Another Bad Publishing Contract

I have died and gone to heaven today. John Scalzi got a hold of yet another contract from yet another imprint of Random House called Alibi.

For two years now, as this shifted in New York, Kris and I started seeing contracts from writers that are this bad and sometimes worse. We have been shouting the same thing that Scalzi is shouting about now. Over and over. So much, we sort of slowed down in fear of seeming like we were repeating ourselves.

So today, in one day, John Scalzi, a major supporter of traditional publishing, suddenly woke up and saw the light of what was being done to writers, not him, but to other writers in contracts from major traditional publishers.

And he’s angry. Wonderfully so.

Read his second article of the day on Random House imprint Alibi and how he goes point-by-point through the contract. You will learn something, everyone, because in all honesty, this kind of contract is getting pretty standard now from many, many traditional publishers. John thinks agents would help writers away from these contracts, but sadly, he is still clueless on that account.  Many writers have signed this kind of contract on the advice of their agent.

And some agent contracts are even worse than this book contract. His post is worth the read.

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53 Responses to Another Bad Publishing Contract

  1. antares says:

    Regarding agents: It is an axiom of law that an agent works for him who pays. For example, real estate agents work for the seller, not the buyer. Thus, literary agents work for the publisher, not the writer.

    • Publishers do not sign with an agent, writers do. A literary agent is your representative. He or she works for you, not the publisher. If he says — or behaves — otherwise, fire his ass.

    • And wait, I hate to double-comment, but you’ve double-confused me. In real estate, it’s the buyer who pays (by definition). If your axiom of law were accurate, the real estate agent would work for him who pays and hence the buyer. But they don’t, they work for the seller, because the seller has signed an agreement to list with them.

      An agent — at least an ethical agent, and Dean and Kris have pointed out that those are getting rare — works for the party who signs a contract to have the agent work for them.

    • Angie says:

      The comparison is a bit off-topic, but in real estate, it depends. If you’re buying a house, you can hire a real estate agent to act for you, the buyer, and his fiduciary duty is to you. If you like a house and are working directly with the seller’s agent, then, frex., telling that agent that you’re offering $210K but are willing to go as high as $225K is stupid, because that agent works for the seller and will tell them your ceiling price. If the agent works for you, though, and not the seller, then telling them your offer and ceiling helps them negotiate for you, and any collusion between them and the seller or the seller’s agent is illegal.

      It depends how you go into the deal, and whether or not you actually hire the agent you’re dealing with. It’s very possible to hire a real estate agent to work with you, the buyer, but you have to specifically DO that, not just trust that the nice person with the clipboard and business cards who’s hanging around in that lovely open house you looked at will have your best interests at heart. :P

      Angie

      • dwsmith says:

        Actually, folks, Real Estate agents are not a good comparison at all. They are regulated, licensed, and never touch your money. Book agents have no regulations at all, no license, no rules, and want all your money before you see it and all the paperwork with that money. Yup, it really is that stupid.

        • Carradee says:

          Real estate agents can be useful as basic comparisons for how the ideal theory works, though. And if you think of literary agents as comparable to real estate agents, the more fishy aspects will stand out.

          I’ve actually used the comparison to point out those fishy aspects to people who weren’t noticing them. But I do agree that it can be a dangerous comparison if you treat it as too analagous.

  2. J.A. Marlow says:

    It’s also highly likely that the other two new Random House imprints share the horrible contract terms. Those imprints:

    LOVESWEPT imprint for romance and women’s fiction
    FLIRT, for the rapidly-growing college-age New Adult audiences

    RUN AWAY!

  3. Chong Go says:

    “Alibi — a form of defense used in criminal procedure wherein the accused attempts to prove that he or she was in some other place at the time the alleged offense was committed.” (wikipedia)

    Which is a sibling of an imprint called “Hydra.” Really? I wonder what they’re trying to say? ;-)

    • Chong Go says:

      I predict their next imprint will be called “211″.
      (That’s the police radio code for an armed robbery.)

      • dwsmith says:

        Chong Go, I think you might be right. And writers will still flock to it because it says “Random House” and they think it gives them credibility.

        The myths that all traditional publishers are the same is strong. In the old days, I sold books to Random House and to Simon and Schuster and now, with what both companies are doing to writers, I will never use or claim that again, sadly.

