Daily Archives: March 6, 2013

A Contract From Alibi

So, don’t ask me how, but I have in my hands (from what I consider a reputable source) a contract from Alibi, which is the sibling imprint of Hydra, the Random House imprint that I thumped on roundly in the previous entry. You will recall that I thumped on Hydra because its contractual terms were so heinous to authors (including, but not limited to, offering no advances). Well, it appears that Alibi’s standard boilerplate contract is no less horrible than — or, more accurately, it appears to be exactly as horrible as — Hydra’s contract was reported to be. This suggests to me that the contracts for Flirt and Loveswept, Random House’s other two eBook imprints in this grouping, are likely to have similar boilerplate.

Shall we dive in? Oh, let’s!

But before we do, just to have this out there:

THIS IS A HORRIBLE AWFUL TERRIBLE APPALLING DISGUSTING CONTRACT WHICH IS BAD AND NO WRITER SHOULD SIGN IT EVER. 

I’m so not kidding on this, people. This is New Coke-level badness. Everyone involved in this contract needs a time out to think on what they have done. It’s genuinely shameful that a publisher is willing to offer this contract — and for that matter, to defend it.

Got it? Great. Here we go.

0. No advance. None (which is why this is point zero, rather than point one). And already I’m all fuck this contract, for reasons I’ve noted in the previous entry.

1. Right here on the first page, the contract notes that Alibi takes the exclusive right to print, publish, sell and license the contracted work, in every possible format, in whole or in part, in every language, in the entire world, for the full term of copyright.

I would note that my agent would probably not get through this paragraph without his head actually, literally exploding, Scanners-like, all over the paper. Why? Because this is an egregious rights grab, breathtaking in its scope.

To give you some context, most (US) book contracts I sign ask for North American English Language rights — which is to say, the publisher wants the right to publish and sell the book primarily in the US and Canada, in English. This leaves me the ability to sell English language rights in the UK/Commonwealth if I want to (which is what I did for Redshirts, for example), and also to sell the book in other languages to other publishers (which is why, for another example, Old Man’s War now has 20 foreign language editions). I don’t have to share that income with the North American English-language publisher; it’s all mine.

Sometimes, I will grant worldwide English rights to a publisher — for example, as I did for The Human Division. However, when I do that, it’s for specific business reasons and I (or more accurately my agent) negotiates an advance and other compensation that reflects that I am giving up financial opportunities to by allowing my publisher worldwide English rights. That’s right! My agent makes sure I get more for letting a publisher keep those rights! As opposed, to, oh, handing them over for nothing up front. And even then, I still keep the foreign language rights. Because those foreign language rights have the potential to add up to a whole bunch of money in my pocket.

There is nothing in the Alibi contract that says that Alibi is going to do anything with those foreign rights in itself (I’m guessing it does not have a bank of translators on call, slavering to translate your work) or that it’s going to make an active attempt to sell those rights to foreign publishers (including Random House publishers across the world). It’s just… taking those rights. Because, why not? If you’re stupid enough to give them your work for nothing up front, you’re stupid enough to give them your work in every single possible language and in every single possible territory.

It’s a big enough rights grab that I’m actually surprised that the language stops with “the world.” I guess there’s a lawyer at Random House who realized that “throughout the universe” might just be tipping the hand a bit.

2. The contract says that the author and the publisher will equally share in net proceeds — which is defined as gross billings after subtracting “Net Billings,” plus amounts received from licensing (some of which are carved up differently). So what are the Net Billings?

A fee to cover sales, promotion, publicity and marketing, calculated to 10% of Net Billings (which seems self-referential and confusing; more reason to have an agent look at this thing); “title set-up costs” including plant cost, conversion fees and other expenses; and expenses relating to any possible legal actions. Likewise, if Alibi decides to publish a print version — which it totally can! You said they could! — then also in Net Proceeds are paper, printing and binding; reserves against returns (i.e., money held back while copies move about from warehouse to store) and freight and distribution expenses. Oh, and, hey: If Alibi decides to make an audiobook (it totally can!), you pick up plant costs for that, including paying the narrator.

