Category Archives: contracts

The Writing Biz: Noncompete Clauses and New Careers

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by James Scott Bell
@jamesscottbell

Two things caught my eye this week I think you should know about.

1. The End of the Noncompete Clause?

Traditionally published authors authors take note (and discuss with your agent): The Federal Trade Commission has issued a rule banning noncompete clauses. Under the rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date on Sept. 4, 2024.

The Authors Guild applauds the rule:

The Authors Guild has long objected to non-compete clauses and advised their removal in our contract reviews. These clauses, which are purportedly designed to protect publishers’ investments by preventing authors from selling the same or substantially similar work to another publisher, are often too broad. Authors are routinely asked to agree not to publish other works that might “directly compete with” the book under contract or “be likely to injure its sale or the merchandising of other rights.” Even more broadly, they may be asked not to “publish or authorize the publication of any material based on the Work or any material in the Work or any other work of such a nature such that it is likely to compete with the Work.”

Such open-ended non-compete clauses can prevent authors from pursuing other writing opportunities. If a new project even arguably deals with the same “subject” as the book under contract, the non-compete can be invoked to prevent an author from publishing elsewhere. For writers specializing in a particular subject, this could be career-derailing.

Certainly an author shouldn’t “compete” with their trad book by, say, self-publishing a similar book in the same season, etc. The publisher does deserve some protection for their investment, and your full marketing effort to help the book succeed.

On the other hand, a writer should be free to make more dough without the threat of a noncompete hammer coming down upon them. Thus, I have advocated for a more specific and fairer noncompete. But that may be moot in view of this new rule.

However, keep watch, for there are grounds for a lawsuit challenging the rule. Indeed, one of the Commissioners strongly dissented:

The rule nullifies more than thirty million existing contracts, and forecloses countless tens of millions of future contracts. The Commission estimates that the rule could cost employers between $400 billion and $488 billion in additional wages and benefits over the next ten years—and does not even hazard a guess at the value of the 30 million contracts it nullifies.

His reason for dissenting is that “an administrative agency’s power to regulate … must always be grounded in a valid grant of authority from Congress. Because we lack that authority, the Final Rule is unlawful.”

We shall see.

2. Can New Writers Still Have a Career?

It is “staggeringly difficult,” according to industry vet Mike Shatzkin.

You don’t have to be an insider to know that there were 500,000 titles in English available in 1990 and that more than 20 million are available from Ingram (thanks to print-on-demand) today. And that everything that was ever made available remains on sale through “normal channels” (which is “online”, not “in store”) forever. It doesn’t take a math genius to reckon that a pretty stable total book purchasing and readership constituency will result in dramatic reductions in sales per title.

In a meeting with publishing vets, he came away with this:

One agent has two clients who are successful self-publishers (there are subsidiary rights and foreign rights to occupy an agent.) Two things stood out about them. One is that they both published exclusively with Amazon, without the complement (which I would have thought would be “standard”) of also working through Ingram. The other thing was that they both started working their genres (and they publish exclusively genre fiction) in 2008 or so, before the rush of self-publishers in genres had saturated the market. So they established their brands in their genre marketplace when the competition was still minimal. The agent reports that both of these authors don’t believe they’d be successful starting to do this today.

JSB: I don’t agree with the last statement as a “rule.” The goal for a writer today is not wide distribution, but growing an “own list.” That can still be done, if the quality is there. True, the “breakout novel” is rarer than ever, but it has always been the exception. The writers who make a good chunk of change over time deliver quality product that grows a readership, which they nurture via email list and some social media presence.

It is, indeed, almost impossible to get a significant advance from a publisher unless sales are assured either by a highly branded author or an author platform of some kind that has significant promise for marketing and sales.

JSB: True that! And if that noncompete rule holds up, I would expect advances to be lower to nonexistent.

Comments welcome.

Toward a Fair Non-Compete Clause

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Recently, a friend sent me the text of a non-compete clause to have a look at. It was from the contract of a New York publishing company. My gob, as they say, was smacked. If there was a contest for the most one-sided non-compete clause ever, this would take the crown.

I say this in love. Truly. I love traditional publishing and want it to survive. But contracts that contain clauses like this one are not going to aid the old cause.

Due to confidentiality I am not at liberty to reproduce the text verbatim, but I can give you the gist:

The clause prohibits the author from publishing “material” that is “similar” to the Work. So what if your crime novel is coming out from Publisher, and you want to self-publish a mystery short story? Or sell it to Alfred Hitchcock’s Mystery Magazine?

Too bad. Because a short story is “material.” And a mystery usually has a crime in it, so it’s “similar.”

Or suppose you’ve had the foresight to reserve audio rights. You have a mellifluous voice, and spend twenty hours recording the audio version of your book for ACX, Amazon’s platform for indie audio works.

