Monday 21 June 2010

How to read a publishing contract (14.5 and 15)

I know, I've been gone so long you thought I'd died - not far off. But Zombie Stroppy Author is here to carry on with that interminable publishing contract.

This is an alternative version of clause 14 that you will get if you are going to be paid a royalty for your book. If you have a long memory, you will recall that the clause 14 we did last time was for a flat-fee book.

14. Advance

The Publishers agree to pay the Author in advance and on account of all sums that may become due to the Author under this Agreement the sum of £x000 (X THOUSAND POUNDS STERLING) per title, payable, £x000 on signature of the contract. The Publishers agree to pay invoices issued by the Agent relating to all aspects of this contract strictly within 30 days of receipt of said invoices.

15. Royalties and Fees Payable

Subject to the terms and conditions set out in this Agreement the Publishers shall make to the Author the following payments in respect of all copies of the Work sold.

(a) Home Sales

Except as otherwise specified in this Agreement, a royalty of 3% (three per cent) of the Publisher's net receipts.

(b) Export Sales

A royalty of 1% (one per cent) of the net amounts received by the Publishers on copies of the Work sold to export markets outside of United Kingdom.

(c) Resetting

If revisions require resetting of more than 30% (thirty per cent) of the Work, the royalty on the revised edition shall be subject to renegotiation.

(d) Remainders

A royalty of 1% (one per cent) of the net amounts received by the Publishers on copies sold above cost of production. No royalties shall be payable on any copies sold at cost price or less.

(e) Royalty-Inclusive-Sales

On all copies sold bound or in sheets for the purpose of publication in the USA or elsewhere, a royalty of 1% (one per cent) of the net amount received bythe Publisher.

(f) Book Club

On all copies sold to Book Clubs, a royalty of 1% (one per cent) of the net amount received by the Publisher.

(g) Third Party

On the licence by the Publisher to a third party to print and publish on a royalty basis, the royalty shall be 10% (ten per cent) of the net amount received by the Publisher.

(h) Royalty-Free

No royalties shall be paid on any copies presented to the Author, given away for review or in the interest of the Work, destroyed by fire, water, enemy action, in transit, or otherwise, or sold at or below the cost of production. Any sums which may be received in respect of single specimen copies distributed to individual teachers for the purpose of publicity shall be regarded as a contribution to the expenses of such publicity and shall not be accounted for as sales.

Got that? Good. Let's move on to 16...
That was a contract negotiated by my agent, and frankly it's a really bad deal. Essentially, this publisher wanted to pay a flat fee, so they set bad royalty rates and a high advance so it would never earn out. Most advances never earn out, so if you are happy taking the advance as a flat fee then it's not worth a lot of argument. It would be different if this book were my life's work. In fact, this contract was for a series of first readers that would be sold mostly into libraries and schools. The royalty is split 50:50 between author and illustrator. If by any fluke the books really take off, the small royalty means you will get some benefit from having written them. I could spend all day on the poor rates here, but let's move on to what it all means.

14. Advance - this clause, curiously, seems to pay the full advance on signature of the contract. I can't remember, but that may have been because I'd already done the work by the time we got around to sorting out the contract (it happens). Usually, you will have the advance in chunks: on signature, on delivery/approval of the manuscript and on publication (on passing proofs if you can persuade them). The advance is considered to be a guess at what you will earn from royalties, paid in advance because you won't want to do the work if you have to hang around for years and years before you get paid. If you are VAT registered, you must charge VAT on the advance.

15. All those bits of royalties....

All these are 'net receipts' - this is a bad deal as it means you get a percentage of what the publisher actually gets, not a percentage of the cover price. So while you might think 'my book sells for £10, I get 10% so I get £1 for every book', if it's net receipts you might get 50p per book, or even less. The publisher may sell at different prices to different purchasers: they will sell at full price or a slight discount to people who buy directly from their website, but will discount by up to 80% if selling to a supermarket chain. A net receipt contract means you can't accurately anticipate your income from the print run. Not that you ever could, because you didn't know how many copies would sell, but even the possible income is not a fixed figure if you are earning on net receipts.

Home sales are sales within your home country (UK in this case). Usually these are through a distributor.

Export sales are sales into another country. Some publishers have their own branch or distributor overseas (OUP and CUP, for example). A publisher can sell into an export market even if you have not sold foreign rights. Foreign rights allow them to publish a co-edition - a version of the book in a foreign language.

Resetting - this means recreating the files from which the book is printed. The book might be reset if there is some change in the world which makes it inaccurate (for example, the Yellowstone volcano destroys the USA and so your book about world wildlife has substantial errors), or if the publisher wants to re-issue the book with different illustrations, or if you have made lots of mistakes that need correcting. Resetting the book costs more money, so the royalty is likely to go down to reflect this. But if your book is amazingly successful and they are resetting because Quentin Blake has asked to illustrate it, you may get the royalty to go up.

