How a Non-Assignment Clause Can Destroy a Publishing Company's Valuation

When the owner of an independent publishing company wishes to sell their company they will

need to establish the value of the business they have built.  The yardstick that will be used is based on cash flow and, ultimately determined by the soundness of its author agreements.  Many start-ups are poorly financed, and in the beginning, the owners have neither the time nor the legal acumen to focus on their most important asset, their boilerplate author agreement.   At the outset of a publisher's career, this error can frustrate their ability to sell the company in later years.    

Problems often arise when publishers borrow agreements found online.  Lacking the necessary legal acumen, a start-up publisher may delete essential provisions that they do not fully understand.  For example, the assignment clause. 

 

Don't Let a Non-Assignment Clause Sink Your Ship

Experience is a hard school. To illustrate, Owen, a successful independent publisher with a backlist of 75 books, decides to sell his company. In his mid-50s, with no children to take over the business, his exit strategy is to bankroll the sale of his growing company into early retirement. As part of the due diligence process, he compiles all of the company’s author agreements, foreign translation licenses, and other important documents for a potential buyer to review. To his dismay, his attorney and broker call to say the deal had fallen through because the publishing agreement he filched off the Internet when money was tight contains a non-assignment clause.  The insidious clause reads, “Neither this agreement nor any right or obligation hereunder may be assigned or delegated, in whole or part, by either party without the prior express written consent of the other.”

What could have been a quick and very profitable business transaction requires the consent of all of Owen's authors, and in one instance, all of a deceased author's uncompromising heirs. And, the author of the crown jewel of Owen's backlist (which accounts for 50% of his gross annual revenue) will exploit the pending sale to renegotiate her contract -- a contract she desperately wants to get out of. 

While there are publishing programs at many universities and organizations such as the IBPA, you can only learn publishing by doing.  Since you are dealing with copyrights - intangible assets -- you must, at least, have an excellent foundation author-publisher agreement.   Then, through persistence and luck, you are in a position to make the most of the opportunities ahead.    

If you intend to sell your publishing company tomorrow, or 20-years from now, you need to pay attention to your author-publisher contract today. As Owen discovered, a well-drafted publishing agreement is a publisher’s most valuable asset.

Taking the boilerplate provisions for granted can also have severe consequences for authors.

Before signing a contract, it is important to understand what the contract says (not what the publisher says it says). In his autobiography, Twain lamented on his lack of legal acumen in negotiating a publishing contract with an onerous non-compete clause:

“I made my contract for The Innocents Abroad with American Publishing Company. Then after two or three months . . . it occurred to me that perhaps I was violating the contract, there being a clause forbidding me to publish books with any other firm during the term of a year or so. Of course that clause could not cover a book which had been published before the contract was made; anybody else would have known that. But I didn't know it, for I was not in the habit of knowing anything that was valuable and I was not in the habit of asking others for information.. It was my ignorant opinion that I was honor bound to suppress The Jumping Frog book and take it permanently out of print. [My publisher] as willing to accommodate me on these terms: that I should surrender to him, free of royalty, all bound and unbound copies which might be in New Company’s hands; also that I hand him eight hundred dollars cash; also that he supervise the breaking up the plates of the book…. One may perceive by these details that [my publisher] had some talent as a trader.” - Mark Twain

Had Twain been wiser, he would have hired a publishing attorney to help him navigate the competitive books clause in his contract.

Most publishing contracts today still contain Twain-like non-competition clauses that can prevent an author from publishing other books during the contract term. While no non-fiction publisher will strike its non-compete clause, if asked politely, most will offer the author a more palatable version of the clause than the one initially presented. In the case of fiction, the non-compete clause should be deleted. The literary result being the fiction publisher has to rely on the next book or option clause to protect its legitimate interests.

Nothing is demeaning or unseemly about asking a publisher to modify specific contract terms. For example, if a book is tied to an existing brand or business, most publishers will tweak their boilerplate out of respect for the author's branding (or trademark) concerns. Book contracts typically give the publisher (not the author) the right to determine the work's title. If the book is an extension or outgrowth of the author’s existing business (e.g., Chicken Soup for the Soul®), asking for approval and ownership of the title – which also functions as a trademark – becomes a critical issue. But don't assume a publisher will change anything -- despite their assurances -- once the ink on your signature is dry. That's not how the Game of Authors is played. As negotiations are winding down, make sure you straighten out misunderstandings and memorialize what has been agreed to. Once a contract has been signed, the parties are under no obligation to vary the terms.