Let’s be clear about this: With the exception of the reserve against returns (which is a complicated entity that is eventually supposed to zero out, with you getting the money you’re owed), all of those things above are things that real, actual publishers cover as part of their ordinary cost of doing business. The fact that Alibi is shifting those costs to the author is hugely significant, for reasons noted in the previous entry (i.e., Alibi is shifting an extraordinary portion of the risk of publishing onto the author’s back). But it’s also worrying to the author for two other reasons:

One, it puts the author in the hole to the Alibi for an amount which the author has almost no control over — it’s Alibi choosing how much to spend on the services and expenses which constitute the Net Billings. All the author is empowered to do (at least as I read the contract) is pay for them. It should be noted that Random House probably owns warehouses and printing presses (or has long-terms arrangements which represent sunk costs), so in effect the publisher will be charging the author for services it provides, i.e., it’s taking money from the author and putting it into its own pocket — payment for services publishers are supposed to provide as their part of the publishing equation. The contractual language does note that some expenses are to be “mutually-agreed” upon, but this just brings up another problem:

Two, it transfers the cost of these services onto the most ignorant partner in the contract — which is to say, the author. Yes, authors, I know. You are smart. But — can you tell me what “plant costs” mean? What about “conversion fees?” Can you give me a sum that you know with certainty to be in the ballpark, in terms of what those costs and fees should be? Do you know how much it costs to print and bind a book? Are you sure? Is Alibi printing them individually or in one large print run? How will that affect unit cost? What’s a reasonable sum for warehousing? You better know because the contract won’t tell you — or at least the one I have in front of me sure as hell doesn’t.

And here’s another thing to consider: When it’s the publisher fronting the costs for printing, warehousing, plant fees or whatever, it will, out of its own self-interest, they will try to lower the cost as much as possible, because not doing so will cut into its profits. But authors, when you are fronting the fees, the printing, warehousing, plant fees and everything else becomes a potential profit center for the publisher.

What impetus does Alibi have to keep those costs down? What impetus will it have to keep those costs high? And how will you know the difference? Well, if you are like most authors, you won’t — and thus, you’ll be at the mercy of Alibi in terms of what costs you owe. This is, I will note, a fine way for Alibi (or any publisher under such a scheme) to make mischief and engage in the sort of accounting that ends up making the publisher a profit and the author, well, pizza money.

3. Author copies? You get one copy, on your preferred platform. Sorry, mom! Gotta pay Amazon! Seriously, that’s just a dick move.

4. Publication rights, as noted, pretty much cover the gamut of all known printed and electronic formats (including audio) — and also the ones which may become known in the future , and also covers a bunch of subsidiary rights, including serial, book club and merchandising (i.e., toys and the like).  Oh, video games? Covered. It’s up to Alibi to license these, so if they lose interest, sucks for you. This is another place where my agent, having recomported his head into something resembling its previous form, has it explode all over again. Basically, it’s all covered; Alibi gets a cut — and will get a cut for as long as the copyright exists.

5. Oh, and the next thing you write? Alibi gets to option to take that, too, for the same terms as this contract (i.e., nothing up front, charging you for all sorts of crap on the back end). If Alibi doesn’t want it, you can shop it elsewhere but cannot accept an offer that’s equal or less than Alibi’s offer. Since that offer is “nothing up front, plus we charge you for shit we’re supposed to pay for,” you should probably be fine.

6. The contract has an out-of-print clause, which could allow an author an escape route, but it doesn’t define what “out of print” means in this case — a problem because a publicly accessible file can sit on a retail server somewhere, and as long as it’s there, the book is technically for sale. This is, again, the sort of thing a good agent would flag in an instant.

