Tips for Negotiating a Book Contract

Asking an Attorney to Review a Book Contract

Book Contract Checklist of Deal Terms

Book contracts must be carefully negotiated to tailor the terms to fit each author's unique situation. They must address key issues such as the grant of rights, title approval, audit rights, termination clauses, royalties, and more. Further, how you, or your publishing attorney, define key terms and clauses are critical to minimizing the likelihood of disputes.  

In book publishing, unlike the film industry, the grant of rights is (or should be) narrow. In exchange for an advance against royalties, publishers receive the basic right to print and publish a manuscript in book form for the entire term of copyright.

Today, copyright lasts for seventy years beyond an author's passing. You might wonder, what could possibly go wrong? The answer: quite a lot. Just ask a publishing attorney. Without a properly negotiated book contract, potential pitfalls include: 

• no ability to reclaim your rights if the publisher fails to account
  
• no recourse to reclaim your rights if the publisher fails to publish or goes out of business
• no means to reclaim your rights for low or no sales
• no way to reclaim unexploited audiobook or foreign translation rights 
• no say in approving settlement of legal claims
• overly broad non-compete clauses
• restrictive option clauses that may be confused for a multi-book deal
  
• publisher rights grab of film, TV, theatre, and merch rights

Publishers are generally most open to accommodating requests for contract adjustments during the initial stages of the relationship, often referred to as the "romance" phase. Later is too late. Unless a book publishing contract allows an author to terminate for cause if the relationship goes awry, or rights are granted on a "use it or lose it" basis, the author is caught between bad and worse options - asking a court to rescind the contract (rescission is seldom granted) or waiting 35 years to exercise their right of termination under the Copyright Act. 

A Book Contract Should Not be Entered into Hastily

The primary purpose of a book contract is to detail the rights, delivery and acceptance conditions, payment terms, and remedies for breach of contract. For example, rather than relying on a lawsuit to get back rights, if a publisher fails to publish within a contractually agreed time limit, there should be a mechanism that permits an author to regain their rights. Similarly, if a publisher fails to exploit specific subsidiary rights (e.g., audiobook or foreign translation) within a reasonable time, it should trigger a reversion of those rights. In addition to reclaiming or recapturing rights, an author should reserve, or hold for their own use, film, television, live stage, podcast, and merchandise licensing rights. If a book publisher claims these rights, they deviate from industry norms. 

What to Expect When Expecting a Book Contract

Preceding the actual book contract is the term sheet. The term sheet contains the main deal terms. To decode a term sheet some authors turn to literary agents, who will receive a 15% commission on everything from books to audiobooks to film deals. Others retain flat or hourly fee book contract attorneys to help them negotiate royalty rates, the grant of rights, and, later, decipher the legal provisions found in the actual publishing contract.  

Initially, a publishing attorney will review the deal terms and make recommendations to their client. The initial task is to determine if the deal terms measure up to industry standards. We do this by comparing the terms to similar terms offered by similarly situated publishers for comparable books. After both parties agree to the deal terms, the publisher will prepare a contract incorporating those terms, plus the publisher's stock provisions. Like agents, attorneys are buffers that save you from dealing with the minutia of contract negotiation. They will help the client think through the offer and its possible ramifications and advise them on what is negotiable and what is not. An author's attorney can argue for the exclusion of certain items or rights from the proposed contract and the inclusion of others, such as naming the author as an additional insured on the publisher's media perils policy. 

It should come as no surprise that publishing contracts are chock full of double dips and legal loopholes, and when it comes to royalties, a hall of mirrors where what it says and what it means are often two different things. The big five New York publishers offer royalties based on the suggested retail price. Royalties for trade paperback books range from 7 - 7.5% of the list price on average. Typically, established publishers offer 10% of the list price for the first 5,000 hardcover copies sold, 12.5% on the next 5,000 sold, and 15% thereafter. Many smaller publishers base their royalty on the "net amount received," which may be 40% to 50% less than the retail price.  The standard eBook royalty rate offered by established publishers, and many independents, is 25% of the net.

Is Your Book Contract Signable?