Why formal agreements are necessary.

The key to a good contract is clarity and understanding the business (not just legal) issues endemic to the publishing industry. Ambiguity and inconsistency are the two critical ingredients in litigation soup.

For authors, it is helpful to keep in mind that most contracts are not take-it-or-leave-it propositions. Be courteous. Be tactful. Knowing what to ask for is critical. Use an agent or attorney who understands the parameters of the typical publishing deal to negotiate your contract. Also, working through an agent or attorney allows an author to preserve her creative relationship with the editor or publishing house while her representative hammers out the business issues.

For publishers, an overly author-friendly contract can be problematic when it comes to selling their company. Perhaps, Michael Joseph, a UK publisher, said it best, “No publisher can afford to fall in love with literature.”

Keep in mind that the duration of most publishing contracts today are for the life of the copyright. If the book is financially successful, the publisher and the author (or author’s heirs) will be bound together for a very long time. The above examples should clarify that getting stuck with a bad contract is a long-term, perhaps, intractable problem. 

Related Blog Posts

 

Libel in Fiction

Fair Use in a Nutshell 

Book Contract Negotiation Checklist 

Twelve Copyright Permission Myths 

Estate Planning for Authors 

 
Beyond the Blog (Resources)

Author Guild

Dramatists Guild

National Writers Union (NWU)

Romance Writers of America (RWA)

Science Fiction Writers of America (SFWA)

Society of Authors (UK)

Society of Children's Book Writers and Illustrators (SCBWI)

Text and Academic Authors Association (RWA)

Independent Book Publishers Association (IBPA)

Negotiating a Book Contract by Mark Levine

What Every Author and Publisher Should Know About Media Liablity Insurance

By Lloyd J. Jassin & Steven C. Schechter

Publishing can be a risky business. 

 

Copyright infringement, defamation and invasion of privacy are just three of the media perils that authors, writers, bloggers, and publishers are exposed to. 

In addition to becoming familiar with fair use (a defense to copyright infringement), and clearing rights to preexisting materials when permission is required, you can reduce personal and business risks with author and publisher liability insurance.

 

Unlike comprehensive general liability policies, media liability policies cover claims of copyright and trademark infringement, invasion of privacy, defamation and other contextual errors and omissions. Some policies even cover claims of misappropriation of ideas, as well as a number of other media perils. Most of these policies also cover the costs of defending a lawsuit, including attorney's fees and court costs.

What Should I Look for in a Media Perils Policy?

Insurance policies vary widely. It is important to emphasize your comprehensive general liability policy almost never protects you against the types of claims discussed in this article. However, if you are sued, or threatened with a lawsuit, your attorney should consult your policy to ascertain the scope of protection - if any - offered.  Keep in mind as well, that if your publisher is sued, the indemnity clause in your publishing agreement will make you responsible for legal defense costs, as well as for any settlement or damage award. 

In the following section we discuss what questions you need to ask when shopping for a media perils insurance policy.

1. Does the Policy Cover Attorneys' Fees?

Determine if the policy provides coverage for legal fees and defense costs, as well as payment of damages. Some policies have defense costs within the limit of liability, while others offer defense costs in addition to the limit of liability. Defense costs outside the limits of the policy provide broader coverage.  Other policies require you to obtain approval before incurring any attorneys' fee or expenses. It's also important to determine whether the policy requires the insurance company to defend a lawsuit against you.  If it does, you can save a tremendous amount of money in legal fees.  A secondary concern is whether the policy will allow you to choose your own defense counsel. 

2. Does the Policy Cover Punitive Damages?

Another key point to investigate is whether the insurance policy covers punitive or exemplary damage awards. Some states, such as New York, do not permit insurance companies to insure you against punitive damages. Because an award of punitive damages may be substantial (sometimes even more than actual damages and attorneys' fees), where permissible, you should make sure that your insurance policy will cover any punitive or exemplary damage award. 