Things that don’t suck about this contract? One, it doesn’t require arbitration rather than access to the courts, which vaguely surprises me. Two, it allows for auditing, which is good. Please note, however, that these are standard contract points; Alibi doesn’t get credit for having them in there. Also, it does not appear that this contract specifically requires the author to pay for editing, cover art, book design and such, but they could be covered by the nebulous “set-up costs” contract point, with its tricky “including, but not limited to” phrasing. Given everything else that’s awful about this contract I wouldn’t put it past Alibi.

And there you have it.

I want to be clear: I can say, without reservation, that this is the worst book contract I have ever personally encountered. Not only would I never sign it — which should be obvious at this point — I can’t imagine why anyone whose forebrain has not been staved in by an errant bowling ball would ever sign it. Indeed, if my worst enemy in the world was presented with it and had a pen poised to scratch his signature on it, I would smack the pen out of his hand and say to him, “I hate you, but I don’t hate you this much.”

Another way to put it: There is no way I can conceive of any minimally competent literary agent looking at this contract without wanting to immediately set it on fire and then piss on the ashes. So much would have to be changed in this contract that I don’t see a competent agent bothering; they’d just send it back with the note “please send me a contract written by someone who is not currently mainlining Nyquil.”

A third way to put it: THIS IS A HORRIBLE AWFUL TERRIBLE APPALLING DISGUSTING CONTRACT WHICH IS BAD AND NO WRITER SHOULD SIGN IT EVER. Yes, I’m aware I’ve already said this. It bears repeating. It doesn’t matter whether it’s from Alibi, Hydra or anyone. Run away from it, as fast as you can, arms flailing like a Muppet’s. It’s the only rational response.

I will note that at the moment I have in my email queue a letter from Random House, written in a “more in sorrow than anger” style, which expresses disappointment that I (for one) didn’t talk to them before writing my piece on their terrible regrettable insulting Hydra deal terms, and waxing rhapsodic about their bold new business model. It’s profit sharing, you see, not like apparently any of those other book contracts out there, which comes as a surprise to me, considering how much of Tor’s and Subterranean’s profits I’ve shared in over the years.

I am speaking for myself and only for myself when I say that I looked at the letter that the folks at Random House sent me and wondered just how incredibly stupid they must think I am to believe that just because they sent a letter that read as all reasonable and nice sounding, that would somehow change the fact that the business model of their new eBook imprints is predicated on preying on writers — and preying on the writers most at risk for being preyed upon, the new and the desperate. I’m wondering in what world I would think paying authors no advances and shoving publishing expenses onto them is somehow a reasonable business model for those authors. I’m curious why they think I wouldn’t see it for what it is: A publishing imprint built to skim the slimmest of margins off the most vulnerable of writers.

So what I will say to them is this:

Dear Random House: Today I received two pieces of writing that you created. One was a letter. One was a contract. I want you to guess which of one of them better told me what you actually think of writers.

Update, March 12: Random House changes the terms of its contracts.

Note to SF/F Writers: Random House’s Hydra Imprint Has Appallingly Bad Contract Terms

Random House recently started Hydra, an electronic-only imprint for science fiction stories and short novels. But, as noted by Writer Beware here, the terms in a Hydra deal sheet shown to them are pretty damn awful:

* No advance.

* The author is charged “set-up costs” for editing, artwork, sale, marketing, publicity — i.e., all the costs a publisher is has been expected to bear. The “good news” is that the author is not charged up front for these; they’re taken out of the backend. If the book is ever published in paper, costs are deducted for those, too.

* The contract asks for primary and subsidiary rights for the term of copyright.

Writer Beware notes, appropriately, that this information comes from only one deal sheet it’s seen from Hydra. But, you know what: One attempt at this sort of appalling, rapacious behavior on the part of Random House is bad enough.

Dear writers: This is a horrendously bad deal and if you are ever offered something like it, you should run away as fast as your legs or other conveyances will carry you.

Why?

1. NO ADVANCE. Dear Random House: Are you fucking kidding me? Random House had 1.7 billion euros in revenue in 2011 (Bertelsmann, the parent company, had fifteen billion euro in revenue in the same year, with over six hundred million euro in net income) and you somehow can’t afford advances all of a sudden? Color me skeptical.