        • I know I was late to the game, but before 2011 I had never ever heard the term ‘indie publishing’. At first, it sounded like a dumb idea, then I was fifty fifty about it. By 2012 I realized that through my research, I would never pursue a traditional contract as an unknown writer.

          Self publishing is the new platform for us to make our livings on, and really, with the amount of power and progress that has been instilled to an indie publisher in today’s climate, Trad publisher’s need to up their game hardcore in terms of service to the writer.

          The other way round – it’s a joke.

          Seems like panic to me :)

  4. Veronika says:

    Quite apart from this being an appalling contract, what’s the point (from the author’s POV) of a digital-only traditional imprint? The only advantage of traditional publishing of fiction that I can see at the moment is getting books into bookstores (and you’ve been saying that even that is changing, Dean). Apart from this, if the author is supposed to do their own promotion, to Twit, etc., and the publisher might not even advertise the books, what’s the point of said publisher? (In 2013 this is a rhetorical question…)

    • dwsmith says:

      Sadly, Veronika, it is only rhetorical for writers who have gotten past the myths of traditional publishing.

      • Veronika says:

        True. The publishing world seems to “work” if you are looking from outside – after all, there are all those books in bookstores, so it must be OK, right? And if you are working towards something that’s a new venture for you (such as publishing your first book), you wouldn’t spot the myths, because you wouldn’t think of the possibility that they might be there in the first place – or at least I wouldn’t have, were it not for your and Kris’s blogs.

  5. Suz Korb says:

    I knew of an aspiring writer who got offered a publishing deal last year. Only, her publisher was offering to print her work as just eBooks without an advance. She cried about it for days. Long had she submitted for years and years only to be handed a lousy contract such as this one. And guess what she did? That’s right, she bloody well signed the contract! That’s when I started to cry for her at her sheer stupidity. None of my aspiring author friends ever listen to me. I’ve had to stop talking to most of them as it frustrates me no end.

    So thanks for this link, although I don’t think it will do most new writers any good. Even when they see the evidence of publisher greed, they still sign with them anyway. Mind boggling dumbness.

    • dwsmith says:

      Suz, it never gets easier watching a writer sign something like this and be happy about it. Nothing you can say. I know.

  6. Ty Johnston says:

    I realize I’m a sicko, but this news actually brought a smile to my face. Why? Because it got my butt back in the chair to write more today.

  7. Lee Allred says:

    In the immortal words of John McClain: “Welcome to the party, pal.”

    Scalzi still seems to have missed the point of the “Net Billings/Net Proceeds” clause. It’s not about recouping the cost of paper clips. It’s about Hollywood accounting where no movie ever makes net profits. There will be no “net proceeds.”

    Combine that with the “No Advance” clause, and you get the one-two punch of writing the stuff for free (signing over all rights in the bargain!) and never seeing a dime afterwards.

    Yippee-ki-yay.

    • dwsmith says:

      Lee, I agree, Scalzi did miss the “Net Billings/Net Proceeds” nightmare. I wonder how many Hollywood contracts he has fallen for on getting a share of the profits. (grin)

      • Actually, I think Scalzi is figuring this out. In his first post, he wrote:

        “All of which is to say that it wouldn’t surprise me if Random House’s charges and fees just somehow manage to zero out an author’s earnings for a year or two and possibly even longer. It should be noted that most books sell nearly all they are going to sell within the first couple of years; after that they get lost in the pile of newer releases, including from the author. Hydra’s deal model has the marvelous potential of cutting out the economic heart of the book for the writer — but not, it should be noted, for the publisher, who will do just fine because its costs have been mitigated up front.
        “Musicians out there reading this may be smiling ruefully at this point, because they will recognize this sort of accounting; it’s how the music labels worked their accounting for years, carefully calibrating their fees and costs to make sure their musicians made as close to zero as possible while the labels kept all the money. But at least the musical labels paid their musicians an advance; Random House’s innovation here is that they aren’t even doing that.”

  8. Thomas E says:

    I look at this and wonder “why would I want to deal with a company that treats other writers like this?”

    And the answer is “I don’t want to.”

    I’ll still deal with a publisher who is willing to give me a fair offer, but I guess I’m going from someone who was trying to break into traditional publishing to someone who is an indie publisher.

