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Traditional Publishing, Non-Compete Clauses & Rights Grabs

Discussion in 'Publishing' started by A. E. Lowan, Jan 28, 2016.

  1. MichaelSullivan

    MichaelSullivan Maester

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    Are you saying that if the contract says, as they all do, that this contract will be governed by the laws of State X, a "good lawyer" can have that part of the contract ignored? I would find that difficult to believe.
     
  2. MichaelSullivan

    MichaelSullivan Maester

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    The Author's Guild is now involved in trying to adjust such clauses. My guess is they will be more than willing to offer to use their legal defense funds for an author that wants to challenge it. I think we'll see just such a case occurring soon.
     
  3. MichaelSullivan

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    Good advice - but let me explain my situation. I had an agent who was an ex-lawyer. And when I saw my non-compete (which was for the length of the copyright for "any work which might affect sales" - which could easily be interpreted as any other fiction book I write). I said, "No way in hell will I sign that."

    Her response wasn't, "You're right, that wouldn't be in your best interest." It was, "They are industry standard, everyone signs them. Stephen King has them. They are never enforced. And it comes from corporate and you can't get them removed or changed."

    My response, was (a) I can't believe that is true and (b) I won't sign it. So she put me in touch with one of the largest IP attorneys in the publishing business and he pulled contract after contract and read me the non-competes that other authors have signed. He echoed what my agent had said, and that I had two choices: (a) walk, (b) sign as it is.

    I still said no. After six months of excrutiating negotiations I finally got it defanged - something neither my agent nor my IP attorney said was possible. and then...and only then did I sign.
     
  4. MichaelSullivan

    MichaelSullivan Maester

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    Which is exactly where I was. In the end, it got fixed - but it wasn't (a) fast and (b) it wasn't painless. Still, authors who have come after me at the publisher mention how easy it was to get their non-compete adjusted. I had to laugh. That's was (a) because I already made the precedence and (b) why did you have to ask - why wasn't the "better language" already there. The answer is - if they think they can get away with the more restrictive language they are going to give it a try. But yes, once one author has broken the door - if you know they have then you can point to them and say - give me what he got.
     
  5. MichaelSullivan

    MichaelSullivan Maester

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    Without question..and in the case where you have self-published income - it's easy to do. And if the offer is small - also easy to do. But when you have more than a half million dollars on the line....it get a lot harder.
     
  6. Russ

    Russ Istar

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    If publisher A is willing to pay you a half million bucks for a contract, you are in a pretty good position to head on over to publisher B.
     
  7. MichaelSullivan

    MichaelSullivan Maester

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    Yes, and no. There are certain aspect of the clause that are basically non-negotiable.

    • We all get 25% of net on ebooks
    • We all have the same %'s on hardcovers (10% first 5,000, 12.5% next 5,000, 15% above 10,000)
    • All terms are life of copyright
    • All contracts have non-competes
    • All contracts have option clauses
    • I could go on and on.

    There are a number of things that CAN and are negotiated.
    [*] All languages or just English speaking
    [*] World rights or NA only
    [*] Audio rights retained or signed
    [*] Movie rights retained or signed
    [*] Joint-accounting or basket accounting
    [*] Three payments or four payments for advance.
    [*] Amount of advance and schedule of payment
    [*] Number of books under contract
    [*] Again I can go on and on.

    But I can tell you the paragraph number for where the various "non-negotiable" clauses are - which is why I can tell my fellow Orbit author who claims they don't have a non-compete to go read paragraph #16. You have no idea how many authors have no idea what is in their contracts. And you have no idea how many swore they did' have a noncompete until I told them to look and low and behold there it was.

    The devil is in the details, and I suspect what you think is "completely different" I'm going to see as having only "minor adjustments." Let's take areal world example.

    All contracts will have criteria that specifies when a book is "out of print" and rights revert. The worst contract will say, as long as a copy (including ebook is in available - it's in print)/ A "better" contract will say as long as x copies are sold in y amount of time - it's in print. - The problem with that is a quick sale near the end of the reporting period will break the threshold and keep the book in print. A "even better" contract will says long as $x is earned in y period of time - it is in print. But the problem is what the threshold? I can tell you that every contract's threshold is so low that it's laughable. For me, as long as I earn $500 in a year the book is in print. That's $9.60 a week - which is laughable. Now...my agent...who was representing an author MUCH bigger than myself and for a deal that was for more than 1,000,000 want to get that raised. They wanted $2,000 a year - which to me sounds more reasonable. The publisher raised it to $750. Wow - now we go from $9.60 to $15 a week. Woohoo. The agent pushed back. The publisher's answer..."$750 is the highest we'll go. It's a deal breaker. So yes, someone who can command a seven-figure contract can't get a decent amount for "ongoing income."

