Five Publishing Contract Clauses I Hate (And How To Fix Them)

If publishing industry contracts aren’t notorious at this point, they should be. These contracts routinely combine the worst of Hollywood accounting, music-industry-level exploitation of the author’s time, thoroughly problematic liability clauses, and a maximalist approach towards ownership of rights by a publisher. In return for all of these, the typical author gets a miserly advance, an meager amount of assistance with promotion and advertising, and a guarantee that their story will go out of print in the near future and stay that way forever.

There’s a lot of reasons for this. One of them, sure, is that the Big Five publishers — Penguin/Random House, Hachette Book Group, Harper Collins, Simon and Schuster, and Macmillan — are immensely prestigious, and they exhibit some of those egregious clauses. But I think a bigger driver in the indie publishing space is that the contracts are being drawn up by parties who haven’t actually put that much thought into some of the clauses, and they’re being negotiated with authors who aren’t aware of what the clauses mean.

I don’t say this to be insulting. I’ve seen some very thorough attention to detail in parts of a contract here or there! But I’ve also spoken with publishers, ones who have published dozens of authors and well over a hundred books, who simply… hadn’t considered what a clause implied. And those implications matter.

Your publisher might disagree that the implications matter, of course. So might many of your fellow authors; there’s an attitude among many indie author communities that the important thing is just to write, to publish, to build a back-catalog. It’s a numbers game, the logic goes, and you don’t want to risk your relationship with publishers.

I disagree, obviously, or I wouldn’t be writing this article. These are legally binding contracts. Any publisher unprofessional enough to take personal offense at a respectful negotiation isn’t a company you should be trusting to do the right thing when the contract allows them to do otherwise.

So, without further ado: I am not a lawyer (much less your lawyer), this is not legal advice, and here’s five kinds of clauses I hate — all of which I’ve seen in contracts from independent publishers.

1: Net Profit Royalties

There are, approximately, three kinds of royalties in the publication world. (In all three cases your royalties go towards paying back your advance before you get another cent.)

The first is “list price” royalties, where you get paid based on the nominal list price without any discounts; this is perfectly fine, though it doesn’t make sense with Kindle Unlimited, Audible, or other subscription services.

The second is “net income” or “net revenues” royalties, where you get paid based on how much money your publisher is actually receiving. This is also perfectly fine! It does wind up meaning that you make less money per book sold on the same percentage of royalties, which is something you should bear in mind — Amazon has an ever-increasing load of junk fees, and discounts offered by a publisher will reduce your royalties if you’re on net. But that’s accounting details; and net income is the only sensible way to navigate services like Kindle Unlimited where there simply isn’t a list price.

The third, and the one that burns me to see, is net profits. It’s a clause whose very existence I find repellant, and it’s the first of the five I want to talk about here.

So, why is a net profits clause so terrible? Well, what exactly is profits? Oh, it’s revenue after expenses. … so what are expenses?

Editing (dev, line, copy), proofreading, typesetting, a cover, production for an audiobook, these are all expenses, obviously. How about marketing and promotion? Warehousing, shipping, and remaindering if your publisher handles fulfilment? These are all definitely expenses. But so’s the work of everyone involved; even if you’re willing to deduct the ad buys from the accounting of your revenues, you might not be willing to add to that the time spent by the marketing consultant. Especially since you don’t get to decide how much money that marketing consultant gets paid.

Or, say, the person who sets up your author page on their website. Or the time of the person who’s jumping through Amazon hoops. Or the accountant. All of these administrative costs are expenses, and a publisher can easily claim them against your profits despite them not being specifically related to your book — and even those expenses which are related to your book, you have no guarantee they’ll charge market price for rather than “billing” you an inflated amount for the time of one of their employees.

This isn’t an academic matter, and it’s not an idle hypothetical. Hollywood accounting is as profane as it is notorious, and it’s not limited to just Hollywood.

So how should this be fixed?

Well, the obvious solution is to cleanse it with fire; it’s just a flat-out unjustified way to structure the deal. And publishers certainly seem to agree — of the six contracts publishers have sent me, five of them use net revenue.

But if a publisher insists on sticking with a net profits royalty calculation, and if you really want to go with that publisher specifically, you need to establish three things: a set of things that they’re allowed to deduct against the revenue (and make it explicit that they can’t deduct anything else!), a hard cap, and the right to object. There are a lot of ways to structure the latter, but “how do you make a net profits clause non-exploitative” is something you want to talk to a lawyer about. Your lawyer, a lawyer whose client is you and whose domain of expertise is this specific thing.

2: All-Encompassing Rights Clauses

A publishing contract, especially an indie publishing contract, is at heart a simple exchange. An author has a book; a publisher has capital and connections/expertise in the non-writing domains. The publisher uses those two things to get the book in better shape for publication and to navigate the trials and tribulations of publication and promotion, and for this they get some percentage of the money from sales.

