Tuesday, August 11, 2015

Do You Need a Collaboration Agreement?

Double the Trouble or Half the Work?

Nearly everyone has heard the oft-repeated statistic that 50% of all marriages end in divorce. But what about creative partnerships?  The odds are no better.  Pity the poor expert, celebrity, author, playwright or screenwriter who enters into a creative partnership without thinking about the financial, emotional and practical challenges ahead of them.  If the relationship falters, a well-drafted collaboration agreement (written during the romance stage of the relationship) can be consulted.   If the relationship fails, that agreement will help make it a clean break up. 

Like marriage, the key reasons most authors cite for failed collaborations are lack of commitment, lack of communication, unrealistic expectations, and of lack of respect. While trust is an important element of any relationship, without a written agreement you are ill-equipped to deal with these and other conflicts.  Contracts define rights and remedies, and thus help avoid misunderstandings.  Put another way, good contracts make good neighbors.

Tip:  If avoiding conflict is not sufficient reason for having a written collaboration agreement, take note that many publishers contractually require – as a condition of working with the author team – that joint authors have a formal written agreement between them.
The Law Presumes 50/50 Ownership

The formation (and dissolution) of a creative partnership is governed by federal copyright law and state contract law. When authors blend their independently copyrightable contributions and talents with the intent to create a unitary work, each collaborator is presumed to co-own the copyright, and share equally in the money the copyright generates - whether profits or royalties. Further, under the default rules of the U.S. Copyright Act – which can be altered by a written agreement -- each collaborator can license the nonexclusive rights to the work to a third party, provided they fairly account for the profits to the other. 
Important! In the absence of an agreement, the way copyright law deals with authorship is black and white.  If there are two authors - and there is no written agreement - each author receives 50% of the profits.  Judges do not apportion a larger or smaller share  based on the collaborators' contributions, experience, reputation or seniority.  
Decision making problems between collaborators commonly arise when there are multiple offers for the work or requests for exclusive rights and no agreement exists between the collaborators. If your collaboration is not working, and your agreement doesn't delegate the right to make business decisions to one of the partners, a recalcitrant collaborator can prevent the other collaborator from licensing or selling film or other rights in the work.  For this reason, you might consider changing the default rules of equal control and ownership, if the book is memoir, or an extension of one author's business or brand.  Relinquishing control, however, does not necessarily mean a smaller financial interest or lack of transparency.   Of course, how collaborators split proceeds and make decisions, ultimately, depends on the writing partners’ sophistication, bargaining power and sense of fairness.  

Ghost Written & "As Told To" Books 

If you can't hold it together long enough to see the work published, the impact of a literary breakup can be devastating.  One such disaster scenario is the unilateral termination of "as told to" collaborations, such as the failed collaboration between Fay Vincent, the former commissioner of baseball, and writer David Kaplan.  After 90% of Vincent’s memoir was completed, Vincent withdrew the project from his publisher, and thwarted Kaplan’s efforts to publish the book under Kaplan’s own name. See, Kaplan v. Vincent, 937 F. Supp. 307 (SDNY 1996).  If the parties had a well-written agreement – as opposed to an oral understanding -- likely, costly , time consuming and psychologically draining litigation would have been avoided. 

If you are a writer who has been approached to help write a memoir, your agreement needs to address: (i) access to pertinent documents; (ii) reasonable access to the subject; and (iii) the subject’s good faith effort to secure the writer’s access to interviews with other individuals as may be needed to prepare the proposal or complete the book. From the subject's perspective, confidentiality is a key issue.  

If you are assisting with a memoir, are you delivering a “warts and all” portrait? Alternatively, is your role to put the best face on your subject’s life story, without resorting to blatant deception? A property drafted collaboration agreement will address these issues.  The greater you detail what is to be delivered, the less arbitrary the acceptance standards will be.  Since progress payments are the norm, if the subject is unhappy, you may not see anything beyond your initial payment or advance.  

A professional writer working on an “as told to” book may want to ask for a kill fee if the subject has the unilateral right to terminate the project.  It's funny how increasing someones financial commitment to a project, will increase their personal commitment as well.   If the subject gets cold feet and pulls out (assuming both writer and subject are parties to the Publishing Agreement), stipulating in the collaboration agreement that the writer does not have to repay her portion of the advance will also help take some of the sting out of a failed collaboration.  In other types of creative divorces, it may be possible to separate out each author's contribution, and transfer those rights to the original  contributor.  These strategies overlap, and are not at the exclusion of each other.  

