All About Contracts

Contract Hell: Part I

The Publishing Agreement is not just about money. It's about rights; not just rights to the Work, but an author's rights to refute anything that is demanded from the publisher. Most publishing agreements are intentionally vague so that the Publisher can decide the terms of the contract after it is signed by the author.

Because most authors don't want to wade through the legalese of a contract, the following will pinpoint key words or phrases that should make it easier for the author to find and resolve potential Contract Nasties. Granted, each Agreement is very different, but the words or phrases should be generic enough that they stand out in any contract.

The first nastie comes in the form of:

Publisher may/shall specify; Publisher may/shall determine; Publisher may/shall retain

Some contracts have these phrases in more than 50 percent of their clauses, others include them only once or twice.

The power of this phrase is that it allows the publisher to decide what happens in a given situation; i.e. the author has no power to negotiate. For example, these phrases can be found in places that define page counts for the book, amount of time allotted for author review, anything dealing with revisions of the book, or how much of the author's royalties will be withheld for items such as royalty reserves or lawsuits. Some contracts go as far as to say that if the author has a major tragedy occur, the publisher will specify the author's time extension without any input from the author.

What does an author do to avoid these? Try to rework the phrase to include a reasonable date, time-frame, agreed-upon templates, or simply something along the lines of: Author and Publisher shall agree upon.

Another alternative is to ask the publisher to specify what it 'usually' determines, specifies, or retains; then have the publisher put it in writing.

Contract Hell: Part II

When contracts are written or signed, a common mistake is to think about the present and not the future. Hence, we forget about things such as revisions and what might happen if the book sells enough units to move on to second, third, and even fourth editions. So, it isn't until this point when an author realizes s/he forgot to negotiate an important part of the contract:

Revisions

Every contract should have some sort of revision clause. It usually doesn't say anything about a second edition, but instead uses the vague term Revision. Technically speaking, the language in some contracts' clauses could even include second printings of the book, which is largely different from a second edition. It is also very different from updating a book from one version of the software to the next.

A second edition can require new chapters, tons of new screenshots, and a complete overhaul of the first edition. New software versions can, in effect, translate to almost an entirely new book (e.g. Windows 2000 to Windows XP)

The brightest red flag in the contract stems from the fact that few contracts contain any language that states the author will receive an advance for revisions of the book. The author's assumption is that the author will receive the same advance for the second edition. Bad assumption. Some publishers refuse to pay advances on second editions, stating that it's in the author's best interest to keep the book up-to-date. Agreed, but that should apply to reprints, not second editions.

A second edition will require the author to block out anywhere from one to three months in order to complete the revision of the book. This should not go unpaid. And, if the revision really requires at least a 20 percent change in the book, then an author should receive at least 20 percent of the original advance. The royalty structure should also be THE SAME as what is outlined in the first edition. If it is to be renegotiated, it should go up, not down.

Another flag is the time frame in which the author is given to write the revision. Bad language in this case would be 'Publisher will specify a time frame in which the Author is to conduct the revision'. Better language would be along the lines of 'Author and Publisher will agree upon a reasonable time frame in which the author is to conduct the revision'.

A final note, if no definition is made as to what constitutes a revision, put some in. A contract should define a revision as a change in more than 20 percent of the book and a new ISBN. It is important to have a similar definition in each contract. It should also state that upon reprints of the book (books that hold the same ISBN and are changed less than 20 percent), that the royalty structure should not change; i.e. the publisher cannot begin to calculate the royalty rate from 0 book sales when a reprint of the book is made.

Contract Hell: Part III

Verbal Agreements on Contract terms

One of the last things you want to do when signing a contract is to make verbal agreements in lieu of having the contract changed to reflect your needs. It's not because you shouldn't be able to trust your editor, but because verbal agreements will get you nowhere.

First, a verbal agreement is usually an excuse to get a contract out the door quickly...avoiding the hassle of asking managers and the legal department what can or can't be done. While it's OK to want to get the contract signed quickly, it's not a good idea to rush through the contract because the other party acts as though it's a hassle.