  9. Mark Terry says:

    I wrote a lengthy comment on John Scalzi’s blog, which is relevant. It can also be found on my blog here: http://markterrybooks.blogspot.com/

    • dwsmith says:

      Sorry, Mark, flat don’t agree with your comment. Agents are getting writers to sign these contracts. I know, I’ve tried to warn away almost a dozen writers now whose agents were having them sign this type of thing and a couple of writers who were signing agency contracts just as bad, if not worse than these. You still have the belief that agents can help writers. Sometimes yes, sometimes no, sometimes they hurt a writer. And I’m afraid that across the board, on the fifty or more contracts I have seen in the last year from many publishers, these contracts and terms are becoming standard practice.

  10. Josephine Wade says:

    My jaw hit the floor when I heard it was Scalzi waving the red flag at bad contracts. I had to check the calendar and make sure that Mayan prediction wasn’t scheduled for today.
    I’m glad to see him speak up on this issue especially since he reaches writers who will not look at websites that are typically viewed by indies and such where these warnings might be better known.
    It’s a class act on his behalf since he could have quietly let those things go.

  11. Zelah Meyer says:

    As I mentioned elsewhere today: The sad thing is, there are authors out there who would happily agree to these terms – even if they understood exactly what they were agreeing to. The even sadder thing is, they’d be insulted that anyone would feel sorry for them.

    In fact, I’m pretty sure that somewhere out there, there are authors who would PAY to be able to agree to a trad pub contract with even worse terms.

    To some people, all that really matters is the badge of approval from a big name publisher. They don’t care if they ever make any money on their book. They just want to be able to talk about their ‘publishing deal’ at parties.

    I warn my writing friends about stuff like this & think it’s important to spread the word in general. I do, however, think that many of us would be disheartened if we knew how many people would run towards this sort of thing quite willingly.

  12. Kyra Halland says:

    It isn’t just the terms of the contracts that are awful. It’s also the attitude of complete and total disrespect for the author. And that, from what I can tell, isn’t confined to just these imprints.

  13. Mark Young says:

    Thanks for the heads up on these contracts, Dean. I found the articles very revealing and passed your links to my writing friends so they can be forewarned. Keep up the good work!

  14. Craig Reed says:

    http://www.publishersweekly.com/pw/by-topic/digital/content-and-e-books/article/56244-rh-responds-to-sfwa-slamming-its-hydra-imprint.html

    RH’s response to Scalzi’s savaging of their contracts — Sure sign that RH is not getting it….

    Craig

  15. The thing I get from that RH response is the same thing I got from working in healthcare where there was this huge disconnect between what people actually *did* in terms of providing services, etc. in the world, and what they *thought* they did. I know Dean and Kris have said this in a number of different ways already, but it still blows my mind how many people in publishing have forgotten what their actual *product* is. I would sit in meetings high up in healthcare admin and insurance that were very similar. They needed to save money, so they’d figure out how to screw over the doctors and nurses, or cut them down to the bare bones and screw over the patients. Yet when you asked any one of those same people what they did for a living, they’d get this proud smile and say, “I provide healthcare!” I remember the one time I confronted a group on that, and said, “Uh, no you don’t. Doctors and nurses provide healthcare. You actually set up barriers between patients and healthcare providers, and then charge people to go through them.” It was like I’d stabbed them in the heart. They absolutely, totally believed that they were somehow “a part of” providing healthcare to sick people. I think publishers somehow think that what they do is providing books to people. Uh, no. Not really. At best, you’re middlemen and facilitators, but unless you’re writing your own bestsellers, you’re still the hired help, when it comes down to the services you actually *provide.* They might have been able to lay claim to some part of the “joint creation” process before, when they had a monopoly on distribution, but it makes less and less logical sense all the time, now, when we can hire these services elsewhere. From the wording of that letter, however, they really seem to have a distorted view of the value they bring to the table. You could write them off as unethical mercenaries, sure, and some of them probably are, but I’ve worked in enough large corporations to know that they wouldn’t function like that, if not for the myth of “what we all do.” Ask any employee of RH what they do, and they would say they provide quality literature to people. And like in healthcare, it only takes a half a step back and a head scratch to say, “Uh, no. No, you don’t.”

  16. Adam Riser says:

    I think going with a traditional publisher or not depends on your objective. If you are presented with a contract like the one being discussed here then, no question, you should say “No deal.”