Negotiating Collaboration Agreements 

Writing your own rules can give one of the parties more or less control or compensation than contemplated by the Copyright Act.  Doing so, is not in and of itself, unethical. Key drafting issues include (i) money (how much and when paid), (ii) decision making authority, (iii) copyright ownership, (iv) writing credits, (v) dissolution and withdrawal, and (vi) how to handle disputes.  

Since collaboration and ghost writer agreements do not involve an equal division of work, there must be mutual respect and objectives. If you are not familiar with the intricacies of the publishing industry, or wish to insulate your creative or personal relationship from the business aspects of your literary partnership, look to your literary agent (if a disinterested party) for advice, or, preferably, engage a lawyer with an unbiased understanding of the publishing industry.  Make certain that attorney understands your goals. Is it more important to have a book that establishes you as an expert, than an additional 10% share of the royalties? Is equal credit more important than equal compensation?  Lawyers are often surprised to find out what their client’s real goals are. 

Below are the major sections found in a typical ghost writer or collaboration agreement. If you are using an off-the-shelf or generic collaboration agreement, or one provided by a helpful literary agent, consider having it reviewed by a publishing attorney to ensure what you intend, and what it says, lines up. 

Responsibilities. Be specific.  What must be delivered?  What is the date it must delivered by?  When you engage a writer to help you write a nonfiction book, the writer will prepare a book proposal before completing the manuscript.  A book proposal is a detailed overview of the book’s concept, and contains the author’s credentials and information about how the book can be marketed. The proposal is the bait used to solicit interest from publishers. The proposal is usually written with the understanding that substantive work on the actual manuscript will not begin until there is an offer from a publisher. This scenario is common with “as told to” books. 

In some circumstances, where one collaborator is far more knowledgeable in publishing matters, it may be appropriate to grant that person the exclusive right to negotiate with agents and publishers. If you are not the one shopping the proposal, you will either reserve the right of final approval of the publishing contract, or predicate approval on receiving some minimally acceptable payment.  

Compensation.  If one of the collaborators has greater immediate financial needs -- whether money is needed to pay his rent or to travel abroad to research the book -- the other party can defer all or part their compensation from the initial advance.  It is customary for larger publishers to advance a sum of future royalties to the authors when they sign a publishing agreement.  It's like a pay day loan.  Once that money that has been recouped or refunded from future proceeds,  the author who deferred can star getting paid, perhaps on more favorable terms than if he had not deferred payment.  Deferring payment is also a way for the subject of a book to obtain the services of a more experienced writer.  You can "sweeten" the deal, by offering the writer more money tomorrow in the form of a deferred bonus - assuming they are willing to bet on the success of the work.    

Delivery dates in publishing are tied to publisher advances.   A missed deadline can result in cancellation of a book contract. That, in turn, can trigger an authors obligation to repay their advance.  Any agreement between collaborators should deal with the return of the portion of the advance paid to each collaborator.   

Keep in mind, even those who do not qualify as joint authors for copyright purposes (for example, individuals who made an important – but not copyrightable -- contribution to the manuscript) may still share in the profits and control of a work through an appropriate contractual arrangement. 

Credit. By some estimates, up to seventy percent of nonfiction books are ghost written. For example, it is widely believed that Theodore Sorenson wrote John F. Kennedy's Pulitzer Prize-winning book, "Profiles in Courage,” for which JFK took both the prize and sole author credit for. Clearly, a talented writer, who knows the ins and outs of publishing, can be a great asset in helping an expert (but not expert writer) go from idea, to book proposal to finished manuscript to published author.  The size and prominence of names, as well as order of names on the cover and title page, needs to be negotiated and agreed to in writing. If there is greater brand equity (or name recognition) in one collaborator’s name, it may make sense for that person's name to appear first. Where the issue is not clear-cut, alphabetical order is another sound approach. 

Writing credits take various forms.  The most common writing credits are: "by Subject and Writer" or "Subject with Writer" or "as told to Writer." By definition, if the book is ghost written, sole authorship credit for the work will be in the subject’s name only. In that case, the writer-for-hire must make peace with the fact the subject will receive sole authorship credit. Some might argue that ghost writers should receive higher fees, because their names don’t appear on the finished book.  If the hiring party or publisher hires someone to work on the book, does that person become a co-author?  You may want to provide for that scenario when you draft your agreement.    