3. Does the Policy Require a Lawyer's Opinion?

Many insurers will not issue a media risks policy unless the publisher, or author, provides an opinion letter from a publishing attorney analyzing the risks of a lawsuit. While the cost of hiring a publishing lawyer to vet your manuscript can be significant, it is another form of insurance in and of itself.  However, it is a cost that should also be taken into account when comparing policies and their rates.

While more common when insuring a film production, some policies will not insure the title of a work unless they receive a lawyer's title report.  While titles are not protected by copyright law, some may fall under the rubric of trademark law, especially titles that evoke an established brand, thus, creating a likelihood of confusion as to source or association with that brand.  Therefore, the cost of obtaining a title report should should be taken into consideration when shopping for coverage.  

4. What Types of Claims Are Covered?

It is important to speak with an insurance broker familiar with this type of coverage to find out exactly which types of claims are covered and which are not. For example, some policies cover claims of intentional infliction of emotional distress or misappropriation of ideas, while others do not. Other insurance policies offer optional coverage, for an additional fee, for claims for bodily injury or property damage resulting from negligent advice or instructions.

All writers and publishers should obtain a policy that covers, at a minimum, claims of libel (written defamation) slander (spoken defamation), invasion of privacy, violation of the right of publicity, copyright infringement, trademark infringement and unfair competition. Obviously, the more types of claims covered, the better the policy. Many insurance policies exclude certain claims, such as those alleging intentional or malicious acts, from coverage. It is important to find out what types of claims are excluded, as you will bear the cost of defending excluded claims yourself.

5. Which Versions of the Work Are Covered?

You should investigate whether the insurance policy will cover more than one version of your work. If your work will be published in hardcover, paperback, traditional eBook and multimedia form, make sure the insurance policy covers all of those versions.  Additionally, find out whether the policy covers condensed versions, serializations, audiobook and other versions of your work. Similarly, you should find out if coverage extends to book jackets, flap copy, press releases, advertising and promotional materials (including catalog copy and companion blog),  interviews and personal appearances.

6. Where Is the Policy Effective?

It may seem like a simple question, but many policyholders fail to ask whether their policy covers claims outside the United States. Most insurance policies cover claims only brought in the US. If your work is going to be distributed outside of the United States, you'd better make sure that your insurance policy will cover claims and lawsuits brought in any country where your work is sold, or translated.

7. Is the Policy a "Claims Made" or "Occurrence" Policy?

There are two types of insurance policies: "claims made" policies and "occurrence" policies.  An occurrence policy offers broader coverage.  A "claims made" policy covers claims made during the policy period, whether or not the actual activity which gives rise to the claim occurred before the policy came into effect. An "occurrence" policy covers material published during the policy period.  If your policy is a "claims made" policy, and a lawsuit or claim is brought the day after your policy expires, the insurance policy will not cover the claim even though the acts giving rise to the claim occurred while your policy was in effect. Alternatively, with an occurrence policy, it doesn't matter when the claim is made. As a rule, you should avoid "claims made" policies.

8. Settlement

As an author or publisher your freedom of speech or press rights are protected under the First Amendment of the United States Constitution, as well under most state constitutions.   Therefore, it's important to ask the broker if the policy gives you input into the selection of a qualified First Amendment or media defense counsel. 

Insurance Policy Prices

The premiums for media insurance policies vary depending a number of factors, including the amount or limit of protection you elect.  The premiums generally take into consideration several additional factors, including:

Whether you consulted a qualified publishing attorney. Most insurers allow rate card credits to authors and publishers who have their manuscripts reviewed by an experienced publishing attorney.

The type of book. For example, the premium for a science-fiction novel will be less than that for an investigative report, unauthorized biography, or roman a clef, which might result in a lawsuit for defamation or invasion of privacy.

Whether releases and permission forms have been secured, and if their scope cover all the uses, versions and editions of the work during the term and throughout the territory in which the work will be exploited.      

Whether you've cleared the title of the book.

Whether any claims have been threatened.

The amount of coverage sought and the deductible. As coverage goes up, so do the premiums, but as deductibles go up, premiums go down.

The writer's experience and reputation.

If you are a publisher, the adequacy of the author or other contributor's contractual representations and warranties as to originality of content and factual accuracy of information.  

The use of appropriate disclaimers.

          The revenues you expect to derive from the sale of your work.  

