On Contracts

A look at licensing contracts and EULAs.

As I have been managing Amazing Stories, I’ve run into two areas of contract law that most others in the field will find themselves bumping up against, and I thought a few notes regarding them might be appropriate.

The two kinds of contracts are rights contracts for creative work and EULA’s – End User Licensing Agreements – those long gobbledygook parts of a website that no one pays any attention to even though they’ll be bound by their terms, often in ways that they had not imagined.

Our field (science fiction) is fortunate to have a professional organization (SFWA) that early on saw the necessity of offering authors (and other creatives) information and guidance when it comes to how to go about selling their work.  Robert A. Heinlein kicked this off early in the history of the organization when he offered (gratis) his own contracts to serve as models for other SFWAns.

The organization has continued to provide such resources, improving and modifying their “Model Contracts” over the years.

I recently asked my attorney to use the new SFWA model contract for short stories (here) as the basis for drawing up our own.  His first remark was that the model contract was heavily weighted towards the author (and reminding me that I was the publisher).  I told him that I didn’t mind – I needed the customary protections offered by such a contract, but I wasn’t in the business of trying to grab more than I was entitled to.

In fact, what I’m actually in the business of is making sure that any contractual relationships I have with creatives is a positive one: I would most definitely like word on the street to be that Amazing pays on time, pays what it is publicly offering (and more when it can), and that our licensing deals are straight-forward, easily understood, agreed to enthusiastically and that creatives understand that they are working with Amazing Stories to secure a reasonable, workable and friendly relationship.  It’s quite simple:  I can have people who are happy to sign a contract or people who grudgingly sign something that’s “the best they can get”.  I think the former kinda contributes to future success.

But my exchange with my attorney does point out a very important aspect of contracts:  there are two sides (at least) to every one and it is important to remember which side of the line you are on.  Which brings up a couple of important observations about contracts.

First, a contract ought to be the written description of what both parties have verbally agreed to.  If you can’t agree on the wording, if you can’t articulate it with words that everyone agrees on the meanings of, then you don’t have an agreement.

When it comes to language, contracts are written much more strictly than we are normally accustomed to.  Words are used according to their actual definitions and, when they aren’t, or are specialized terms, they’re defined somewhere at the beginning of the contract.  Those preamble definitions also mean exactly what they say.  For example, “On X Date” means precisely that 24 hour period taking place starting at Midnight;  “On or about X Date” gives you a little leeway (which is best to define.)  “And” means exactly that – BOTH whatevers that are mentioned.  “Or” means one of the whatevers but not another.

And – perhaps the most important thing to remember is “verbal assurances do not trump the written contract”.

Which brings me, briefly, to EULAs.

More often than not, EULAs contain language that reads like the biggest rights grab in history.  “We reserve the right to use the materials you place on the site for promotional purposes; we reserve the right to all derivative works that may be derived from the materials you place on the site….”

I’ve been offered numerous opportunities to use various websites for promotional purposes, but the language of their EULA’s clearly gives them the right to take my materials and use them for their own gain, without having to include me in any creative way, nor to give me a share in whatever they may earn from doing so. And since the rights I’ve acquired to date are usually restricted to non-exclusive, first electronic and non-exclusive electronic archiving in perpetuity (sometimes with a reservation for further usages following additional negotiation), I simply don’t HAVE the rights to allow a website such usages.

In speaking to representatives of these various websites, I always hear the same refrain:  “oh, but we’d never do that;  the EULA is really only referring to you giving us the right to link to your post or publish a promotional item about it.  Nobody else has a problem with this”.

Ahhh, that last.  They’re right.  But probably because no one has ever really read their contract and understood the implications.

Here’s an actual clause discussing what a website can or can not do with “user generated content”:

User Submissions remain the intellectual property of the individual user. By posting your content on the Sites, you expressly grant XXXXX a non-exclusive, perpetual, irrevocable, royalty-free, fully paid-up worldwide, fully sub-licensable right to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, transmit, perform and display such content and your name, voice, and/or likeness as contained in your User Submission, in whole or in part, and in any form throughout the world in any media or technology, whether now known or hereafter discovered, including all promotion, advertising, marketing, merchandising, publicity and any other ancillary uses thereof, and including the unfettered right to sublicense such rights, in perpetuity throughout the universe.

(All emphasis mine.)

Look at the highlighted section carefully.

Remember what I said about preciseness of language?  See that underlined word – “including”? That word is NOT followed by “and limited to”.  By not limiting that “including”, the above EULA effectively places absolutely NO restrictions whatsoever on use of your intellectual property by the website.

When I question such language, I’m ALWAYS told that the website restricts its usage to the promotion, advertising, marketing, merchandising, publicity uses thereof.  In other words, suppose George R.R. Martin joins and participates on the site.  The website could advertise that “George R.R. Martin is one of our members;  special chat with the author of Game of Thrones next Friday!”, and George could not say boo about them playing off of his name.

But.  Note that the EULA also says: and any other ancillary uses thereof,.  The website could, for example, transcribe the chat and sell it as an ebook; they could turn it into a script and have actors re-enact the chat for a television show.

