Thursday, September 29, 2011

Bad Publishing Contract Clauses, Part 1

Posted by Victoria Strauss for Writer Beware 

I 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.

Monday, September 26, 2011

Trouble at Aspen Mountain Press

Posted by Victoria Strauss for Writer Beware

To all appearances, Colorado-based Aspen Mountain Press is an active and problem-free publisher. According to its Submissions page, it is currently seeking new fiction, and it recently launched a SF/fantasy imprint.

This attractive facade, however, is misleading. For a number of weeks now, I've been hearing from authors and staff about major troubles with AMP. Complaints (see this example, which is similar to the reports I've received directly) include nonpayment of royalties, continuing to sell books whose contracts have expired, delayed publication schedules, and lack of communication.

Word of problems with AMP first surfaced this past June, when an AMP staff member announced that AMP's founder, Sandra Hicks, was taking a leave of absence from the company and senior staff were assuming responsibility for all operations.

Apparently, those efforts didn't bear fruit. AMP's senior staff quit en masse in early August. Subsequently, Ms. Hicks became incommunicado, reportedly refusing to respond to phone calls, email, or paper mail. Scheduled books weren't released; scheduled royalty payments weren't made.

Ms. Hicks broke her silence in late September, promising to remedy some of the delayed releases (though apparently that hasn't happened yet). But many of AMP's authors, fed up and frustrated, just want their rights back.

Will AMP survive? At the moment, the signs aren't promising, though you never know. For now, authors considering submitting to AMP are well-advised to hold off until the current problems are resolved (if indeed they can be).

You can read much of the ugly story at Absolute Write. Relevant discussion starts on page 4 of the thread. Also see first-hand accounts by AMP authors Esther Mitchell, Celia Kyle, Grace Wen, and Andy Dunn.


Friday, September 23, 2011

PUBSLUSH Press: Update

Posted by Victoria Strauss for Writer Beware

On Tuesday I posted about PUBSLUSH Press, a new crowdfunding venture for books. I found it an interesting idea (rather than just donating cash to worthy projects, PUBSLUSH supporters actually pledge to buy books; if the number of supporters reaches 2,000, PUBSLUSH publishes), but had a number of concerns, especially regarding PUBSLUSH's publishing contract.

PUBSLUSH contacted me soon after I put the post online, and we had a cordial email exchange. As a result, they've made some positive changes--but unfortunately a number of important issues remain unaddressed.

The discrepancies in the number of supporters required for publication, as well as in the royalty rates, have been resolved. A new publication agreement has been posted, and the figures are now consistent with the information in PUBSLUSH's FAQ.

Authors' 120-day display commitment now extends from the date of submission (before, for authors who submitted while the site was still in beta, the clock didn't start ticking until the official launch).

The website's misleading characterization of the $5,000 publication bonus as an advance has been corrected.

I was also concerned by the fact that simply submitting to PUBSLUSH constitutes acceptance of the terms of its publishing agreement. That's not something PUBSLUSH seems to want to change, but they did tell me that they'll be re-desiging their submission page to make it clearer to authors that they're binding themselves to a legal agreement.

The publication agreement (though not the website) clarifies the circumstances under which PUBSLUSH will morph into writers' literary agent, and states a commission: 15%. This is good to know, but still a concern--there's an inherent conflict in a publisher also functioning as a writer's agent, possibly in what ought more properly to be a subrights licensing situation.

Unfortunately, also, PUBSLUSH doesn't seem to want to address the other contract issues I flagged. I'm particularly worried about the lack of an adequate rights reversion clause (not only is "out of print" not defined, books must be out of print for a full two years before authors can request return of rights; PUBSLUSH insists that "two years is standard in any publication agreement," but this is just not true); about the fact that royalty rates aren't fixed (they will be set only upon a work's selection for publication, which means that writers must bind themselves to a publication agreement with no idea of what they will actually be paid); and about the option clause's sweeping claim on sequels and related works.

Last but not least--and leaving aside all questions about the viability of the PUBSLUSH concept--I remain concerned about PUBSLUSH's staff's apparent lack of publishing industry experience.

PUBSLUSH's willingness to respond to criticism, and to put changes in place, is welcome and commendable. But there's still plenty here to suggest that writers should be cautious about its publishing venture.

EDITED JULY 2013 TO ADD: Pubslush has changed its basic business concept. Its crowdfunding model now works more like Kickstarter, except that authors keep the money they raise whether their campaigns reach their goals or not (more at PW). There's no longer any publishing commitment or obligation for authors who use the crowdfunding platform.