This isn’t a work for hire. The author has already written a book! There isn’t a salary being paid to the author, or an hourly wage. There’s a product that exists right now and which needs to be improved and launched, and there’s a counterparty with the means to make those improvements and launch it. There’s a firm timeline in which these things will happen, and concrete clauses for what happens if they don’t.

None of these descriptions apply to adaptations. If the contract gives the publisher the rights to a comic adaptation, you are almost certainly not getting one; they’re asking for the rights in case your story gets huge or they get an opportunity to resell it. In the meantime, if you want to make a comic, well, they have the rights; they’re not doing anything with those rights, but neither can you.

The same applies for translations. The same applies for audiobooks. The same applies even more so to subsequent works in the series. These are rights that you may well want to exercise yourself — the audiobook market is big and growing — but which your publisher might not be interested in or think it’s worth their time to pursue.

How I Would Fix These Clauses:

If you’re not going to just remove them and leave only the rights that are going to be immediately exercised? (Which would be, for most publishers, worldwide rights for all English language print and ebook formats?) Put a “Use It Or Lose It” rider on them.

Listen, I’ll readily admit that I’m not a huge fan of publishers hedging against the success or failure of a story by having it both ways. I don’t think that they’re actually valuing anything other than the immediate rights they’re planning on exercising when they offer advances and royalties; I don’t think they’re actually paying more for the other rights. But there’s a big difference between a publisher making sure they have a ticket to profit off of an unexpected success versus a publisher squatting on the rights.

A publisher doesn’t have any legitimate interest in squatting on the story’s rights, which means they have no legitimate objection to a clause which grants the author the right to go elsewhere with unexercised rights if they find a route to exercising those. (Sure, sure, give it a time window; add a good faith clause; these are details and I’m not giving you legal advice.) If they think an audiobook is going to be successful enough to reduce the ebook revenue and so they want to sit on the audiobook rights to prevent one from being made because making an audiobook is a bunch of effort they don’t want to engage in, that’s Bad, Actually! If that’s why the publisher is demanding irrevocable rights that they don’t plan on exercising, you should push back on it and, if they balk on changing it, factor both the loss of reach/readership/income on your part and their priorities into your business relationship with them.

Likewise, it’s one thing for a publisher to demand right of first negotiation or right of first refusal, but it needs to be first negotiation/refusal (as opposed to “you can’t publish your next story with anyone but us” or similar) and there needs to be a time limit on exercising it. No publisher worth the word is incapable of making up their minds about what they want to offer you for a story within ninety days.

3: Onerous Warranty & Indemnity Clauses

These are technical clauses that are almost never invoked. Nobody’s suing publishers, right, so there’s no worries about publishers turning around and passing that on to authors when it’s not justified. Right? It’s not like the United States has abandoned truth as a defense for libel /defamation — oh wait, that happened, and also there are countries out there where it’s illegal to publish LGBTQ fiction at all (relevant to my story, and sure, maybe not yours, dear reader).

The point of a warranty & indemnity is that you’re making certain commitments (“I own the IP and can legally sell you the publishing rights”, for example) and if you’re lying or you break them later the publisher can recoup legal fees from you. That’s legitimate! The publisher is valid in not wanting to eat a giant lawsuit because your story was secretly a political broadside involving your self-insert going around and checking out all of your political enemies as they burn in hell. (Dante was so valid, y’all.)

What’s not legitimate is having the author indemnify the publisher against alleged, rather than actual, breach. Also, asking a writer to warrant that their work is legal to publish in every jurisdiction in the world. How the shit is a writer going to know that? We’re not lawyers, and we’re especially not lawyers who know what the law is in every country where Amazon publishes ebooks.

If your publisher doesn’t want to change these clauses, I’ve gotta ask: why? If the publisher doesn’t think there’s a situation where they’re going to turn around and try to collect from the author when some chud sues them on spurious grounds, then the publisher doesn’t lose anything by making the clauses more reasonable.

What Needs To Be Fixed:

I’m not going to give a long analysis here. I’m just going to lay out what I think the clauses should (approximately) look like.

1. The author warrants that the work is legally publishable to the best of their knowledge and isn’t in the public domain.
2. Author and publisher indemnify each other for any damages-after-insurance owing to actual breach which arise out of a final settlement. (Yes, each other; it should be reciprocal.)
3. Author and publisher will cooperate with each other if there’s a lawsuit.
4. If either of author or publisher is trying to hold the other liable for legal fees, that has to come with some degree of actual input on the case.

