A. By “tricky” you mean contract terms that may have unforeseen consequences for the author. That is a big topic, but here are some prominent examples:
The Cross-collateralization Clause: “All Works covered by this Agreement or any other agreement between Publisher and Author shall be considered one account and shall be accounted for jointly or collectively.”
What it Does: This little beauty is an accounting concept that gives your publisher the right to charge your royalty account for any amount owing to the publisher under any other publishing agreement. For example, you have just submitted your third novel, KILLING MADLY, to your publisher. Your first novel, KILLING SPREE, sold well, but your second, KILLING FRENZY, earned out only $10,000 of its $12,500 advance. Under the terms of your current publishing agreement, you are to receive a $15,000 advance for KILLING MADLY, upon acceptance. But when the check comes, it’s for $12,500 – the publisher has deducted the $2,500 shortfall from KILLING FRENZY.
Your Response: Knowledgeable authors and agents will try to get the clause deleted or modified to avoid an unearned advance from an unsuccessful previous book sucking up the royalties on subsequent books.
The Deep Discount Clause: “On sales at greater than publisher’s normal wholesale discount, publisher shall pay Author one-half of the royalty rate set forth above. . . “
What It Does: Originally, this clause was meant to apply to non-returnable quantity special sales that a publisher made at a high discount to purchasers outside normal book-purchasing channels (such as premium sales, export sales, direct-mail sales, or sales on a non-returnable basis). But guess what? Many publishers now apply the clause to normal bookstore and wholesale sales. Since many –sometimes most– books are sold to bookstores and to Amazon at a discount rate of 55% or more, and to big discounters like WalMart, Target, and clubs like Costco, at over 65%, this clause in effect guarantees that the author’s royalty rate always will be reduced.
Your Response: You can try increasing the threshold to a specific percentage – say 55% or even 60%. Some agents request a copy of the publisher current discount schedule before agreeing to royalty schedules – but the publisher always can change the schedule. Even better, just make sure the clause only applies to its original purpose – “special sales” — sales outside normal wholesale and retail trade bookselling.
The Reserve on Returns Clause: “If royalties have been paid on copies that are thereafter returned, then Publisher shall have the right to deduct the amount of such royalties on such returned copies from any future payments under this or any other Agreement.”
What It Does: This seems fair, at first glance. But there is no cap! How long the retailer keeps your unsold books on the shelf or rack depends both on the format of the book and the type of retailer. Unsold trade hardcovers or full-size (“quality”) paperbacks may stay on a chain bookstore shelf for up to a year; mass-market paperbacks only a month or two. And for those paperbacks distributed through drugstores, airports, and supermarkets – a few weeks! Without a reserve cap, you are at the mercy of the publisher’s accounting department, who may reserve as much as 50% “just to be safe.”
Your Response: You MUST specify a reserve cap or risk having half or more of your royalties held up for months or years. A typical “fair” cap is in the 15-25% range, for no more than one six-month accounting period.