    But if you can procure a multi-million dollar–or even six figure–advance from a publisher on a book that gets the entire staff of that company excited (meaning you get the benefit of their marketing power and reach), then I think the sensible writer-business person’s response should be, “Yea yea,” so long as the terms are favorable.

    Because the fat cats in NY are still the ones with the deep pockets. In 15 years that may change, but for now it’s still the case. So for someone to, in effect, say “I will never work with a traditional publisher” or “I hate traditional publishing”–which is the vibe I’ve gotten from some of the comments on the Scalzi site and here–is a little short-sighted.

    Contracts are negotiable–with the assistance of a good IP attorney, as Dean recommends–and the writer who goes out into the publishing world willing to look at all options and possibilities is the one who succeeds. Publishing traditionally is neither good nor bad, just depends on the situation.

    • dwsmith says:

      Adam, exactly. What you are getting here is a turning of the corner into your viewpoint. For most writers, it is still knee-jerk that traditional is better. Scalzi and Random House and Simon and Schuster and other such events have finally starting getting writers to look. And get to the place where they make a business decision, not a stupid decision from an old myth. So I agree, Adam. We now have a choice and cutting off that choice in either direction is just silly business.

  17. Chris Welsh says:

    Oh, man, Dean, thank you for pointing us to these. I really hope any desperate soul out there who is thinking about signing one of those contracts gets wind of this.

  18. He he, just read that article and came here to tell you about it in case you didn’t see it yet. Fool me…

  19. I agree that this contract is draconian and disrespectful due to 1) the grabbing of rights, 2) requiring the author to pay costs. However, as an indie publisher with a few dozen authors on board, as well as being contracted myself for novels with another small press, I am concerned at the slamming of “no advance and profit sharing.” As a publisher I take all the initial cost risk and so have always described my press as “small but traditional” even though our advances are token. Is that wrong? I feel a bit sneered at, when all I’m doing is taking on the editorial/design/technical side of publishing to help writers get their stuff to market.

    And yet, in this changing world, perhaps definitions are becoming less important…

    • dwsmith says:

      Sorry, Grace, but I’m afraid I agree with John on this one. Writers these days can either do it themselves or should get advances for publishers. Period. This attitude that writers do no work and publishers take all the risks is one I have been hearing for 40 years and for 40 years it makes me angry. What the hell do you think I do when I write??? It’s my job and I deserve to be paid for it. So stop trying to ride on author’s work and call it something else. I started Pulphouse in 1987 and paid professional rates because I respected authors. You show no such respect. You take advantage of authors who just flat don’t have a belief in their own work, and honestly, that’s sad.

      I stand with John Scalzi and am happy he has finally stood up for authors.

      Sorry this makes you feel sneered at, but actually, from those of us who know better, that’s exactly what we are doing, so your feeling is correct.

      You came to my blog with your whining. You had to expect this. I am a professional writer, I expect to be paid for my work. Period.

      • Thank you for making your view clear, Dean. I have always respected you greatly and I recommend your strategies to all the writers I know until they’re surely sick of hearing it :P And I will continue to do so!
        I am sorry you feel that way about my method. I pay my authors a high royalty rate, and they get paid when I do. I work hard for my share – rake through slush, choose only the best, and do all the preparation myself. I’d just as happily tell the authors who come to me that they should put themselves in print. One of my authors was seriously considering that recently, but as he said, “I’d be picking your brain the whole time anyway.” I don’t doubt that some of them will go it alone in future – several already have, and I cheer them on. But if some want help to get their books out there, if they’d like editorial support, if they’d rather not have to pay the front-end publishing costs or think about design and technicalities – then I’m not exactly sure what the problem is. There are quite a number of small presses who do what I do, and many of them have won awards (only reached finalist 12 times myself, but we’re working on it!).
        Help me understand. I don’t want to whinge, and I certainly don’t want to take advantage of anyone. Years ago when I started, this model seemed sensible, and if that isn’t the case any more, then I want to change and do it right.
        Thoughts?

        • dwsmith says:

          Grace, wow, after my rude answer, your very clear question was a complete surprise and I honestly respect that a great deal.

          So let me see if I can give a less grumpy response. (grin) And an answer to your question.

