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Just Say No to Bad Contracts

By Sneed B. Collard III

[Editor's note: This passionate piece was originally published in the SCBWI Bulletin. I'm pleased to have it on The Purple Crayon because Sneed addresses some crucial concerns for authors. For this republication, I've added some comments and resources. -- HU]

I know I'm not alone in seeing fewer book contracts since the economy hit the skids and eBooks hit the market. That reality raises my anxiety level, along with the pressure to sign any book contract landing on my desk. And yet last week, for the second time in a year, I chose not to sign a book contract. Am I nuts?

I don't think so. I'll even argue that for the vast majority of writers, signing an unfair contract is worse than signing no contract at all. Here are a few reasons:

1) It's nice to be able to write and eat at the same time.
2) Signing a bad deal tells publishers your work is worth less, now and in the future.
3) Exploitive contracts often are for books that aren't necessarily a writer's first love. Why not use that time to write something you truly care about?

Of course, bad contracts have always been around, but in our poor economy and with changing technology, more publishers are claiming hardship-and asking authors to pay for their real or feigned financial conundrums. "The primary difference in my recent contracts," says award-winning author Larry Dane Brimner (Birmingham Sunday), "has been that with two of them I was requested to take a reduced advance and with one of those two, a reduced royalty."

Even if an advance and royalty seem acceptable, publishers have many other means to deprive an author of fair compensation. Perhaps the most insidious is the deep discount. "In its worst form," explains bestselling author David Lubar (The Big Stink), "the deep discount clause allows the publisher to make more money by increasing the discount. For example, some contracts state the author will receive 1/2 the standard royalty (based on the list price) when a book is sold at a discount of 50% or greater.  For a $10 book, if the book is sold at a 49% discount, the author gets $1.00 and the publisher gets $4.10.  By adding 1% to the discount, the author now gets 50 cents, and the publisher gets $4.50." [Ed. note: in my experience, discounts like this should apply only to "special sale" situations--sales made outside the usual channels, at discounts of 55% or more. To fix this problem, ask that royalties only be reduced when the books are sold outside trade channels. If the publisher chooses to give a discount of 50% or more to a wholesaler or to Amazon, that's their decision, but the author should not suffer for it. On the other hand, a special sale of, for example, 3,000 copies of a book to a charitable organization at a discount of 60% is a true "special sale."]

Are publishers justified in offering these disappointing terms? Perhaps, but it's hard to see how. As a new publisher myself, I can tell you that manufacturing costs are low. Publishers have also found ways to reduce their overhead. Many publishers have fired their most senior-and most skilled-editors, replacing them with lower cost "freshmen". And more than ever, authors and illustrators have become a publisher's primary sales force, free of charge!

So, confronted with this unfairness, will publishers begin seeing the light and offering better terms? "No," literary agent Jeff Dwyer of Dwyer & O'Grady simply states. "Publishing is a supply and demand business and the products are subjectively chosen. There's a large supply of new talent seeking publication, and too few publishers who have the capital to accommodate that demand."

With the dawn of the electronic rights era, in fact, publishers are making contracts even worse by seeking to fully control all rights to authors' and illustrators' work forever. "Besides the grant of rights clause, and the various discounting clauses," explains Jeff Dwyer, "the termination clauses are the most important to understand. If the grant of rights clause provides for control of the talent's work product for an almost unlimited period of time, then there needs to be provisions in the termination portion of the publishing agreement to make the arrangement fair to both parties."

Dwyer advocates that fair contracts need to include a clause stating that the author's work must remain actively available for sale through normal trade channels, and that annual sales must reach a certain minimum dollar amount for the contract to remain in force. If this minimum is not reached, then the publisher should pay a negotiated sum to the talent (that's us) to retain control of the work or revert the contract to the talent. Without such a clause, authors and illustrators face the prospect of never regaining control of their work, even if the publisher no longer markets or promotes it. [Ed. note: Print-on-demand and ebook editions make this scenario of being in print but not actively sold more likely to occur, because a publisher can keep a book in their catalog without needing to maintain physical inventory in their warehouse. Agents may have a clause like the one described above in their standard agreement with a publisher; there's no reason why an individual can't ask for this as well.]

But what if we can't get fair terms? What are we to do? Do we just accept this new world, where writers and illustrators are nothing more than intellectual serfs, serving our publishing masters? If I believed that, I'd apply for a job at Costco this second. Fortunately, there still are publishers who do their best to treat authors and illustrators fairly. Even better, this new age in publishing coincides with a new age of opportunity for writers and illustrators. These range from releasing our work directly through eBooks and print-on-demand, to starting our own publishing companies, as I've done with my new company Bucking Horse Books. Your own best solution will depend on your publishing history, your experience, and your situation, but the sooner you embrace new opportunities, the faster you can stop feeling like a victim and begin creating your own publishing and artistic destiny.

Additional contract resources:

Sneed B. Collard III has written more than fifty-five books, published by a dozen different publishers. His books have won many awards, including the Washington Post-Children's Book Guild Nonfiction Award for his body of work. Contact him at collard(at)bigsky.net or via Bucking Horse Books.    

Copyright © Sneed B. Collard III. Originally published in the SCBWI Bulletin. Used by permission. May not be reproduced in any form without prior permission. Terms of use

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