Six Essential Issues in Any Ebook Contract Negotiation

Print Friendly

For more information on ebook royalties, contracts and negotiations, attend Digital Book World 2013 in New York in January.

Publishers and authors are shaping new standard contracts as the industry shifts toward digital-first and e-original book publishing.

As opposed to big publishers, which are thought to pay authors a standard ebook royalty of 25%, new independent ebook publishers like The Atavist, Open Road Media and OR Books, can and do pay authors substantially more. But, on what terms? And, royalties aren’t the only issue at hand as a new publishing landscape emerges.

There are six basic issues at stake in an ebook contract negotiation:

1. Duration
2. Territory
3. Consent
4. E-functionality
5. Medium
6. Royalty

Basically, these issues add up to answering the following questions for the publisher (and the author):

  • What can I do with this intellectual property?
  • How long can I do it for?
  • What cut of it am I going to get?

Kim G. Schefler, Esq., a Partner at Levine Plotkin & Menin, and F. Robert Stein, Esq., of counsel at Pryor Cashman, conducted a mock negotiation at the fall meeting of the Entertainment, Arts and Sports Law section of the NY State Bar Association, elucidating these points.

The contract, as proposed by a hypothetical independent publisher in the mock negotiation, described the property — the ebook under discussion — as “a previously unpublished book, which includes photographs and illustrations.” Schefler and Stein’s conversation followed basic negotiation strategies and revealed emerging ebook contract precedents.

 

Duration

Digital technology moves swiftly, and rapid content delivery and speedy adaptation to new opportunities looks to be the new norm.

Matters of duration address the time frame that governs the commitments in an ebook contract.

— How long will the contract remain in effect?

In our example, the publisher stipulated that rights would comprise “The exclusive right for the full term of copyright and all extensions and renewals….” And the author countered by offering instead “The exclusive right for five years from the date hereof….”

Similarly, the author and publisher need to answer:

— How much time can elapse between manuscript acceptance and publication? For an ebook this can be a matter of months, in contrast to 18 months for conventional print books.

— How much time does the publisher have to produce alternate formats allowed by the contract?

— How long until the rights revert back to author, before the contract term expires organically. This is contingent upon more than duration alone: It involves time passed since initial publication, the agreed upon definition of “out-of-print,” and a minimum level of annual author earnings.

 

Territory

Independent ebook publishers rarely have the resources to translate their publications but seek World rights in English as a matter of course.

Authors may choose to limit this territory — to only the U.S. or North America for instance. In this negotiation, the author proposed adding qualifiers like “English-language” and “English-language editions of” in nearly every section of the contract to clarify that the publisher didn’t have the rights to translate the ebook for non-English markets.

 

Consent

Evolving digital platforms and shorter production schedules lend themselves to quick, shrewd decisions.

Throughout an ebook contract, the publisher favors using their own discretion at decision points: Using the ebook content in-full or in-part in any form; and regarding the design, cover, and title of the ebook, for instance.

Thus, the publisher strategically benefits from phrases like “in the Publisher’s judgment.”

In contrast, the author pushes for disclaimers like, “subject to Author’s prior written approval in each instance” or simply, “subject to Author’s approval.”

If, when, and how consent is required during the term of contract is carefully described in each relevant section.

 

E-functionality

Each device and e-reading ecosystem features unique (and often proprietary) functionality. To ensure that an ebook can remain available, publishers often prefer the rights to define and enable these features broadly: “functionality features available for any applicable electronic or digital device or other distribution system now known or hereafter created.”

An author’s concern that advancing technology could infringe on opportunities for unique product development make it wise to narrowly define approved functionality.

What’s challenging here is anticipating and describing the future. Established publishers feel they lost revenue when the digital transition made ebook rights of their long-standing back-list titles available to other publishers. They’ve learned that contracts that outline rights to content “in book form” aren’t specific enough. In an effort to close the stable door after the horse has bolted, publishers now seek rights to develop book content in all prospective media, known and unknown. Authors generally don’t want to relinquish those prospects ad infinitum.

A flexible compromise must be struck that suits the time frame of the contract and the priorities of each party.

 

Medium

The ebook, evolving new media, and emerging channels for content sharing and distribution make for an animated debate around “what is a book?”

The formats, features, enhancements, and iterations that an ebook can take must be thoughtfully defined in an ebook contract.

Of particular importance are what adaptations and apps can be developed by each party and what percentage of the ebook content the author can use commercially as well as what constitutes competitive works.

Can a publisher that acquires the rights to a travel ebook also develop an app from that content, which adds, say, video and site-specific historical information, let’s users build a profile, upload personal travel photos and plot their next journey?

Can the author give away sample chapters of that travel ebook to promote her next project?

Can the author arrange for the production and sale of a DVD version of the book that’s simply a dramatic reading of the text and tasteful video of the images included in the ebook?

