Very Bad Publishers Part III

Creative Accounting and Other Horrors

“Creator owned” contracts and the companies that tout them may leave with you your copyright (or a portion thereof) and nothing else. “Creator owned” at many companies is not about fairness, or making good books; it’s a marketing tool. And you, the creator, are buying it. 

The comics industry is everything you ever heard about Motown, only without the glitter

The good news: remember, these sad events took place (mostly) between 1986 and 1989. Now I have great work, good friends, terrific publishers, a comfortable studio, wonderful books to work on, and sometimes…every once in awhile…OK, there’s even a little glitter after all. 

Look out for yourself, and don’t give up hope.

But remember: everything I write about here is standard in contracts in trade publishing (books and comics) right now.

Nothing has changed.

Someone offered me a contract even worse than this a few years ago. Only it was work for hire. On a public domain project.

And they wanted the original art to boot.

Creative Accounting 

In the old days of comics, the work for hire contract was a simple to understand deal: they get all rights, you get a check, the end.

Simple.

Beyond your initial page rate you were unlikely to see any more money on your book, nor did you expect any. A decent page rate at a major publisher could be solid money for an illustrator. At the time (1986), The Graphic Artists Guild Handbook of Pricing and Ethical Guidelines stated that the average American illustrator pulled in less than $10,000 a year. So a decent comic book artist who could pull in $40,000 or more a year was doing better than OK. And $40,000 went a lot farther in the 1980’s than it does now.

A full time comic book artist generally made more 50 years ago on page rates alone than creators do now.

But comic book work for hire agreements that reserved all publishing rights for the publisher in exchange for a guarantee of upfront income left most comic artists unprepared for the complexity of the retail trade publishing paradigm.

When I got into comics, mainstream comics publishers were only just starting to pay royalty rates.

In standard book/trade publishing, no page rates are paid. Instead, an advance fee is paid against royalties; the author/artist gets a flat amount of money up front that is deducted from later book sales. 

Say you agree to do a book for $3,000. If the book sells a lot of copies, whee! You get more money. If not, $3,000 is all you will ever see. If you spent six months working on your book baby, you just worked six months for $3,000.

Consequently, when I realized my old publisher’s sales figures were nothing near their claims and their marketing department was virtually non-existent as well as grossly underfunded, you can imagine my horror. If the company averaged low-midlist sales, it would be difficult to earn out even my pittance of an advance.

The sales figures on the GN’s were only half my problem: creative accounting was the next hard lesson I learned, but a lesson that has served me well lo, these many years, and a lesson a few newbies are learning now…too late to recover from the horrors in the contracts they have already signed, but maybe not too late to not make the mistake on the next contract.

Rando pic, at The World backstage in New York City with some very cool people. At far left Adam Alexander, the mathmetician who created Adam’s Star, cartoonist Leslie Sterbergh in a gold mask, a drag queen performer playing Margaret Thatcher, and I can’t recall who the other person is. This is not in any way relevant to this article, but Leslie was one of the first people I met in the comics industry, one of the coolest people on the planet, and I miss her. That’s all.

As you may recall from the previous installments of this sad saga, I’d signed two major graphic novel agreements with this former publisher (Donning). Each agreement was for a series of books to be produced over a multi-year period. One book earned an advance of $300 a month for a year (to cover four books of 64 pages), and the second $350 a month for two years (to cover 10 books of 64 pages). I was willing to work for low pay up front based on claims of the advertising and promotion support I eventually did not get, and the sales this publisher never had in the first place.

What I didn’t know was that the accounting at this publisher would make it virtually impossible for me to see any royalties on any of the books until the term of the contract was up due to a practice called cross collateralization.

While you are working on your first book, you are accruing debt at your publisher, because you are being paid an advance against future royalty earnings. However, once your first book has been published and you move on to work on your second, the first book will be earning out its debt and you expect that you will be seeing royalties on its earnings in roughly one year’s time.

That time window is especially important because as your advance is petering out, you rely on the royalties to start coming in so you have income to keep producing new books. Your publisher is in no way obligated to keep paying you anything else once your advance has run out, so if you are still obligated to produce more books but you are not yet earning any royalty income, you are in a situation where you may be forced to work for nothing until you complete all the books in your contractual agreement. 

That could take years.

The financial picture originally presented to me by my publisher when I signed on showed me numbers that would give me an income of $30,000+ per year, a fortune to an artist coming up from the small press where I was earning less than $9,000 (pre-tax and other expenses) a year writing and drawing best-selling black and white comics!

