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Friday, December 3, 2010

Guest Blogger: Jeffrey V. Mehalic

The Top 5 Things a Writer Should Look At in a Publishing Contract


Thank you very much for inviting me to guest-blog today on Lady Scribes. I'm happy to be here.

My name is Jeff Mehalic, and I have a law practice in Charleston, West Virginia. I will also be opening an office in New York soon.

In addition to my litigation practice, I negotiate on behalf of writers and authors, and also represent them in disputes and litigation arising from their contracts.

I also write a blog called West Virginia Business Litigation and have just started another one called The Write Lawyer, which may be of particular interest to your readers.



Before I talk about what you should pay particular attention to in a publishing contract, let me add a disclaimer here. My opinions here are general in nature and should not be interpreted as legal advice for any particular situation. Any recommendations or advice necessarily depends on the specific facts.

The Top 5 Things a Writer Should Look at in a Publishing Contract

Because a standard publishing contract contains pages of complicated language with confusing -- and sometimes incomprehensible -- legal terms and phrases, I recommend that an author hire an agent or an attorney to negotiate his/her contracts (unless it’s what the author does for a living. And even then, the author may not be objective enough to recognize the pitfalls in a contract).


1. Grant of Rights

This is where you grant, i.e., license, your work. You need to know exactly what rights you are granting -- the format(s) for your work -- and as to each one, the territory (geographical area) of the grant; the time period (duration) of the grant; and the language(s) for the grant.


2. Advance

This is how much you will receive up front and how it will be paid out. Obviously you want as large an advance as possible, and usually the publisher will negotiate the amount -- up to a limit -- as opposed to a take-it-or-leave-it offer.

Then, once you've agreed on the amount of the advance, you have to negotiate how it will be paid out. Here are three examples of pay-outs for an advance, which are unrelated to the size of the advance: a 50-50 split, where half of the advance is paid when the contract is signed, and the second half is paid on acceptance of the manuscript (in most cases, this is the author’s best choice); 40-40-20, where the publisher pays 40% of the advance when the contract is signed, the next 40% when the manuscript is accepted, and the remaining 20% when the book is published; and thirds, where the publisher pays one-third of the advance when the contract is signed, the next third when the manuscript is accepted, and the final third when the book is published. And just as you want to negotiate to get as large an advance as possible, you want as much of it paid up front as possible.

3. Royalties & Payouts

This provision includes how you will be paid for each right you have granted to the publisher, such as hardcover, trade paperback, mass market, etc. The royalty rates vary, so be careful.

The payout for a print book may include an escalation scale. For example, for a mass market book, you would get 6% for the first 30,000 copies you sell, 8% on the next 30,000 you sell, and 10% on anything above that. The numbers are hypothetical, but you get the idea.
Also be careful with contract language regarding monies earned and how they're paid out. For example, joint accounting and cross-collateralization both refer to a practice where a publisher lumps all your books together for accounting purposes. So if your first book didn't earn out, but your second one is a NYT bestseller, the publisher can use the profits on your second book to offset its losses on your first one. You want to have the accounting for each of your books done separately.


4 Subsidiary Rights

As an author, you want to retain as many rights as you possibly can. Examples of rights the publisher usually wants to keep are reprint rights, including paperback reprint rights, second serial rights, book club rights, and electronic rights. Examples of rights that can be negotiated are first serial rights, foreign language rights, audio rights. Examples of rights that you should always keep are commercial/merchandising rights, and dramatic/performance rights (movies, television, theater).


5 Option

An option clause gives a publisher the right to publish your next work, subject to the negotiation of mutually-agreeable terms. Under the option, the publisher usually has a period of time within which it can exclusively review the work and make an offer – basically a right of first refusal. If the parties don’t reach an agreement or the publisher passes, your are free to take the work elsewhere.

If you grant an option, the language needs to be as specific as possible. The genre needs to be specified (particularly important if you write in more than one genre), the length of the work (word count), when the option period starts, the length of time the option is in effect, and that the parties agree to negotiate a new contract, not simply that you will accept the terms of your current contract. The idea is to keep getting better deals.

Finally, pay close attention to broad language anywhere in the contract and make sure clauses are as specific and clear in time, content, and definition as possible. You want to sell books, not litigate over what your understanding was of an obscure provision in the contract.

My thanks to Lady Scribes, and I will answer your questions or comments today and throughout the weekend.


--
Jeffrey V. Mehalic
Law Offices of Jeffrey V. Mehalic
Phone (304) 346-3462
Fax (304) 346-3469

22 comments:

  1. Welcome to the Lady Scribes, Jeff. What a wonderful thing to have all this information in one place. Thank you so much for doing this informative guest blog.

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  2. Wow, talk about a post to keep bookmarked. I'll definitely be studying this. Thanks so much for sharing with us!

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  3. How would an author hire you to review or negotiate a contract?

