Thursday, January 24, 2013

Understanding Contracts

When a publisher hands you your first contract it can be a heady experience. You are finally going to have a published book with your name on the cover. You are over the moon and so thankful to the publisher who is giving you your chance finally. You look at the thick document and you’re positive the publisher has your best interests at heart, she’s been so lovely throughout the whole process, and there really is no reason to waste your time reading all of the fine print.  So you sign and initial and date and you get your copy and throw it in the corner on top of your exercise books from form two and the Cosmos you’ve been stacking up for five years for a reason that has yet to make itself clear. You forget about it. All you want is to see is your novel with your name on the cover.

Everything in this scenario is wrong. The first and foremost thing for a writer to keep in mind at all times is that the publisher is part of a money making enterprise. The less they can give to you the writer the better. It doesn’t mean they are nasty or cheating, they’re actually doing their job, trying to make money for the business that employs them. The only one in that little group that cares about the writer is the writer. If the writer relinquishes that duty, no one will be doing it for them. If you remember nothing else remember that.

The contract the publisher gives you is a draft. It is what they want. When they give it to you, you as the writer should now say what you want. Then negotiations begin. You must be realistic. If this is your first book and you have no track record, you are not going to have a lot of negotiating power. Aim high but be willing to accept less. But know your limit. At any point until the contract is signed you can walk away from the deal. It’s better to walk away than to have your book tied up with a publisher who is sitting on it doing nothing.

A standard writing contract will have some important parts a writer should pay attention to and understand completely.

1) What are you giving away?
Most publishers would want exclusive world rights to your book for eternity. If the publisher is small and unable to sell your book world-wide why should your book be tied up with them? These rights should be negotiated. You can set geographical parameters and time limits when the copyright reverts back to you.
2) What is the royalty rate and on what amount?
I hear many new authors complaining, “My book is sold at the shop for P100 and I’m only getting paid P6 per book.” Or  “Why should I get 10% and the publisher get 90% of the money?” Both of these statements show a lack of understanding of the contract and the bookselling business.

First, the publisher is taking on a lot of costs to get your novel from manuscript stage to published book. Try self-publishing and that will give you some insight into the costs involved.  Also, in most contracts you get paid royalties on net not gross. What that means is you get paid royalties on the money the publisher receives for the book. Publishers offer discounts to booksellers so that the bookseller can make some money too. If the cover price is P100 at the bookshop, the publisher might have sold that book to the bookshop at about P50, so you will get your 10% on the P50, not the P100, which seems only fair since the publisher only receiver P50 on the sale of that book.
3) Advances and royalty rates
In Southern Africa it is not common to receive advances on books, but in USA and Europe it is standard practice. An advance is money given to the writer when they sign the contract. It is an advance on future royalties. For new writers, it is usually quite small as it is a gamble if they will sell any books. For established writers, it can go into large sums. But when royalties are earned the advance is deducted. Sometimes if the book bombs terribly the publisher will ask the writer to pay back the advance, though this is uncommon.

Royalty rates in Southern Africa are usually 10%. This is not written in stone. I personally have book contracts that range from 10-18%. It will depend on what you can negotiate, and you must always negotiate. And even though I’ve said advances are uncommon, depending on the project and how much the publisher wants it, advances can be negotiated too.

The important thing to remember is that everything is negotiable on a contract. Sign nothing until you understand it, but be realistic.


Sue Guiney said...

You sound like my lawyer husband -- and you are both so right. My impulse is always to think the publisher is my friend and so I don't have to negotiate. but the contract isn't about friendship. It's about business, and the only friend you have in this situation is yourself. It doesn't mean the process has to be contentious, but it does have to be seen as a business transaction. This is such an important post, Lauri. I hope you don't mind if I tweet and share it on fb.

Lauri said...

I'm more than happy for you to share it, thanks Sue.

Lauri said...

I'm more than happy for you to share it, thanks Sue.

Vanessa Gebbie said...

Brilliant post. Whether you are in UK, USA or Botswana, this is brilliant. There is a lot to learn from this, Lauri - thank you and I'll spread it about too.

TJ Dema said...

Aha, ofcourse. Thank you Lauri.

Beverley Nambozo Nsengiyunva said...

Invaluable, thanks.

Myne said...

Thanks for sharing, Lauri :)

Ann Summerville said...

Great post. Having worked in the legal field for years, I cringe when people say "I signed it because it was a standard contract." There's no such thing. I've heard horror stories from many authors. I still think self publishing is the best way to go. At least you're only paying distribution fees and no one else can pull your books from the "virtual shelves" except you.