Second, if a verbal agreement is made and your editor leaves the company, your verbal agreement is quickly rendered worthless. There's no way of telling whether the replacement editor will accept the terms of the verbal agreement or give you the 'Well, we just don't do that' excuse. Some publishing companies have a turnover ratio of 40 percent or more in a given year. Never the possibility of your editor leaving for another company, especially these days when there is so much consolidation and sales gong on.

Third, there is always the potential of your editor being a Jeckyll/Hyde editor who will quickly see you as a burden immediately after the contract is signed. Amazingly enough, these editors somehow suddenly 'forget' about verbal agreements after the contract is signed. To get out of it, this person simply will not return your phone calls.

Finally, if the editor can agree to it verbally, why can't s/he agree to it on paper? An answer of 'we just don't do that in writing' is unacceptable and should be indicative of your coming relationship with the publisher. Find out why they 'just don't do that' and make sure they're good reasons. The fact is, due to the lack of solid training, a number of editors don't know why the company can't do something...they just know that they can't ask for it. Make them do some legwork, it'll be good for you and them. Once you get their answer, you should ask a lawyer, agent, or fellow author whether this answer is real or just a bunch of hot air.

Contract Hell: Part IV: The Options Clause: get rid ofit if you can.

Most Option clauses state that the publisher has the right of first refusal to the author's next book-length work. This is unfair.

Why is it in the contract? The argument publishers like to use is that they are trying to build the author and publisher's name together, and the author should respect that the publisher can't build on a success if the author is shopping around with other publishers. They need to feel that they can trust the author, and this clause exists to insure that trust.

The reality of it is that it simply makes an editor's job easier and it instills fear into authors-fear that they'll get sued if they don't publish their next book with the same publisher. Well, I have yet to hear of a lawsuit over this one, and most veteran editors will admit that this clause wouldn't hold water in court anyway.

Publishers should earn the right to your next work. They should do this by taking care of the authors and ensuring a smooth editorial process that includes no delays in authors' payments.

So tell the publisher that if you enjoy the working relationship, there's no doubt you'll return to that publisher for your next work. And if the relationship goes sour, what's the likelihood of either party wanting to work together again anyway?

But What If They Refuse to Delete It?

If the publisher absolutely refuses to delete the Option clause, you should be very careful with this publisher. Make sure you get a GOOD reason why. A good reason is not 'because we don't do that' or 'every publisher keeps these clauses in'. These are BS excuses and it means the editor doesn't know why.

But if you really feel that you have to write this book and the Option clause must stay, make it more reasonable. Option clauses usually give the publisher 60 days to review your proposal, then another 30 to negotiate a fair price for your book. If no agreement is made, then you have the right to take the proposal to another publisher. How fair is this?

Make it reasonable. Most computer book proposals would be dead after 3 months. Reduce this time period to 30 days if you can. If the publisher still refuses to budge, you really should consider shopping for a new publisher.

Contract Hell, Part V: Cross-collateralization, or cross-accounting 

What is it?

Let's pretend a guy named Bill wrote a book two years ago called Microsoft XP for Total Morons. The book didn't sell very well, and Bill only earned out $2,000 of his $10,000 advance. Not good. Technically, he owes the publisher $8,000, but he never received a bill for it and his Acquisitions Editor told him that the publisher never asks for that money back anyway. So he didn't worry about it. 
So now Bill writes another book called Java for Geniuses for another imprint of that same publisher; he received an $8,000 advance. As soon as this book hit the shelves, it made the bestseller list. In fact, by his third royalty statement he had completely earned out his $8,000 advance. So he makes plans for spending his first royalty check, which he thinks will be about $2,000.

Bill's next royalty statement arrives. And it says he earned an extra $3,000! Great! But wait! He quickly sees that there won't be any check coming. All of that $3,000 was taken from him and applied to the unearned advances on his first book, Microsoft Bob for Total Morons. He now realizes that he made a mistake and won't receive a royalty check until the unearned advance from the MS Bob book is totally recouped by the publisher.

