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Aug 2007

Richard Curtis on
Publishing in the 21st Century

Mastering the Business of Publishing

by Richard Curtis

Originally published by E-Reads


Multibook Deals

FOR MANY WRITERS the term "multiple-book deal" conjures images of byzantine negotiations conducted in a smoke-filled conference room by a battery of literary agents, lawyers, accountants, and publishing executives, of telephone-number advances and thick contracts replete with state-of-the-art jargon about best-seller escalators, book club passthroughs, and topping privileges. The tyro author who would be overjoyed to get even a one-book contract must view such deals as relevant only to the gods in some literary Valhalla. What pertinence do these Ludlumian, Michenerian, Grishamian transactions have to the humble and brutish lives of nickel-a-word galley slaves?

The truth is that many more multiple-book contracts are proffered to writers than most people imagine, and most of them are no more complicated than one-book contracts. And their terms are substantially lower than those generally associated with Olympic-sized swimming pools on the grounds of Beverly Hills estates. In fact, if you write in any of the traditional genres the chances are that sooner or later you'll be offered a multiple-book contract. Whether your specialty is science fiction, mysteries, westerns, romances, male adventure, or even popular nonfiction, it is likely that a publisher will be interested in signing you up for more than one book at a time. You may have created a character in a novel whose exploits you or your publisher would like to extend to further books. Or your publisher may like your work well enough to ask you to write books in a series created "in the house," as it were. You would do well to understand the features of such deals, if for no other reason than that, after longing to have one offered to you, you might ultimately decide that they're not that hot after all and you'd be better off selling one book at a time.

When you think about it, a multiple-book deal is simply an elaborate extension of your option clause. In a traditional contract, the publisher usually gets an option on your next book at terms to be negotiated. In a multiple-book contract, the publisher makes a commitment to more than one book and specifies the terms and conditions for the acquisition of those books. The nature of those books is usually described in detail: "Books number 4, 5, and 6 in the adult western series featuring the hero Luke Starbuck," or "Four saga-length works of fiction set on and around a Savannah, Georgia, peanut farm during the American Civil War." The general terms—"boilerplate"—that characterize a contract for one book now cover two or three or more at a time. The warranties you agree to on book number one are identical to those on numbers two and three, for instance. A few boilerplate items may be altered to adjust for the multiplicity of books in the contract. The termination clause will have the phrase "on each work" in it or something along those lines in order to account for the probability that each book in the contract will go out of print at a different time.

One of the reasons publishers like multiple-book contracts, then, is simply that they are convenient. They enable publishers to prepare one contract for several books whose terms are pretty much identical. This may seem like insufficient reason to offer such deals to authors, and in truth it is. But when you realize how much time and labor goes into the preparation of even a routine book contract, you might feel less inclined to criticize publishers for wanting to speed up the flow of paperwork, which after all benefits authors too.

The principal object of multiple-book deals is security. Ideally, they should make publishers and authors feel equally secure (agents don't mind a little security either, by the way), but things don't always turn out that way, as we shall see.

The security comes in because all parties know where they stand with each other for the duration of the contract. The publisher knows that his author is not going to leave him after the next book or the book after that. The publisher also knows he won't be hit for a high price one or two books from now if the author gets hot tomorrow, because the prices for those future books will have been fixed at the outset, when the multiple-book contract was signed. The author, by the same token, knows there will be a home waiting for his next two or three books, and can count on a specific sum of money to be paid him when he delivers them. Even if the market for his kind of books collapses, his publisher is still contractually obligated to pay him for each delivered book, whereas if the author made contracts with his publisher on a book-by-book basis, the publisher could drop him as soon it became apparent that there was no more market for his stuff.

