Good Faith or Good Practice?
About 15 years ago, I sat at a conference table with an author and his soon to be publisher, and listened to the publisher’s counsel state that the publisher likes to have all copyrights in its name.
I shifted in my seat, uncomfortable with the direction of the conversation.
The author, who was also my client, didn’t question the publisher, nor did he ask about options to recover the rights when or if the book went out of print, nor the option to recover the rights at any other point.
I attended the meeting as a publicist. The author wanted me there during negotiations for the contract, to discuss PR and marketing, who would do what, and so on.
All these years later, I can’t remember why the contract wasn’t signed that day, but I do remember saying something to the author later. I asked him if he wanted to retain the copyright and license it to the publisher or if he really wanted to turn over complete ownership of the book to the publisher.
He believed the publisher was acting in good faith, that it wasn’t operating with intent to deceive, and that things would be fine.
Look up “good faith” and “law” together online and you’ll find a number of definitions, all of which tend to be anchored to the phrase “honest intent.” Here’s the good faith definition from Cornell Law School:
“A term that generally describes honest dealing. Depending on the exact setting, good faith may require an honest belief or purpose, faithful performance of duties, observance of fair dealing standards, or an absence of fraudulent intent.”
There’s also a definition for “bad faith” on Cornell Law School’s site, too:
“A term that generally describes dishonest dealing. Depending on the exact setting, bad faith may mean a dishonest belief or purpose, untrustworthy performance of duties, neglect of fair dealing standards, or a fraudulent intent.”
So how do you know if someone is acting in good faith or bad faith when you enter into a contract with them?
It’s unlikely you’ll ever meet someone who states at the gate that he or she is operating in bad faith. Afterall, why would you ever sign a contract with such a person?
So what do you do when a publisher (or any other entity with which you’re negotiating with) asks for terms that aren’t what you expected, that sound “off,” and/or don’t pass the gut check?
You protect yourself.
You might believe that the publisher is acting in good faith, but you don’t sign a contract partially based on assumptions. You sign a contract that spells out everything, so that assumptions are eliminated.
In the case of my client, he went back to the publisher and said he wanted to retain the copyright and would license the rights for publishing. The publisher agreed and that was that.
The author could have signed as the publisher initially wished, because the author was scared of losing the contract. Instead, he countered. He stated different terms.
If you’re scared of losing a contract if you don’t sign, then you need to hold back and really consider if what you’re doing is good enough for now or the best for the long run. It might be that the company is acting in good faith, but if you don’t understand all the terms and/or are operating on assumptions, at a much later point, you might find yourself feeling you are on the end of a deal that isn’t in your best interest.
There’s about a two-minute segment of VH1’s “Behind the Music” episode about the group TLC, which has stayed strong in my mind, even though almost 20 years have passed since I first watched it.
In the episode, “Left Eye” breaks down “how a group can sell 10 million albums and be broke.”
Ok. There are 100 points on an album. TLC has seven. Every point is equal to eight cents. Alright? Seven times eight . . . Fifty-six cents. That means that every time an album gets sold, TLC gets fifty-six cents. So, ten million records . . . $5.6 million. Seems like a lot of money. Well, it’s not a lot of money when the record company has spent $3 million to record your album. And, in the record business, we pay all costs back to the record company. We pay recording costs, video costs. So, now, we have $2.6 million left. Well guess what? When you have that much money, you’re in about the 47, 48, 49 percent tax bracket. Well, that immediately gets deducted to $1.3 million.Then, you split the rest three ways. You got about $300,000 a piece, if that much. Okay? $300,000. I can buy a nice house with that. And, what am I gonna pay my bills with?
OK. Let’s just cruise by the reality that many people make do on less than $300,000 a year. That’s not the point here. The point is that the group entered into a contract with specific terms.
When you’re on the other side of such terms . . .
I’d be mad myself if I made $300,000 and knew that there were a lot of other people making millions of dollars off of my hard work. Yes, they might have had the expertise to get it all done, and maybe I wouldn’t be a household name if not for them, but . . . I want to be banking some of that money for the future, too.
That’s exactly what Dolly Parton did when she said no to Elvis Presley recording her song “I Will Always Love You.” I wrote about this a while back, in the post “Horse Sense: Lay a Little Heavy on the Business Side.” A few days before Elvis was set to record the song, Colonel Tom Parker (a.k.a. Elvis’ manager) called up Dolly and told her:
“Now, you do know that Elvis is recordin’ your song. And you do know that Elvis don’t record anything that he don’t publish or at least get half the publishin’ on.”
“I can’t do that. This song’s already been a hit with me. And this is in my publishing company. And obviously this is gonna be one of my most important copyrights. And I can’t give you half the publishing, ’cause that’s stuff that I’m leavin’ for my family.”
Elvis didn’t record the song, but years later, Whitney Houston did—and her recording became one of the best-selling singles of all time. Dolly Parton’s eye on tomorrow instead of today served her well.
Were Colonel Tom Parker or TLC’s recording company acting in bad faith?
Or did the artists accept certain terms that ended up tasting like bad faith after the fact?
I can’t answer those questions for them, but I learned lessons from them.
Know your rights, understand the terms, and always follow good practices.
Good faith is a priority, but it can lead to assumptions and a chance you’ll end up in a bad place.
There’s also the reality that some people are really snakes. They’ll say they are acting in good faith, but the opposite is closer to the truth.
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