By Thomas Hauser
Publishing is a business. No one questions that reality. And whatever it might have been in the past, publishing is no longer the "gentlemanly" business it was once thought to be. Rather, it's about squeezing every last dollar out of every available source—and the most vulnerable source is the author.
Best-selling writers might be treated fairly by the media conglomerates that dominate publishing today, but the average author isn't. And no clearer proof exists than the "standard" book contract, routinely forced upon authors and their agents. Many of the clauses that have been imposed on authors throughout the industry bear no relationship to any economic reality other than the best interests of the publisher.
Yet these clauses flourish because virtually every major publisher insists on them—and the average author has no recourse.
Kay Murray has been general counsel for The Authors Guild since 1994. "The contracts were bad enough when I got here," says Murray. "But over the past five years, they've become far more exploitative. The new technology has led to a significant decrease in cost and risk to publishers, but they simply won't share the wealth. In fact, every few months now, there's another change for the worse, with all of the major publishers acting in lockstep on it."
The abuses fit into several categories. First, in contracts that are ostensibly written to assure publication, there are now clauses that, under certain circumstances, can prevent writers from being published.
In the past, when an author signed a contract with a publisher, he or she could safely assume that the book under contract would be published. However, as a general rule, most publishers now insist upon a clause that relieves them of that obligation. More specifically, if a publisher chooses for any reason not to publish a given book, the author can keep the portion of the advance that has been paid. But that's all. And in some instances, if the author resells the book to another publisher, even that partial advance must be repaid. In other words, the standard publishing contract today is nothing more than a one-sided option to publish—obligating the author, but not the publisher.
As for traditional options, publishing contracts now often contain several Draconian provisions. Authors must submit their next book in completed manuscript form to the publisher before it is considered by any other publisher. But the first publisher need not consider the manuscript before publication of the work currently under contract. And then, even if the first publisher declines the second project, the author must subsequently offer that publisher the chance to match any offer received at a later date from any other publisher.
Thus, an author who has a book under contract to a publisher can find his or her career put on hold indefinitely.
In sum, just getting published is an adventure in contract law for most authors. And when authors are published, they find that their royalties have been cut precipitously by today's standard publishing contact.
For example, most publishers now require a clause stating that, if the publisher increases its discount to a particular book-buyer beyond a certain percentage, the author's royalty is cut in half. The logic underlying this provision is that, if a publisher has to give a giant like Barnes & Noble a break in order to sell books, then the author should shoulder part of that burden. However, the way the formula works in practice, a publisher can increase its discount to Barnes & Noble by, say, forty cents on a twenty dollar book (two percent of list price) and that might result in the author's royalty being cut in half, from $3 to $1.50. In other words, the publisher takes $1.50 out of the author's pocket, gives forty cents to Barnes & Noble, and keeps the remaining $1.10 for itself.
Similarly, if a publisher brings out a trade paperback edition of a book that it originally published in hardcover, the author would get eight percent of list price under the standard book contract. But if the publisher sells paperback rights in a sweetheart deal to one of its affiliates, the author gets only fifty percent of the amount received from the affiliate, and that amount may well be less than an open market sale to an unaffiliated paperback publisher would bring.
The handling of electronic rights is another form of exploitation. In this new arena, there are no warehouse costs, no printing costs, and no rational correlation between what an author is paid and the publisher's income. Premium sales (such as books sold to corporate purchasers as give-away items) and special sales (for example, bulk purchases) are often treated in a similarly one-sided manner.
It should also be noted that, when it comes to royalty statements, honest accounting is not a high priority for most publishers.
So, obviously, things are unfair. And there's more. There's nothing improper about an author being held liable if he or she has violated someone's rights. But most large publishers now insist upon a warranty and indemnification clause that holds the author liable for damages and attorneys' fees...regardless of fault. In some instances, a publisher can even settle a lawsuit without the author's consent, and charge the author for the cost of settlement, whether or not the author has done anything wrong!
And, on top of that, the standard publishing contract gives publishers the right to extend an author's warranty and indemnification to third parties who might not even defend against a lawsuit. (How would you like to be the author who's hit with a $10 million judgment from a court in Belgium?)
The list goes on. The standard publishing contract is replete with clauses that strip authors of control over their books. Publishers can grant sublicenses to third parties, who are empowered to cannibalize, and, in some cases, even rewrite a manuscript, and the author has no say in the process. A publisher can sublicense a book to Screw magazine or the like, and if the author doesn't like it, tough luck. Moreover, most authors today are accorded no meaningful consultation rights with regard to book covers and dust jacket copy.
As a practical matter, publishers will negotiate on some of these issues and occasionally make minor changes in contracts. Small publishers and university presses are a bit more flexible than large ones. But for most authors, there is no recourse because there is no power. As Kay Murray of The Authors Guild says, "the playing field simply isn't level. The contracts are all so bad now, it's choose your poison."
But one ray of hope does exist. As Microsoft found out recently, the antitrust laws of the United States are sometimes enforced. And while Microsoft was the target of a lawsuit alleging monopoly abuse, the Sherman Act has a second component aimed at shared abuse of power. To wit: "Every contract, combination, or conspiracy in restraint of trade is illegal."
Quite possibly, what now passes for "standard" in the publishing industry is an illegal restraint of trade. The Antitrust Division of the Justice Department should take a long, hard look at the standard publishing contract. Publishing today is characterized by powerful corporate entities acting in concert, to the detriment of essentially powerless authors. And if one cares about the future of the printed word, something must be done to remedy the situation, because it's driving a lot of good writers out of book publishing. They simply can't make a living writing books anymore.
- Thomas Hauser is a New York city attorney and the author of 22 books, including "Missing," which served as the basis for the feature film starring Jack Lemmon and Sissy Spacek, "Muhammad Ali: His Life and Times," and most recently, "Mark Twain Remembers," published by Barricade Books. He is currently completing his ninth work of fiction—"Finding The Princess"—which will be published by the University of Arkansas Press in Autumn, 2000. He can be reached by fax at (212) 496-7990.
