Chapter Fifty-Four
Dissecting the Self-Publishing Contract
Five Key Issues for Authors
Self-publishing can be a huge undertaking. There are so many issues to weigh. Different self-publishing service providers have different strengths, and it can be hard to know which to use. Is your book primarily text or images? Do you plan to publish your book as an e-book, in print, or both? Do you need assistance with the entire self-publishing process, or are you able to do some of the work yourself?
All of these are important considerations—but they aren’t the only ones. The contract terms offered by the providers you are considering are important as well. Provider contracts (often referred to as “Terms of Use” by online providers) vary widely, and some are fairer than others. Authors need to protect their creative works and their investment in the self-publishing process. Understanding the terms that govern the author/provider relationship is essential.
The following are five key contract issues for authors evaluating self-publishing providers.
1. RIGHTS OWNERSHIP
Who “owns” the book and who controls its distribution and sale are key issues in all publishing contracts. Provider contracts should clearly state that the author is the sole owner of the text of the self-published book. In addition, the author should own the book design, cover art, and formatting of the self-published book—even when these are created by the provider. Plainly said, self-publishing should mean that you, the author, own 100 percent of the rights to your book.
Instead of talking in terms of ownership, a provider’s contract language should discuss licensing of rights. The contract should enumerate the rights licensed: most commonly, the right to print, publish, distribute, and sell the book. The author may also license the right to convert the book to one or more e-book formats and the right to house an electronic copy of the book on the provider’s server.
The provider’s contract should state whether the licenses are “exclusive” or “nonexclusive.” If an author grants an exclusive license to a provider, the provider is the only person or entity that may exercise that right while the contract is in place. The licensed right may not even be exercised by the author during that time, so authors should be careful about granting exclusive licenses. Exclusive licenses are appropriate when a provider agrees to significant obligations beyond merely publishing and selling (e.g., warehousing, order fulfillment, marketing, publicity, catalog, and website presence) but then only if the contract is easily terminated by the author.
Licensed rights should be limited only to those that are necessary for the provider to fulfill the self-publishing services, and the length of time those licenses remain in place should also be limited (licenses should either be for a specific period of time or terminable at will by the author). Some provider contracts require authors to grant very expansive licenses that allow the provider tremendous control. These providers also may try to include “out of print” clauses, noncompete clauses, and option clauses in their contracts—none of which are appropriate in a self-publishing scenario. Steer clear of these providers.
2. DESIGN SERVICES
Self-publishing providers offer a range of packages and services. Authors engage these providers for their expertise in editing and design, as well as distribution and e-book conversion. It is important to compare and contrast these offerings to determine exactly what the various providers include in terms of cover art, interior design, fonts, placement of bar codes, and so on.
Provider contracts should be clear about the services offered and when additional fees will be charged. For instance, the contract should state whether an author must pay additional fees for revisions of the designs created, and whether the provider will refund an author’s money should the provider and the author fail to see eye to eye on production issues.
When evaluating the many additional services offered by various providers (and the attendant fees), authors should consider what, if anything, they can do themselves. There is no need to buy what you don’t need. For instance, many providers will procure ISBNs as part of their services. Because it is expensive for an individual to purchase a single ISBN, it may make sense for the author to have the provider do so, unless the author intends to issue the self-published book in multiple formats or editions. (Each version and format of a book requires a separate ISBN. If you anticipate that you will be issuing the book in multiple formats, or reissuing your book in the future through someone other than your current provider, you may be better off purchasing a block of ten ISBNs.)
By comparison, copyright registration is easily done online and requires payment of a nominal filing fee to the U.S. Copyright Office (the current fee is $35). Registering your copyright yourself is preferable to paying your provider a marked-up fee to do so.
As noted above, ownership issues can arise with regard to design aspects of self-published books. Authors who engage providers to design and format their books are encouraged to look for contract language along the lines of “Author owns 100 percent of the book cover, design, and layout.” If authors supply their own images for their self-published books, they must first clear the rights to use those images.
Authors own the rights to images they create themselves (e.g., photos they take), but they are not free to use images pulled from the Internet without first obtaining permission. Even stock images obtained via Internet or subscription services are subject to restrictions. Authors must abide by the licensing terms and pay the appropriate fees to such services before including images on or in their self-published books.
If an author retains a freelancer (an independent contractor) to provide cover art or other book design services, an agreement between the author and the freelancer that specifically states, in writing, that the freelancer’s work is a “work for hire” under U.S. Copyright law and that the freelancer makes no claim of ownership in the author’s book should be drawn up. This allows the author to use the book’s cover and design aspects in other ways as well, for example, on the author’s website, in print materials, and on social media.