    Yes, that is definitely one that can be different - as I noted above - but seriously? does anyone really care if you get your advance x days earlier? Not when faced with things like NEVER GETTING BACK YOUR RIGHTS!


    Again, you are correct - but they are so trivial to be laughable. For instance, I know an agency that always get's joint accounting rather than basket accounting. Is that nice. Yeah, sure. I'd prefer it to not having it. But show me an agency that can get a reasonable out of print clause...it doesn't exist. When I was about to shop around my most recent contract I talked to 10 of the biggest IP attorneys in the book business and asked each one of them if I could get movement on x and y and z. And not one of them said they could -- no matter who the client was.

    No need to be sorry, I have plenty of "wiggle room" and I think based on how this publisher has treated me so far they will be reasonable and provide approval when I want to do x or y or z. I wouldn't have signed it if I was worried about long term repercussions. The situation was unfortunate -- and the problem was a miscommunication between my agent and my publisher. They were not on the same page - even though I had been crystal clear. In the end, I could have walked, but we made some changes at the 11th hour to make it "workable" - is it what I want? No. Is it what I think is fair? No. Do I think it will matter? Probably not. At present, it's not an issue as I don't have a work ready to go. But in a year or two, I might...and we'll see what they say about publishing that work. If they refuse, I think I have an excellent case to challenge the non-compete and I'd be more than willing to be a test case. It'll only be an issue if the publisher and I don't work as a team, and at this point, I see them extending the olive branch in an appropriate way. So while the contract might not be ideal, the reality may be just fine.

    But...you can't "expect that" - any author has to look at a contract in the "worst case scenario."
     
  8. Devor

    Devor Fiery Keeper of the Hat Moderator

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    I wouldn't count on it. At least part of an offer like that would come from the way your book fits into the publisher's portfolio of works. There are also specific people responsible for coming up with that offer. There's no reason to assume that another publisher would be willing to match it.

    ((edit))

    Also, Michael, it's good to see you back.
     
  9. MichaelSullivan

    MichaelSullivan Maester

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    I think you are quite naive as to the reality of the business. I know Kameron personally, and I'll tell you there are few authors who are savvy as her when it comes to contracts - she is an EXCEPTIONAL business person. I don't know her agent, personally, but I can say that Kameron calls the shots and she would't let someone who is ineffective lead her astray. So...I think you have come to the wrong conclusion. It's not that Kameron or her people are ineffectual. It's that there is only so much pushing you can do. The publishers wield so much more power than the author - there are thousands who are more than willing to accept a "less than ideal contract." And if I, or Kameron walk from the bad ones, it ultimately doesn't change anything. In a very real sense, most authors are cogs in a system, and they are more than willing to replace you with someone else.
     
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  10. MichaelSullivan

    MichaelSullivan Maester

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    Well first of all...no. For a contract that I was paid more than a half million dollars I got (a) several rejections (b) one publisher that wouldn't produce the book in hardcover - a deal breaker for me so that was off the table (c) at least one that wouldn't consider it without audio rights - which I had previously sold so that was off the table (c) other offers that weren't nearly as attractive (d) at least one at laughable advance level (e) and a few that were still working on their terms. Now would one of those I hadn't heard from come in? I don't know. But at the time I had (a) an advance I was happy with (b) the company I wanted to work with (c) pre-negotiating terms that I thought we all agreed on. So there was no reason not to say yes. It was only months and months later that we realized that the publishers and I were on different pages with regards to the non-compete. And we worked out a compromise. Probably not what they wanted, and certainly not what I wanted. But it was "good enough" for both of us to move forward with.

    Had the deal fallen apart my only recourse would be to self-publish - which would have been fine. Any other publisher would wonder why a broker deal went bad - and it would scare them away.
     