At my new publisher, I expected to earn a modest but decent living on comics I created and owned, the dream of every comics newbie.

However, cross collateralization virtually assured that I would not see any of those royalties. For the duration of my contract (which was going to take years to complete) I was being consigned to a life of rock bottom poverty, and even the possibility that I would have to work for two years or more with no income at all.

Here’s how it goes:

About the time Book I has earned out expenses, you are getting your advance against Book II. Your publisher then counts all expenses against Book II against all profits on Book I. This makes it impossible for you to see any money on your work as long as you are working and getting an advance on Book II unless you are getting some pretty darned impressive sales on Book I.

Add to all that the fact that many book publishers withhold 50% of all your earnings against possible returns of unsold books for as long as one year, and you have an even more serious problem.

Even if your book had sold a healthy 30,000 copies, for the first year, the accounting will only pay you for 15,000 copies. You will have to wait almost two years after your book has been released to start seeing any money assuming you do not have any other books on which you are being paid an advance. If so, any advances on Book II will be cut out of your royalties on Book I, even if your two book projects are totally unrelated to one another.

To make matters even worse, like many book contracts for newbies like me, I did not realize all the implications of what I was signing (and yes, I had a lawyer -two actually- and apparently, they didn’t see this problem coming, either).

So, when I learned that the production expenses of lettering and coloring would be paid by the publisher but charged to me and accounted as part of an advance against royalties, imagine my sad state.

I was so accustomed to comic book publishers paying for lettering and colorists that I didn’t really understand the implications of the sleepy little clause about “net expenses” in my contract and what that meant to me.

My publisher went out and hired letterers and colorists for my book, and later even an assistant I did not really know, didn’t want, and couldn’t trust as far as I could spring a piano.

All I knew was that my editor, The Woman, was furious that I drew too slow and wanted to know why I couldn’t produce 100 pages a month like a Japanese comic artist.

Having only recently acquired knowledge about Japanese comics, like any newbie she thought she now knew everything. She couldn’t understand why American comics artists – whose art styles and work styles are nothing like Japanese comics artists – couldn’t produce 100-300 pages a month. 

It’s OK to laugh.

My studio in the corner of my bedroom where I worked for a portion of the Donning days while living with my parents. That chair did me no favors.

Anxious to become big players in graphic novel publishing – “I’m on a mission from God!” The Woman would shout (and I bet you think I am joking, but she was actually quoted saying this in an issue of Publishers Weekly) – they wanted to create a bullpen of artists with me as the cornerstone of their company. For months, I worked in an office cubbyhole on my own comics, but also slaving as unpaid gofer and overall assistant, until I ran screaming away into the night never to return (and that is not hyperbole, either).

I’d fled a publisher that to this day I refer to as Teh Crazy, (because Teh Evil sounds fun and goofy in an Austin Powers kind of way, but it totally wasn’t) to go to Donning, and here Donning was turning out to be…well, not worse, but like leaving a supremely weirdo cesspool to live in a hovel that at least had toilet paper, and that seemed like an improvement, so buck up little artist and make pictures, yay!

Browbeaten, depressed, and demoralized, I did as I was told as The Woman began hiring all kinds of people to “help” me and demanded I work with an assistant to expedite production…and she could afford all this new help because I was the one actually paying the bill, even though I did not know it. The freelancers invoiced the company, but I got to pay it when the royalty statements came in. All their expenses came out of my paycheck. So, I never actually got a paycheck, I just got a statement showing me how much my books were in the red over a year later.

To make matters even more horrifying, I found out that my also-rans were actually MAKING MORE MONEY THAN I WAS ON MY OWN BOOKS.

That’s right, in the aggregate, the letterer, colorists and the guy who spotted my blacks and pretended to be a help on my backgrounds earned three times what I did as the actual writer and artist of my graphic novels.

And I also realized that there was no freaking way I was ever going to see any income on my work unless it sold in the stratosphere.

As soon as The Woman was removed from her lofty post as Ghoul Editor in Chief, (stories differ, fired or laid off? Inquiring minds want to know…) I began getting rid of the people she had hired to “help” me.

First, I let the assistant go. This was a very good thing because later I found out that my assistant was a bit of a case in his own right and had never actually done most of the work he was hired to do.

