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The Publishers Are as Bad as Amazon

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In recent months, America's publishing giants have been up in arms about the predatory practices of Amazon.com. Their outrage would be less hypocritical if they weren't guilty of conduct that's just as bad.

I'm an author. One of my books (Muhammad Ali: His Life and Times) was on the New York Times best seller list. Another (Missing) served as the basis for an Academy-Award-winning film. I've learned over the years that big-name writers might be treated fairly by the media conglomerates that dominate publishing today. But the average author isn't.

Publishing is a business. It's about squeezing every last dollar out of every available source, and the most vulnerable source is the author. No clearer proof of that exists than the "standard" book contract.

Many clauses that are imposed on authors throughout the industry today bear no relationship to any economic reality other than the best interests of the publisher. Yet these clauses flourish because virtually every major publisher insists on them and the average author has no recourse.

The abuses fit into several categories.

First, there are clauses that prevent writers from being published.

In the past, when an author signed a contract with a publisher, it was safe to assume that the book under contract would be published. However, as a general rule, most publishers now insist on a clause that relieves them of that obligation. More specifically, if a publisher chooses for any reason not to publish a given book, the author can keep the portion of the advance that has been previously paid but that's all. And in some instances, if the author resells the book to another publisher, even that partial advance must be repayed. In other words, the standard publishing contract today is nothing more than a one-sided option to publish.

As for traditional options, publishing contracts now often contain the following provisions:

1) The author must submit his next book in completed manuscript form to the publisher before it is considered by any other publisher;

2) The first publisher need not consider the manuscript before publication of the work currently under contract; and

3) Even if the first publisher declines to bid on the manuscript, the author must subsequently offer the publisher the chance to match any offer received at a later date from any other publisher. Thus, an author who has a book under contract to a publisher can find his career put on hold indefinitely.

In sum, just getting published is an adventure in contract law for most authors. And when authors are published, they find that their royalties have been cut precipitously by today's standard publishing contract.

For example, most publishers now require a clause to the effect that, if the publisher increases its discount to a particular book-seller beyond a certain percentage, the author's royalty is cut in half. The logic underlying this provision is that, if a publisher has to give a giant like Amazon.com a break in order to sell books, then the author should shoulder part of that burden. However, the way the formula works in practice, a publisher can sometimes increase its discount to the bookseller on a twenty dollar book by, say, forty cents (two percent of list price) and cut the author's royalty in half (from $3.00 to $1.50). In other words, the publisher takes $1.50 out of the author's pocket, gives forty cents to the bookseller, and keeps the remaining $1.10 for itself.

Likewise, if the publisher publishes a paperback edition of a book that it originally published in hardcover, the author might get eight percent of list price. But if the publisher sells paperback rights in a sweetheart deal to one of its own subsidiaries, the author gets only fifty percent of the amount received from the subsidiary and the publisher gets the other half.

The handling of electronic rights is yet another form of exploitation. Here, there are no warehouse costs, no printing costs, and no rational correlation between what an author is paid and the publisher's income. Premium sales and special sales are often treated in a similarly one-sided manner.

Are things bad? Absolutely. And there's more.

There's nothing improper about an author being held liable if he has violated someone's rights. But most mainstream publishers now insist upon a warranty and indemnification clause that holds an author liable for damages and attorneys fees regardless of fault. In some instances, the publisher can even settle a lawsuit without the author's consent and charge the author for the cost of settlement whether or not the author has done something wrong. And on top of that, the standard publishing contract gives publishers the right to extend an author's warranty and indemnification to third parties who might not even defend against a lawsuit. Query: How would you like to be the author who's hit with a $10,000,000 libel judgment from a court in Belgium?

The list goes on. The standard publishing contract is replete with clauses that strip authors of control over their books. Publishers can grant sublicenses to third parties who are empowered to cannibalize and in some cases even rewrite a manuscript, and the author has no say in the process. Most authors today are accorded no meaningful consultation rights with regard to book covers and dust jacket copy.

As a practical matter, publishers will negotiate on some of these issues and occasionally make changes on the margin. Small publishers and university presses are a bit more flexible than large ones. But for most authors, there is no recourse because there is no power.

But one ray of hope does exist. The antitrust laws of the United States are sometimes enforced. And in addition to outlawing predatory monopolistic practices, those laws provide that "every contract, combination, or conspiracy in restraint of trade is illegal."

Quite possibly, what now passes for "standard" in the publishing industry is an illegal restraint of trade.

Publishing today is characterized by powerful corporate entities acting in concert to the detriment of essentially powerless authors. Something must be done to remedy the situation because it's driving a lot of good writers out of publishing. They simply can't make a living writing books anymore.

The Antitrust Division of the United States Department of Justice should take a long hard look at the standard publishing contract.

Thomas Hauser is a New York author and attorney. This essay is taken from his most recent book (Reflections: Conversations, Essays, and Other Writings), published by the University of Arkansas Press.