No go, because the clause in question prohibits the author from “exploiting” any reserved rights that may “conflict” with sale of the book. And who gets to decide if there is such a conflict? Not you.

And there isn’t even language in the clause suggesting the author might seek the “prior written consent” of Publisher! Message: Don’t even ask, dude.

Further, how long do all these restrictions last? There is no time limit (though the overall agreement is for “life of copyright.”) Which leads me to believe that the wet-behind-the-ears law grad who drafted this needs to be flogged with a hardcover copy of Calamari and Perillo on Contracts. This clause is clearly unenforceable without a time limit. Courts will not allow a company to tie up someone’s economic future ad infinitum.

But the burden of challenging the clause is, of course, on the author. Or, should the author go ahead and publish a work the publisher deems to be “competing,” the publisher may task some associate at their retained law firm to put down his coffee and make life difficult for the author.

Who is going to be the big dog in that fight? Let’s compare the status of our respective parties:

Publisher = deep pockets.

Author = pockets with holes.

Now, before I move on, let me emphasize that the traditional publisher absolutely deserves to have a fair non-compete clause in the contract. Here’s why.

The publisher takes a risk with an author, puts up capital (in the form of advance and production costs) with the hope of return. A significant part of the return is from bookstores (remember those?) Bookstores do not want to stock competing titles from the same author during the same season.

Thus, the standard non-compete was to keep John Grisham from publishing The Firm with one publisher and The Pelican Briefwith another, and having them both come out at the same time. The books would “cannibalize” each other, so the saying goes. One, or more likely both, publishers would be harmed by this.

Here’s another reason publishers need the clause. Suppose Publisher is coming out with your debut thriller, and pricing it as a $14.99 trade paperback, and a $9.99 ebook. But, at the same time, you bring out a self-published thriller and price it at $3.99 in digital and the same $14.99 in POD. And then you unleash your social media marketing efforts to emphasize the book that’s brining you more money per unit (i.e., your self-pubbed effort).

That’s not cricket. You are hurting Publisher’s investment in you. That’s why the non-compete clause exists.

But by now that clause should have morphed into something more equitable than the specimen I reviewed. Publishers have to realize that the times are not a-changin’––they’re a-changed. Permanently. They should not play hardball with contracts as if it’s still 1995.

Authors (and agents) should not accede to a “standard” non-compete clause. One like this should be a deal breaker.

Here’s an idea: negotiate!

So what isa fair non-compete clause? Very simple: a time-limited clause that specifically defines the type of material covered. For example:

For one year from the date of publication of the Work, Author will not publish or authorize to be published, in either print or digital media, any work greater than thirty-thousand words in the thriller, mystery or crime genres.

This leaves open the publishing of short-form work which, I might add, the publisher should encourage. This is how the writer attracts more readers, many of whom will then seek out the author’s trad-published books. It’s a classic win-win.

In this era of suspicion, vituperation and even paranoia, here is a way for publishers and authors to actually do what is in their mutual interest.

Imagine that.

The Scoop on Agents

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By John Gilstrap


Last week, our friend and frequent-poster Terri Lynn Coop posted the following comment:


“You’ve talked about becoming agented and querying. However, what happens once your novel or non-fic is sold to the publisher.
What kind of deadlines are there? How firm are those deadlines? What role does your agent play after the publishing contract is signed? What sort of public face does your agent and publisher expect you to maintain from contract to release (is there a difference between fiction and non-fiction)? When do you see your advance?”


It’s a great bunch of questions. I’m going to take a shot at some answers.  The underlying assumption of my answers is that this is a first published book we’re talking about.  The rules don’t change a lot after you have a chip in the game, but they do change a little.  I’m also going to juggle the order of the questions a little:


What role does your agent play after the publishing contract is signed? 


Understand that a lot of negotiation goes into what a publishing contract looks like.  What rights will be sold?  More importantly, what rights will be retained by the author?  Is this a one-book contract, or a multi-book contract?  What will the pay-out schedule be?  If it’s a multi-book contract, will they be individually accounted or jointly accounted?  (Joint accounting means that Book #1 would have to earn back its advances before you could start earning advances on Book #2.  It’s by far the least preferable method, but first-timers often don’t have a lot of heft there.)


The agent is the go-between for all uncomfortable transactions.  For example, in fifteen years, I have never discussed money issues with an editor, and no editor has had to tell me to my face that I wasn’t worth the money I was asking for.  The agent keeps the creative relationship pure.  Beyond that, if everything goes well, the agent doesn’t have a lot to do after the contract is negotiated.


But things rarely go well.  What happens if your editor quits or gets fired?  What happens if you really hate the cover, or if the editor is getting carried away with his editorial pen?  On a more positive note, the agent will continue to pursue foreign publishing contracts, movie deals, etc.


What kind of deadlines are there? How firm are those deadlines? 