When presented with the contract, you will want to modify specific terms.  In the case of a subject matter expert, business owner, or series author, you want title approval. Yet most stock contracts state the publisher decides the book's title.  Contract clauses are malleable, not words set in stone. A good publishing attorney - or agent- knows the contract managers at the major publishing houses. Logical arguments supporting rational positions and knowledge of industry practice are the underpinnings of most book contract negotiations.

Whether one of the big five New York publishing houses or one outside of the insular world of New York publishing, a well-drafted publishing contract can anticipate potential issues, reduce disputes, improve financial return, and save thousands of dollars in legal fees later on. 

Benefits of Reviewing a Signed Agreement with a Publishing Lawyer

For those who have already signed a publishing agreement, a publishing attorney or literary lawyer can help you understand the deal's limitations and determine if those limitations are enforceable. For example, a publishing attorney can advise whether a next book option is enforceable or simply an unenforceable agreement to agree. For example, a common concern is whether a non-compete clause can prevent an author from writing a new book on a related topic. Similarly, a publishing attorney can advise on termination for cause options or termination as a matter of right under the Copyright Act.  

Tip. 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 world of books and authors.     

Book Publishing Contract Checklist

Below are matters to consider when you draft or negotiate your next publishing agreement. Each key point deserves greater attention than given here (and will be the subject of future blog posts). While not all clauses are equally important (or negotiable), a well-drafted contract will cover all or most of the points outlined below.

I.   General Provisions
      1. Name/address of parties
      2. Description of work (synopsis)
          -Tentative title, # of words, illos, intended audience, fiction, non-fiction, etc.

II.  Grant of Rights and Territory
      1. Is it an assignment of "all rights" or a license agreement?
      2. Duration (term of years or life of the copyright?)
      3. Geographic scope
           a)     The world?
           b)     Limited (e.g., the U.S., its possessions, and Canada)
      4. Exclusive rights granted
           a)     Primary rights
                  -Hardcover
                  -Trade paperback
                  -Mass market
           b)     Secondary (subsidiary rights)
                   -First serial (pre-pub excerpts)
                   -Second serial (post-pub excepts)
                  -Reprint rights
                  -Dramatic rights
                  -Film/TV rights
                  -Audiobooks    

                  -Foreign translation

                  -British Commonwealth rights

II.   Manuscript Delivery
      1. Delivery requirements
          a) When due? Is the date realistic? Time is of the essence?
          b) What format? 
          c) What to deliver?
                -Rights cleared photos, illos, charts?  Illos? Charts? 
                -Permission & Release

      2. Manuscript Acceptance

          a) Satisfactory in "form and content" or at "sole discretion" of                      the publisher? 
          b) Termination for unsatisfactory manuscript
          c) Termination for changed market conditions
          d) How is the notice of acceptance or dissatisfaction given
          e) Good faith duty to edit
          f) Return of the author's advance
                 -First proceeds clause
                 -False first proceeds clause

III. Copyright Ownership
      1. In whose name will the work be registered?
      2. Who will register the work with the Copyright Office? 
      3. Is there a signed collaboration or ghostwriter agreement? 
      4. The scope of permissions should parallel rights granted publisher
      5. Reserved rights (i.e., rights retained by the author)

IV. Author’s Representations & Warranties
      1. Author sole creator
      2. Not previously published; not in the public domain
      3. Does not infringe any copyrights
      4. Does not invade the 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 the Author

V. Indemnity & Insurance Provisions
      1. Author indemnifies the publisher
      2. Does indemnity apply to claims and breaches?
      3. Can the publisher withhold legal expenses? If so, for how long?   
      4. Has the author been added as an additional insured to media perils policy?
      5. Does the author have approval over the settlement of claims?  

VI. Publication
      1. Duty to Publish within [insert number] months
          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. Advance Readers Copies - MUST be sent 3-4 months before pub date
      5. Style or manner of publication
          a) Book Title - Right of consultation or approval?
          b) Book jacket - Right of consultation? Approval?
          c) Changes in manuscript
      6. Initial publication by a specific imprint in a particular format? 

