Pub Rants

Category: publishing contracts

Agenting 101: Sales Thresholds in OOP Clauses

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.

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

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.

Publishers, You Want An Edge On the Competition?

STATUS: TGIF and blogging early as I actually want to leave the office before 7 pm tonight.

What’s playing on the iPod right now? OVER THE HILLS AND FAR AWAY by Led Zeppelin

Then let me throw this idea out there before all of you jump on the 25% of net band wagon so as to be like every other publisher out there offering substandard e-royalties.

Three years ago when I had a hot project (as in I’m getting pre-empts, potentially going to auction, going to have my choice of publishers), if Random House was in the mix, I’d lean their way. Why? Because RH had decent royalties for eBooks (at 25% of retail—which I know doesn’t match ePublishers but for a NYC major, not bad). Obviously other factors were in consideration such as marketing plans, other royalty structures, escalator break points but I think you can see where I’m going here.

This was 3 years ago (maybe even longer) when eBook sales might have added up to 10 copies total in any given 6-month period (SF&F or major authors excluded).

I could see the change a-coming; it was just going to be a matter of time.

So RH, you used to have a strong leg-up—which this year you’ve taken away from yourself. I can’t help but think that’s short-sighted.

You want an edge on the competition? Well then, why are all you publishers racing to do the same short-sighted thing?

Tell you what. Come to me with strong trade paperback royalty escalators, solid e-royalties percentages with escalators, decent audio percentages (downloadable or otherwise), etc. and I’m open to talking about non-outrageous advances or dare I say it? No advance at all if we can truly do a shared equal risk on a no returns basis (a la Vanguard Press and Harper Studio).

Maybe I’m alone on this (but I doubt it), I’m totally open to discussing less on the front end for a larger share of the back end.

But what I hear from publishers is the same low advance spiel with no change on the back end. And you’re wondering why I’m not leaping out of my chair with joy. I often hear that agents are to blame for demanding crazy advances etc. but have publishers asked themselves lately what’s been offered in return? Given an alternative, agents could be persuaded to think outside the box. Not given any viable alternative, then we have to stick with business as usual in order to best represent our clients.

Two to tango, certainly, as I’m thinking that “business as usual” won’t suffice for either publishers or agents as the publishing model rapidly changes…

And since it’s Friday and sheesh did I get off on a rant there, a gratuitous Chutney-in-the-snow shot from this morning. She HATES wearing her fleece. Can you tell? She won’t even look at me. Grin.

No Imeem file available.

Contract A Go-Go

STATUS: It can stop snowing now…

What’s playing on the iPod right now? I’D RATHER BE WITH YOU by Joshua Radin

I first caught wind of the contract changes from Macmillan via Richard Curtis’s blog about the changes they want to try for in e-royalties.

Oh boy, here we go again. Great, a battle because a publisher wants to do LOWER than that 25% of net that publishers as of late have been trying to push as “standard.” I long for the Random House days of 25% of retail…)

Then Publishers Lunch had a note about it, thank goodness.

Macmillan had sent a letter out to agents regarding the changes but for some reason, I, and just about every other agent I know (and folks that’s a lot), had not received this letter despite all of us having numerous clients with the Macmillan Group.

Small oversight I’m sure. When I emailed their contracts director, she mentioned that the letter was going out in waves to agents as their email list was long. Okay, fine. I’m a little annoyed but when I asked for the change letter and the sample of new contracts, it was sent immediately.

So now I’m in the process of reviewing. Macmillan had planned on implementing these new contracts on Nov. 9. Today I got an email that agents can respond until January 4, 2010. Good to know.

And first off I want to give Macmillan kudos for being totally upfront about the changes they want to do. Unlike, cough cough, Simon & Schuster last summer with their out of print clause and, cough, cough, Penguin Group with clause 9.ii.b. back in March.

So they are least being transparent but if the e-royalties are any indication of things they want changed, it looks like more contract battles ahead…

Agenting 101: Royalty Statements: Reconciliation To Print

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.

Time For A Cool Change

STATUS: I’m working on two different contracts this afternoon. So necessary, so time consuming, and always delightful when it concludes.

What’s playing on the iPod right now? P.Y.T. (PRETTY YOUNG THING) by Michael Jackson
(of course!)

It’s no longer okay for Publishers to say to me in a negotiation: “we have a policy that we won’t do that.”

Especially when I’m talking about royalty structures and for this rant, the royalty structure for a trade paperback.

Just to be clear, there are three main types of print formats for books. There is hardcover–which is of a certain size and has a hard cover covered by a dust jacket. There is trade paperback—which is usually the same size as a hardcover but with, funny enough, a soft cover and no jacket. Then there is mass market—which is the smaller soft cover usually associated with “pocket” size (although some of them are tomes that wouldn’t fit in a back pocket or otherwise).

