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Contract clauses 9 and 10

Now we get to clause 9 & 10. These are probably the clauses that everyone is curious about. Well, okay, more curious about.

So… in order to keep you all in suspense, I'm going to go on a bit about why I'm actually doing this. One: Because I want to. Two: Because contracts are something we all talk around as if they were somehow vaguely unseemly -- we can use innuendo, but not hard fact. I understand this. I even understand why, to a certain extent, this is true. It's very, very hard for FTN not to compare him or herself to other FTNs. If things are vague, and numbers aren't mentioned, than some useful information can be exchanged, but no one is crabbing. But the usefulness of that information?

Take the SFWA model contract. It's a lovely model contract. I really like it. Is it useful for FTN? Not really, imho. People like Ray Feist, who taught us all a lot when GEnie was still active, was also making way into the 6 figures when he was teaching us what we should all be fighting for, and what he could easily achieve, we could only achieve if we had the editor's photos. As in blackmail photos. And maybe not even then.

Plus, I can refer to things. Rather than trying to explain them. Because they're laid out in clear English. Yes, I said that with a straight face. Why do you ask?

I think that what I'm slowly putting up is indicative of an average first contract for Science Fiction and Fantasy genre novels with a regular publisher. I cannot stress this enough. I was shocked when I found out that publishers regularly start romance writers at 4% royalties, given their numbers in comparison, for instance, but I can't speak for Romance contracts because I've never signed one. Or YA contracts. Or, in fact, any contracts but my own and the ones I've seen from other houses by authors who are also -- not surprisingly -- writing in my field. There will be marked similarities between these and many other first book contracts in other genres -- but there will be different types of wiggle room, I think, in each line.

Are these the same as the contracts I'm signing now? No. But what I'm trying to do is offer information to people who are putting their toes into the water for the first time. And if I'm trying to do that, I might as well be complete.

I do get the distinct impression, though, that some people find this almost shocking. Why is that?

Anyway, onward.

Advance Payments

9. Publisher will pay to Author as an advance against and on account of all sums accruing to the Author hereunder the sum of $7,500.00, as follows: $3,750.00 on signing hereof; and $3,750.00 on acceptance of the complete and satisfactory manuscript of the Work in accordance with Paragraph 1. Author shall not be required to repay such advance except as specifically required by the provisions of this agreement or if Author is in default of the obligations hereof.

This is straightforward, and it's standard. Half on signing. Half on delivery (of an acceptable manuscript). As I said elsewhere, you can be offered the sum in any number of ways, but you should be able to get them to pay you a two-split for advances at this level. For 80K or 100K? Not so simple. But this is small money in comparison.

And you'll note that a living wage, it's not.

Royalty Payments

10. a. The Publisher agrees to pay the Author a royalty on the retail price *or, for any hardcover copies, on the invoice price (see Paragraph 28)* of each copy of the Work sold by Publisher, less returns (subject, however, to the provisions and exceptions in this agreement set forth below:

I had a little fit when I first saw the additional text -- but I was reminded that "invoice price" and "net" were not the same. The invoice price is a funny thing, and I haven't seen it done at all in recent years -- but a number of years ago, for reasons I'm not clear on, the actual cover price was about 50 cents higher than the retail price on the invoice. The invoice price referred to would be the 29.45, rather than the 29.95 that was printed on the dustjacket of the book. I'm sorry I can't tell you why -- for some reason, I didn't think to ask a rep, and it didn't last all that long, at least in Canada.

i. With respect to copies sold by Publisher in a mass market softcover edition six percent (6%) up to and including 150,000 copies; and eight percent (8%) for copies sold in excess of 150,000.

Below, in the question I grabbed from Scalzi's blog, the author in question said they'd managed to get 8% for their royalty rate (from Bantam). My agent at the time thought it wouldn't be difficult to get 8%, but the publisher in this case would not budge. Oddly enough, the publisher the author below is dealing with is the publisher my agent at the time most frequently dealt with. He didn't have a lot of clients at Del Rey then. You can negotiate different splits -- I think you could probably, in this day and age, argue it down to 100K, and have even seen that. In either case, it's generally theoretical; these numbers are after returns.

So, practically speaking, my royalty rate for this sale was 6%.

Of the things in the contract that I'd really want to push for, 8% royalties is probably the biggest.

ii. With respect to copies sold by Publisher in a trade softcover edition seven percent (7%).

