Contract red flags, ranked by severity

What should authors look out for in royalty rates? #

Royalty rates are a critical component of any publishing contract, directly impacting your earnings. Here are the key points to consider:

• E-book royalties: The standard in the industry is around 25% of the publisher’s net receipts. However, the Authors Guild argues that 50% of net is a fair rate. Be wary of contracts that offer less than 25% of net, as this can significantly reduce your earnings given the high profit margins on e-books.
• Net vs. list: A royalty on list price is based on the cover price, while a royalty on net is calculated after the retailer’s discount, which can be 40–55% off. This means the same percentage on net pays roughly half compared to list. For example, a 10% royalty on a $20 book with a 50% discount would net you $1 instead of $2. Always clarify whether your royalty is based on list or net.
• Audiobook royalties: Common rates are around 25% of net. Given the higher production costs, ensure that the royalty rate reflects the market standard and the potential revenue from audiobook sales.

How can rights grants affect an author’s career? #

Rights grants can have long-term implications for your work and career. Here are the key considerations:

• World rights: Granting world rights to your publisher means they control the sale of your book in all territories. While this can be beneficial if your publisher has a strong international presence, it can also limit your ability to sell rights separately or work with other publishers in different regions. Make sure the contract specifies adequate compensation for these rights.
• Subsidiary rights: These include rights for film, television, translations, and more. Negotiate for a higher percentage of the revenue from these rights, as they can be lucrative. The standard for subsidiary rights is often 50/50, but some publishers may try to negotiate for a higher share.
• Reversion rights: Make sure the contract includes clear reversion clauses that allow you to regain rights to your work if the publisher fails to keep it in print or meet certain sales thresholds. Vague or unlimited reversion rights can leave your work languishing with the publisher indefinitely.

What are the dangers of non-compete clauses? #

Non-compete clauses are designed to prevent authors from publishing works that compete with the publisher’s interests. However, they can be overly restrictive and harm your career:

• Scope: A non-compete clause that is too broad can prevent you from publishing any similar work, even if it is in a different genre or under a different name. Make sure the clause is specific and limited in scope.
• Duration: Non-compete clauses that extend for an indefinite period or for several years can severely limit your ability to publish other works. Negotiate for a shorter duration, such as one to two years.
• Geographical limitations: Some non-compete clauses may restrict your ability to publish in certain territories. Make sure the clause is limited to the territories where the publisher has a presence.

How do hidden costs impact an author’s earnings? #

Hidden costs can erode your earnings and catch you off guard. Here are the key points to consider:

• Editing fees: While some publishers cover editing costs, others may pass them on to the author. Given the median costs of developmental, line, and copy editing (ranging from 3.0–7.3¢/word), these fees can add up quickly. Make sure the contract specifies who is responsible for these costs.
• Marketing fees: Some publishers may charge authors for marketing services. These fees can be substantial and may not always result in increased sales. Clarify what marketing services are included in the contract and whether there are any additional fees.
• Production costs: Costs for cover design, interior formatting, and ISBNs can also be passed on to the author. For example, a single ISBN costs $125, and a fiction cover design can range from $625–$1,250. Make sure the contract specifies who is responsible for these costs.

How can authors protect themselves in contract negotiations? #

Protecting yourself in contract negotiations is key for safeguarding your rights and earnings. Here are some strategies:

• Seek legal advice: Consulting with a lawyer who specializes in publishing contracts can help you understand the implications of each clause and negotiate better terms.
• Understand your rights: Familiarize yourself with industry standards and your rights as an author. This knowledge will empower you during negotiations.
• Negotiate for better terms: Don’t be afraid to negotiate for better royalty rates, rights splits, and reversion clauses. Publishers may be willing to compromise on certain terms.
• Get everything in writing: Make sure all agreed-upon terms are included in the contract. Verbal agreements are not legally binding and can lead to disputes later on.

Frequently asked questions #

What is the standard royalty rate for e-books?

The standard royalty rate for e-books is around 25% of the publisher’s net receipts. However, the Authors Guild argues that 50% of net is a fair rate.

What are subsidiary rights, and how do they affect me?

Subsidiary rights include rights for film, television, translations, and more. They can be lucrative, and authors should negotiate for a higher percentage of the revenue from these rights.

What is a non-compete clause, and why is it important?

A non-compete clause is designed to prevent authors from publishing works that compete with the publisher’s interests. It is important because it can restrict your ability to publish other works, potentially harming your career.

What are reversion rights, and why are they important?

Reversion rights allow authors to regain rights to their work if the publisher fails to keep it in print or meet certain sales thresholds. They are important because they ensure that your work is not left languishing with the publisher indefinitely.