3. HOW THE MONEY FLOWS
Providers take different approaches to pricing. Some dictate pricing and royalty terms, while others allow authors to set their own retail price, author discount, and wholesale price (although sometimes this is subject to a minimum dollar amount to ensure the provider can cover its administrative and credit card costs). Authors should seek arrangements that provide them with 100 percent of book royalties after deduction of production costs and third-party service provider costs.
When it comes to tracking and getting paid for sales, self-publishing service providers offer an advantage over traditional publishers. Several offer easily accessible sales information online and pay royalties on a monthly or quarterly basis, as opposed to the annual or semiannual payments provided by traditional publishers.
Compare provider contracts based on how providers track sales, how frequently they pay royalties, and the manner in which they pay. Many providers set up author accounts and establish a threshold amount, above which funds are made available for electronic transfer. (If an author prefers a physical check, a processing fee may be charged.) Look for contract language that establishes definite parameters and procedures for payment and provides a mechanism by which authors can track sales and, thus, judge the accuracy of payments made.
With regard to payments, be aware that, as with traditional publishers, providers will declare the right to withhold payments as an offset against any money the author owes the provider (e.g., payment for services, returns, refunds, customer credits). Providers will withhold payments if a claim is made against an author for copyright infringement, defamation, or other violation of a third party’s rights. Some providers will also withhold payments for a period of time after termination of the contract (e.g., Amazon will hold funds for three months), so they are sure to have funds on hand to process refunds, credits, and returns that accrue after the contract has ended.
Lastly, authors are responsible for paying income tax on the revenue they derive from book sales. Most providers will require, at a minimum, that you provide them with a Social Security or Tax Identification number so they may fulfill their reporting obligations to the taxing authorities.
4. ENDING THE RELATIONSHIP
Self-publishing is changing rapidly. The services offered by providers this year may be radically different from those offered in years to come. For that reason, it is important to have flexibility when it comes to terminating a contract with a provider. Ideally, an author should be able to terminate a provider contract (or, in legal terms, “rescind” the author’s grant of rights) at any time. Provider contracts may require advance notice of termination, but such notice should not exceed thirty days.
Most provider contracts allow for immediate termination, followed by a short period within which the provider may alert third-party sellers and fulfill sales pending at the time of termination. Authors who have purchased additional services from their providers (e.g., inclusion in an online or print catalog, premium distribution services) may have separate contracts for those services and may need to take additional steps to terminate them.
Be aware that providers also have termination rights. Many providers include contract language that allows the provider to suspend an author’s access to its services, particularly if an author engages in illegal or unethical behavior, or otherwise violates the rights of others. Authors are counseled to keep backup copies of their books and other content as protection in the unlikely event they are denied access to their providers’ services.
5. RESOLVING DISPUTES
As with any business relationship, the possibility exists for a dispute between authors and providers. Sometimes these disputes are about money, which highlights the importance of reviewing and auditing royalty statements, as mentioned above. Sometimes the disputes occur before publication and are resolved by a refund of some or all of the author’s money. Regardless of the dispute, provider contracts will include dispute resolution provisions, which generally benefit the provider.
Some provider contracts set a discrete, and usually short (e.g., six to twelve months), period of time within which an author may bring a claim against the provider for breach of contract. Authors are contractually bound by these time periods, even if state law provides a longer period of time within which a claim may be brought.
Providers also often include language that limits the issues on which an author may base a claim, or that limits the author’s recovery to only unpaid royalties, or that requires the author to use arbitration rather than the courts to resolve disputes. These dispute resolution provisions are not likely to be negotiable, but because they dictate how and when an author may bring legal claims against a provider, they should not be disregarded.
THE SMART CONSUMER’S APPROACH
In conclusion, there are a multitude of issues for authors to consider when evaluating self-publishing provider contracts. The issues outlined above are particularly important, however, because they affect an author’s ability to control the self-published work. There are many reputable providers whose contracts offer even-handed terms.
In comparing provider contracts, trust your gut. Ask yourself if the contract seems fair. Is it written in easy-to-understand language? Are you able to negotiate any terms (or, at least, choose from a variety of packages)?
Be a smart consumer. Talk to others who have used the self-publishing provider you are considering. And, above all, review contract terms so you can minimize the risk of problems and maximize all the possible benefits.
Aimee Bissonette earned her bachelor’s degree from Colorado State University and her law degree from the University of Minnesota Law School. She has worked as an occupational therapist, teacher, lawyer, and small-business owner. In her legal practice, she works with numerous children’s book authors and illustrators. In addition to her books for children, Aimee has published a book for K–12 teachers and administrators on the legal issues associated with technology in the schools. She lives with her husband, family, and dogs in Minneapolis, Minnesota.