How Publishers Abuse Termination Fees: Sky Warrior Books

Posted by Victoria Strauss for Writer Beware


I've written before about termination fees in publishing contracts: why they are bad not just for authors, but for publishers, and how publishers can abuse them. Here's another case study in how termination fees can become a tool for retaliation.

Sky Warrior Books, "a press dedicated to publishing quality SFF, mystery, historical fiction, paranormal, nonfiction, and other genres", is run by publisher and author Maggie Bonham (who also writes as MH Bonham and Margaret H. Bonham). Among the lesser-known authors on its list, there are several books and anthologies written/edited by established SF/fantasy authors.

Sky Warrior's contract--which is problematic in a number of respects, including vagueness in the royalty language--has not one, but two early termination fee provisions:
12.a.ii.: Prior to publication, the Author may terminate this contract for unspecified reasons by reimbursing the Publisher for costs incurred, plus a termination fee of $500. Examples of costs incurred include expenses such as editorial and cover art.

12.f.ii.: Post Publication: In the event that the Author is terminating the agreement in order to sell the Work to another publisher, individual or company for publication, the Author shall pay a termination fee of 10% of the advance and royalties earned on the Work to the Publisher, plus purchase all remaining inventory at cost +15%, with no royalties paid on copies purchased under this clause.
Sky Warrior also appears to have issues with timely royalty accounting. Complaints can be seen at the Absolute Write Water Cooler and at Ripoff Report; I've gotten some as well. Two of the authors who contacted me challenged the lack of payment and pressed for answers, whereupon Maggie Bonham terminated their contracts and reverted their rights, without asking for money. A third author--the one who's the subject of this blog post--also got her rights back. From her, however, Bonham demanded termination fees.

The author--who has asked that I don't use her name, so I'll call her Eve--signed a four-book contract with Sky Warrior in early 2013. Book 1 was issued in late 2013. Sky Warrior has two royalty periods--January-June and July-December--with the publisher required to make "all efforts" to issue payment within 120 days of the period's close. But it wasn't until September 2014, nearly nine months after the close of the July-December 2013 royalty period, that Eve even got a royalty statement for her 2013 sales. As for payment, Bonham indicated, without explanation, that she wouldn't be doing that until December 31. (Here's where the vague royalty language I mentioned comes back to bite: if a publisher isn't contractually required to pay within a stated timeframe, but only obliged to make "all efforts" to do so, it can argue "circumstances beyond our control" and do pretty much whatever it wants.)

Meanwhile, Book 2 had been published in early 2014. Eve says she wasn't given notice of the pub date until 24 hours prior, and never saw page proofs, despite the stipulation in her contract that she be able to review and approve them (according to Eve, the book included many errors). Royalty statements and payment for Book 2, due by the end of October 2014, didn't materialize--nor did royalty statements and payment for the same period for Book 1.

By December 2014, Eve was fed up. She hired a lawyer and demanded contract termination and rights reversion for all four books, citing multiple breaches of contract. In response, Bonham categorically denied breach, and defended the absence of royalty payments by claiming that, because vendors take up to six months to pay, the contract's 120-day royalty payment window actually began to run six months after the end of a royalty period (even though there is no wording whatsoever in Eve's contract to support this). She admitted she didn't make even that extended deadline for Eve's 2013 royalties. It wasn't her fault, though: it was due to--wait for it--"circumstances beyond our control".

On the up side, Bonham did agree to revert Eve's rights--but on the down side, not for free. For Books 1 and 2, she invoked Clause 12.b.ii., levying a fee of $56.13, which she claimed was 10% of royalties for the first half of 2014 (an additional 10% of royalties for the second half of 2014 would be due "when calculated"). For Books 2 and 3, which hadn't yet been published, she invoked Clause12.a.ii: $500 for each book, plus $317 for assorted costs including editing. The total of $1,373.13 was due within 60 days; any royalties accrued and owing would be applied to this "outstanding balance." As the cherry on top, Bonham warned Eve that "any libelous or slanderous statements by her, her family members, or her associates" would result in legal action.

In my opinion, it's debatable whether Bonham was entitled to invoke the termination clauses, since Eve wasn't seeking to terminate the contract for "unspecified reasons" (she cited specific breaches) or "in order to sell the Work to another publisher, individual or company for publication" (she had no competing offer; she just wanted out). Be that as it may, for Bonham this is a win, whichever way it goes. She gets rid of a pro-active author, and if Eve pays up, she also gets some extra cash. If Eve refuses, Bonham gets to hold onto royalties she otherwise would have been on the hook for paying (in Eve's case these amount to several hundred dollars).

As it happens, Eve is an active member of the Science Fiction and Fantasy Writers of America. She turned the matter over to SFWA's Grievance Committee, which has a good record of mediating disputes between authors and publishers. Bonham, however, refused to cooperate, doubling down on her denial of wrongdoing and reiterating her her demand for money. She also accused SFWA and Writer Beware of a dastardly conspiracy:
After all, if we are harmed, you will have participated in the further erosion of independent, small presses, and I can't believe the rumor that SFWA and Writer Beware are cooperating with the Big Five publishing houses' efforts to destroy the independents once and for all. Although I did find it curious that Writer Beware's publisher avoid list is populated exclusively with small presses, often based in rural areas, far from the New York in-crowd.
Damn. And we thought we were being so discreet.

Seriously, though, I think Eve's experience illustrates how publishers can use termination fee clauses to retaliate against authors who displease them. The other authors I heard from who complained about nonpayment had their rights reverted without any demand for money. It's hard not to conclude that Eve was being punished for having the temerity to hire legal assistance.

The other takeaway here is the importance of taking contract language seriously. No matter how good a publishing relationship looks at the start, things don't always go on as they begin. Never assume that provisions in your contract won't at some point apply to you--no matter how unlikely that seems--or that your publisher, who right now seems so responsive and enthusiastic, won't invoke onerous clauses if things go south. To quote author and editor Jane Friedman, contracts aren’t there for when times are good and everyone is well-intentioned--they need to work for you when things go to hell. (For more on the danger of making assumptions, see my 2014 blog post, Evaluating Publishing Contracts: Six Ways You May Be Sabotaging Yourself.)

Bonham is now threatening to turn Eve's "debt" over to a debt collector.

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