This is boilerplate. The boilerplate here differs from house to house; I've seen as low as 6% to 25,000 copies, going up to 7.5 after; I've seen 7.5 going to 8.5 after 50,000 copies. I don't think we even tried to change this, because we couldn't see it happening, and it wasn't worth niggling about. You could probably -- and should, depending on who you're publishing with -- move this up some, but you won't have a lot of leverage. It's an argument worth having if you think there's a likely chance these terms will actually apply to you. Trade paperbacks always have low royalty rates compared to hardcovers.

iii. With respect to hardcover copies sold by Publisher ten percent (10%).

This is sub-average. Because there was no way this was going to be published in hardcover, it also wasn't worth arguing about. Otoh, had we wanted to argue about it, it would have been fairly easy to change it, imho. But, choose your irritants (I would say battles, but this just doesn't qualify).

The standard boilerplate clause I've seen otherwise breaks down like this: 10% for the first 5,000 copies; 12.5% for the next 5,000 copies and 15% for all copies thereafter. Of the retail price (or in the case of this contract, the "invoice" price). If for some reason, you feel you're going to be published in hardcover, than it would be good to revert to the standard boilerplate, rather than the substandard one I got.

b. If the Work is published in more than one of the formats described in paragraph 10(a) above, the applicable royalty set forth in this agreement shall apply separately to each such publication and in determining increases in royalty rates based upon whether particular sales levels have been reached, only sales in such format of such publication for which a royalty is payable under the provisions of said paragraph 10 (a) shall be included.

c. One-half (1/2) of the prevailing royalty rate with respect to hardcover copies and with respect to softcover copies of the amount received by Publisher for copies sold directly to the consumer through the medium of mail order, coupon, radio, television, or space advertising, or through Publisher's own book clubs.

d. One-half (1/2) of the prevailing royalty rate with respect to hardcover copies and with respect to softcover copies of the amount received by Publisher for copies sold by Publisher (i) as premiums to commercial purchasers for use in connection with other goods or services, (ii) to governmental agencies, (iii) to book clubs, (iv) outside usual wholesale and retail trade channels, or for more than manufacturing cost but at less than the regular wholesale price, or at a discount of more than 60% from the United States invoice price (see Paragraph 28) and (v) for use of plates or film by a governmental agency. All sales subject to this sub-paragraph 10(d) are herein referred to as "special sales".

e. One-half (1/2) of the prevailing royalty rate with respect to hardcover copies *of the invoice price (see Paragraph 28)* and with respect to softcover copies of the retail price for copies sold by Publisher for export outside the United States, its territories and possessions.

f. No royalties shall be payable for any copies sold at or below the cost of manufacture. The royalty payable on "remainders" sold by Publisher shall be 5% of the amount received by Publisher, except that no royalty is payable as to any such remainders sold at or below the cost of manufacture.


These last clauses are pretty self-explanatory. I'm not in love with e), and if I were going to do it again, I might try to change that. Maybe. I've never seen a lot of special sales on my royalty statements, though -- so it's not something that I'd personally be getting an ulcer about.


Comments

( 12 comments — Leave a comment )
qiihoskeh
Sep. 17th, 2004 07:54 pm (UTC)
I confess, I didn't understand the last few clauses at all. And there was at least one other clause in an earlier entry I didn't understand. But then I'm dull-witted. But as I don't have a novel, much less a marketable one, I comment only to maybe save someone else the embarassment.
msagara
Sep. 17th, 2004 08:19 pm (UTC)
Confusing clauses
I confess, I didn't understand the last few clauses at all. And there was at least one other clause in an earlier entry I didn't understand. But then I'm dull-witted. But as I don't have a novel, much less a marketable one, I comment only to maybe save someone else the embarassment.

I'm perfectly happy to explain what the clauses mean -- I need a little more guidance, though :/. Could you point out which ones made no sense, and I'll try to explain them in practical English?
msagara
Sep. 17th, 2004 08:21 pm (UTC)
Re: Confusing clauses
In fact, since the point of these posts is to offer useful information, I enjoin anyone who doesn't understand any of the clauses to speak up and point out which ones make no sense. There are lawyers here, and they can correct me if I'm somehow in error <g>, but since I'm typing in everything specifically so people will understand this part of the process, if it's not clear, I'm not succeeding.
qiihoskeh
Sep. 18th, 2004 12:59 pm (UTC)
Re: Confusing clauses
I was referring mainly to c, d, and e, although part of the problem is because I have a terrible time reading any outline format that is neither indented nor including the whole identifier (e.g. 12.b.i.). I'm going to look at the rest of the comments, which may clear things up.