Remainders are copies that can't be sold. The publisher wants to be rid of the whole deal, so sells the remaining copies from the print run at a massive discount. Often they are sold below cost price, just to dispose of them. It's cheaper than pulping them, which involves paying for them to be destroyed. (I know, sob, sob.) You will probably be given first option to buy remaindered copies.

Royalty-inclusive sales refers to copies of the book produced specifically for a foreign market. They may be supplied as bound books or pages ready for binding. As there has been more work involved in producing the book (it has been specially produced and re-set, perhaps with pictures more appropriate to that specific country), the royalty is reduced to reflect the cost to the publisher.

Book Club sales attract a lower royalty for no very good reason, at least in the case of the publisher only giving you a royalty on net receipts. Sometime the publisher lets the book club do their own edition, and sometimes they sell bulk copies at a huge discount. If they print their own, it should fall under the next clause, Third Party. But if it is discounted, and you are getting a royalty on net receipts, why should it be a lower royalty? Worth arguing about this one, or at least asking for an explanation as to why the rate is so low (if it is).

Third Party means some other organisation takes on printing and distribution of an edition, paying the publisher for the privilege. An example here is (as happened to me once) the Open University adopts one of your books as a set text and wants to print it with their own logo on. You get a higher royalty as the publisher has low costs in a deal like this.

Royalty-Free copies are generally given away or accidentally destroyed. I'm puzzled by the last part of this clause, though - if the publisher has *given* the copies to a teacher, why on Earth would the teacher insist on giving the publisher some money? Is the world full of mad, rich teachers? I don't think so. So this looks like a fiddle. I suspect it means that if there is a conference and teachers' goodie-bags include your book, which the conference organiser may have paid for, you don't get any money. If this is the case, it's shameful. But I'm not certain.

There - that was a long haul. Well done if you've stuck it to the end. I shan't go on here about royalty rates as this is quite long enough.



  1. Thank you so much for doing all this. I'm one of those authors whose eyes glaze over at the talk of percentages and clauses, but a post like this makes me try harder. Well done!

  2. I'm so glad it's useful, Miriam!

  3. Stroppy, what is the difference between an outright fee and advance? By the way, thank you so much for your blog! You do not know how much you have helped some of us.

  4. Hi SaHarA - thank you for you kind words. That is so good to hear.
    If you are paid an outright fee, you get all the money at the start and you don't get any more no matter how many copies the publisher sells. If you get an advance, the situation is slightly more complex. Suppose. for argument's sake, you are paid an advance of £2000 against royalties of 10% and each copy is sold for £10, so the royalty is £1 per copy of the book. You have already been paid £2000. So for the first 2000 copies of the book sold, you don't get any more money as the royalty is offset against the advance you have had. If the book goes on to sell more copies, after earning back the £2000, you will be paid £1 for each copy sold. As the royalty is 10%, if the publisher discounts the book to £5, you will receive only 50p per copy - but you will still be getting something above the original £2000.

    In most cases, you are better off having a royalty if you can get it. But sometimes you might be able to negotiate things like reprint fees on a flat-fee deal, so that you do get a bit more if the book is very successful. The drawback to having an advance is that if you have a large advance and it doesn't earn out (ie you never earn back in royalties the money they have given you), the publisher is less likely to pay you a large advance again and in some cases might not take your next book.

    Hope that helps!

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  6. Thanks for taking the time to write this - I've just been offered contracts for two books (one this year and one for next year) and had a panic attack on first reading through them. Your writing has helped calm me a little, knowing there is someone out there to help! I only just found out how poor royalty percentages are - I was expecting a lot more! Still, I'm thrilled to have two book deals - it hasn't sunk in yet... cheers!

    (Sorry about the deleted comment above - I was using a different computer to mine and was accidentally signed in as someone else!)

  7. That's excellent news, Chris - congratulations!

  8. Stroppy-I´ve just started reading through all this and it has been a huge help. I´ve been approached by a publisher and had a contract sent through and am trying to understand it-I´ve not got an Agent (still debating whether or not to get one). The Publisher is a small one. One question I have-what is your view on not being offered and advance? And, as a first time author, what should you expect for Royalties. As Chris said above, the small percentage was quite a shock.
    Thanks in advance and, again, thanks for the information-it´s been great reading. I have the feeling I´ll be on this site a lot!

  9. net royalties.. a question. if the variables in the net royalties can be from discounted and book club outlets etc... what if an organisation that commissions a work say a museum or Gallery and they sell the work in their own shops...does this mean the Author or illustrator should have a share of the retailer profit plus the much reduced distribution costs if a book is published this way.. say 10% of net profits on this is more than 10% of retail cost of book....