Copyright.  A work for hire is a work specially commissioned, or one created by a regular employee in the course of their employment. Whether your collaborator is a joint owner, or merely a writer-for-hire with no ownership interest in the book must be addressed contractually before work on the manuscript begins.  If you want to own the copyright yourself, your contract must specify that the work is a  work for hire.  If the work qualifies as a work for hire, 
Tip:  If you are the hiring party, it is especially important to clarify the nature of the writing services before you hire the person you wish to perform those services.  Later may be too late if your objective is to own all of the rights.  After-the-fact attempts to classify a work as "for hire" often fail.  
Death & Disability.  In the event of the death or disability of one of the collaborators, the agreement should set down rules for hiring a new writing partner to complete the book. The agreement might specify that the authority to enter into contracts, and make creative decisions, vests solely in the remaining or surviving author (subject to a duty to account).  If a work is likely to be revised, the agreement should include a clause that allows the remaining author to revise the work and reduce the compensation paid to the collaborator's heirs or representatives if it becomes necessary to hire an outside writer.  The agreement should also specify whether the person hired to complete the work is entitled to receive credit as an author.  When a collaborator dies, state law, or  the Copyright Act, will determine who steps into that deceased author's shoes. If an older work, the order of succession may be determined by the Copyright Act - not the deceased author's will.  For an article on the order of succession under the Copyright Act (which may trump the author's wishes as expressed in her will), read my article on copyright termination and estate planning at:  http://www.copylaw.org/2011/08/copyright-termination-is-author-right.html

Control of Business & Editorial Matters. Control of business (e.g., who is responsible for seeking out and approving book deals?) and editorial matters (e.g., who has the authority to approve the final draft of the work or authorize revisions?) critical or key issues. In cases where there are more than two authors, unanimity may be required for certain decisions (e.g., approval of the initial publishing contract). Other decisions may require a simple majority vote. Additionally, the parties may give approval rights over certain decisions (e.g., selection of a literary agent or publishing attorney) to one author, provided that person has superior knowledge and experience in such matters. Action Item! If one party retains approval rights over the manuscript, the other party should try to impose reasonable limitations, such as a chance to correct the manuscript within (e.g., 30) days after receipt of the other party’s comments. One way to avoid disputes over what constitutes a satisfactory manuscript is to reference the approved book proposal. A typical provision may look like this:
Provided Subject has made herself available to Writer as set forth in Paragraph X, Writer shall deliver a complete Proposal, satisfactory to Subject in content and form, on or before __________. Subject shall have the right to approve the Proposal. Subject shall further have the right to promptly review and comment on draft sections of the manuscript from time to time to ensure that the Work substantially conforms to the approved Proposal, and for purposes of ensuring the accuracy of those facts contained therein. Subject shall have the right to approve the final text of the Work prior to the delivery date specified in the Publishing Agreement.
Requiring the subject to provide written reasons for any dissatisfaction of the manuscript establishes objective criteria by which the writer’s contribution will be judged. 

Representations & Warranties. Special attention should be paid to the warranties and indemnity clauses of your agreement.  Warranties are promises that the work does not infringe on anyone's copyright, defame anyone, violate anyone's right of privacy, or otherwise cause harm to anyone.  An indemnity is a promise to reimburse the other party if any of your warranties are false.  Warranties should be reciprocal. If any liability arises because of a breach of either parties’ representations or warranties, the non-breaching party should be reimbursed for costs and expenses (including reasonable attorney's fees), and damages paid to others.   If you are a "for hire" writer, meaning, the copyright vests in the party that hired you, the agreement should require the hiring party to make best efforts to have the publisher name you as an "additional insured" on the publisher's media liability policy.  Even if you are added, because the deductible portion of the publisher's media perils policy can be very high, you may want to investigate supplemental deductible insurance.  If you are relying on material provided you by the person who hired you, you should exclude this material from your representations and warranties.    
TIP.  Since verifiable truth is a complete defense to libel (at least in the United States), your collaboration agreement should also require that both parties retain copies of all recorded interviews, transcripts, books, notes, letters and other research materials used in preparation of the book. If there is a lawsuit, you will need to prove the truth of the statements that appear in your book (see §9.12.1, The Copyright Permission and Libel Handbook (John Wiley & Sons).
Miscellaneous.  The agreement should also address who bears the cost and responsibility of obtaining permissions to use other people's copyrighted material; the right to create prequels and sequels; multiple agents; ownership of any trademark or service mark rights that arise as a result of publication; the return of the advance if the book is sold to a publisher, but, ultimately rejected for non-delivery or delivery of an unsatisfactory manuscript; in the event of dissolution, separation of rights in the material contributed by each author; and dispute resolution.   If the intention is to self-publish, keep in mind that you are bound by the same rules that apply to bestselling authors and large scale commercial publishing ventures.


