E-Books

Negotiating A Book Contract

Posted on by Mark Levine

Negotiating a Book Contract by Mark L.  Levine is the complete step-by-step guide to negotiating your own book contract — or to making sure your agent hasn’t missed anything important to you!

Negotiating a Book Contract applies to books of fiction and nonfiction, textbooks and children’s books, whether in hardcover, paperback or as an e-book, and is for illustrators as well as writers.

Negotiating a Book Contract is organized according to the typical sequence of clauses in publishers’ book contracts. You can quickly and easily match your contract, clause by clause and section by section, with Levine’s analysis and comments. Immediately see what you need added, deleted or changed to protect your interests.

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Does an e-book edition mean that my book never goes out of print and rights don’t revert to me?

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Q. Both my publishers are telling me that my books will never go out of print because electronic and print-on-demand editions will always be available. Is there any way to deal with these claims?

A. You raise an important question. The subject is likely to remain a contentious one and will probably be resolved only after several definitive and consistent decisions are reached in future lawsuits involving the issue.

Assuming that a contract does not specifically grant e-book rights to the publisher, the decisions in those lawsuits will largely depend on the specific language in each contract’s “out of print” clause. If, as the Authors Guild has been advising members for at least the past 35 years, your contracts specifically say that “in print” is based solely on the sale of hardcover and paperback editions, you don’t need to worry about e-books being a factor and even the most recalcitrant publisher should agree. If you also included language long recommended by the Guild that copies produced “by reprographic processes such as Xerox” are excluded for in-print determinations, a publisher is unlikely to have much success claiming that POD copies should be included since both photocopies and POD are single-copy on-demand production methods made possible by new technology. Failure to have either of these provisions in your contract, however, in no way means that your publisher is entitled to include e-books or PODs in its in-print calculations. Authors are not required to be prescient when reviewing proposed book contracts.

If your out-of-print clause has the very broad language widely used 20-30 years ago, viz., that the book is out of print “when the Work is no longer available for sale” — without any criteria for determining availability — it may be tougher to convince obstinate publishers. But your position is no less meritorious, especially if your contract is from that time period. Here, it will be important to argue that since the publisher had no right to print e-book or POD editions in the first place, sales of those editions cannot rightly be considered proof under your contract that a book is in print.

In both situations, your case will be even stronger if your contract has the fairly standard “reservation of rights” clause that all well-advised authors should have in their contracts and which virtually no publisher has ever objected to, viz., “All rights in the Work not specifically granted in this Agreement to the Publisher are reserved to the Author.”

There are many other types of out-of-print clauses, most of them narrower in scope than the broad “no longer available for sale.” The specific criteria typically listed in those clauses, combined with the points mentioned above, may help you in negotiations with your publishers. Unfortunately, even many of these narrower definitions of out-of-print may not suffice to convince a publisher that you are right (nor clear enough for the publisher to convince you that it is right). This is because it is rare for contracts of any sort to provide specific exclusions for technologies not yet invented. Virtually all of these contracts were drafted by publishers, however, and any vagueness or ambiguity in them should be resolved against the draftsman, a concept often found in court decisions involving a broad variety of contracts.

Because this issue is such a common and important one, it would be good if authors with the same publisher and the same language in their contracts, or with different publishers but where the language in their contracts is the same, got together to share costs and hired a top-notch litigator to bring the case, or some organization did so on their behalf.

In any event, if you believe your book is out of print and your publisher says it isn’t because it has (or intends to) license an e-book edition or because an online, POD or e-book edition is available through Google Book Search or another site, you should promptly give a written out-of-print notice to your publisher. Be sure to carefully follow the procedures outlined in your contract’s out-of-print clause. Sending that notice will start the clock running on the time period in that clause. Delay in sending the notice helps only the publisher since it risks nothing by taking no action while “considering” the issue or stalling you.

State in that notice—which typically requires a demand that the publisher put the book back in print itself or via a licensee—that an e-book or POD edition will not satisfy that requirement. Also consider stating, after consultation with your lawyer, that if the publisher attempts to sell or license any such edition, or print any version whatever after the termination of the 6- or 12-month period specified in your contract’s out-of-print clause without having properly put the book back in print before that deadline or licensing it by that date, you explicitly reserve the right to exercise all rights available to you under law and will hold it liable for all damages that result if it publishes the book without authorization. Add that your remedies will include the right to injunctive relief and that those damages will include statutory damages under the copyright law.