Another important factor is scheduling dependability. Where series or other related books are involved, success rests heavily on the timing of release of the books, and that timing can be set with certainty only if the publisher can absolutely count on reliable delivery of three or four or six books. By tying the author up for that many, the publisher knows (or at least hopes) that the author won't accept contracts with other publishers that will interfere with the delivery and publication rhythm of the series.
Of course, the big multiple-book deals that make front-page headlines incorporate all of the above factors plus very big front-money. These deals are designed to nail down a bestselling author for as long as possible, and in many cases there is little or no description of the books because nobody including the author knows what they're going to be about. Indeed, the publisher may not even care what they're about as long as it's guaranteed he'll get his mitts on them.

The publicity value of a multiple-book deal may outweigh its actual monetary value. The pages of publishing trade publications and writers' newsletters are filled with references to deals that make author and publisher look good but do not necessarily stand up to intense scrutiny. A "five-figure deal" might be for $99,000 or it might only be for $10,000. Or you may read about deals that "could bring the author $850,000 per book." They could, yes, if they sell like hotcakes, get picked up by major book clubs, go on the best-seller list for two years, and are made into major motion pictures. The actual guaranteed money in such deals might be quite modest, but the built-in escalators, bonuses, and similar features enable the publishers to wring the most publicity out of them.

And of course, deals that may seem relatively small to the public at large can be most impressive in the author's "hometown"—that is, the genre in which he writes. A three-book deal for a $75,000 advance might be sneezed at by the New York Times, but if the books are science fiction, romance, westerns, or some other genre, the writers and editors who read about such exploits in the trade papers will sit up and take notice.

Big deals or little, the underlying accounting principles are the same. Let's examine them.

There are several ways in which the accounting may be set up in a multiple-book contract. The first is to fix the advance for each title in the contract and to keep the royalty accounting on each book separate from that on the other books in the package. Thus you might have a three-book, $30,000 advance contract, with the advance per book pegged at $10,000. When book number one is published and earns more than $10,000 in royalties, the author will collect the overage in royalties even though the second book, say, has not yet earned back its $10,000 and the third book has not even been published.

The other way to structure a multiple-book deal is to "jointly account" the advances on each book. Joint accounting (also known as "basket accounting" and "cross-collateralization") creates a common royalty pool for the earnings of all books in the contract. This means that royalties earned over and above the advance on one book in the contract will not necessarily be paid to the author but will instead be applied to the unearned advances on other books in the contract. Until the total of advances in that contract has been earned out by royalties from any or all books in that contract, the author will not receive additional royalties. For instance, suppose we have that $30,000 advance deal for three books, but with joint accounting. Book number one is published and earns $15,000. Does the author receive royalties? No, because the three-book combination must earn a total of $30,000. Suppose, further, that the second book earns $15,000 too. Does the author now receive royalties? Again, no, because the two books have earned, together, no more than the $30,000 originally advanced to the author. Now book number three is published and earns $4,500 in royalties. Does the author now get anything? Yes, he gets $4,500, for the total royalties earned by the three books is $34,500, or $4,500 more than was originally advanced. Of course, it can work the other way around too.

uppose the first book in the package was a wild success and earned $35,000. The author would then collect $5,000 royalties on his three-book contract even though the second and third books weren't yet published. And when those books were published, all royalties they earned from the very first dollar would go to the author, because his $30,000 advance would have been earned out on the first book.

There are pitfalls for both author and publisher in multiple-book deals, for such deals are like long-term commodity investments. If you bet that a commodity will be worth X dollars one year from now, and between now and then the value soars far beyond what you estimated it would be, you will be left holding a considerably undervalued contract. Apply this to the case of an author who grabs a three-book contract for a $30,000 advance. The advance is paid in four equal installments of $7,500 apiece, the first on signing and the next three on delivery of each book. The first book is published and becomes a wild success: book club, reprint, movie, the whole bit. Now he delivers the second book and what does he get?—a mere $7,500. He may be mad at himself (to say nothing of his agent) for tying himself up for so long for so little. Of course, the difference between an author and a pork belly (and perhaps the only difference) is that the author at least has the opportunity to make up in royalties for the inadequate advance he negotiated two or three books ago when he was just another lowly writer in the crowd. Thus he may only collect $7,500 when he delivers book number two, but a few months later he may collect $50,000 in royalties earned on book one.

