Friday, 26 October 2012

The Contract is King

If you live outside the world of publishing, it's easy to ignore the fuss that gets made about contracts. Most unpublished authors have never seen one, and many published authors have an agent to deal with the contractual nitty-gritty. So I came into the industry blissfully unaware of how quickly contracts would become part of my daily life.

Most contracts are not written for normal human beings to read. They're full of arcane phrases that no-one would use in real life and often adopt a bewildering approach to punctuation. They have a language of their own, and perhaps, having been a programmer, I'm better equipped to understand them than some other people. From a lawyer's point of view, the perfect contract is one that covers every possible eventuality and does not leave anything to chance. From my point of view, the perfect contract is one that minimises risk to an acceptable level while maintaining readability. Some contracts are so long and impenetrable that they put all of the power on the side of the organisation providing the service. Think of the iTunes user agreement or the terms and conditions for an online store – how many of us actually take the time to read those before ticking the box?

For a neat April fools gag in 2010, the video games retailer GameStation added the following to their terms and conditions:
By placing an order via this Web site on the first day of the fourth month of the year 2010 Anno Domini, you agree to grant Us a non transferable option to claim, for now and for ever more, your immortal soul. Should We wish to exercise this option, you agree to surrender your immortal soul, and any claim you may have on it, within 5 (five) working days of receiving written notification from gamesation.co.uk or one of its duly authorised minions.
7,500 people signed up that day without noticing. In this case, the devil really was in the detail!

But back to publishing. In my daily life – especially when discussing rights or licensing, contracts are an invaluable tool. Quite often, the only way to find out exactly what we have agreed and with who is to read the contract. Exploiting foreign and digital rights is big business for publishers, and HotKey Books have helpfully posted a number of recent blog posts on the issue following the Frankfurt Book Fair (here,here and here). When I'm putting an app proposal together, rights are especially important, because I will often be looking to take content from more than one place and mash it all together into something new. I'm also keen to produce something that we can sell across global markets, so that usually results in a lot of time spent staring at the same clause in multiple contracts and tabulating the results in Excel. Hardly rock and roll.

Recently, I was sat in a meeting where we argued for an hour about whether a product was an app or an eBook. This sounds like a narrow distinction, but the author of the original work had two different royalty rates in their contract and the decision would hugely affect how much they were paid. I left the meeting feeling rather sorry for the author, who to my mind had done exactly the same amount of work regardless of how it was packaged. But maybe it was their agent's fault for not pushing for a better deal? On the other hand, there are app projects we haven't pursued because the author had negotiated too high a royalty or would have been able to exert too much control. So it looks like you can't win!

The wider truth is that contracts which seem entirely reasonable when they're signed can quickly go out of date. Contract law struggles to keep up with the fast pace of the digital world, and perhaps we will see more author contracts where royalties are paid on a flat percentage for all rights and all markets. I'm sure that the newer publishers have thought of this stuff from the start, but for the rest of us it will be a gradual struggle to catch up. If there's one lesson to take from all this: the next time you're presented with any kind of contract, make sure you read the small print. Your soul may not always be at stake, but your future income certainly could be.

Nick.

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