Successful contract negotiation requires knowing “what you’re willing to give up and what you’re not,” said authoring attorney Michael Lennie, with Lennie Literary & Author’s Attorney.
Authors should negotiate better terms on several contract provisions, he said. They include:
The most important things to negotiate in a first contract are the amount of the advance, the royalty rate and who will control which rights, said Jeff Herman, owner of the Herman Literary Agency in New York.
Keep in mind when negotiating the advance how the publisher calculates it, Herman said: “It will tell you how far they’re willing to go.” To calculate how much of an advance it will offer, the publisher looks at the number of books it will sell during the first year and the dollar amount the author will receive per copy. For example, if the author will receive $2 per copy, and the publisher will sell 10,000 copies the first year, the author will earn $20,000 in royalties. That $20,000, he said, is the highest the publisher will be willing to go in negotiating the advance.
If authors are not careful when negotiating language related to foreign sales in their book contracts, they can end up earning next to nothing on international sales of their books.
Stephen Gillen, an attorney with Wood Herron & Evans, said that although he cannot provide exact language authors can use to negotiate the foreign sales clause in their contracts without knowledge of the unique facts and circumstances of each case, he suggests authors use the following to start the discussion with their publisher:
Textbook authors need to be alert for the possible impact on them of the practice among some U.S. textbook publishers of selling books in foreign countries using an “inter-company” transfer price.
U.S.-based publishers generally sell into overseas markets through relationships with foreign publishers based in the destination country. Books sold in this way are sold to the foreign publisher at a discounted price to compensate the foreign publisher for its role in the distribution process. In such a case, the author’s royalty is calculated on the lesser amount received by the U.S. publisher from that sale.
Q: “What are the tax advantages and disadvantages of a textbook author setting up an incorporation rather than operating as a ‘sole proprietor’?”
A: Stan Gibilisco, author of several textbooks including Geometry Demystified:
“I tried this when I lived in Hawaii and discovered, to my horror, that my royalty income was subject not only to their income tax, but to their ‘sales’ tax as well (they call it a general excise tax). I figured that if I formed a Nevada corporation and had all my income channeled into it, and then became an employee of that corporation, the royalty income would not be subject to that onerous tax. It was a beautiful theory, but, like so many theories, did not work. The legislators in Hawaii had thought of that before I did and the law was airtight. Love it or leave it. I left.
Q: “How do you go about getting a contract to publish an academic book? How is the process different from getting a contract for a college-level or K-12 textbook?”
A: Stephen E. Gillen, Attorney, Wood Herron & Evans:
“Textbook contracts vary significantly based on curricular level. The K-12 market works with much higher volumes but is price sensitive (because schools adopt and purchase the books). The college market works on lower volumes but is less price sensitive (because professors adopt but students purchase).