V. Money Issues
      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

          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
                 -Hardcover
                 -Trade paperback
                 -Mass market
                 -Foreign translation
                 -British Commonwealth
                 -Future technology rights
.                -Database rights 
                 -Audio rights
                 -Motion picture/TV
                 -Merchandising

      4. Reasonable reserve for returns
          a) What percentage will be 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

VI. Accounting Statements
      1. Annual, semiannual, or quarterly statements
      2. Payment dates
      3. Can the publisher recoup an outstanding advance from the next book?
      4. Does the contract afford author audit rights? 
      5. Limit on time to object to statements
      6. Limit on time to bring legal action
      7. Can you hire a forensic accountant to review books on a contingency basis?
      8. Pass through clause for subsidiary rights income
      9. If the publisher fails to account, can you terminate the contract? 

VII. Revised Editions
      1. Frequency
      2. By whom?
      3. Can they reduce your royalty if you don't participate in a revision? 
      4. Sale of a revised edition treated as the sale of a new book?
      5. Reviser credit (May the original author remove their name?)

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

IX. Competing Works & Morality Clauses
      1. How is competing work defined?
      2. How long does the non-compete run?
      3. Are there adequate exclusions from what constitutes a competing work?

X. Out-of-Print
      1. How defined?
      2. Notice requirements
      3. Author's right to purchase plates, film, inventory

XI. Termination
      1. What triggers the reversion of rights?
          a) Failure to publish within 12 (or 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 X)
      2. Survival of Author's representations and warranties
      3. Licenses granted before termination survive?

       TIP. Pay attention to what triggers the duty to return the advance?  

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

###

 

Illustration: from Lawton Mackall's Bizarre 

Illustrator: Lauren Stout

Date: 1922

Related Blog Posts

Libel in Fiction

Fair Use in a Nutshell 

Twelve Copyright Permission Myths  

Estate Planning for Authors 

DISCLAIMER / TERMS OF USE

Not Legal Advice. The information contained in this blog is intended as general advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information published here. Be aware that the law may vary from state to state. Therefore, this blog cannot replace the advice of an experienced attorney. No attorney-client relationship is created by your access to or use of this website.   Contacting us by email does not create an attorney-client relationship. If you wish to establish a professional relationship, it must be done through a mutual agreement in writing. Please do not send us any confidential information until an attorney-client relationship has been established.

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Trademarks. COPYLAW is a registered trademark of Lloyd J. Jassin.

 

A Writer's Guide to Copyright Fair Use

Fair Use Uses a Four Part Balancing Test

Fair use allows authors and other creators to make reasonable use of copyrighted material without paying a fee. It functions as a free expression safety valve by allowing authors to make statements about important societal issues. Without it, copyright owners could squash criticism, commentary, news reporting, scholarship, and even research they didn't like or approve of.

Understanding Fair Use

Fair use is a defense against copyright infringement. Courts favor uses that challenge, interpret, build upon, tease, or poke fun at the original work, resulting in new insights and meaning. Such uses are known as transformative uses. Examples of transformative uses include editorials, criticism, scholarship, news reporting, teaching, and parody. The more transformative the use, the greater the likelihood the use will fit under the aegis of fair use. In addition, courts favor uses that are primarily educational or noncommercial.  Uses that displace sales or licensing opportunities for the owner of a work seldom qualify.

The Four Fair Use Factors

Using a four-factor fairness test, courts weigh the exclusive rights of copyright owners against the societal interest in the free flow of information. No one of the following factors is determinant, although factor four, which relates to economic harm to the copyright owner, weighs heavily in any fair use decision.

1.     The purposes and character of the use, including whether the use is primarily commercial. This factor also weigh the transformative nature of the use; 

2.     The nature of the work that's been copied;

3.     The amount and importance of what's quoted in relation to the original work;

4.     The effect the copying has on the market for the original work and its derivatives 

"Courts are solicitous of commercial publishers' free speech rights.  Therefore, the fact that a publication is sold does not strip it of fair use protection. Fair use determinations are based on the totality of the factors. No one factor is controlling."

