Okay, let's spend a little time talking about publishing contracts.
First, the disclaimer. I AM NOT AN ATTORNEY AND AM NOT MAKING ANY ATTEMPT TO GIVE LEGAL ADVICE. In fact, my advice would be to never enter into a publishing contract without an agent or literary attorney. My personal attorney looked at my first publisher contract and said, "It's a good thing you have an agent. I would have to do weeks of research to comment intelligently on this document."
Consider this more of a "tour," talking about what you can expect to see on a typical New York contract. It may take more than one post, but let's start and see what happens.
I. Identifying the date, the parties to the contract and the purpose of the contract. Contracts typically begin with a statement indicating who is contracting and for what purpose.
My contract gives my name and lists my address as that of my agent. Correspondence regarding the contract (and all advances and royalty checks) go to my agent who is my authorized representative in the publishing world. I have a separate contract with my agent which governs our interactions. She deposits the checks, takes out her share and forwards a check to me within the time prescribed by our contract. This is standard practice.
My publisher contract specifies the literary work's tentative title and describes the subject matter of that work. The description is less than twenty words, but includes the genre and the overall plot.
II. Author's Grant. This section grants specific rights to the publisher for the term of the copyright and any renewals. It includes what rights are being granted and in which specific countries and territories.
I began reading agent blogs in 2004, starting with Miss Snark. During this tour, I will refer you to specific posts relating to various subjects.
Agent Jonathan Lyons had a great post on the grant of rights here. Take a look at it.
This is the place where a contract specifies exclusive or non-exclusive rights to things such as printing, publishing and selling the work in various mediums (hardcover, paperback, audiobooks, etc.) and through various distribution channels (bookclubs, serializations, etc.). If you grant non-exclusive rights, you are able to grant those same rights to another entity. Obviously, most publishers are seeking exclusive rights.
III. Author's Warranty and Indemnity. Here the author assures the publisher that s/he wrote the work in question, owns the work in question, has not put it in the public domain and did not infringe on anyone's copyright in writing the work in question.
The author also indemnifies (secures the publisher) against any losses emerging from misrepresentation of the warranty.
About ten days ago, in the wake of the unveiling of the two recent fake memoirs, Nathan Bransford posted here about this clause in the contract.
IV. Delivery of the Manuscript. This paragraph describes when and how the manuscript shall be delivered (date and in what form: electronic, hard copy, etc.) This paragraph also describes what a "satisfactory" manuscript will look like and what happens if the author fails to provide a satisfactory manuscript.
Again, check out Jonathan Lyons' blog here for more information on this section. You'll need to scroll down to the third post on the page.
V. Publication. This paragraph specifies how much time the publisher has to actually publish the manuscript. It also indicates what happens if the publisher fails to meet its obligation.
Let me stop here and point out that a publisher's "boilerplate" contract generally favors the publisher. It's up to the author and the author's legal representative to ensure that language in the contract is fair to the author. If a contract doesn't include clauses like this one, two years after the signing, the author can find him/herself without a released book and no idea when the book will be released. If the proposed book's genre is no longer popular, the publisher is unlikely to want to publish the book unless there is a legal obligation to do so.
VI. Advances. Finally, we come to the money. Advances are exactly that. An advance against the royalties your book will earn. As long as you don't do anything dishonest (remember Paragraph III up above) and you perform as agreed, you don't have to return the advance.
When we talk about "earning out" the advance, that's when the royalties for books purchased total up to more than the advance paid. If your book doesn't earn out, you don't have to give the advance back. However, this is a case where an overly large advance can work against you. You want to be able to earn out. Otherwise, you run the risk of the publisher refusing to contract with you again on the next book--or of offering a much lower advance. See here for the story of Tom Wolfe leaving his publisher of forty-two years after he ran into this sort of problem.
Advances grew out of the fact that it can take a long time from the point of contract to the release date. E-books didn't originally give advances because they could release a book within one or two months. Now that this window for e-book release is expanding, a number of e-publishers have begun giving advances--even if only a token amount.
Increasingly advances are paid in thirds: one third upon acceptance of a signed contract, one third upon submission of a satisfactory manuscript and one third upon release of the book.
I personally like the three-part advance. The first part motivates me to write, the second part is a reward for a job done and the third part gives me money to spend on publicity at the very moment the book is being released.
VII. Royalties. This is the section where the percentage of royalty the author receives for each medium (such as hardcover, trade paper, mass market and all other editions) is determined. These paragraphs will also indicate whether the royalty is a percentage of list price or net receipts. See Jonathan Lyon's post on this here.
This section also declares when no royalties shall accrue; for instance, when books are used for purely publicity purposes.
This post is long enough. Let's stop here for now and pick this up again later.
In the meantime, if you would like to see an example of an e-publishing contract, go here to EPIC, the Electronically Published Internet Connection.