Bad Contract Alert: NovelCat

How cute is NovelCat’s kitty logo? If only its contract were so adorable.

NovelCat is yet another of the serialized fiction apps, mostly based in Singapore and Hong Kong, that have sprung up relatively recently and are aggressively recruiting authors. A few have decent contracts, but many offer truly terrible terms, which I’ve explored in a couple of previous posts: EMP Entertainment and A&D Entertainment, which appear to have been deputized to recruit for Webnovel (this post includes an assessment of a number of similar companies), and Fictum, a new platform from ByteDance.

The full NovelCat contract can be seen here. It’s non-exclusive, and the non-exclusivity doesn’t seem to be vitiated by prohibitions within the contract (as with the EMP and A&D contracts, which include several clauses that severely restrict their supposed non-exclusivity). There’s also an advance; the amount wasn’t stipulated in the contract I saw, but similar platforms pay anywhere from a few hundred dollars to $1,500.

But…

The grant term is 20 years, auto-renewable for another 20 years if you neglect to “dispute” renewal or if you do dispute it and NovelCat doesn’t agree (Clause 9). That’s not as bad as the life-of-copyright grants I’ve seen in other serialized fiction platform contracts, but it’s still a seriously excessive grant term–especially since options for authors to terminate are very, very limited.

Did I mention that termination options are limited? Per Clause 2.2.4, you can ask NovelCat to remove your work from its platform, but it doesn’t have to agree. The only other situation in which you can terminate is if NovelCat defaults on its obligations or otherwise breaches the contract. Even assuming NovelCat still exists in 20 years, that’s a long time for your work to be stuck in one place, especially if it’s generating little income.

Although the contract is non-exclusive, it makes claim on a large array of subsidiary rights (Clause 2.2), including “movies, TV dramas, online drama series, animations, dramas,
games, audiobooks, radio dramas” (soooo much drama!), which NovelCat can “commercialize…in any form, format, language or method, or produce, use, sell, market, import, reproduce and distribute Contractual Works or derivative works.” It can also use your title and character names as “trademarks on relevant commodities,” and license subrights to third parties, with no obligation to inform you if it does.

For the average author, how likely is it that NovelCat will use or license any of these subrights? In most cases, probably not very (with the possible exception of audiobooks). Still, it’s a pretty sweeping authorization, and if you sign a contract where something can happen, you should never assume that it won’t happen.

You must grant rights not just for one work, but for all works related to that work in just about any way–even if you haven’t written them yet. Here’s the relevant clause, from the Definitions section:

This is one of the more greedy rights grabs I’ve seen.

Speaking of rights, clause 4.1.3 suggests that NovelCat can simply buy you out at an agreed-upon price, and thereafter keep all sales and licensing proceeds.

Royalties are paid monthly…but they are paid on net profit (Clause 4). The royalty percentage sounds high (50% of “distributable income”), but distributable income is defined (in the Definitions section) as “the income after channel charges, promotion fees, claw-back deductions, all costs and any other charges are deducted from sales revenue generated from works”. In other words, net profit.

Since you don’t know what the deducted costs will actually amount to (the contract includes no requirement that NovelCat disclose them), 50% could be considerably less than it sounds. Additionally, there’s nothing to clarify how “sales revenue” is generated. Page reads? Some kind of coin or tip system? Something else? Between that lack of clarity and all the deductions, you really have no idea what you might be paid.

You also will be paid only once you recoup whatever advance you’re offered, and will receive payouts only when accumulated royalties exceed $100.

As with some other serialized fiction app contracts I’ve seen, word count requirements are pretty stiff–as are penalties for failing to meet them (Clause 3.2). You must produce “not less than 30,000” words per month (a pace that even a prolific writer might find difficult to keep up on a constant basis). If you fail to deliver, you are “fully liable for losses arising from such failure”–an ominous phrase that the contract neither explains nor defines.

Furthermore, if that failure is “without cause”, or you confirm that you can’t finish, or you write “abnormally” (whatever that means) by failing to adhere to “outlines” (whatever those are), you are deemed to have breached the contract and NovelCat can simply take over the writing, and retain both copyright and income for such new writing, while still using your name as the author.

There’s what amounts to a morals clause (Clause 3.2.8). You must “actively preserve the image of Party A” and can’t take “any action that is prejudicial” to such image. Vague and sweeping language like this can be and is easily abused–especially since it would be up to NovelCat to decide what’s “prejudicial”–and could seriously limit your ability to speak or write about your NovelCat experience.

It’s not just about speech. If NovelCat deems you to have breached Clause 3.2.8, Clause 6.2.2. suggests that you could suffer quite a financial hit: “Party B shall pay Party A USD 1,000 as liquidated damages and punitive liquidated damages equal to twice the total amount of remuneration
and relevant fees Party B has obtained from Party A. If such liquidated damages are not enough to compensate for Party A’s losses, Party B shall be liable for all losses beyond such liquidated damages.”

Disputes are governed by the laws of mainland China, and are subject to arbitration. Generally speaking, when you sign a contract with an arbitration clause, you’re giving up your right to resolve disputes in court. Even without an arbitration clause, disputes can be very difficult to resolve if you’re contracting with a company from overseas.

eading/writin

Bottom line: this is a really problematic contract. Even if NovelCat were willing to negotiate–and many serialized fiction platforms absolutely are not–you’d have to do a major overhaul to make it more author-friendly. Additionally, the dense language is a chore to parse even for someone with a lot of knowledge, and its complexity can make even the kind of analysis I’ve done above hard to understand.

If all of that is challenging for someone like me, with years of experience reading publishing contracts, imagine what it’s like for the writers NovelCat and others are seeking to recruit, many of whom are young, inexperienced, and don’t have English as their first language.

Also, the explanations provided by the marketing people who approach these writers, while not actually false, is often misleading or incomplete–especially in regard to the income writers may receive from their presence on the platform. There are dozens of these platforms out there, all competing for readers: in other words, an increasingly diluted market. I’m hearing more and more from writers who’ve signed with one or another of the platforms and are discovering that even after months of posting segments or chapters, they still haven’t made enough income to exceed the payout threshold. And because their contracts are interminable, they can’t get free.

Writer beware.

UPDATE 12/4/21: I’ve just seen a contract from a company called MiracleNovel that is substantailly the same as the NovelCat contract. There are a few differences–a 10-year rather than a 20-year term, fewer subrights claimed, no advance, and the buyout clause discussed above isn’t included–but otherwise the two contracts are word-for-word identical.

My assumption was that it was the same company doing business under multiple names. But NovelCat’s parent company is HK Xinmo Technology Limited, and MiracleNovel’s is Shenzhen New Generation Culture Media Co.,LTD. And while HK Xinmo Technology has the kind of web presence you’d expect, Shenzhen New Generation Culture Media doesn’t appear to have any web presence at all, or none that I could find anyway.

Regardless, MiracleNovel is soliciting authors on Facebook. If you hear from them, be aware: their contract is terrible.

UPDATE 5/5/23: Sometimes contracts change over time, but I’ve just seen the contracts NovelCat is currently offering, and both the exclusive and non-exclusive versions are almost entirely identical with the one I’ve analyzed above.

The only difference in the exclusive contract is some minor language changes to accommodate the fact that it’s exclusive rather than non-exclusive–plus one major change: the term of the grant of rights is “indefinite”. In effect, this means the life of copyright in Hong Kong, where the company that owns NovelCat is based: the author’s lifetime plus 50 years.