1. Rights. Unless you are “work for hire,” (giving up all copyright) the standard publishing agreement will provide that the author licenses or assigns all “print” rights to the publisher, plus “subsidiary” rights: foreign, book club, electronic, film, audio, drama. Except for print rights, however, all of these are negotiable, depending on your bargaining power. Unless there is a specific reason not to do so, always try to retain as many subsidiary rights as you can. Even first novelists should be able to retain film and foreign rights. Don’t skim over this clause–examine it closely, and, if necessary consult a lawyer or knowledgeable agent if you have questions.
2. Royalties. Obviously always negotiable, this rate will depend on whether the book is paperback, trade paperback, or hardcover, and is generally a sliding rate. For example, a hardcover book might have royalties of 11 percent on the first 5,000 copies sold, 12.5 percent on the next 5,000, 15 percent thereafter (paperback is generally in the six to nine percent range). The key to royalties is not only the percentage but what price the percentage is based upon. Different types of books–nonfiction, fiction, professional textbooks–often use different prices. The alternatives are retail price (list); invoice price (list minus freight); or net receipts (the amount actually collected by the publisher). You must understand the implications of each formula before you can understand your proposed royalty rate. For subsidiary rights (like foreign rights) retained by the publisher, all net receipts should be split equally with the author. Again, consult an expert if you’re confused–don’t rely on the generosity of the publisher.
3. Warranty and Indemnification. These are purely “legal” clause often skimmed over by authors and not fully understood either by agents or editors. These paragraphs set forth the respective responsibilities of the parties in the event of claims by third parties against the book, such as for defamation, copyright infringement, or invasion of privacy. Drafted by the publisher’s lawyers, they often can be overbroad to a ludicrous degree. You should carefully examine what is covered, who is covered, and whether the author’s indemnities take effect merely upon a claim being made (bad!) or upon a final court decision.
4. Front and back matter. In nonfiction books, publishers often require authors, at their cost, to provide “front matter” and “back matter” such as tables of contents and illustrations, indices, and the like, even though the publisher is much better equipped to generate these. This can be negotiated. Be sure you understand your responsibilities and the cost to you (such as paying an indexer) before you sign on the dotted line.
5. Option Clauses. These clauses give the publisher the right to either buy or make an offer for the author’s next book. Best advice: don’t accept any option clause. Most publishers are willing to give on this issue. If you can’t eliminate an option clause entirely, then make sure it imposes no real burden. This can be done by setting up a very limited period during which the publisher may bid on your next book, and permitting you to sell the book to other publishers if a higher offer can be obtained.
6. Revisions and Updated Editions. This clause only applies to nonfiction books, but then it can become paramount. Make sure the clause has a mechanism to determine when the revisions have become so extensive it is essentially a new book subject to a new contract (and more money!), and that the clause puts a cap on the number of revisions in any one time period.
7. Out of Print clauses. I know, you don’t want to think about it, but it eventually will happen. The publisher may lose interest in your book, and you will want to get the rights to the book so you can have it republished. It is critical that “out of print” be defined reasonably, especially now that digital and on-demand publishing can make the literal meaning of the clause obsolete. Ideally, the definition should be pegged to the publisher’s marketing efforts–when the book no longer is in the publisher’s catalog and/or available through major chains, it should be considered “out of print.”
It bears repeating–if you are unsure about these clauses, ask a knowledgable expert for help. It may save you from a great deal of grief.