In the mock negotiation, contested media included, “links to web sites…sound recordings, literary, pictorial, graphic, and non-dramatic audio visual material” and “enhancements…such as sound, images, animation, interactivity…audiovisual elements [and] apps.” Also under consideration were the parameters of audio rights — “non-dramatic, single-reader” as opposed to “dramatic, multi-reader.” Essentially, any presentation of the ebook content that goes beyond mimicking a conventional print book is carefully allocated.

Additionally the author, generally, cannot compete with the publisher through comparable works. During the term of contract, the author cannot sell a product that will diminish the value of the publisher’s rights to the ebook. So it should be clear that whatever adapted ebook or (new) media rights the author retains, when exploited, would not constitute competition with the publisher.

 

Royalty

Ebook royalties run the gamut from 0% to 100% depending on an authors’ chosen publication and distribution channel.

A contract with an independent ebook publisher will take up what percent of the publisher’s net revenue the author will receive, if this rate will increase to after the publisher recoups plant costs (production, design, editorial, etc.), and whether the author can exercise an option to receive the publisher’s current standard rate, should it increase — this falls under a most-favored-nation clause, where the publisher will allow the author to enjoy royalties at least as good as those generally paid to other authors.

Large publishers pay between 25% and 40%, while self-published authors can command upward of 70%. Independent publishers, such as Other Press and Rosetta Books, are likely to pay in the 50% range.

Knowing that major publishers pay in the 25% range, independent ebook publishers can incent their services by offering a higher rate.

As independent publishers capitalize on digital-first and e-original publishing opportunities and large houses, like Random House and HarperCollins launch digital-only imprints, ebook contracts and these six issues will shape the future of digital publishing. Yet even as the contracts progress, the issues will linger; authors and publishers will focus on what can be done with the content, how long the rights last, and how much of the profit they will get.

For more information on ebook royalties, contracts and negotiations, attend Digital Book World 2013 in New York in January.

Image Credit: Negotiation image via Shutterstock

DeannaUtroske

About DeannaUtroske

Deanna Utroske is the Content Producer at Digital Book World and an active member of New York Women in Communications, where she serves on the Integrated Marketing & Communications Committee. Previously, Deanna worked in the editorial office of Signs: Journal of Women in Culture and Society, a publication of the University of Chicago Press.

Related Posts:

5 thoughts on “Six Essential Issues in Any Ebook Contract Negotiation

  1. Nice article. A topic that, in my view, needs to be discussed a lot more and are area where far too many authors have abandoned their common sense and duty to their own talent.
    I come from a business background and I believe there are some other issues that writers need to start to build in to their contracts – whether publishers like it or not.

    1. Duration & Reversion:
    If an advance is payable then a longer duration must be expected. If there is no advance then duration should be much shorter imho e.g. 5 years, though the investment by the Publisher in promotion and media must also be taken into account.
    Rights reversions should always be explicitly stated as happening ‘automatically’ on expiration of that period, with no requirement or necessity for correspondence, notification or agreement.

    2. Performance:
    It’s no use being contracted to someone who is not meeting their obligations. A contract needs to explicitly state what exactly the publisher is committing to do to promote the title, how that is to be measured, and the fact that if these measurements are not met, the author has the right to demand reversion of all rights.

    3. Medium/Format:
    These need to be strictly defined. An App is a completely different medium and should never be included in the same contract as an eBook. The same goes for adaptations and other forms/media. A publisher that seeks a wider definition must be expected to offer significantly better terms, and an author should stay focussed on what they are willing to throw into the pot. Additional contracts can easily be drawn up later if opportunities for Apps, dramatisations, audio or other mediums arise.

    4. Royalty:
    Whatever percentage is being discussed – irrespective of the number – what really matters is ‘what is it a percentage of ?’
    If it is a percentage of a Publisher’s net revenue, then there MUST be a series of definitions of exactly what constitutes gross revenue and what deductions are explicitly allowed to be deducted. This is not anal retentiveness or excessively conspiratorial!
    If these are not defined, then publishers will be free to deduct all kinds of ‘expenses’ and ‘outlay’ and ‘costs’ that are extraordinarily easy to manipulate and concoct. Equally the definition of Gross revenue is important because the agency that pays the publisher (eBook sellers, resellers, agents) may be deducting their undefined expenses before paying the publisher and this is also not beyond ‘manipulation’.
    The author should also look at who appropriate variable percentages may be. The rate may increase once the Publisher’s investment (advance or promotion costs) is recouped. The rate may rise if/when revenue exceeds certain levels (25% until costs recouped; 45% thereafter; 60% when sales exceed $1M …)

    5. Conflict resolution, Mediation:
    Any disagreement, about the contract, between Author and Publisher should entail easy and speedy options for the author to access binding mediation.

    • Ebook contract negotiation certainly is a topic that warrants discussion. Thanks for weighing in, Howard.

      Some of the issues you raise are more aligned with common sense than with ebooks specifically. As you rightly point out, matters of performance and mediation require attention in all contracts.

    • Hi Howard,That was great advice,but if you are like me and dont know the ins and outs that you suggest who should you contact to do the negotiating for you,keeping in mind i cant afford high price lawyers,Thanks,Ray.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>