If you are an author, you can ask your publisher to name you as an additional insured under their media perils policy, if they carry one.  However, don't be lulled into a false sense of security, as these policies often have very high deductibles, which are used to lower the publisher's insurance costs. 

If there is already a claim made against a book, an insurance company may refuse to insure you, or exclude the preexisting claim.   For this reason, think twice about publishing all or part of the book online, or in a magazine or newspaper before the official book is published.

INSURANCE CHECKLIST

While not an exhaustive list, here is a checklist of points to raise with the broker when shopping for a media perils policy:

          What types of claims are covered?  

     

          What is the period of coverage? 

What is the deductible and the limits of coverage for each claim? 

Are legal fees and defense costs covered separately or in addition to the maximum policy coverage? 

What are the conditions for coverage, i.e., is prepublication review and an opinion letter by an attorney required? 

Who is covered (publisher, author, or both)? 

Is there an additional charge or fee for naming an author as an "additional insured" party? 

Are lawsuits outside the United States covered? 

Is the policy a "claims made" policy or an "occurrence" policy? 

Does it cover translations or other editions of the work (e.g., mass market paperback, trade paperback,  eBook versions, etc.)? 

Are punitive damages covered? 

Do you have the right to have your own attorney represent you or does the insurance company require their attorney? 

Can the insurance company settle a case without your approval or do you have the right to approve settlements?

Resources

Organizations such as the Authors Guild and National Federation of Press Women, offer its writer members affordable media perils insurance policies. If you are a small independent publisher, contact the Independent Book Publishers Association (IBPA). 

 

Related Blog Posts

 

Libel in Fiction

Fair Use in a Nutshell 

Book Contract Negotiation Checklist 

Twelve Copyright Permission Myths 

Estate Planning for Authors

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.

LLOYD J. JASSIN is a New York-based publishing attorney and entertainment lawyer in private practice. He is co-author of the bestselling Copyright Permission & Libel Handbook (John Wiley & Sons). Contact: Law Offices of Lloyd J. Jassin, The Paramount Bldg, FL 12, 1501 Broadway, New York, NY 10036, Tel: (212) 354-4442, email: jassin@copylaw.com. Follow him on Tweeter:  https://twitter.com/lloydjassin

STEVEN C. SCHECHTER is a media and entertainment law attorney based in Paramus, NJ, and co-author of The Copyright Permission & Libel Handbook (John Wiley & Sons). Contact: Law Offices of Steven C. Schechter, 36 Farview Ter, Paramus, NJ 07652, Tel: (201) 880-9818, email: schechter@medialawyer.tv

Music & Publishing Industries Suffer Setback in Digital Download Case

 

Copyright Alert: 9th Circuit Holds Digital Downloads are Licenses Not Sales

FBT Productions LLC v. Aftermath Records (9^th Circ. 2010)



What should musicians and authors be paid for digital downloads?  In a decision with implications for the publishing industry the Ninth Circuit Court of Appeals recently ruled that rapper Eminem’s production company was entitled to 50% of his record label’s revenue from digital sales. 

The issue in F.B.T. Productions v. Aftermath Records was whether a digital download was a “sale” or a “license.” Like the music industry, publishers have taken the position that digital downloads should be accounted for as sales not licenses.  Typically, the royalty rate paid for subsidiary rights revenue is split 50/50 between the author and publisher, compared to 25% of net paid to authors for the “sale” of an eBook. 



Distinguishing Sales and Licenses

 

In its September 3, 2010 ruling, the court held that digital downloads should not be treated as auditable physical units for royalty accounting purposes.   The ruling is important for the recording industry, because recording artists (like book authors) receive 50% of the record company’s net receipts from rights licensed to third parties -- as opposed to 12% to 20% of the retail price. 

The divisibility of copyrights was the theory relied upon by the court in determining that a digital download from the iTunes store was not a sale but a license. 

The Ninth Circuit held:

When the facts of this case are viewed through the lens of federal copyright law, it is all the more clear that Afterrmath’s agreements with the third-party download vendors are “license” to use the Eminem master recordings for specific purposes authorized thereby — i.e., to create and distribute permanent downloads . . . — in exchange for periodic payments based on the volume of downloads, without any transfer in title of Aftermath’s copyrights to the recordings. Thus, federal copyright law supports and reinforces our conclusion that Aftermath’s agreements permitting third parties to use its sound recordings to produce and sell permanent downloads . . . are licenses.

