Bad Publishing Contract Clauses, Part 1

Posted by Victoria Strauss for Writer Beware 

Writer BewareI get a lot of questions about publishing contracts, and many requests to review them. I’m not a lawyer, but I do have a fair knowledge of publishing contract boilerplate, as well as a good grasp of the issues that writers need to look out for, and I’m always willing to provide experience-based feedback. (Plus, I am fascinated by contract language. What can I say, I’m a geek at heart.)
 
Since I see so many contracts, and so many are from small presses (which may or may not have the expertise to create a rational contract or choose a good contract template), I encounter some really bad, bizarre, and nonstandard stuff. So I thought I’d start an occasional series, to let you all in on the weirdness.

I won’t be posting the publishers’ names here, but you can write to me (my contact info is in the top right of the sidebar), and I’ll let you know who it is.

So, without further ado…here’s an excerpt from a contract that came across my desk this summer. (A relevant bit of info: the term of this contract is 3 years.)


Upon termination of the Contract, the Publisher retains the right to sell or dispose of any media format, of inventory. The Author will receive applicable or adjusted royalties on these copies, and the rights not used by the Publisher, will revert to Author for the manuscript, but not for the cover art. The Publisher will have an inventory amounting to 1000 copies per any media format at termination of Contract. Rights for the book will stay with the Publisher, until all copies are exhausted. This is any media format…e-book, print, pod, audio, etc., which the book is published. All media formats are considered published and in inventory, when they go up for sale.

This puts a unique spin on a publisher’s traditional right to dispose of unsold inventory when a book is taken out of print or a contract term ends, either by selling the inventory through traditional sales channels (and paying a royalty on those sales) or remaindering (in which case, usually, no royalty is due). The publisher can’t produce more inventory, it can only sell off what it has on hand; and “inventory” is understood to mean “physical inventory”–i.e., not ebooks, which should be removed from sales channels immediately (though it usually takes a little while for vendors to comply). Moreover, the fact that the publisher is allowed to try and recoup some of its expense for unsold product does not delay rights reversion, or indeed, affect reversion at all.

With this publisher, however, termination triggers a refill at the inventory pump. Whatever the publisher may have on hand (and ebooks are never really “on hand”), termination causes inventory to magically shoot up to 1,000. Worse, it delays the reversion of rights, making reversion contingent on all inventory being sold, down to the last book. Suppose your book was available from this publisher as an ebook and a POD print edition; just imagine how long it might take a small publisher to sell 1,000 copies of each format.

In effect, termination isn’t really termination–it’s an indefinite extension of your original grant of rights, rendering the official 3-year contract term moot. And–talk about a Catch-22–because the contract has officially terminated, you’re no longer covered by its guarantees and protections. Is this even legally enforceable? Perhaps a lawyer or two will weigh in.

Plus, you’d have to trust the publisher’s accounting. This particular contract does include an audit clause–but with the contract terminated, the publisher could argue that your right to audit had terminated too.

This isn’t the only bad clause in this publisher’s contract–bad clauses don’t usually appear in isolation. But it is by far the worst.

3 Responses

  1. Bruce Moran

    Hi Edward, I am very interested in what makes a great termination statement in an Author Contract.
    I really want to be fare to both the Author and to TRP.

    What would you recomment?

    Another issue for publishers:
    Example:
    Author wants to terminate the 7 year contract early.
    the Contract is 3 years old.
    Company has 250 Hard Cover and 100 Paper Backs in stock.
    The agreement states that the author may purchase at a 60% discount.

    What would be a fare settlement for both the author and publisher?

    Thank you in advance.
    Bruce

    1. WriterBeware Post author

      Bruce,

      A good termination clause is most important in a life-of-copyright contract. Ideally, it will ensure that the book is taken off the market, and the writer can demand rights reversion, once sales fall below a specific minimum level. For a small press–depending on average sales–that might be fewer than 10 copies sold in two (or four, if the royalties are paid quarterly) consecutive royalty periods. This prevents the publisher from holding on to the rights for a book that isn’t selling.

      For a publisher (as opposed to a self-publishing service, where terminate-at-will clauses are essential), I don’t think that allowing authors to terminate a contract early serves either the author’s or the publisher’s interest. It’s much better to simply have a reasonable grant term (7 years is too long, in my opinion; 3 or 5 years would be better), or, if it’s a life-of-copyright contract, a detailed reversion clause as described above that kicks in once the book has ceased to sell in significant numbers. I’m especially opposed to contracts that let the author terminate early, but impose some sort of kill fee or purchase requirement.

  2. Pingback: Mind Sieve 10/10/11 « Gloria Oliver