So, I wasn’t the only one who started a breakdown on the contract. JR Matthews actually went and did it himself, before me, here – https://www.reddit.com/r/ProgressionFantasy/comments/1ppvey2/breakdown_of_just_how_insanely_predatory_that/
Great analysis, covers the majority of the red flags I caught, and really, well worth reading. Some thoughts on what can be done in the comments and the like.
That being said, his analysis also had commentary that I wanted to comment on. Not that JR’s wrong, but I figured I’d add nuance to this.
Now, mind you, JR’s mostly thinking in terms of independent publishers (small, digital publishers first), so the reason I’m adding nuance discussions here, is because there are times when what he’s said might not play out.
Part of this is because I’ve seen more types of contracts (trad pub, short stories, other digital contracts, etc.), but also, because I am trying to get a little wider perspective so people aren’t led astray if they ever go outside of our little sphere of LitRPG.
2. Exclusive License and Term
Again, I’ve talked about how it’s possible that in a trad pub deal with the big 5, you might have to give up all your rights (or most of them). Depending on the amount of the advance they offer, you might choose to go ahead with such a sale. After all, a 6 figure contract or a seven figure one might convince you to sell all your rights.
Not saying you should, keep what rights you can, but realise that it will be asked for at times, and with the big 5 at least, it’s just a negotiating point, though one that they only might move in small parts (TV, merchandise, maybe special editions).
Now, skipping to…
d. Royalty Rates
Here’s where things are going to get contentious.
Let’s start with the assumption that you’re a midlist or small hit as an author.
Here’s what the ebook & print sales for a series (Climbing the Ranks) looks like over basically 3 years (Amazon only). The coral (blue) are pre-orders, the big jumps are generally when we have a release.
This is a midlist series. Not great sales, but not horrendous. What I want you to note is how sales drop, after the 3 month period. At 6 months, you’re down to around $300-400 a month, at most.
Now, take a 50/50% royalty split. Author gets $200. Publisher gets $200. Not horrid, but not life changing.
However, with $200, how much advertising can you do? I can tell you, for ourselves, we generally spend at minimum $5 per day on Facebook ads when we are promoting a series (mostly when there are 3 books running). Now, that’s $150 a month. Amazon Ads are generally another $50 on top.
Suddenly, you’re breaking even as a publisher, not including the time you’ve dedicated to make the ads, never mind the cost of admin producing royalties, making adjustments on the books, handling author questions, etc.
Still, if you can do $400, you’re at least breaking even there and maybe making a bit on royalties on audio (which can be 50% for some authors, though if it’s sub-licensed out, that’ll drop). On top of that, don’t forget that you’ve got to consider things like paid newsletter promos like ENT that can help, but you do have to pay for them. And they don’t always turn positive.
Now, what if your royalty rate is 70%/30% in favor of the author? If that’s the case, you’re making $120.
Well, you need to scale back ads. You might get rid of FB ads. However, ads are stacked – you need awareness, you need interest and you need that final push. That’s what FB and Amazon ads (AMS) together do. So now your AMS are less effective.
Talking of ROI…
When we first started using FB ads, our ROI used to be 3-5x. Put a $1 in (within reason), you got $5 back in the series. Nowadays, it’s dropped. Sometimes we get 1.5x, sometimes 2x. Sometimes, we lose money.
AMS is better, but remember, they work best when you have FB ads driving in more awareness and traffic. So, that has dropped to, and where we track a 1-2x ROI normally, it might have dropped.
Going back to the chart. See how sales keep dropping (and this is a series we support with ads). The longer a book or series is out, the lower the sales go. Eventually, they’ll die off if no new releases are made and no ads are supporting it.
Also, the time between books are part of the reason why it’s necessary to support sales with ads. If you have more readers coming into book 1, a good series will drive more readers to book 2 & 3.
Anyway, that’s my biggest thing about royalty rates.
Yes, higher rates for authors can be good. Having multiple thresholds is good, but if the author takes too much, the publisher has no space to do things like new covers (needed every 5 years), more ads, new audiobooks, etc.
That being said… this assumes your publisher does paid ads. If they don’t, then of course it’s best to get as much money as you can.
Also, on another note, higher advances can actually be a good way to get your publisher to do advertising, because they want to make their money back.
JR’s entirely right about the audio side.
Creation of Derivative Works:
I actually missed how you couldn’t even talk about how the new books that were being ghostwritten (maybe by AI) was not yours. Great catch on JR’s part. Why having multiple eyes is great.
Marketing Expenses
I have no issues with people not putting marketing expenses into contracts. There’s a lot of reasons for this, among them – your enforceability on such things, because you’d have to do audits to find out what was spent where, and also… how do you count?
If you limit spend to ‘paid advertising’, this might mean money spent without any effect too. I’d rather, for the most part, that you work with people you can trust to do the job, and force their hand if necessary.
In most cases, that’s an advance. If they give you a $20,000 advance, they NEED to make your book sell to recoup their expenses. If they don’t? You’re fine. You got your advance. Which is why a higher advance is better in this sense.
Lastly…
Please note, neither JR nor I (so far) have talked about what is missing in the contract (beyond the most basic level). That’s in my next post which I’m going to also use to roast AI. 😛
Edit (12/21/2025) – The Writers’ Beware post came out about this, and I completely missed two things. One is not included in the contract so, should be added to the next post (the lack of copyright being mentioned and/or added to any books produced under the author’s name) and, secondly, something JR and I both missed (potentially). Specifically…
The term addition could be read as an ‘addition’, so +10 years, not a 10 year reset. Now, this might not be the intention (and might not be how it is ruled to be used in court and/or if utilized at all); but because the language is not specific enough, it could be read like that. It’s why clear contract language is important, since such arguments are… painful.
If you are ever fascinated by how bad unclear contract language can get, look up Tom Clancy’s estate and the movie rights for his Jack Ryan books. That’s another giant mess that 2 judges threw their hands up over.
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