Crowdfunding is now Pubslush's main focus. In accordance with this, it has de-emphasized the publishing side of its business. However, according to its website, it is still committed to "pioneering a new kind of flexible, highly mobile publisher," and Pubslush Press does still plan to acquire books that "trend highly on the site."

I haven't seen a current Pubslush publishing contract (I asked, and was refused), so I don't know whether the contractual problems I've identified above have been addressed, or whether they remain.

Wednesday, September 21, 2011

PublishAmerica and CBA: Rowling Redux

Posted by Victoria Strauss for Writer Beware

I'm sure you all remember the notorious J.K. Rowling Incident, in which PublishAmerica tied Rowling's name to one of its numerous author promotions. Rowling was not amused; through a spokesman, she made it clear that she had no relationship with PublishAmerica. Subsequently, her legal team sent PA a cease and desist demand, which occasioned a truly jawdropping "tone" response from PA.

Given how annoying or embarrassing this was for everyone involved, you might think there wouldn't be a repeat.

Whoops.

PublishAmerica authors report receiving the following solicitation:
Dear author:

There are 1,100 Christian bookstores. in the United States. That's a lot of bookshelves they need to keep filled.

The week after next is Christian Store Week!

The CBA, formerly known as the Christian Booksellers Association, is encouraging authors to schedule an in-store event in their area Christian bookstores. We'll be happy to submit your name.

Your book in a full-color Fall sales/marketing catalog will go next week to the Association for Christian Retail. We will also contact each Christian bookstore separately!

We're making a high quality, full-color, attention grabbing, easy-to-order presentation next week for the Christian bookstores association. They need to know about America's lowest retail priced book: your book.

Secure your book's spot in this high quality full-color 8 x 11 presentation for the Christian bookstores. Go to www.publishamerica.net/ChristianStores.html to activate. Your book and your name will be promoted in prominent and beautiful full-color. We'll also tell them in what town/state you live, so that area stores know you're there!

Must choose a shipping option to activate. No use of coupons allowed. Mention your book title(s).

Thank you,

--PublishAmerica Bookstore

DISCLAIMER: PublishAmerica has no affiliation with the CBA and/or individual Christian bookstores beyond that of a regular publisher/bookseller relationship, without preferential access or other special treatment. No specific result from PublishAmerica's best efforts to represent and promote its authors and their books is suggested or guaranteed.
The cost: anywhere from $49 to $99, depending on which option you choose.

Note the disclaimer. Clearly, PA doesn't want another Rowling situation on its hands. However, disclaimers aren't always enough.

The solicitation was forwarded to CBA--and like Rowling, they are not amused. I learned this evening that CBA has sent a warning to the Operating Board of American Christian Fiction Writers, which has been passed on to ACFW members. CBA has also posted the following alert in their e-news feed:
WARNING TO CHRISTIAN AUTHORS

CBA has been informed that Christian authors are being contacted by an organization called PublishAmerica that¹s soliciting for authors to submit their books to a sales/marketing catalog that they claim will be going to CBA. Please be aware that CBA has no knowledge of PublishAmerica; that PublishAmerica is not connected to Christian Store Week; and that CBA has no agreement of any kind with PublishAmerica, nor is CBA affiliated in any way, shape, or form with that organization.
Eric Grimm, CBA Manager of Strategic Partnerships, confirmed for me in email that this information has also been forwarded to Christian Retailing, the trade journal for Christian and church bookstores.

Whoops, indeed.

Tuesday, September 20, 2011

PUBSLUSH Press

Posted by Victoria Strauss for Writer Beware

I've been getting a number of questions lately about PUBSLUSH Press.

From PUBSLUSH's FAQ page:
What is PUBSLUSH Press? PS Press (as we prefer to call ourselves) is a full service publishing platform that connects writers directly with their readers using social media. We operate like a traditional publishing house, except we let the reading public decide what gets published. Best of all, we give you the power to change lives. For every book purchased, we will donate a book to a child in need.
What this means, basically, is that PS functions rather like Kickstarter, Unbound, and other crowdsourced funding websites--except that instead of pledging cash, donors promise to buy books once they're published. Writers submit 10 pages plus a summary of their manuscripts to the PS website, where the submission is displayed for 120 days. Potential supporters can read the material and, if they like it, pledge their support--from $25 to receive physical and digital copies of the book, to $500 to receive the books plus a variety of perks such as a dedication and a copy of the original manuscript (you must submit your credit card information in order to make a pledge, but according to PS's FAQ, your card is only charged if the book is selected for publication). Once a book receives 2,000 supporters (though see below), PS will publish it, and pay $5,000 to the author (again, see below). There are no entry fees or other fees to participate in the site.