Advances are typically all authors make from a book. It’s a competitive market and most books sell relatively small numbers. One reason to go with a publisher at all — especially these days — is because you get a concrete, definable amount of money fronted to you at the start; which is to say, you know you’ll get paid at least that much. The publisher is not doing you a favor by fronting you an advance; the publisher is making a hard-headed determination of how much money it will owe you (under terms of contract) and giving you that much up front so they don’t have to bother with royalties on the back end.

It’s also — importantly — an amount of money the publisher has invested in a book, which it will not get back if the book fails. It’s the publisher’s skin in the game, as it were. If there’s no advance, there’s no skin in the game for the publisher, and no real motivation for the publisher to bust its ass on behalf of the book.

Neither Random House nor Bertelsmann is some hard-scrabble, scrappy company trying to make it in this big world; please look again at their revenues and net income. However, even if they were hard-scrabble, scrappy companies it would still be wrong not to offer advances to authors.

Now, according to Writer Beware, Hydra is offering to split the net it makes from the books 50/50, which on the surface at least is a better cut than what authors currently get from traditional publishers (which is typically 25% of net). No doubt this 50/50 net split is being dangled as a fair trade for an advance. But remember that by avoiding paying any advance at all Random House has hugely mitigated its risk — which means that it has positioned itself to start making a profit from the writer’s work from day one without any substantial financial investment on its part.

Theoretically the author would be making a profit from day one, too, but wait:

2. The author is being charged costs previously borne by the publisher. That “one time” fee for editing/design plus a continual “sales, marketing and publicity fee” of 10% of the net revenue, plus additional continual printing and warehousing fees if the book ever goes to print.

What this means is that the author starts off his or her publishing journey in the hole to the publisher for an unspecified “one time” fee that publishers previously covered as part of their ordinary expenses, and see their income permanently diminished by other charges previously assumed by the publisher; the deal sheet in question states that the “50/50 split” is after these charges are accounted for, i.e., Random House has just made sure that the real world value of that “50/50 split” is substantially closer to the 25% of net that its traditionally-published authors are offered.

And how much will that “one time” fee for editing and design be? I don’t know, but I know that good editing, cover art, page and book design aren’t cheap; Donato Giancola, the artist who did the painting for the hardcover of Old Man’s War, got paid nearly as much for his work as I got paid to write the book. It’s not in the least unreasonable to assume that “startup costs” for a book can cost thousands of dollars. So that’s thousands of dollars that are going to be applied against the income of the writer before he or she makes dollar one — but not before Random House starts making money. Remember again that Random House is shunting some (and, well, possibly all) of its editorial costs over to the writer’s ledger; it’s once again actively minimizing its own costs — and investment — by maximizing the costs to the writer.

All of which is to say that it wouldn’t surprise me if Random House’s charges and fees just somehow manage to zero out an author’s earnings for a year or two and possibly even longer. It should be noted that most books sell nearly all they are going to sell within the first couple of years; after that they get lost in the pile of newer releases, including from the author. Hydra’s deal model has the marvelous potential of cutting out the economic heart of the book for the writer — but not, it should be noted, for the publisher, who will do just fine because its costs have been mitigated up front.

Musicians out there reading this may be smiling ruefully at this point, because they will recognize this sort of accounting; it’s how the music labels worked their accounting for years, carefully calibrating their fees and costs to make sure their musicians made as close to zero as possible while the labels kept all the money. But at least the musical labels paid their musicians an advance; Random House’s innovation here is that they aren’t even doing that.

Note to Random House: You’re aware what the typical consumer thinks of music labels at this point, right? You’re aware that one of the reasons that people don’t feel bad about pirating music is because they believe strongly that the music labels screwed the musicians anyway, so why bother? So, if your contracts are even less fair to authors than musical label contracts are to musicians, what are they going to think about you? And how does it look for the industry as a whole? You’re not making it easier for anyone.

