I'd like to tackle two common misconceptions about publishing in this piece. Firstly, a lot of people who should know better — business journalists covering the publishing industry, for example — seem to think that authors sell the copyright on their books to their publishers. And secondly, a lot of readers think that if a book is available in print in the English language in, say, the United States, they ought to be able to buy it anywhere in the world. This might be true in a practical sense, but in a legal context it's anything but — and with more and more ebook readers trying to buy titles internationally and running slap-bang into software-enforced geographical blockades, it's time to explain why.
Unfortunately I'm not a lawyer. I'm going to invite a couple of folks with law degrees who specialise in intellectual property law to kick the tyres on this post, but it may still contain inaccuracies — if you're selling a book of your own you must not rely on me for legal advice because I'm not qualified to give it. Also? It's incomplete, and merely represents a worm's eye view of book contracts from the perspective of an author of commercially published genre fiction.
(And it's so damn long that I didn't want to clog the front page of my blog up with it. So to continue reading it click the link below ...)
If you live in a country that has signed (and enacted laws compliant with) an international treaty known as the Berne Convention for the Protection of Literary and Artistic Works of 1886 (as subsequently amended and updated, right on through to its current successor, the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights) — which is to say, almost everywhere — then, when you write, by the very act of writing, you acquire certain legal rights to your work.
The rights you have can be loosely divided into Moral Rights and Copyright. (Clarification: the French legal tradition of droit d'auteur originally provided for "proprietary rights" and "moral rights"; the English common law tradition of Copyright only provided the equivalent of proprietary rights. With the convention, you get both.)
Your Moral rights are, broadly, the right to be attributed as the author of your own work, the right to publish your own work pseudonymously or anonymously, and the right to the integrity of the work — barring the work from alteration, distortion, or mutilation. Even if you have assigned the proprietary rights in the work to a third party these moral rights may persist.
As for Copyright, you own (for your own work) the exclusive right to copy, adapt, and distribute the work, for a period which in the English-speaking nations is currently set at your life, plus 70 years.
(Note: At this point I want to stress that I am describing the system by which authors are remunerated as it exists, not as I think it should be. I can already sense the thunderous rattle of a million knees jerking in the near distance. If you're about to post a comment critiquing this arrangement, or copyright law in general, you may as well stop right now because I will delete it on sight. I want to keep the comments on this posting for discussion of book contracts and their implications, not ideology. If you want an ideology chat, I'll set up another posting.)
How authors exploit their moral rights and copyright to earn a living depends on the sector in which the author works.
Technical authors are typically employees or contractors working for a company under a contract that defines their activities as Work For Hire. Under many countries' copyright law, there is an exception to the general rule ("if you wrote it, you own it") for material prepared at the direction of someone else; the employer, not the employee, is considered the copyright owner. (In other jurisdictions this may be termed corporate copyright.) Note that technical writers still have moral rights — the right to have their name associated with their writing — because moral rights are inalienable ... but the copyright belongs to someone else.
To someone in my line of work — writing commercial fiction — the idea of selling my output on a work-for-hire basis is anathema. It's fairly easy to predict the print run and profitability of a technical manual for a sewing machine or a car; they're both entirely dependent on the success of the underlying product. But if a fiction writer sells their copyright, and the publisher licenses the media sub-rights and there's a successful motion picture or TV series or dessert topping based upon it, the author of work-for-hire is out in the cold. They've relinquished all claim to a cut in the proceeds of their work. So commercial writers try not to do that.
When you "sell your novel" to a major publisher (or even a small one), what you are actually selling is the right to reproduce the work in a variety of specified formats in the English language in certain designated territories for a specified duration. In return for signing the ten-to-fifteen page contract, you receive royalties, which may vary depending on the format and the volume of sales, usually based on the publisher's net receipts from the work. You may also receive an advance against royalties: this is effectively a loan against the anticipated value of your future royalty earnings.
Note that sensible authors do not negotiate contracts themselves, unless they have a day job as an intellectual property lawyer; they go through a literary agent. Literary agents have a lot more experience of contractual negotiations in publishing than any author, usually have a contract lawyer on tap, and their relationship with the author is a symbiotic one: that is, they take a percentage of the author's cut, so they have a vested interest in maximizing the author's income. (SF author Tobias Buckell's survey suggests that agented first novels receive advances that are on average nearly twice the size of unagented novels; the literary agent's cut is typically 15%. This is one of the reasons why authors use agents.)
What goes into a book contract?