Is it double the trouble or half the work?  You decide.  However, a collaboration agreement provides a chance for you – preferably, under the guidance of a qualified attorney – to fashion your own private body of law to govern your creative relationship. Ideally, the time to address the major issues confronting contributors and collaborators is before the actual creative process begins. Although collaborators might not feel comfortable discussing long-term financial and other issues, it is always easier and less expensive to deal with these matters up front, rather than after a dispute arises. 

© 2013 - 2015.  Lloyd J. Jassin  

Disclaimer: This article discusses general legal issues of interest and is not designed to give any specific legal advice concerning any specific circumstances. It is important that professional legal advice be obtained before acting upon any of the advice contained in this article.

About the Law Offices of Lloyd J. Jassin  At the Law Offices of Lloyd J. Jassin we provide more than legal advice. We offer a broad understanding of the industries in which our clients operate and a network of contacts within the publishing, entertainment and licensing communities. Clients gain access to all of the knowledge, counsel, and advocacy that the firm can provide.  View my complete profile

Contact:  Law Offices of Lloyd J. Jassin, The Paramount Bldg., Floor 12, 1501 Broadway, NYC, 10036, (tel.) 212-354-4442; (Email), or visit: http://www.copylaw.org. Follow us on Twitter: http://twitter.com/LloydJassin

Thursday, January 8, 2015

A Helpful Checklist for Book Contract Negotiations

"The author writes, the publisher invests, and from the sales of the book they create together and from exploitation of rights, the author earns royalties and fees, and the publisher earns its profits. It is as simple as simple - and as complicated - as that."
                                      - from Publishing Agreements: A Book of Precedents
This checklist is a navigation tool to help publishers (and authors) analyze, draft
and negotiate a publishing agreement. Whether you are just starting out, or a seasoned publishing professional, the dance steps are the same. You court (or get courted), then you sign a contract. Unlike marriage, where you vow to spend the rest of your life with one partner, when you sign a publishing contract you vow to spend the rest of your life, plus another 70  years (the current term of copyright) with one publishing partner. The possibility of being released sooner exists, but, that is the subject of another post.

A publishing contract confers upon a publisher the status of exclusive licensee. As an exclusive licensee, the publisher enjoys all the benefits of copyright ownership.  That includes the right to sublicense rights, as well assign their duties and obligations to a third party.  While not all clauses are equally important (or negotiable), a well-drafted contract will cover all, or most of the below points.  

This checklist is not intended as a crash course on drafting or negotiating a publishing agreement. If you are determined to draft (or negotiate) your own contract, lock yourself in a room for three days, then call a publishing attorney.
Publishing Contract Negotiation Checklist 

  I.   General Provisions

      1. Name/address of parties
         -Why kind of author?  Joint?  Single?  Corporate entity?
      2. Description of work (synopsis)
          -Tentative title, no. of words, illos intended audience, fiction, non-fiction,

II.   Grant of Rights and Territory

      1. Is it an assignment of "all rights" or a license agreement?
      2. Term or time period (i.e., usually the life of the copyright)
      3. Geographic scope
           a)     World
           b)     Limited (e.g., U.S., its possessions and Canada)
      4. Exclusive rights granted
           a)     Primary rights
                  -Trade paperback
                  -Mass market
          b)     Secondary (subsidiary rights)
                  -Periodical rights
                  1) First serial (i.e., pre-publication excerpts)
                  2) Second serial
                  -Book club
                  -Dramatic rights
                  -Film/TV rights
                  -Other digital versions (apps, enhanced ebooks)
                  -Radio rights
                  -Merchandising (commercial tie-in) rights
                  -New technologies
                  -Foreign translations rights
                  -British Commonwealth rights

