, and publishers such as Macmillan and Hachette moved solely to an agency commission model for the sale of eBooks. (See sidebar tags for “publishing contracts” and “electronic books” to get up to speed on these past events.)

The hardest part about being an agent right now is figuring out what dang language to put in the contract when terms are changing, literally, every week.

But today’s topic is a no brainer when it comes to contract terms that need to be revisited in light of the ever-changing eBook landscape.

Publishers, in the old school world of actually selling physical copies of the book, like to hold a reserve for returns on any given title. This reserve is usually specified on the royalty statement (although some publishers do not include that info and then we as the agency have to specifically request it). Because publishers sell books to booksellers who can then later return them for full credit or refund, they have to hold a certain percentage in reserves to account for the possibility of all these returns. Publishers like to hold reserves on each specific edition of the title.

Got that?

But here’s the interesting thing. Some publishers are holding a reserve on the eBook edition.

Right. Explain to me how somebody would return an electronic book. They can’t. eBooks are non-returnable so why would a publisher be holding a reserve for returns on an electronic edition?

What a good question. They shouldn’t be. So now we’ve implemented policy here at the agency to make sure that no reserves are being held for eBooks on any past contract where that was not specified (which means we are having to ask when each roy. statement arrives and make sure reserves are not held). Oh what fun!

And on future contracts, we are including specific language that no reserves will be held on the electronic edition. And yes, if you don’t specifically raise a ruckus about this, some publishers are holding a reserve on the eBook (not all, mind you, but some are).

Oh, I’m going to be ranting about this kind of stuff all week so stay tuned. Those of you who are agented authors, aren’t you glad somebody is worrying about this stuff on your behalf?

Agenting 101: When The No-Compete Clause Comes Into Play

by Kristin Nelson

STATUS: TGIF! Have a great weekend. I plan to.

What’s playing on the iPod right now? CAN’T GET YOU OUT OF MY HEAD by Kylie Minogue

Currently, Publishers consider non-multimedia electronic rights as part of the “standard” package of the grant of rights when buying a work from an author.

For years, I often held electronic rights (back when publishers weren’t paying attention to it) but now, publishers will walk away from deals unless eRights are granted. Very few authors, especially the new or the debut, are willing to walk away from an offer over a right that makes up such a small percentage of current overall sales—at least in today’s world. Who knows about 10 years from now.

But here’s another interesting tidbit. Let’s say you are successful in keeping electronic as a reserved right. Publishers are getting stricter in the language they are using in the no-compete clause of the contract and that language may make it impossible for you to exercise that reserved right.

I’ve talked about the no-compete clause here in my Agenting 101 series.

But just to jog your memory, here is a sample of language from a no-compete clause in a publishing contract (and since I lifted it from my previous entry, this language is easily several years old).

“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.”

So what am I trying to say here? I’m telling you that even if you are able to reserve your electronic rights so as to as to set up your own deal with Kindle or Scribd (or whoever), your publisher could make an argument that sales of your reserved electronic right is materially damaging the sales of their licensed rights.

Ah, I see the light bulbs going off as you get what I’m saying here.

We’ve particularly seen this over the last two years when reserving comic book/graphic novels rights only to fight on the no-compete clause to make it even a possibility for the author to exercise those rights.

Unless you are embroiled in publishing contracts on a daily basis, very few authors make the connection of how these two very different clauses (grant of rights and the no-compete clause) clearly impact each other. Once again, I hope I’ve shed just a little light on it.

And on that lovely note, have a great weekend!

Agenting 101: Bring Back Term of License?

by Kristin Nelson

STATUS: Getting the blog done early so I can concentrate on a ton of reading today.

What’s playing on the iPod right now? NINE IN THE AFTERNOON by Panic! At The Disco

I’ve only been in publishing for close to going on 10 years. In light of some agents who have done this job since the early 70s, I’m a baby indeed.

But I have heard that back in the day, Publishers utilized a term of license rather than a term of copyright with an Out Of Print clause.