I am going to do something that will cause traditionalist publishing professionals to wince, and pull a contract out of the filing cabinet. It's with a large American publisher and it's some years old, and I'm going to withhold the publisher's name, the book title, and the actual amount of money in it ... but discuss the rest in mind-numbing detail.
The contract consists of ten US Legal pages of fairly dense typescript, some of it with strikethrough (thanks to my agent's kind habit of going through the first draft to arrive from the publisher's legal department with
fire and the sword a red pen).
Note that unlike many authors I sell North American (US and a list of associated territories including the Philippine Republic and Puerto Rico) rights to a different publisher from other English Language rights — UK and commonwealth rights go to a British publisher. This complicates things no end, so there are two extra pages consisting of a list of countries that the US publisher has a non-exclusive right to publish the work in — meaning that they're competing with other publishers if they want to sell English editions in places like Burma, Fiji, and Zambia.
The first chunk of the contract specifies the parties to the contract, the works to which the contract applies (two novels), and then the Author's Grant of rights.
The Author's Grant specifies that, during the full term of copyright and renewals (or until termination of the contract — there are termination clauses later on) I am selling the publisher the exclusive right to publish and sell the work, in whole or in part, in the English language, in [list of territories]. This part of the contract runs to ten clauses of dense legalese and includes formats in which the work may be published, including things like large type editions, newspaper serialisation, microfilm, ebook, and so on. (There's also a struck-out-by-agent land grab for audio book rights, motion picture and TV rights, games, and stuffed toys. This is the other good reason why smart authors employ agents; a draft publishing contract is inevitably full of little whoopee cushions inserted by the publisher's lawyers and intended to separate the author from control over the fruits of their labour.)
(Digression: yes, I did say "ebook rights" in the same context as "exclusive territorial rights". My UK publisher has the exclusive right to sell ebooks in the UK and associated territory, and my US publisher has ditto in their regions. This is why, as often as not, if you go to somewhere like Fictionwise or Diesel and try to buy an ebook edition of one of my books, it'll let you get as far as proffering payment then tell you to sod off because you live in the wrong country. This is stupid, sucky, and serves nobody's best interest (not even the publishers), but as I mentioned in the first of these posts, group-wide policy on e-rights is set by executives so high up the totem pole they can't even see the ground, much less the realities of ebook publishing. Discussion of how things should be arranged, as opposed to how they are arranged, is deferred for another posting. Digression over.)
Moving swiftly on to clause two:
The second chunk of the contract specifies a bunch of contractual representations, warranties, and indemnities: notably, that I wrote the books, that they're all my own work and I didn't steal any of it, that it hasn't previously been published by someone else and that I have the right to sell the rights in chunk one.
I also basically reassure them that the work isn't libelous, doesn't infringe copyright, isn't illegal in any way, doesn't contain instructions likely to kill the user if they follow them (see also: "The Anarchist's Cookbook"), and that anything stated as fact is based on my careful investigation or research for accuracy. Oh, and if anyone sues the publisher I'm required to cooperate with their defense [see also: lots of provisions for allocating blame/splitting costs if someone sues us].
The third chunk is about deliverables and dates. It sets out precisely when, to the nearest day, I am required to hand over each manuscript; the format the manuscript is to be provided in: and so on. If I fail to deliver on time, the publisher can terminate the contract and require me to repay the advance. If the manuscript is crap, there are provisions for the editor to tell me to fix it, then a strict time period within which it must be fixed: again, if it's not fixed on time and to spec, the publisher can terminate the contract. Oh, and I'm not allowed to tinker with the rejected novel and sell it elsewhere for 12 months after this date — I have to give the publisher a chance to decide whether or not they want to buy it.
There's other stuff, too: I'm required to read, revise, correct and return proofs and copy edits promptly, and if I vomit red ink on the page proofs I may have to pay a contribution towards the additional typesetting costs (unless the editors agree it was justifiable).
Note that the dates in the third chunk of the contract are enforced flexibly and with discretion by any sane publisher; they know damn well that authors are sometimes late. A publisher who sacked every author who was ever late would rapidly run out of authors! Nevertheless, if I'm late in handing in a book, I'm relying on my publisher's goodwill. Food for thought.
The fourth chunk is about publication dates and binds the publisher's hands, much as the third chunk binds the author's hands. The publisher is required to publish the book within 24 months of the date of acceptance of each book. There are a handful of loopholes (for lawsuits, labor disputes, or government intervention), but if they don't publish within 24 months I can yell at them in writing: they then have six months to publish, and if they can't manage that, I get to terminate the agreement, take my rights back, and keep the advance.