Useful Fair Use Tips and Strategies

Despite the ad hoc nature of reported fair use decisions, here are general guidelines to help you ascertain if you have a viable fair use defense. 

• Fair use favors transformative uses. Are you using the work as a springboard to make new insights? Do you critique the original? Have you made a connection between the work you've copied and other works? Are you using the work to buttress your arguments or the arguments of others?
• Is the use a commercial use? While relevant, a commercial use is not dispositive. If the use can provide some social benefit, "by shedding light on a earlier work, and in the process creating a new one," the use may still be a fair use. 
•  In Andy Warhol Foundation v. Goldsmith (2023), the U.S. Supreme Court held that the claim to fairness diminishes, "where an original work and copying use share the same or highly similar purposes, or where wide dissemination of a secondary work would otherwise run the risk of substitution for the original or licensed derivatives of it."
• Since ideas are common property, fair use is more likely to be found using factual material.  
• Poetry, song lyrics, and visual works enjoy a high degree of protection under copyright law, so fair use tilts against the use of these works.
• Quoting from an unpublished work will expose you to greater risk than quoting previously published materials.
• The use must be reasonable in light of the purpose of the copying. The less you copy, the more likely fair use will be found. However, sometimes even a small (but important) portion borrowed from a work may qualify as an infringement.
• Synthesize facts in your own words, keeping in mind that close paraphrasing may constitute copyright infringement if done extensively.
• Lack of credit, or improper credit, weighs against finding fair use. However, giving credit will not transform an infringing use into a fair use.
• A parody (lawful), as opposed to satire (unlawful) is a work that ridicules or mocks another work. Fair use looks favorably upon parody. Make sure the parody is apparent and conjure up just enough of the original to convey your parodic points. 
• While fair use favors non-profit activities, being a not-for-profit will not automatically shield you from liability if your actions reduce the monetary incentives for creating future works. 

To sum up, don't compete with the work you copied. If the use displaces or diminishes the market for the original work, including potential licensing revenue, likely it's not a fair use. Generally, the more transformative the work is, the less the economic impact is.

Does Your LLC Protect You from Personal Liability for Infringement?

No, it does not. If you personally direct the infringement, your personal LLC or corporation will not shield you from personal liability for claims of either copyright or trademark infringement.  Under the theory of vicarious liability, infringement may arise if the managing member or corporate officer has the right and ability to supervise the infringement and a direct financial interest. Further, if you have knowledge of the infringement, and materially contribute to the infringing conduct of another or encourage or assist in the infringement, you may be liable for contributory infringement. 

 

Conclusion
 

Reminder. Fair use is a defense to copyright infringement. Unfortunately, fairness, like beauty, can be debated but not defined. If you are uncomfortable with the case-by-case nature of fair use determinations, consult with a copyright attorney. They can help you walk the sometimes tricky line between fair and foul use. By hiring an attorney, and following their advice, your good faith effort to ensure fair use applies, may have a positive impact on the measure of damages if a court rejects your fair use defense. Finally, your attorney can advise you on how to protect yourself against claims of infringement (and other media perils) with publisher's liability insurance. 

Resources

A Guide to Trademark Fair Use & Title Clearance

Trademark Registration and the Single Book Title

  

Image: Tight-Rope Walker, c.1885 (oil on canvas)

About the Artist:  Jean Louis Forain  (1852 - 1931)

 

DISCLAIMER: This article discusses general legal issues of interest and is not designed to give specific legal advice about specific circumstances. Professional legal advice should be obtained before acting upon any of the information contained in this article.

LLOYD JASSIN is a New York-based copyright, publishing, and entertainment attorney. 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.). In addition, 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 was First Amendment counsel to the Independent Book Publishers Association  (IBPA) and is a member of The Beacon Press advisory board.  

You may reach attorney Jassin at jassin@copylaw.org or at (212) 354-4442. His offices are in the heart of Times Square, in The Paramount Bldg., at 1501 Broadway, FL 12, NYC, 10036. Follow the Law Firm and Lloyd on Twitter at http://www.twitter.com/lloydjassin