PublishAmerica Contract Analysis

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victoriastrauss

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This is really long, so I'm going to post it in two parts. I recently provided this analysis to (ahem) certain official persons, and I thought that past, present, and hopefully-not-to-be-future PA authors might find it helpful.

Obligatory disclaimer: I am not a lawyer, so this is not legal analysis.

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Analysis of Revised PublishAmerica Contract
(in use from early 2002 to present)

General Concerns


Negotiability


A commercial publisher’s contract is always negotiable. PublishAmerica (hereafter, PA) doesn’t specifically state that its contract is non-negotiable, but it has shown itself unwilling to make changes in areas that authors who sign with commercial publishers typically expect to negotiate, such as the disposition of subsidiary rights.

Revisions to This Contract


This contract is the result of a revision of the original PA contract, which was in use from the company’s inception in 1999 through early 2002. Revisions include:

- Clause 1, Grant of Rights, has been changed from life of copyright to seven years, with a renewal option at the end of the first seven-year term.

- Clause 20, dealing with the publisher’s right to sell or license subsidiary rights, has been changed to empower the publisher to sell or license these rights only if specifically instructed by the author in writing (formerly, no author authorization was required).

- Clause 28, the Next Book Option, has been removed.

Apart from these alterations, the contract remains essentially unchanged.

Nonstandard Contract Clauses

Clause 1, Grant of Rights--
This clause grants PA the right to publish the work in book form anywhere in the world, in any language, for a term of seven years, with the option for a second seven-year term if both publisher and author agree.

This is certainly better than the life-of-copyright term (the author’s lifetime plus 70 years) of the earlier contract. Even so, seven years is longer than desirable for a print-on-demand-based publisher, especially where that publisher does little or nothing to market and distribute its books.

Another concern: the PA contract claims many rights that PA hasn’t shown itself capable of exploiting, including foreign and translation rights. A publisher shouldn’t claim rights it doesn’t have the ability to market--or else the author should be able to negotiate to hold on to those rights (see Negotiability, above).

Clause 3, Royalties--
This clause specifies the royalty percentages to be paid to authors. As in a standard commercial publishing contract, royalties rise as sales volume increases. Unlike a standard commercial publishing contract, however, royalties are paid on net or “sales” price--the money the publisher actually receives for the books--rather than on cover or retail price.

Since booksellers expect discounts of anywhere up to 55%, this means that the author of a PA book priced at $19.95 might be getting a royalty as low as $0.72 per book ($19.95 x 45% x 8%). A similarly-priced book from a commercial publisher would pay a royalty of $1.60 ($19.95 x 8%).

Also, PublishAmerica’s reservation of the right to issue multiple editions suggests it could simply declare a new edition every time book sales got close to the royalty increase point (see Clauses 16 and 19, below).

Clause 4, Copyright--
This clause states that copyright “shall be taken out in the name of the author.” It isn’t clear whether PA will simply print a copyright notice in the front of the book, or register copyright in the author’s name with the US Copyright Office at its own expense (registration costs $30, and is a requirement for bringing an infringement suit). Commercial publishers do both.

In fact, PA only prints a copyright notice; authors have to register their own copyright and pay the fee themselves.

Clause 9, Promotion--
This clause describes what the publisher will do to promote the book. Commercial publishers’ contracts don't generally include a clause like this. Because the publisher has paid an advance for the work, and will invest substantial time and finances in editing, designing, and printing it, it has a major stake in marketing the work to the best of its ability, in order to recoup its investment and make a profit. It doesn't need to be bound to this contractually.

At the end of the clause, there’s this language: "The author agrees...that the Publisher may, at the Publisher's election and discretion, cause to promote the said literary work, as designated, in any electronic format, and that the Publisher may sell or cause to sell copies of the said literary work in any electronic format." In effect, this is a grant of electronic rights. PA presents electronic publication as a promotional strategy--but electronic rights are a separate category of rights and should be listed (and negotiated) separately. Also, royalties for e-books, which are far less expensive to produce and distribute than print books, should be proportionately higher--but according to this clause, e-book royalties are the same as those for printed books.

