Contracts: Top Ten Things to Negotiate and
What's Not Worth Your Time

By LAURA RESNICK

Nearly every expert queried for this article hated the title. There are no things which are not worth your time," most of them said--even those who then proceeded to coherently explain precisely what isn't worth your time."

"There are no 'top ten' things," they all said. For this reason, some refused to comment at all, while most kindly agreed to offer their advice on the understanding that every individual case is different and no good agent, editor, or literary lawyer likes theorizing in a vacuum.

Having now properly qualified that which is to follow, here goes--in no particular order of importance, because the respondents stressed that they weren't ordering their points of importance.

Top Ten Things to Negotiate

(1) Option Clause

This one came up often, with varying degrees of passion. Considering that I have heard at least one multipublished author (and more than one new author) say, "What's an option clause?" I thought it worth moving this to the head of the list.

Virginia Kidd, a literary agent, probably puts it most succinctly: "Negotiate for a limited option clause."

Agent Jane Dystel spells out the details of a limited option clause:

1. The option should be for the author's next book, its classification to be specified according to what the present book is (i.e., fiction, nonfiction, fantasy, romance, etc.)
2. The author should be required to submit no more material (and usually substantially less material) than he did to sell the first book to the publisher.
3. The publisher should have a deadline of no more than sixty (60) days to consider the proposal for the next book after it has accepted (not published) the first book.
4. If the publisher makes an offer which the author does not want to accept, the author should be free to show his proposal to another publisher. There should be no "matching" or "topping" privileges.

Russell Galen of the Scovil Chichak Galen Literary Agency strongly recommends that any matching or topping clause should be deleted from the contract. A "matching" option means that if you, the author, want to accept an offer from another publisher, you must give the option holder (your current publisher) the right to match the new offer and thus claim the book. A "topping" privilege means that the option holder must to the new offer, usually by 10%.

The limited option clause, Galen says, is basically a promise by the author to be a nice guy and give the current publisher a fighting chance to keep him; the author still retains sovereignty, the right to say yes or no. But with a matching or topping clause, the author has given up the right to decide who he wants to do business with.

(2) Reversion Clause

Russell Galen points out that many books go out of print within a year or two of publication, and if the author's career eventually takes off, reprint rights in the reverted books can be worth serious money. According to Galen, the standard reversion clause is not acceptable, and there are several items that should be negotiated. He lists the following four points:

1. Many contracts will say that, out of print or not, a book can't revert until a certain number of years have passed. Try to keep this to two years; five is bad but not horrendous; more than five should be "resisted."
2. Many contracts will state that the publisher retains the rights if the book is still in print in any edition the publisher has licensed, which could tie up a book for a long time in the case of world-English-language or world-rights deal. As the author, you want this clause to say the book becomes revertible if it is not in print in the USA. As Liana Cassel of Writers House Inc. points out, you don't want to find that your book is out of print in the U.S. but can't revert to your because of one foreign sale to Indonesia.
3. The book must be revertible if it is not in print in a trade hardcover, trade paperback, or mass market edition. Otherwise the publisher could hold onto the rights even if the only edition in print is a non-trade hardcover (i.e., one not sold through stores but through book clubs, mail order, collector's editions, etc.). This is especially important with the uncertainty about what future technology may devise in terms of book production.
4. If the deal was a hard/soft deal, the publisher should not be able to hold onto the book by licensing rights to a mass market reprinter. If you sold the book hard/soft, it was with the expectation that the publisher would do a hardcover and then its own paperback. If it lets the paperback go out of print, then it must let you terminate the contract; it shouldn't be able to hold onto the rights by dumping paperback rights onto a third party.

(3) Electronic Rights

This is both a vague and controversial area at this time, since, as Liana Cassel says, the success and money in this market is still undetermined and unclear. If the publisher insists on retaining these rights, Virginia Kidd suggests limiting them in some way. Try to get a separate advance and royalty rates on the work's electronic rights, and specify that these rights are not part of the subsidiary rights split. ("For God's sake," she adds, "don't settle for the 50/50 split they want to give you.")