What could he have done about it? Bill didn't read his contract closely enough. The key phrase he should have watched out for was: 'this or any other agreement or any other advances'

This phrase can be found under headings such as Payments, Royalties, Overpayment, Offset, or something along those lines. Bob needed to talk to his Acquisitions Editor about crossing out these phrases (Note: some contracts have it in two places). By doing this, he would restrict any overpayments to the agreement he was signing...not an agreement signed two years ago.

By crossing out any verbiage in his contracts that says his royalties can be offset under any other agreement, it is possible that Bill would have never had to pay back his original advance to the publisher, and he would happily be receiving royalties for his second book.

Contract Hell, Part VI: You and the Index

Look at your royalty statements or contracts very closely...you may be paying your publisher at least $1,000 to index your book.

Why? Because in some contracts, the phrase that specifies which party pays for the index is in fine print buried somewhere in the middle of a paragraph. The phrase will look something like this:

Publisher shall find a third-party to generate the index and will charge it to the Author's royalty account.

Some acquisitions editors will tell you that this is standard practice in the industry. It is not. There are quite a few publishers (large and small) that do not charge authors for the index. So if you're in a competitive bid situation, be sure to ask if you are expected to pay for the index. If so, try to have the charge removed or reduced. 
Why should you be charged for the index?Good question, and there are a variety of answers. Don't stop negotiating with your acquisitions editor until you get an answer you're happy with. Here are some answers you might hear:

All our authors pay for the index. Don't accept this as a final answer. This aspect of a contract is usually negotiable.

The index is one of the most important elements of the book. Since the author is most closely tied to the text, we would like the author to be responsible for the index. If the author cannot do it due to time constraints, we will have to find an out-of-house trained professional to prepare the index for the author. These indexers usually charge $X.XX, but we're only going to charge the author $X.XX; so the author is getting a really good deal. Um, maybe. The index is an extremely important part of the book, yes. It is an art that takes a tremendous amount of talent, yes. But so does editing, page layout, printing, selling, marketing, cover-creation, and every other aspect of book production. And some of these tasks are occasionally contracted out-of-house. So ask why they're not charging you for all of that stuff, too.

If you must pay for indexing, be sure your contract defines how much the publisher will charge you. Ask your acquisitions editor to set a maximum per-page amount that will be charged to you. The most you should pay is about $3.00 per page. 
There is some discrepancy among publishers on the 'going rate' of professional indexers. Publishers that have indexers in-house usually charge between $2.50 and $3.00 per page for the index. Publishers that contract with freelance indexers may charge upwards of $5.00 per page for the index. On a 1,000 page book, that's $5,000, all of which will be charged to your royalty account!

If your publisher wants to charge you $5.00 per page for the index, negotiate for a lower price. If that's not possible, consider doing it yourself, or hiring your own freelance indexer to do it.

Important Things to Know About Discounts

Hi, my name is Bill and I got a 15% flat royalty rate on my last book. I'm cool. Hi, my name is Jeff and I got a 10% flat rate on my last book. I'm a loser. That damn publishing company is ripping me off! Not so fast.

The 'mine's bigger than yours' statement just can't be made by looking at royalty rates. In fact, in many cases, that Great royalty rate isn't so great at all ... it's actually half of what the author thinks it is.

How is that? Check the Discounts clause.

It's an ugly clause, and there's no real way for a newbie (or even an oldie) to really understand it unless they compare actual royalty statements or talk to someone who knows the business.

The discount clause is a paragraph in the Royalties section of contracts that basically states that once books are sold at a discount higher than XX%, the author's royalties are reduced by a certain amount. In most cases, the royalty rate is chopped in half. Some publishers start at a 50% discount, some 55%, 56%, 60%, 80%, and I know of one publisher that doesn't even have a discount clause.

Sure that sounds great, but means absolutely nothing unless you know at what discount rate most books are sold to buyers.

