From Book Deal to Book Contract
The most important clauses to scrutinize in your hopefully wonderful and totally fair book contract
My last post ended on an exciting note: the long-awaited moment of accepting a publication offer from a publisher for your book. That offer was likely short enough to say in one breath: something like “$90,000 for world English rights, including audio, payable in thirds.” Today we’ll cover the far less exciting aftermath of that phrase: the process of reviewing and negotiating the contract that comes barreling after that offer.
In that last post, I recommended that you take a break of a “a month or two” after reaching a handshake deal with a publisher, so that you don’t start writing in earnest until you’ve got a full contract ready to sign. I didn’t pluck that number out of thin air—the negotiation process with a publisher can easily take that long, or longer depending on your agent’s (or your) existing relationship with that publisher. This is because publishing contracts expand that ten-word offer into something like 15 pages—what do all those other words cover?
What all those other words cover
To give you a quick and overwhelming sense for what a book publishing contract covers, just look at this list of section headers from the sample contract created by the Authors Guild:
1 The Work
2 Grant of Rights
3 Copyright
4 Advance Against Royalties
5 Royalties
6 Subsidiary Rights
7 Delivery
8 Termination of Agreement
9 Publication
10 Reversion of Rights
11 Sublicenses
12 Promotional Materials/Promotion by Author
13 Statements of Account
14 Representations and Warranties
15 Indemnities
16 Insurance
17 Publisher Right to Legal Review
18 Author Copies
19 Infringement of the Work
20 Author’s Right to an Audit
21 Competitive Works
22 Revised Editions
23 Publisher’s Right of First Negotiation
24 Author’s Property
25 Advertising
26 Author’s Editor
27 Appointment of Agent
28 Insolvency
29 Governing Law
30 Assignment
31 Notices
32 Severability
33 Effect of Headings
34 Full Agreement
35 Appendices
For the sake of brevity (and to avoid a 35-part series on “The Book Contract” that isn’t finished until October 2024), I’ll focus here on the most important deal terms that you or your agent should scrutinize: Grant of Rights, Copyright, Royalties, Termination, Statements of Account, Author’s Right to an Audit, Competitive Works, and Publisher’s Right of First Negotiation.
Totally Unsurprising Disclaimer
Everything that follows is my opinion, from my unique point-of-view and limited experience. Please do not construe this as legal advice—in fact, it’s entirely possible my point-of-view doesn’t even address one facet or another of your particular project and situation.
Grant of Rights
This is the core section of any book contract—in essence, it describes the rights to your book that are being granted to your publisher, and the territory in which those rights can be exercised by your publisher. Typical rights your publisher will expect (or even require) are the right to reproduce and distribute the book in certain territories in hardcover, electronic, and often audio formats; the right to license certain subsidiary rights (e.g. serial, translation if you have publishing rights worldwide, anthology); and the right to use your name and likeness in the book and for promotional efforts related to the book.
Then there are rights that are perhaps open for negotiation: merchandising rights or dramatic rights (film/TV/theater). These can be granted to your publisher if you do not have a literary agent, but are often reserved to the author and their literary agent if they have one on board.
And then there’s the right that (in my opinion) your publisher should not have: the right to own the copyright for your book. Speaking of . . .
Copyright
This clause in your publishing contract typically is a promise made by your publisher to register the copyright for the book in your name, and to display a notice of that copyright registration in every copy of your book. Underlying this promise is the larger one of course: that your publisher will not own the copyright to your book. I unfortunately have seen contract drafts in which the publisher stipulates that they will own the copyright to the book. Unless your publisher is hiring you as a ghostwriter for another figure’s book, or MAYBE if they have supplied you with the whole book idea AND have hired a writer to help you execute it, your publisher should not own the copyright to your book—in the vast majority of situations, this is a deal-breaker for me.
Royalties
Royalty rates cover what portion of each sale of your book will go into your pocket (or, more accurately at first, what portion will be put into your account with the publisher to compensate them for the advance they’ve already paid you). Royalty rates are key details for any book deal, but they often go unmentioned during the offer stage because there are industry-standard rates that most US publishers use:
Hardcover royalties: 10% of the retail price on the first 5,000 copies sold; 12.5% of retail price on the next 5,000 copies sold; and 15% of retail price on all copies sold thereafter
Paperback royalties: 7.5% of retail price on all copies sold
Ebook royalties: 25% of the publisher’s net revenue on all copies sold
Audiobook royalties: 25% of net revenue on all downloadable copies sold; 10% of net revenue on all physical (CD) copies sold
There are other royalty rates for other types of sales (e.g. export, direct, large-print), but in the interest of length let me just mention two other royalty-related details to keep a sharp eye out for:
High-discount royalties: Publishers reduce their royalty rates on sales for which they have to offer a “high discount” to booksellers. These high-discount sales unfortunately make up a significant portion of many authors’ total sales: Amazon, for example, can demand high discounts from publishers because they have captured so much market share that in most cases it’s simply not feasible to not have your book available on Amazon. And even with physical retailers, there’s pressure simply due to available shelf space for all the new books that are coming out every week.
These high-discount royalty rates vary from publisher to publisher, but if you’re negotiating your contract yourself (or you simply want to have a better grasp of what’s in your contract), ideally these high-discount reduced royalties don’t kick in until around 55% off the retail price, and from there ideally your royalty rates are only being lowered by ~20% at first (i.e. your base hardcover royalty might be 8% of retail price on high-discount sales rather than the full 10%).
