THE PECULIARITIES OF COMPUTER BOOK CONTRACTS

IVAN HOFFMAN, B.A., J.D.


There are some clauses in contracts for computer books that do not exist in deals for non-computer trade books or at least do not exist to the same degree. By being aware of such potential pitfalls, the writer of computer books may empower himself or herself to make a better deal and so be in a position to reap larger rewards for his or her considerable talent. Anyone who understands this stuff enough to explain it to someone else seems to me to deserve the best deal possible!

Computer book contracts, like other contracts, are drafted by counsel to protect the company. Perfectly acceptable. Computer book publishers have and deserve to have legitimate business concerns that the following clauses and others serve to address. However, we live in a free market in which each side is advised to know and understand their rights and obligations. Often what occurs is that the author also has legitimate business concerns that are the subject of the same clauses but which pull in opposite directions. Thus the power of the open and free market negotiation. The author is, under those circumstances, well advised to seek counsel of his or her own to make the pull potentially of equal power.

  1. Initially, the requested grant of rights is often quite broad. It is usually for all rights in all media. This broad grant includes but is not limited to rights to publish the book as a CD-ROM that either accompanies the book or is to be marketed separately as well as rights to publish it over the Internet. While many non-computer trade book contracts often have this same set of rights requested by the publisher, because trade book publishers are often only in the trade book business and merely license other rights, the rights required to be granted by the author may often be narrowed through negotiation. The author is advised to make certain that he or she also obtains, in the royalty section of the agreement, a provision to be paid on all the rights that he or she grants. It is not a given that because a grant is made that there is a corresponding payment made.
  2. Related to the first issue is the question of just how many authors are involved in the project. Unlike the non-computer trade book industry, computer books may have several authors. Thus the scope of rights granted as well as other issues may depend upon whether or not all the authors can see the same contractual issues and are willing to negotiate in the same fashion about those issues.
  3. Also related to the previous issue is a question of which party conceived of the idea for the book. Most frequently in the non-computer trade book business, an author conceives of an idea and then writes the book based upon it. However, the computer book business sometimes sees the company conceiving of the idea and then approaching a particular author or authors to write the book. The scope of rights granted by the author may depend upon whose idea it was and whether or not the author is engaged to write a book that has been previously developed as part of a series of books owned by the company.
  4. Another peculiarity of computer book deals is that computer books themselves often involve use of material that may be proprietary. Examples of these materials may be code, screen shots, or even patented or copyrighted programs. The author is requested to grant to the publisher exclusive rights as to all material comprising the book. Unfortunately, unless the author specifically excepts material owned or controlled by third parties, significant problems may later arise. And in this regard, it is often laid at the doorstep of the author to obtain all such permissions and this can be a daunting task filled with pitfalls along the way. Great big "caveat author" in this area! (see discussion below about warranties and representations.)
  5. Penalty clauses. These are often onerous and quite expensive. They provide that upon a failure to deliver any of the requested materials according to a deadline, often itself quite rigid and tight, the author must pay to the publisher a stated amount, often deducted from the author's advance. Note here that the deliverables in this instance may include the previously mentioned third party permissions thereby placing the author's money at the jeopardy of persons over whom that author has no control. Now having said this, I am of course aware that, because of the ephemeral nature of computer books and their short shelf life, timing is important. So a balance should be struck by either providing some non-monetary penalties or indeed eliminating the clause entirely or providing for greater latitude and notice and opportunity to cure and/or other such fancy provisions.
  6. The advance. Given the sometimes huge size of computer books, the advances paid to the author are often not commensurate with weight. Size often does not equate with sales but it seems to be the belief of many publishers that it does and yet the author is not given an advance that matches the work that is entailed in producing a 500+ page book. And if there are several authors, that advance may be divided among them all. Certainly as far as the company is concerned, it is one book and the costs entailed in producing that book, costs that include any collective author advance, have to be allocated only as to that one book. From the company's point of view, having several authors does not mean that each author should be entitled to an advance that that author might receive were he or she the sole author. The consumer probably doesn't care how many authors are involved but merely cares about content. However, joint and collective authors may end up working just as hard for a smaller percentage of that collective advance. And indeed working with others may involve more time and energy that working alone may not.
