Sunday, March 11, 2012

Net Vs Cover Price

As I've said in the past, my greatest strengths today are a result of my past failures. If I can tip a writer off to avoid roadblocks or glitches, I'll get on that wagon ASAP, even if it's too late for me. And this time it is. I was reading a hard copy contract that I resigned because of a breach of contract committed by one of my publishers. In my case, the publisher neglected to assign me an editor within a specified time period which made the contract null and void. I wholly expected that the terms, agreements and any clauses would be a duplicate of what I signed 14 months ago. In other words, I trusted my publisher to not deviate from the original agreement, or notify me if any amendments or changes had been altered, changed or added. There were no notifications in the accompanying contract and letter.

Never take things for granted. If you receive a new contract, read it over line by line, or compare it side by side with the original. Things can change radically in 14 months, and that's the rightful prerogative of the publisher. When looking at my new contract royalty clause, I noticed that the trade paperback royalty allotment stated 10% on net and 20% net on e-book sales. This threw me for a loop. I distinctly remember having never seen "net" after the figure in the last contract. The old contract did read cover price, after having confirmed it. In fact, I would have immediately called the publisher on it if I'd been perceptive enough. What struck me was the very low percentage combined with the net terminology. If memory serves, I believe these royalty figures are below Publisher America's figures. Double stun. And it was too late.

Cover price royalties are fairly easy to determine for trade paperback or e-books. If the books sells for $10.00 retail, then the author is entitled to $1.00 in royalties for that book. There are no hidden surprises. I've also seen "cover price" written as "gross" revenue. Same thing. The problem with a net definition is that royalties are determined after the vendor or book store has taken their commission-share. Online vendors can take as much as 50% to 65% of the sales proceeds, leaving the balance to the publisher, which must be split with the author. It's gets worse. If the net clause is not fully defined for what it includes (additionally), it could very be that the publisher will take out expenses related to publicity, mailing expenses, productions costs, and even editing and artwork expenses. And in that contract scenario, all of the power lies with the Publisher. With very low royalty numbers on net proceeds, this can virtually leave the author next to nothing in future proceeds.

Although I'm going to mention this to my publisher (at this late stage), it remains potentially futile to expect any type of a post-contract change or adjustment. My contract was signed by me, dated and witnessed. There really is no wiggle room, unless this was a typographical error. An error could be rectified. But the publisher is well withing their rights to refuse any change or request at this stage. In reality, I'll probably end up pulling about 2% to 5% royalties on cover price, a pittance for the very hard work that went into the book's writing, editing and production. I have only myself to blame for glossing over this very important clause in the new contract. This very well might have been a "boiler plate", which is usually reserved for new authors. And unless you don't know the difference between net and cover price, you too can end up in this unfavorable situation. Since my agent was not involved in the sale, I can't pass it off to her in hopes of a revision.

Don't make this mistake. That goes for every clause contained in your contract. Refer to the Science Fiction Writers of America, as an example of a standard, industry accepted contract that is fair and up-to-date--a contract that favors and protects the author. Lesson learned. 

Planet Janitor: Custodian of the Stars (Engage Science Fiction) (Illustrated)

1 comment:

  1. Yikes! good to know. Shared on twitter and G+