Leaving aside any reservations about the effectiveness of crowdsourcing as a way of locating quality material, and any doubts as to whether it's possible to convince 2,000 people to contribute $25 based on 10 pages of manuscript, and the silly "the traditional system is broken so we need a new process" stuff in the About Us section of PS's website, and concerns about PS's apparent use of spam-style emails to publicize its service and recruit aspiring authors...leaving aside all those things, PS seems like an interesting idea. Rather than focusing on funding the creative process--which then may or may not make it in the marketplace--PS cuts to the chase: book sales. Essentially, supporters are pre-ordering books, which means that any author who attains the publishing threshold is guaranteed at least 2,000 sales. Not too shabby, in an overstuffed book market, where sales for small press-published books often struggle to rise beyond low three figures. Plus, there's that $5,000 payment.

But--and you knew there would be a but, didn't you?--there are some unanswered questions, as well as a number of concerns.

- Who is PUBSLUSH Press? What experience does PS's staff have with publishing? There's no information whatever at the website. You thus have no assurance that your book will be competently edited, published, distributed, or marketed. Pre-sales or no, that's still a very important question. (A bit of digging yields this interview, which identifies PS's founders as Jesse Potash and Hellen Barbara, who say they have "extensive experience from a wide array of industries"--but not which ones.)

- If you submit to PS, you're done submitting, at least for a while. PS's Publication Agreement--to whose terms you agree simply by uploading your submission--requires that for the 120 days you'll be on the PS site, you cannot submit to any other publisher or service similar to PS. If you submit while the site is still in beta, the 120 days extends from the website's official launch, not from your actual submission date. Do you really want to put your book on hold?

- While your submission is available on the PS website, PS promises that it will also (theoretically at least, since manuscript display websites haven't proven to be major magnet for editors) be available to publishing house editors. If a contract offer results, PS will "act as your agent to facilitate the contract." I could find nothing on the PS website, or in its Terms of Service, to indicate what that entails, or what sort of commission, if any, might be due. This needs some major clarification.

- According to PS's FAQ, 2,000 supporters are need for publication. According to the Publication Agreement, the number is 2,500. PS is in beta, and I'm thinking this discrepancy is a startup glitch--but since submitting to PS constitutes automatic acceptance of all the terms of the Publication Agreement, this is something that really needs to be resolved.

- Another discrepancy: the royalties mentioned in PS's FAQ (35% for ebooks, 20% for direct sales, and 10% for trade sales) don't match the royalties in the Publication Agreement (40% for ebook sales, 25% for audio sales, 10% for trade sales, and 7% for direct and book club sales). Although royalties may be a moot point; see below.

- And another discrepancy: Authors chosen for publication receive $5,000, a payment that PS's FAQ describes as an advance. Per Paragraph 5 of the Publication Agreement, however, the $5,000 is not an advance at all, but a publication bonus that "shall not be used as a credit against the royalties payable to Author pursuant to Paragraph 7 of this Agreement."

What does that mean? Well, according to Paragraph 7,  "Author shall not be entitled to royalties on the initial printing of the Work, and shall receive only the initial publication bonus set forth in Paragraph 5 with respect to income from the initial printing." Royalties become due only on subsequent printings.

This sounds horrible, but in some circumstances--theoretically, at least--could work out in the author's favor. Per the Publication Agreement, the initial printing is 2,500-3,000 copies (remember, most of those copies have been pre-sold). If the print run is 2,500 copies and your book retails for $12.99, your royalties (10% of list price) would have been $3,248, so you'd actually be $1,752 to the good.

It's a bit hard to see how this makes sense, from the publisher's standpoint. Of course, it's possible that when royalties do become due on subsequent printings, they will be withheld till the unearned balance of the bonus is recouped--there's nothing in the Publication Agreement to suggest this, but there's nothing to preclude it, either. Also, any author advantage disappears as cover prices rise--for instance, for a print run of 3,000 and a cover price of $18.99, royalties due would be $5,697, saving the publisher over $600. Keeping cover prices high, therefore, would seem to be to PS's benefit--if not to readers'.

- Again per Paragraph 7, authors receive royalties on electronic and audio versions of the book. Will those royalties be subject to the same first-printing embargo? The contract doesn't say. This is another issue that really needs to be clarified.