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  11. MichaelSullivan

    MichaelSullivan Maester

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    Exactly correct. A book that resonates with one editor, might not with another. I know of one fairly proficient author who contends that there is only one editor in all of publishing who would release his books - and he's just glad he found that one. He's convinced if anything ever happens to that relationship - he's done even though he's sold millions of copies.



    It's good to be back. I've had a pretty crazy time as of late. But now things are calming down and I have more time.
     
    Devor likes this.
  12. Russ

    Russ Istar

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    Actually some of the things in your non-negotiable list are negotiable. For instance there are people getting variable rates of e book sales beyond 25% at certain sales levels. Some up to 40% for very strong sales.

    There are contracts without non-competes. There are contracts with different %'s than the ones you quote for hard covers as well.

    In the article that started this thread Ms. Kameron says:

    Or perhaps she is more naive than I? :)


    I don't have any Orbit contracts but I have a number from other Hachette imprints, some do not have non competes. I will have a look at them when I get home tonight to see if those that do have it at para 16.

    Funny, the Author's Guild initiative you have talked about has made this issue one of their big points. If you are a member perhaps you should suggest they rethink their approach.
     
    Last edited: Feb 29, 2016
  13. Russ

    Russ Istar

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    In the area of naivety let me suggest that my father worked his whole career in publishing, I worked in publishing before becoming a lawyer, my wife works in publishing and a significant portion of the people I spend time with are in the industry.

    Despite the fact that you know Kamerson personally, there are reasons that her top advance was what, $20k, and you have done deals much, much larger than that. You are both authors, yes publishers have a great deal of power, and thus you are both cogs in the system, like almost any other job.

    But there are reasons that you have made significantly more than she has. What do you think they are?
     
  14. Russ

    Russ Istar

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    This presumes, strangely, that a $500,000 deal is done via the willpower or taste of a single editor. That may happen, but it is pretty rare. Most purchases at that level are done by a committee or group, not a single person. You can argue whether or not that is a good or bad thing, but it is a reality of the business today.

    If you have a product that you can sell to publisher A for $500,000, it is pretty likely that you could sell it to publisher B for something pretty darned close. In fact your own description suggests there were plenty of other sources you could have sold that particular deal to, but they just had not developed yet.

    I am not suggesting you did the wrong things (I have no idea), what I am suggesting is that someone with a $500,000 product (obviously a strong product and author with substantial traction) has a lot more options to sell elsewhere than a debut author looking at an $8k advance or a royalties only deal.

    By the by, isn't it a bit odd to sell the audio rights before you sell your home turf print rights?
     
    Last edited: Feb 29, 2016
  15. MichaelSullivan

    MichaelSullivan Maester

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    Not to sound like a broken record, but I'm talking about within the big-five. Yes you can get a different royalty rate with a smaller press, but if you are published by Tor, Ace, Orbit, Del Rey, Harper Voyager - you are getting 25% of net. For example. The biggest earners in the genre recently banded together and made a pact not to sign another contract at 25% of net of ebooks. Then I saw one of them sign a new contract, so I asked if that meant they got the royalty rate upped. The answer was no. Instead the publisher adjusted the advance to be larger than that author will ever earn back, so while the royalty rate is the same -- they'll end up making a higher amount. THIS is how the publishing industry deals with the "big earners" - the royalty rates are the same, but the authors get more money because they have high advances that won't earn out.

    By the way...my contracts have auto-escallators which means if the publisher signs another author with the higher royalty rate, then my royalty rate goes up. And I assure you my rate hasn't changed. Now you could say that they signed, and didn't tell me about it - but I'm sure if I do an audit (which I'm in my rights to do so) I'll find they haven't given more than 25% of net to anyone else. By the way...I do know that contracts written some time in the past DID have higher than 25% but that was before ebooks were "a thing" and once they became a major venue the standardization has been 25% across the board. So yes, I can believe that an "old contract" could have an ebook rate of even 50% -- but you can't get a deal written with those terms today.

    Again, I've talked to more than half a dozen of THE IP attorneys in publishing and they all say the same thing. You can get a "modified" non-compete but they haven't seen a single one written without one. I've personally told more than a dozen people who swear they don't have non-competes...that they do, and EVERY one of them have come back and said, "You're right." Ask Mark Lawrence if he has a non-compete? After seeing him say in a number of posts that he didn't I asked him to check - guess what he does.