To the extent publishers transfer the right to make digital copies available to a digital download distributor, who then sells direct to consumers, it would, under the holding of this decision, constitute a license.  Digital download distributors do not, to quote the decision, “obtain title to digital files.”  The legal principle is quite simple.  Copyrights are divisible.  They can be assigned for less than their complete term, for a particular territory, and for a particular use -- rather than all rights under copyright.  If iTunes or Amazon or Sony or Kobo purchases an eBook from a publisher and resells it to a consumer, in the Ninth Circuit, it would considered a sale.  On the other hand, if the publisher retains ownership of the files, and receives periodic statements iTunes, et al, the rule of the case, applied mechanically, would categorize revenue from the "sale" of a digital download as subsidiary rights income.  


Many contract templates have already been modified by publishers in anticipation of a decision such as this one.  As such, they are likely immune to the decision's economic impact.  With regard to legacy or backlist contracts, labels and publishers will try to mitigate the impact of this decision by seeking retroactive contract amendments, and, perhaps, waivers of claims for back royalties.

The court regarded the record label’s ability to regain possession of the digital files at any time as a key element in supporting it’s finding that the label did not “sell” anything.

There is no dispute that Aftermath was at all relevant times the owner of the copyrights to the Eminem recordings at issue in this case, having obtained those rights through the recording contracts in exchange for specified royalty payments. Pursuant to its agreements with Apple and other third parties, however, Aftermath did not “sell” anything to the download distributors. The download distributors did not obtain title to the digital files. The ownership of those files remained with Aftermath, Aftermath reserved the right to regain possession of the files at any time, and Aftermath obtained recurring benefits in the form of payments based on the volume of downloads . . . Under our case law interpreting and applying the Copyright Act, too, it is well settled that where a copyright owner transfers a copy of copyrighted material, retains title, limits the uses to which the material may be put, and is compensated periodically based on the transferee’s exploitation of the material, the transaction is a license.

Importantly, if FBT were applied to books, you would find the word “license” multiple time, in, for example, Amazon’s Digital Distribution and Sony’s eBook agreements with publishers. 

Opportunities for Authors & Strategies for Publishers

 There is no way to predict whether the Second Circuit would follow the same line of reasoning as the Ninth Circuit.  Historically, the Second Circuit and Ninth often come to different conclusions via-a-vis new media issues.  No doubt, the commentators will have a day of it.  The decision will be opposed by the music and publishing industries.  Public statements will be made stating that the decision should be limited to the facts of this particular case.  And, while Eminem’s label may threaten to take the case to the Supreme Court, it will likely not act on that threat, as a final adverse judgment (assuming the Supreme Court would hear the case) would be devastating to that beleaguered industry.   

"The Penguincubator"
Dowload or Book Sale?
Penguin's Early B2C Experiment

Like the recent Random House–Wylie dust up, and the Rosetta Books decision, matters such as this are usually settled on confidential terms.  As the  FBT decision is not limited to records, agents and publishers should turn to their lawyers to help them determine what is the best current business practice in view of this important decision.  Consequences?  Agents will be emboldened to demand higher royalties from digital downloads, raising the familiar argument, "There's little direct cost today in getting eBooks into readers' hands.  Give me more!"   The future?  eBook rates for backlist titles (but maybe not for frontlist titles) will rise above 25%, and some wise publisher in the next six months will issue a press release stating that “In the light of dramatic changes that have taken place in the book publishing industry over the past several years, it is only fitting that the authors who comprise our backlist – and their heirs – be paid in accordance with today’s standards.”  

As the Rosetta Books decision illustrated, additional rights beyond primary rights, when sought by a publisher, are subject to separate negotiations and consideration.  If not resolved by a separate agreement, or amendment to the contract, such matters can wind up in court.   Whether this decision helps establish new ground rules for artist and author compensation remains to be seen.  I bet it does. 



How will this affect book publishing?  Will it accelerate the pace of the industry’s transition from a B2B to a B2C model?  Will conglomerates unload (trade) publishing houses?  Will Google start acquiring houses like the TV networks once went after studios?  A Penguincubator on every corner?  Stay tuned. It's not the end of publishing, just another chapter. 