  7. The warranties and representations. Computer books by their nature often include screen shots, references to web sites, programs and so on. The author makes representations and warranties to the publisher that everything contained in the book has been created by the author and the author has the right to transfer all rights to all this material to the publisher. This may simply not be possible since, as I mentioned above, the book may involve proprietary material for which licenses must be obtained. Yet the author often makes this broad grant of rights only to find that upon the execution of the agreement and the publishing of the book, the author is in immediate breach of the contract if not indeed liable to third parties.
  8. Marketing representations. This clause provides that if the book is no longer a hot commodity in the marketplace by the time it is delivered, the publisher may cancel the agreement and the author must return any advances or other monies previously received. This is a significant clause because it makes the author, not the publisher, responsible for the continued marketability of the book. Presumably, if the publisher has done its work through its marketing department, it knows or should know what the market for the book is. And yet the author, who is given no control over any of the marketing of the book when it is done, is now made to be the maven of marketing and suffer the consequences if a wrong guess is made by the publisher. If the publisher decides to cancel the project because the publisher decides the book is no longer marketable, then it may be acceptable to terminate the contract but the author should not have to return any previously received advance and, in a better scenario, should be entitled to the balance of the advance still unpaid. The author did not make the original marketing decision and yet the author is the one being penalized. And this becomes especially true if it was the publisher that conceived of the project in the first instance. Now having said that, it is clear that the publisher may have incurred certain expenses in developing the book during the time it is being written. A legitimate issue. But the writer has also incurred expenses in the form of her or his time, lost opportunities and so on. The balance is that each side should walk away as whole as possible. Under the clause as I have stated it, the author becomes the insurer of the publisher. The publisher ends up whole and the author in the hole.
  9. The royalties. Given the price of the book, the work that goes into it, not only are base royalty rates exceedingly low, but the actual dollar and cent royalty received by the author is often much, much lower than the royalty rates. This is because the basis for royalty calculation creates a sizable reduction in the figures upon which the royalty rate is calculated. Often no reserve against return percentage or liquidation period is set forth. Book club and mail order sales, often a significant source of computer book revenue, are paid at a reduced rate. I realize that publishers may claim that they have additional costs, such as for the inclusion of a CD-ROM, but such costs are included in the higher retail price of the book and should not, under any circumstances, be a justification for making the author pay for such costs through a reduced royalty rate or royalties.
  10. Revisions and revised editions. Given again the short shelf life of many of these books and the rapid pace by which technology advances, the publisher often has a clause that gives them to right, but not the obligation, to have the author create a revised edition or a revision to the original book. Presumably the publisher will exercise this right only if the original book is successful and yet the author is often not guaranteed the first right to write the revision or revised edition. And as a double whammy, the publisher can cause the author to revise the book or produce a revised edition under the same terms as in the original contract for the original book. Success breeds no rewards to the writer. And if the publisher exercises it right to bring in a new writer, the costs and royalties payable to the new writer may be deducted from the royalties due the original writer for revised editions, which royalties are often quite low to begin with.

CONCLUSION

There are many other clauses in computer book contracts that may also impact directly upon the amount of money the author or authors receive as well as their liability to the publisher or to third parties. This article presents merely a sampling of such issues. These contracts may often be as complex as the software about which they deal and should be read very carefully by someone who knows as much about what the contract is about as the author knows what the book is about.

© 1996 Ivan Hoffman

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This article is not legal advice and is not intended as legal advice.  This article is intended to provide only general, non-specific legal information.  This article is not intended to cover all the issues related to the topic discussed.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This article is based on United States law.  You should consult with an attorney familiar with the issues and the laws of your country.  This article does not create any attorney client relationship and is not a solicitation.

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No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.


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