Pub Rants

Category: publishing contracts

Speaking of eBook Royalty Rates…

STATUS: Monday madness! Sounds like a new game show. I can’t believe it’s 5 pm already. Lots of phone calls and prep work for my NYC trip in two weeks.

What’s playing on the iPod right now? HEARTS AND BONES by Paul Simon

Which I blogged about a couple of weeks ago, I just received a letter in the mail today from Random House stating that as of Dec. 1, 2008, they’ll be changing their eBook royalty rate policy.

Sigh. Here we go. RH used to have one of the nicer royalty rates in the industry (of the big NYC Houses that is. I think a lot of the smaller, ePublishing houses have more aggressive standard rates from what comment posters have mentioned.)

RH’s standard royalty rate was 25% of retail (as opposed to 15% of retail that most houses use).

Now they are moving to 25% of net amount received. A big difference. Now it’s still on par with what industry “standard” tends to be in New York but I’m still disappointed.

From the letter: “The new rates are very much in line with the ebook and digital audio rates being offered today by our major competitors. Previously, Random House’s digital royalties represented a considerable premium over the digital royalties offered by other publishers. As the economics of publishing in digital formats come into clearer focus, we realize we can no longer afford to offer such a rich premium if these businesses are going to mature and become profitable.”

I was tempted to add some commentary in there but refrained. For me, RH’s generous eBook rate gave them a bit of an edge if all other factors were equal. Well, that’s going the way of the dinosaur.

If you are a new author, chances are good you are going to get the industry standard in your first contract (barring crazy auction and publishers throwing around huge pots of money that is). And if you are an established author (with a solid track record that’s building), well then, all royalty rates are negotiable, aren’t they? eBook being just one of the factors to play with in the deal points negotiation.

Why You Have Bankruptcy Clauses In Contracts

STATUS: TGIF! I really enjoy writing that every Friday. I finished one contract and got ready to dive into another but alas, too many interruptions. Will have to tackle on Monday.

What’s playing on the iPod right now? GAUCHO by Steely Dan

This week I read in Publishers Weekly that Sports Publishing, LLC has filed for Chapter 11 bankruptcy.

Well, lately, just about every day I read a tidbit in Media Bistro or Shelf Awareness about a newspaper, magazine, bookstore, or what have you calling it quits.

In fact, I received an email today from a wonderful editor at Rager Media (a small independent literary house out of Ohio). He was writing to tell me that they were closing the doors.

That’s very sad news as they were doing some powerful books over there.

But all this got me thinking about bankruptcy clauses. When I heard about Sports Publishing, I immediately got out the contract file for one of my early books—CHAIR SHOTS by Bobby Heenan and Steve Anderson. This was way back in the day when I was foolish enough to take on nonfiction projects before I realized that my expertise was much more focused on fiction and the occasional memoir.

There it was on page 6—a nice bankruptcy clause highlighting how rights will revert. Today I wrote a formal letter requesting the reversion and final accounting so I have it in writing. I’m glad it’s there in black and white on the contract page–which is why we have this clause in all our contracts.

But my contracts manager recently told me that she’s seeing some push-back from publishing houses wanting to eliminate the clause. (I’d have to dig a little to find out what the rationale is behind that.) Now I’m also not a corporate bankruptcy attorney so I really can’t detail the vagaries of how corporate bankruptcy unfolds. All I know is that I’d rather have the clause in that contract so rights revert—even if the courts don’t allow that to happen automatically. Good thing I have an intellectual property attorney and his firm on retainer. Looks like I’m about to learn how it works.

eBook Royalties

STATUS: Finished up a contract today. Oh man, that always feels so good to get the final draft out to the author to sign. Contracts are by far the most time-consuming part of an agent’s job.

What’s playing on the iPod right now? PROUD MARY by Tina Turner

As agents, we are constantly learning. Even old veterans had to learn the ins and outs of eBook royalties over the last decade.

And even still they are tricky. Every publisher has their own structure (which is a bit annoying) but there you have it. Also, there are two basic ways to pay e-royalties.

Some publishers do a straight percentage of retail price of the work (standard is 15%). But some publishers do the royalty based on net amount received. Not quite the same thing. Standard for net amount is 25%.