Related Blog Posts

 

Libel in Fiction

Fair Use in a Nutshell 

Book Contract Negotiation Checklist 

Twelve Copyright Permission Myths 

Estate Planning for Authors 

THE INFORMATION CONTAINED IN THIS ARTICLE IS OF A GENERAL NATURE.  IT IS NOT INTENDED AS LEGAL ADVICE.  READERS ARE STRONGLY ADVISED TO CONSULT WITH AN ATTORNEY BEFORE RELYING ON ANY INFORMATION CONTAINED HEREIN.  THIS POST DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP OR ANY OTHER EXPECTATION OF REPRESENTATION

Can I Use a Title that Someone Else Has Already Used?

As an author or publisher, you know the power of a well-chosen title in attracting readers and establishing your brand. However, amidst the excitement of finding the perfect title, it is crucial to tread carefully and consider the legal implications. If your chosen title is likely to cause confusion with an existing brand or trademark for related goods or services, you could find yourself in a serious predicament. In the unfortunate event that your book is found to be infringing someone's trademark rights, you may face two possible outcomes. Firstly, the aggrieved party can initiate a straightforward online takedown request with online retailers, resulting in your book being removed from their platforms. Secondly, and more significantly, you may have to respond to a lawsuit. For these reasons, it's important to integrate a title search into your process to protect your reputation as an author or publisher.

Trademark Law in a Nutshell

Trademark law serves as a means of consumer protection, focusing on preventing buyer confusion. The key element in any trademark claim is the "likelihood of confusion," a term that can be challenging to define. It serves as the test for determining trademark infringement. It's important to note that even if a trademark hasn't been registered, if you misrepresent the source or approval of your book, it is still a violation of unfair competition and trademark law.

Can I Use a Title that Someone Else Has Already Used?  

The test for trademark infringement is the probability consumers will be deceived about the source of your book when they see it. It’s a factor analysis. Similarities in sight, sound, and meaning, and the relatedness of the goods are the key vectors in the trademark infringement analysis. Add to the mix the strength of the mark (discussed later), the cost of the goods, and several other factors, and you have the secret sauce of infringement analysis. In addition to luring potential purchasers away from a competitor’s product by using a confusingly similar mark, Congress prohibits using a recognizable logo, design, name, or likeness to falsely suggest a connection or commercial endorsement - even in the absence of direct competition.

Unlike series titles (discussed later), a title of a single creative work cannot be registered as a trademark unless it has attained secondary meaning, which is a function of significant sales, advertising and promotion.  Generic titles (100 Best Science Fiction Movies) standing alone are not entitled to trademark protection either.

Sample Interview Releases

 Disclaimer

These forms are provided as is. Use of these forms do not create an attorney-client relationship. It is your responsibility to ensure the accuracy of these forms. Before using these forms confer with your own legal advisor.

Form A

Dear_,

You have informed me that you are the author of a book tentatively entitled ________ (the “Book”) to be published [by Publisher or about subject matter of book].

You have interviewed me for the Book, and I hereby consent to your use of my name, photographs, comments as quoted or derived from the interview(s), and any materials I provided to you, in the publication, advertising, or promotion of the Book, and any editions or revisions thereof, in any languages, throughout the world.

I hereby consent to your use of my name, likeness, and biography and the right to fictionalize same, and to portray, impersonate, or simulate me in any way whatsoever, and to make use of any incidents or episodes in my life, factually, fictionally, or in any combination thereof, in preparation, production, performance, broadcast, exhibition, and exploitation of one or more motion pictures or television programs, or both, including episodes of any television series (herein collectively referred to as the “program”), including, but not limited to, merchandising, publication, and other allied rights therein. You shall have the right to use the proceeds of any interviews in and in connection with the Book, and all services rendered by me hereunder (including my interviews and conversations) are rendered as a “work for hire” for copyright purposes.

I understand that the Book and/or portions thereof may be published in newspapers, magazines, and other printed media and may be released or distributed in other recorded media, such as television, motion pictures, computer disk, videodisc, and by other electronic means. I hereby consent to all such derivative uses, including the exhibition and publication in any and all media, now known or hereafter discovered throughout the world in perpetuity. Rights granted herein may be assigned to other individuals or entities.