III.   Manuscript Delivery

    1. Delivery requirements
          a) When due? Is the date realistic? Time is of the essence?
          b) What format? Specify size of paper, spacing, margins, etc.
          c) What to deliver?
                 -Number of manuscript copies, disks (what WP format?)
                 -Index (who pays?)
                 -Number of illustrations, charts, photos (who pays?)
          d) Copyright permissions and releases
                 -Scope of rights (does it parallel grant of rights?)
                 -Who pays?
      2. Manuscript Acceptance
          a) Criteria: Satisfactory in "form and content" or at "sole discretion" of the  
            publisher? (Note: Historically, this clause has been a litigation flashpoint)
          b) Termination for unsatisfactory manuscript
          c) Termination for changed market conditions
          d) How is notice of acceptance or dissatisfaction given
          e) Good faith duty to edit
          f) Return of the author advance
                 -First proceeds clause
                 -False first proceeds clause

  IV. Copyright Ownership

      1. In whose name will work be registered?
      2. Exclusivity
      3. When will work be registered? (Should be done within statutory period).
      4. Joint authors 

      5. License versus assignment
      6. Independent Contractor or Work for hire
. Reserved rights
          -Overlap between audio & multimedia on the one hand, & performance rights on the other
          -Overlap between print on the one hand,  & screenplay /  play publishing on the other

V. Author’s Representations & Warranties
      1. Author sole creator
      2. Not previously published; not in public domain
      3. Does not infringe any copyrights
      4. Does not invade right of privacy or publicity
      5. Not libelous or obscene
      6. No errors or omissions in any recipe, formula or instructions
      7. Limited only to material delivered by Author

VI. Indemnity & Insurance Provisions
      1. Author indemnifies publisher
      2. Does indemnity apply to claims and breaches?
      3. Can publisher withhold legal expenses? Is it held in an interest   
      bearing account
      4. Is author added as additional insured on publisher's insurance?
      5. Does publisher have ability to settle claims without prior approval of
      author? If so, are there a dollar amount limitation?

VII. Publication
      1. Duty to publish within [insert number] months of ?
          a) Force majeure (acts of god)
                 - Any cap on delays?
      2. Advertising and promotion
      3. Right to use author's approved name and likeness
      4. Bound galleys/review copies
      5. Style or manner of publication
          a) Title consultation or approval?
          b) Book jacket
                 - Right of consultation? Approval?
          c) Changes in manuscript
      6. Initial publication by specific imprint or publisher may sublicense

VIII. Advances & Royalties
      1. Advance against future royalties
      2. When payable? (in halves, thirds, etc.)
      3. Royalties and subsidiary rights:
          a) Primary rights
                 -Hardcover royalties
                 -Trade paperback royalties
                 -Mass market royalties
                 -eBook royalties
                 -Royalty escalation(s)
                 -Bestseller bonus
                 -Royalty reductions
                  1) deep discount and special sales
                  2) mail order sales
                  3) premium sales
                  4) small printing
                  5) slow moving inventory
                  6) bundling with other works
          b) Secondary (subsidiary) rights royalty splits
                 -Book club (sales from publisher’s inventory v. licensing rights)
                 -Serialization (first serial, second serial)
                 -Anthologies, selection rights
                 -Large print editions
                 -Trade paperback
                 -Mass market
                 -Foreign translation
                 -British Commonwealth
                 -Future technology rights
.                 -Audio rights
                 -Motion picture/TV
     4. Reasonable reserve for returns
          a) What percentage is withheld?
          b) When liquidated?
      5. What is royalty based on? (Retail price? wholesale price? net price?)
          a) At average discount of 50%, 20% of net is same as 10% of list
          b) At average discount of 40%, 16-2/3% of net is same as 10% of list
          c) At average discount of 20%, 12-1/2% of net is the same as 10% of list
       6. Recoupment of advances

IX. Accounting Statements
      1. Annual, semiannual, or quarterly statements
      2. Payment dates
      3. Cross-collateralization
      4. Audit rights
      5. Limit on time to object to statements
      6. Limit on time to bring legal action
      7. Examination on contingency basis
      8. Pass through clause for subsidiary rights income
      9. Reversion of rights for failure to account

X. Revised Editions
      1. Frequency
      2. By whom?
      3. Royalty reductions if done by third party
      4. Sale of revised edition treated as sale of new book?
      5. Reviser/Author credit

XI. Option
      1. Definition of next work
      2. When does option period start?
      3. Definiteness of terms (i.e., is option legally enforceable?)
      4. What type of option? (e.g., first look, matching, topping)

XII. Competing Works      
      1. How is competing work defined?      
      2. How long does non-compete run?
      3. Any reasonable accommodations?

