Who Does Your Publishing Contract Protect?

As ALLi's Services Watchdog, I've seen a dismaying number of disputes that could have been avoided with a proper contract. And, I've seen just as many disputes where a bad contract ties the client's hands while letting a bad service provider dodge their responsibilities.

A contract is a formal description of what two parties will provide, and what they will receive in return. It's meant to protect both parties in the event of a misunderstanding or one party's failure to perform. However, some publishing contracts serve to indemnify the publisher while offering little protection to the author.

Wading through pages of dense legalese peppered with “heretofores” and “notwithstandings” is an excellent cure for insomnia, but the effort spent deciphering those arcane incantations is an important investment that can avoid wasted money, wasted time, and anguish. Authors must ensure that their rights are not compromised by a bad contract.

Here are ten of the most common contract pitfalls indie authors must watch out for.

Look for the exit

The first thing you should look for in any contract is how you can get out of it.

Exploitative vanity presses often rely on termination clauses to snare unwary authors. They spell out the process by which the author may cancel the contract and secure a refund, and these are frequently very short timeframes. When an author begins to suspect that they've signed up for a bad deal, the vanity press may try to stall or pacify them until the refund window has expired.

Others require the author to pay a termination fee to get out of the contract, a practice we at ALLi strongly discourage.

Before you sign a contract, understand when, why, and how you can exit that agreement. Put a reminder on your calendar as those deadlines approach so you can assess whether the service is fulfilling their obligations and promises. If they're not, get out while you still can.

Set standards for performance

The contract should specify what happens if the publisher fails to publish the book. If the publisher fails to capitalize on your work by a given date, all rights should revert to the author and the contract should terminate. Otherwise, your book could be in limbo indefinitely.

Know your rights, and hold onto them

In publishing contracts, it's vital that you understand what rights you're handing over to the publisher, and how you will be compensated for those valuable assets. Be extremely wary of language that allows the publisher to license or sell your work without your explicit approval.

One publisher we've received several complaints about includes a clause in their contracts allowing them to license or sell the author's work to a third party. The royalties seemed generous… at least until the authors discovered that their work had been sold in bulk, for a pittance.

Picture it: you spend months of your life crafting a novel, and with one stroke of a pen, it's handed over to a shady company that will do nothing with it. No one will read your hard work, because it's now essentially out of print in the largest markets of the world. The new owner has no interest in selling you the rights back. And all you have to show for it is a sum smaller than a few months' sales.

Never grant rights beyond what the publisher needs and can effectively market. Don't grant worldwide rights to a publisher who only distributes to the United States. Don't give away print rights to a publisher who is digital-only. Don't grant audiobook rights to a publisher who doesn't produce audiobooks.

And when you sign away those rights, be fully aware of their value, be sure you're receiving appropriate compensation, and know when and how those rights will be returned to you.

Exclusivity is a valuable consideration

When a publisher or service requires exclusivity, you are giving up the right to publish your book with other services or to sell it on your own. That's a risk you're taking on; if the company does not live up to their promises, you may find yourself tied inextricably to their substandard service.

So, if a contract requires exclusivity, you must be certain that the company is worthy of that trust, and you must receive value for the risk you're assuming.

Neutral arbitration isn't always neutral

Arbitration clauses require the author to bring any disputes to a supposedly neutral arbiter instead of filing suit in a court of law. While this isn't necessarily bad, there are situations where arbitration is not to the author's advantage.

Arbitration may be binding or non-binding. Non-binding arbitration means that if you don't agree with the arbiter's decision, you may still file suit to recover damages in court. With binding arbitration, you must agree to the arbiter's decision, and this can be problematic if the arbiter is biased or unqualified, as sometimes happens when the contract allows the other party to choose the arbiter.

Of particular concern is the rising trend of religious arbitration, where arbiters issue decisions based on religious teachings rather than legal precedent. These religious tribunals may not have a solid understanding of publishing practices. Worse, they may be biased in favor of the service provider.

One Christian publisher includes mandatory, binding arbitration in their contracts. The arbiter they select in a dispute is the pastor of the owner's church — and a friend of the owner. Can you guess who the decision favored?

Who is in control?

Read your contract carefully to determine what control you have over the publishing process. Do you get any say in the editing? Cover design? Pricing? Know what processes you are turning over to the publisher.

Publishers sell books to readers, not authors

Avoid any publishing contract that requires you to purchase a specific number of copies of the book from the publisher. Legitimate publishers make money by selling books to readers, not their authors.

Don't be a hand-me-down

Assignment clauses specify whether a contract and the rights it conveys can be transferred to another party. For example, a publisher may sell its catalog to another publisher, either for profit or as part of the company's liquidation.

Assignments should always require the explicit written consent of the author. Without this assurance, you may find your contract in the hands of a completely different company than the one you signed on to, and there's no guarantee this new company will be reputable or competent.

Keep your options open

An option clause requires you to make your next book available to the publisher, usually at the same terms as the first book. This is a potentially ruinous clause that must be examined carefully. It binds the author to the publisher, and it may preclude negotiation for better terms if the author's first book is a smash hit.

A gentler version of this is the right of first refusal. This clause requires the author to submit their next book to the publisher, who can then make an offer for it. The author is not required to accept the offer; it just gives the publisher the first chance to bid on it. This puts the author in a much better position to negotiate for the best possible terms.

Whatever form these clauses may take, they should have a clearly defined time limit in which the publisher must act. Beware of open-ended terms that could keep your book off the market for an unreasonable period of time.

When in doubt, seek help

Although the essence of contract law is clarity, it can nonetheless be bewildering for novice and experienced authors. If contract language is unclear, seek professional help to help you decipher it.

ALLi members receive free contract advice as a benefit of membership.