So you have to check the language. You might look at a contract and see 15% and think it’s all groovy. But 15% of net amount received is not the industry standard.

See what I mean?

Then there are some publishers who refuse to do “standard.” You have to know who they are and take it into consideration before granting a book. Sure, the percentage of
e-royalties is miniscule compared to overall sales of a book in print formats but who knows what the future might bring so you have to at least think about it.

Some publishers allow language that if the industry e-royalty rates go up in the coming years, you can go back and re-negotiate it in the contract. I’m all about that and get it in my contracts whenever I can.

Right now, after looking at my incoming royalty statements, it’s very clear to me that the best sales for eBooks are still in SF&F. No surprise there as SF&F readers tend to be tech savvy and early adapters.

It will be very interesting to see how this sales percentage grows over the next decade when tech savvy young’uns start becoming book buyers (or so we hope they do!).

Parlez-Vous Olympics?

STATUS: I have to admit, I’m definitely being distracted by the 2008 Olympics. Last night instead of reading queries, sample pages, or doing the editing I was supposed to, I watched Michael Phelps nail the 200m butterfly gold. Folks, I swam swim team my whole life until I was in college (breast stroke and freestyle (aka. front crawl) if you want to know). The butterfly is one dang hard stroke and to do it in that many seconds for 200 meters. Holy cow! The Men’s Gymnastics team bronze wasn’t half bad either.

What’s playing on the iPod right now? The Olympics on TV, duh.

Here’s a thought from the query slush pile. Even if your novel is based on events from your life or were inspired by what you’ve experienced, I still think it’s best to leave that info out of the query itself. For some reason, writers simply cannot relate those details without lapsing into hyperbole.

I do think it’s a pertinent discussion once an agent or editor has expressed interest in the full manuscript after reading sample pages. After all, if spun right in the editorial letter, it can be a plus but writers themselves rarely manage to capture that appropriate balance (maybe because it’s different when an agent says it to the editor versus when writers are talking about themselves).

And when you finally do share that personal detail, keep the narration short and concise. It’s really just on a “need to know” basis. Too many writers are seduced by the melodrama and include every single detail. And even though writing the novel itself might be cathartic, no agent really wants to know that the writing was therapy (if that makes sense).

And in an aside, good agent friend Janet Reid is talking on her blog about going contracts alone. The ten things you need to know (above and beyond everything I talk about in my Agenting 101 entries).

Shades Of The S&S Out Of Print Debacle

STATUS: Heading out tomorrow morning for RWA in San Francisco. To be honest, I don’t know how much time I will have to blog but if I can, I’ll try and send reports from the floor.

What’s playing on the iPod right now? APOLOGIZE by OneRepublic

Hey it didn’t work all that effectively for S&S in the United States but who says it won’t fly across the pond?

The agents over there of course. Since I do have an international reading base, this is for you Brits out there. It’s Random House UK’s turn to see if they can play with the Out of Print clause in this digital age.

Here’s the story. Haven’t heard any news about whether RH USA will be follow suit but I imagine we Yanks will be watching closely.

HarperCollins New Imprint

STATUS: I can see the glass of my desktop. This is the first time in about a month that I’ve reduced the piles enough to have a clear surface. Now I’m off to do client reading like mad because I’m a little behind.

What’s playing on the iPod right now? WHEN LOVE COMES TO TOWN by U2 and B.B. King

When I first read the news, I immediately thought of Vanguard and the new imprint model Roger Cooper is exploring over there at The Perseus Books Group.

This, too, is an advance-less imprint with some big differences. Basically Vanguard focuses mostly on fiction and working with PR-savvy authors who already have an established name and fan base. Instead of an advance, Roger allocates a budget of 50 to 100k (or an agreed upon amount) for marketing and promotion and then there is a 50/50 split with the author in profits.

It’s an alternative for name authors looking for a different publishing model.

For the new HarperCollins imprint, it’s not clear where the focus will be but I hear the emphasis is on nonfiction. So far I haven’t heard mention whether the monies will be used instead on marketing/promotion as in the Vanguard model. The press release only mentioned a focus on the internet marketing and not buying-in co-op space in the stores.