XIII. Out-of-Print
      1. How defined? (Eg, __ copies sold over __ accounting periods)
      2. Notice requirements
      3. Author's right to purchase digital files, inventory

XIV. Termination
      1. What triggers reversion of rights?
          a) Failure to publisher within ___ months of manuscript acceptance
          b) Failure to account to author after due notice
          c) Failure to keep book in print (see Section X)
      2. Survival of Author's representations and warranties
      3. Licenses granted prior to termination survive

      4. First proceeds clause

XII. Miscellaneous
      1. Choice of governing law
      2. Mediation / Arbitration?
      3. Bankruptcy
      4. Modification
      5. Literary agency clause

      6. Personal guarantee if the author is a business entity, not a human being. 

Resources Beyond the Blog

Author Guild
Dramatists Guild

Independent Book Publishers Association (IBPA)
National Writers Union (NWU)
Romance Writers of America (RWA)
Science Fiction Writers of American (SFWA)
Society of Authors (UK)
Society of Children's Book Writers and Illustrators (SCBWI)
Text and Academic Authors Association (RWA)

Looking for professional advice? Contact us

DISCLAIMER: This article discusses general legal issues of interest and is not designed to give any specific legal advice pertaining to any specific circumstances.   It is important that professional legal advice be obtained before acting upon any of the information contained in this article.

The Copyright Permission and Libel Handbook: A Step-by-Step Guide for Writers, Editors, and Publishers (Wiley Books for Writers Series)LLOYD JASSIN is a New York-based publishing attorney.  He teaches a digital rights & permission at the NYU Publishing Program.  He is co-author of the Copyright Permission and Libel Handbook: A Step- by-Step Guide for Writers, Editors and Publishers (John Wiley & Sons, Inc.).   Lloyd has written extensively on negotiating contracts in the publishing and entertainment industries, and lectures frequently on contract and copyright issues affecting creators and their publisher partners.  A long-time supporter of independent presses, he is First Amendment counsel to the Independent Book Publishers Association  (IBPA) and sits on the advisory board of The Beacon Press, one of America's oldest independent presses.

He may reached at Jassin@copylaw.com or at (212) 354-4442.  His offices are located in the heart of Times Square, in The Actors' Equity Bldg., at 1501 Broadway, FL 12, NYC, 10036.  Follow the Law Firm and Lloyd on Twitter at http://www.twitter.com/lloydjassin

(c) 2013 - 2015

Friday, January 2, 2015

Outside of a Dog #4: What Are Words Worth?

Outside of a Dog is an irregular series that features publishing wisdom from a variety of classic and contemporary sources. As a lawyer, I'm fascinated by the economics and entrapments of publishing contracts and cases.

"It is better to have a permanent income than to be fascinating."
                                                           --Oscar Wilde (1854 - 1900)

How are authors paid?  Generally, badly.

Most writers write because literature is their calling, not for the money.  However, authors must eat.
To that point Samuel Johnson said, "No man but a blockhead ever wrote except for money."  So, when a contract is negotiated between an author and a publisher, the author is generally paid a nonrefundable advance against future royalty income.  That means the author won't see another dollar until the advance is earned back.  (How an advance is calculated is discussed later in this post). 

There have been many bitter remarks written about the size of those book advances and the economics of traditional book publishing.  Mid-list authors, demoralized by anemic advances, whose royalty accounts are perennially in-the-red, should take note that publishing is an equal opportunity abuser.  Calvin Trillin, Edgar Allan Poe, and even the poet Horace have groused about the meager earnings and economics endemic to the publishing industry. What follows is a sampling of those author grumblings.