Both Kidd and Cassel recommend that if a publisher does retain electronic rights, you negotiate a clause indicating that your percentage or royalty will be negotiated at a later date in the event that the publisher licenses or exercises those rights.

F. Robert Stein, literary lawyer, adds that the author should refuse to grant the publisher the right to create derivative works in electronic form (e.g. CD-ROMs), since such a grant would entail a loss of creative control over the final product.

(4) Royalties

"Publishers kill authors by creative bookkeeping," Richard Curtis, literary agent, writes in his book How To Be Your Own Literary Agent. For this reason, Curtis recommends you pay particular attention to the contractual clauses relating to the details of royalty reporting. Curtis points out that there is no statute, uniform code, or tradition defining the form and content of royalty statements. Every company has its own idea of what and how information should appear (and not appear) on its statements. The only thing they all have in common is that none of them adequately reports what the author needs to know.

Curtis recommends the following eight items as necessary for you, the author, to have a complete picture of your book's financial activity:

1. Number of copies printed
2. Number of copies shipped or distributed
3. Number of copies sold
4. Type of royalty: Regular, special discount, Canadian, foreign export, etc.
5. Royalty rate, in terms of percentage and/or a dollars-and-cents amount
6. Number of copies returned
7. Details of reserve against returns, expressed in dollars
8. Details of subsidiary sales, contracts, and income

Curtis acknowledges how unlikely it is at this time that any but the most successful authors (and perhaps not even them) can negotiate contractual rights to all this information. However, he points out that to make such information standard and available to all writers is a task worthy of professional writers' guilds.

(5) Auditing

Liana Cassel says that many publishers have a standard clause about royalty reports being binding "unless notice has been made to the publisher within 2-3 years." She recommends negotiating out such time-limitations for auditing; they force the author to police the publisher's accounting department (which should not be his responsibility) or pay for a costly audit every three years just to make sure that he isn't losing any money through royalty reporting errors.

(6) Acceptability Language

If the publisher insists that the first half of the advance must be repaid in the event that they deem the final manuscript unacceptable even after the author has made the requested revisions, Raymond E. Feist of SFFWA's Contracts Committee advises the author to ensure that the contract guarantees the writer can wait to do so until he makes another sale with the book, thus repaying the first advance with proceeds from the second.

(7) Publication of the Manuscript

The contract should ensure that, having purchased and accepted your book, the publisher must publish it within a given time frame or else the rights revert to you (without your needing to pay back the advance). Jane Dystel recommends this time frame be within eighteen (18) months of accepting the completed manuscript.

(8) Subsidiary Rights

Finding a great deal of cross-over in the terms "subsidiary rights," "ancillary rights," and "multi-media rights," I herein use the term to refer to all of the above, excluding the relatively new and amorphous electronic rights referred to in Item (3).

The general consensus is that you should hold on to these rights--unless there's a good reason not to. This is a topic in which the words "each individual case is different" really take on meaning, and therefore it cannot be covered adequately here.

As Raymond Feist writes in "Contract Article V, A Little More Money: Sub-Rights," in the SFFWA Bulletin (Spring, 1992): "Some agents don't do well with overseas sales. Your agent should be forthcoming about that; don't be afraid to ask him or her. Seventy-five percent of a translation sold through your American publisher is better than 100 percent of no sale. An agent willing to work with the Foreign Rights Department of your publisher will often suggest they split up rights along the lines of who has the stronger connections in those markets."

On the other hand, if you have no agent, it doesn't mean you can't possibly sell foreign rights without going through your publisher. Feist's own Hungarian and Polish sales resulted from overseas publishers having read his work in English and hunting him down. Also, as you build a body of work, you may find it advantageous to have retained your foreign rights and thus be able to eventually sell several books at once to a foreign publisher after your work becomes in demand overseas.

Virginia Kidd not only recommends retaining foreign language and U.K. rights, she also suggests that if this is not possible, then you should insert a time limit of, say, two years in which the publisher must exercise those rights or lose them.