Other stuff: the publisher isn't obligated to publish the work in all the editions to which they have publication rights. And there's boilerplate about what to do if the final manuscript is legally questionable.
The fifth chunk: this is the one close to my heart, because it talks about money.
First, it sets out an advance. 50% of the advance is payable on execution of the contract; 25% upon publication of the first book; and the remaining 25% upon publication of the second book.
Next, it sets up royalties. Trade hardcovers pay royalties based on a percentage cut of publisher's suggested retail price through normal channels. Credited returns (books returned unsold by shops) are deducted from the count of copies sold, and "a reasonable reserve for estimated returns" is withheld — that is, if the publisher ships 1000 hardbacks and they know from experience that 20% will be returned for credit, they must release the royalties due on 800 hardbacks, but may hold back 20% for two accounting periods of 3 months each against the anticipated returns. (If the returns don't show up, the reserve against returns must then be released for payment to the author.)
There's an escalator on royalties. I get 10% on the first 5000 copies of each book, 12.5% on the next 5000 copies, and 15% on all copies of each book sold thereafter.
(In reality, neither of these books sold at the 15% rate; they both nudged into 12.5%.)
Next, there are a whole bunch of accounting provisions for different channels — wholesale distributors, jobbers, or booksellers. If the discount for a channel is over 50% off SRP, "the publisher shall pay to the author the prevailing royalty rate above less one half the difference between a 44% discount and the discount granted (it being understood that in no event shall the amount paid to the author be less than one half the prevailing royalty rate [detailed above]". In other words, steeply discounted books pay a correspondingly smaller royalty, but never less than 5%. Most likely a hardcover won't be steeply discounted unless it goes bestseller, in which case it's cranking on the 15% royalty rate; so the floor on hardback royalties is more realistically 7.5%.
Copies sold via radio or TV solicitation or direct mail or coupon advertising pay 5% of the actual selling price, incidentally. And there is a 10% of SRP or royalty equal to the initial royalty rate (whichever is lower) on all copies sold from a reprinting of 2500 copies or less made within two years of publication. And, and, and.
(Forget spreadsheets: trying to do cash flow projections based on the royalty schedule in this contract really demands an expert system. These contracts would be easier to understand if they were written in Lisp or ML ...)
Royalties on mass market paperback editions are set at 8% on the first 150,000 copies of each book, and 10% thereafter, or 5% on copies sold at a discount of more than 55% off SRP.
(In reality, neither book came anywhere near to 150,000 in mass market. Most midlist SF/F books in the US sell 15,000-35,000 in mass market.)
Trade paperbacks: the author gets 7.5% of SRP (subject to the aforementioned confusing smoke and mirrors about discount rates).
Royalties for "other editions" — this includes ebooks: the author gets 15% of the SRP on all copies sold. (Note that this contract predates current norms on ebook publishing in which I could expect 20% or even 25% on ebooks.)
Next there's a chunk on who gets what if the publisher sublicenses some of the rights they've bought.
Publishers, as a licensee of the author's rights, can farm them out to other publishers such as book clubs, or for anthology excerpts, or in abridged publication (in the unlikely event "Reader's Digest" wanted to publish a Stross novel). They have a sub-rights department, in which clerical staff who manage their contract portfolio try to identify rights that they can sell to other publishers. If they do this, I generally get 50% of the proceeds of this additional sale. This is the third reason why smart authors use literary agents: my agent only takes a 20% cut for sub-rights sales, but they're on commission (unlike the publisher's clerical staff) which provides them with a strong motive for getting out and selling.
(Note: Publishers try to buy all the rights that are available. Smart authors hold back as much as possible and get their agents to parcel them up and sell them on their behalf. It would have been easy for me to have sold the translation rights to these two novels as part of the package with my American publisher — and they might have given me an extra 20% on the book advance. But by holding back the translation rights and selling them piecemeal over several years, these two books have earned me almost as much revenue from translated editions as the entire US advance.)
No royalties: there's a waiver of royalties for: review and promotional copies, books destroyed prior to sale, sale of copies at below manufacturing cost ... and publication in Braille or by audio recording for the blind and other physically handicapped persons.
There now follows an entire page specifying accounting arrangements for the preceding two US Legal pages of mind-numbing percentages. The publisher is required to provide semiannual statements in accordance with regular accounting practice. There's a strict timetable for these. At each statement period, royalties must be paid to the author (or their agent), unless less than $10 has accrued (in which case it can be carried over).