          Nothing at all wrong with helping authors get their work into print. Nothing at all. In fact, I am a supporter of Lucky Bat Books, a fee-charging place that helps authors. They have a menu of fees and authors pay them for the help up front and author keeps all the proceeds from the sales and gets all the paperwork.

          And since I owned Pulphouse, a small press, I sure understand that side of it as well. We paid 6 cents per word in 1987. And upwards of 10 cents and more for some projects. We paid the authors up front for one-time use rights without royalties. And we kept our print runs limited and the authors never transferred any ownership. Just sold us for a set amount the rights we needed. Again that’s standard.

          The model you are working on is a royalty-based one. And you have the best of intentions, that much is clear. So do many agents, but that doesn’t mean I am going to give them all my money and my paperwork on that money as so many writers do. Your writers are signing up, turning over rights to you, you do the work they could do themselves, and then take a percentage (a royalty) for doing that. You take ZERO risk. The writer has taken all the risk in your system. And in a business situation, they are “trusting you” to maintain good business practices. And yes, you have contracts I’m sure and also give them statements I’m sure. And yes, some trust is needed in this business.

          But the key that I preach, and that is the correct word…preach, is that no writer should trust any more than they have to in any way. I mean, writers could surely trust Random House, right? See where I am going??

          We have to trust Apple and Amazon and Kobo and the rest to report our sales monthly as accurately as possible. And when working with big publishers, we have to trust them as well to report sales. But the key difference is that with Apple and Amazon and Kobo, we don’t sign over any rights. They are a distributor. Nothing more. With your press and Random House and others, we sign over rights and thus you are taking some of our property to make money on it and we should be paid up front. Period. A fair amount. Otherwise, we can do it ourselves.

          One other slightly silly way of looking at this is in real property. (Copyright is a form of property, sort of.) Say you own a house. Someone wants to take your house and rent it and make money off your house and they don’t want to give you any money up front, but they promise, crossing their heart and hoping to die, that they will pay you a percentage of the money they do make, if they don’t get sick or if they don’t need your money to pay other bills or if they don’t hurt your house in the process.

          That’s what you are doing with writer’s property. Your basic model is flawed. It depends on writers so sad that they can’t figure out how to do their own covers, so stuck in myths they think writers shouldn’t have to learn business. And those are the very things I am fighting against here. Writers need to learn business, stand up for themselves, demand advances and respect for their work.

          Your business model gives them none of that and won’t help them in any way other than in some pathetic need to see a book in print.

          I know your heart is in the right place, that much is clear. And I know you think you are helping writers, that much is clear. And I honestly admire your response to my nasty response.

          I hope this helps clear up my side a little. I stand with John completely, now that he has come over to my side. (grin) You get advances from publishers for your work and only sell to publishers the rights they need to buy.

          Writers spend months and months writing a book sometimes. It takes me a few hours to hire someone to copyedit a book, a few more hours to lay it out and a few more hours to upload it and get it into paper.

          Sorry, months for the writer, a few hours for the publisher. Publisher gets all the money and all the paperwork. Nope. Business model is bad for writers.

          • Thanks Dean for your detailed answer. Just one objection: I do take risks. I pay out for editing and design, sometimes too much I’ll grant you (especially when I was getting started) and if a book sells less than we hope for, then I’m in the hole and the author owes nothing. The rights they sold me are limited in any case and they can also get the rights back anytime they like.

            So what you’re saying is it would be more legit for me to charge a one-off fee and give all proceeds to the authors? Okay…I guess I’m reluctant to do that because I’ve always learned that any form of authors paying = vanity, even if the end result is similar for me. Indeed, my publisher membership (and thus eligibility for awards) in some writers’ organisations hinges on the fact that my authors are not allowed to pay me for any book production costs.

            Writing is my first love, so maybe I need to step back a bit from publishing other people and just write like the storm! I hate paperwork anyway.

            Once again thank you so much for your time and all the wisdom you share here :) You are very much appreciated over here in New Zealand (hence the late night posting, haha…)

          • dwsmith says:

            Grace, from a writer who got derailed from his writing from 1987 until 1992 by publishing other people’s work, I think you might want to run from publishing. (grin)

            As far as charging fees for services, that’s not vanity. That’s simply saying “You want a cover?” That will cost $200. Then the writer has a choice to take the risk or not. Nothing depending on sales, nothing depending on paperwork. And no promises other than to deliver a cover. (grin)

            The problem, Grace, as I’m sure you well know, is that publishing costs. And to start a publishing company that publishers more than your own work and do it right, costs money. And has huge risks that most writers don’t understand.