So my thoughts (off the cuff and will probably evolve as I hear and read about how those first authors do with this imprint):

1. I can see this working for established authors with clear name recognition. Not sure I can see the advantage for a debut writer unless he/she has a large platform.

2. One of the biggest issues in publishing is how long it takes to publish. Since most books take 12 months to hit the shelves (and sometimes 18 or 24), this is a huge concern. I’d like to see an advantage in speed for this imprint—to forgo the advance to get books out in a timely manner (which can be a huge leg-up for nonfiction titles).

3. Connected to this is accounting periods. With this new publishing model, I’d like to see a revamping in the accounting/royalty statement period. Currently, publishers release statements twice a year and thus hold author monies/earnings for that time span. Since there is no advance paid, I’d like to see more regular royalty statements so authors do not have to wait unduly for their earnings from this imprint (as they haven’t had any other book monies to live off of in the meantime). Otherwise an author could be waiting up to a year, a year and 6 months, or whatever before seeing any return on their investment in writing/publishing the book. Since we are shifting the publishing paradigm…

4. Will there be monies allocated to marketing/promotion? Will there be a dedicated marketing person or publicist?

I’m sure tomorrow I’ll think of five other things to add here…

Payment Schedules

STATUS: All six contracts are almost complete. I’ll so drink to that!

What’s playing on the iPod right now? ELENORE by The Turtles

Over the weekend I realized my whole Friday entry was a bit cryptic if one didn’t know anything about payment schedules in publishing contracts. I’m pretty certain I’ve covered this in one of my prior entries (check out the Agenting 101 blogs) but what the heck, it doesn’t hurt to repeat it.

When a publisher buys a book, they don’t pay out the advance all at once (and probably none of you suffer from that assumption that they did, but I’ll state the basics just in case). No, when a publisher buys a book, they will stipulate a certain amount for the advance and then the payments are attached to what I call triggers—as in something contractually happens and a portion of the advance is paid.

Typical triggers can be these:

1. on signing of the contract

2. on d&a (delivery and acceptance) of a detailed outline
Side note: this happens often when a publisher is buying new books from one of their already established authors and they are buying on spec—as in nothing has been put on paper yet.

3. on d&a of the final manuscript

4. on publication of the work

5. on publication of a paperback edition

My favorite payouts are, of course, ½ on signing and ½ on d&a. Personally, when the monies are small, I really don’t see the sense in doing it otherwise. Now, I can understand when the advance pops into the six figures etc. but I don’t have to like it and I will certainly use all leverage possible to eliminate it. That’s my job after all—to get the best payout structure possible amongst other things.

Lately I’ve been seeing a lot of emphasis from Publishers to have payment in thirds rather than halves.

Of course I don’t lean that way either but I’m okay with it for the most part—if I can avoid the upon publ pym.

I’m sure y’all are sensing a mantra here. I’m not always successful and I imagine as Publishers dig in on this topic, it will be harder and harder to get.

Now as to Friday’s entry, what I meant by weighting forward is this.

What if the advance is 30k for one book. Payouts can look any number of ways.

If it’s in halves, that’s easy:
15k on signing
15k on d&a

If in thirds:
10k on signing
10k on d&a of outline
10k on d&a of full manuscript

Now let’s say you have to have the pym on publication and I can’t budge the Publisher on it. My job is to weight the payments forward.

Instead of equal thirds like this:
10k on signing
10k on d&a of full manuscript
10k on pub

I’ll try to weight monies forward:
12.5k on signing
12.5k on d&a full manuscript
5k on publication

And this can have a myriad of variations. I just did what was easy math.

Clear as mud?

Payments on Pub

STATUS: TGIF! I’m going to be so happy when all these contracts complete. That’s my new definition of happiness. That way I can get back to reading—which is the more fun part of the job.

What’s playing on the iPod right now? YOU LEARN by Alanis Morissette

I wish this issue would go the way of the dinosaur. I was talking with a few agent friends today and this topic came up—as it often does. Unfortunately, I’m convinced this one is stuck here for good so what to do about it.

Certain publishers are demanding payments on pub no matter what the advance is. (Cough—a publisher that begins with a “P” comes to mind). Other houses are more relaxed until the money gets into the six figures, then the upon pub payment rears its head.