- Still in Paragraph 7: "Royalty rates are subject to modification by Publisher for administrative and financial reasons, at Publisher’s sole discretion, and royalty rates shall not be confirmed with respect to a particular Work until such date as Author is notified that its Work has been selected for publication." In other words, authors must agree on submission to a Publication Agreement that offers them no assurance as to what their royalties will actually be.

- These are far from the only issues with PS's Publication Agreement. It's a life-of-copyright agreement with a completely inadequate reversion clause ("out of print" isn't even rudimentarily defined; moreover, authors can't demand reversion until the book has been out of print for at least two years); there are sweeping claims on a wide range of subrights despite the lack of any evidence that PUBSLUSH is capable of exploiting them; there's an onerous competitive works clause; and there's an option clause that amounts to a perpetual option on sequels and related works. Moreover, because submitting to PS constitutes full agreement to all these terms, the author forfeits any possibility of negotiation.

- Did I mention that you bind yourself to all the terms of the Publication Agreement simply by submitting? Yes, I did, several times--but it's a point that bears repeating, especially since writers so often gloss over the fine print. In any situation where submission constitutes automatic agreement, you owe it to yourself to carefully consider what you are agreeing to, and whether you are willing to be bound by those terms if you're picked for publication.

- As I said above, I think PUBSLUSH is an interesting idea, and--except for the founders' possible lack of publishing experience--all the issues I've identified can be fixed pretty easily. However, PUBSLUSH has no track record at the moment. It's an unknown quantity. (As of this writing, only 2 of the 10 properties on PS's website have garnered any pledges, for a grand total of 7 supporters.) Given what it's asking authors to commit to, that constitutes a major risk. Do you want to be a guinea pig?

EDITED 9/23/11 TO ADD: PUBSLUSH contacted me after they saw this post, and we had a cordial email exchange. They've made a number of changes to answer some of the issues identified above. See my update.

EDITED JULY 2013 TO ADD: Pubslush's business model has been re-worked--it is now a crowdfunding site, a la Kickstarter, and has de-emphasized the publishing program, although publishing is still part of its mission. See the note at the bottom of my update for more.

Thursday, September 15, 2011

The Google Books Lawsuit Will Go To Court

Posted by Victoria Strauss for Writer Beware

The Google Books lawsuit, which generated a widely hailed and criticized settlement that was ultimately rejected by the court, will go to trial--although the parties in the case say that they are still in talks.

Per Publishers Weekly,
The Google Books case is headed to litigation. At a status conference Thursday, Judge Denny Chin adopted a proposed trial schedule that, if followed, would have the case ready for trial by July 2012. But the conference also offered a ray of hope, as attorneys said that settlement talks were progressing. AAP attorney Bruce Keller told Chin that the publishers had agreed to the proposed trial schedule, but that substantial progress had been made between publishers and Google, and that he hoped the trial schedule would become "moot." Google attorney Daralynn Durie echoed that expectation later in the hearing, also telling Chin that progress was being made and noting that the business principals "not the lawyers" were in discussion...

Authors Guild attorney Michael Boni also told the court that talks were ongoing, and that the authors were hopeful of a settlement, but it was clear that publishers had made more progress, raising the likelihood that the authors and publishers cases could be split.

In other Authors Guild lawsuit news, a consortium of library groups has issued a statement criticizing the AG's recently filed lawsuit against several major university libraries over their use of orphan works via the HathiTrust repository.
“The case has no merit, and completely disregards the rights of libraries and their users under the law, especially fair use,” the statement reads. “We are confident the court will not look kindly on this shortsighted and ill-conceived lawsuit."

For a thorough (though pro-library) analysis of the orphan works issue as it pertains to libraries, see this research packet from the Association of Research Libraries.

On the other side of the issue, the Authors Guild has punctured the assumption of due diligence in HathiTrust's procedures for locating copyright holders for the orphan works it plans to issue. So far, the AG has (easily) located the copyright holders for three so-called orphans: The Lost Country, a novel by J.R. Salamanca; a study on adolescent aggression by psychologist Albert Bandura; and Confusion, a novel by James Gould Cozzens. A subsequent post on the AG's blog, listing HathiTrust's "orphan work candidates" and inviting comments from the public, appears to have located several more.

Tuesday, September 13, 2011

Authors Guild And Others Sue Universities for Copyright Infringement

Posted by Victoria Strauss for Writer Beware

In the wake of the failed Google Book Settlement and the still-unresolved lawsuit that produced it, the Authors Guild, two international writers' groups, and several individual authors have filed suit against a number of major US universities that have combined unauthorized scans of in-copyright books into a repository called HathiTrust, which will allow unlimited downloads by students and faculty of "orphan" works included in the repository (orphan works are in-copyright books whose authors can't be found--with "can't" meaning almost anything on a continuum from "impossible to locate" to "didn't look very hard").