I waive any right to inspect the Book or program(s). I further waive any claim in connection with the aforementioned use or uses, including, but not limited to, claims relating to defamation, rights of privacy or publicity, confidentiality, copyright, or otherwise.

I represent and warrant that I have full right, power, and authority to execute this Agreement, and I am over twenty-one years of age.

Very truly yours,

[Interviewee’s signature]

[Interviewee’s name]

[Address]

[Email Address]

How to Negotiate a Publishing Contract: A Checklist of Terms

Standardized book publishing contracts wield considerable power in contract negotiations.  However, publishing contracts are not etched in stone. Book publishers, understanding the ebb and flow of the literary world, often adapt their contracts when asked. The crux of success in this process lies in discerning exactly what changes to ask for. 

When it comes to deciphering the complexities of a publishing agreement, authors often navigate these waters with different compasses. Some entrust their journey to literary agents, who, for a 15% commission, become lifelong partners in the transition from aspiring writer to published author. Others opt for the counsel of publishing attorneys, offering their services for a flat rate or hourly fee to guide them through the dense forest of legal terminology and publishing industry lingo.

However, once the initial excitement of securing a publishing deal wanes, a stark realization may emerge with startling clarity: signing the contract might have meant relinquishing your rights for an extraordinarily long period. In most cases, the publisher's exclusive control over a work spans the author's lifetime and extends a further 70 years beyond.

Caution is key. Publishing contracts are often laden with hidden traps and legal intricacies, particularly regarding royalties. It's a deceptive maze where the written word and its true meaning can diverge significantly. While major publishers don't typically set out to exploit authors, they are inclined to optimize their benefits, sometimes at the author's expense. As for smaller publishers, they range from benevolent guides to cunning adversaries.     

If chomping at the bit to sign a contract but cannot afford to hire a lawyer, visit Victoria Strauss' Writer Beware blog - a beacon of light in the "shadow-world of literary scams, schemes, and pitfalls." Writer Beware doesn't offer legal advice, but it does a stellar job exposing and raising awareness of questionable business practices in the literary world.   

Book Publishing Checklist

  I.   The Basics

      1.  Sign personally or on behalf of a corporation or LLC?

           -Why signing on behalf of a corporation or LLC may not offer as 

           much protection as you think

      2. Description of work (synopsis)

          -Tentative title, # of words, # of photos, intended audience, fiction, non-                    fiction

II.   Grant of Rights and Territory

      1. Is it a license of certain rights or an assignment of all rights? 
      2. Term of years or life of copyright? 
      3. Geographic scope
           a)     World?
           b)     Limited?  (e.g., the U.S., its possessions & Canada)
      4. Exclusive rights granted
           a)     Primary rights
                  -Hardcover
                  -Trade paperback

                  -Mass market
                  -eBook

          b)     Secondary (subsidiary rights)
                  -Periodical rights
                  1) First serial (right to publish pre-publication excerpts)
                  2) Second serial (right to publish excerpts after publication date)
                  -Book club
                  -Dramatic rights
                  -Film/TV rights
                  -Video Recordings / Audio Recordings

                  -Ebook rights

                  -Other digital versions (apps, enhanced eBooks)
                  -Podcast / Radio rights
                  -Merchandising (commercial tie-in) rights
                  -Future technologies
                  -Foreign translation rights
                  -British Commonwealth rights

        c)    Rights Reserved by Author - Film, Television, Dramatic, Merch         

        d)    Ask for audiobooks or foreign translation rights to revert if they go

                unexploited after a period of time

III.   Manuscript Delivery

    1. Delivery requirements:

          a) When due? Is the date realistic?
          b) What format? Specify the size of the paper, spacing, margins, etc.
          c) What to deliver?
               -Index (who pays?)
               -Number of illustrations, charts, photos (who pays?)
          d) Permissions

                The copyright permissions you receive from third parties 

                 must encompass the same rights you have granted to your publisher.