Clause 10, Author’s Free Copies and Author’s Discount--PA usually allows between two and five free copies (this is one of very few aspects of the contract that PA is willing to negotiate), and an author discount that tops out at 30%, depending on the number of copies ordered. A commercial publisher typically supplies anywhere from 10 to 25 free copies, and offers an author discount of 50%, regardless of how many copies are ordered.

The clause goes on to state: “The Author may dispose of these copies in any manner, and, if re-sold, may retain all monies derived therefrom.” A commercial publisher will usually prohibits the re-sale of author-purchased books. Commercial publishers don’t expect authors to hawk their own books--selling books is the publisher’s job. For PA, however--and any other publisher that fails to provide marketing and distribution support for its books--author purchases are a major (if not the main) source of income.

Clause 12, Royalty Statements and Accounting--
This clause deals with timing of royalty statements, and with the author's right to examine the publisher's records. While the wording of this clause is reasonably standard, Writer Beware has heard from several authors who’ve attempted to examine PA’s records and have either been stonewalled or told flat out that such an examination wasn’t allowed.

Clause 14, Editing--
This clause begins: “If, in the Publisher’s opinion, the manuscript of the said literary work requires substantial editing, the Publisher agrees to provide such editorial service without cost or expense to the Author.” A commercial publisher’s contract, where the provision of editorial services at the publisher’s expense is an assumed part of the publication process, will never include such a statement.

The clause implies that PA will provide substantive editing for manuscripts that need it. However, there’s no evidence that PA has ever provided substantive editing, let alone the full range of editorial services furnished by a commercial publisher (including substantive or content editing, copy editing, and proofreading). As far as Writer Beware knows, PA provides only light copy editing of inconsistent quality.

In the summer of 2004, PA stopped providing even that. Authors are now offered three publishing “options”: a “super fast track” option where the book goes immediately into production exactly as submitted, without editing or author revisions; a “fast track” option that allows the author the chance for a final revision, after which the book goes into production exactly as is, without editing; and a “no hurry” option, where a manuscript is assigned to an editor for PA’s usual light copy editing, and the author is allowed to proof the result and make further changes. Authors choosing Options 1 or 2 must consent to have the following disclaimer printed on the copyright page: “At the specific preference of the author, Publish America allowed this work to remain exactly as the author intended, verbatim, without editorial input.”

It hardly needs to be said that a commercial publisher, whose reputation rests on the quality of its books, would never send books to press unedited and unproofed--let alone with a disclaimer.

[font=&quot] Continued in next post.... [/font]
 

victoriastrauss

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Continued from previous post...

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[font=&quot]Clause 16, Revision--This clause obliges the author to revise his/her book at the publisher's request after it's published, and empowers the publisher, if the author doesn't revise to the publisher's satisfaction, to hire someone else to do the revision and charge the cost against the author's royalties.

This kind of clause is appropriate for reference and academic works, which may be popular enough to publish in multiple editions, and may need revision to remain timely. But it's not appropriate for general nonfiction, and it's never appropriate for works of fiction, which are complete when published and don't need repeated revision.

[/font]​
The clause also states: “The provision of this agreement shall apply to each revision of the work as though that revision were the work being published for the first time under this agreement.” This suggests that whenever a book gets close to the sales point at which royalty percentages must increase, PA could simply demand a revision, and continue paying the lowest royalty percentage. See also clause 19, below.
[font=&quot]
Clause 17, Promotion
--Duplicative, since it deals with the same issues as Clause 9 (marketing and promotion). Again, a commercial publishing contract won’t include such a clause.
[/font]​
[font=&quot]
Clause 19, Editions
-- This clause deals with the publisher's right to produce as many editions of a work as it deems necessary. Again, this is appropriate for academic or reference books, which may need to be issued in revised editions, but not for fiction or general nonfiction.
[/font]
There’s also this language: "On all such subsequent editions that the Publisher may produce, the Author shall receive a return as specified in Provision #3 of this agreement of the sales price of every copy that may be sold."
[font=&quot]
[/font] As with Clause 16, this suggests that anytime a book reaches sales numbers that would bump it into a higher royalty percentage, the publisher could declare a new edition, at which point the royalty accounting would begin again from scratch. Authors could thus be perpetually held at an 8% royalty, despite contract provisions for royalty percentage escalations.