            The problem comes when a publisher attempts to walk that line between putting up the investment and letting the writers carry the investment. That’s what Random House is doing, letting the writers carry the publishing investment.

            The line is always the advance from a traditional or small press. That advance is a publisher paying for product to sell.

            Another example: Without that advance, you have a store (that granted, has costs as any store does) but you are getting your inventory for free. Many, many businesses wish that was the case, but it never is. In publishing, writers have so little belief in their own work, they think it’s all right to give it away for free. They will stock your store or the Random House store without getting a cent for their work and only a promise and some hype about profit sharing that may or may not happen.

            I’ve run a lot of businesses and not one of my retail stores ever expected to get the inventory for free. I always expected to pay up front or on 30/60 day invoice.

            So as I said, I admire your response to my first nasty letter. That saying that writers don’t work and thus publishers carry all the costs just makes me see red. I think you really do have your heart in the right place, and I hope that if you stay on the publishing side, you change your model just slightly and pay advances. It is all the difference and gives value to your writers.

            And will get you a higher level of inventory to sell as well. Just a side note. (grin)

            Thanks for the great discussion. Sorry about my first letter. Thanks for the very smart response. I think some people might get something out of this discussion.

          • Roscoe says:

            Indeed, Dean. And Grace, I’m glad there’s places out there with someone like you at the helm. Best of luck, I’m looking through Splashdown’s catalogue as we speak.

    • Marimba Ani says:

      Grace, I was reading the Nitty Gritty section of Splashdown’s website and it seems that you only pay authors royalties of 50% of net “after breakeven”, which you say is usually around a hundred copies.

      This makes your contract very close to Hyrda’s, at least in that regard. You aren’t just a “no advance” publisher, you’re a “no advance and the writer doesn’t get paid until we recoup our production costs” publisher. So, no, Splashdown doesn’t take risks. You arrange for a cover and editing, but the author still pays for them–not upfront, but on the back end.

      Given those terms, authors would do better to save their pennies to pay upfront for covers and editng, and publish themselves. That way, they see ALL of the returns from their risk, rather than cutting you in for half for fronting them a few hundred dollars for a few months.

      I hope this makes the objection to your style of publishing company a little clearer for you. Thank you for reading this and for responding to Dean with such good humor.

  20. Really fascinating discussion, Dean and Grace. Thanks so much for digging, Grace, the back and forth was really illuminating. And Dean, you just articulated so much better than I (ever) could why I got so super irrationally angry at someone on a different board the other day, lol…who was essentially saying that writers write “for fun” or “for the love of it” so to give them money for that was a handout. I just about burst a blood vessel. That’s one myth that just makes me so completely nuts, I can barely respond to it rationally. I guess people should only get paid for work they hate? I know a lot of computer programmers, doctors and lawyers who would be working for free too, if that was the case. Grumble, grumble, grumble…

  21. This is an interesting discussion, and it boils down to one simple fact for me. Why is a publisher willing to pay for book design, or for a cover, and yet not pay the writer? That doesn’t make sense. The writer’s book is the driving engine of all of this, and yet it’s okay to pay the artist who creates the cover up front. It’s okay to pay the editors that work on the book. It’s okay to pay the designers and anyone else that touches the book.

    Oh, the writer? No. We’re not paying them anything. We’ll give them a royalty later, maybe, if the book earns out the money we spent paying everyone else.

    And writers agree to this?

    • Ryan,

      In many small presses that work on a royalty-based system the production staff is also working on a royalty-based system. The model then becomes, in theory, everyone is working and invested in the book’s final success. The more copies sold, the more the staff makes. Which is to me, vastly different than a salaried editor, copy-editor, publicist and fee-based artist, approach that typically comes with traditional publishing (and larger, respectable Small Presses).

      So it does *not* make sense, in any form to me, to have a traditional publisher setting the low bar at putting costs back on the author. They are invested in the book from the outset of the project, financially, and the author shouldn’t be omitted from that process.