In fact, all foreign contracts use a term of license (5 years is common), with the exception of UK and ANZ (which stands for Australia/New Zealand) which often use an OOP instead.

What is a term of license? Simply put, a term of license is a clause in the publishing contract that states that the contract will expire 5 or 7 years from the date of the agreement and all rights revert back to the author.

In other words, no matter how well the book is doing, all rights revert on that date unless the publisher and author would like to renegotiate the terms and create a new contract with a new term of license.

Interesting, no?

In this rapidly changing digital age, a return to a term of license might be an attractive alternative. Whatever terms that are negotiated today will have to come up for renegotiating upon term expiration.

Some pros?
–There is a set reversion date no matter what.
–If the book does well, there is the possibility of renegotiation for better terms for the next agreement.

Some Cons?
–Most books, in general, go out of print in about 2 or 3 years via the OOP clause and rights revert. With a term of license, the out of print work could be tied up for 2 to 5 years longer than if there had been a sales threshold that triggered the reversion earlier.
–The next negotiation might be for lesser rates than what you locked in with your initial or previous contract.

Food for thought. Also, I don’t see publishers jumping on the “return to term of license” train anytime soon.

Agenting 101: Sales Thresholds in OOP Clauses

by Kristin Nelson

STATUS: Contracts and more contracts.

What’s playing on the iPod right now? VIVA LA VIDA by Coldplay

I know I’ve blogged about this before and the info is available under the tag Publishing Contracts but what the heck, it bears repeating. I can add the link under the Agenting 101 headings now for easy access.

OOP stands for Out of Print. Every publishing contract should have either a term of license for set period of years (7 being common) or the contract should have an out of print clause based on a sales threshold.

Sales threshold being the key term here if it’s not a set license period.

Sales threshold means that in order for a book to be in print, it has to sell a certain amount of copies, standard language is around 150 copies, in any accounting period. Most accounting periods are for 6-month periods in the publishing world.

This applies to ALL formats of the work—that would include eBooks.

In other words (and to repeat), the mere presence or the ability to do an eBook or a POD version will not keep a work in print UNLESS the publisher is selling 150 copies or more of any eBook or short run POD version in the 6-month period.

So even in the world of digital versions, the publisher still has to sell at least 300 copies a year to keep the work in print. If they don’t, rights revert to the author.

Remember the whole big snafu that S&S tried to pull last summer but eliminating those crucial last 4 lines of the S&S OOP clause that detailed the sales threshold? Yep, that’s why agents were in an uproar and refused to have clients sign those contracts.

Without that sales threshold, in this digital world, a work would never go out of print. However, with that sales threshold, publishers still have to sell 300+ copies to retain the rights.

Never Give Up…Never Surrender! Guest Blogger Mari Mancusi

by Kristin Nelson

STATUS: Sorry about no blog entry on Friday. The whole day got away from me.

What’s playing on the iPod right now? A KIND OF MAGIC by Queen

No doubt, I’ve been on a ranting streak for awhile. For a nice change, how about a blog entry on a midlist series getting a second life. Let’s talk about something positive today rather than more of my righteous indignation. Grin.

Here is Mari Mancusi. Author of the YA BLOOD COVEN vampire series—originally started years ago, before the craze, but now have new covers and a new floor display in Borders.

Never Give Up…Never Surrender!

I know I can’t be the only author who mutters the Galaxy Quest creed every time the publishing industry throws me a curve ball. This particular time was three years ago, when I got an email from a fellow author, published by the same publishing house that did my Blood Coven Vampires series.

“They’re not picking up anyone’s options!” she lamented.

Shocked, I frantically called Kristin and she started to do some digging. Turns out, the author was right. My publisher was basically fading out their YA line and concentrating more on their core business of adult romance.

My series was basically DOA before the third book had even come out.

I was devastated. Though I’d written other books, none meant as much to me as my little vampire series. And I hated disappointing all my loyal readers who, after Book #3 – Girls that Growl – was released, kept begging for more. But what could I do? Kristin went back to the publishing company to ask again and again, but they kept saying no.

