I recently had a chance to review Rain's Letter of Intent and publishing contract. Here's the response I sent to the individual who provided it to me.
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Letter of Intent
The Letter of Intent immediately suggests a lack of professionalism.
- There are a number of errors, both of grammar and terminology (for instance, "advances" are called "advantages").
- Many of the terms mentioned, such as the royalty percentage (12% of "gross margin") and the copyright transfer, are nonstandard.
- Other terms are unclear. For instance, what does "The AUTHOR assigns RPI full creative, strategic and business rights" actually mean?
The LOI seems to be intended to be a contract negotiation vehicle. It's stated that once it's executed, no further changes will be allowed. But how can an author negotiate a contract she hasn't read in its entirety? Essentially, you're being asked to commit yourself to a contract sight unseen on the basis of an abbreviated, confusing document.
Most concerning: the LOI is misleading. For instance, it states that "
All rights revert to the AUTHOR upon expiry of the three year term." But the contract has an automatic renewal clause, with no provision for the author to terminate (see below). So in fact, rights don't revert until the publisher says so.
Contract
- Clause 1, Publishing Rights, is worth quoting in its entirety:
By executing this agreement the AUTHOR agrees and understands they will be transferring all copyrights to PUBLISHER exclusive worldwide rights to publish, distribute, and sell the WORK(S) for a three year term according to international copyright law regarding:
• Printed Trade Paperback and or Hard Copy Edition (s).
• Reprints, foreign sales and serialization
• EBook Edition (readable-text digital format provided in electronic download, disk, CD/CD-ROM, eBook Reader or similar media of presentation, including motion picture/television/video/DVD rights).
• Book clubs, chap books, merchandising, audio books
• And or all forms of marketing, promotions, and reproduction be it printed or electronic versions of said WORK(S)
There is no grant of subsidiary rights sales defined under this Agreement. PUBLISHER may not offer for license or reproduce any portion of AUTHOR’s WORK(S). AUTHOR agrees that AUTHOR will retire any existing contracts with any other publishing entity in which AUTHOR has outstanding for the WORK(S) immediately upon acceptance of this Agreement.
This is horribly unclear. It starts out by stating that the author must transfer "copyrights" to the publisher. However, when you transfer copyright in your book, you transfer ownership of the book, including subsidiary rights. But this contract states that there's "no grant of subsidiary rights," which is impossible if a copyright is transferred.
After having apparently claimed copyright and then contradicted that by stating that there's no grant of subsidiary rights, the contract contradicts itself yet again by actually enumerating and including a number of subsidiary rights: book club rights, audio rights, serialization, and film/dramatic rights. It then contradicts itself a final time by stating that "PUBLISHER may not offer for license or reproduce any portion of AUTHOR’s WORK(S)." If the publisher can neither license nor reproduce the author's work, how will it manage to publish it?
I think that Rain may not understand the difference between rights and copyright. To put it mildly, this is not an encouraging sign.
- Clause 1.A. mentions movie rights ("]n the occurrence that a third party shows interest in acquiring movie and/or screenplay rights, the PUBLISHER will notify the AUTHOR and commence negotiations.". There are three issues here. First, movie rights are subsidiary rights, and as noted above, the contract seems to exclude, or to intend to exclude, subsidiary rights. (On the other hand, if indeed authors are transferring copyright, all this is moot--movie rights would be included and wouldn't need a separate mention.)
Second, the publisher has not shown it can sell movie rights. Small publishers shouldn't demand rights they can't market.
Third, this contract states that the publisher will pay royalties (
"Upon conclusion of the grant of said rights, PUBLISHER will establish a new royalty rate with the author based solely on the grating [sic] of the movie and/or screenplay rights." This isn't appropriate for movie rights sales--if a publisher sells your movie rights, it pays you a percentage of what it is paid--say, 50%.
- Clause 2, Term--The term of the contract is three years. This isn't a bad term, but there's an automatic monthly renewal clause,. EPIC (an organization of digitally published writers) warns against automatic renewal clauses. Often, automatic renewal clauses will contain a procedure by which the author can terminate the contract if s/he chooses to--but this one doesn't have such a procedure. In essence, this contract will continue for as long as the publisher chooses, and the author has no recourse.
Also, if the contract has a term limit, why does the publisher need to demand a transfer of copyright?
- Clause 4.B. gives the publisher "first option privileges" on the author's next book. What the heck are first option privileges? First right of refusal? (I.e., the publisher gets the first look at the manuscript and has the first chance to offer a deal--this is pretty standard, although you really want to see a timeframe for the publisher to give an answer once the option manuscript is submitted.) First right of publication? (I.e., the publisher has the automatic right to publish the manuscript if it chooses--much less advantageous for the author, since you may not be able to refuse.) There's no way to tell.
- Clause 4.D. reads: "The AUTHOR assigns the PUBLISHER full creative, strategic and business rights to the WORK(S) upon execution of contract." Again, what the heck does this mean? It needs to be spelled out in detail. You don't want to sign a contract where the wording is so vague you don't know exactly what you're actually granting. Also, if you've transferred copyright to the publisher, you don't need language like this--all of those creative, etc. rights would go with the copyright.
- Clause 7, Royalties. Royalties are "12% of Net Sales." This would be a poor royalty, even if it only meant the publisher's net receipts (the book's retail price less wholesalers' or distributors' discounts, which can be anywhere from 40-55%). But the wording of Rain's royalty clause seems to suggest it means the publisher's net profits, which is MUCH less advantageous. Here's the exact wording: "
Net sales are defined as the Total Dollar amount that is actually received by the PUBLISHER from the wholesale or retail sale of the WORK(S) minus the Total Dollar amount of any Returns of the WORK(S) and all costs associated with the sale." Since exactly what these costs are isn't specified, you have no idea how much they might reduce the amount on which royalties are paid.
- Clause 9, Editing.
"The PUBLISHER will try to notify the AUTHOR prior to any and all substantial changes. PUBLISHER may make corrections without AUTHOR's consent." In other words, the publisher can do as it wishes and not tell you about it. You may get an unpleasant surprise when you finally receive your printed book.
The language of this clause, as well as language in the LOI ("[FONT="]
The “AUTHOR” agrees to have the final manuscript “WORKS” fully edited and ready for production")[/FONT], suggests that Rain does not edit its books.
- Clause 16, Author Purchased Copies. No author discount is provided by Rain; this is highly nonstandard. This clause also requires the author to report to Rain about any copies he or she re-sells. Where publishers allow authors to resell their books (and not all do), they don't require them to account for those sales.
- Clause 23, Release Date. "Every reasonable attempted [sic] will be made to release the WORK(S) for approximately [date redacted--I don't want to identify the person who shared information with me]." "Every reasonable attempt" is much too vague. A publishing contract should bind the publisher to either a stated time period (say, 18 months), or a specific date by which the publisher must publish, or else return rights.
In summary, this is a horrible, confused, contradictory contract. I couldn't advise any author to sign it as it currently is.
- Victoria