    This one I would say is conceivably possible -- but I would have to see the signed contract with my own eyes before I'll come off my stance. I've seen more than 80 contracts to date and every single big-five contract had THE EXACT same royalty rates for hardcovers. I have seen some variations in paperback (and mass market paperback) but only in fractions of a %'s. Romance and tie-in novels is much less, but I've seen no contract that is higher. But, hey, prove me wrong. Send me the contract and I'll eat my words - but over the last eight years of looking for a contract to refute my claims I've yet to see them. In fact, Brandon Sanderson, who is one of the highest paid authors in the industry, distributes his contract as part of the class he does at BYU - so go look at it some time. It'll bare out what I'm saying.

    Hmmm...I've signed 5 six-figure contracts (one for more than half a million), three of which were with two different big-five presses. I've signed more than 50 foreign language contracts. I've also compared contracts with several dozen fellow big-five published authors. My agent is one of the biggest names in the industry and not only represents me but also Brandon Sanderson, Peter V. Brett, Jack Campbell, Charlaine Harris and dozens of others. When I discuss with him where he can and cannot move the needle is he lying to me? What about the conference calls I've had with multiple agents and IP attorneys? When I ask them, "Have you ever seen a contract with anything other than 25% of net?" and they say...."not yet, but I think it's only a matter of time." Are they lying?

    I'm not speaking from "theory" - I'm speaking from hands-on experience. But I'm not here to convince you of anything. All I can do is share my experience and those of others - who ARE ACTUALLY SIGNED! I suspect you are reporting "what you've heard" or talking about small-press contracts - which are a whole different ball game. I don't have anything against small presses. Heck, I've signed with two of them in the past. But they don't move the needle of the author's published through them. Today, if you are "in publishing" you have to be either (a) a successful self-published author or (b) with the big-five. I've done both and know people who have done both. The information I'm sharing isn't theory and conjecture it comes from real-world experience.

    You can either listen or not. I really don't care. But I'm sure there are others who are reading this that may be getting something out of what I'm saying.
     
    Last edited: Feb 29, 2016
  16. MichaelSullivan

    MichaelSullivan Maester

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    Did I say the decisions weren't made by committees? But before it gets to committees you have to have the acquisition editor who is willing to champion it. What one person likes, another may not. And if they don't, it never GETS to the committee.

    Not true at all. I had offers for 5-books that were less than what another publisher was offering for one book. And to make that low offer they needed approval from their other departments. Do you think they can go back and say, "Okay I know we all agreed on $125,000 but we're going to have to pay $500,000 to be in contention." Do you think that's what they'll do? No. They came out of that original meeting with a cost analysis that calculated a range and then they offered a number that was probably less than their maximum, but only a fool would offer a quarter of what they authorized to pay.

    But let's just say for the sake of argument that it happened exactly that way. They met with their committee and decided the price could be somewhere between $100,000 and $500,000. And the person who was making the offer decided to low-ball it and offer $125,000. Do you want to sign with someone that though so little of your work when first submitted? I sure as hell wouldn't. I'm not going to sign with someone after they slap me in the face

    In fact, let's look at the difference between my first and second contract with the same publisher. For the first contract they offered me six-figures, I thought it was fair. We signed. All good. I earned out in 9 months proving the amount was a good one, but still a bit low as the books have earned me more than two and a half times the original advance. So anyways...I present a second series. Now based on that data, the advance offer should be higher than the first contract, right? Wrong. They came in with a offer that was still six-figures but was less per book than the first contract. Why do such a thing? Because they thought I would take it. I wouldn't. My agent ended up getting them to come up - a lot....such that it was more per book than the first contract, but to be honest, if they had made me a fair offer out of the gate, they could have gotten me for a lot less than they did. By pissing me off with the first offer, I wanted more than I normally would have. And...it tainted our relationship. I signed that contract because they were paying more than "market rate" - but did I really want to continue doing business with them? No. It showed a lack of respect that drove a wedge.

    Plenty? How many big-five fantasy imprints are there? Count them up...it's not that many, and I already had an offer I wanted from my first choice - would I take a third-stringer just because they matched or bumped the advance a bit? No. I took the offer I did because it was (a) fair and (b) a company I respected. As I said, it wasn't until much later in the game that we realized that the agent hadn't properly communicated the requirements of the non-compete. Did it cause friction, yeah. But as I said the publisher has done plenty of things to show they value me and my work that I think if I have a work to publish, they'll provide the approval that is required.