Crucial to determining whether sales of e-books (or PODs) should be included in determining whether your books are out of print, however, is determining whether your publisher has the right to publish or license e-book (or POD) editions. Given your question, I have assumed in this answer that your contract does not specifically grant these rights (which, of course, may not stop some publishers from claiming otherwise). If your publisher clearly has those rights, then unless you had the foresight to include some sophisticated provisions in your contract, you likely have no good argument. But if your contract is one of the older ones where publishers were simply granted the right to publish books “in book form,” you are right to contend that it did not get e-book rights too. Although decided under circumstances that may limit its use as conclusive precedent, Random House v. Rosetta Books LLC, a 2001 case available online, is strong support for this view.

A final note: When signing any new contracts, try to include provisions that will enable you to regain the rights to traditional print editions of your book even while the publisher or its licensee retains the e-book rights if the latter are what keeps the book “in print.” How to do this is too lengthy to explain here. The “Out of Print” chapter in the new edition of my book explains how to do this.

Please note that there are additional differences and similarities between e-book and POD editions that may be relevant to answering your question more completely, but space does not permit discussing those here.

(Originally published in the Summer/Fall 2009 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Are print-on-demand books considered print-on-paper or electronic editions?

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Q. Are print-on-demand books considered print-on-paper or electronic editions?

A. They are generally considered print-on-paper (“POP”) books, but there are arguments on both sides.

Favoring their treatment as electronic editions: until the time of actual purchase, they exist only as an electronic file and not as a printed book.

Favoring their treatment as print-on-paper editions: the purchaser receives a print-on-paper book, not a file to be read on a computer or other e-device.

To avoid possible future disagreements between you and your publisher, your contract should specify how you and the publisher intend print-on-demand (“POD”) books to be treated. If the two of you agree, they can even be treated differently in different sections of the agreement.

Clauses affected by this decision primarily include grant of rights, royalties, out of print and reversion of rights. If your contract includes — as it should — provisions for separately determining when your e-edition and print-on-paper editions go out of print, you need to avoid confusion about what rights revert to you.

A reversion of POP rights to you will be illusory — and you will not find a traditional publisher interested in bringing out a new edition — if your original publisher, retaining the e-rights after your POP edition goes out of print, can cause a POD edition to be printed whenever someone wants to buy a traditional book. So even if your contract treats PODs as electronic editions for royalty or out-of-print purposes, specify that they are treated as POP copies for grant of rights purposes if POP rights revert to you when the POP edition goes out of print.

(Originally published in the Fall 2011/Winter 2012 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Are e-books sold or licensed when bought online?

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Q. My publisher wants to include this sentence in my new contract: ”Sales of e-books, whether by Publisher or by a licensee, shall be considered sales by Publisher for purposes of the royalty provisions of this Agreement.” It’s not in my earlier contract. Is it okay to include?

A. While I am sympathetic to a publisher wanting to include this or similar language in new contracts and would likely recommend to a client that, as a business matter, he or she accept it, I would definitely not recommend that you or anyone else amend any previous contracts to include the provision.

But before you agree to include the requested language in your new contract, be sure the contract requires your publisher, whenever it increases its standard e-book royalty rate, to automatically increase your e-book royalty rate to that higher rate. This is important because the so-called “standard” rate that most of the major publishers are paying now is half of what most author advocates believe it should be.

The reason your publisher wants to include the new language is likely because of a September 2010 California case. In F.B.T. Productions v Aftermath Records, a federal appeals court ruled that the rap artist Eminem should have received royalties on iTunes downloads of his songs equal to 50 percent of what his music company received from iTunes rather than the far smaller “per recording” royalty payable on sales of his recordings (e.g., as CDs).

The court ruled this way on the grounds that the arrangement between his music company and iTunes was a license of the right to duplicate and distribute his songs (which it was) and that, accordingly, the subsidiary rights provisions of his contract – which provided for a 50/50 split of all licensing revenue — applied. It said that the “per copy” royalty based on the price of the song applied only when the song was sold by the publisher, not by a licensee.

Although the application of this case to any particular contract (book or music) is uncertain—much depends on the exact language in several different sections of that contract and how those provisions interrelate—the reasoning clearly applies to book publishing contracts and e-books.