Today I want to rant about trade paperback royalty structures. For twenty years, the “standard” royalty percentage authors earn from trade pb sales from publishing houses has been 7.5% flat.

Why is that? Why is the trade paperback royalty lower than the mass market version where “standard” starts at 8% and usually escalates to 10% (typically around 150,000 copies)?

Trade pb has a higher price point for point-of-sale so that’s not the reason. Yes, it’s more expensive to print than a mass but it’s not as expensive as a hardcover. And why is there no escalation?

Especially now when publishing is rapidly changing and there is a movement away from doing hardcover publication and doing original trade paperbacks instead—even for debut literary authors.

So why in the world are we stuck with an outdated royalty structure that doesn’t match how publishing is currently operating today?

And it’s not enough to tell me, “well, we’ve never done an escalation for a trade paperback royalty. It’s just not done here at our house.”

Just because it hasn’t been done in the past doesn’t mean we can’t talk about it in the here and now. Publishing is not the same as it was 20 years ago so why are the royalty structures?

Very good question I think.

I’m out. TGIF!

Calling All You "Angels"

STATUS: Grumpy. I’ve been doing contract discussions for the last two months with various publishing houses regarding the changing digital landscape and monies associated with it. Most publishers demand that electronic rights be sold at same time as the print rights but they don’t want to answer bothersome questions such as the Google Partner Program or the Google Settlement.

What’s playing on the iPod right now? UP THE JUNCTION by Squeeze

Or maybe another word that begins with an “A” and has exactly 6 letters as well. I have to say that the digital landscape is changing publishing and publishing contracts almost daily.

Take the most recent Penguin contract I received about four weeks ago as an example. Now publishers always reserve the right to change their boilerplate at any time. I get that. All I ask is the courtesy of being notified when they have done so.

Remember the whole S&S furor last summer when they deleted the crucial last four lines from their out of print clause—thus eliminating the absolutely critical sales threshold that allows rights to revert back to the author—and didn’t tell anyone that they had done so?

Well, this isn’t quite as egregious as that little contract fiasco but I’m miffed all the same. This time, Penguin has inserted a new clause that has become 9. (b) ii. of the contract and didn’t mention it.

Nope. Found it because I scrutinize every contract closely.

This new clause is what I would call a kitchen sink clause for electronic uses of a work. So broad it’s meant to cover anything currently in existence and things we can only imagine for the future. It’s also going to set a strong precedence of reducing the split of monies to authors for electronic display of rights—and yes, I’m talking about Google here (or any other entity of like nature) and all the revenue generated by electronic microtransactions or click-thru ads in association with electronic content etc.

The prevailing philosophy has been that the electronic display of content was a subright use of an author’s electronic/display rights. Handled under sublicense, standard split for this is 50/50 between author and publisher. This new clause treats this income not as a subright but as a sales channel with a royalty structure of 30% of net amounts received given to the author.

There’s a big difference between 30% of net amounts received and 50%. And I don’t care that right now I’m talking about pennies, really, because who knows what this revenue will look like 10 years from now. Twenty years from now.

The digital landscape is literally changing publishing daily and as usual, it’s up to we agents to fight unfair clauses that don’t allow the author of the work to participate equally in the revenue generated by their content.

Rethinking Contract Clauses

STATUS: Relaxing. Just about to do some sample page reading for an hour before hitting the sack.

What’s playing on the iPod right now? F.M. by Steely Dan

With all our recent deals, I’m definitely in contract mode this week. And there is a lot to think about.

With the Google lawsuit settlement happening, all current and future negotiations are going to have to address revenue split from Google advertising from the book registry. If the publishing house is participating that is. And don’t get me started on the whole topic of if the book is already on Google book search and is, indeed, searchable. We’ve been spending the last two weeks putting together letters for each individual client regarding their books and Google.

But that’s not all. The digital revolution is making us rethink contract clauses—even within the current standard language.

Take this for an example. My contracts manager and I got to talking on Friday about what is a rather an innocuous clause in the contract. In the royalties section, Publishing contracts always specifically state that no royalties will be paid for copies given away to promote sales or to charitable institutions etc.

Or similar language. It varies depending on house and contract.

Well, we were talking about electronic book giveaways done recently by Stanza, by Kindle on iPhone and even by Orbit—which I highlighted a couple of weeks ago (the Brent Weeks’s debut for $1).

And don’t get me wrong, I’m not remotely opposed to these kinds of promotions but I am thinking that perhaps an author needs to have a say in it and if they are to have say, then that needs to be in the contract—and dealt with in the copies given away clause. I think free ebook promotions can have strong impact but I also think the author should have input regarding how that ebook promotion might work. Little things like for how long will the promo last? How many copies will be given away? How will the publisher measure sales from said promotion? Interesting, no?

So now I’m thinking perhaps we need to ask for author approval on free copies done for special electronic promotions.

