A couple of other thoughts from the record exec side of me.
<rant>
-charge more. Like $5-10. Why? People would be willing to pay that much, it will always cost more and take longer to make then you plan and by charging more you could afford to pay the contributors.
-pay the contributers, either cash or with product, (give them X amount of zines to sell / give away.) I know we would all do it for free. But put your punk guilt aside for a moment and think about all the crap you do for money that you hate. If we want to build a world where we earn a living for what we love we're going to have to accept payment at some point.
-Allow contributers to print and sell the zines (if they aren't being paid in product in which case they should be able to buy additional zines to sell at cost). This helps everyone out and increases the distribution and visibility of the zine
-Write out an agreement with the contributors, you don't have to sign it, but it should all be in writing. I would ask for 1 year exclusivity for LE, and the option to reprint in an anthology. Decide what the compensation should be, write that down too.
Handshake agreements suck. Nobody remembers the specifics the same. We change, our principles change, people die and suddenly you are dealing with their family instead of them. (true story involving my friend and elliot smith) So yeah, write it down. (i have some examples of agreements if anyone wants one)
</rant>
xo