Unlike print-on-paper books, e-books are not individually sold by publishers to online booksellers which in turn sell the book to their own customers. The transaction is essentially accomplished through a license between the publisher and the online seller whereby the online bookseller gets a master copy of the e-book and duplicates it for transmission to its customer. As a license by the book publisher, it should be treated the way other licenses are treated under your earlier contracts (assuming they even have the right to publish and license e-books), which is a division of the proceeds received by the publisher between author and publisher. Except for movies and foreign translations, this split is generally 50/50. Many contracts even have a clause in the subsidiary rights section, “For all other rights: 50 percent to author and 50 percent to publisher.” No wonder your publisher wants to put the clause you mention into its new contracts.

For new contracts, where you and the publisher are agreeing in advance that sales by third-parties under e-book licenses will be treated as sales of individual copies by the publisher for royalty purposes, that reflects the current commercial reality in book publishing; most authors wishing to sign with traditional publishers have little leeway here. That said, there is no reason to let the publisher off the hook on prior contracts. For one thing, there may well be a question of whether the publisher has e-book rights at all. For another, the e-book royalty offered by most major publishers today is half what author advocates believe it should be. Third, the publisher drew up the original contract and, under a general rule of contract law, ambiguities in a contract are resolved against the drafter. So don’t agree to any suggestion from your publisher to amend earlier contracts and make sure that it doesn’t sneak a clause to that effect into your new contract, amending the prior ones without you even being aware of it. You’re entitled to a 50 percent royalty on e-book contracts, and if the law will give it to you on existing contracts despite publishers’ obstinacy, you shouldn’t sign that right away.

(Interestingly, the “agency model” for e-book sales being used by Apple with major publishers could undercut this argument on sales made through Apple since that business structure treats the publisher as the seller and Apple merely as its agent. Whether a court would look through that arrangement and say that, in practice, it is nonetheless a license is a separate issue, and not for today or this column.)

(Originally published in the Spring 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Can my publisher cheat me of my royalties by selling my book through its subsidiaries?

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Q. Royalties on two textbooks I wrote are being watered down because my 1980s contracts didn’t anticipate sales of e-textbooks or rentals of my textbooks in regular and digital formats. More importantly, the contracts didn’t anticipate that my publisher would own or control the companies that handle its digital and rental copies. As a result, my royalties are calculated based on the revenue my publisher receives from these captive companies rather than the larger amount those companies received from the students who bought the book. How can I avoid this outrageous situation in the future?

A. Presumably you and other authors entitled to royalties from the same publisher have banded together to hire a good lawyer to deal with the existing publisher. Although I’m not a litigator, I believe the courts would frown on shenanigans like that. You should also consider publicizing the situation without omitting the name of the offending publisher(s). Even if a court finds the practice legal, in my opinion it’s clearly unethical. Good reputations are important to textbook publishers, and if they can be embarrassed by accurate recitations of the facts and circumstances, publicity is certainly a weapon to brandish.

As to your future contracts, here are two versions of the type of clause you’ll want to include.

The first is one that authors should already be including in all their contracts and isn’t specific to e-books or electronic rights, viz.,

Except as otherwise specifically provided in this Agreement, any license granted, or copies of any version of the Work sold or rented, by Publisher under this Agreement to an Affiliate shall be granted, sold or rented on financial and other terms which are no less favorable to Publisher than the terms upon which Publisher would have granted such license, or sold or rented such copies, to an unrelated or unaffiliated person or entity.

Even better would be adding “in an arms-length transaction and” after “rented” but many publishers won’t agree to that.

The second, which has the benefit of being more specific and eliminates the question implicit in the prior one of what terms are “no less favorable,” would be:

For purposes of the provisions in this Agreement providing for payments by Publisher to Author (as royalties or otherwise) computed based on amounts received by Publisher, those amounts shall instead be computed based on amounts received by the relevant Affiliate of Publisher in those situations where Publisher has directly or indirectly provided the relevant version of the Work to an Affiliate (by sale or otherwise) and the amount received by the Affiliate from its customer or the end user is greater than that received by Publisher from such Affiliate.

If using this version, a similar paragraph should be added to cover subsidiary rights licenses, where the author’s share is a specified percentage (never less than 50 percent) of what the publisher – or its affiliate — gets from the ultimate licensee.

In either case, the following definitions should be included in the contract:

As used herein, “Affiliate” means a Person that directly or indirectly, through one or more intermediaries or otherwise, controls, or is controlled by, or is in or under common control with, Publisher. “Person” includes any individual, firm, division, corporation, limited liability company, joint venture, partnership, trust or other unincorporated organization or association or other enterprise.