    We are not in disagreement about the fact that someone who gets $500,000 offers has more leverage than a debut author getting $8,000...but what I'm telling you is even when you are getting $500,000 there are some things the publishers are NOT willing to bend on. THAT's the takeaway. Or at least it should be.
     
    Last edited: Feb 29, 2016
  17. MichaelSullivan

    MichaelSullivan Maester

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    You betcha - and it's very, very smart. Why? Well because for contract #1 I tried to get audio rights held back and my agent couldn't deliver, and then for contract #2, I tried again to hold them back, and again the publisher made it a "deal breaker." So as long as the rights were available the publisher was going to want them. Period.

    But, sell them ahead of time, and they are off the table. So the publisher has to decide if the print and ebook is enough for them. For all but one of the publishers, it was. For the first two contracts I signed (where I couldn't keep the rights back), I have to split everything the audio books makes with the publisher 50/50 for doing nothing more than signing a piece of paper. To date I've lost more than six-figures because of the way that deal was structured. In fact, that publisher has earned more from that one subsidiary right, then they paid me for an advance. And I had a really big advance. So, yeah, I kinda object to losing half the money when the publisher doesn't have to do anything on their end.

    By keeping that right, not only did I get a six-figure advance for the audio rights, but my piece of the pie went up substantially because less people have fingers in the pie. The most recent audio deal I've brokered has an advance for one book that is almost the same as the print/ebook advance). So by selling the audio rights first I make just shy of double the money. Seems like a good strategy to me.
     
  18. Russ

    Russ Istar

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    Well there are different ways to go at it, but I am pleased it worked for you.

    For instance, one can get the offers in for the audio rights so you know a real market figure for the value, and when your agent receives an offer for the book they can then go back to the publisher and say "that is reasonable for the book but we want $X more for the audio rights." Then they can either match it or go without. Works just as well because you are still only giving up the 15% to your agent.
     
  19. MichaelSullivan

    MichaelSullivan Maester

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    Kameron and I have discussed these various clauses at length. Go ahead and ask her about them. You'll see we are on the same page. Her statement wasn't meant to indicate that with higher sales she can bend publishers to her will. She knows the score.

    The lack of non-competes is what all the authors said to me as well. But go ahead and look. No one would be more excited than I to discover a contract without one. In a non-Orbit contract it might be a different number. And it might be called something else. Look for paragraphs that talk about "conflicting publication." What I can say is the "non-compete" clause came from the "Hachette level" not Orbit. The IP attorney I was working with pulled contracts from Grand Central Publishing, Mulholland Books, Fithworks and Hodder & Stoughton, just to name a few. I highly doubt you'll find any - but send me a copy - you can redact the author's name and advance amount. As I said, I'd be happy to be proven wrong - but having gone through this exercise more than two-dozen times, I've yet to be.
     
    Last edited: Feb 29, 2016
  20. MichaelSullivan

    MichaelSullivan Maester

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    Do you think I don't know that? Seriously? Think about what you are saying.

    I'm supposed to go to the audio producer and say, "Thanks for the offer, but I'm not going to accept it, instead I'm going to try and use it as leverage, but hey, if it doesn't work, sure I'll come back to you." Why would I put in jeopardy a perfectly good relationship on the CHANCE that it might help out a partner whose arm I have to twist into "doing the right thing?" And let's say it works. And they increase the offer by the same amount as the audio producers...they still are going to want their cut royalty cut- so I still get 50 cents on the dollar. MAYBE if I'm lucky I can up that to 60 cents on the dollar or 70 cents on the dollar - but why? Seems to me $1 on the $1 is a much better deal. Any deal signed with the publisher isn't just out the 15% agency fee. Your assumption only holds if the books DON'T earn out. If they do (and so far all of mine have) then I'm leaving money on the table with your approach.

    Oh, and if the deal DOES fall through, I go back the audio producer and say, "Yeah, it didn't work out...So I'll take that offer you made me." If I were them I'd say, "That deal is no longer on the table, you wanker." And I would have no one to blame but myself.
     
    Last edited: Feb 29, 2016
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