All of this is terrible, but if you’re the writer and you sign on to this, there’s not much you can do about it because:

3. The contract is for the length of copyright. Which means you will never get the property back to sell it to someone who will offer better terms, and apparently even subsidiary rights are covered in the deal. To use the music label metaphor once more, this is like the music label owning the master tapes of an album. And again one is left to wonder what in the last twenty years of the economic history of the music industry suggested to Random House that this would be a fine model for them to follow.

Again: This is on the basis of one Hydra deal sheet that Writer Beware has seen. But again: Even one deal sheet of such appalling excrescence is one too many.  If this is the economic model Random House genuinely plans to follow for the future of electronic publishing, it deserves to die. It’s horrible for authors, which is bad enough, but it’s also horribly bad for the industry, both in terms of optics (do consumers really need another reason to hate large publishing companies?) and in chaining publishers to a cycle of diminishing returns.

It’s also bad because, frankly, it’s delusional. Dear Random House: It’s clear you’re targeting new, unagented authors here because no agent who is not manifestly incompetent would allow his or her client to sign such a terrible contract. But here’s the thing: New authors don’t actually need you to sell their work online. They can do it themselves — and are, and some of them are doing quite well at it. You are working under the assumption that these newer authors are so eager to be with a “real” publisher that they will suddenly forget that publishers are no longer a bottleneck to being published, or that you are offering nothing they can’t do themselves (or have done for them) and offering them nothing for the service — indeed your business model appears predicated on sucking as much as possible from them in fees and charges while offering as little as possible in way of compensation. Hydra is a vanity publisher, in sum.

Do you genuinely believe these new authors are that stupid? And if so, do you genuinely want an entire imprint of your publishing empire populated by such people?

Let’s talk about me for a moment. Anyone who knows me knows I feel pretty positively about the traditional publishing model; I work with Tor (part of Macmillan, one of publishing’s “Big Six”) because I get excellent service from it, including brilliant editing, fantastic art and design and top-flight marketing and publicity. Tor and its people earn every penny they make from my books, as far as I’m concerned, and I’m happy to partner with them and hope to do so far into the future; I am happy to defend Tor whenever someone blithely and stupidly suggests that my publisher is “just a middleman” sucking money from me. They aren’t and they don’t.

But make no mistake that my admiration for Tor — or any of my publishers, large or small — is grounded in the fact that ours is an equitable relationship. The minute the relationship stops being equitable is the moment when the relationship is done. Because the fact of the matter is that, if it came to it, I could put out my own work; pay for the editing and art and everything else and then put all the profit into my pocket. Because this is the world we live in now. I don’t usually want to, for all sorts of reasons. But I could. And at this point, so can anyone.

And this is ultimately what I would say to any author who is considering Hydra or any publisher (large or small) who would offer a deal as fundamentally awful as what Hydra seems to be offering: Why partner with someone who doesn’t see you as a partner? The Hydra deal sheet is pretty clear about this — it’s not a contract of partners, it’s a contract a parasite offers to a host. But the fact is that if Hydra likes your stuff enough to want it, then you can probably find a real publisher, who offers a real partnership, including the payment of advances and the assumption of risk. Or you can publish it yourself, pay your costs up front (hey, they’re business expenses!) and keep everything you make.

In short: You can do better than Hydra. So do better.

P.S.: As a note to any publishing house checking to see if authors will kick if you try to slide this shit past us and say it’s “the new reality of publishing” — this is us kicking. We will kick you plenty hard. Yes we will.

Update, 8:38pm: I’ve seen a contract from Alibi, Hydra’s sister imprint. It’s terrible. See my review here.

Winter’s (Hopefully) Last Fling

Last night’s winter storm looks to have dropped about half a foot of snow around here, more or less, but the high for today is going to be slightly above freezing, reaching fifty degrees by Saturday. So this isn’t going to last, and given the time of year, this seems likely to be the last major snowstorm of winter here. So I figured it was worth getting at least a couple of snaps. Here they are.

If this particular winter storm came to visit you, how are you holding up? I understand that Virginia is especially messy at the moment. Let me know in the comment thread.