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The Authors Guild Fair Contract Initiative

November 16, 2015

Tags: Authors Guild. writers' rights, book contracts

Updated 3-10-16. Book Authors: Study the contract alerts the Authors Guild has spelled out in its Fair Contract Initiative. The main contract issues are spelled out briefly below, with links to the full Authors Guild argument on each issue. Here are the main issues, once over lightly:
The Authors Guild Fair Contract Initiative: A Preview
(Authors Guild, 6-17-15)

End the Discount Double-Cross (11-16-15) Publishers routinely use contract provisions to slash authors’ royalties to mere pennies per copy sold. So-called “deep discount” clauses stipulate that a publisher’s sale at a discount of over 55%, for example (a number that appears to be the new standard), the author’s royalty suddenly drops from, say, 15% of list price to 15% of the far smaller amount the publisher actually receives. With a clause like this in effect, why would any rational publisher maintain a higher wholesale price when a lower one would deliver 25% more to its bottom line—entirely at the author’s expense?...The documented decline in authors’ incomes stems in part from these unconscionable reductions in royalty payments. Scroll down on Authors Guild page for what you (or your agent) should hold out for on a book contract.

Half of Net Proceeds Is the Fair Royalty Rate for E-Books See Checking In on the Digital Royalty Debate (Rachel Deahl, PW, 12-6-13) "By finding ways to keep their top authors in-house without raising the e-book royalty rate above 25%, the big houses have, in effect, killed the debate. And this comes at a time when most publishers’ profits have improved because of e-books. Richard Curtis, a literary agent and founder of the e-book publisher E-Reads, repeated an oft-said refrain when he noted that “the 25% [e-book royalty] rate has been the chief cause of publishers’ return to prosperity.” Argue for 50%, not 25%, on ebook royalties.

A Manuscript’s Acceptability Should Not Be a Matter of Whim (Authors Guild) Avoid fuzzy-wuzzy contract wording that allows easy rejection of a manuscript--certainly not if it means the author must return the advance. At the very least the author should have a chance to revise to editorial specifications. If the publisher isn't sure it will like a book once it's delivered, it should consider an option agreement.

Publishers’ Payment and Accounting Practices Need to Keep Up with the Times (Authors Guild, 10-15-15) most publishers pay royalties twice a year on income that they may have received as long as nine months before. We believe that fair book contracts should specify quarterly payments of income received by the publisher no more than three months in the past.
---Unlimited reserves for returns allow publishers to hold onto authors’ earnings and manipulate payments forever; "We think that any fair reserve clause must include limits, both for the dollars that may be withheld (no more than, say, 20% of royalties) and the length of time the clause may remain in force (say, one year). "
---Fair contracts should stipulate exactly what information must be displayed in the royalty statement. Royalty statements will not become clear and transparent unless contracts force publishers to make them that way.
---Authors can no longer tolerate being at the mercy of the publisher to accurately and honestly report the actual numbers behind these revenue streams as opposed to just some bottom-line figure computed in secret; it’s essential to know how many people are accessing a work and the income attributable to it in clear and precise terms. Include an audit clause in the contract.
---A fair author clause should stipulate that if an error of 5% or greater is found in the author’s favor, the publisher must pay the audit costs in addition to the money it owes the author, preferably with proper interest on the amount in question.

Delete the Non-Compete (8-27-15) In attempting to restrict authors from competing against their own works, publishers craft broad, harsh non-compete clauses that can unfairly impede authors from making a living. These clauses have to go...Ideally, we’d like to see non-compete clauses completely struck from publishing agreements. But we’re willing to accept clauses that simply and straightforwardly prevent an author from publishing substantially the same book elsewhere. Going beyond that can limit the author’s right to make a living, as well as the author’s freedom of expression.

Authors, Keep Your Copyrights. You Earned Them. (8-13-15) Most trade publishers do not ask for an outright assignment of all exclusive rights under copyright; their contracts usually call for copyright to be in the author’s name. But it’s another story in the world of university presses. Most scholarly publishers routinely present their authors with the single most draconian, unfair clause we routinely encounter, taking all the exclusive rights to an author’s work as if the press itself authored the work: “The Author assigns to Publisher all right, title and interests, including all rights under copyright, in and to the work…” Oppressive copyright grabs are routinely negotiated out of agreements by knowledgeable authors and agents, and there is no credible justification for their existence.

Option Clauses Shouldn't Hold Authors Hostage (9-23-15) A few authors are lucky enough to sign multi-book deals worth six or seven figures. But many more writers, without really thinking about it, tie themselves to unprofitable multi-book deals in the form of one-sided options or “next book” clauses—and they do it for free. Option clauses prevent an author from selling her book on the open market and getting the best deal possible. In cases where the first book sold particularly well, unless and until the publisher passes on the next book, an option certainly precludes an auction from developing. An option can also hold up the author’s ability to get a new advance—a necessity for full-time authors. Even worse are options that give the publisher the right to the author’s next book-length work “on the same terms” as the first. Fair “next book” clauses do exist and may be appropriate where the publisher invests in marketing, but they must be strictly limited.

Advances Should Remain Advances (3-10-16) Advance-splitting policies (traditionally one-half on signing, one-half on acceptance of the manuscript) have postponed payment to the author so late and in so many ways that authors have to find another way to support themselves while writing a book. Go back to the traditional formula, publishers.

A Publishing Contract Should Not Be Forever (Authors Guild, 7-28-15) Diamonds may be forever, but book contracts should not be. Three basic changes are urgently needed: (1) time-limited contracts, (2) a clause that provides for reversion of unexploited rights, and (3) a specific new unchallengeable definition to replace historic “out of print” clauses that are not remotely relevant in the electronic age. Time-limited licenses are just the first step in making sure that publishing contracts aren’t forever. “Out-of-print” clauses may be easily manipulated in this day of e-books and print-on-demand technology. The second step--ensuring that publishers can’t sit on subsidiary rights that they’ve licensed but fail to exploit--is at least as important. The contract should define when book rights are being “inadequately exploited” and therefore available for reversion to the author when the book fails to generate a certain amount of income—say, $250–$500—in a one-year period. Using income as the yardstick, not a specific number of sales, is essential: Publishers might otherwise be able to game the clause by offering one-cent e-books the way they’ve gamed existing clauses by using e-books and print-on-demand. It’s more important than ever for authors to reacquire their rights so they can make e-book and print-on-demand titles available from their backlist. Publishers should not be allowed to hold a book hostage; their contracts should provide clear language stating that if a specific royalty minimum is not paid within a certain period of time, then the book is defined as “out-of-print.”
Eight Principles of Fair Contracts (PDF, 73.40 KB, Authors Guild Fair Contract Initiative)

A.C. Crispin's comments on the AG's eight principles (Writer Beware, 1-29-16) Helpful clarification and emphasis.

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  1. December 18, 2015 1:35 PM EST
    - Pat McNees