Sad news from the LA Times that the author and publishers of The Shack are now in court fighting over the royalty earnings.

Read the entire article here.

Then weep.

Then pray that cooler heads prevail and that it can somehow be kept out of the court system.

The key element to the story, from my agent’s perspective, is that there was not a solid contract in place from the beginning. It started with a hand shake. Then when a big publisher (FaithWords, a division of Hachette) wanted to get involved in distribution a contract was put in place. But the agreement between the publisher, Windblown Media, and the author has terminology that remains unclear. Signing a contract that pays based on net profits can be trouble unless “profit” is defined very clearly. Most book contracts are based either on retail price or on net receipts. Big difference between receipts and profits. Young claims that Windblown has under-reported the profits.

Windblown Media counter-sued and claims that their owners Wayne Jacobsen and Brad Cummings should be named as co-authors of the book because of the work they did back in the beginning of the project.

So Hachette, in a defensive move, had to file their own lawsuit against Windblown Media and William P. Young. Why? Because they have one million dollars they owe to these fellows, but if they send a check, and it is later determined by the other lawsuits that the money was paid incorrectly, then Hachette could be sued. So they very wisely put the money in a judicial escrow account where it will remain until Windblown and Young settle their dispute. In other words, from now on…no one gets paid…until the things are settled by the courts.

What a mess.

Clearly some huge misunderstandings have occurred. Dig even deeper into the article and note that “reserves against returns” is misunderstood. In addition there is dispute over reduced royalties paid on books sold at a very high discount. Both are well documented industry practices and are usually in a contract with clear definitions.

This illustrates why writers need literary agents to help with their intellectual property concerns. This week I have helped three clients unravel their royalty statements. Each case had different concerns and because of what I do I could understand and explain the situation. In one case we are writing a note to the publisher asking for clarification. In another case I think the royalty rate for e-books does not match the contractual rate and thus a note has been sent asking for clarification.

I have seen situations among writing friends disintegrate over editorial and publishing issues. That is why I encourage anyone who is wanting to collaborate on a project that they get a solid collaboration agreement in place as early as possible.

Don’t just shake hands and hope for honorable behavior. We would like to hope for honor and honesty but we are all fallen creatures in desperate need of redemption.

At least consider using a conciliation organization like Peacemakers (click here for the first steps in dispute resolution) before taking anyone to court.

Update: August 2, 2010

If you would like to read the actual court documents you can follow these links — the federal court complaint of Jacobsen and Cummings (the founders of Windblown Media) vs. Young, Young’s court motion to dismiss, and Windblown’s legal response.

Then enjoy the actual court document where Hachette is asking for court relief — this is where they state that there is nearly a million dollars in royalties waiting to be paid.

Update: May 13, 2011

Apparently the lawsuit of Jacobsen et al. against William Paul Young et al. has been dismissed (according to court documents dated January 10, 2011).  The issue has been settled, or is in the process of being settled. This can mean any number of things. 1) The parties reached an out-of-court settlement 2) The parties decided to drop the suit 3) Any number of other things. The bottom line is that the suit will not go before a judge or a jury to be settled. That is good news.

Click here for a PDF of the actual dismissal ruling.

 

Update: August 18, 2011

According to Publisher’s Lunch (a newsletter to which everyone interested in the publishing industry should subscribe):

On August 12, a little more than a month before the case was set to go to trial, Young reached a confidential settlement agreement with  Jacobsen and Cummings and the Ventura court case was dismissed without prejudice. Young’s lawyer Michael Anderson declined to comment beyond affirming a settlement deal had been reached; Martin Singer, representing Jacobsen and Cummings, did not answer requests for comment.

 It appears that this is merely the final conclusion to a settlement agreed to earlier in the year. So, essentially, this is only confirmation of the update I wrote in May. Bottom line is that the dispute seems to be over.
Check back in a few months and see if there is more news.