Of course, I could have given up then and there. After all, I’d just gotten a new children’s publisher and was under contract for two hardcover books at a much higher royalty rate. I could have easily moved on and said goodbye to my blood coven vampires. To my twin heroines, Sunshine and Rayne.

But the series meant too much to me for that. And it meant too much to my readers who kept begging to know what happens next. So I kept pushing. I started a “Save the Blood Coven” campaign in which I got readers to help spread the word and get bookstores and libraries to stock it. I did videos, I enlisted a street team, I encouraged my readers not to let the big corporations decide what they got to read.

And so the sales continued, slow but steady, over the next two years. And every day I’d have new teens write to me and say they’d just recently discovered the series. But though the publisher kept reprinting the first three books, they also kept refusing to buy book #4.

Then, out of the blue, something strange happened. My editor from Germany wrote me an email, asking about book #4. She said she didn’t care if the US published it or not. Would I consider writing it just for them?

I decided to do it. Namely because it allowed me to continue writing my beloved series. And Kristin and I schemed for alternative ways to get it to a US audience. Maybe a small publisher would see the Bookscan numbers and see it as an opportunity. Maybe we could sell it POD since I already had a fan base. Or I could give it away as an e-book. Somehow – someway – I was determined to get that story to my readers, no matter what!

But before pursuing those more drastic options, Kristin decided to go back one last time to my US publisher, to see if they’d changed their minds. After all, the Twilight movie had just swept into theaters and vampires were hotter than ever.

And low and behold, they said yes. Not only yes to a fourth book, but also that they would reprint the first three books as well, with shiny new covers for a whole new generation of (vampire hungry) fans!

I think I cried when Kristin told me the good news. She, in return, said that the sale, in many ways, meant more to her than ones she’d made for six figures because this particular sale was a victory. The result of a two year battle that seemed hopeless until the very end. But we didn’t give up. We didn’t surrender.

And sometimes, even in these bad economic times, a story of publishing can actually have a happy ending!

Mari

Visit the series at www.bloodcovenvampires.com

Agenting 101: Why I Don’t Like Net Amounts Received

by Kristin Nelson

STATUS: Phone conference in 10 so I’m trying to dash this entry out before it begins.

What’s playing on the iPod right now? NESSUN DORMA by Paul Potts

If you read my Agenting 101 entries on royalty statements (see right side bar), you should know why Kristin wouldn’t like net amounts received.

But if you haven’t, then I happy to just rant about it and tell you. There are two main reasons why I don’t like royalties to be based on net amounts received.

1. It’s archaic and currently doesn’t serve much of a purpose as audio and eBooks have a retail price and there are high discount clauses in all contracts so why not simply make the royalty based on retail?

And

2. Agents can’t track net amounts received by the Publisher. The only way we will get that information is if we:

a. audit and therefore look at the books to see what monies were actually received, from what account, for how much, and what were the deductions, or

b. we put a clause in the contract, not unlike reconciliation to print, that allows us to request the information from the publisher at any time and they can print out all the amounts received information so I can determine if what is on the royalty statements is correct.

Ah yes, once again the onus is on me as the agent to be a squeaky wheel, to demand more info, and pry the necessary info out of the publisher to see if the royalty statement is remotely accurate. And this is making a huge assumption that the publishers have the necessary software in place that will allow for this information to be accessed, printed, and shared.

I know Random House has that in place. Do the others? Guess I’m just about to find out because you know I like kicking up a fuss and less is not more for me when it comes to royalty statements.

See how much simpler it would be if all royalties were based on retail price? I’m capable of doing the math easily on royalties calculated via retail price.

Now that we have this big push from publishers to move to 25% of net receipts for eBook royalties, whose going to hurt 10 years from now when eBooks may be the main format and print editions the secondary?

Yep, you can see why I’m in state of righteous indignation all the time as of late. Maybe it’s time we move back to a term of license on contracts instead of Out of Print clauses and term of copyright.