Monkey Business

In the 1932 comedy Monkey Business, Groucho Marx says “Oh, I know it’s a penny here and a penny there, but look at me. I worked myself up from nothing to a state of extreme poverty.” The line, attributed to S.J. Perelman, is an apt statement about typical author earnings, which, according to the Authors' Licensing and Collecting Society has fallen by 29% since 2005.

Perelman was a thorn in the side of  his book publisher, Bennett Cerf, when it came time to negotiate his new Random House book contract. In response to Cerf's refusal to increase his book advance, Perelman, Algonquin Round Table wit and prolific author, countered: “I am afraid that a $250 advance is mandatory; after fourteen months of my life on my Sabine farm, I have practically no worms to drop into the bills of my young and the movie business isn’t helping to any degree.” Marshaling all the right arguments, he added that Cerf would be better served by sending him back to his typewriter with a “happy grin and a high heart,” than "leaving his money to an animal hospital."

Showing his talent for satire, even in the face of contract negotiations, Perelman wrapped up negotiations with the following:  “[C]all in Swaine, Cravath, deGersdoff & Wood and draw up those tortuous contracts.  I’ll have Samuel Untermyer [Perelman's attorney] go over them (I pay him fifty or sixty thou a year just to handle my book contracts) and send them on without delay.”  While a noted penny-pincher, Perelman understood the utility of having a fountain pen-for-hire to look over his contracts.

What Are Words Worth?

While there is no set formula, publishers base advances on the number of copies they project to sell in first six months to a year after a book first goes on sale. Clearly, Perelman's publisher, Random House, was not expecting much.  To calculate an advance, a publisher looks at what the royalty payout to the author is on each copy, then multiplies that by the number of copies they project to sell (less a deduction for anticipated returns).  If a publisher pays an advance of $50,000 for a first novel,  assuming a royalty of 8% of a cover price of $19.95 (think trade paperback original), or $1.59 a copy, that means the publisher will have to sell more than 31,446 copies before the advance is earned out and the author earns a dollar more than the $50,000 already paid to her.  For this reason, during negotiations it's important for an author to ask how many copies the publisher thinks it will sell, and at what price.  If you are fortunate enough to be taken to lunch before an offer is made, a good time to slip in the "How many do you think you can sell?" question is after the first glass of wine has been polished off.  In vino veritas.

Unlike Perelman, author Kurt Vonnegut had a different relationship with money and the writing process. Rebelling against the "more is better" approach to advances, he advised his son (author Mark Vonnegut) “to carry on without an advance” while working on his first book. You can read the complete letter he wrote to his son in Kurt Vonnegut: Letters, but here's an excerpt:
I have mixed feelings about advances on first books. They are hard to get, for one thing, and are usually so small that they tie you up without appreciably improving your financial situation. Also, I have seen a lot of writers stop writing or at least slow down after getting an advance. They have a feeling of completion after making a deal. That’s bad news creatively. If you are within a few months of having a finished, edited manuscript, I advise you to carry on without an advance, without that false feeling of completion, without that bit of good news to announce to a lot of people before the job is really done.
Thackery wrote "the rewards of the profession are not to be measured by the money standard." Not surprisingly, in the present age, the size of an advance is a prediction of how well the book will do.  It's the bet the publisher is placing on the book.  If a book goes unread, I'm not certain where the rewards lie. 

Trillin's Extravagant Lunch Principle

Many books have been written about contract negotiations. Attorney Mark Levine offers his industry specific insights in his excellent book Negotiating a Book Contract.  If you intend to publish more than one book with a publisher, you must read the section on cross collateralization.  This is a bet -hedging clause drafted by contract grinches that pools royalties to pay off book advances that have not earned back, from books that have. Contracts with cross collateralization clauses deservedly get bad reviews from author advocates.  Author, Calvin Trillin's brand of contract advice is colored by a an insider's cynicism fed by extravagant author lunches and familiarity with the entire publishing scene - not a law degree. His singular advice is “the advance for a book should be at least as much as the cost of the lunch at which it was discussed.”  My advice is to lock yourself in a room for three days after being lunched, or presented with a contract, then call a publishing attorney.  

A corollary to Trillins’ formula governing advances: The cost of clearing permissions should never exceed the size of the advance.  The takeaway being, think carefully about the book you want to write as the cost of  permissions can bankrupt you.  