The author has the right to examine the publisher's written records on serving written notice; if there are errors amounting to 5% or more of the total sum paid to the author during the period under question, the publisher foots the auditor's bill.
Other chunks: A bunch of other clauses now follow, setting out terms ...
Copyright. The publisher shall print a proper copyright page in each edition of the work, saying who wrote it. They'll also lodge a formal copyright claim for United States copyright and lodge copies with the Library of Congress. I guess that's a pro-forma acknowledgement of my moral rights.
Infringement. If the copyright of the work is infringed, both the author and the publisher have the right to go after the infringer with a pointy stick (although normally only one of them would bother).
Author's property. The publisher is not responsible for loss or damage to the author's property (such as the original manuscript or proofs). This is less meaningful today than it was in the era before photocopiers and laser printers.
Author's copies. The author shall be crushed to death beneath a crate of hardcovers of their own immortal work. The author may buy additional copies at a 40% discount and zero royalty rate. (Smart authors arrange with their local specialist bookstore to buy a carton and split the discount while still trousering the royalties.)
Contracts with others. The publisher shall keep the author duly informed if they sub-license any of the rights for an amount likely to exceed $500.
Use of author's name and likeness. In which it is agreed that the publisher may use that drunken nude centerfold shot of yr. humbl. crspndnt. as the centerpiece of an advertising campaign. (Okay, only kidding: it says "approved likeness" in boldface in the contract.)
Motion picture/TV tie-ins. If the author sells film or TV rights, he promises to do his best to ensure that the publisher has the right to use the film or TV production's name and stills to promote the book. (This is a no-brainer. "What, you don't want to shift an extra quarter million copies of your book in paperback?")
No competing work. The author agrees not to publish stuff based on these novels that is likely to injure its sales prospects. (Prequels or sequels don't count.)
Out of print provisions. WAKE UP! Buried in the small print on page 8 is a landmine! If one or more books falls out of print, and after written notice from the author the publisher fails to put them back into print, the author can issue a notice to terminate the agreement and grab the rights back. (The definition of "out of print" is: the book is not out of print so long as it's under contract for publication or on sale through normal wholesale/retail channels in any full-length edition. Print On Demand or ebook editions do not qualify as being "in print" unless there are total sales of 300 copies per year.)
Comment: This is important because if a publisher craps out and stops printing a book, I may need to claw my rights back and re-sell the book elsewhere. I'll get less money for a reprint (a lot less), but at least I'll be in control of it again.
You can go back to sleep now ...
Termination by publisher. If it ain't selling, the publisher can give up and terminate the contract.
Bankruptcy and liquidation. I can get my rights back if the publisher goes bust. (Important: agents, or smart authors, always make sure there's a clause to this effect in the contract.)
Rights on termination. If sub-rights have been sold, terminating a book contract can be slightly messy and take a while to clean up. The publisher has a grace period to dispose of any remaining stock, and the publisher may continue to participate in sub-licensed rights transactions until they, too, terminate. On the other hand, the author may not re-sell the reverted rights immediately; the publisher has an exclusive period of 60 days to try and convince the author to sell the rights back to them before the author can go elsewhere.
Option on next work. (This is an important one.) The publisher gets an exclusive option on the author's next work. The author has to submit it to the publisher before anyone else, and the publisher has 30 days to decide if they want to publish it. If they don't, the author is off the hook. If they do, "the parties shall negotiate in good faith with respect to the terms of an agreement to publish such work".
Publishers want to buy author careers, not individual books. This clause is to force the author to send the next book to them, rather than shop it around or auction it elsewhere. It's not bulletproof — no publisher can stop an author who is out of contractual lock-in from going elsewhere if they really want to — but it's a clear declaration of intent.
Reservation of rights to author. All rights not explicitly granted to the publisher remain with the author.
... And we're done! Just another two pages of legal boilerplate defining stuff like 'definition of "Author"' or "severability" (if a court rules that provisions of the contract are invalid or unenforceable), and some afterthoughts (if the author sells TV or movie rights, the publisher will allow the TV or movie studio to use extracts of up to 10,000 words for promotional purposes subject to certain provisions), and then we get to the signatures.
I haven't run the contract through a word count, but I suspect it's at least three times as long as this blog entry (3842 words). It's certainly much longer than the deed of sale for the apartment I live in ...