Bear in mind that by the same token the publisher stands to lose if the commodity—the author, his books, and the market—go short, that is, drop below what the publisher projected when he tied the author up for all those books. If a publisher signs you up for that four-novel peanut-plantation saga, and just around the time you're delivering the first one the market for plantation sagas collapses and your publisher can't give them away—well, there's going to be much rending of garments and maybe of jobs at that publisher's office.

So, it's a bit of a crapshoot both ways, and if you feel your books are going to be worth far more than the per-book advance you've been offered in a multiple-book deal, then turn that deal down. If the publisher doesn't agree with your appraisal of your future value, then he'll turn the deal down. Sometimes you can forge a compromise. If your publisher feels that the individual value of the books in a three-book deal is $10,000, and you feel it's $15,000, you can split the difference by structuring advances of $10,000 on the first book, $12,500 on the second, and $15,000 on the third. If the deal is jointly accounted, you'd simply add these advances up for a total advance of $37,500, but when you negotiate the next contract your price per book starts at $15,000.

Once a publisher has a good writer in his stable, he may be willing to pay high, even to overpay, to keep him there for a long, long time. I remember negotiating with a publisher for an author he coveted, and I fixed a price of $225,000 for a three book contract. He winced. "That's awfully high."

"What can I tell you?" I said with a shrug. "That's what I think he's worth, or will be by the time he writes his third book."
"Who knows how much he'll be worth two years from now?" the publisher sighed philosophically. "We could all be dead two years from now."

"That's true," I replied. "So why don't we just make a deal for one book and see how that one goes?"
The man sat bolt upright in his chair, a stricken look on his face. "Don't do me any favors." Alarmed at the prospect of having this rising young author for only one more book, the publisher quickly met my terms.


Payout Schedules

WHILE THE SIZE of the advance is the criterion by which most authors measure the commercial value of their books, the size and timing of the installments in which the advance is paid are just as significant, and sometimes more so. Because the "payout schedule" directly affects the cash flow of publishers and authors, it is often a bone of bitter contention in negotiations, and many a player has walked away from an otherwise good deal because the payout schedule nullified advantages gained in the negotiation.

With few exceptions, advances are paid in installments. Part of the total money is payable upon signing the contract, the balance payable on acceptance of partial, complete, or revised manuscript; on certain calendar dates; on publication; and even after publication. Although the payout formula may be fairly simple when the advance is small, publishers and agents devote a great deal of attention to it when the stakes get high, The reason, of course, is the cost of money.

Until recently, when the inflation rate ground to a comfortably low single-digit crawl, it could be projected that the value of one thousand dollars deferred for one year was nine hundred dollars. At the same time, interest rates appreciated the value of that thousand dollars to something like twelve hundred in a year. Thus, between inflation and interest, a year's postponement of payout to an author meant a swing of some 20 percent in the value of that money. Both interest rates and inflation have, at this writing at any rate, stabilized at manageable levels, but for both publishers and authors, 5 or 10 percent per annum is worth fighting over and may indeed make a significant difference to their balance sheets.

Let's take a closer look at payout schedules installment by installment and sketch some ways authors may improve their position when the haggling begins.

• Payment due on signing of the contract. All contracts large and small require a consideration to be paid on signing, even if it be no more than one dollar, in order to bind the agreement. If the total advance is small enough, it may be payable in full upon signing. Most publishers today, however, have policies prohibiting payment in full on signing, and editors are ordered to defer some part of the advance in negotiations. Even if your book is a flawless gem requiring not a jot of revision, an editor may contrive to pay a second installment of your advance "upon acceptance of revisions" in order to satisfy company policy. Then, a week or two after vouchering the signature installment, the editor will put through the acceptance installment as well.

If the contract is for an unwritten book, the advance will be divided at least into an on-signing payment and an acceptance one to create an incentive for the author to deliver the work. The publisher may try to divide the advance even further, into installments payable on delivery of a partial manuscript or first draft.