By examining various royalty statements you would find that, for most publishers, approximately 1/2 to 2/3 of your book's sales are being sold at a discount of 50% or more. By examining things a little more closely, you see that most of these discounts fall into the 50% to 55% category. Hence, a large number of your books are being sold at a discount of 50% to 55%.

Getting back to Bill and Jeff. Bill had a 15% flat royalty while Jeff had 10% flat rate. Let's say that Bill's royalties were cut at a 50% discount, while Jeff's were cut at a 60% discount. For Bill, approximately 60% of his books are going to be sold at a high discount ... essentially making his royalty rate 7.5% on most of the book's sales. For Jeff, only about 2% of his book's sales are going to be sold at a high discount ... making his royalty rate a more 'true' royalty rate.

So while Jeff thought he was a loser when compared to Bill, the end result (what they'll receive in royalties) will be similar.

What's an author to do? See about getting that discount rate changed. Some publishers have more than one discount clause, but they won't tell you about it unless you ask.

Tips on Work for Hire Agreements

Ever find yourself in a bind on a schedule? Ever realize you could use an extra hand on a project? Well if that's the case then you might have considered hiring out some chapters to other authors to help make the deadline. If you're an author work-for-hire can be a good shot of money and spurt of work at just the right time. If that's the case, having worked both sides of the system here is some helpful advice:

1. Sign a simple work-for-hire agreement

The last thing you need is an author having an opening to your royalties or any other dispute with you because you worked off of a simple verbal agreement. There's no need to bring in the lawyers a simple letter of agreement signed by you and your working partner should be enough and Studio B sues these with its clients on a regular basis. Your LOA should contain:

• Which chapters you want written and how many pages you want each to be.
• A rate for each page written
• An explicit outline (even if its nothing) of any royalties the work for hire author will earn
• An explanation of any credit that will (or won't be given)
• Due dates

2. Offer a bonus for on time performance

You'll want to give work-for-hire authors enough time to do the job but you're in a hurry. What's worse your name is on the contract and not the Work-for-hire's so bullying doesn't help. What tends to work best to ensure on-time delivery is offering a good bonus for on-time delivery. Make it at least 20% and a good 33% is even better. The stake needs to be significant enough to bring pressure for fast work.

3. Try and minimize the number of authors you hire but have a backup. Find quality work.

If you've got three chapters to send out it is best to try and get one author to help -- it keeps writing styles similar and cuts down on the coordination. However, you're also putting all your eggs in one basket so if you can get at least one person to work on standby.

Finally, you almost never want to hire a first timer as a work-for-hire author. They may even be good, but when you need someone to hit a deadline, and do it with a minimum of effort experience reigns.

4. Authors don't take more work than you can handle. Realize the real value you have.

Work for hire work tends to be tough for three reasons, one you don't have the vision or outline control for the book, and two you're usually being brought in to a pressured situation to begin with. Finally, it usually pays well (because of the impending deadline.) and thus it's tempting to take it on.

The best time to take on work-for-hire book work is when you have the time. Many times you're not being hired for your expertise more so than your availability. I realized this much more when I was late with a chapter than when I said I'd do it.

5. Work with your publisher but keep their involvement minimal.

Your editor can be the best help for hiring out work. However, you don't want to go to them and make it sound like a desperate situation. The best thing to do is one of the following. Handle the entire situation yourself or bite the bullet and come forward in a cooperative manner. The best time to seek out some outside help is early in the process, not late.

Sometimes its great to bring it up before it's a problem. Ask your editor for how they might help you if you need some extra writing help or when you might come back if you get bogged down. It's not like it doesn't happen. The benefits of having an editor help can be better than trying to manage it on your own. First off your editor can help you find good talent. Second with them on board you have an extra person to help coordinate and push helping authors to get the job done.

Work for hire is a common part of the computer book industry but your first experience with it shouldn't make you wish for it to be an uncommon aspect. If you follow some of the rules I've laid out you'll find it can be a good part of your authors toolbox.

More about writing

How do I determine and stay true to the audience for my book?