4: You Should Have A Reversion Clause

There are a lot of books that are out of print. Like, a lot of books! Some of these were even ebooks at one point, but despite the fact that the author would like to have them distributed again it is not in the author’s power to do so.

There are various reasons why publishers do this. They might feel that the book is competing with other books whose royalties are lower, or where there’s a larger brand to build, for example. There are tax shenanigans around having unexploited IP, there’s a sort of false scarcity thing, there could be personal dislike, the distribution platform might have decided to boot you off and it’s too much of a hassle to appeal it, there’s a bunch of reasons.

All of these reasons suck for the author. It’s an impediment to building your back-catalog, to building your brand, to building your community — and it just plain sucks to have written and published something and not be able to share it with others!

This problem is made vastly worse when it’s a “length of copyright” term for exclusive publication. It’s one thing to lose out on the right to have your story available to anyone through licit means for seven years; it’s another thing entirely if it’s seventy.

At some level, it doesn’t actually matter why a publisher wants to have the option to not have a story available for purchase. Authors should not accept it. This is not work-for-hire; the entire purpose of the publishing agreement is to publish and make available the work in question.

How To Fix It: A clause reverting the rights for publication in a given format to the author after six months of the work not being generally available in that format. That’s enough time for a publisher to fix any problems that came up and got the book yanked from, say, Amazon, while still preserving the fundamental nature of the deal: the publisher gets to publish the work.

5: Overly Controlling Secrecy Clauses

I understand that publishers are running a business, and that business involves using the available pieces of leverage to make as much money off of each individual author as possible. And indeed, when you obfuscate peoples’ royalties and advances, you get much the same result as when companies obfuscate peoples’ salaries: you get to negotiate with each individual author independently, without them knowing what other authors are getting and therefore with them not knowing how much they should be asking for and/or expecting.

I don’t expect that any publisher is going to be willing to remove that from their contracts. And you know what? That’s fine. It’s not great, and I’d love to see it change and for the standard royalties and advances for different publishers be a matter of public record… but obviously I would want that to happen — I would benefit tremendously, if only because I’m a nerd who loves to see the numbers. There’s a concrete business interest on publishers’ parts, one that’s legitimate in a real sense, and I respect that.

But your secrecy clause should not include a ban on discussing the technical, non-financial terms of your contracts. Your secrecy clause should not prevent discussion of how well the book has sold. Your secrecy clause probably legally can’t prevent an author from discussing the contract with lawyers, accountants, and other professional assistance, and it certainly shouldn’t try to do so.

And inasmuch as the secrecy clause in a contract is wielded to prevent an author from discussing their relationship with the publisher, inasmuch as it exists to stifle truthful critique, reporting, or discussion? That shit should not be in there.

There exist trade secrets, and sure, the amount of money that’s exchanging hands can be among those. But let that be the end of it. Yes, it’s advantageous to muzzle authors and prevent them from saying things that are truthful but put you in a bad light; it’s still deeply shitty, and I hate it.

And fundamentally, that’s what this blog post is about. It’s not me saying I have the power to change the world. It’s not me saying that there’s some moral imperative for publishers to change what they’re doing, at least not for this clause.

I just hate it.

How To Fix It: Confidentiality clauses should apply only to trade secrets, private communication, and anything directly related to how much money is exchanging hands. Confidentiality should apply only to matters that haven’t already entered the public domain to no fault of the party in question, and confidentiality should be reciprocal.

In Summary:

Indie book publication is a business. It’s a business in which there are a vast number of authors and a moderate number of publishers. When you’re doing business, you should do so in a professional manner and with attention to detail — and that means that your contracts should be negotiated as one professional to another.

None of the publishers I’ve interacted with in the space in which I write are nefarious or ill-meaning. But every contract I’ve seen has at least some things I have serious problems with, and many of these things are ones where, when I’ve brought them up with publishers (often through other authors who have asked me for my advice), the publisher doesn’t actually care about what the clause says; they just grabbed something from a template or had the lawyer they put on retainer give them something.

They also sometimes have grammar and spelling issues! And it’s no more a personal insult to ask that there be a rights reversion clause if the story is no longer available for purchase than it is to point out a homophone substitution error.

Remember: authors and publishers are in a mutually beneficial relationship. We want to get published without having to find our own editors and run our own ad campaigns; you want to publish books without having to pay someone a salary. Let’s move our contracts towards something that reflects the mutuality of the underlying truth.

Anyway, thank you for reading this. If you’re interested in reading more of my writing, you should instead read Cory Doctorow’s blog “The Pluralist”, Matt Levine’s newsletter/column “Money Stuff”, or any number of other writers who are better than I am. But if you’ve already read those and want some fantasy civics, divinity, queerness, and alchemy-as-chemistry/chemistry-as-alchemy, you could take a look at my web serial, Quill & Still.