    
      2. Manuscript Acceptance
          a) Criteria: Satisfactory in "form and content" or at "sole discretion" of the  

            publisher? (This clause is often a litigation flashpoint)
          b) Termination for unsatisfactory manuscript (define "unsatisfactory")
          c) Termination for changed market conditions (potential deal breaker)
          d) When must the publisher either accept or reject? 

          e) Good faith duty to edit
          f) Return of the author's advance
                 -First proceeds clause
                 -False first proceeds clause

 

  IV. Copyright Ownership / Ownership of Series Titles

      1.  Whose duty is it to register the work with the U.S. Copyright Office?
      2.  Joint author?

      3. Work for hire? 

      4.  Rights typically reserved to the author

            -Film, television, dramatic rights, multimedia, merchandise licensing

      5.  Who owns the trademark to your series title? 

V. Author’s Representations & Warranties
      1. The author is the sole creator
      2. Not previously published; not in public domain
      3. Does not infringe any copyrights
      4. Does not invade the dual rights 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 the Author

VI. Indemnity & Insurance Provisions
      1. Typically, the author agrees to reimburse the publisher for losses & expenses
      2. Way to limit author exposure, e.g., author approval of settlements
      3. Can the publisher withhold legal expenses? Is money held in an interest-  

      bearing account
      4. Name the author as additional insured on the publisher's media perils policy 

      5.  Other drafting tips

VII. Publication
      1. Duty to publish within ___ months of delivery & acceptance
          -Failure to publish triggers the author's right to terminate the agreement

      2. Specify which formats the book will in initially be published in
      3. Author's approval over the use of name and likeness
      4. Bound galleys / Library Reviews 

      5. Review copies
      6. Style or manner of publication
          a) Title consultation or approval?
          b) Book jacket approval (needed if the book is a brand extension of a                             service or business)  

        c) No changes to the manuscript galley proofs approved by the author
       

VIII. Advances & Royalties
      1. Advance against accumulated 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 split                                           -                                -Serialization (first serial, second serial)
                 -Anthologies, selection rights
                 -Large print editions
                 -Hardcover
                 -Trade paperback
                 -Mass market
                 -Foreign translation
                 -British Commonwealth
                 -Future technology rights
.                 -Audio rights
                 -Motion picture/TV/live stage
                 -Merchandising
                 -Advertising

     4. Reasonable reserve for returns
          a) What percentage is withheld?
          b) When liquidated?
      5. What is royalty based on? (Retail price? If based on "net," define the term                   net carefully)
          a) At an average discount of 50%, 20% of net is the same as 10% of the list
          b) At an average discount of 40%, 16-2/3% of net is the same as 10% of the list
          c) At an average discount of 20%, 12-1/2% of net is the same as 10% of the list
       6. Recoupment of advance 

IX. Accounting Statements
      1. Annual, semiannual, or quarterly statements
      2. Payment dates
      3. Cross collateralize (good for publishers, bad for authors)
      4. Audit rights
      5. Limit on time to object to statements 
      6. Limit on time to bring legal action
      7. Examination on a contingency basis
      8. Pass through clause for subsidiary rights income
      9. Important! Termination for failure to account

X. Revised Editions
      1. Frequency
      2. By whom?
      3. Does the contractual in royalties correspond to the extent of changes                        made in comparison to the original author's contribution?

      4. Why is selling a revised edition bad for the author's bottom line?
      5. Reviser/Author credit

XI. Option
      1. Definition of next work
      2. When does the option period start?
      3. Definiteness of terms (i.e., is the publisher's option actually 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?
      4. Special issues for fiction writers

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

XIV. Termination
      1. What triggers the reversion of rights?
          a) Failure to publish within (usually between 12 - 18) months of manuscript acceptance
          b) Failure to account to the author after due notice
          c) Failure to keep the book in print (see Section XIII)
      2. Survival of Author's representations and warranties
      3. Do licenses granted before termination survive
 
XII. Miscellaneous
      1. Choice of governing law
      2. Mediation or arbitration?
      3. Bankruptcy
      4. Literary agency clause
      5. Personal guarantee if the author is a business entity, not a human being.
                     

Related Blog Posts

Libel in Fiction

Fair Use in a Nutshell 

Twelve Copyright Permission Myths  

Estate Planning for Authors 

Contact: 
Law Offices of Lloyd J. Jassin
The Paramount Building
1501 Broadway, Floor 12
New York, NY 10036
212-354-4442 (tel.)
jassin@copylaw.com (email)

Offices in New York and Northern N.J.


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