      When working on a royalty-based system (where costs are not pushed onto the author), the press makes back that a lower production cost for digital works at much lower sales rates, and print costs by using POD. Every publisher is looking to make a profit. Every publisher is looking to recoup production costs. With production costs at minimum, they’ve covered their expenses. As long as that standard is met with each book, they can’t go bankrupt. *Their* risk is effectively mitigated, and whatever additional sales then occur is strictly profit.

      Just as any contract is written for the publisher’s interest, not the author’s, thus the royalty-only based system is too. In exchange, the author is offered no production expense and receives a royalty higher than traditional print’s standard 25% (digital), minimal distribution, minimal publicity, but has a ‘stamp of approval’ on the book.

      Does it make it right? No.

      You also ask “And writers agree to this?”

      Some of this is, like Dean says, naive out-of-the gates authors blindly walking into the unforeseen and being taken advantage of. The contracts don’t come with a label: “WARNING, you can do better than this by self publishing your book, we’re just offering a convenience.” Often it’s not until someone is published that an author begins to *study* the *business* of publishing.

      On a more personal level, there are many other reasons an author might agree. The last royalty-only based contract I signed I did for a multitude of reasons. A) There was a year plus stretch in between published books and I needed to keep my name alive. B) As a single mom of two supporting a farm, that budget just doesn’t stretch like it ought to, to cover production costs for self publishing, often enough. C) That whole time factor to do all those production things myself — that budget doesn’t stretch like I’d like it to either. D) Places I wanted reviews from did not accept self published works. Yada yada. Bottom line for me was I was willing to sacrifice an advance to get the work out quickly without incurring cost to me of any sort, be that financial or time.

      I’m a member of RWA and support the stance that money flows to the author. I would never, never, never sign a contract where I had to pay any cost or the cost of production was deducted before I was paid. I wouldn’t walk away either, I’d run like it was a bomb. Yet I do think there can be viable reasons for entering a strictly royalty-paying contract.

      The *problem* is that very little knowledge is provided to authors on just what they are agreeing to.

  22. JK says:

    Hi Dean,

    You’ve some experience with writing screenplays. Would you speak to that in regards to the copyright and contracts discussion?

    Screenwriters don’t have the option to “self-publish” unless you fund an entire movie production on your own, so it’s a more restrictive position to be in.

    All contracts I have seen in the film business give no provision for the author to ever get their copyright back (rights revision), as their screenplay was used to make the film, sold to the film company, and not usually commercially exploited on its own.

    Some deals give the writers “points” (a percentage of the film’s gross profits) if the released film makes a certain gross profit level (we know there are no “net” profits in films!), or allows the writer to see some profits from merchandising, sequels, etc. Of course, if you are a “star” screenwriter, or have a track record, you can negotiate a better contract for yourself than a newbie could, with a higher upfront payment (not an advance), decent “points”, and higher merchandising profit share.

    What I am most concerned about are screenwriting contests, where film production companies offer a take-it-or-leave it contract to the winner to make their screenplay into a film. While this may be a way for a screenwriter to get a foot in the door of Hollywood, it may not be the best contract in terms of money flowing to the writer.

    These contracts typically offer a low six figure up front payment (maybe more, as a bonus, triggered by the film’s gross over a threshold), smaller sequel payments, and a tiny percentage of merchandising. Books and games made from the film are usually not offered any further payment, as they are considered part of the property of the screenplay, already owned by the film production company, and part of the rights the writer assigns (might be included in merchandising).

    For a newbie without film industry connections, or a screenplay in a bidding war, I think these contests could be a good trade-off to get into the business (and then they’d have power to negotiate a better contract next time), unlike books, where the writer can self-publish at any time, without waiting to be offered a deal.

    Thanks,
    JK

    • dwsmith says:

      JK, you are way out of the level of this blog and honestly, I wouldn’t attempt to answer any of your questions without an IP attorney on board and a standard Screenwriter’s Guild contract in front of me.

      But that said, I would avoid screenplay contests at all costs. 99% scams in Hollywood. Maybe 100%. And if you happened to win, you would get pennies instead of more millions than you want to count.

      Don’t go into that world unless you know what you are doing, and if you know what you are doing, you would never go into that world as a writer. Catch 22.

  23. Thank you SO MUCH for posting this! Very enlightening indeed.

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