She and Feist both agree that you should not give away dramatic adaptation rights. Period, full-stop. While it's unlikely that your novel will eventually become the basis for a hit Broadway musical, Feist points out that most people probably felt that way about T.S. Eliot's Old Possum's Book of Practical Cats back in 1939. Certainly no one guessed that that collection of poems would someday become the basis for Andrew Lloyd Webber's international hit musical Cats (whose promotional slogan is, appropriately enough, "Now and Forever"), or that Eliot's estate would today be the wealthiest of any deceased published author.

In addition, retain the rights to audio cassette recordings of your work, since this is such a fast-growing area in the USA, a society of commuters. Feist recommends regarding audio recordings of the work as a separate publishing venture: "If your publisher is going to bring about an audio adaptation of your work, let them negotiate that under a separate contract."

(9) Subsidiary Income

Jane Dystel recommends that all subsidiary rights income should flow through to the author after the initial advance has earned out, rather than the author having to wait for the semi-annual royalty period in which to receive monies due from those sales (monies which, after all, the publisher received in lump sums, unlike ordinary royalties).

(10) Hardcover Rights

Virginia Kidd recommends that if the publisher does not intend to publish a hardcover of the work, you should try to retain this right. You may get an opportunity to license a limited hardcover (first) edition to a small publisher. This has indeed proved a lucrative area for some science fiction and fantasy writers, though it has yet to make any impact in the romance genre.

BONUS POINT:

Raymond Feist considers the following language to be the single most important thing you must insist on somewhere in any literary contract: "Any rights not expressly granted herein to the Publisher reside exclusively with the Author."

What's Not Worth Your Time:

Most agents seem to agree that any clause in a contract is important if it matters enough to the author. Richard Curtis has known authors to leave a publisher over the publisher's refusal to negotiate enough free copies of the book into the contract. While this may seem trivial, Virginia Kidd mentions boosting the number of complimentary copies as an important contractual point to negotiate; it makes it easier (and cheaper) for you to exercise your UK, foreign language, and dramatic rights if you have plenty of copies of the book on hand (i.e. to use in submissions). Author Mary Jo Putney adds that additional copies are a valuable promotional tool for the author, who can then hand out the book to reviewers and booksellers who might be neglected by the publisher, but who can influence word-of-mouth sales.

While any improvement in a contract is worth getting, Russell Galen says there are contract issues which are overrated and which sometimes hold up deals for more time than the issue is worth--or which even kill a contract without gaining anything for the author. He advises that removing the limited basic option clause discussed earlier in this article is one such case. While the clause requires nothing of the author beyond giving the publisher the first look at his next work (remember: with the limited clause, you are free to reject the offer and move on), the publisher will; nonetheless fight hard to retain this right, considering removal of this clause to be an outright declaration that, even while negotiating this contract, you're already planning to go elsewhere with your next book.

Richard Curtis says that fighting over the indemnity clause and competing works clause will seldom profit the author; not only are publishers extremely unlikely to budge on these issues, but the clauses will be too similar from house to house (when dealing with reputable publishers) to make moving to a new house over this particular issue feasible. He also adds that, regardless of what the bankruptcy clause says, if a publisher goes bankrupt, federal laws prevail, and your book can be tied up as an asset.

Other stipulations clearly depend on the author. For example Kidd advises that trying to negotiate cover approval and an advertising budget into the contract are unlikely to be worth your time unless you're already successful enough to have significant negotiating clout. Dystel, however, recommends at least securing cover consultation.

And while some authors have been able to convince their publishers that they're losing readers by using cheap paper and tiny type, Kidd suggests that trying to negotiate stipulations about the type of paper and type used in your book is also not worth your time.

ACKNOWLEDGMENTS:

The following people provided information for this article, either by direct response or through their writings:

Literary agents Russell Galen, Virginia Kidd, Jane Dystel, Liana Cassel (responding for Amy Berkower, who was out of town), Richard Curtis, Natasha Kern, and Mel Berger; authors Mary Jo Putney and Raymond E. Feist; and literary lawyer F. Robert Stein.

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