Business Posts: Contract Review (Patreon)

Recently had to go over a number of contracts for others and realised, well, I should probably create a post and/or document to make use of as a checklist for things to watch for.

Firstly, and most importantly, I'm not a lawyer. Please do not take any of this as legal advice, beyond the basics of - hey, this is something to look at. I always recommend that anyone I speak to also speak with a lawyer, specifically an Intellectual Property lawyer who works in the jurisdiction (or at least, country) where the contract is domiciled and knows publishing contracts.

Alright, so let's talk about the things I scan for. These are the BIG issues, though contracts are always written in such a way that they refer to one another and 'gotchas' can always appear anywhere, which is why you need to read them over carefully and then have a lawyer do that.

So.

Signing Parties

Who is signing these documents? Make sure you verify that you're signing to the entity / corporation / individual you are signing with.

As an example, I've seen some companies say they are 'Webnovel' but are instead, an independent company who publish your work onto the Webnovel app. As such, you aren't signing with Tencent (the company that owns Webnovel) but through an intermediary. In that case, you'd actually earn less potentially (since they are getting a % from Tencent, which then passes on to you).

Dates

Obviously, the contract should be dated. Not just when you are signing, but also when the contract is in effect.

Watch for dates and when dates begin, because certain portions of certain contracts can set term start (which is different from the start date of your contract) for when a work is published. (See Term below for more detail).

Copyright and Rights Licensing

What rights are being licensed? You almost never sign away copyright as an author (unless you're a ghostwriter or something). For most authors, you are only ever going to license your rights. Rights that can be licensed include and are broken up by:

• the type (ebook, audiobook, print, movie, merchandise, etc.).
• geography (worldwide, North America, UK, etc.).
• language (English, German, Russian, etc.)
• how many books are you licensing?

I am always wary of any right's licensing that takes everything and/or takes rights that the publisher has no specific plans to use.

You can (often) set-up reversal of rights, but often you need to get a signed 'reversal of rights' document to make use of your rights, especially on places like Amazon or Audible. Especially if said rights were previously used.

Better to not give the rights away if there are no plans for use, and then sign extensions or amendments to the contract to add them later.

Reversion of Rights

What are the reversion of rights clauses like? They're often based around 'out of print' or non-use of rights. The non-use clauses are often easier, though you might have to deal with 'breach of contract' side, so that you give them extra time to fix the issue.

However, for out of print rights, what is considered 'out of print'. Old contracts used to define it as not being purchasable (before the advent of Print-on-Demand). Nowadays, the out of print clause can often include a specific royalty number that must be achieved. If that's the case, you might want to make sure that number is high. $50 a quarter is not a lot at all. If you have specific number of books sold, publishers have been known to have 'sales' just to drive those numbers up and keep their rights.

Term

How long are you licensing your rights for? This can vary greatly, with a lot of digital first (audiobook or ebook) publishers trending towards 7-10 years as their initial offers. Traditional publishers (small or Big 5) often are much longer, sometimes up to life of copyright (i.e. your lifespan + 70 years).

Things to watch out for:

• life of copyright terms (especially with smaller publishers, though I'd hate to sign even to Big 5 publishers that)
• when the actual terms start when it's shorter (date of contract, date of publication of ebook/audiobook/etc.,).
• renewal terms for the contract. Does it automatically renew? How do you cancel the contract? How much notice do you need to begin the cancellation process and in what way?

Royalties

What are your royalty percentages? Are they gross or net? Gross or net of what? If this amount is not specified, you should try to get it specified so you know. Especially if they say it's 'net' of something.

Do you have an escalator clause (multiple, increasing tiers of royalties). Why not? Why shouldn't you get that? I find a lot of companies are happy to add these, because they are often 'giving' away less unless you're really successful.

Do you have royalties specified for each right licensed?

If there are terms that are used here, are they specified in the contract? How broad are those terms (e.g. mass market sales, book club sales, etc.).

Advances and Accounting

Are your advances accounted for jointly (basket accounting) or separately? Preferences vary, though in general; joint accounting means you have to wait much longer to see royalties, even if book one does incredibly well because you're paying off the advances for the remaining books first.

It does mean you get much bigger checks later (IF you earn out your advances).

When are statements sent to you? Is it clear how those statements are written? How do you dispute such statements and/or ask for them?

Many contracts are based off 'acceptance' of the manuscript. Can you / should you specify what that means? If you send your finished manuscript in, but they haven't gotten around to editing in 1 year, are you being paid your portion of the advance? If not, why not? Can you specify that?

Delivery of Work, Publishing Requirements & Use of Rights

When you deliver the work, how fast must they tell you if the manuscript is acceptable? Do they define what is acceptable in the contract (length, manuscript type, etc.)?

Linked to the above aspect of sending in manuscripts, is there a publishing requirement when you send your works in and/or that they have to make use of their rights within a specified timeframe or they lose those rights? For example, if someone takes both ebook and audiobook and print rights, if they don't use the print and audiobook rights within 6 months, can you automatically have those reverted to you so YOU can make use of them?

Audit Clauses

Do you have audit rights? If not, why not? When can you dispute statements?

How are the audit rights structured? I've seen contracts that require you to hire an accredited accounting agency (a big 5 one). Can you subtract that?

Payment

How are you being paid? Do you both have to agree? Is it defined in here?  Generally electronic payment methods are accepted, but you might want to define this.

Author Copies

Not so much as a gotcha, but you can often get 20-30 copies negotiated with bigger trad publishers. Also, you can get often negotiate to buy more copies and can get that amount defined within here at what markup.

Exclusivity & First Offer Rights

Do they have exclusivity provisions in here? Can you narrow them or remove them entirely? If you can set it up so that the exclusivity provisions are very narrow (no releases within 3/6 months within the sub-genre is a reasonable one for bigger indie publishers) or non-existent, that will help you a lot. Wide reaching exclusivity concerns can be a problem.

Breach of Contract

What are you remedies for breach of contract? How much time do they have to fix it? How much time do you have to fix it? What are the penalties involved?

• be careful about any indications of return of advances / revenue / etc.
• make sure there's a specified timeframe of when they need to fix it and what the penalties to them are.

Survivability / Bankruptcy / Sale of Company

Is your contract being passed on to the new company? Do you want that? If you can have it revert to you in any of these cases, it might be best rather than have the company go into bankruptcy and your rights go into the air as trustees and the eventual owner figures out what to do with you.

Governing Territory

Be careful about this one. Different states have different laws. Always try to get a lawyer in said territory (country if not specific state) look it over.

Confidentiality

Many places have started doing confidentiality clauses. Be careful about them, but remember - you're not held to it till you sign. So there's nothing wrong with showing your contract to people BEFORE you sign it.

And lawyers are almost always carved out in these clauses.

Okay, can you think of anything i missed? Let me know. Send questions too.