This is probably the single most important decision you'll make concerning your book. You should speak with people in the market and try to find out what people are looking for in the type of book you are writing. Find out as much about these people as possible. What percentage of the total market do they comprise? Keep in mind that a book can't be all things to all people.

Once you've selected your audience, you should remain true to it. I recommend actually selecting between one and five real people who represent your target audience. Then, based on either firsthand information about these people, or by asking them questions during the writing process, craft your manuscript to make them happy. If you select the right people, you're sure to have a best-seller

How long should my manuscript be?

Lengths of computer books vary greatly. Depending on the design for the book, there are different equations you can apply to figure out your anticipated manuscript length. Check with the Publisher at the beginning of the project to find out how they do their projects.

Because your contract will specify how many pages must be included in an acceptable manuscript, you want to avoid submitting a manuscript that is too long or too short. It's often very painful and time-consuming to cut your manuscript a the last minute when you're trying to make a deadline.

A good ballpark figure is that for a standard book, with a typical word/page count, you can figure that one book page equals approximately one page of single spaced text manuscript. Screen shots typically take up half a page, if they are set in the text block, and less or none if they run in the margins.

How long will I have to write my book?

If you have a great book idea, you can be sure that at least five other people have the same exact idea. As a Publisher, I was always amazed by how I would receive several proposals all with similar ideas at about the same time. No matter how completely unique you think your book idea is, there will be other gifted writers submitting similar proposals.

To further complicate things, timing to market makes all the difference in computer book publishing. The first book out on a hot topic usually sells twice as many copies as the second book out on a topic. This ratio typically holds true even if the second book is significantly better. What does all of this mean? Don't ask how long you have to write your book. Ask yourself, 'How fast can I get it done?'

As far as Publishers are concerned, the common range of time to write a book is between six and nine months, depending on the book (length, level of presentation, release of any software that might be important to the book, etc.). New technology books tend to have short writing schedules, whereas books on applications and operating systems can take longer if there is a long cycle between beta and final release. Even though you may have more time to write a book, provided the software goes through several beta cycles before release, publishers will still require a book that is published day and date with the software release.

If you want to be successful in this business, you have to write well and write fast.

How often are royalties paid?

This varies greatly from Publisher to Publisher and should be stated explcitiy in the contract.

How should I organize the content of the book?

This varies from book to book, but the key objective of any effective organization is to make the book as useful as possible. There are several factors that contribute to the book's overall usefulness, such as clarity, ease of access to information, a logical progression of topics at an appropriate level of depth and detail, and remaining true to your target audience. By thinking carefully about how a reader will actually use your book, you will gain many insights into how it should be organized.

As you create your outline also think carefully about how you plan to use subheadings to show how topics progress; summary devices like tables, checklists and illustrations; figures and diagrams to present ideas in concrete form; special notes, tips and cautions to highlight key advice or information; chapter and section summaries to aid the reader in reviewing or locating information.

If you're writing a book for an established series, it would make sense to study several books from the series to ensure that your book makes sense in the context of the series.

What about financial considerations?

Many factors will impact the offer you receive. The most important factor is the projected sales forecast. If a Publisher is quite confident about the potential success of a title, they will be far more willing to offer attractive terms if your unique skills and talents are the reason for the aggressive forecasts. If this is the case, you have a great deal of leverage to negotiate a favorable deal. On the other hand, if you are writing a book that will be included in an established book series that is heavily marketed, then Publishers will be less likely to give you generous terms even though sales forecasts will be high. This often holds true because there will be 10 other authors ready to take your place should you want to hold out for an unreasonable deal in the Publisher's mind. Your winning proposal will help to engender confidence in the sales and marketing people. Confidence leads to higher sales forecasts, and higher forecasts lead to higher royalty rates. Any questions?

Exorbitantly high costs associated with publishing a project or a low price point relative to cost can adversely impact your financial position. For example, if you're proposing a 1,200 page, four color book that sells for $14.99, it's quite clear the Publisher will lose money on every copy it sells. But a 100 page one color book selling for $40 would look extremely attractive provided it would sell in appreciable quantities. Although both extremes are ridiculous, you can be sure that your book will fall somewhere in between. Even small variations in page count, a second color, a four color signature, an added disk or CD-ROM, or gatefold, can have a tremendous impact on the project's overall profitability. It's in your interest to write a book proposal for a book that will be extremely profitable.