Before using either of the two suggested clauses, of course, you should check with your own lawyer to make sure it interfaces correctly with the other provisions in the publisher’s proposed contract and does what you intend.

(Originally published in the Spring 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Is there a standard definition of “electronic rights”?

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Q. Is there a standard definition of “electronic rights”?

A. No, not for “electronic rights” nor for the many different rights encompassed in that term. (Some contracts use “multimedia rights” instead of “electronic rights,” but there is no agreement on what that term means either.)

Most electronic rights definitions used in publishers’ contracts are too vague or too broad or both. As a result, authors and agents must negotiate appropriate definitions for these subsidiary rights on a case-by-case basis.

Authors should define each electronic right they are granting narrowly and specifically. Properly done, this will enable authors to know precisely what rights they are granting to their book publishers and which they are free to license to software companies, electronics and games companies, apps and educational developers, and other non-book companies in order to exploit non-e-book electronic rights to their work.

If, despite negotiations, the contract you sign with your publisher still contains broader definitions than you’d like, be sure to add a provision that any rights not exercised by your publisher or one of its licensees (as to any language, medium, format or territory) within x years after initial publication of your manuscript (in any form) shall revert to you upon written notice to your publisher. Such a reversion clause should always be included by authors when agented rights (e.g., translations and movie rights) have been granted to the publisher. But it is particularly important when dealing with broad electronic rights clauses because no one—not the publisher, the author or the agent – can anticipate all the possible uses of rights granted in such broad clauses. As recent history suggests, many have yet to be invented.

(Originally published in the Spring 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

What kind of hyperlinks can my publisher insert in my e-book?

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Q. I’m granting e-book rights, but not other electronic rights, to my publisher and I have been very specific in saying that the publisher can’t make any changes to the text or illustrations. The publisher is insisting on a clause that clearly states it has the right to insert hyperlinks, which makes sense to me since I know a lot of e-book programs allow the reader to click on a word to learn its definition. Is there any reason why I shouldn’t agree to the publisher’s clause?

A. The publisher’s request makes sense but, to protect yourself, you should include provisions covering the following:

  1. The hyperlinks will be added by the publisher and at its expense, and no cost incurred in connection with the hyperlinks will be charged to you.
  2. Publisher will remove, at its expense, any links to which you at any time object.
  3. If any hyperlinks are to a site that result in a transaction by the user and the publisher receives revenue from that transaction, you will be entitled to a percentage of that revenue. This percentage should be specified in the contract.

(Originally published in the Fall 2010/Winter 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Why is my book being published only as an e-book?

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Q. I have licensed both print and e-book rights to my publisher. Are they obligated to publish the book in both editions?

A. Only if your contract says so. Prudent authors will provide that simply publishing the book in an e-book edition (which will be far less costly for publishers) is not sufficient, and that the contract will terminate and all rights revert if no print-on-paper edition is published by a specified date. Alternatively, you could provide that no e-book edition may be published until after the print-on-paper edition is published. In either situation, if it is important to you that the print edition be in hardcover, you need to say that in your contract and also provide that publication in a print-on-demand edition does not satisfy that requirement. You may also want to specify a minimum initial print run (in the thousands) to assure that there is no attempt by a less than scrupulous publisher to technically fulfill the requirement by a nominal printing.

(Originally published in the Fall 2010/Winter 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

What does “net” mean in the royalties and subsidiary rights sections?

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Q. My publishing contract doesn’t define “net.” It’s used in both the royalties and subsidiary rights sections. What does it mean?

A. “Net” is one of the worst terms for authors to leave undefined in a contract.
“Net” – more typically, “net proceeds” or “net receipts” – is what is left after various expenses are deducted from a larger amount, e.g., the book’s list price (in the royalties section, for those royalties not based on list) or the total amount paid to your publisher by a licensee (in the subsidiary rights section). Since the amount an author will receive in such situations is a percentage of the reduced amount, it is important to specify exactly what the expenses are that may be deducted in computing net. If not specified, authors may discover that the publisher’s understanding differs from theirs.

In particular, with many publishers now paying authors a royalty of 25 percent of net on e-book sales, your contract should specify that the only permissible deduction from the e-book’s price is the commission to the online bookseller (typically 30 percent at the moment). Smart authors will also provide that if the commission to the online bookseller is at any time increased, then the royalty will still be computed as if the commission was only 30 percent.

(Originally published in the Fall 2010/Winter 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.