Contracts? They are the pages of scary legal stuff that someone else deals with, right?
A contract is a business agreement for the supply of goods or performance of work at a previously specified and agreed upon price. The payment often comes as an advance against royalties, which allows the author to have a share of income for the life of the book, although sometimes a flat fee payment is made. Contracts are essential and having a working knowledge of what goes into your contracts, and why, can only increase understanding of your business and aid clarity in discussing contract queries from authors/agents, and help you to negotiate better deals all round.
A good contract maps the story of the book from acquisition to publication, and understanding how your contracts work is not simply about rigorously applying the law.
I am always so thankful for the knowledge and expertise of Contracts Managers. Asking them questions (however foolish you may think they are) could end up saving a lot of headaches and a lot of money, if the road gets bumpy further on.
The Contracts Manager does a lot more than navigate the way through comments and queries from authors, agents and licensees. They can offer advice on copyright, permissions, rights, translations, ghost writers, distribution, royalties and terms.
What can you expect to find in a contract?
Clauses may (and should include) information and terms regarding Licence, Territory, Advances, Royalties (including co-edition royalties), E-book and subsidiary rights, Delivery, publication and production, Copyright and moral rights, Accounts, Assignment and Reversion.
All of this can make your head spin. The first time that you read a contract, and many of the common queries can be avoided if the contract is written in clear and concise terms, avoiding too much jargon.
It is often only the advance and royalties that authors are interested in, and their agent, should they have one, will be negotiating terms if they feel they are not favourable to their client. Possibly the most important clause is Licence, and it is usual for a contract to state ‘volume form’ (all traditional book formats) or ‘all media forms currently in existence and herein after invented’, which will include audio, film/television, electronic and merchandising. The Publisher will hold the exclusive right to publish and sell the work for a new book, in the formats agreed to.
Territory is where the book will be sold by the publisher; UK publishers generally require world rights, US publishers (as their home market is larger) do not always require world rights, and so negotiate separately for other markets. This leads to English language and translation rights, where the UK and Traditional British Commonwealth (which may or may not include Canada) is one territory and the USA , its dependencies and the Philippines is the other. Depending on the book in question, World English rights can also be granted, and translation rights discussed separately.
Most advance offers are held against royalties, and although we see headlines in Trade press about huge advances, this are not the norm, and it is up to you to manage the expectations of the author/agent! Advances may be paid in several different ways; in one go, on signature, or in installments such as on signature, hardback publication and paperback publication – but this is more likely if the advance is substantial.
Royalties will in an ideal world escalate to a higher level than the basic when a certain number of sales have been reached, and this is an important clause if the book becomes a long-running seller. Trade book royalties are usually based on the recommended retail price for the home market sales, with sales to book clubs and exports on the net receipt, and high discount clauses can be a bone of contention. A book club or big retailer often push for a high discount and this has a marked effect upon royalties and revenues for both author and publisher.
Ebooks and subsidiary rights
Ebook rights have developed with technology and formats, but it is important to ensure that any contract is flexible enough to encompass future developments and requirements. Subsidiary rights include paperback reprint, book club editions, large print editions, standard reprint, audio rights, anthology rights, serial rights in newspapers and magazines, and quotation rights. Each right usually has a percentage against it payable to the author.
Delivery and publication
This is the first major step, and the contract needs to clearly lay out what the book will be about, does the author receive a fee on signing, how many words are anticipated, when will the script/illustrations/index (as necessary) arrive, what format are they to be received in, and what happens if they are not delivered? It is also likely that some guide publication price may be mentioned in the contract, and that the publisher has a clause stating that they will undertake to publish the work within a set time period.
The Contracts Manager has to write a contract that satisfactorily copes with as many positive and negative scenarios that could occur, and It is essential that discussion takes place to clarify what will happen if the author does not deliver an acceptable script, and what ‘acceptable’ means and finding a mutually agreed upon definition to any terms that may be open to differences in understanding.
The vast majority of scripts are delivered in accordance with contractual terms, and are publishable, and then it is essential to look at commercial/processing costs versus the vision the author has of seeing their book in print. It is not commercially cost-effective to say, for example, embossed and foiled lettering on the cover of a first novel, or hardback or even trade paperback formats are the wisest way to market an unknown author. The Publisher will consult with the author over production details (including cover design, blurb and maybe catalogue copy), but you generally have the final say. There should be a clear timeframe for the checking of proofs, and exactly what is expected of the author at this stage to avoid delays. There are of course, many ways to smooth any ruffled feathers!
Copyright and moral rights
Author’s moral rights are often asserted within the contract, and the Publisher will include a copyright line in each edition of the work published.
Accounts to authors are usually twice a year payments for any royalties earned, and even if nothing has been earned a statement is usually sent.
Reversion of rights back to an author usually occurs due to a break in contract or if the book is out of print for (historically) over 9 months. The print-on-demand availability has now made it possible for authors or trustees of their estates, for example, to reclaim rights on out of print books.
A clause regarding what will happen to the author’s rights to their work should the publisher go out of business or is sold, is a potentially overlooked but important one. It is wise to state that the publisher requires written consent from the author to reassign the rights to their work elsewhere.
Knowing how your own systems work aids the writing of a clear contract, one that the publishers’ assets are invested in a product that adds value and gives pleasure to the readers in whichever format they choose to read.
Mara Livingstone-McPhail was a bookseller, reviewed books on BBC radio and organized book events in inner-city schools before being lured to London by the team who now run Chicken House Books. A freelance editor, proofreader and writer, she reads every day for as long as she can keep her eyes open.