Net royalties: A handful of publishers only offer royalty rates based on their net revenue, rather than the retail price. If you have multiple publishers to choose from, it’s always better to get industry-standard retail-price royalties instead of net royalty rates. In my experience, net-revenue royalty rates would need to be more than twice as high to be comparable to retail-price royalty rates (i.e. ~25% of the net revenue from a book sale might be close to 10% of the retail price).
Termination
The termination clause is not a fun one to consider, let alone negotiate. It covers the conditions under which the contract might be cancelled: the publisher fails to publish the book within a certain timeline, they are not meeting a minimum threshold of annual sales, they go bankrupt, you fail to deliver a manuscript, you deliver a manuscript that they deem unacceptable—it feels inauspicious to even mention these things at the start of the book-writing process.
But it’s invaluable to spend a bit time on the language regarding one of these scenarios: namely, the situation in which you do deliver a manuscript but the publisher deems it unacceptable for them to publish (perhaps the finished manuscript differs drastically from what the proposal promised, or the publisher has significant legal concerns). In this case, most publishers will allow you to attempt to get a book deal with another publisher first, and then repay what you owe to your first publisher out of the proceeds from the new deal. The alternative—when the publisher demands that you simply pay back what they paid you out of your pocket—can be quite harsh, especially if you’ve been writing the book for a year or so and have likely spent the first portion of the advance already on luxuries like shelter, food, and clothing.
The good news is that most publishers will agree to the former arrangement if you ask them to (particularly if you explain the advance will be a primary source of income for you). If they don’t, it’s worth taking an extra moment to consider whether they will be a constructive partner in your publishing process.
Statements of Account / Author’s Right to an Audit
Your contract with a book publisher should include two record-keeping clauses with the approximate titles above: the first, “Statements of Account,” should not only state that they will submit to you royalty statements delineating book income from sales and licensing, but should also tell you when those statements will arrive and what periods each statement will cover. (Most publishers will send royalty statements twice a year, each covering a six-month period.) The second clause, “Author’s Right to an Audit” (it’s actually usually titled something else like just “Audit” or “Examination of Books”) should grant you the option to conduct an audit of the publisher’s records to verify the accuracy of those statements. If either of these clauses are missing from a contract, ask for them to be included. If either of them is a bit hand-wavy, ask the publisher to include specifics. If the publisher does not include both of these clauses, or only has incredibly vague language about sending statements “periodically,” proceed with caution (or don’t proceed at all).
Competitive Works
Publishers usually insist on including a sort of non-compete clause in book contracts—something that asserts you will not publish another textual work that might compete with the book they’ve just agreed to publish. When it comes to preventing an author from signing multiple book deals for books that are incredibly similar (How to Value Vipers and How to Appreciate Adders, let’s say), it’s a reasonable requirement—but you’ll want to make sure the language doesn’t overreach into any writing you do for your day job or career development. If it does, the good news is that you can usually ask the publisher to carve out specific works/channels in this clause (say, an ongoing newsletter or academic publications needed to advance your career). As with the other clauses above, if the publisher balks at clearing certain writing outlets, either in the contract or in written correspondence with you, take a moment to deliberate before moving ahead.
Publisher’s Right of First Negotiation
“Publisher’s Right of First Negotiation” is a clunky phrase—in practice this is simply referred to as an “option clause”; it’s the publisher’s right to receive your next book proposal, and have the option to make you a publication offer on it, before you share it with any other publisher. Publishers will almost never cut this clause from a contract, so you’ll want to make sure you have a clear, unencumbered exit from this exclusive consideration stage if you decide you want to share the proposal with other publishers.
Most publishers will ask for 60 days to consider a book proposal and make an offer: 30 days to field an offer and another 30 days to negotiate if an offer is submitted. If a publisher is asking for more time than that, it’s worth asking if the period can be reduced.
If possible, it’s also a good idea to make sure the option clause “matches” the book project under contract—that is, if your first book is solely authored then the publisher’s option should be on your next solely authored book, and if your first book is coauthored with someone else then the option should apply to the next book that you and the coauthor want to write.
The other detail to keep an eye out for is any sort of requirement that you give your first publisher the option to match any offer from another publisher if you do take your book proposal elsewhere. Ideally, your first publisher has those 60 days, and if you decide to refuse their offer that’s the end of the process—no need to go back to your first publisher for some second chance to acquire your next book.
I think we can all agree that this hasn’t been the most entertaining post (not the most entertaining to write either, if I’m being honest), but I’m hopeful it’ll be one of the more valuable entries in Hook to Book. I’ve seen too many instances of authors signing contracts that are unfavorable in one regard or another, even with publishers that have already agreed to more favorable terms in their other contracts.
Also, even though I’ve focused on just eight sections above, that does not mean there might not be deal-breaker issues in the other clauses. To be clear, every section of your book contract should be closely reviewed. For all those other contract sections—and honestly for the eight I’ve covered here too—the Authors Guild contract advice is terrific. Save this link somewhere, and refer to it as needed: https://authorsguild.org/resource/model-trade-book-contract/.
It would be silly to wish you “joyful” contract negotiations, but may they at least be infused with a mutual respect that will set the table for a wonderful book writing and publishing process to come.