(I really shouldn't say/have said anything -- I don't have a telephone now and may not be able to get back here for a couple days/weeks).
(Deleted comment)
mmarques
Sep. 19th, 2004 06:56 am (UTC)
But it is sometimes possible to get salary information in general. For example, as a technical writer, I belong to the Society for Technical Communications and receive the results of their annual salary survey (broken down by geography and experience).
(Deleted comment)
msagara
Sep. 18th, 2004 04:33 pm (UTC)
Re: And now a question...
It's pretty much Canada, yes. And yes, it's half the prevailing rate.

This was considered standard; I asked my agent about it at the time, and he seemed a bit surprised that I would ask. But in the case of most authors, the Canadian content doesn't count for much. This would not be true of many authors. Certainly people like Rob Sawyer do very well in Canada.
desayunoencama
Sep. 18th, 2004 01:38 am (UTC)
That fifty cent difference between the invoice price and the retail price is, I believe, the Freight Pass Through, where the customer is being charged, essentially, for the shipping costs. It's why many hardcovers say FPT on the dustjacket (which acronym has nothing to do with whether or not they are a First Printing, which is what most people tend to think it stands for).
(Deleted comment)
alfreda89
Sep. 18th, 2004 07:36 am (UTC)
Is that really something one can argue about?

I've heard it said (by Ray, I think) that there are really only two or three things that are etched in stone--and oddly, they aren't always the same thing for the publisher and the individual writer. When you clash on these things, you may have a deal breaker--but usually there's a way to alter the contract to make both parties accept the result, even if they're not happy about it.

As in, the liability clause isn't coming out. But you can alter it so they have to tell you about a challenge, and they can't just settle it and hand you a bill.
zhaneel69
Sep. 18th, 2004 11:04 am (UTC)
I do get the distinct impression, though, that some people find this almost shocking. Why is that?

I think that people find it shocking that someone is willing to take the time. I know I was when you offerred and I'm thrilled you did. I think this is very useful stuff.

I think the willingness to say what you thought was worth fighting over, what you did fight over, what has changed over the years, etc. is also useful. And people fight over different things.

As for not understanding:

c. One-half (1/2) of the prevailing royalty rate with respect to hardcover copies and with respect to softcover copies of the amount received by Publisher for copies sold directly to the consumer through the medium of mail order, coupon, radio, television, or space advertising, or through Publisher's own book clubs.

So... if they can show the sale is a direct reponse to a radio/television/apce advertising they can cut your rate in half?

d. One-half (1/2) of the prevailing royalty rate with respect to hardcover copies and with respect to softcover copies of the amount received by Publisher for copies sold by Publisher (i) as premiums to commercial purchasers for use in connection with other goods or services, (ii) to governmental agencies, (iii) to book clubs, (iv) outside usual wholesale and retail trade channels, or for more than manufacturing cost but at less than the regular wholesale price, or at a discount of more than 60% from the United States invoice price (see Paragraph 28) and (v) for use of plates or film by a governmental agency. All sales subject to this sub-paragraph 10(d) are herein referred to as "special sales".

So (i) references to trade between the Publisher and some other Publisher?

(ii), (iii) are understandable.

(iv)Huh? Like Costco?

(v) is understandable.

Zhaneel
(Anonymous)
Sep. 18th, 2004 01:18 pm (UTC)
Discussing the details
As someone who recently signed a two-book "good deal" mainstream publisher contract (with HarperCollins), I'll add that I would love to discuss the details of my recent payments and contract, and in fact wrote up a long post about them, explaining escalator clauses and the like, which my agent asked me to please take down, because having those specifics out there would potentially make it harder for him to negotiate for me in future. (With mythical movie people, for example :-)

I didn't really want to take it down, but I could see his point. We came up with a compromise, where I took it down but e-mailed the piece to anyone who asked to see it within two weeks. (Sorry, I don't have it anymore -- this was a few months ago, and I am ruthless about deleting things.)

My point being, that it can apparently be against an author's best interests to be detailed and explicit about these things, especially early in their careers. With any luck, in a few years I will be more established and able to discuss my early contracts in detail with no potential financial repercussions. Fingers crossed.

- Mary Anne (http://www.mamohanraj.com)
melinda_goodin
Sep. 18th, 2004 07:32 pm (UTC)
Thank you for taking the time to type all of this and explain it. I'm mulling on it to see which bits I understand and which bits I don't.
( 12 comments — Leave a comment )