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  4. Clarissa,

    Thank you very much. It's great to be here. I hope the post helps your readers navigate the murkiness of a publishing contract.

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  5. Gillian,

    Thank you for your kind words. I'm flattered that you'll bookmark the post!

    Take care.

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  6. Ana,

    An author can contact me initially by phone or email, then we'll go from there.

    Thank you for your question.

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  7. Jeff,

    Thank you for joining us today. I felt so lost when I received my offer. I had no experience with negotiating contracts or even a clear understanding of what was standard in the publishing business. Plus, I was in a such state of bliss/shock I could barely string two words together at the time.

    I was relieved to have my agent to negotiate the contract. I highly recommend hiring representation for this process.

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  8. LOL. I guess I'm still in shock, because I can't get my word order correct either.

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  9. Samantha,

    Don't worry, I knew what you meant!

    Unfortunately, publishers exploit -- or at least try -- the feelings that you describe: the delight (and relief) that you've sold your book (and are willing to agree to nearly anything), and then, after the euphoria wears off and you're presented with the contract, the realization that much of it doesn't make any sense.

    As I said at the beginning of the post, even if you negotiate contracts routinely, you should get an agent or attorney to represent you in publishing contract negotiations. Many of the provisions, in addition to being difficult to comprehend anyway, are unique to publishing.

    Congratulations on your offer, and thanks for commenting.

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  10. Jeff, thanks for sharing this info, in such a clearcut fashion. I'm glad I will have Christine negotiating these things for me, but I know it's important that I read and understand the contract too, and this helps. :)

    A question about commercial/merchandising rights--what kinds of things does this cover? I'm guessing action figures or something like that, but was just curious what other items might be included. :)

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  11. This information is very helpful and interesting, but I wonder if, with the increased piracy of electronic books, if any publishers, authors, or agents are implementing clauses addressing how any of these parties would be defending the rights of the author and publisher in prosecuting pirates or pirating sites?

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  12. I have to agree this is definitely worth bookmarking. Thanks Jeff for joining us here on Lady Scribes with such wonderful information. As an unpublished writer, I have to confess, I haven't thought that far ahead yet and now I'm thinking to myself, how can I not think so far ahead? I would be very naive to believe that I could negotiate something like this myself. Thanks so much for opening my eyes.

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  13. Donna,

    Thank you for your kind comments. You're correct about action figures being part of commercial/merchandising rights, which also includes any tie-in with a book, such as dolls, games, posters, etc. Harry Potter and Twilight merchandise are the best current examples.

    Thanks again.

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  14. Qaey,

    Thank you very much.

    I'm not aware of any specific clauses that address piracy. Publishing contracts rely on and incorporate copyright laws that provide remedies for the publisher and the author in the event of an infringement such as piracy.

    As a sidenote, let me also say that the individuals and companies that tend to engage in piracy are the same ones that don't have any assets to satisfy a judgment. So even if you prevail on your claims, you're unlikely to recover anything.

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  15. Melissa,

    Thanks very much for your kind words and comment.

    I understand that as an unpublished author, your focus is on writing a manuscript that will turn you into a published author.

    What a lot of authors don't understand -- or understand too late -- is that writing the manuscript and attracting a publisher's interest is only part of the battle. Negotiating a contract that fairly compensates you and addresses in a reasonable way the other issues I mentioned is just as important.

    And since most writers feel more comfortable with manuscripts than contracts, that's why it makes sense to obtain representation when it comes time to negotiate.

    Thanks again.

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  16. This is great information, Jeff. The murky waters of a contract can be very tricky to navigate. Just a word here or there can make such a difference, and writers might not catch it. Thank God for agents like Christine, and attorneys like yourself who help explain the jargon, because even if we have an agent, I think it's important for the author to understand as much about the process as possible.

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  17. Anita,

    Thank you very much.

    You're exactly right that even if an author is represented, s/he needs to know what is in the contract and why it's there. That is important not only for the contract at issue, but for the contracts that will, hopefully, be negotiated in the future. The more knowledge an author has about the process, the better.

    Take care.

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  18. Thank you Lady Scribes and Jeff Mehalic. This is such important info. Even though I think I understand most contract verbiage, I'm still getting a lawyer next time.

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  19. Carly,

    Thanks very much for your comment. You're right that even if you understand most or even all of what's in a contract, it doesn't hurt to have an agent or lawyer -- who has only your interests to protect -- to review the contract and assist with negotiations, if necessary.

    Take care.

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  20. Dear Jeffrey,

    When the publisher fails to fulfill some conditions of the contract, the author can take him to court. If all the rights to the book revert back to the author, does that mean that he needs to look for another publisher?

    Thanks in advance,
    D.

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  21. D,

    If the rights revert to the author, the author is free to take the book to another publisher or pursue other options, such as self-publishing.

    Thanks for your question.

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    ReplyDelete