When I was much younger, working for St. Martin’s Press, I witnessed an interesting variation on Trillin’s Extravagant Lunch Principle.  Jimmy Ernst, son of surrealist painter Max Ernst, died on the first day of his book tour.  I was the publicist.  That he died before seeing the glowing reviews his memoir, A Not So Still Lifereceived is beyond  tragic.  With Jimmy gone we had to come up with a plan to promote an authorless autobiography.  I will never forget the three hour lunch at The Russian Team room where my boss, Jimmy's agent, and I planned a modest publication party to support the now orphan work.  After lunch, I returned to the Flatiron Building to attend the weekly marketing meeting.  At the meeting, I made my pitch for the publication party, only to have my request for $400 to fund the party shot down.  Distressing.  But, weirdly, the entertainment expense voucher my boss submitted for the $400 lunch at The Russian Tea Room (where the party was discussed) was approved.  

You Can't Make a Living, But you Can Make a Killing in [Publishing]*

Victor Bohnam Carter in his book Authors by Profession tells that John Milton, in the midst of a financial crisis, signed a hellish publishing contract for his epic poem, Paradise Lost.  “The agreement was dated April 27, 1667, and provided that Milton receive £5 for the first edition or impression of 1300 copies,  £5 for the second, and the same for the third.”  During his lifetime, Milton received a total of £10 from his publisher Samuel Symons.  Milton’s widow later sold the copyright to Symons for £8.   Edgar Allan Poe died virtually penniless, having risen above the poverty line only once during a fourteen year period between 1835 and 1849.  Similarly, Walt Whitman lived his whole life in poverty.  

Things were no better for authors in ancient Rome.  How do we know?  The poet Horace (who coined the phrase “carpe diem”), grumbled loudly that his works brought the Sosii brothers (his publishers) gold, but, him, only fame.  Hic meret aera liber Sosiis, hic et mare transit, Et longum noto scriptori prorogat alvum. — (Art. Poet., 345)

While the size of that advance is not always an accurate predictor of a book's success, an author who receives a small advance invariably receives less promotion and publicity than one who receives what PublishersMarketplace, The Daily Variety of the publishing industry, calls good deal ($50,000 - $99,000), or a significant deal ($100,000 - $250,000).  nice deal, as defined by
 PublishersMarketplace, ranges from $0 - $49,000. 

But, it's not all doom and gloom for the recipients of a nice deal. Tom Clancy's The Hunt for Red October ($5000), published by The Naval Institute Press, went on to sell millions of copies. Terry Pratchett, Stephen King, Jacqueline Susann, and JK Rowling all received small advances for their first books, which goes to show that publishing is a perplexing business where small bets can pay off big, and big ones can come back to haunt you.

Michael Joseph in his autobiography, The Adventure of a Publishing wrote:

"I do not believe that the terms of a contract are often the reason for an author’s dissatisfaction, as may be supposed.  There are barrack room lawyers among authors, but they are very few.  For the most part authors are content with the terms they receive.  If they have an agent, the publisher cannot be held responsible; if they have not, they usually have little understanding of royalty scales and advances and are grateful for what they receive." Joseph went on to say that "nowadays there can be few publishers foolish enough to underpay their authors.”  Joseph was living in a pre-Kindle world, before the uprising of self-published authors opting for 70% of the list price from Amazon, versus 25% of net eBook sales traditional publishers are willing pay. 

My other problem with Joseph's remark is that the publishing community has always lamented that authors are easily seduced by offers from competing publishers. “I never saw an author in my life,” wrote Oliver Wendell Holmes, “saving perhaps one, that did not purr audibly as a full grown domestic cat on his fur smoothed the right way by a skilled hand.” In truth, while it may appear more verdant, the grass is not always greener at the publishing house across the street. 


In a 1956 letter to travel writer Leila Hadley, S.J. Perelman shared his philosophy about the business of publishing: “[T]he only rule of thumb I know is, get the biggest advance you can (which in turn forces them to try to recoup their investment) and be as demanding on advertising, publicity, etc. as is consonant with your decency.”  Categorizing the common practice of only advertising a book after it begins to sell as “Alice-in-Wonderland” thinking, he urged Ms. Hadley to “be on the ground and participate in all the Martha Dean, Tex and Jinx, and TV panels merde you can evolve.”  Not bad advice.  

*apologies to Robert Anderson who once said: "You can make a killing on Broadway, but you can’t make a living."

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