He had hired a bunch of people I did not even know claiming it would all be good professional experience for them and never paid them for their help. So, I went to a convention and met a bunch of angry people wondering where the hell their money was. One of them was so distrustful of the assistant guy, she had secreted the initials of her name in the architecture of some of the backgrounds she had helped ink (Hi Tracy). This convinced me that these people were telling the truth (Hi, Chip) and I gave them a credit in the acknowledgments of the back of one of the books I had done…best compensation I could offer. The contract bound him and his “heirs and assigns”, yet he had left me holding the bill when the “assigns” showed up looking to get paid.

I never seriously tried to work with a background assistant after that.

Worse still was the realization that not only was having an assistant expensive, the work that came in was often unusable and had to be redone. Fedex charges to ship the art boards back and forth were pricey, too. And all of it came out of my check.

I got really pissed off when I later heard him gloat that I had to let him go because I had no money.

The guy who didn’t do the work who was getting more money than I was.

Bye, assistant!

I re-inked segments of the book from scratch, just to get the last of his bad taste out, even though he’d (I mean, his assistants) only worked on a few dozen pages.

Later, I got rid of my colorists as they began to ask why they didn’t get royalties. Weren’t people buying the books because of their wonderful coloring? 

And isn’t it funny how they seemed to think I was making a lot of money on my books, enough to pay them a cut, even though they were making more money per page than I was?

There would be no royalties. Not for them. Not for me.

It’s not that I object to the idea of paying a colorist royalties, but there was simply no money.

Bye, colorists!

I took up the coloring reigns on the books myself, and billed the publisher for the work. If the publisher was going to front total strangers money on my book, he could pay me the same rate as he was paying them: it would still be counted as an advance against royalties I now knew I would never get…but at least I’d get some extra dough coming in up front.

If you think this all couldn’t get any worse though, think again.

Most people think royalties are paid as a percentage of cover price, and sometimes that is true.

However…

Royalties are often based on net receipts with “net’ being an undefined term in the contract, just like the horror stories you hear about in Hollywood, with mega-million films never ever going into the black, and no one really being able to figure out what the hell the expenses were.

Imagine how much trouble you can get in trying to define “net” after the contract is signed. Consider all the trouble I was in in the above few paragraphs, all because of “net”.

A lot of publishers have clauses that drastically cut royalties depending on the discount structure at which a book is sold. For example, if I was supposed to be getting 8% of cover price, I assumed I would actually get 8% of $6.95. But that almost never happened.

Why? Because many of my books were sold in the direct market at a discount of greater than 50%. And my contract stipulated that I would earn 50% royalty on discount sales of greater than 50%.

Which meant I would not get 8% I would get 4%.

Have fun calculating how many books you would have to sell to earn a decent living on 4% of $6.95 cover price.

Deduct your meager $350 a month advance, but then add in expenses for lettering, coloring, and the recently fired assistant.

Then calculate the losses from the first book you did with The Woman, which sold in the toilet and cost everyone big bucks. These losses were now being accounted against any profits on A Distant Soil.

Then deduct 50% again from the whole because 50% of any sales will be held against returns for up to a year after the sale date.

So, let’s break it down by the numbers:

You get 8% on all sales of your book under 10,000 copies.

Except for direct sales (accounting for 60% of all your sales.) On those sales you get 4%.

However, even on sales in the direct market that are non-returnable book sales, your publisher will withhold 50% of all your sales as a reserve against possible returns of unsold books. So, for at least one year, you will only get paid 2% of cover price.

On your $6.95 book that sold 10,000 copies, here’s what you earned:

On retail sales, you got +$2,224

On direct market sales you got +$1,668

Total: +$3,892

Divide by 2 to cut the 50% reserve against returns and you now have +$1,946.

Your meager $350 a month advance comes to $4,200

So, before you have even calculated the cost of lettering and coloring on a book that sold 10,000 copies – which would be considered a healthy small press sale – you are in the hole $2,254.

And people wonder why comics creators turned to self publishing.

Well, anyway, there’s a load of crap about publishing they won’t teach you in art school.

Remember:

Define Net

Forbid Cross Collatoralization of Accounts.

Come back later for more fun tales…and then stay tuned for the thrilling conclusion where I get the last laugh and the big bucks, too. 

EDIT: Years later, I found the original colorist invoices. Some of the fees were $40 per page, others were $30 per page. So, the original math in this article doesn’t work out exactly. But it’s not off by more than a few hundred bucks. And pretty much what colorists at small press companies get now, so the colorists were actually making more money in 1987.

Oh, boy.

Fair play and fair pay. Never would have left a single publisher if I’d gotten it.

Me. 1989. I think. At least I had great hair.