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Publisher Wins Arbitration Suit Against Author for a Return of an...

If I was an author, I would probably want to get my hands on this arbitration decision1. Regnery was in litigation with author Richard Miniter. He had a two book contract with Regnery and delivered a book called Disinformation. Regnery believed that the book “did not live up to [Miniter's] two book contract”. Instead, Miniter took a book to Simon & Schuster that Regnery believed should have been its. (This sounded like shades of Dara Joy).

Miniter claims that he wanted to write a book about Abu Musab al-Zarqawi for his second book but that Regnery refused to pay an advance. The book fell apart when al-Zarqawi was killed in 2006.

The claims of Minter sound like Dara Joy. She took Ritual of Proof to HarperCollins instead of giving it to Dorchester claiming the Ritual of Proof was a science fiction not a romance. I am pretty sure that Dorchester won that round. Regnery says that they had a two book deal and that he kept the money for the advance and failed to deliver. Regnery sued Miniter, took it to arbitration per the contract, and Regnery won, getting a judgment in the amount of $150,000.00.

Minter claims that the advance was not for two books but for the one book and that Regnery is unhappy because the first book didn’t turn the expected profit. The money quote from Miniter is thus:

Regnery won this award by contending they’re entitled to some of the advance on that first book they published because they didn’t make as much money as they expected on it. If that becomes a precedent it could be dangerous for authors worldwide because advances would, in effect, become loans.

But, in reality, isn’t that exactly what an advance is? A loan against royalties?

Via Publisher’s Weekly.

1. Arbitration is a legally binding method of resolution. It is not the same as a court trial and is not subject to the same rules that bind a trial. Essentially, the parties can agree to an arbitrator (or it might be in the contract that the arbitrator come from a certain pool of individuals). The arbitrator acts like a judge and makes a determination that is binding and rarely is overturned.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

12 Comments

  1. veinglory
    Mar 14, 2008 @ 09:52:47

    An advance is an advance of royalties. It is important it not be returnable because this makes it an ‘honest signal’ of how well the publisher thinks they will do with the book and therefore their quality as a publisher. This is the only really reliable indciator an author has when choosing a publisher for a highly commercial book.

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  2. Jane
    Mar 14, 2008 @ 09:58:18

    But, Emily, if you aren’t going to fulfill your contract, why shouldn’t it be returned?

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  3. Caroline
    Mar 14, 2008 @ 10:35:38

    If you don’t fulfill your contract, you *do* have to return the advance on books you don’t complete and turn in (also, often the publishers can demand the advance back if they deem the book you turn in unpublishable, even after revisions). But if you turn in a book, and they publish it, that advance belongs to the author, no matter how little actual profit the publisher realizes on the book. It is not a loan that must be repaid if the book tanks. If the book earns more money than the author has been advanced, then the authors gets additional royalties. The publishers already protect themselves by holding reserves on a book’s earnings, sometimes for years and years.

    It sounds like this was a poorly worded contract. The author thinks it covers only one book, while the publisher thinks it covers two. What agent or attorney would allow that ambiguity?

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  4. Jane
    Mar 14, 2008 @ 10:40:09

    Is it that the standard in the industry is to not get a return of the advance against royalties or is that contractual? Because I had heard that in the contract, the publisher has the right to ask for a return of whatever advance is not earned out but never does.

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  5. Angelle
    Mar 14, 2008 @ 10:52:37

    I think it’s fair that the author gives the advance back for the second book if he never delivered it (or there was a breach of contract). Otherwise, it’s my understanding that the author keeps it.

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  6. Jody W.
    Mar 14, 2008 @ 11:11:03

    Jane — yes, it’s industry standard that if an author fulfills contract terms but the book doesn’t “earn out”, the author still gets to keep the whole advance.

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  7. Nora Roberts
    Mar 14, 2008 @ 11:27:05

    Maybe the books were joint accounted. I think this would mean if the guy didn’t deliver the second book, which was joint accounted with book one, he reneged on the contract. The books may have been basketed together–a not uncommon practice, so that the advance and the royalties on book two were tied to the royalties earned by book one.

    It’s complicated–we need an agent to explain it clearly.

    But you don’t turn in the book, the publisher can demand the advance back.

    Nora

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  8. S Andrew Swann
    Mar 14, 2008 @ 11:58:06

    It basically all depends on the contact language. SOP is, as long as you deliver as promised in the contract, the advance is all yours even if the publisher doesn’t make a dime in sales. This is not to say that some publishers might stick in some language that specifies otherwise. . .

    I suspect in this case, Nora is right, and the two books were joint accounted. (Never heard of this practice until I sold a pair of books to Bantam and my agent had to negotiate the joint-accounting language out of the contract.) If that’s the case, in essence, the author’s on the same legal ground as someone who turned in half a novel and skipped on a single book contract. But, again, a decently-worded contract will spell exactly what happens in the case of non-performance. And if it says you give the whole advance back, you can’t really fight that.

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  9. Maya Reynolds
    Mar 14, 2008 @ 14:23:46

    Is it that the standard in the industry is to not get a return of the advance against royalties or is that contractual? Because I had heard that in the contract, the publisher has the right to ask for a return of whatever advance is not earned out but never does.

    Not in my contracts. The only reason my publisher would have recourse against my advance is if, as Nora says, I did not fulfill my obligation to produce a manuscript. There is additional language about how a manuscript that isn’t up-to-snuff would be handled, but it still doesn’t include return of the advance.

    The reason print authors receive advances is because of the time gap between contract and actual publication. This was also why e-publishers rarely paid advances. Most e-books were released within a few months of the execution of the contract. However, now that release dates for e-books are taking longer, some e-publishers are paying advances, too.

    Joint accounting–sometimes called basket accounting–can delay a writer seeing a dime in royalties until all books in the deal have been published and the returns calculated. It also means that, even if Book A sold well, if Book B and/or C don’t sell as well and you got an advance on the three-book deal, you may never get another farthing because all three books’ sales added together don’t earn out the three-book advance.

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  10. veinglory
    Mar 14, 2008 @ 17:13:54

    If the return is just for the book he never delivered then there is not issue. But that is not what this says: “they're entitled to some of the advance on that first book they published because they didn't make as much money as they expected on it.” They are meant to have accurate expectations–and they wear the consequences when they don’t.

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  11. Angelle
    Mar 14, 2008 @ 19:44:13

    If the return is just for the book he never delivered then there is not issue. But that is not what this says: “they're entitled to some of the advance on that first book they published because they didn't make as much money as they expected on it.” They are meant to have accurate expectations-and they wear the consequences when they don't.

    That’s what the author is saying, not the publisher.

    If you read the actual article, the publisher’s reason for wanting that money is that he never gave them the second book. They never mentioned how well (or poorly) his first book did.

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  12. veinglory
    Mar 15, 2008 @ 16:58:55

    Well then that is entirely fair. The author signs the contract and should live up to the letter and spirit of it.

    ReplyReply

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