Suddenly, it makes that little clause a whole new ball game.

Consultation

STATUS: Such is the joy of January that the processing of Client 1099s with my bookkeeper is fast upon us.

What’s playing on the iPod right now? SO WHAT by Pink
(and man has this title been stuck in my head all day!)

It’s been awhile since I did a real rant on my blog so what better way to kick off the new year then to treat my reading audience to one?

Agents fight the good fight to get a little clause into author contracts that states that the author will have consultation on the cover and the cover copy (be it flap copy, back copy, or what have you).

For the most part, this isn’t too hard to do and is usually established in the agency’s boilerplate with the publisher.

Great right? Cover consultation means that the author will be consulted on what the final cover will look like. One would assume that it would mean that the author might have some input into what the final cover will look like. And all parties understand that given a disagreement on the cover, the publisher will have final say. [Cover Approval stated in contracts being reserved for the Nora’s, Stephenie’s, Neil’s, Stephen’s, and JK’s of the world.]

Good. Everyone is agreed.

And here comes the rant. But what constitutes “consultation” varies widely from publisher to publisher.

Some publishers send the final cover that can no longer be changed, and say you’ve been consulted. Grrrr. If the cover stinks, I’ve got a big fight on my hands. All of which could have been avoided had we just been really consulted—as the contract states.

Some publishers make you work for the consultation. Grrrr. This means you have to call the editor, email the editor, and harass the editor until you get the cover. It’s frustrating and exhausting and let me tell you, if I have a choice between publishers, I’ll consider this aspect when looking at the two deals on the table.

I do want to state here, in general, most editors really do want their authors to be happy with the cover and so will work with you but the above happens enough to make me want to pull my hair out.

Last week I was chatting with an editor (a big and powerful editor whom I just adore) who has included the author and me on every step of the cover process. From the first conception draft to the “final” draft that went to sales (who then rejected it and then we had to start all over and tackle second draft concepts etc.). And when I was talking to this editor on the phone, I paused and took a moment to thank her for really consulting with us on every step of the process. Not just paying lip service to the clause in the contract but really consulting us. And this for a debut author to boot! [Agents expect this with established authors]. Talk about a sheer joy this has been!

She was startled and said, “Why wouldn’t I? You two have been great.” How I long for every editor to handle it this way. Now please keep in mind this: both the author and I were sane, objective, reasonable, and actually offered good suggestions and because of that, all input was taken seriously. Thus the editor trusted us to work on the cover with her—not against her. This plays a big part in this whole consultation game.

But what I wouldn’t give for the cover process to be just like this for every book I sold. I will make sure that during this process, my author and I are sane, reasonable, and offering good suggestions. Just simply give us the chance.

Doom & Gloom & Google

STATUS: Four more hours until I can go home and vote!

What’s playing on the iPod right now? BOBBY JEAN by Bruce Springsteen

Oh my. I’m reading all my daily news feeds this afternoon and I have to say that even I was stunned at the Media Bistro headlines.

Get a load of this:

Time Inc. plans 600 layoffs

Christian Science Monitor to go Web-only (not bad news per se but certainly sign of the times I think!)

Gannett will Cut Ten Percent of Newspaper Jobs

McGraw Hill Cuts 270 Jobs

Yowza!

In other big, big news, from Wall Street Journal Google settles lawsuit [link from the AP] regarding book scanning and book search. And yes, it means one more thing to talk about during deal negotiations as this is yet another revenue stream. Luckily, my contracts manager and I already have discussed Google revenue and where it falls in many of our contracts.

Publishers Marketplace has several key stories regarding the news. [Click here and here] You may or may not have to subscribe to see the full story. And if you want to read the 141 page settlement, you certainly can by clicking here. I suggest, at the very least, reading Attachment A: Author-Publisher Procedures. Also, here’s the settlement administration link.

One of the big questions being kicked around is the difference between commercial availability and “in print.” Does the presence of a book in Google’s book search program constitute a work being in print? There’s a lovely explanation of the two tests to determine so in the Author-Publisher procedure. And, according to the Author’s Guild, the answer is no as the OOP clause in the contract still prevails and that should contain a sales threshold that defines whether a book is in print. From what I’ve read of the settlement, that is indeed correct.

But it’s still tricky. What happens when a book is considered OOP (and the rights have reverted to the author) but Google still makes the text searchable on their book search site (and is potentially generating revenue for that)?

Good question. And this too is addressed. Will Google then send statements (and checks) to the authors who hold the rights? Yes, they should (as that is covered under the Author-controlled Section 4.1 of Author-Publisher Procedures Attachment) but the onus is solely on the author and there are a lot of steps outlined! [Payment is detailed in 6.2]

And authors and agents thought it was hard enough extracting information from publishers regarding their royalty statements. This could take revenue tracking to a whole new level.

It’s a brave new world, isn’t it? Happy reading.