5 Keys to Literary Agreements by Matt Hooper

 NCWA blog welcomes Matt Hooper. Matt will be NCWA’s guest speaker on December 3rd. See end of post for links.

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Authors often ask me: “What are the top 5 provisions I should be concerned with in my literary agreement?” Literary agreements are filled with important provisions, and every contract term has a meaning that should be carefully considered. While it’s hard to narrow down a list, there are five common provisions that authors should carefully weigh:

(1) Copyright.  The author should own the copyright, plain and simple. The author should grant the publisher the right to exploit the work in certain forms and fields for the duration of the agreement (which is usually the duration of the copyright, and any renewals thereto, unless earlier terminated in accordance with the termination provision in the agreement). The author should never grant or assign the copyright in the Work to the publisher.

(2) Royalty.  The author should expect 10% to 15% as a print royalty (sometimes on a sliding scale), and 20% to 30% as an eBook royalty. Publishers will try to argue that their expenses do not change between printed works and eBooks, but that is just not true. Also, most publishing agreements provide that if the Work is licensed or assigned to a third-party publisher, the author’s publisher can pay the author 50% of the royalty otherwise owed to him or her. If the author agrees to this provision, he or she should make sure that the publisher cannot license or assign the Work to any affiliate, subsidiary, or parent organization.

(3) Cross-Collateralization.  If the author agrees to create multiple books for a publisher under one agreement, he or she should be sure that the publisher cannot cross-collateralize expenses across all of the books. For example, pretend that an author’s contract calls for the author to deliver 3 books to the publisher: the author gets paid $50,000 in royalties for the first book; $100,000 in royalties for the second book; and then the third book tanks, even though the publisher spent $100,000 in marketing support for the book. If the publisher is allowed to cross-collateralize expenses across all books, then the publisher can demand that the author repay the publisher $100,000 from the royalties the author has received to date. No author wants to be in that situation.

(4) Option / Non-Compete.  Most stock publishing agreements have a provision that provides that the author may not ever draft any book that competes with the book that they have drafted for the publisher, and then defines a “competing work” as “any work of fiction” or “any work of non-fiction,” in line with the book that is the subject of the contract. These provisions are over-reaching, sometimes unenforceable (dependent upon the jurisdiction), and should be revised. Make sure to place a reasonable time limit on the non-compete provision (12 to 24 months after date of publication), and narrow the “competing work” definition as much as possible.

For example, if the book that is the subject of the contract is on travel to Washington wineries, try to narrow the provision to: “For a period of one year from the date of publication of the Work, Author agrees not to publish any work that addresses the subject matter of wineries in Washington.”

The publisher will push back, but you will find middle ground. Most contracts also contain option provisions, which basically provide that the publisher has the right of first refusal on the author’s next work. These provisions are normal, but the option should be for a very limited time (usually within 60 to 90 days of delivery of the draft).

(5) Accounting & Audit Rights.  Because publishing agreements are almost always royalty-based, the author should always include an accounting and audit provision in the agreement, providing that the publisher will provide quarterly or semi-annual statements to the author, and that the author may, once per year, audit the publisher’s books and records as it relates to the Work. If the audit reveals a discrepancy of over 10%, the publisher should have to pay for the audit.

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Matt will be NCWA’s guest speaker on December 3rd. Click here for details.

The above posting should not be construed as legal advice.  If you have any questions, please contact your literary attorney, or you can contact Foster Pepper attorney Matt Hooper at (206) 447-4400.

Matt Hooper practices law in Business, Intellectual Property, Litigation and Dispute Resolution in Arts and Entertainment, Sports, Yacht and Aircraft. He serves as the Chair of Foster Pepper’s Arts and Entertainment Group. Matt’s wide variety of experience includes serving as a film producer, entertainment executive and business consultant, and CEO of an online proprietary television network viewed in 44 countries.

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