You will have to do some solid reckoning before accepting too small an installment on signing, otherwise you'll run out of money before you turn in material qualifying you for the next installment. First you must subtract your agent's commission if any, then calculate the amount of time that will pass until you are entitled to the next payment. You then have to figure whether your living costs (including anticipated lump sum payments like school tuition, income taxes, or insurance premiums) during that period will be covered by what you collect when you sign your contract. A $50,000 advance may seem attractive to you, but if your publisher wants to pay you $10,000 on signing and it takes you six months to write the book, and your monthly nut is $3,000, you're going to be up the creek halfway through the writing of the book. So you must bargain hard for a down payment that will sustain you until you've turned your manuscript in.

• Payment due on delivery of partial manuscript or first draft. These installments are generically known in the book trade as "satisfactory progress" payments. To help bridge the gap between the on-signing and the acceptance checks, and to encourage or compel progress, publishers frequently negotiate installments payable when the author turns in part of the book. A typical deal might be structured: one third on signing the contract, one third on delivery of half the manuscript, and one third on delivery and acceptance of the complete manuscript.

Of the many ploys cooked up by publishers to stretch out their money, "satisfactory progress" is the least effective, and if it weren't so dangerous it would be just plain silly. At the very least, "satisfactory progress" is satisfactory neither to authors nor publishers, and the only thing it does for progress is halt it.

In a "satisfactory progress" situation, an author faces a number of choices, all of them terrible. He can turn in a rough draft, which is usually an embarrassing mess that will send most editors into respiratory arrest, or at least provoke them to request revisions that the author would ordinarily make on his own when tackling the final draft. Or he can stop work in the middle of the book, polish and retype what he's done so far, and turn a partial manuscript in. Either way, he will have to suspend work on his book until he has received some feedback from his editor. Even if his editor offers no feedback whatever, it may take weeks or longer to get that editorial reaction, and such delays are inevitably harmful to creativity and cash flow. If the editor does have criticisms, the author may be required to rework what he's turned in in order to get his hands on that money. To avoid all that hassle, therefore, an author may choose to forgo his "satisfactory progress" payment and forge ahead with the rest of the book, which defeats the purpose of such interim payments. Most authors do not polish chapters after drafting them, but prefer to finish a rough draft of the entire book and polish it in the final draft. Thus the time between the completion of a first draft and a final draft, or delivery of half the manuscript and all of it, may be so brief that the machinery for putting through the "satisfactory progress" installment will scarcely have begun turning when it will be time to put through the final acceptance payment.

Furthermore, many editors feel it's silly to read a partial manuscript or first draft when the final product will be turned in a few weeks or a month later.

In short, "satisfactory progress" payments reflect little understanding of how authors work and pose a genuine threat to both the quality of a book and the timeliness of its delivery. Ultimately, this ends up hurting the publisher as badly as it hurts the author.

• Payment due on acceptance of the manuscript. Whenever possible, the balance of the advance on a commissioned book should be payable no later than upon acceptance. A number of contracts stipulate that a manuscript is deemed acceptable unless the publisher notifies the author to the contrary within a period of time, thirty days, sixty days, or thereabouts. This is a very desirable feature and one worth fighting for if it does not appear in the boilerplate of your contract.

In most contracts the definition of "acceptability" embraces revisions. If serious revisions are required by a publisher, the acceptance segment of the advance may be delayed until satisfactory revisions are turned in. If the revisions are minor, however, the publisher may often be prevailed upon to put through the acceptance money and take it on faith that the author will turn in acceptable revisions. There is an in-between state where revisions are necessary but the author cannot afford to do them without some sort of financial relief. In such cases the publisher may be persuaded to release some of the acceptance money to carry the author during the revision period.

I've expressed myself many times about the prevailing requirement in publishing contracts that an author must repay the on-signing installment of his advance if his manuscript is rejected. But in case you haven't read what I've said—well, I think it stinks. The on-signing advance should be regarded as a forfeitable investment, not a refundable loan. Needless to say, hard-headed (or hard-hearted) publishers see things quite differently.