Deadlines are part of the negotiation process.  You’ll have to agree to respond to your editorial letter by a certain date with a corrected manuscript, and then you’ll have copyedits and page proofs, all while making your commitment to deliver the next book in the contract if it’s a multi-book deal.  I consider deadlines to be inviolable.  I’ve had to push the delivery date by a couple of weeks once, but I hated doing it because it inconveniences so many people, and it makes me look unprofessional.  Here is another instance where a track record of performance keeps people from losing faith in the author.  For first-timers, blowing a deadline can kill a career.  Remember, by blowing the deadline, you technically violate the contract, which the publisher would have the authority to void.


Writers need to understand that publishing calendars are set 12 to 18 months ahead.  Working backwards from those dates are the in-house deadlines for the production side of things (cover design, copyedits, publicity, ARCs, reviews, and a thousand other details).  If a deadline is blown by as little as a month, publishers may pull the author’s book from the calendar and replace it with another, thus potentially adding months to the publication date.


When do you see your advance? 


This is another  negotiated deal point.  Advances are paid out in pieces.  There’s always one piece on signing.  After that, the milestones vary from author to author, often depending on the horsepower of the agent, and on the “importance” of the author.  Other payment milestones can include: submission of edited manuscript (this is the “D&A payment–Delivery & Acceptance); hard cover pub date; softcover pub date; and even, in some cases, some period of time after the pub date.  If there’s a second book in the contract, there’ll likely be a payment milestone for the submission of an outline for the second book, followed by submission of an acceptable manuscript.


Meanwhile, if you’re happy at the publishing house, sometime while writing the second book of a two-book deal, your editor and agent will start negotiating the next deal.


What sort of public face does your agent and publisher expect you to maintain from contract to release (is there a difference between fiction and non-fiction)? 


This is where the issue of an author’s platform comes in.  If you’re a celebrity writing your autobiography, the pressure will be high to be out there to flog it.  Similarly, if you’ve written a book about a presidential candidate during an election year, the publisher will press hard for you to have media face time.


On the other hand, if you’ve written a novel featuring a feline crime solver (or about a freelance hostage rescue specialist), chances are that you couldn’t buy publicity outside of your local newspaper.  In that regard, an author’s public face is only as public as the author wants it to be.


I think that’s all of it.  Okay, Killzone comrades, let’s hear from you.

Publishers Trying Stuff

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We’ve been all over the e-book revolution here at TKZ. Last month I asked what the publishing industry would look like in six months. We’re starting to see some things taking shape.
First, the news. The publishing industry’s first quarter stats are in, and here’s the headline:
E-book sales are up 159.8%. Adult hardcover and mass market paperback sales are down 23.4%.
If you were an American car manufacturer and you saw that sales of Japanese made cars were up 158.8% and sales of American cars were down 23.4% in the first quarter, what would you do? I’ll tell you what you would do. You would run to the federal government and ask it to bail you out.
Traditional book publishers can’t do that. (Well, I guess they could try, but it would be a tougher sell than a Charlie Sheen self-help book.)
So what should they do? Try stuff. Innovate. Move fast.
There’s a problem, though. It’s not easy for major industries to change. Publishers have been operating under a model that is a hundred years old. But the market does not care. It is merciless. So adapt or be left in the dust.
This week one of the major Christian book publishers, Tyndale, announced a “digital first” imprint. They are going to bring out four fiction titles in July that are e-book only, by new authors. Then they’ll add non-fiction titles. If a title performs well, they will consider giving the author a print run.
Tyndale issued a press release that read, in part:
Lisa Jackson, Associate Publisher explains, “The world of publishing is shifting rapidly, and it’s important that we as publishers deliver content in as many ways as possible. The Digital First project allows us to get fresh, new voices into the marketplace more quickly and efficiently than ever before.”
“I am very excited about this new initiative,” says Ron Beers, Senior Vice President and Publisher. “Tyndale has always been known for its innovation. Now we are working hard to be at the leading edge of the digital publishing revolution and to use that creativity and expertise to most effectively launch new voices into the marketplace. We are one of the few houses that has invested heavily in in-house digital expertise and this has allowed us to be more nimble yet strategic in bringing digital content to market.”
***
Looking at this from a business angle, this seems like a solid move. Whether this will be a net positive for the bottom line cannot be predicted. There are too many variables and the landscape changes almost daily. But it’s proactive and “outside the box,” and that’s what it’s going to take to survive. Plus, it lowers the risk of finding new authors the old way, via advance and print runs and hoping to sell through. It’s like a farm system.
Now, what about the writers? How is this deal for them? I have not seen an actual contract, but I have heard informally that we’re talking very low advances with a higher percentage on the back end, between 30 – 50% royalty.  IOW, shared risk and reward.
Seems like a win-win.


Yet the stats above indicate that print is in a downward trajectory. So will being “in print” mean the same thing a year from now? Will there be enough shelves for the new writers to occupy?

What do you think?