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Termination Fees in Publishing Contracts: Why They’re Not Just Bad for Authors

Header image: sepia-colored paper torn to reveal the word "Publishing" underneath in large letters (credit: alexskopje / Shutterstock.com)

In the course of my work with Writer Beware, I see a lot of publishing contracts (for the most part, these are from small presses). One of the red flags I'm encountering more often these days is early termination fees: a penalty that must paid by the author if s/he wants to get out of a contract early.

A few examples of early termination clauses, taken from contracts in my possession:

The Author may terminate this agreement before the end of the term by means of a contract buyout....The Author will pay to the Publisher the sum of $500.00 (five hundred dollars) to exercise this contract buyout option. This fee must be paid to the Publisher by the Author at notification of intent to exercise the buyout option. The Author will be responsible for full payment of damages and customary legal fees as a result of legal action stemming from failure to pay this buyout clause.

The Authors Guild’s Fair Contract Initiative

Header image: sepia-colored paper torn to reveal the word "Publishing" underneath in large letters (credit: alexskopje / Shutterstock.com)

I write a lot about publishing contracts on this blog, and questions about publishing contract terms make up a large portion of my Writer Beware correspondence. Unfair and even outrageous contract terms are a major problem in the publishing industry, whether they stem from a traditionally one-sided relationship that's being challenged by developing technology (Big Publishing) or the plague of ignorance, inexperience, and greed that afflicts the small press world.

Last year, the US-based Authors Guild announced its Fair Contract Initiative, whose goal is "to shine a bright light on the one-sided contract terms that publishers typically offer authors and to spur publishers to offer more equitable deals."

Why do publishers insist on offering their newest partners more than a hundred conditions so dubious that they’ll quickly back down on them if asked? It largely boils down to unequal bargaining power and historic lethargy. Anxious to get their works published, authors may wrongly believe that the contract their editors assure them is “standard” is the only deal available, take it or leave it. And much of that “standard” language has been around for years thanks to institutional inertia; as long as somebody signs an unfair clause that favors the publisher, the firm has no interest in modifying it.

Profit Engine: The Author Solutions Markup

As most of you already know, Penguin Random House dumped Author Solutions at the end of 2015, selling it to a private equity firm for an undisclosed amount. ("A Penguin Random House Company" has already vanished from Author Solutions' logo.)

The sale received quite a bit of media coverage, at least some of which acknowledged AS's troubled reputation--something else that won't be new to you if you're a regular reader of this blog.

One of the areas that I and others have often criticized is AS's huge range of marketing services, which are aggressively pitched to authors who sign up for publishing packages. Most of these services are dubiously useful (email blasts), jawdroppingly expensive (book signings at book fairs), or both (cinema advertising). Basically, they're the equivalent of liquor at a restaurant: relatively inexpensive to deliver, but extremely profitable because of the enormous markup at which they can be sold. (AS executives have actually admitted, in depositions related to class action lawsuits brought against AS, that selling books is not one of the goals of AS's marketing services.)

Freelance Mills, Cyberbullying, and Plagiarism, Oh My!

IAPWE logo

If you're a regular reader here, you'll know that I love the strange and twisted stuff that happens (mostly) at the outer fringes of the publishing and writing worlds. Today, three head-shaking examples.

Of course, professional is as professional does, and the person wouldn't have contacted me if they didn't feel at least a little uneasy. And red flags do fly at the IAPWE's website, from the cheesy-looking logo to the lack of substantive information about the organization and its members, to the dime-a-dozen advice blog posts, to the fact that its fancy-sounding New York City address is actually a UPS store. (UPDATE: IAPWE's address has changed--it's now apparently operating out of an apartment building in Albany, NY.) The organization also seems to be very new--its domain was registered only in September 2015 (which makes it a little odd that its first blog post is dated May 2015).

Another question: is IAPWE an organization "dedicated to bringing the most updated, legitimate and vetted writing and editing job opportunities to its members", as its About page claims, or is it a writing and editing services provider, as this Craigslist ad suggests?

Author Solutions Sold to Private Equity Firm

I was working on my usual year-end roundup post, when I spotted this, in PW:

Penguin Random House has sold its Author Solutions division to an affiliate of the Najafi Companies, a private investment firm that at one point owned Bookspan and made an offer to buy several hundred Borders outlets after the chain filed for Chapter 11. 

The terms of the deal, which closed on December 31, have not been disclosed.