Clause 20, Subsidiary Rights--Deals with the publisher's exclusive right to negotiate "for the sales, lease, license or other disposition" of a wide range of subsidiary rights, including reprint, motion picture, dramatic, and "all other fields".
[font=&quot]
[/font] PA no longer requires writers to allow it to sell or license all subsidiary rights; it will now do so only if the author provides written authorization. However, this clause remains problematic, not only because PA has demonstrated no ability to market or sell subsidiary rights, but because the following language has not been changed: "Approval of all terms, provisions and conditions of any and all contracts in connection with any such sale, lease, license or other disposition shall be given by the Author upon the recommendation of the Publisher; and, for that purpose, the Author agrees to duly execute any and all contracts, assignments, instruments and approved papers submitted by the Publisher."
[font=&quot]
[/font][font=&quot] In other words, the writer who authorizes PA to sell or license his subsidiary rights is required to agree in advance to whatever deal the publisher may make, no matter what it is. Even where it’s optional for authors to empower their publisher to sell subsidiary rights, they shouldn't be[/font][font=&quot] compelled to agree to sales ahead of time, without knowing what they’re agreeing to. In commercial publishing contracts, subsidiary rights sales are subject to the author’s approval.[/font]
[font=&quot]
Clause 22, No Guarantee of Sales
--
This clause states that the publisher doesn't guarantee the sale of any specific number of copies of the work.

[/font]​
[font=&quot]Language like this will never appear in a commercial publishing contract. The publisher expects from the outset to sell as many copies as it possibly can, and intends to make significant efforts to ensure that. It doesn't need an advance rationale for failure--let alone to include such a rationale in its contract--because it doesn't expect to fail.

Such a clause in a publishing contract is nearly always a sign of a publisher that knows it isn't able, or doesn't intend, to market its books.

[/font]​
[font=&quot]Clause 24, Out of Print and Rights Reversion[font=&quot]--[/font] This clause deals with the process by which the publisher declares a book to be out of print, and with the procedure by which the author can then request the return (reversion) of her rights.

It’s essential for a grant of rights (see Clauses 1 and 20) to be balanced by a good out of print/reversion clause. This ensures that the book will be taken out of print once it stops selling, and that the writer will be able to regain her rights for re-sale elsewhere.

[/font]​
[font=&quot]PA's out of print/reversion clause is inadequate in three respects. First, the out of print declaration is left solely to the discretion of the publisher. There's no objective standard to define when the work must go out of print, which leaves the author no recourse if the publisher refuses to relinquish rights. A commercial publishing contract will typically tie the out of print declaration to minimum sales or royalties over a defined time period (say, less than 250 copies sold in each of two consecutive accounting periods).

[/font]​
Second, there’s no procedure the writer can follow to regain her rights once the book is declared out of print. Again, this leaves the writer with no recourse if the publisher doesn’t offer to revert the rights. Commercial publishing contracts include a series of steps that can be followed--typically, a request in writing that the publisher either reprint the book or return the rights, after which the publisher has a specified period of time to decide.

[font=&quot] Third, if PA chooses to offer rights reversion, there’s a fee involved: "...the Publisher...will offer to transfer to the Author the work and its rights in the copyrights thereon, the plates at their value for old metal, the engravings...at one-half their original cost, the bound stock at one-half the list price, and the sheet stock at the cost of gathering, folding, sewing, and preparing for shipment...Unless the Author shall, within 30 days, accept said offer and pay the amount set forth in said writing, the Publisher may dispose of the work, copyrights, plates, books, sheets and other property." In other words, unless the author pays what PA asks, she will not be able to regain her rights--and she has a mere 30 days to decide. A commercial publishing contract will never tie rights reversion to money--the author will never have to buy anything from the publisher or pay the publisher a fee in order to regain her rights.


For PA, this clause has been an additional income source. Writer Beware has heard from a number of PA authors who were told they would have to purchase “overstock” as a condition of terminating their PA contracts--anywhere from 10 to over 100 copies.