What is the writing process like at most publishing companies?

The process starts with a great proposal. The proposal is sent to the appropriate Acquisitions Editor for review. If the Acquisitions Editor thinks the project has merit, it'll be discussed in an 'Ed Board Meeting' with sales, marketing and other editorial people. Provided the Editor successfully sells the project internally, the editor will then 'run some numbers.'

'Running the numbers' means the editor is plugging several variables into a spreadsheet to determine the economic feasibility of a project. Key variables that an editor plugs into a spreadsheet include: cover price of book; unit sales forecasts; cost of manufacturing, editorial, and production; estimated royalty rates, and marketing costs.

Once an Acquisitions Editor determines that the book can be profitable, the editor will make an offer and the negotiation process begins. If there are several publishers interested in your project, then you have some leverage to negotiate favorable terms. If you're only getting an offer from one publisher, then you're really at the Publisher's mercy. But so keep in mind that editors sometimes talk about numbers with an agent or author and not necessarily intend to make a formal offer. The numbers game will, in part, determine whether the editor continues to pursue it.

Assuming a contract is signed, the real writing process begins. You'll work closely with your Acquisitions and Development Editors to shape the manuscript. Your editors should give you feedback on your work, and you should solicit lots of feedback to make sure they think you're on the right track. Be professional and persistent.

After the manuscript starts to take shape, your editors will forward your manuscript to production for a design, to copy editing for work on grammar and spelling, and to technical editors to ensure accuracy. At this point, you'll usually get your manuscript back for what is typically called 'Author Review.' This will be your final chance to read the book over to make sure the Copy Editor didn't change the meaning of something important, and that the Technical Editor made appropriate corrections. 
After Author review, the manuscript goes into production to be typeset, indexed, and paged. The production process including the time to print the book usually takes eight weeks. After the book is bound, it usually takes anywhere from two to four weeks to show up in bookstores.

What word processor should I use?

Each Publisher has different requirements, but most seem to prefer Microsoft Word. As we discuss your project with prospective publishers, we'll ask them to send their author guidelines to you so that you can review the specifics of how they want you to prepare your art and text manuscripts. Some publishers are flexible, and others are very rigid about how a manuscript is prepared. Definitely follow their recommendations. Many authors take shortcuts only to find themselves making massive alterations at the last minute before a book goes into production. 
Also, don't bother designing your manuscript if your Publisher is going to do the layout. They prefer to receive a simple set of documents from you, so that their pre-press people can easily work your text and art into the Publisher's design for your book. Be sure not to use a layout program like Quark, PageMaker, or Frame unless you discuss this first with your Publisher.

What's the difference between a Royalty Contract and a Work for Hire Contract?

Most authors receive remuneration based upon royalties, however some Publishers offer Work for Hire contracts. A Royalty contract pays an author a percentage of the Publisher's gross sales less returns. The percentage varies from one Publisher to another. Many times, a royalty contract will offer a sliding scale royalty structure. This means that as the publisher sells more books, you step up into higher royalty rates. With a Royalty contract, Publishers often offer royalty advances. Royalty advances work like interest free loans where the collateral is your future royalty stream. With a royalty contract, we always try to get you the highest possible royalty rate and advance.

Work for Hire means you get a lump sum payment for the Work, and the Publisher owns the material. There are only two times when a Publisher uses a Work for Hire contract: 1) They think the book will sell extremely well regardless of who authors it; or 2) they're bringing you in to fix a manuscript with problems where they are already fully committed from a royalty perspective. In either case, think carefully about Work for Hire situations. They may present good situations to start a writing career, but for the accomplished writer, a Work for Hire situation typically won't advance your career financially unless the fee is quite lucrative.

We almost always try to get royalty contracts so that you can share in the success of the title you're writing.

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