• Payments due on publication. The purpose of publication installments is to enable publishers to start recouping what they've paid the author as soon as possible after disbursing his advance. Publication payments used to be the norm in American publishing. Then the rise of strong agents in the 1960s drove publication payments out of favor. But when money started to get expensive again in the 1970s (with double-digit inflation and interest rates), publishers pushed the agents back, and it is now common for publication installments to be paid. In some foreign countries such as England, the publication installment is still an article of faith.

The most common mistake authors make when agreeing to publication payments in a negotiation is failing to fix a time limit on them. Unacceptable language is, "$5,000 payable upon publication of the Work." Acceptable: "$5,000 payable upon publication of the Work or twelve months after acceptance, whichever date is sooner." The reason should become obvious if you think it through. Few contracts require publication of a book in less than twelve months after its acceptance, and many allow for publication in eighteen or even twenty-four months. Tacked on to these times are grace periods giving publishers an additional six months or more beyond the deadline to publish the work upon notification by the author that the deadline has passed. A publication payment may therefore not be due for as much as three years after a book has been accepted.

What is worse, publication of a book may be cancelled entirely for any of a number of reasons: staff changes, new policies, or events or trends that date that book. That means that the publication portion of the advance will not be payable at all, at least not according to the publisher's interpretation of the contract. I don't know if the point has been tested in court, but it can certainly be argued that if you sell a book to a publisher for $25,000, and the publisher cancels publication, you still sold the book for $25,000 even if some of that sum was to have been paid, for the publisher's convenience, on publication. Therefore, whenever you negotiate a publication advance, you should always stipulate that the installment will be due on publication or X months after acceptance, whichever date comes first. The X is negotiable, but should be no longer than the outside date by which the publisher is required to publish your book.

• Postpublication payments. Publishers have devised a fascinating array of gimmicks to postpone the day of reckoning to authors. Among these is the postpublication advance. Such installments may be payable on a specific date—X months after publication, say—or, in the case of a hardcover-softcover deal, one installment may be payable when the hardcover edition is published, another when the paperback edition is brought out. There are other creative variations on this theme, but because a book begins earning royalties from the date it's shipped, all postpublication advances amount to the same thing: paying authors with their own money.

Authors may want to try to negotiate payout schedules advantageous to their income tax status. An author who has already made a lot of money in a year may not want to receive a large on-signing payment that same year. A deal can be structured, therefore, so that only a token amount is paid on signing the contract and the balance of the on-signing advance is paid early in January of the following year. Not surprisingly, publishers like such setups, since they enable them to legitimately keep authors' money for several months. Literary agents, however, are not always thrilled to have their commissions deferred just because a client is enjoying a good year, so I don't feel your agent is out of line to request his commission on the full on-signing advance now, and to take no commission when the rest of your money comes in January.

If you do want to structure installments in a way that you feel is advantageous to you tax-wise, and your publisher is agreeable to the arrangement, the time to do it is when your contract is negotiated. If a contract is already in force and you ask your publisher to defer until next January a payment that is due this October because you don't want more money this year, the Internal Revenue Service may disallow it if you are audited and your publishing contract examined. The same holds true of requests to agents to hold money until the start of the next year.

The law makes it quite clear that money received by a fiduciary—a literary agent, for example—is construed to have been received by the author. This is not to say that publishers and agents do not hold money for authors in such circumstances, but getting away with it doesn't alter the statutes concerning "constructive receipt," and you may be liable for an adjustment in tax for that year plus interest and penalties.

Even if you are nothing more than a working-stiff type writer, it's still a good idea to get as much money up front as you can. A smart agent and a smart accountant will help you to structure your cash flow so that your hide is relatively intact every April 15. Don't let publishers earn interest on your money. Remember, the sooner you get your hands on it, the sooner you can start blowing it on stupid investments.

All the best,

Richard Curtis


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