Clause 27, Warranties and Indemnity-- The PA contract requires the author to indemnify and hold the publisher harmless for any and all claims made against it, whether or not those claims are upheld in court.

[/font]​
[font=&quot]Commercial publishing contracts require authors to make a series of warranties (that the work is original, that it hasn’t been previously published, that they have the right to sell it, that it isn’t libelous, that it doesn’t violate anyone’s copyright). The author’s liability is limited to breach of these warranties (not extended to all claims of any sort), and the duty to indemnify doesn’t kick in unless the breach is sustained by a final court judgment.[/font]

[font=&quot]Commercial publishers also usually add authors as additional insureds under their media perils insurance policies, which means that the publisher’s insurance will defend in the event of litigations based on claims for libel, privacy, and copyright infringement.

Clause 30, Arbitration--As written, the arbitration clause is probably unenforceable (perhaps deliberately so, to prevent authors from seeking redress). It calls for using the Voluntary Labor Arbitration Rules of the American Arbitration Association--but a publisher-author dispute isn’t a labor dispute, and would fall under commercial arbitration rules.

[/font]​
It’s also significantly more expensive to go to arbitration than to file in small claims court (several hundred dollars as opposed to less than $100)--another disincentive for authors to take action.

[font=&quot]Clause 33, the $1 Advance[font=&quot]--[/font][/font]An advance is a demonstration of the publisher's financial and business commitment to the success of a book project. The higher the advance, the greater stake the publisher has in the book’s success. A "symbolic" advance of a few dollars is meaningless--except as a charade to produce the appearance of legitimacy.
 

LV Dutton

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Acording to something I've read, the copyright of a work, is automaticlly that of the creator of the work, even if the work is never placed in a paid copyright, the orginator of the work owns the copyright and all the rights to that work. So says the copyright website
 

victoriastrauss

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LV Dutton said:
Acording to something I've read, the copyright of a work, is automaticlly that of the creator of the work, even if the work is never placed in a paid copyright, the orginator of the work owns the copyright and all the rights to that work.
That's true. But in the US, you must have previously registered copyright (that's the paid part) in order to sue in court if your work is infringed. No one needs to register copyright for unpublished work (which is highly unlikely to be stolen), but registration is a good idea once something is published and (theoretically) exposed to a wide audience.

- Victoria
 

James D. Macdonald

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A couple of comments.

First, people who want to read the full text of a typical PublishAmerica contract can see it here: http://www.cs.du.edu/~aburt/StingContract.pdf

(This is the contract offered for Atlanta Nights, December 2004.)

Second, concerning the language in the Promotion and Marketing clauses in the contract (9 and 17): "...at the Publisher's election and discretion" means "if we feel like it." The Publisher is not actually bound by those clauses to do any promotion or marketing whatsoever. Those clauses are empty.
 

HapiSofi

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James D. Macdonald said:
A couple of comments.

First, people who want to read the full text of a typical PublishAmerica contract can see it here: http://www.cs.du.edu/~aburt/StingContract.pdf
I'm an editor at a real publishing house. I work with publishing contracts all the time. Here's my basic take on the PA contract:
1. It's not a good contract. It gives little or no protection to the author. It doesn't clarify likely areas of misunderstanding between the author and publisher. It doesn't provide workable means for constructively settling disputes and misunderstandings. It chiefly focuses on exempting the publisher from any or all obligations to the author.

2. Contrary to what PA says, it is not a standard publishing contract. It's nothing like any standard publishing contract I've ever seen. Claiming that it is (which they do, constantly) is one of PA's more blatant and shameless frauds.

3. The contract's errors, omissions, and other blemishes aren't innocent. PA wasn't just being ignorant and/or incompetent when it drew it up. Their contract is deliberately deceptive. For instance, it's full of promises and descriptions that read one way before you understand PA's nature, and read another way after you've figured out that PA is just an exceptionally slick vanity publisher. Those do occur in nature, but not one after another after another.

5. And then there's Clause 24, which is a masterpiece of fraudulent construction. Victoria's description hardly does it justice.​
There is no good reason for anyone, ever, to sign with PA.
 
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