The unauthorized scans were obtained from Google--one of the perks of Google's unauthorized library scanning project was that the libraries that provided the books received free copies of the files--and HathiTrust is believed to include up to seven million in-copyright books from authors in dozens of different countries. The rules for defining "orphan" works have been established by the University of Michigan, the lead institution on the project.

The Authors Guild press release follows.

-----------------------------------------

AUTHORS AND AUTHORS’ GROUPS FROM AUSTRALIA, QUEBEC, THE U.K., AND U.S. SUE HATHITRUST, THE UNIVERSITY OF MICHIGAN, AND FOUR OTHER U.S. UNIVERSITIES FOR COPYRIGHT INFRINGEMENT

Digital Files Provided by Google at Issue, As Plaintiffs Seek to Impound Unauthorized Scans of 7 Million Copyright-Protected Books, Pending Congressional Action

NEW YORK – The Authors Guild, the Australian Society of Authors, the Union Des Écrivaines et des Écrivains Québécois (UNEQ), and eight individual authors have filed a copyright infringement lawsuit in federal court against HathiTrust, the University of Michigan, the University of California, the University of Wisconsin, Indiana University, and Cornell University. Plaintiff authors include children’s book author and illustrator Pat Cummings, novelists Angelo Loukakis, Roxana Robinson, Danièle Simpson, and Fay Weldon, poet André Roy, Columbia University professor and Shakespeare scholar James Shapiro, and Pulitzer Prize and National Book Award winning biographer T.J. Stiles.

The universities obtained from Google unauthorized scans of an estimated 7 million copyright-protected books, the rights to which are held by authors in dozens of countries. The universities have pooled the unauthorized files in a repository organized by the University of Michigan called HathiTrust. In June, Michigan announced plans to permit unlimited downloads by its students and faculty members of copyright-protected works it deems “orphans” according to rules the school has established. Other universities joined in Michigan’s project in August.

The first set of so-called orphans, 27 works by French, Russian, and American authors, are scheduled to be released to an estimated 250,000 students and faculty members on October 13th. An additional 140 books, including works in Spanish, Yiddish, French, and Russian, are to be released starting in November.

“This is an upsetting and outrageous attempt to dismiss authors’ rights,” said Angelo Loukakis, executive director of the Australian Society of Authors. “Maybe it doesn’t seem like it to some, but writing books is an author’s real-life work and livelihood. This group of American universities has no authority to decide whether, when or how authors forfeit their copyright protection. These aren’t orphaned books, they’re abducted books.”

“I was stunned when I learned of this,” said Danièle Simpson, president of UNEQ. “How are authors from Quebec, Italy or Japan to know that their works have been determined to be ‘orphans’ by a group in Ann Arbor, Michigan? If these colleges can make up their own rules, then won’t every college and university, in every country, want to do the same?

The complaint also questions the security of the 7 million unauthorized digital files. The numbers are staggering. The universities have, without permission, digitized and loaded onto HathiTrust’s online servers thousands of editions, in various translations, of works by Simone de Beauvoir, Italo Calvino, Bernard Clavel, Umberto Eco, Carlos Fuentes, Günter Grass, Peter Handke, Michel Houellebecq, Clarice Lispector, Mario Vargas Llosa, Herta Müller, Haruki Murakami, Kenzaburō Ōe, Octavio Paz, and Jose Saramago, among countless other authors. Works from nearly every nation have been digitized. HathiTrust’s databases house more than 65,000 works published in the year 2001, for example, including thousands of works published that year in China, France, Germany, India, Indonesia, Italy, Japan, Russia, Spain, and the U.K., and hundreds from Australia, Austria, Brazil, Canada, Egypt, Israel, Lebanon, Mexico, The Netherlands, The Philippines, South Korea, Switzerland, Thailand, Turkey, and Vietnam.

“These books, because of the universities’ and Google’s unlawful actions, are now at needless, intolerable digital risk,” said Authors Guild president Scott Turow. “Even if it weren’t for this preposterous, ad-hoc initiative, we’d have a major problem with the digital repository. Authors shouldn’t have to trust their works to a group that’s making up the rules as it goes along.”

Google’s library scanning project is already the subject of a federal class-action lawsuit in New York. A status conference in that case is scheduled before Judge Denny Chin this Thursday, September 15.

Attorneys Edward Rosenthal and Jeremy Goldman of Frankfurt Kurnit Klein & Selz are representing plaintiffs.