Now, suppose that GRRM really likes the site and decides to put an excerpt from the latest GoT novel up for his friends over there.  (Maybe its even restricted to only those other members that George approves.)

“… use, reproduce, modify, adapt, publish…” The website could take that content and publish it.  “…and including the unfettered right to sublicense such rights”. They could translate and sell it in foreign markets. They could sell it to a TV broadcaster or film studio, have a show made, plaster Game of Thrones and George R.R. Martin all over it – and not pay George one thin dime.

“Oh, but that’s not what that clause really refers to.”

Except that’s what it says.

Maybe you CAN trust the people who are giving you verbal assurances of the additional, non-written restrictions they are voluntarily placing upon themselves – but what happens when the website is sold, or the company that owns the website comes under new management?  (ALL EULA’s have a clause that allows them to remain in force when this kind of thing happens.  The contract transfers, in full force, to the new owners.)

Your verbal assurances are out the window, and all you have to go by are those words that are actually down on paper.

The above ought to be of particular interest to indie authors; indies frequently use social networks to promote their works and I’ll just bet that many of them have already “sold” non-exclusive rights, in perpetuity, throughout the universe, to much of their content.  (And if you think merely deleting those posts and samples & etc., takes care of the exposure, think again.  You can’t see it anymore, but the website has it archived somewhere.)  Note also the impact that the presence of work on such websites might have when it comes to a publisher’s “non-compete” clause: if the publisher learns that the rights to your work are encumbered by the rights that have been given to a website (through the EULA), the contract might be withdrawn.  Similarly, those works might violate the terms of an existing contract.

What can you do about it?  Not much.  EULAs are cast in stone and simply visiting a website often makes you a party to their terms.  One bit of advice:  don’t put any content on sites with this kind of EULA that you aren’t prepared to share for the rest of time.  You might also think of putting the content on your own site and then linking to it (with freshly-written teasers) rather than posting the the whole thing somewhere you don’t control.

You can also call them up and argue;  I did manage to get one website to change their terms (before I signed on);  you never know.

The proper solution would be to state, in the EULA, that the rights of usage the website reserves to itself are LIMITED TO promotional and operational purposes and expressly does not include marketing, selling or sub-licensing the content for purposes other than that.  (In reality, most of the folks I’ve talked to about their EULAs – not something you do while waiting for a bus – were unfamiliar with its language, unfamiliar with its implications and had never even questioned it themselves.  It is most likely that their EULA was borrowed from some other site, that borrowed it from elsewhere, some site whose attorney’s needed to write such an onerous contract, and the language has perpetuated itself not out of need but out of habit.  This in turn does suggest that if enough people decide they don’t like the contract, it could be changed.)

Back to rights contracts.  Your best bet is to have a model contract that is heavily weighted in your favor (restricts the license to very specific and limited uses) and one that does not restrict your other uses of your content, in any way.

It’s doubtful that anyone on the other side will agree to sign your contract.  That’s not why you have it.  You have it so that you, your attorney and your agent can compare the “author favorable contract” to the publishers contract and quickly zero in on where they diverge.

Putting that contract together is also a learning experience for the author.  Your attorney will ask questions and as you work through it, you’ll become familiar with the language, what various clauses mean, how various rights affect your marketing of your work and the pitfalls to watch out for.

Of late (apparently), a lot of publishing contracts (for books) have some kind of “non-compete” clause built in.  These are usually written so that the author can not do anything else with the property or properties directly related to the rights they are licensing, except offer them to the publisher (or must first obtain the publisher’s consent).

For example:  If J.R.R. Tolkein had sold The Hobbit to FlybyNIght Publications, Inc., under a contract with a non-compete clause, it probably would have prevented him from selling The Lord of the Rings to, say, Doubleday.  Why?  Because FBN Inc., would have claimed that characters, setting, etc., were all related to The Hobbit and, therefore, publication by a competitor is “competition”.

Further, Tolkein probably would not have been allowed to sell Hobbit t-shirts, or sell individual Hobbit songs, or offer a line of Hobbit costumes for cosplay, unless FBN got a piece of the action.  Chances are, ol’ JRR probably would not have been allowed to publish excerpts on his own website.

It probably wouldn’t have gone that far, but if the non-compete clause wasn’t restrictive of the publisher….

At least part of the reason that people sign these kinds of things is because they’re presented with a fait accompli, they WANT their book published and they WANT the associated money.  They may NEED the money.

Snidely Whiplash, anyone?

Maybe, maybe not.  There’s two sides to every contract.  The publisher may be trying to secure various rights to protect or enhance different aspects of their business, and what they are asking for may be reasonable, from their perspective.

Remember though that earlier statement about the relationship I want to establish through my contracts?  I want creatives to know that if they’ve got an issue with something I’m asking them to sign, I will be willing to listen and quite possibly willing to modify the language – as I’ve already done on several occasions with Amazing’s “model contract”.  You’ve got a story to sell and I need good content;  surely we should be able to come to a mutually satisfying agreement that leaves both parties satisfied – and happy with the arrangement.


Bottom line:  read your contracts CAREFULLY.  Interpret them in a fashion that is LEAST favorable to yourself.  Consult with your attorney (always) and think hard about compromising your rights before you (may) do so.

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