Unless there is an auction going on. Then the agent can get the publisher off it because they want the book enough to be in an auction so will often be flexible where payout is concerned so as not to lose the auction.

If an author is big enough or established enough, well, anything is possible right? Not just no payments on pub.

But if you can’t get rid of it, what do you do? Well, we weight the money forward so as little money as possible will be paid on pub.

One agent did point out another factor I hadn’t really considered which is that an on pub payment allocates money in a different year as other monies in the contract (as publication more often than not happens in a year other than the contract). This can be better for authors in terms of paying taxes. This is true but it seems to me that taxes can be managed properly and most people would prefer the monies earlier.

I’m out.

Aggressive Competitive Works Clauses

STATUS: Fun picture of the week. My cousin was in Washington D.C. with her family and they visited the International Spy Museum and guess what they found in the gift store there? It just tickled us pink.

What’s playing on the iPod right now? WATCH YOUR STEP by Anita Baker

As y’all know, I’ve been working on a lot of contracts lately. One contract was with a new publisher (Macmillan) that I had never sold a book to before so there’s just a lot of extra negotiation necessary to hammer out the boilerplate.

When I started reading the contract for the first time, I was pleasantly surprised at how normal it was. There were lots of elements already included that normally we would have to request and fight for. But it wasn’t so…until page 16 when I reached the Competitive Works clause.

I think my jaw dropped open and stayed that way for a good 15 minutes. I even rang up my contracts manager because I couldn’t believe how aggressive it was. Until this moment, I had never seen a publisher contract where the Competitive Works clause was more than one short paragraph.

CW, by the way, is where the publisher tries to limit what other books an author is allowed to write while working with this publisher. Needless to say, as an agent, I’m pretty aggressive in removing a lot of elements to this clause or adjusting them appropriately because if you don’t, it can really interfere in how an author can write for a living.

This clause had four sub-paragraphs in it, each one worded slightly differently but amounting to the same thing.

My fav is this one, “the Author will complete the Work and submit it to the Publisher prior to beginning work on any other book for INSERT GENRE (excluding only other books that may already be under separate contract to the Publisher).”

My goodness. And then there were three more paragraphs…

Uh, that will need to be changed.

Interminable Length Of Time

STATUS: Don’t mind me. I just took an extended MLK holiday! Seriously, I just forgot to blog yesterday. I had 3 meetings and the third one didn’t end until 8 p.m. I kept thinking I was forgetting something but it didn’t occur to me until this morning that it was the blog entry.

What’s playing on the iPod right now? ORANGE COLORED SKY by Natalie Cole

Very few of my blog readers probably suffer from the misassumption that publishing moves quickly once an offer is made.

But just in case you do think that, let me make it clear for the record that publishing moves at a snail’s pace that probably wouldn’t be tolerated in other industries. And lately, it seems, publishing houses are moving at an interminably slow pace when it comes to mailing out contracts for deals recently made. Ninety-five year old grandmothers on the highway in their Buicks move faster than publishers. And personally, I don’t think claiming “the holidays” is enough of an excuse.

Let me give you just a sampling of what agents like me are dealing with.

In November (2007), I concluded the deal points for two offers. Just this week I received a contract for one of those deals, and I’m still waiting on the contract for the other. And trust me, it’s not like this delay went unnoticed. I’ve been prodding since early December.

So what I’m saying is that my job often entails loud and frequent whining.

Here’s another example. For a deal “concluded” in late October, I received the contracts the first week in December (which isn’t too bad actually). It took my contracts manager and me about a week to review and then write up the letter to the contracts director at the publishing house.

Now we have been waiting a month and three weeks for a response. Yes the holidays were in the middle of that and yes, I can be flexible but when we are three weeks into the new year without a response, the you-know-what has hitteth the fan.

So what can an agent do? Well, we can give an ultimatum (as in if I don’t have the contract by XYZ date, the deal is off) but that is rarely what an author wants. After all, they have accepted this offer for a reason. Sometimes, it’s necessary though and when push has come to shove and a deadline has been given, response time quickens remarkably.

Funny how that happens…