[This article first appeared in the May 2010 edition of WQ. © Alex Adsett, 2010]
Hooray, you’ve been offered your first commercial publishing deal – congratulations! Now, watch out, because here comes the fine print.
Some publishers will make you an offer in writing outlining the biggest parts of the deal first; usually this includes the advance, the royalty rate, and the territories, although some publishers will send the contract straight out to you after an initial notification that they’re interested. Either way, remember you do not always need to accept everything that is offered and you are able to negotiate.
Be careful to let the publisher know if you are accepting only parts of their initial offer (advance, royalties, or territory), as they will otherwise assume you have agreed to everything, and it is harder to negotiate later.
Licence vs Assignment
A s an author, you will most likely be the sole copyright owner in your work. When you sign a contract with a publisher there are a number of things that can happen to your copyright.
The most common option in trade publishing is for you to grant the publisher an exclusive licence. This means that you remain the copyright owner in name, but the publisher owns the exclusive rights you have licensed. This is comparable to the publisher `renting’ the copyright in the work from you. If someone rents a house from you, they have the exclusive right to live in the house, and even though you are the owner/ landlord, you cannot do certain things with your property while it is leased to someone else. If you grant the publisher an exclusive licence for the copyright then you cannot take advantage of whatever specific rights you have granted to the publisher for as long as the publisher has those rights.
It is not uncommon, particularly in educational publishing, for a publisher to request an assignment of copyright. This means that the publisher becomes the owner of the work. G oing back to the house analogy, this is like selling someone your house instead of just renting it to them. You do not have any rights in the work anymore, and you will probably not be able to get the work back when the publisher has finished using it.
Sometimes you can get away with granting only a non-exclusive licence. This is used more when licensing a short story into an anthology, and it means that the publisher has the right to use it, but you can still use it as well.
a) Flat fee or royalty:
When you license or assign rights in your work, the publisher will usually pay you by royalties (with or without an advance) or by a once-off at fee payment.
Royalties are a way for the publisher and the author to share the risk with a book. It means that the author will get a percentage share of the profits from each book sold, and so the more the book sells, the more income an author will receive. A ¯at fee is more common when the rights are being assigned to the publisher, and means the author will not receive any more income no matter how many or few copies the book sells.
b) Base royalty:
It is important to look at whether your publisher has offered you a royalty against recommended retail price (RRP) or net receipts, as this can make a big difference to your income. The standard royalty in Australia for printed copies of the book is 10 per cent RRP, which can roughly be equated to 20 per cent of net receipts, while electronic book (e-book) royalties are about 25 per cent of net receipts.
If your royalty is 10 per cent of RRP, then no matter what price the bookshop sells your book at (eg full price at $30 or on sale at $2), you will still receive 10 per cent of the recommended retail price set by the publisher.
If you are getting a royalty of 20 per cent net receipts, then you receive 20 per cent of whatever price the bookseller passes back to the publisher. Standard publisher discounts for bookshops range between 35 and 55 per cent, so this means you might be getting a lot less for a book sold at a big chain store than you would for a book sold through your local independent bookshop.
c) High discount royalty:
The royalty clause in your contract will probably include a lower royalty if the publisher has had to give a higher-than usual discount. This is not unreasonable, as the publisher is then earning less as well. It is standard for the normal royalty to be reduced by half or one third when a certain high discount is reached. However, be careful to make sure that the high discount does not start lower than about 55 per cent, as otherwise it would be reducing your royalty on standard bookshop discounts, not only in special circumstances.
d) Advance against royalties:
An advance payment (different from a ¯at fee payment) is recoupable against royalties, which means the publisher will keep all the author’s royalties until the advance has been earned back. Afterwards, any royalties due are paid to the author at regular intervals (usually every six or twelve months). A s a rough guide, the publisher should be willing to offer you an advance equal to half the royalty of first print run.
For example: If the author is going to get 10 per cent of RRP for a book priced at $20 (exclusive of G ST) with a first print run of 2,000 copies, if the whole print run were to sell through without any damaged or free copies, the author should receive $4,000. As there is always risk and uncertainty in publishing, you could expect the publisher to offer the author an advance of $2,000 before the book is published. The author’s royalties on the first 1,000 copies sold would be deducted from the $2,000 advance, but the royalties due on any copies sold after the first 1,000 would be payable to the author.
Copyright in a book can be split up in any number of variations, and can be licensed (or assigned) to any number of different people.
When the publisher licenses the rights, they are going to try to license as broadly as possible – all forms, editions, and languages throughout the world. This will give the publisher the best chance of exploiting all the possibilities in your book and recouping their investment. Before licensing all or some of your rights you should ask: a) what is the publisher going to dif they get these rights and b) what would I be able to do if I kept hold of these rights?
An Australian publisher is always going to want the rights to publish the book in the English language in Australia and (usually) New Zealand. If they also want World rights, or UK, Asia, or USA , or translation, then you need to know that they are going to be able to make use of these rights in a way that will help your book. A t the same time, there is no point holding on to World and translation rights if you have no way to make use of the rights yourself.
When the publisher licenses your book, they will want to use some rights directly themselves (eg to print copies and sell them in Australia), and sublicense some rights to other people (eg Korean translations). The rights that the publisher is able to sublicense are called subsidiary rights, and instead of getting a royalty like you would when the publisher directly sells a copy of your book, you will usually get a 50±90 per cent share of any subsidiary rights income received by the publisher. Some subsidiary rights include quotation rights, audio, UK or US sales, translations, and film.
If you have licensed the rights to the publisher, the term of the contract is probably `duration of copyright’. This means the publisher could hold the rights for 70 years from the author’s death. It is important to have a reversion clause in the contract so that your copyright reverts back to you if the publisher is no longer selling the book or keeping it available for sale. With e-books now available, it means your book might always be available, so I recommend having a reversion clause that means the publisher has to sell a certain number of your book (eg 100 copies) in a 12 month period, or else the rights revert to you.
Things to watch out for
There are many things that should be included in a publishing contract to both protect the publisher and protect the author. A long with licenses, territories, rights, and royalties, there should also be some mention of delivery dates and what exactly is being delivered, what will happen if your manuscript isn’t quite what the publisher wanted, who will pay for any permission fees and cancellation if the publisher does not fulfill its obligations.
It is important for you, or someone you trust, to read every word of the contract you are signing. D o not make promises you cannot keep (ie delivery dates, warranty clauses) and do not sign anything that you do not understand. Essentially, anything that the publisher has promised you in arranging the publishing deal should be included in the contract. If the publisher has said that your print run will be 10,000 copies or that they will get your favourite artist to design the cover or that they will throw you a launch party at the Opera House, then make sure these are included in the contract. Seek independent advice if you do not understand the contract or need help with negotiation, but do not be worried about asking your publisher for an explanation of the terms.